SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _______________)*
CENTURA BANKS, INC.
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(Name of Issuer)
COMMON STOCK, NO PAR VALUE PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
15640T100
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(CUSIP Number)
JOSEPH A. SMITH, JR., POST OFFICE BOX 1220, ROCKY MOUNT, NC 27804;
(919) 977-4400
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(Name, Address, and Telephone Number of Person Authorized to Receive Notices
and Communications)
NOVEMBER 1, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 15640T100 Page 2 of 8
-------------------
Pages
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DEAN E. PAINTER, JR.
SSN: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
(2d) or (2e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of North Carolina
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7 SOLE VOTING POWER
NUMBER OF SHARES 747,887
BENEFICIALLY OWNED
BY EACH REPORTING
PERSON WITH
---------------------------------------------
8 SHARED VOTING POWER
0
---------------------------------------------
9 SOLE DISPOSITIVE POWER
747,887
---------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
747,887
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
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CUSIP No. 15640T100 Page 3 of 8
-------------------
Pages
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WINIFRED P. PAINTER
SSN: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
(2d) or (2e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of North Carolina
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF SHARES 747,887
BENEFICIALLY OWNED
BY EACH REPORTING
PERSON WITH
---------------------------------------------
8 SHARED VOTING POWER
0
---------------------------------------------
9 SOLE DISPOSITIVE POWER
747,887
---------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
747,887
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, without par
value, of Centura Banks, Inc. ("Centura Common Stock"). The principal executive
offices of Centura Banks, Inc. ("Centura" or the "Issuer"), a North Carolina
bank holding company, are located at 134 North Church Street, Rocky Mount, North
Carolina 27804.
Item 2. Identity and Background.
This Schedule 13D is filed by Dean E. Painter, Jr. and
Winifred P. Painter, who are individuals and North Carolina residents (together,
the "Painters"). The Painters are husband and wife and share the same principal
residence located at 1211 Briar Patch Lane, Raleigh, North Carolina 27615.
Dean E. Painter, Jr. is the Chairman and President of CLG,
Inc. ("CLG"), a North Carolina corporation headquartered in Raleigh, North
Carolina which specializes in the leasing of computer equipment. Winifred P.
Painter is the Secretary/Treasurer of CLG. In addition, the Painters are both
directors, as well as the principal shareholders, of CLG. The principal
business address of CLG is 3001 Spring Forest Road, Raleigh, North Carolina
27604.
During the last five years, neither of the Painters has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws, and
which judgment, decree, or final order was not subsequently vacated.
The Painters are both United States citizens.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the terms of an Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of August 21, 1996,
between Centura and CLG, a North Carolina corporation of which the Painters were
principal shareholders, CBI Acquisition Company ("CBI"), a wholly-owned
subsidiary of Centura, was merged with and into CLG (the "Merger"), effective as
of November 1, 1996, and all of the issued and outstanding shares of the common
stock of CLG ("CLG Common Stock"), including the shares of CLG Common Stock
owned by the Painters, were converted into and exchanged for shares of Centura
Common Stock to be issued in connection with the Merger (the "Exchange").
Pursuant to Section 3.2 of the Reorganization Agreement, each share of CLG
Common Stock issued and outstanding immediately prior to the effective time of
the Merger was converted into and exchanged for the
4
<PAGE>
right to receive 332.3944 shares of Centura Common Stock and cash as payment for
any fractional shares resulting from the Exchange. As a result of the Exchange,
the Painters obtained the shares of Centura Common Stock covered by this
Schedule 13D.
A copy of the Reorganization Agreement is included as Exhibit
B to this Schedule 13D and is specifically incorporated herein by reference.
Item 4. Purpose of Transaction.
As set forth above, CLG and Centura entered into the
Reorganization Agreement, pursuant to which CLG was acquired by Centura as a
result of the Merger of CBI with and into CLG and the Exchange of the issued and
outstanding CLG Common Stock for shares of Centura Common Stock. The terms of
the Merger are set forth in the Reorganization Agreement. The related Agreement
and Plan of Merger pursuant to which CBI was merged with and into CLG is
attached as Exhibit A to the Reorganization Agreement.
The shares of Centura Common Stock issued in connection with
the Merger were issued as consideration for the issued and outstanding shares of
CLG Common Stock acquired by Centura in the Merger. Pursuant to the
Reorganization Agreement, CBI was merged with and into CLG, with CLG being the
surviving entity, with each share of CLG Common Stock issued and outstanding
immediately prior to the effective time of the Merger, including the shares of
CLG Common Stock owned by the Painters, being converted into and exchanged for
the right to receive 332.3944 shares of Centura Common Stock and cash as payment
for any fractional shares resulting from the Exchange.
A copy of the Reorganization Agreement is included as Exhibit
B to this Schedule 13D and is specifically incorporated by reference herein.
The shares of Centura Common Stock received by the Painters in
the Exchange are held by the Painters for personal investment. The Painters have
no present plans or intentions which relate to or would result in any of the
transactions required to be disclosed in Item 4 of Schedule 13D.
Item 5. Interest in Securities of Issuer.
Subsequent to and as a result of the Exchange, the Painters
own collectively approximately 1,495,774 shares of Centura Common Stock, or
approximately 6.03% of the 24,789,444 total shares of Centura Common Stock
outstanding as of September 30, 1996, as adjusted to reflect the issuance to the
Painters of such 1,495,774 shares. Individually, Dean E. Painter, Jr. owns
747,887 shares of Centura Common Stock, as to which he has sole voting and
dispositive power. Winifred P. Painter owns 747,887 shares of Centura Common
Stock, as to which she has sole voting and dispositive power. Neither Dean E.
Painter, Jr. nor Winifred P.
5
<PAGE>
Painter has sole or shared voting or dispositive power over the shares of
Centura Common Stock owned by the other and each of Dean E. Painter, Jr. and
Winifred P. Painter hereby specifically disclaim beneficial ownership of the
shares of Centura Common Stock owned by the other.
The 1,495,774 shares of Centura Common Stock acquired by the
Painters in the Exchange do not include approximately 166,197 shares of Centura
Common Stock acquired by certain adult emancipated children of the Painters, as
to which shares the Painters have neither sole nor shared voting or dispositive
power. The beneficial ownership of the approximately 166,197 shares of Centura
Common Stock owned by the Painters' children is hereby specifically disclaimed
by the Painters and such shares are not covered by this Schedule 13D.
The Painters have not effected any transactions relating to
shares of Centura Common Stock during the 60 days preceding the date of filing
of this Schedule 13D, other than entering into the Reorganization Agreement
described herein.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Reorganization Agreement
Set forth below is a description of certain provisions of the
Reorganization Agreement. Such description is qualified in its entirety by
reference to the terms of the Reorganization Agreement filed as Exhibit B to
this Schedule 13D and specifically incorporated by reference herein.
Pursuant to the terms of the Reorganization Agreement, CBI was
merged with and into CLG, effective as of November 1, 1996, and all of the
issued and outstanding shares of CLG Common Stock, including the shares of CLG
Common Stock owned by the Painters, were converted into and exchanged for the
right to receive 332.3944 shares of Centura Common Stock in the Exchange, as
well as cash as payment for any fractional shares resulting from the Exchange.
As a result of the Exchange, the Painters obtained the shares of Centura Common
Stock covered by this Schedule 13D.
The Merger was consummated following the satisfaction of
certain conditions set forth in the Reorganization Agreement, including (i)
approvals of the shareholders of CLG; (ii) approvals of all applicable
regulatory authorities; (iii) receipt of opinions of counsel with respect to
certain income tax and securities law aspects of the transactions contemplated
by the Reorganization Agreement; (iv) receipt of letters from the independent
accountants for CLG and Centura with respect to certain matters related to the
financial statements of CLG and the accounting treatment accorded the Merger,
respectively; (v) the satisfaction of certain requirements relating to the
listing of the Centura Common Stock to be issued in connection with the Merger
with the New York Stock Exchange; and (vi) certain other customary closing
conditions.
6
<PAGE>
Affiliates Agreements
As directors of CLG, Dean E. Painter, Jr. and Winifred P.
Painter are considered to be "affiliates" of CLG under Rule 145(c) of the Rules
and Regulations of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). As such, the Painters
are each subject to certain restrictions upon the transfer of the shares of
Centura Common Stock which they received in the Exchange pursuant to Rule 144
and Rule 145 of the SEC's regulations, as well as pursuant to certain
requirements relating to pooling of interests accounting treatment of the
Merger. As a result, the Painters have each entered into an Affiliate Agreement
with Centura pursuant to which the Painters agree to observe the regulatory and
accounting restrictions upon the transfer of the shares of Centura Common Stock
which they received in the Exchange.
Specifically, each of the Painters has agreed to not sell,
transfer, or otherwise dispose of his or her interests in, or reduce his or her
risk relative to, any of the shares of Centura Common Stock received in the
Exchange until the requirements of SEC Accounting Series Release Nos. 130 and
135, relating to the publication of financial results of post-Merger combined
operations of CBI and CLG, have been met. In addition, the Painters each have
agreed to sell the shares of Centura Common Stock received in the Exchange only
in conformity with the applicable provisions of Rule 144 (which provisions do
not include paragraph (d) of Rule 144 pertaining to restricted securities) or
Rule 145(d) promulgated by the SEC, or following the registration of such shares
under the Securities Act or pursuant to an exemption from such registration
available under the Securities Act.
Copies of the Affiliates Agreements entered into by Centura
and each of Dean E. Painter, Jr. and Winifred P. Painter are included as Exhibit
C and Exhibit D, respectively, to this Schedule 13D and are specifically
incorporated by reference herein. The description of certain provisions of the
Affiliates Agreements set forth above is qualified in its entirety by reference
to the terms of each of the Affiliates Agreements filed as exhibits hereto.
Item 7. Material to be Filed as Exhibits.
The following Exhibits are filed as part of this Schedule 13D:
Exhibit A - Agreement relating to the filing of joint acquisition
statements as required by Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, as amended.
Exhibit B - Agreement and Plan of Reorganization, dated as of August
21, 1996, by and between Centura and CLG.
Exhibit C - Affiliates Agreement, dated as of November 1, 1996, by
and between Centura and Dean E. Painter, Jr.
Exhibit D - Affiliates Agreement, dated as of November 1, 1996, by
and between Centura and Winifred P. Painter.
7
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, each of the undersigned certify that the information set forth in
this statement is true, complete, and correct.
Dated: November 1, 1996
/s/ Dean E. Painter, Jr.
------------------------
Dean E. Painter, Jr.
/s/ Winifred P. Painter
-----------------------
Winifred P. Painter
007426/115/147772
8
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Description of Exhibit Page No.
A Agreement relating to the __
filing of joint acquisition statements as
required by Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, as amended.
B Agreement and Plan of __
Reorganization, dated as of
August 21, 1996, by and between
Centura and CLG
C Affiliates Agreement, dated __
as of November 1, 1996, by and
between Centura and Dean E.
Painter, Jr.
D Affiliates Agreement, dated __
as of November 1, 1996, by and
between Centura and Winifred P.
Painter.
9
<PAGE>
EXHIBIT A
<PAGE>
AGREEMENT RELATING TO
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(f)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or her, as applicable, contained
therein, but shall not be responsible for the completeness and accuracy of the
information concerning the other, except to the extent that he or she, as
applicable, knows or has reason to believe that such information is inaccurate.
IN WITNESS WHEREOF, the undersigned hereby execute this statement as of
the 1st day of November, 1996.
/s/ Dean E. Painter, Jr.
------------------------
Dean E. Painter, Jr.
/s/ Winifred P. Painter
-----------------------
Winifred P. Painter
007426/115/150708
<PAGE>
EXHIBIT B
<PAGE>
CENTURA BANKS, INC.
AND
CLG, INC.
*****
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of August 21, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
GENERAL
2.1 Procedure........................................................... 4
2.2 Required Regulatory Filings......................................... 5
2.3 Action by CLG Shareholders.......................................... 5
2.4 Authorization and Issuance of
Centura Common Stock............................................. 6
2.5 Reasonable Best Efforts; Cooperation................................ 6
2.6 Confidential Information............................................ 6
2.7 Effectiveness of the Merger......................................... 7
2.8 Effect of the Merger................................................ 7
2.9 Employment Agreements............................................... 9
2.10 Board of Directors of Centura....................................... 9
2.11 Centura Omnibus Equity Compensation Plan............................ 9
2.12 CLG Individual Commission Plans......................................9
2.13 Other Employees.....................................................10
2.14 Taking of Necessary Action..........................................12
ARTICLE III
CONSIDERATION FOR ACQUISITION
AND RELATED MATTERS
3.1 The Exchange........................................................12
3.2 Exchange Ratio......................................................12
3.3 Cash in Lieu of Fractional Shares...................................12
3.4 Exchange Agent......................................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY CLG
4.1 Organization, Good Standing, and
Authority of CLG...........................................13
4.2 Binding Obligations; Due Authorization..............................14
4.3 Absence of Default..................................................14
4.4 Capitalization......................................................14
4.5 Financial Statements................................................15
4.6 Absence of Certain Developments.....................................15
4.7 Books of Account; Corporate Records.................................15
i
<PAGE>
TABLE OF CONTENTS (Continued)
Page
4.8 Taxes...............................................................15
4.9 Qualification to Do Business........................................16
4.10 Insurance...........................................................16
4.11 Litigation..........................................................16
4.12 Brokerage; Advisors.................................................16
4.13 Properties..........................................................17
4.14 Intangible Property.................................................17
4.15 Equipment Leases....................................................17
4.16 Employee Relations and
Employee Benefit Plans.....................................18
4.17 Contracts and Commitments...........................................21
4.18 No Materially Adverse Contract
or Other Types of Agreements...............................21
4.19 Environmental Matters...............................................22
4.20 Information Furnished...............................................24
ARTICLE V
REPRESENTATIONS AND WARRANTIES BY CENTURA
5.1 Organization, Good Standing, and Authority..........................24
5.2 Binding Obligations; Due Authorization..............................24
5.3 Absence of Default..................................................25
5.4 Capitalization......................................................25
5.5 Financial Statements................................................25
5.6 Filing of Reports...................................................25
5.7 Absence of Certain Developments.....................................26
5.8 Loan Loss Allowances................................................26
5.9 Taxes...............................................................26
5.10 Qualification to Do Business........................................27
5.11 Insurance...........................................................27
5.12 Litigation..........................................................27
5.13 Brokerage; Advisors.................................................27
5.14 Books of Account; Corporate Records.................................27
5.15 Information Furnished...............................................28
ARTICLE VI
ACCESS TO AND INFORMATION CONCERNING
PROPERTIES AND RECORDS
6.1 Access by Centura...................................................28
6.2 Access by CLG.......................................................28
6.3 Information Related to Opinions.....................................28
ii
<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE VII
AFFIRMATIVE COVENANTS OF CLG
7.1 Operation of Business...............................................29
7.2 Payment of Taxes....................................................29
7.3 Substantial Litigation; Adverse Condition...........................29
7.4 Properties..........................................................29
7.5 Contracts...........................................................29
7.6 Insurance...........................................................29
7.7 Filings and Financial Statements....................................30
7.8 Accounting Principles and Practices.................................30
7.9 Rule 145............................................................30
7.10 Approval of Shareholders............................................30
7.11 Environmental Assessment............................................30
ARTICLE VIII
AFFIRMATIVE COVENANTS OF CENTURA
8.1 Maintenance of Existence............................................31
8.2 Filings with Commission.............................................31
8.3 Fairness Hearing....................................................31
8.4 Accounting Principles and Practices.................................31
8.5 Issuance and Reservation of
Centura Common Stock.......................................31
8.6 Listing of Centura Common Stock with
New York Stock Exchange....................................32
8.7 Payment of Taxes....................................................32
8.8 Substantial Litigation; Adverse Condition...........................32
8.9 Properties..........................................................32
8.10 Contracts...........................................................32
8.11 Insurance...........................................................32
8.12 Stock Repurchases...................................................32
ARTICLE IX
NEGATIVE COVENANTS OF CLG
9.1 Amendments..........................................................33
9.2 Capitalization......................................................33
9.3 Long-Term Indebtedness..............................................33
9.4 Hypothecations......................................................33
9.5 Dividends...........................................................33
9.6 Employee Benefits...................................................33
iii
<PAGE>
TABLE OF CONTENTS (Continued)
Page
9.7 Inconsistent Agreements.............................................33
9.8 Capital Improvements................................................34
9.9 Acquisition of Control..............................................34
9.10 Other Acquisitions and Mergers......................................34
9.11 Sale of Assets......................................................34
ARTICLE X
NEGATIVE COVENANTS OF CENTURA
10.1 Senior Securities...................................................34
10.2 Dividends...........................................................35
10.3 Inconsistent Agreements.............................................35
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Centura..........................................35
11.2 Indemnification by CLG..............................................35
11.3 Indemnification by Dean E. Painter, Jr..............................36
11.4 Notification; Right to Contest and Defend...........................36
11.5 Limitation on Indemnification Liability.............................36
11.6 Survival of Indemnification.........................................37
11.7 Limitation on Amount................................................37
ARTICLE XII
CONDITION PRECEDENT TO THE CLOSING
12.1 Restraining Orders..................................................37
12.2 CLG's Representations...............................................38
12.3 Opinion of Counsel to CLG...........................................38
12.4 Accountants' Letter.................................................38
12.5 Affiliates' Agreement...............................................39
12.6 Centura's Representations...........................................39
12.7 Opinion of Counsel to Centura.......................................39
12.8 Tax Opinion.........................................................39
12.9 Securities Opinion..................................................39
12.10 NYSE Listing........................................................39
12.11 Accounting Treatment................................................39
12.12 Loan Agreements.....................................................39
iv
<PAGE>
TABLE OF CONTENTS (Continued)
Page
ARTICLE XIII
CLOSING DATE
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, AND COVENANTS
ARTICLE XV
ENTIRE AGREEMENT
ARTICLE XVI
TERMINATION OF AGREEMENT
16.1 Mutual Consent; Absence of Shareholder
Approval; Termination Date.................................41
16.2 Election by Centura.................................................41
16.3 Election by CLG.....................................................41
16.4 No Monetary Damages.................................................42
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 Expenses............................................................42
17.2 Publicity...........................................................42
17.3 Amendment...........................................................42
17.4 Governing Law.......................................................42
17.5 Communications......................................................42
17.6 Successors and Assigns..............................................43
17.7 Cover, Table of Contents, and Headings..............................44
17.8 Counterparts........................................................44
Exhibit A AGREEMENT AND PLAN OF MERGER
Exhibit B EXECUTIVE EMPLOYMENT AGREEMENT
DEAN E. PAINTER, JR.
Exhibit C EXECUTIVE EMPLOYMENT AGREEMENT
EDWIN J. LEE
v
<PAGE>
Exhibit D FORM OF OPINION OF SATISKY & SILVERSTEIN, L.L.P.,
COUNSEL TO CLG
Exhibit E FORM OF OPINION OF POYNER & SPRUILL, L.L.P.,
COUNSEL TO CENTURA
vi
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as
of August 21, 1996, between Centura Banks, Inc., a North Carolina bank holding
company with its principal office in Rocky Mount, North Carolina ("Centura"),
and CLG, Inc., a North Carolina business corporation with its principal office
in Raleigh, North Carolina ("CLG").
W I T N E S S E T H
WHEREAS, Centura, through its wholly-owned bank subsidiary, Centura
Bank, and its other subsidiaries and those of Centura Bank, offers a full range
of financial services, including, but not limited to, full service commercial
and consumer banking services, retail securities brokerage services, insurance
brokerage services and mortgage banking services, throughout the State of North
Carolina and through a variety of alternative delivery channels; and
WHEREAS, CLG is engaged in the business of buying, leasing,
refurbishing, servicing and selling computer and technology equipment throughout
the United States; and
WHEREAS, Centura and CLG desire to effect, subject to the necessary
regulatory approvals and the approval of the shareholders of CLG, the merger
(the "Merger") of CBI Acquisition Company ("CBI"), a wholly-owned subsidiary of
Centura, with and into CLG, which Merger will be evidenced and accomplished by
means of an Agreement and Plan of Merger to be entered into by and between CBI
and CLG in substantially the form of Exhibit A attached hereto (the "Merger
Agreement"), pursuant to which all of the issued and outstanding shares of
capital stock of CLG shall be converted into and exchanged for shares of the
common stock of Centura (the "Centura Common Stock") to be issued by Centura in
connection with the Merger as provided herein (the "Exchange"); and
WHEREAS, the Board of Directors of CLG (i) has determined that the
Merger will be in the respective best interests of CLG and its shareholders and
should be recommended for approval to the shareholders of CLG, (ii) has approved
this Agreement and the Merger Agreement, and the transactions contemplated
hereby and thereby, including the Exchange, (iii) has submitted this Agreement
and the Merger Agreement to the shareholders of CLG for approval, and (iv) has
authorized the execution and delivery of this Agreement and the Merger
Agreement; and
WHEREAS, the Board of Directors of Centura has determined that the
Merger will be in the best interests of Centura and its shareholders, has
approved this Agreement and the Merger Agreement, and the transactions
contemplated hereby and thereby, including the Exchange and the issuance and
delivery of the Centura Common Stock in connection therewith, and has authorized
the execution and delivery of this Agreement and the Merger Agreement; and
1
<PAGE>
WHEREAS, Centura and CLG desire to provide for certain undertakings,
conditions, representations, warranties, and covenants in connection with the
Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided in this Agreement, the capitalized terms
set forth below (in their singular and plural forms, as applicable) shall have
the following meanings:
"BHC Act" shall mean the Bank Holding Company Act of 1956, as amended.
"Centura Common Stock" shall mean the existing class of common stock of
Centura, without par value.
"CLG Common Stock" shall mean the existing class of Class A voting
common stock of CLG, $1.00 par value, and the existing class of Class B
non-voting common stock, $1.00 par value.
"Closing Date" shall mean the date specified pursuant to Article XIII
hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Commissioner of Banks" shall mean the Commissioner of Banks of the
State of North Carolina.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.7 hereof as the effective date of the Merger.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange" shall mean the exchange of all of the issued and outstanding
shares of capital stock of CLG for shares of Centura Common Stock in connection
with the Merger as provided in Article III hereof.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
"Exchange Agent" shall mean Registrar and Transfer Company, Cranford,
New Jersey.
"Exchange Ratio" shall mean the relationship of shares of Centura
Common Stock to shares of CLG Common Stock as established by Section 3.2 hereof.
"Exhibits" shall mean the Exhibits referenced herein and so marked,
which Exhibits are hereby incorporated by reference and made a part hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System and the Federal Reserve Bank of Richmond.
"Financial Statements" shall mean (a) with respect to Centura, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Centura as of December 31, 1995 and 1994 and the related consolidated statements
of income, shareholders' equity, and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1995, 1994,
and 1993 as filed by Centura in the SEC Documents, and (ii) the consolidated
balance sheets of Centura (including related notes and schedules, if any) and
related statements of income, shareholders' equity, and cash flows (including
related notes and schedules, if any) included in the SEC Documents filed with
respect to periods ended subsequent to December 31, 1995, and (b) with respect
to CLG, (i) the balance sheets (including related notes and schedules, if any)
of CLG as of January 31, 1996 and 1995 and the related statements of income,
retained earnings and cash flows (including related notes and schedules, if any)
for each of the three fiscal years ended January 31, 1996, 1995, and 1994, as
have been Previously Disclosed, and (ii) the balance sheets of CLG (including
related notes and schedules, if any) and related statements of income, retained
earnings and cash flows (including related notes and schedules, if any) of CLG
with respect to periods ended subsequent to January 31, 1996, as have been
Previously Disclosed, all of which Financial Statements shall be prepared in
accordance with generally accepted accounting principles consistently applied.
"Merger Agreement" shall mean the Agreement and Plan of Merger between
CBI and CLG which shall be substantially in the form attached hereto as Exhibit
A and which shall be executed by the parties thereto on or prior to the Closing
Date.
"Previously Disclosed" shall mean information disclosed (i) in a letter
delivered prior to the date of this Agreement from the party making such
disclosure to the other party, or (ii) in an SEC Document delivered prior to the
date of this Agreement by the party making such disclosure to the other party,
which delivery shall in either case be made in the manner described in Section
17.5 of this Agreement.
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"Regulatory Authorities" shall mean, as the context requires, any or
all of the Federal Reserve, the Commissioner of Banks, the North Carolina
Secretary of State, the Commission, and the United States Department of Justice.
"SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by Centura pursuant to the Securities Laws.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
"Securities Laws" shall mean the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Securities Opinion" shall mean an opinion of Poyner & Spruill, L.L.P.,
counsel to Centura, to the effect that issuance of the Centura Common Stock as
contemplated by this Agreement is exempt from registration under the provisions
of ss.78A-17(16) of the North Carolina General Statute and ss.3(a)(10) of the
Securities Act.
"Tax Opinion" shall mean an opinion of Poyner & Spruill, L.L.P.,
counsel to Centura, to the effect that the Merger constitutes one or more
reorganizations pursuant to and within the meaning of Section 368(a) and other
applicable provisions of the Code, and that no income or loss will be recognized
as a result of such transactions by CLG, its shareholders, or Centura, except to
the extent that income or loss may be recognized as a result of the payment of
cash in lieu of fractional shares of Centura Common Stock or upon the exercise
of dissenters' rights or as a result of the required recapture of any tax
attributes of CLG.
ARTICLE II
GENERAL
Centura and CLG shall take all steps required by applicable law and
regulations or deemed appropriate by the Boards of Directors of each institution
to effect the Merger, including:
2.1 Procedure. Subject to the provisions and conditions specified
herein and in the Merger Agreement, and the obtaining of all required federal
and state regulatory approvals:
(a) CBI will be merged with and into CLG and under the
organizational documents of CLG and, thereafter, the resulting
institution shall operate under the name of and be known as "CLG,
Inc.";
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(b) Centura will issue shares of Centura Common Stock and, at
the Effective Time, the shareholders of CLG will be entitled to receive
shares of Centura Common Stock in exchange for shares of CLG Common
Stock held of record by each such shareholder as of the Effective Time,
all in accordance with and subject to the terms of this Agreement and
the Merger Agreement;
The Merger shall be accomplished in accordance with the terms of this
Agreement and the Merger Agreement and with all applicable state and federal
statutes and regulations promulgated by or subject to the authority of the
Regulatory Authorities.
2.2 Required Regulatory Filings. As soon as practicable after the
execution and delivery of this Agreement:
(a) Centura shall cause to be prepared and filed with the
Federal Reserve appropriate notices, applications, and other materials
to obtain the necessary approval of the acquisition of CLG by Centura
pursuant to the Merger;
(b) Centura shall file or cause to be filed with the
applicable Regulatory Authorities such other applications, filings, and
documents as shall be necessary to consummate the Merger in such forms
as may be prescribed by the respective Regulatory Authorities and
containing all appropriate information as may be required;
(c) Centura shall cause to be prepared and filed an
Application for Fairness Hearing with the Secretary of State of North
Carolina, as Administrator under the North Carolina Securities Act, to
seek a hearing with respect to the fairness of the terms and conditions
of the Merger.
In connection with the foregoing, the parties hereto shall take all
reasonable and necessary steps and actions to comply with and to secure all
approvals for the Merger as may be required by all applicable state and federal
law, rules, and regulations, including those of the Regulatory Authorities.
2.3 Action by CLG Shareholders. This Agreement and the Merger
Agreement, and the transactions contemplated hereby and thereby, shall be
submitted by CLG to its shareholders for approval, as soon as practicable after
approval of this Agreement and the Merger Agreement by the Boards of Directors
of Centura and CLG and the Board of Directors of CLG shall recommend approval of
this Agreement and the Merger Agreement, and the transactions contemplated
hereby and thereby.
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2.4 Authorization and Issuance of Centura Common Stock. At or prior to
the Effective Time, Centura shall take such corporate action as shall be
necessary to authorize and approve the issuance of the shares of Centura Common
Stock to be issued to the shareholders of CLG as provided in this Agreement and
the Merger Agreement. The Merger shall effect no change in the shares of the
Centura Common Stock issued and outstanding at the Effective Time, except for
the issuance of additional shares of Centura Common Stock by virtue of the
Merger.
2.5 Reasonable Best Efforts; Cooperation. Centura and CLG shall each
use all reasonable best efforts to satisfy the conditions to the effectiveness
of the Merger as soon as is reasonably practicable. Centura and CLG will
cooperate in the preparation by Centura or CLG, as the case may be, of such
applications, articles of merger, petitions, and other documents and materials
as Centura or CLG, as the case may be, may deem necessary or desirable to submit
to the Regulatory Authorities and, where appropriate, to the various state
securities law authorities and to any other regulatory authority in order to
obtain all approvals of, consents to, and permissions for, the consummation of
the Merger. Each party shall have the right to review and approve, in advance,
all data and characterizations of or relating to it or any of its subsidiaries
which appear in any such applications, petitions, registration statements, or
other documents or materials prepared by the other party and each party shall
promptly advise the other of comments received from any of the Regulatory
Authorities, whether oral or written, in respect to any such filings or which
may affect the timing or consummation of the Merger.
2.6 Confidential Information. Any information obtained by Centura and
CLG concerning the other in the course of negotiating this Agreement or of
effecting the Merger shall be kept confidential by the recipient; provided,
however, that (i) any of such information may be disclosed to the directors,
officers, employees, agents, and representatives of Centura and CLG who need to
know such information in connection with such negotiations or transactions (it
being understood that such persons will be informed of the confidential nature
of such information and shall be directed to keep such information
confidential), (ii) any of such information may be disclosed to the extent
necessary (subject to court seal or other confidential treatment to the extent
reasonably available) to a court or other governmental body having jurisdiction
or in any registration statement, application, or related or similar document
filed with any governmental body, and (iii) any other disclosure of any such
information may be made to which the other consents in writing. Upon termination
of this Agreement, all such written information (including all copies thereof)
obtained hereunder by either party from the other party shall be returned to
such party as soon as possible. This Section 2.6 shall become inoperative with
respect to any of such information that (x) becomes generally available to the
public other than as a result of disclosure not otherwise permitted hereby by
the party obtaining such information or by its directors, employees, agents, or
representatives, or (y) was available to such party on a nonconfidential basis
prior to its disclosure by the other party, or (z) becomes available to such
party from a source not bound to such party by any confidentiality agreement or
duty of confidentiality regarding such information.
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2.7 Effectiveness of the Merger. The Merger provided for hereunder,
including each of the steps set forth in Section 2.1 hereof, shall become
effective upon and on the date of occurrence of the last of the following events
(the "Effective Time"):
(a) All required regulatory approvals in connection with the
Merger shall have been received and all applicable waiting periods
shall have expired without adverse action;
(b) The requisite approval by the shareholders of CLG of this
Agreement and the Merger Agreement, and the transactions contemplated
hereby and thereby, shall have been obtained. CLG acknowledges that it
has approved this Agreement and the Merger Agreement, prior to the date
of this Agreement. Centura acknowledges that it has approved this
Agreement and the Merger Agreement, and, as the sole shareholder of
CBI, it has approved the Merger Agreement prior to the date of this
Agreement;
(c) Centura shall have received the approval of the Secretary
of State of North Carolina, as Administrator under the North Carolina
Securities Act, of the terms and conditions of the issuance and
exchange of the Centura Common Stock as contemplated by this Agreement
and the Merger Agreement and the fairness thereof with respect to the
relative interests of CLG and its shareholders and Centura and its
public shareholders;
(d) Centura, CBI, CLG and the CLG shareholders shall have
received the Tax Opinion;
(e) Centura and CBI shall have received the Securities
Opinion;
(f) All conditions to be performed by the parties, as set
forth in Article XII of this Agreement, shall have been complied with
or otherwise satisfied, unless appropriately waived in writing by the
appropriate party or parties hereto; and
(g) There shall have been delivered for filing with the North
Carolina Secretary of State articles of merger with respect to the
Merger (containing such terms and provisions, including the Merger
Agreement, as are required by applicable law and which articles of
merger shall be completed, signed, and verified by CBI and CLG as
applicable); provided that, if the filing of such articles of merger is
the last of the events set forth in this Section 2.7 to occur and the
effective time and date specified in any of such articles of merger or
articles of restatement as filed is later than the time and date of
such filing, the latest of such later times and dates shall be the
Effective Time.
2.8 Effect of the Merger. At the Effective Time:
(a) CBI and CLG shall, as provided by applicable law, be a
single corporation following the Merger, and the separate existence of
CBI shall cease, with CLG being the surviving corporation of the
Merger;
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(b) CLG, as the surviving corporation of the Merger, shall be
deemed to be the same corporation as CBI and, without limiting the
generality of the foregoing, all rights, franchises, and interests of
CBI in and to every type of property (real, personal, and mixed) and
choses in action shall be transferred to and vested in CLG by virtue of
the Merger, without any deed or other transfer, and CLG, without any
order or other action on the part of any court or otherwise, shall hold
and enjoy all rights of property, franchises, and interests, in the
same manner and to the same extent as such rights, franchises, and
interests were held or enjoyed by CBI prior to the effectiveness of the
Merger; and CLG shall be liable for all liabilities of CBI, and all
debts, liabilities, obligations, and contracts of CBI, matured or
unmatured, whether accrued, absolute, contingent, or otherwise, and
whether or not reflected or reserved against on balance sheets, books
of account, or records of CBI, shall be those of CLG and shall not be
released or impaired by the Merger; and all rights of creditors and
other obligees and all liens on property of CBI shall be preserved
unimpaired;
(c) The Articles of Incorporation and the Bylaws of CLG at the
Effective Time shall be and constitute the Articles of Incorporation
and the Bylaws of CLG as the surviving corporation, until the same
shall thereafter be altered, amended, or repealed in accordance with
applicable law;
(d) The following individuals shall be the members of the
Board of Directors of CLG following the Merger, all of whom shall
continue in office until their current terms expire or until their
successors shall have been duly elected and qualified:
Ron E. Johnson Winifred P. Painter
Edwin J. Lee Frank L. Pattillo
Robert R. Mauldin Cecil W. Sewell
Dean E. Painter, Jr. William H. Wilkerson
(e) The following individuals shall be the officers of CLG
following the Merger:
Dean E. Painter, Jr. Chairman & Chief
Executive Officer
Edwin J. Lee President & Chief
Operating Officer
William H. Wilkerson Executive Vice President
Joseph A. Smith, Jr. Secretary
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2.9 Employment Agreements. Centura shall cause CLG, as the
surviving corporation, to enter into employment agreements with Dean E. Painter,
Jr. and Edwin J. Lee to serve as Chairman and Chief Executive Officer and
President and Chief Operating Officer, respectively,of CLG, substantially in the
forms attached hereto as Exhibits B and C.
2.10 Board of Directors of Centura. Centura shall appoint Dean E.
Painter, Jr. to the Board of Directors of Centura and Centura Bank as a Class
III director for a term expiring at the 1999 annual meeting of Centura's
shareholders at which directors are elected; thereafter, if not in default in
the performance of his duties, Centura shall nominate and use its best efforts
to see that Mr. Painter is elected for an additional term.
2.11 Centura Omnibus Equity Compensation Plan.
(a) Centura shall recommend to the Compensation Committee of
the Board of Directors of Centura that certain employees of CLG, designated in
the manner set forth in this Section 2.11(a), be granted non-qualified stock
options under and pursuant to the Centura Omnibus Equity Compensation Plan and
that 171,674 shares of Centura Common Stock be reserved and set aside for the
grant of such options to such employees. The employees of CLG who are to be
eligible for such participation, the number of shares of Centura Common Stock to
be represented by options for each such employee and the performance criteria
associated with the vesting of such options shall be recommended, in each case,
by Dean E. Painter, Jr. prior to the Effective Time.
(b) Centura shall recommend further to the compensation
Committee that each of the non-qualified stock options granted pursuant to the
provisions of Section 2.11(a) above, (i) be granted at an exercise price of
$35.50 per share, (ii) be exercisable by the recipient thereof at any time
within 63 months after the date of grant, (iii) vest at the cumulative rate of
20% per year and in accordance with individual and CLG performance criteria
referenced in Section 2.11(a) above, (iv) vest immediately upon change of
control of Centura, and (v) remain available for granting to CLG employees, as
determined in accordance with Section 2.11(a), above, to the extent that the
same are forfeited for whatever reason.
(c) Prior to Closing, Centura shall deliver to CLG a copy of
the minutes of the Compensation Committee indicating the action taken in
accordance with the foregoing provisions of Sections 2.11(a) and (b).
2.12 CLG Individual Commission Plans. Centura shall assume all
obligations and liabilities of CLG under and pursuant to all individual
commission plans in effect between CLG and a salesperson on the Effective Date.
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2.13 Other Employees.
(a) Retained Employees. Centura shall cause CLG, as the
surviving corporation, to adopt the employee welfare benefits available to
employees of Centura Bank as of the Effective Time. Thereafter, any employee of
CLG as of the Effective Time who continues to be employed by CLG following the
Merger, including any members of management of CLG (a "Retained Employee"), will
be provided with the employee welfare benefits generally available to all
similarly situated employees of Centura Bank, including, but not limited to, the
group insurance plan of Centura Bank, on the same terms and at the same cost as
similarly situated employees of Centura Bank with no interruption in benefits
and with acceptance of all pre-existing conditions accepted under the comparable
plan or plans maintained by CLG prior to the Merger. Such benefits shall be
provided for dependents and/or families of such employees as permitted by
Centura Bank's employee benefits plans on the same terms and at the same cost as
for dependents and/or families of similarly situated Centura Bank employees. To
the extent that, CLG provides any employee welfare benefits (other than
severance benefits or accumulated sick and vacation leave for years prior to the
year in which the Merger is consummated), Centura agrees (a) to provide, or to
cause CLG to provide, such benefits under the existing employee welfare benefit
plans of CLG, or, in Centura's discretion, (b) to terminate the existing
employee welfare benefit plans of CLG and to make or cause CLG to make an annual
payment to such employees in a mutually agreed amount so as to enable such
employees to provide for themselves and their families, on an after-tax basis,
welfare benefits comparable to that which they are currently receiving from CLG,
but only to the extent that the employee welfare benefits provided under plans
of Centura or CLG following the Merger are less in the aggregate than the
benefits currently provided to such employees and their families by CLG. In
determining whether the employee welfare benefits provided under plans of
Centura Bank or CLG following the Merger are less in the aggregate than the
benefits currently provided to such employees and their families by CLG, Centura
may offset the value of any benefit currently provided to employees and their
families by CLG but not provided by Centura Bank or CLG following the Merger by
the value of any benefit provided by Centura or CLG following the Merger but not
currently provided by CLG.
To the extent CLG maintains any nonqualified pension or
similar plans for the payment of deferred compensation or similar benefits, the
accrual of additional benefits under such plans shall be frozen at the Effective
Time, and Centura may, in its sole discretion, (a) require CLG to terminate any
of such plans and pay to the participants the present value of the frozen
accrued benefits thereunder (determined in accordance with applicable laws with
respect to calculation of a lump sum distribution on termination of a qualified
defined benefit pension plan); (b) assume the existing obligations under any of
such plans, as frozen, in accordance with the terms thereof; or (c) require CLG,
with the consent of the participants, to terminate any of such plans and cancel
all obligations thereunder in exchange for comparable benefits provided under
existing nonqualified plans of Centura or Centura Bank.
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At (or prior to) the Effective Time, contributions under any
employee defined contribution pension plan (including any plan permitting
elective deferrals under Section 401(k) of the Code) maintained by CLG shall be
discontinued. After the Effective Time, Centura may, in its sole discretion,
cause CLG to merge such plan with the Centura Banks, Inc. 401(k) Plan or cause
CLG to terminate such plan, subject to Internal Revenue Service approval, and
distribute or transfer the accounts in accordance with the elections of
participants thereunder made in a manner consistent with the terms of such plan,
ERISA and the Code.
Following the Merger, CLG shall be permitted to adopt the
pension and 401(k) plans of Centura or Centura Bank, as applicable, and all
Retained Employees will be eligible to participate in such plans 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 all
service to CLG prior to the Effective Time.
It is expressly agreed by the parties hereto that the
obligations under this Section 2.13 with respect to qualified plans shall be
performed in accordance with the requirements of the Code and ERISA, including
without limitation Sections 404 and 415 of the Code, and any other applicable
federal or state statutes or regulations or decisions of any administrative
agency or court interpreting the same.
(b) Terminated Employees. Centura shall cause CLG, as the
surviving corporation, to adopt the terms and provisions of the Centura Banks,
Inc. Salary Continuation Policy as of the Effective Time. Thereafter, any
employee of CLG as of the Effective Time who is terminated by CLG following the
Merger, 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 Retained Employee
who is terminated by CLG after the expiration of such one-year period shall be
eligible to receive Salary Continuation and other benefits to the same extent as
other similarly positioned employees of Centura Bank and, in computing the
Salary Continuation and other benefits to be so provided, such persons shall
receive 12 months of credited service to CLG following the Merger for each 12
months of Active Service to CLG prior to the Merger. For purposes of this
Section 2.11(b), "Salary Continuation" shall be defined to mean a payment to
such Terminated Employee in the amount of two weeks (10 working days) Salary for
each 12 months of Active Service with CLG prior to the Merger, or with CLG
following the Merger and prior to such termination. For purposes of this Section
2.12(b), "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 CLG 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.
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2.14 Taking of Necessary Action. If, after the Effective Time, any
further action should become necessary or desirable to carry out the purposes of
this Agreement and to vest in CLG following the Merger the full and absolute
right to all of the assets, rights, privileges, immunities, powers, and
franchises of CBI as existed immediately prior to the Effective Time (including,
without limitation, the perfection of title to any real property by appropriate
public recordations of documents or instruments of transfer if required by law),
the appropriate officers of CLG, as the surviving corporation, shall be, and
they hereby are, authorized to take all such necessary action as may be
appropriate.
ARTICLE III
CONSIDERATION FOR ACQUISITION AND RELATED MATTERS
3.1 The Exchange. At the Effective Time, each shareholder of CLG,
subject to the effective exercise of dissenters' rights as provided in the
Merger Agreement, shall be entitled to receive the number of shares of Centura
Common Stock into which shares of CLG Common Stock are to be converted under
Section 3.2 hereof. The number of shares so determined shall be adjusted to
reflect any consolidation, split up, other subdivision or combination of Centura
Common Stock, any dividend payable in Centura Common Stock, or any capital
reorganization involving the reclassification of Centura Common Stock subsequent
to the date of this Agreement. Each share of issued and outstanding CLG Common
Stock shall by virtue of the Merger and at the Effective Time automatically be
exchanged for and converted to, without any further notice to or action on the
part of the holder thereof, shares of Centura Common Stock at the Exchange Ratio
set forth in Section 3.2 hereof and cash as payment for fractional shares as
provided in Section 3.3 hereof.
3.2 Exchange Ratio. The Exchange Ratio shall be 332.3944 shares
of Centura Common Stock for each share of CLG Common Stock.
3.3 Cash in Lieu of Fractional Shares. No fractional shares of Centura
Common Stock will be issued or delivered hereunder, but, in lieu thereof, a cash
payment in an amount equal to the Closing Price multiplied by the fractional
interest of Centura Common Stock that would otherwise be issued in the Exchange
shall be made to each holder of CLG Common Stock who would otherwise receive
such a fractional interest in the Exchange. Centura and CLG acknowledge that any
such cash adjustment is simply a means of dispensing with the need to issue
fractional shares and is not separately bargained for consideration. For
purposes of this Article III, "Closing Price" shall mean the closing price of
Centura Common Stock on the New York Stock Exchange Composite Tape on the
trading day immediately prior to the Effective Time.
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3.4 Exchange Agent. Registrar and Transfer Company, Cranford, New
Jersey, shall serve as the exchange agent under the Merger Agreement.
Immediately prior to the Effective Time, Centura shall deposit with the Exchange
Agent that amount of shares of Centura Common Stock and cash necessary to
consummate the Merger. Promptly after the Effective Time, the Exchange Agent
will forward to each former shareholder of CLG a letter of transmittal providing
for the transmission of the certificate or certificates theretofore representing
shares of CLG Common Stock to the Exchange Agent for exchange and conversion in
accordance with Sections 3.2 and 3.3, above.
Each holder of CLG Common Stock, upon presentation and surrender of the
certificate or certificates therefor to Centura or the Exchange Agent, shall be
entitled to receive in exchange therefor a certificate or certificates
representing the whole number of shares of Centura Common Stock and a check for
the amount of cash payable with respect to fractional shares, if any, to which
that holder is entitled under the terms of this Agreement and the Merger
Agreement. Until so presented and surrendered in exchange for a certificate
representing Centura Common Stock, each certificate which represented issued and
outstanding shares of CLG Common Stock at the Effective Time shall be deemed for
all purposes to evidence ownership of that whole number of shares of Centura
Common Stock and the right to receive a cash payment for any fractional interest
in shares (without interest) into which such shares of CLG Common Stock have
been converted pursuant to the Merger. Beginning one year after the Effective
Time, no dividends will be paid to the holder of record of a certificate
representing issued and outstanding shares of CLG Common Stock at the Effective
Time until such holder physically surrenders his certificate for exchange.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY CLG
Except as Previously Disclosed, which disclosures shall be by specific
reference to the applicable section or sections of this Article IV, CLG hereby
makes the following representations and warranties. For purposes of this Article
IV, the term "to the best knowledge of CLG's management" shall mean the actual
and personal knowledge, after reasonable inquiry, of Dean E. Painter, Jr. and
Edwin J. Lee, in their capacities as President and Executive Vice President,
respectively, of CLG.
4.1 Organization, Good Standing, and Authority of CLG. CLG is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of North Carolina, having all requisite corporate power and
authority to enter into and carry out the provisions of this Agreement and the
Merger Agreement. CLG is not in violation of its organizational documents or
bylaws, or, to the best knowledge of CLG's management, of any applicable federal
or state law or regulation in any material respect, or in default with respect
to any order, writ, injunction, or decree of any court, or, to the best
knowledge of CLG's management, in default under any order, license, regulation,
or demand of any governmental agency, any of which violations or defaults would
materially and adversely affect any of its businesses,
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properties, financial position, or results of operations taken as a whole. CLG
has all requisite corporate power and authority to conduct its business as now
conducted or proposed to be conducted, and to own, operate and lease the
properties and assets used in such business.
4.2 Binding Obligations; Due Authorization. Subject to all requisite
shareholder and regulatory approvals, this Agreement constitutes, and the Merger
Agreement upon execution and delivery will constitute, valid and binding
obligations of CLG, enforceable against it in accordance with the terms of such
documents, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court. The execution, delivery, and performance of this Agreement
and the Merger Agreement, and the transactions contemplated hereby and thereby,
have been duly authorized by the Board of Directors and shareholders of CLG.
4.3 Absence of Default. None of the execution or the delivery of this
Agreement or the Merger Agreement, the consummation of the transactions
contemplated hereby or thereby, or the fulfillment of the terms hereof or
thereof, will conflict with, or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, the articles of incorporation or
bylaws of CLG. None of such execution, consummation, or fulfillment will
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a default under (i) any material agreement or instrument under
which CLG is obligated or (ii) (assuming receipt of the approvals referred to in
Section 2.2 hereof and the approval of the shareholders of CLG) violate any
statute or regulation of any government or agency to which CLG is subject, any
of which conflicts, breaches, defaults, or violations will prevent consummation
of the Merger or have a material adverse effect on the business or operations of
CLG taken as a whole.
4.4 Capitalization. The authorized capitalization of CLG as of January
31, 1996 consisted of (i) 25,000,000 shares of CLG Class A common stock, $1.00
par value, of which 4,500 shares are presently outstanding, and (ii) 25,000,000
shares of Class B common stock, $1.00 par value, of which 500 shares are
presently outstanding. All such outstanding shares of capital stock are duly
authorized, validly issued, fully paid, and nonassessable. None of the capital
stock of CLG is subject to any restrictions upon the transfer thereof under the
terms of its articles of incorporation or bylaws. All of the issued and
outstanding CLG Common Stock is owned by Dean E. Painter, Jr., Winifred P.
Painter, Jill A. Painter and Michael K. Painter and none of such shareholders is
the beneficial owner of or has the contractual right to own beneficially any
additional shares of the issued and outstanding CLG Common Stock. For purposes
of this Section 4.4, the term "beneficial owner" shall have the meaning provided
in Rule 13d-3 (17 C.F.R. ss.240.13-3) of the Commission, as in effect on the
date hereof. There are not outstanding any options, rights, securities, or
warrants binding upon CLG that enable the holder thereof to purchase or
otherwise acquire shares of any class of the capital stock of CLG.
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4.5 Financial Statements. CLG has Previously Disclosed copies of CLG's
Financial Statements and, subject to year-end adjustment in the case of
unaudited Financial Statements with respect to periods ended subsequent to
January 31, 1996, such Financial Statements are true, complete, and correct in
all material respects and fairly present the financial position of CLG as of the
dates indicated and the results of operations, retained earnings and changes in
cash flows for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis.
4.6 Absence of Certain Developments. Since January 31, 1996, and prior
to the date hereof, there has been (i) no material adverse change in the
condition, financial or otherwise, of CLG or in the respective assets,
properties, liabilities, or businesses of CLG, (ii) no incurrence by or
subjection of CLG to any obligation or liability (whether fixed, accrued, or
contingent) or commitment material to CLG not referred to in this Agreement,
except such obligations or liabilities as were or may be incurred in the
ordinary course of business; (iii) no declarations, setting aside, or payment of
any special dividend or other distribution with respect to any class of capital
stock of CLG; (iv) no material loss, destruction, or damage to any property of
CLG, which loss, destruction, or damage is not adequately covered by insurance;
and (v) no material acquisition or disposition of any asset or contract nor any
other transaction by CLG other than for fair value in the ordinary course of
business. Since such date and prior to the date hereof, CLG has conducted its
business in all material respects only in the ordinary course and, to the best
knowledge of CLG's management, in substantial compliance with all laws which
govern the ownership of its properties and the conduct of its business.
4.7 Books of Account; Corporate Records. The books of account of CLG
are maintained in substantial compliance with all applicable legal and
accounting requirements and, to the best knowledge of CLG's management, are
maintained in such a manner as to reflect accurately their respective income and
expenses and all of their respective assets, liabilities, and shareholders'
equity. To the best knowledge of CLG's management, CLG has filed all material
reports and returns required by any law or regulation to be filed by it, and it
has duly paid or accrued on its books of account all taxes and charges due
pursuant to such reports and returns, or assessed against it, including, without
limitation, all such reports and statements, and all such assessments which CLG
is required to have filed or paid, none of which reports, statements, or
assessments has been the subject of any material objection by the applicable
Regulatory Authorities. The minute books of CLG contain complete and accurate
records in all material respects of the corporate actions of its shareholders
and Board of Directors and of all committees thereof.
4.8 Taxes. To the best knowledge of CLG's management, CLG has filed all
material tax returns, reports, lists, and statements required to be filed by any
federal, state, local, foreign, or other taxing jurisdiction of any nature
whatsoever, and paid all taxes, assessments, and other governmental charges due
upon it or its income, property, assets, or net worth (other than taxes or
charges which are not yet delinquent, are being contested in good faith, have
not been finally determined, or for which there are adequate reserves that were
established on or before January 31, 1996), and no extensions for the time of
any such payment have been
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requested or granted. No material additional assessments of tax by any
governmental authority are, as of the date hereof, pending or, to the best
knowledge of CLG's management, known to be pending, threatened, or in process of
proposal, and no unexpired waivers or other extensions of the statute of
limitations executed by or binding upon CLG with respect to federal or other
income taxes or any other taxes are in effect as of the date hereof. In the
opinion of CLG's management, the accruals and reserves made for tax liabilities
in the January 31, 1996 audited balance sheet and the April 30, 1996 unaudited
balance sheet are adequate for the payment of all federal, state, local,
foreign, and other tax liabilities of any nature whatsoever of CLG or with
respect to its assets and properties whether or not proposed, pending,
threatened, or disputed, for all periods ending on or prior to such date.
4.9 Qualification to Do Business. CLG is duly qualified and licensed to
do business and is in good standing in all jurisdictions where the conduct of
its business requires it to be qualified and licensed to do such business and
where the failure to be so qualified and licensed could result in a material
liability or adversely affect the operations and properties of CLG in any
material respect.
4.10 Insurance. CLG has in effect insurance coverage with reputable
insurers, including blanket bond coverage, which coverage in respect of amounts,
types, and risks insured is, in the opinion of CLG's management, adequate for
the businesses conducted by it.
4.11 Litigation. No action, suit, investigation, or proceeding is
pending against, nor, to the best knowledge of CLG's management, has the threat
of such been communicated to, CLG before any court or governmental agency,
domestic or foreign, nor is there any basis for any other material action, suit,
investigation, or proceeding which, in the judgment of legal counsel for CLG,
has a reasonable prospect for success. On the date hereof, there is no action,
suit, investigation, or proceeding brought by CLG which seeks damages in excess
of $25,000. To the best knowledge of CLG's management, on the date hereof, there
is no litigation, proceeding, or governmental investigation pending or
threatened against CLG relating to the Merger.
4.12 Brokerage; Advisors. Neither CLG, nor any of its officers,
directors or employees, has employed any broker, finder, or financial advisor or
incurred any liability for any fees or commissions in connection with the
transactions contemplated herein. There are no claims for brokerage commissions,
finder's fees, or similar compensation arising out of or due to any act of CLG
in connection with the Merger or based upon any agreement or arrangement made by
or on behalf of CLG. CLG has not entered into any agreement or understanding
with any party relating to financial advisory services provided or to be
provided with respect to the Merger. CLG shall indemnify and hold Centura
harmless against any liability or expenses arising out of such a claim,
agreement, or understanding.
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4.13 Properties. Except for property and assets leased or disposed of
in the ordinary course of business, CLG owns, free and clear of any mortgage,
pledge, lien, charge, or other encumbrance which would materially interfere with
the business or operations of CLG, all of its real or personal property and
other assets reflected in CLG's most recent Financial Statements or acquired by
it subsequent to the date thereof. The real and personal property, if any,
leased by CLG as lessee is free from any adverse claim which would materially
interfere with the respective businesses or operations of CLG. All of the
properties and equipment owned or leased by CLG as lessee are in normal
operating condition, free from any known defects, except such minor defects as
do not materially interfere with the continued use thereof in the conduct of the
normal operations of CLG.
4.14 Intangible Property. To the best knowledge of CLG's management,
CLG owns or possesses the right, free of the claims of any third party, to use
the trademarks, service marks, trade names, copyrights, patents, and licenses
currently used by them in the conduct of their respective businesses. To the
best knowledge of CLG's management, no material product or service offered and
no material trademark, service mark, or similar right used by them infringes any
rights or any other person, and, as of the date hereof, CLG has not received
written or oral notice of any claim of such infringement.
4.15 Equipment Leases.
(a) Each lease pursuant to which CLG leases computer equipment
to others ("Equipment Lease") is in full force and effect and constitutes the
legal, valid and binding obligation of CLG and the lessee thereunder,
enforceable in accordance with its terms, except as such invalidity or
unenforceability would not materially and adversely affect the business and
operations of CLG as a whole or as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court.
(b) Each Equipment Lease (i) serves as the functional
equivalent of an extension of credit by CLG to the lessee thereunder, (ii)
leases property (the "Equipment Lease Property") that was acquired by CLG
specifically for the purpose of leasing such property or was acquired by CLG
specifically for an earlier lease transaction, (iii) is "on a nonoperating
basis", and (iv) has the effect of yielding a return that will compensate CLG
for not less than CLG's full investment in the Equipment Lease Property plus the
estimated total cost of financing the Equipment Lease Property over the term of
the Equipment Lease, from (A) rentals, (B) estimated tax benefits, (C) estimated
residual values that in no case exceed 25% of the acquisition cost of the
Equipment Lease Property, and (D) in the case of Equipment Leases of not more
than seven years, such additional amount, which does not exceed 60% of the
acquisition cost of the Equipment Lease Property, as is provided by an
unconditional guarantee by the lessee, independent third party or manufacturer
determined to have the financial resources to meet such obligation.
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(c) For purposes of subsection (b)(iii) of this Section 4.15,
an Equipment Lease shall be considered to be "on a nonoperating basis" for the
reason that CLG provides no servicing, repair, or maintenance in connection with
the Equipment Lease Property during the term of the Equipment Lease.
4.16 Employee Relations and Employee Benefit Plans.
(a) CLG has Previously Disclosed true and complete copies of
any employee handbooks and any reports and/or plans prepared or adopted pursuant
to the Equal Employment Opportunity Act of 1972, as amended. As of the date
hereof, to the best knowledge of CLG's management, CLG is in all material
respects in compliance with all federal and state laws, regulations, and orders
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice. As of the date hereof, to the best knowledge of CLG's management, no
dispute exists between CLG and any of its employees regarding any employee
organization, wages, hours, or conditions of employment which would materially
interfere with the businesses or operations of CLG. As of the date hereof, there
are no employment, consulting, labor, or collective bargaining agreements
binding upon CLG. As of the date hereof, CLG is not aware of any attempts to
organize a collective bargaining unit to represent any of its employees.
(b) CLG has Previously Disclosed a listing of any and all
employee benefit plans, employment or severance agreements or similar
arrangements to which CLG is or has ever been a party or by which it is or has
ever been bound, legally or otherwise, including, without limitation, (i) any
"employee welfare benefit plan" or "employee pension benefit plan" (within the
meaning of Sections 3(1) and 3(2) of ERISA) (the "Benefit Plans"); (ii) any
profit sharing, deferred compensation, bonus, stock option, stock purchase,
equity-based compensation, pension, retainer, consulting, retirement, severance,
welfare or incentive plan, agreement or arrangement, (iii) any plan, agreement,
or arrangement providing for "fringe benefits" or perquisites to employees,
officers, directors or agents, including but not limited to benefits relating to
CLG automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave,
disability, medical, dental, hospitalization, life insurance and other types of
insurance (including, without limitation, any "voluntary employees' beneficiary
association" (as defined in Section 501(c)(9) of the Code) or similar trust fund
providing the same or similar benefits), or (iv) any employment agreement not
terminable on thirty (30) days (or less) written notice or providing for an
annual salary in excess of $.00. The plans, agreements and arrangements
described in this Section 4.16 may be referred to herein as the "Benefit
Arrangements." CLG has delivered to Centura true and complete copies of all
documents and summary plan descriptions with respect to the Benefit
Arrangements, or summary written descriptions of any of the Benefit Arrangements
not otherwise in writing, along with (1) the most recent actuarial and financial
reports and statements of assets and liabilities prepared with respect to any of
the Benefit Arrangements, (2) the three most recent annual reports filed with
any government agency with respect to any of the Benefit Arrangements,
including, without limitation, all schedules thereto and financial statements
with attached opinions of independent accountants, if required, and (3) all
governmental rulings, advisory opinions and determination letters and any open
requests for
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governmental rulings, advisory opinions or determination letters that pertain to
any Benefit Arrangement. Subject to Section 2.13 of this Agreement, each of the
Benefit Arrangements may be amended or terminated at any time by CLG or, after
the Effective Time, by Centura.
None of the Benefit Arrangements is (i) a plan subject to
Title IV of ERISA or (ii) a "multiemployer plan" (within the meaning of Section
3(37) of ERISA. CLG is not obligated to provide any post-retirement welfare
benefits to its employees or former employees, including post-retirement health
or life insurance coverage. To the best knowledge of CLG's management, there are
no negotiations, demands or proposals that are pending or have been made which
concern matters now covered, or that would be covered, by plans, agreements or
arrangements of the type described in this Section 4.16(b).
(c) To the best knowledge of CLG's management, CLG has fully
complied in all material respects with all provisions of ERISA and the Code and
any and all other laws, rules, and regulations applicable to the Benefit
Arrangements. All reports and descriptions of any Benefit Arrangements required
by ERISA or the Code have been timely filed and distributed and, to the best
knowledge of CLG's management, all notices required by ERISA, the Code, or any
state or federal law or any ruling or regulation of any state or federal
administrative agency with respect to all Benefit Arrangements have been
appropriately given. CLG has received no written notice of the existence of any
default or violation by any other party of ERISA or the Code or any other laws,
rules or regulations applicable to the Benefit Arrangements. Other than routine
claims for benefits, CLG has not received any written notice of any pending
material claims or lawsuits which have been asserted or instituted against any
of the Benefit Arrangements, the sponsor or administrator of any of the Benefit
Arrangements, or against any fiduciary of any of the Benefit Arrangements with
respect to the operation of such arrangement. CLG has not received any written
notice of any pending investigation or pending enforcement action by the
Internal Revenue Service, the Department of Labor or any other governmental
agency with respect to any of the Benefit Arrangements.
(d) Each Benefit Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service to the effect that such plan is qualified under
Section 401(a) of the Code and that the trust under such plan is tax exempt
under Section 501(a) of the Code. No such determination letter has been revoked
or, to the best knowledge of CLG's management, threatened to be revoked and, to
the best knowledge of CLG's management, no event has occurred that will or could
give rise to disqualification or loss of tax-exempt status of any such plan or
trust under such sections. To the best knowledge of CLG's management, no event
has occurred that will or could subject any Benefit Plan to tax under Section
511 of the Code. To the best knowledge of CLG's management, CLG has no material
liability under any such plan that is not reflected in the Financial Statements
of CLG as of January 31, 1996. To the best knowledge of CLG's management, all
contributions due on or prior to the date hereof to any Benefit Plan have been
timely paid or provided for in accordance with ERISA and all other applicable
federal and state
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statutes and regulations. To the best knowledge of CLG's management, no Benefit
Plan has an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA).
(e) To the best knowledge of CLG's management, no "prohibited
transaction" (which shall mean any transaction prohibited by Section 406 of
ERISA and not exempt under Section 408 of ERISA, or prohibited by Section 4975
of the Code and not exempt under Section 4975(d) of the Code) has occurred with
respect to any Benefit Plan (i) which would result in the imposition, directly
or indirectly, of an excise tax under Section 4975 of the Code or a penalty
under Section 502 of ERISA, or (ii) the correction of which would have an
adverse effect on the financial condition, results of operations, or business of
CLG.
(f) Each of the Benefit Arrangements has been duly authorized
by all necessary corporate action by CLG.
(g) To the best knowledge of CLG's management, each of the
Benefit Arrangements which constitutes a "group health plan" (within the meaning
of Section 5000(b)(1) of the Code) has been operated in compliance with the
group health plan continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, the standards and requirements of
Section 609 of ERISA, Title XXII of the Public Health Service Act and the
provisions of the Social Security Act, to the extent such requirements are
applicable. No event has occurred and no condition exists with respect to any
such group health plan which would subject CLG to any excise tax under Section
4980B of the Code. Each such plan which is subject to Section 1862(b)(1) of the
Social Security Act has been operated in compliance with the secondary payor
requirements of such section. To the best knowledge of CLG's management, each of
the Benefit Arrangements has been operated in compliance with the provisions of
the Americans with Disabilities Act of 1990 and the Family and Medical Leave Act
of 1993.
(h) To the best knowledge of CLG's management, neither CLG nor
any administrator or fiduciary of any of such Benefit Plans (or agent or
delegate of any of the foregoing) has engaged in any transaction or acted or
failed to act in any manner which could subject CLG to any direct or indirect
liability for a breach of any fiduciary, cofiduciary, or other duty under ERISA
(including, without limitation, any direct or indirect liability under Sections
502(c), 502(l), or 4071 of ERISA). To the best knowledge of CLG's management, no
oral or written representation or communication with respect to any aspect of
the Benefit Plans has been made to employees of CLG prior to the Effective Time
which is not in accordance with the written or otherwise preexisting terms and
provisions of such Benefit Plans in effect immediately prior to the Effective
Time.
(i) CLG does not and has not employed the services of any
"leased employees" (within the meaning of Section 414(n) of the Code) who must
be taken into account for the requirements of Section 414(n)(3) of the Code.
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4.17 Contracts and Commitments. Except where the failure to do so does
not constitute a material omission on the part of CLG, CLG has Previously
Disclosed or made available to Centura or granted access to originals or copies
of the following documents or summary descriptions of the following information
relating to CLG, which copies or summary descriptions are complete and accurate
as of the date hereof, except as otherwise expressly provided hereunder:
(i) organizational documents, and bylaws and any amendments
thereto, as well as minutes of all meetings of the shareholders and
Board of Directors and committees thereof since January 1, 1990;
(ii) all employment contracts, individual commission plans,
consultation after retirement, and any other remuneration arrangements
applicable to employees of CLG, accompanied by any agreements embodying
such contracts or arrangements, and any actuarial reports and audits
relating to such plans; and
(iii) all federal and state tax returns filed for the fiscal
years 1994, 1995, and 1996 (if available), copies of the most recent
federal and state revenue agency examinations, and all tax rulings
received from the Internal Revenue Service since January 1, 1990.
4.18 No Materially Adverse Contracts or Other Types of Agreements.
Without limiting any of the foregoing representations and warranties, on the
date hereof:
(i) All policies of insurance (including surety and blanket
bonds) insuring any material risks of CLG are in force on the date
hereof and CLG is not in any material default with respect to any such
policies; and
(ii) (a) Each lease, contract, mortgage, promissory note, deed
of trust, loan, credit arrangement, or other commitment or arrangement
of CLG is in all material respects valid and enforceable in accordance
with its terms (except as such invalidity or unenforceability would not
materially and adversely affect the business and operations of CLG as a
whole or as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors
rights generally and except that the availability of equitable remedies
is within the discretion of the appropriate court) and is not subject
to termination as a result of the Merger without the consent of any
other party, and (b) CLG is not in default in any material respect
under any such lease, contract, mortgage, promissory note, deed of
trust, loan, or other commitment or arrangement, which default would
materially and adversely affect the business and operations of CLG as a
whole.
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4.19 Environmental Matters.
(a) For purposes of this section and Section 7.11, the
"Premises" means and includes, collectively, all the real property owned in fee
or leased by CLG as lessee, which real property shall be Previously Disclosed
pursuant hereto.
(b) For purposes of this section, "Hazardous Materials" means
and includes petroleum products, any flammable explosives, asbestos or any
material containing asbestos, and/or any hazardous or toxic waste, chemical,
substance or material defined as such by the United States Environmental
Protection Agency, the United States Department of Labor, the North Carolina
Department of Environment, Health, and Natural Resources, the North Carolina
Department of Labor, the North Carolina Department of Crime Control and Public
Safety, or for the purpose of or by any Environmental Laws as may now or at any
time hereafter be in effect.
(c) For purposes of this section, "Environmental Laws" means
and includes the federal Comprehensive Environmental Response, Compensation and
Liability Act, the Emergency Planning and Community Right to Know Act, the
Occupational Safety and Health 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 Coastal Area Management Act, any
North Carolina laws or rules implementing the aforementioned federal laws, any
"Superlien" law, the North Carolina Oil Pollution and Hazardous Substances
Control Act, the North Carolina Hazardous Chemicals Right to Know Act, or any
other decree regulating, relating to, or imposing liability, responsibility or
standards of conduct applicable to environmental conditions and/or releases (or
potential releases) of Hazardous Materials in, on, at or affecting the Premises,
as such may now or at any time hereafter be defined or in effect.
(d) CLG hereby represents and warrants to Centura for the
purposes of this Agreement and the contemplated transfer, sale and conveyance of
the Premises that:
(i) To the best knowledge of CLG's management, no
Hazardous Materials have been used or placed in, on or at the
Premises in violation of, and the Premises are presently in
compliance with, all applicable Environmental Laws, and there
are no circumstances presently existing in, on, at or relating
to the Premises which would result in violation of any
applicable Environmental Law;
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(ii) To the best knowledge of CLG's management, CLG
has not caused or permitted the installation, storage,
treatment, disposal, discharge, release or threatened release
of Hazardous Materials in, on, at or from the Premises in
violation of any Environmental Law nor has engaged in, or has
knowledge of, any activity on or in the vicinity of the
Premises which resulted in, the presence or release of any
Hazardous Materials which may impact the condition of the
Premises;
(iii) To the best knowledge of CLG's management, as
of the Closing Date, the Premises shall be free of the
presence of Hazardous Materials, except for those materials
used in the ordinary course of business by CLG;
(iv) To the best knowledge of CLG's management, CLG
has complied in all material respects with, and have caused
the Premises to comply in all material respects with, all
applicable Environmental Laws relating to or affecting the
Premises, and the Premises are free and clear of any liens
imposed pursuant to any applicable Environmental Laws;
(v) To the best knowledge of CLG's management, CLG
has, and at all times have had and/or maintained, all
licenses, permits and other governmental or regulatory
authority necessary for compliance with all applicable
Environmental Laws;
(vi) To the best knowledge of CLG's management, CLG
has complied in all material respects with all Environmental
Laws relating specifically to notification, registration,
record keeping, installation, financial responsibility, leak
detection, equipment, facilities, activities, and operations
on the Premises;
(vii) There is not now pending or, to the best
knowledge of CLG's management, threatened any action, suit,
investigation or proceeding against CLG or the Premises (or
against any other party relating to the Premises) seeking to
enforce any right or remedy under any Environmental Laws;
(viii) CLG is not now, nor has been, subject to any
order, nor, to the best knowledge of CLG's management, been
threatened with any enforcement action, received any notice,
or received any request for information or any other demand or
inquiry pursuant to any Environmental Law with respect to the
Premises or any activity or condition in, on, at or relating
to the Premises;
(ix) CLG immediately shall give Centura oral and
written notice in the event that CLG receives any notice from
any governmental agency, entity or any other party with regard
to Hazardous Materials in, on, at or affecting the Premises;
and
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(x) CLG shall provide to Centura on or before the
Closing Date, and CLG has a continuing obligation to provide
to Centura, copies of all information in its possession, under
its control or available to it concerning the environmental
condition of the Premises and any and all properties adjacent
to the Premises, the condition of which would affect the
condition of Premises.
4.20 Information Furnished. Each representation and warranty in this
Article IV and all information furnished or to be furnished to Centura pursuant
to the terms of this Agreement, other than information prepared by parties other
than CLG, as of the date hereof or the date furnished, are and shall be true,
accurate, and complete in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES BY CENTURA
Except as Previously Disclosed, which disclosures shall be by specific
reference to the applicable section or sections of this Article V, Centura
represents and warrants as follows:
5.1 Organization, Good Standing, and Authority. Centura is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of North Carolina. Centura is a bank holding company duly
registered pursuant to the BHC Act and the North Carolina Bank Holding Company
Act of 1984, and it has all requisite corporate power and authority to enter
into and carry out the provisions of this Agreement. Centura is not in violation
of its organizational documents or bylaws, or of any applicable federal or state
law or regulation in any material respect, or in default with respect to any
order, writ, injunction, or decree of any court, or in default under any order,
license, regulation, or demand of any governmental agency, any of which
violations or defaults would materially and adversely affect any of its
businesses, properties, financial position, or results of operations taken as a
whole. Centura has all requisite corporate power and authority to conduct its
business as now conducted or proposed to be conducted, and to own and operate
and lease the properties and assets used in such business.
5.2 Binding Obligations; Due Authorization. This Agreement constitutes,
and the Merger Agreement, upon execution and delivery will constitute, valid and
binding obligations of Centura and CBI, subject to required regulatory
approvals, will be enforceable against them in accordance with the terms of such
documents, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court. The execution, delivery, and performance of this Agreement
and the Merger Agreement, and the transactions contemplated hereby and thereby,
have been duly authorized by the Board of Directors of Centura, and the Merger
Agreement and the transaction contemplated thereby, will be duly authorized by
the Board of Directors of CBI prior to the Effective Time.
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5.3 Absence of Default. None of the execution or the delivery of this
Agreement or the Merger Agreement, or the consummation of the transactions
contemplated hereby or thereby, or the fulfillment of the terms hereof or
thereof, will conflict with, or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Centura. None of such execution, consummation, or fulfillment will
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a default under (i) any agreement or instrument under which
Centura is obligated, or (ii) (assuming receipt of the approvals referred to in
Section 2.2 hereof) violate any statute or regulation of any government or
agency to which Centura is subject, any of which conflicts, breaches, defaults,
or violations will prevent consummation of the Merger or have a material adverse
effect on the business or operations of Centura.
5.4 Capitalization. The authorized capital stock of Centura as of June
30, 1996 consisted of (i) 50,000,000 shares of Common Stock, without par value,
of which 22,499,295 shares are presently outstanding, and (ii) 25,000,000 shares
of Preferred Stock, without par value, none of which has been issued or is
presently outstanding. All such outstanding shares of capital stock are duly
authorized, validly issued, fully paid, and nonassessable. None of the capital
stock of Centura is subject to any restrictions upon the transfers thereof under
the terms of its Articles of Incorporation or Bylaws. In addition, as of June
30, 1996, Centura had reserved for issuance under Centura's Omnibus Equity
Compensation Plan and certain other equity compensation plans assumed from
predecessor corporations an adequate number of shares of Centura Common Stock,
including the amount for which options to purchase shares have been granted and
are currently outstanding. Other than the foregoing, there are not outstanding
any options, rights, securities, or warrants binding upon Centura or upon its
shareholders that enable the holder or holders thereof to purchase or otherwise
acquire shares of Centura Common Stock.
5.5 Financial Statements. Centura has Previously Disclosed copies of
Centura's Financial Statements and such Financial Statements are true, complete,
and correct in all material respects and fairly present the consolidated
financial position of Centura and Centura Bank as of the dates indicated and the
consolidated results of operations, retained earnings and changes in financial
position or cash flows for the periods then ended in conformity with generally
accepted accounting principles applied on a consistent basis.
5.6 Filing of Reports. Centura has timely filed all reports required to
be filed with the applicable Regulatory Authorities and such reports, as filed,
complied in all material respects with applicable law and regulations. Centura
has filed all SEC Documents required to be filed by the Securities Laws and all
documents required by any applicable state securities laws and such SEC
Documents and other documents, as filed, complied in all material respects with
the Securities Laws and such state securities laws.
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5.7 Absence of Certain Developments. Since December 31, 1995 and prior
to the date hereof, there has been (i) no material adverse change in the
condition, financial or otherwise, of Centura or in the assets, properties,
liabilities, or businesses of Centura; (ii) no occurrence by or subjection of
Centura to any material obligation or liability (whether fixed, accrued, or
contingent) or commitment not referred to in this Agreement and such obligations
or liabilities as were or may be incurred in the ordinary course of business;
(iii) no declarations, setting aside, or payment of any dividend or other
distribution with respect to the capital stock of Centura, except for regular
quarterly dividends paid or to be paid with respect to such stock; (iv) no
material loss, destruction, or damage to any property of Centura, which loss,
destruction, or damage is not adequately covered by insurance; and (v) no
material acquisition or disposition of any asset or contract nor any other
transaction by Centura other than for fair value. Since such date and prior to
the date hereof, Centura has conducted its business in substantial compliance
with all laws which govern the ownership of its property and the conduct of its
business.
5.8 Loan Loss Allowances. The allowances for loan losses set forth in
Centura's most recent Financial Statements are adequate in the opinion of
Centura's management, as of the date thereof, to absorb reasonably anticipated
losses in the loan and lease portfolios of Centura and Centura Bank in view of
the size and character of such portfolios, current economic conditions, and
other pertinent factors.
5.9 Taxes. Centura has filed all material tax returns, reports, lists,
and statements required to be filed by any federal, state, local, foreign or
other taxing jurisdiction of any nature whatsoever, and paid all taxes,
assessments, and other governmental charges due to any of the said taxing
jurisdictions upon it or its income, property, assets, or net worth (other than
taxes or charges which are not yet delinquent, are being contested in good
faith, have not been finally determined, or for which there are adequate
reserves that were established on or before December 31, 1995), and no
extensions for the time of any such payment have been requested or granted. No
material additional assessments of tax by any governmental authority are, as of
the date hereof, pending or, to the best knowledge of Centura's management,
known to be pending, threatened, or in process of proposal, and no unexpired
waivers or other extensions of the statute of limitations executed by or binding
upon Centura with respect to federal or other income taxes or any other taxes
are in effect as of the date hereof. In the opinion of Centura's management, the
accruals and reserves made for tax liabilities in the Financial Statements are
adequate for the payment of all federal, state, local, foreign, and other tax
liabilities of any nature whatsoever of Centura or with respect to any asset or
property of Centura, whether or not proposed, pending, threatened, or disputed,
for all periods ending on or prior to the date thereof.
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5.10 Qualification to Do Business. Centura is duly qualified and
licensed to do business and is in good standing in all jurisdictions where the
conduct of its business requires it to be qualified and licensed to do such
business and where the failure to be so qualified and licensed could result in
liability or adversely affect the operations and properties of Centura in any
material respect.
5.11 Insurance. Centura has in effect insurance coverage with reputable
insurers, including blanket bond coverage, which coverage in respect of amounts,
types, and risks insured is, in the opinion of Centura's management, adequate
for the businesses conducted by it.
5.12 Litigation. No action, suit, investigation or proceeding is
pending or threatened against Centura before any court or governmental agency,
domestic or foreign, which, if decided against Centura, will have a material
adverse effect on the financial condition of Centura on a consolidated basis;
nor, to the best knowledge of the management of Centura, is there any basis for
any other material action, suit, investigation, or proceeding which, in the
judgment of legal counsel to Centura, has a reasonable prospect for success.
Centura further represents that there is no litigation, proceeding, or
governmental investigation pending or threatened against Centura relating to any
of the transactions contemplated by this Agreement.
5.13 Brokerage; Advisors. There are no claims for brokerage
commissions, finder's fees, or similar compensation arising out of or due to any
act of Centura in connection with the transactions contemplated by this
Agreement or based upon any agreement or arrangement made by or on behalf of
Centura, and Centura has not entered into any agreement or understanding with
any party relating to financial advisory services provided or to be provided
with respect to the transactions contemplated by this Agreement. Centura shall
indemnify and hold CLG harmless against any liability or expenses arising out of
such a claim, agreement, or understanding.
5.14 Books of Account; Corporate Records. The books of account of
Centura are maintained in substantial compliance with all applicable legal and
accounting requirements and in such a manner as to reflect accurately each
respective item of income and expense and all of its assets, liabilities, and
shareholders' equity. To the best knowledge of Centura's management, Centura has
filed all material reports and returns required by any law or regulation to be
filed by it, and it has duly paid or accrued on its books of account all taxes
and charges due pursuant to such reports and returns, or assessed against it,
including, without limitation, all such reports and statements, and all such
assessments which it is required to have filed or paid, none of which reports,
statements, or assessments has been the subject of any material objection by the
appropriate Regulatory Authorities. The minute books of Centura contain complete
and accurate records in all material respects of the corporate actions of its
shareholders and Board of Directors and of all committees thereof.
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5.15 Information Furnished. Each representation and warranty in this
Article V, all information Previously Disclosed to CLG, and all information
otherwise furnished or to be furnished to CLG pursuant to the terms of this
Agreement, as of the date hereof or the date furnished, are and shall be true,
accurate, and complete in all material respects.
ARTICLE VI
ACCESS TO AND INFORMATION CONCERNING
PROPERTIES AND RECORDS
6.1 Access by Centura. CLG, to the extent permitted by law and except
for certain information covered by confidentiality agreements between CLG and
other parties relating to a possible acquisition of CLG by such parties, shall
give Centura, its counsel, accountants, investment bankers, and other
representatives full access, at reasonable times and upon reasonable notice
throughout the period through the Effective Time, to all of CLG's properties,
books, contracts, commitments, and records, and CLG shall furnish to Centura
during such period all such information concerning CLG and its affairs as
Centura may reasonably request. In addition, CLG shall also make its officers
available to discuss with Centura's representatives the substance of all
documents, financial statements, and other information provided by CLG to
Centura and such other matters as Centura shall deem pertinent to the
transactions contemplated by this Agreement.
6.2 Access by CLG. For purposes of this Section 6.2, the term "Centura"
shall include Centura and Centura Bank. Centura, to the extent permitted by law,
shall give CLG, its counsel, accountants, investment bankers, and other
representatives access, at reasonable times and upon reasonable notice
throughout the period through the Effective Time, to such information relating
to Centura and to be specified by CLG as shall be reasonably necessary and
appropriate under the then circumstances for CLG to confirm the accuracy of the
representations and warranties set forth in Article V hereof and to carry out
the transactions contemplated by this Agreement. In addition, Centura shall also
make its officers available to discuss with CLG's representatives the substance
of all documents, financial statements, and other information provided by
Centura to CLG and such other matters as CLG shall deem pertinent to the
transactions contemplated by this Agreement.
6.3 Information Related to Opinions. Each party will provide all
information reasonably requested by Poyner & Spruill, L.L.P. in connection with
(i) its issuance of the Tax Opinion and the Securities Opinion, and (ii) the
closing in reliance on such Tax Opinion and Securities Opinion. Each party shall
also, to the extent reasonably requested by Poyner & Spruill, L.L.P., verify all
such information as required by Poyner & Spruill, L.L.P. in connection with its
issuance of the Tax Opinion or Securities Opinion, which verification shall
include, without limitation, the delivery to Poyner & Spruill, L.L.P., on or
prior to the Closing Date, of a letter containing certain factual
representations relating to the Tax Opinion by each party (which letter shall be
prepared and provided to each party by Poyner & Spruill, L.L.P.).
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ARTICLE VII
AFFIRMATIVE COVENANTS OF CLG
Except as otherwise consented to or waived by Centura in writing, CLG
covenants that, throughout the pendency of this Agreement, it will:
7.1 Operation of Business. Maintain and operate its business only in
the usual, regular, and ordinary manner appropriate to entities of comparable
size and character in accordance with past practices and comply in all material
respects with all applicable laws, regulations, orders, judgments, and decrees
except where CLG is in good faith contesting the validity of any of the
foregoing; and, to the extent consistent with such operation and sound business
practices as determined in good faith by CLG, make all reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers and employees, and preserve its present relationships
with depositors, suppliers, customers, and others having business dealings with
it.
7.2 Payment of Taxes. Punctually pay and discharge all taxes,
assessments, and other governmental charges lawfully imposed upon them or any of
their property, or upon the income and profits thereof; provided, however, that
nothing herein contained shall prohibit CLG from contesting in good faith and by
appropriate proceedings the validity of any tax, assessment, or governmental
charge; and, provided further, that any such contested assessment or charge
shall be reported to Centura.
7.3 Substantial Litigation; Adverse Condition. Promptly upon receipt of
notice, notify Centura of (i) the commencement of any litigation against CLG
seeking damages in excess of $25,000 or threatening the consummation of the
Merger, or (ii) the existence of severe and adverse business conditions which,
in the reasonable opinion of CLG's management, threatens the continued, normal
business operations of CLG as a whole.
7.4 Properties. At all times maintain, preserve, and keep all
properties in a satisfactory condition so as to ensure their normal use in its
business operations, except where failure to do so would not materially and
adversely affect the business or operations of CLG as a whole.
7.5 Contracts. Perform all obligations under all material contracts,
leases, and documents relating to or affecting its assets, properties, and
business, except where failure to do so would not materially and adversely
affect the business or operations of CLG as a whole.
7.6 Insurance. Maintain in full force and effect insurance in amount
and scope of coverage which, in the judgment of CLG's management, is consistent
with the nature and scope of all activities as conducted now or in the future by
CLG.
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7.7 Filings and Financial Statements. Provide Centura promptly with
each quarterly balance sheet, statement of income, statement of retained
earnings and statement of cash flows prepared by CLG.
7.8 Accounting Principles and Practices. Maintain all of its books and
records, including all financial statements, in accordance with accounting
principles and practices consistent with those used for its most recent
financial statements, except for changes in such principles and practices
required by federal or state regulation or under generally accepted accounting
principles.
7.9 Rule 145. Not later than 30 days after the date of this Agreement,
CLG shall deliver to Centura a letter identifying all persons who will be (in
the opinion of CLG and its counsel, which opinion is concurred in by Centura and
its counsel), at the time the Merger is submitted to a vote of shareholders of
CLG, "affiliates" of CLG for purposes of Rule 145 under the Securities Act. CLG
shall thereafter advise said affiliates in writing (which written notice shall
be prepared and provided to CLG by Centura and which shall be reviewed and
approved by CLG and its counsel prior to its delivery to such affiliates) of the
restrictions on resale of securities contained in Rule 145, the permissible
methods of resale available under Rule 145, and the imposition of the
restrictive legend and stop transfer orders referred to in the last sentence of
this Section 7.9. Prior to the Effective Date, CLG shall deliver to Centura a
written agreement signed by each of said affiliates (which agreement shall be
prepared and provided to CLG by Centura and which shall be reviewed and approved
by CLG and its counsel prior to its execution by such affiliates) stating that
he or she will not sell, pledge, transfer, or otherwise dispose of the shares of
CLG Common Stock held by such person prior to the Effective Time and will not
sell, pledge, transfer, or otherwise dispose of the shares of Centura Common
Stock to be received by such person upon consummation of the Merger (i) except
in compliance with applicable provisions of the Securities Act, and (ii) until
such time as the financial results governing at least thirty (30) days of
combined operations of CBI and CLG have been published within the meaning of
Section 201.01 of the Commission's Codification of Financial Reporting Policies
and Accounting Series Release Nos. 130 and 135 published by the Commission
thereunder. Such written advice and agreement shall be approved in advance by
counsel to Centura. All certificates representing shares of Centura Common Stock
delivered to such affiliates shall bear appropriate legends referring to the
aforementioned restrictions, and Centura shall instruct its stock transfer agent
to impose stop orders with respect to such certificates.
7.10 Approval of Shareholders. CLG will take such action as is
necessary to cause its shareholders to act upon this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby.
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7.11 Environmental Assessment. CLG shall permit Centura to have
performed, at Centura's sole discretion, either a Phase I or a Phase II
Environmental Site Assessment and any other investigation and exploration that
Centura, in its sole discretion and cost, deems necessary, of each parcel of the
Premises by an individual or organization acceptable to Centura. Such
assessment, investigation or exploration shall include, without limitation, such
matters as shall be applicable to each parcel of the Premises, and as may be
specified by Centura in a writing referring specifically to this Section 7.11.
ARTICLE VIII
AFFIRMATIVE COVENANTS OF CENTURA
Except as otherwise consented to or waived by CLG in writing, Centura
covenants that, throughout the pendency of this Agreement, it will:
8.1 Maintenance of Existence. Maintain its existence as a bank holding
company under the BHC Act and applicable state laws regarding bank holding
companies, cause Centura Bank to maintain its existence as a North Carolina
bank, and conduct, and cause Centura Bank to conduct, its and their respective
businesses in compliance with all material obligations and duties imposed on it
and them by laws, governmental regulations, rules, and ordinances, and judicial
orders, judgments, and decrees applicable to Centura and Centura Bank, or its or
their respective businesses or properties, except where Centura or Centura Bank
in good faith and by appropriate proceedings contests the validity of any of the
foregoing.
8.2 Filings with Commission. Provide CLG promptly with a copy of any
and all filings made with the Commission subsequent to the date of this
Agreement and prior to the Closing Date.
8.3 Fairness Hearing. Prepare and file the Application for Fairness
Hearing with the Secretary of State of North Carolina, as Administrator under
the North Carolina Securities Act, to seek a hearing with respect to the
fairness of the terms and conditions of the Merger.
8.4 Accounting Principles and Practices. Maintain all of its books and
records, and cause Centura Bank to maintain all of its books and records,
including all financial statements, in accordance with accounting principles and
practices consistent with those used for its December 31, 1995 financial
statements, except for changes in such principles and practices required under
generally accepted accounting principles.
8.5 Issuance and Reservation of Centura Common Stock. As and when
required to consummate the Merger, issue the shares of Centura Common Stock for
which and into which shares of the CLG Common Stock issued and outstanding at
the Effective Time are to be exchanged and converted as provided in Article III
hereof.
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8.6 Listing of Centura Common Stock with New York Stock Exchange.
Centura shall prepare and file with the New York Stock Exchange (the "NYSE") all
applications and materials prescribed by applicable regulations and policies of
the NYSE, and shall take any and all such other actions, as may be required to
list the Centura Common Stock to be issued to the shareholders of CLG in
connection with the Merger with the NYSE.
8.7 Payment of Taxes. Punctually pay and discharge, all taxes,
assessments, and other governmental charges lawfully imposed upon it or its
subsidiaries or any of its or their respective properties, or upon the income
and profits thereof; provided, however, that nothing herein contained shall
prohibit Centura or Centura Bank from contesting in good faith and by
appropriate proceedings the validity of any tax, assessment, or governmental
charge; and, provided further, that any such contested assessment or charge
shall be reported to CLG.
8.8 Substantial Litigation; Adverse Condition. Promptly upon receipt of
notice, notify CLG of (i) the commencement of any litigation against Centura or
Centura Bank seeking damages in excess of $500,000 or threatening the
consummation of the Merger, or (ii) the existence of severe and adverse business
conditions threatening the continued, normal business operations of Centura or
Centura Bank.
8.9 Properties. At all times maintain, preserve, and keep all
properties in a satisfactory condition so as to ensure their normal use in the
respective business operations of Centura and Centura Bank, except where failure
to do so would not materially or adversely affect the business or operations of
either Centura or Centura Bank.
8.10 Contracts. Perform all obligations under all material contracts,
leases, and documents relating to or affecting the respective assets,
properties, and business of Centura or Centura Bank, except where failure to do
so would not materially or adversely affect the business or operations of either
Centura or Centura Bank.
8.11 Insurance. Maintain in full force and effect insurance in amount
and scope of coverage which, in the judgment of Centura's management, is
consistent with the nature and scope of all activities as are conducted now or
will be conducted in the future by Centura or Centura Bank.
8.12 Stock Repurchases. The parties acknowledge that, between the date
of this Agreement and the Closing Date, Centura may repurchase a number of the
shares of Centura Common Stock which will be issued in the Exchange. Such stock
repurchases shall be consummated in accordance with the safe harbor provisions
set forth in Rule 10b-18(b) promulgated under the Exchange Act and shall
otherwise be consummated in a manner and at a time so as to not result in
artificial changes to the trading price of Centura Common Stock.
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ARTICLE IX
NEGATIVE COVENANTS OF CLG
CLG covenants that, throughout the pendency of this Agreement, unless
(i) specifically provided herein or permitted hereunder, or (ii) Centura shall
have consented in writing to an exception to any such covenant, it will not:
9.1 Amendments. Amend the articles of incorporation or bylaws of CLG.
9.2 Capitalization. Authorize or establish any other class of capital
stock.
9.3 Long-Term Indebtedness. Incur any indebtedness for money borrowed
that becomes due and payable more than one year after such incurrence; provided,
however, that the foregoing shall not prohibit CLG from incurring such
indebtedness (i) in the ordinary course of its business, (ii) for the purpose of
financing capital expenditures permitted by Section 9.8 hereof, and (iii) for
the purpose of refinancing any indebtedness existing on the date hereof or
permitted by this Agreement on terms at least as favorable to CLG, so long as
the consummation of the Merger or any related transaction will not constitute a
violation of any term of any such indebtedness.
9.4 Hypothecations. Except in the ordinary course of conducting
operations, purchase, redeem, retire, or otherwise acquire, or hypothecate,
pledge, or otherwise encumber, any shares of any class of its capital stock.
9.5 Dividends. Declare, set aside, or pay dividends on any shares of
any class of capital stock or make any other distribution of assets to the
holders of any shares of any class of capital stock.
9.6 Employee Benefits. Enter into or institute any employment contract,
deferred compensation, bonus, stock option, profit-sharing, pension, retirement,
or insurance plan, or similar employee benefit plan or program, or terminate or
materially amend any such employee benefit or stock option plan or program now
in existence, grant any stock option under any stock option plan or program now
in existence, or, except in the ordinary course of business and consistent with
past practices or except in connection with certain individual compensation
plans entered into from time to time by CLG with certain of its employees,
increase the salaries and other compensation payable to its directors, officers,
and employees.
9.7 Inconsistent Agreements. Enter into any agreement, understanding,
or commitment, written or oral, with any other party which is inconsistent in
any material respect with the obligations of CLG arising under this Agreement.
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9.8 Capital Improvements. Effect any single capital improvement or
single purchase of equipment or furnishings other than in the ordinary course of
business involving an expenditure in excess of $50,000. All expenditures in
excess of such amount contemplated by CLG as of the date hereof are Previously
Disclosed and are hereby consented to by Centura, provided that the aggregate
expenditures for all projects Previously Disclosed shall not exceed $100,000.
9.9 Acquisition of Control. Acquire direct or indirect ownership or
control of voting shares or securities convertible into voting shares of, or any
other interest in, any presently non-affiliated corporation, any newly-organized
business entity, any joint venture or other entity, other than shares or
interests acquired in the ordinary course of business in a fiduciary or
custodial capacity or as a result of debts previously contracted.
9.10 Other Acquisitions and Mergers. Initiate, propose, or otherwise
solicit from any person, corporation, or other group acting in concert any bids
or offers to purchase or acquire CLG, cause CLG to merge into or consolidate
with any other corporation or person or permit any other corporation to be
merged or consolidated with it, or acquire all or any substantial part of the
assets of any other corporation or person not affiliated with CLG as of the date
hereof.
9.11 Sale of Assets. Sell or lease all or any material portion of its
assets or business other than in the ordinary course of business.
ARTICLE X
NEGATIVE COVENANTS OF CENTURA
Centura covenants that, throughout the pendency of this Agreement,
unless (i) specifically provided herein or permitted hereunder, or (ii) CLG
shall have consented in writing to an exception to any such covenant, it will
not:
10.1 Senior Securities. Authorize, create or issue any class of capital
stock which ranks prior to the Centura Common Stock in respect of dividend
payments or of distributions or payments upon liquidation of Centura, or amend
its Articles of Incorporation so as to adversely affect the rights of the CLG
shareholders (as if they were holders of the Centura Common Stock on the date
hereof) in respect of dividend payments or of distributions or payments upon
liquidation of Centura.
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10.2 Dividends. Declare, set aside, or pay dividends on any shares of
any class of capital stock or make any other distribution of assets to the
holders of any shares of any class of capital stock, other than (i) dividends by
Centura Bank to Centura, (ii) Centura's regular quarterly cash dividends payable
with respect to shares of Centura Common Stock in amounts generally consistent
with Centura's past practice, and (iii) stock dividends or splits payable with
respect to shares of Centura Common Stock. The payment of any and all dividends
by Centura to its shareholders or by Centura Bank to Centura shall be subject to
all applicable federal and state laws and regulations.
10.3 Inconsistent Agreements. Enter into any agreement, understanding,
or commitment, written or oral, with any other party which is inconsistent in
any material respect with the obligations of Centura arising under this
Agreement or which would prevent Centura from completing the transactions
contemplated by this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Centura. From and after the Closing Date,
Centura shall defend, indemnify and hold harmless CLG and Dean E. Painter, Jr.
from and against any and all liabilities, claims, damages, loss, costs and
expenses, including reasonable legal fees, arising out of the inaccuracy or
nonfulfillment of any representation or warranty, or the breach of any covenant
or agreement, made by Centura in this Agreement; provided, however, that the
obligations of Centura set forth in this Section 11.1 with respect to damages
suffered by CLG and/or Dean E. Painter, Jr. shall be limited to CLG's and/or
Dean E. Painter, Jr.'s actual damages resulting therefrom and shall not extend
to any consequential damages arising in connection therewith or as a result
thereof. In addition, from and after the Closing Date, Centura shall defend,
indemnify and hold harmless each of the directors and officers of CLG to the
fullest extent of the law from and against any and all liabilities, claims,
damages, loss, costs, and expenses, including reasonable legal fees, arising out
of any and all acts performed or omissions made by such persons during the
periods in which they were directors and officers of CLG. The provisions of the
foregoing sentence are intended by the parties to this Agreement to create
personal rights in the directors and officers of CLG, who shall be deemed to be
third party beneficiaries of thereof.
11.2 Indemnification by CLG. From and after the Closing Date, CLG shall
defend, indemnify and hold harmless Centura from and against any and all
liabilities, claims, damages, loss, costs and expenses, including reasonable
legal fees, arising out of the inaccuracy or nonfulfillment of any
representation or warranty, or the breach of any covenant or agreement, made by
CLG in this Agreement, provided, however, that the obligations of CLG set forth
in this Section 11.2 with respect to damages suffered by Centura shall be
limited to Centura's actual damages resulting therefrom and shall not extend to
any consequential damages arising in connection therewith or as a result
thereof.
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11.3 Indemnification by Dean E. Painter, Jr. From and after the
Closing Date, Dean E. Painter, Jr. shall defend, indemnify and hold harmless
Centura from and against any and all liabilities, claims, damages, loss, costs
and expenses, including reasonable legal fees, arising out of the inaccuracy or
nonfulfillment of any representation or warranty, or the breach of any covenant
or agreement, made by CLG in this Agreement, provided, however, that the
obligations of Dean E. Painter, Jr. set forth in this Section 11.3 with respect
to damages suffered by Centura shall be limited to Centura's actual damages
resulting therefrom and shall not extend to any consequential damages arising in
connection therewith or as a result thereof. The obligations of Dean E.
Painter, Jr. set forth in this Section 11.3 are joint and several with the
obligations of CLG set forth in Section 11.2 above. To the extent that Dean E.
Painter, Jr. becomes liable to Centura under this Section 11.3, such liability
may be satisfied by the delivery by Dean E. Painter, Jr. to Centura of an amount
of Centura Common Stock equal in value to the amount of such liability, the
value of which stock shall be based upon the closing price of Centura Common
Stock on the NYSE Composite Tape on the trading day immediately prior to the
date of such delivery.
11.4 Notification; Right to Contest and Defend. Promptly after receipt
by a party of notice of any claim or the commencement of any action, a party
("Indemnitee") shall, if a Claim in respect thereof is to be made against the
other party ("Indemnitor") pursuant to this Article XI, notify the Indemnitor in
writing of the claim or the commencement of that action. The Indemnitor shall be
entitled, through counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's cost and expense, to contest any such claim by all appropriate
legal proceedings; provided, however, that the Indemnitor first notifies the
Indemnitee of its intention to do so within 30 days after receipt of such notice
from the Indemnitee. If the Indemnitor joins in any such contest, the Indemnitor
shall have full authority to determine all action to be taken with respect
thereto except that no settlement binding Indemnitee or any officer, director,
employee or affiliate of an Indemnitee to relief against the Indemnitee shall be
agreed to by Indemnitor without satisfactory prior arrangements between the
Indemnitor and the Indemnitee to assure the Indemnitee that the Indemnitor will
have sufficient funds available to satisfy any award for which it will have the
obligation to indemnify Indemnitee. If, after the opportunity of defense granted
hereunder, the Indemnitor elects not to contest any such claim, the Indemnitor
shall be bound by the result obtained with respect thereto by the Indemnitee. If
requested by a party, the other party shall cooperate fully with the requesting
party and its counsel in contesting any such claim or, if appropriate, in making
any counterclaim or cross-complaint against the party asserting the claim, but a
party will reimburse the other party for any reasonable expense incurred in so
cooperating.
11.5 Limitation on Indemnification Liability. Indemnification
obligations of the parties under this Agreement shall expire on the third
anniversary of the Closing Date except as to any claim of which Centura has
given written notice to CLG and Dean E. Painter, Jr. or CLG and Dean E. Painter,
Jr. have given written notice to Centura (as the case may be) before the third
anniversary of the Closing Date.
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11.6 Survival of Indemnification. The indemnification obligations of
the parties under this Agreement shall be the sole remedy for any liability or
claim arising under or by reason of this Agreement, and are in lieu of any and
all other rights and remedies the parties may otherwise have by contract or law.
Each party represents and warrants that all information concerning it which is
included in any statement and application made to any governmental agency in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects and shall not omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. Each party
agrees at any time upon the request of the other to furnish to the other a
written letter or statement confirming the accuracy of the information contained
in any statement or application, or in any draft of any such document, and
confirming that the information contained in such document or draft was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this Article XI shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the other party.
11.7 Limitation on Amount. No party shall have any liability to the
other under this Article XI until the total of all claims asserted against
either exceeds $250,000 and then only for the amount of such claims in excess of
$250,000. The liability of any party hereunder shall not exceed $3,000,000 in
the aggregate. For purposes of this Section 11.7, CLG and Dean E.
Painter, Jr. shall be deemed to constitute one party.
ARTICLE XII
CONDITIONS PRECEDENT TO THE CLOSING
In addition to the general conditions contained in subsections (a),
(b), (c), (d) and (e) of Section 2.7 hereof, the following are conditions to the
closing of the Merger, except that (i) any of such conditions may be waived, to
the extent permitted by law, by the mutual consent in writing of Centura and
CLG; (ii) Centura may unilaterally waive in writing, on behalf of all parties
hereto, to the extent permitted by law, the conditions set forth in Sections
12.2 through 12.5 and 12.8 and 12.9, (iii) CLG may unilaterally waive in
writing, on behalf of all parties hereto, to the extent permitted by law, the
conditions set forth in Sections 12.6 through 12.8 and Section 12.10.
12.1 Restraining Orders. No order, judgment, or decree shall be
outstanding whether against a party hereto or a third party that would have the
effect of preventing completion of the Merger; no suit, action, or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Merger; and no suit, action, or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit the Merger or obtain other substantial
monetary or other relief against one or more of the parties hereto in connection
with this Agreement, unless in the reasonable opinion
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of counsel to the party wishing to proceed (which opinion shall be satisfactory
in substance to the other party in its reasonable judgment), such suit, action,
or proceeding is likely to be resolved in such a way as not to deprive either
party of any of the material benefits to it of the Merger and not to materially
adversely affect the business or financial condition of the party subject
thereto.
12.2 CLG's Representations. The representations and warranties of CLG
contained herein shall have been true and correct in all material respects on
the date made and shall be true and correct in all material respects at the
Effective Time as though made at such time, excepting any changes occurring in
the ordinary course of business, none of which individually or in the aggregate
has been materially adverse, and excepting any changes contemplated or permitted
by this Agreement. CLG shall have in all material respects duly performed all
covenants, not otherwise waived by Centura in writing, required by this
Agreement to be performed by it prior to or at the Effective Time. Centura shall
have received a certificate of appropriate officers of CLG dated such date and
certifying in such detail as Centura may reasonably request to the fulfillment
of the foregoing conditions.
12.3 Opinion of Counsel to CLG. Centura shall have received an opinion
satisfactory in form and substance to it from Satisky & Silverstein, L.L.P.,
counsel to CLG, dated the Effective Time and addressed to Centura, in
substantially the form attached hereto as Exhibit D, which opinion may provide
that it is given in reasonable reliance upon information provided by such other
counsel as they feel necessary in giving such opinion.
12.4 Accountants' Letter. Centura shall have received from James E.
Woodruff, Jr. independent public accountant, a letter dated the Effective Time
and addressed to Centura in form and substance satisfactory to Centura to the
effect that:
(i) he is an independent public accountant with respect to CLG;
(ii) in his opinion the audited financial statements of CLG
examined by him and included in the Independent Auditor's Report, dated
March 27, 1996, have been prepared in accordance with generally
accepted accounting principles consistently applied and fairly
represent the financial position of CLG as of such date;
(iii) he has read the unaudited interim financial statements
of CLG for the period from the date of the most recent audited
financial statements through the date of the most recent interim
financial statements available in the ordinary course of business and,
based on such review and except as disclosed in such letter, nothing
has come to his attention which would cause him to believe that such
financial statements are not presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements
of CLG at January 31, 1996.
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12.5 Affiliates' Agreement. Each of the affiliates of CLG, as
identified under Section 7.9 of this Agreement, shall have signed and delivered
the agreement referred to therein in form and substance satisfactory to Centura
and its counsel agreeing to comply with the restrictions on resale of the shares
of Centura Common Stock to be issued to them pursuant to this Agreement.
12.6 Centura's Representations. The representations and warranties of
Centura (other than with respect to the number of issued and outstanding shares
of Centura Common Stock set forth in Section 5.4 hereof) contained herein shall
have been true and correct in all material respects on the date made and shall
be true and correct in all material respects at the Effective Time as though
made at such time, excepting any changes occurring in the ordinary course of
business, none of which either individually or in the aggregate has been
materially adverse, and excepting for any changes contemplated or permitted by
this Agreement. Centura shall have in all material respects duly performed all
covenants, not otherwise waived by CLG in writing, required by this Agreement to
be performed by it prior to or at the Effective Time. CLG shall have received a
certificate of appropriate officers of Centura dated such date and certifying in
such detail as CLG may reasonably request to the fulfillment of the foregoing
conditions.
12.7 Opinion of Counsel to Centura. CLG shall have received an opinion
satisfactory in form and substance to it from Poyner & Spruill, L.L.P., counsel
to Centura, dated the Effective Time and addressed to CLG, in substantially the
form attached hereto as Exhibit E.
12.8 Tax Opinion. Centura and CLG shall have received the Tax Opinion.
12.9 Securities Opinion. Centura shall have received the Securities
Opinion.
12.10 NYSE Listing. Centura shall have satisfied all requirements
necessary for the listing on the NYSE of the shares of Centura Common Stock to
be issued to the shareholders of CLG in connection with the Merger.
12.11 Accounting Treatment. No event shall have occurred subsequent to
the date hereof which shall preclude the Merger from being accounted for, and
Centura shall have received an opinion from KPMG Peat Marwick, independent
public accountants ("KPMG"), that such Merger shall be accounted for, under
generally accepted accounting principles, as a pooling of interests.
12.12 Loan Agreements. In connection with all leases, contracts,
mortgages, promissory notes, deeds of trust, loans, credit agreements, or other
commitments or arrangements to which CLG is a party, which, in the reasonable
opinion of Centura, are material to the business and material of CLG as a whole,
CLG shall have received the written consent to the Merger of the other parties
thereto, if such consent is required pursuant to the terms of such documents.
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ARTICLE XIII
CLOSING DATE
As soon as practicable after the later of (i) the receipt by Centura of
the final regulatory approval or consent necessary to effect the Merger, or (ii)
satisfaction or waiver of the conditions precedent to closing set forth in
Article XII and in subsections (a), (b), (c), (d) and (e) of Section 2.7 hereof,
a closing will be held at the main offices of Centura, 134 North Church Street,
Rocky Mount, North Carolina, or such other place as may be agreed upon by the
parties hereto, at such time as may be agreed upon by the parties hereto (the
"Closing Date"), and the Exchange shall occur at such time or as soon thereafter
as practicable.
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, AND COVENANTS
Centura and CLG agree that no representation, warranty, or covenant
contained in this Agreement, or in any exhibit, schedule, letter, certificate,
or other instrument referred to in this Agreement or delivered or made by or on
behalf of any party to either this Agreement or in connection with any
transactions contemplated by this Agreement shall survive either the Effective
Time or any termination of this Agreement pursuant to Article XVI hereof, except
for (i) the covenants set forth in Sections 2.9, 2.10, 2.11, 2.12, 2.13, 7.9,
and 17.1, and Article XI (to the extent provided therein) hereof, which shall
survive the Effective Time, and (ii) the covenants set forth in Sections 2.7 and
17.1 hereof which shall survive the termination of this Agreement, and (iii) the
Merger Agreement which shall survive the Effective Time. Nothing in this
Agreement shall be construed to alter the effectiveness of any legal opinion,
accountant's certificate, or any other letter or report rendered in connection
with the transactions contemplated by this Agreement.
ARTICLE XV
ENTIRE AGREEMENT
This Agreement, all exhibits, appendices, schedules, or supplements to
this Agreement, and all other agreements contemplated by this Agreement, embody
the entire agreement between the parties hereto with respect to the transactions
contemplated hereby, and, except as expressly provided herein, neither this
Agreement nor any other agreement contemplated by this Agreement shall be
affected by reference to any other document. All prior negotiations,
discussions, and agreements by and between the parties hereto with respect to
the transactions contemplated hereby which are not reflected or set forth in
this Agreement therefore have no
40
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force or effect. Each representation, warranty, covenant, condition, or
agreement contained in this Agreement made by any of the parties hereto shall
have independent force and effect and shall not be affected by any other
representation except by specific reference.
ARTICLE XVI
TERMINATION OF AGREEMENT
16.1 Mutual Consent; Absence of Shareholder Approval; Termination Date.
This Agreement shall terminate at any time when the parties hereto mutually
agree in writing. This Agreement shall terminate at the election of either
Centura or CLG, upon written notice from the party electing to terminate this
Agreement to the other party if this Agreement and the Merger Agreement are not
ratified, confirmed, and approved by the legally required affirmative vote of
the shareholders of CLG or there has been a denial which is not appealable of
any material regulatory approval or consent required to consummate the Merger.
Unless extended by the written mutual agreement of the parties, as provided
herein, this Agreement shall terminate if all requisite regulatory approvals are
not received prior to December 31, 1996 (the "Termination Date"). The
Termination Date may be extended in the event that an application is pending
before a regulatory agency on the Termination Date and the party on whose behalf
such application has been filed certifies to the other party hereto that there
is no reason to believe that such application will be disapproved; provided,
however, that such extension shall not be effective for more than ninety (90)
days after the Termination Date.
16.2 Election by Centura. Notwithstanding the approval of this
Agreement, the Merger Agreement, and the transactions contemplated hereby and
thereby by the shareholders of CLG, this Agreement shall terminate at Centura's
election, upon written notice from Centura to CLG, if either or both of the
following events shall occur and shall not have been remedied to the
satisfaction of Centura within thirty (30) days after written notice is
delivered to CLG: (i) there shall have been any material breach of any of the
obligations, covenants, or warranties of CLG hereunder, or (ii) there shall have
been any representation or statement furnished by CLG hereunder which is false
or misleading in any material respect at the time furnished.
16.3 Election by CLG. This Agreement shall terminate at CLG's election,
upon written notice from CLG to Centura, if either or both of the following
events shall occur and shall not have been remedied to the satisfaction of CLG
within thirty (30) days after written notice is delivered to Centura (i) there
shall have been any material breach of any of the obligations, covenants, or
warranties of Centura hereunder, or (ii) there shall have been any
representation or statement furnished by Centura hereunder which is false or
misleading in any material respect at the time furnished.
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16.4 No Monetary Damages. The rights of the parties hereto to terminate
this Agreement, as provided in Section 16.2 and 16.3, shall be their sole and
exclusive remedies prior to the Closing Date and neither party shall be liable
to the other for monetary damages in the event the other party exercises its
right to terminate provided therein.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 Expenses. Whether or not the transactions contemplated hereunder
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby by Centura shall be paid by
Centura, and all such costs and expenses incurred by CLG shall be paid by CLG.
17.2 Publicity. Except as may be required to comply with disclosure
obligations imposed by federal or state law or regulation and after reasonable
attempts have been made to comply with this Section 17.2, the form, content, and
timing of all announcements, communications, and press releases of any kind
concerning this Agreement, or any of the transactions contemplated hereby or
thereby shall be subject to the prior approval of Centura and CLG.
17.3 Amendment. This Agreement may not be amended, modified, or
supplemented except by an instrument in writing signed by duly authorized
representatives of each of Centura and CLG. No covenant, condition, or other
provision of this Agreement may be waived, and no exception may be consented to,
except by an instrument in writing signed by a duly authorized representative of
the party entitled to grant such waiver or consent.
17.4 Governing Law. This Agreement and the transactions contemplated
hereby and thereby shall be governed by and construed in accordance with the
laws of the State of North Carolina, except as otherwise expressly provided in
this Agreement or as federal law may be applicable to the transactions
contemplated by this Agreement.
17.5 Communications. All notices, requests, demands, consents, waivers,
and other communications hereunder shall be in writing and shall be delivered by
hand or sent by certified or registered mail, postage prepaid, return receipt
requested, or by nationally recognized overnight express delivery service, as
follows:
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If to Centura:
Centura Banks, Inc.
Post Office Box 1220
134 North Church Street
Rocky Mount, North Carolina 27804
Attn: William H. Wilkerson
Group Executive Officer
With a copy to:
Michael S. Colo, Esq.
Poyner & Spruill, L.L.P.
130 South Franklin Street
Rocky Mount, North Carolina 27804
or
If to CLG:
CLG, Inc.
3001 Spring Forest Road
Raleigh, North Carolina 27604
Attn: Dean E. Painter, Jr.
President and Chief Executive Officer
With a copy to:
Howard A. Satisky, Esq.
Satisky & Silverstein, L.L.P.
900 Ridgefield Drive, Suite 250
Raleigh, North Carolina 27609
Any such notice or other communication so addressed shall be deemed to have been
received by the addressee as of the date of such receipt or confirmation.
17.6 Successors and Assigns. The rights and obligations of the parties
hereto shall inure to the benefit of and shall be binding upon the successors
and assigns of each of them; provided, however, that this Agreement and any of
the rights, interests, or obligations hereunder and thereunder shall not be
assigned by either of the parties hereto without the prior written consent of
the other party hereto.
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17.7 Cover, Table of Contents, and Headings. The cover, the table of
contents, and the headings of the Articles and Sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of either such document.
17.8 Counterparts. This Agreement may be executed in several identical
counterparts, each of which when executed by the parties hereto and delivered
shall be an original, but all of which together shall constitute a single
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CENTURA BANKS, INC.
By: /s/ Cecil W. Sewell, Jr.
-----------------------
Cecil W. Sewell, Jr.
President and Chief
Operating Officer
ATTEST:
/s/ Frank L. Pattillo
Assistant Secretary
(SEAL)
CLG, INC.
By: /s/ Dean E. Painter, Jr.
------------------------
Dean E. Painter, Jr.
President and Chief
Executive Officer
ATTEST:
/s/ Edwin J. Lee
- -------------------
Assistant Secretary
(SEAL)
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Dean E. Painter, Jr. joins in the execution of this Agreement in his individual
capacity solely for the purpose of being bound by the provisions of Article XI
hereof.
/s/ Dean E. Painter, Jr. (SEAL)
------------------------
Dean E. Painter, Jr.
007426/115/143682.05
45
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Exhibit A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") to be effective at
_____ p.m. on the ____ day of ____________, 1996, by and between CBI Acquisition
Company, a North Carolina corporation having its principal place of business at
134 North Church Street, Rocky Mount, North Carolina 27804 ("CBI"), and CLG,
Inc., a North Carolina corporation having its principal place of business at
3001 Spring Forest Road, Raleigh, North Carolina 27604 ("CLG").
W I T N E S S E T H:
In connection with this Agreement, CLG and Centura Banks, Inc., the
sole shareholder of CBI ("Centura"), have entered into an Agreement and Plan of
Reorganization, dated as of August __, 1996 (the "Reorganization Agreement"),
pursuant to which CBI will be merged with and into CLG (the "Merger") and all of
the issued and outstanding shares of capital stock of CLG shall be exchanged for
shares of the common stock of Centura as provided in the Reorganization
Agreement (the "Exchange"). The respective Boards of Directors of CBI and CLG
have determined that the Merger, as effected pursuant to the terms and
conditions set forth herein, is in the best interests of their respective
corporations and their shareholders. In consideration of the premises, and the
mutual covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties, intending to be legally bound, agree as follows:
ARTICLE I
TERMS AND CONDITIONS OF THE MERGER
1.1 General. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined herein), CBI shall be merged with and into CLG
pursuant to the provisions of, and with the effect provided in, Sections
55-11-01, et seq. of the North Carolina General Statutes. CBI and CLG are
collectively referred to herein as the "Merging Corporations."
1.2 Effect of Merger. At the Effective Time, the separate existence of
CBI shall cease and CLG, as the surviving entity, shall continue to operate
under the Articles of Incorporation of CLG and with the name "CLG, Inc." On and
after the Effective Time, CLG is hereinafter sometimes referred to as the
"Resulting Corporation."
A-1
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1.3 Business of the Resulting Corporation. The business of the
Resulting Corporation shall be that of a North Carolina corporation engaged
primarily in the business of buying, leasing, refurbishing, servicing and
selling computer and technology equipment throughout the United States and shall
be conducted at the main office of the Resulting Corporation, which shall be
located at 3001 Spring Forest Road, Raleigh, North Carolina 27604, and at its
legally established or authorized offices, agencies, and facilities.
ARTICLE II
EFFECTIVE TIME
2.1 Effective Time of Merger. The Merger shall be effective at the date
and time specified in the Articles of Merger relating to the Merger which are
filed, together with a duly certified copy of this Agreement, with the North
Carolina Secretary of State as required under Section 55-11-05 of the North
Carolina General Statutes (the "Effective Time").
2.2 As of the Effective Time:
(a) The corporate existence of each of the Merging
Corporations shall be merged into and continued in the Resulting Corporation.
(b) All assets, rights, franchises, and interests of the
Merging Corporations in every type of property (real, personal, and mixed) and
choses in action shall be transferred to and vested in the Resulting Corporation
by virtue of the Merger without any deed or other transfer. The Resulting
Corporation, upon the Merger and without any order or other action on the part
of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stock and bonds, guardian of estates, assignee, and
receiver, and in every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises, and interest were held or enjoyed by
each of the Merging Corporations at the Effective Time.
(c) The Resulting Corporation shall be liable for all
liabilities of the Merging Corporations and all debts, liabilities, obligations,
and contracts of the Merging Corporations, whether matured or unmatured,
accrued, absolute, contingent, or otherwise, shall be those of the Resulting
Corporation, none of which shall be released or impaired by the Merger; all
rights of creditors and other obligees and all liens on property of each of the
Merging Corporations shall be preserved unimpaired; and all actions and legal
proceedings to which either of the Merging Corporations was a party prior to the
Merger shall be unaffected by the consummation thereof and shall proceed as if
the Merger had not taken place.
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<PAGE>
ARTICLE III
COMMON STOCK OF THE MERGING CORPORATIONS
As of the Effective Time, all outstanding shares of common stock of CLG
shall be exchanged for shares of common stock of Centura as provided in Article
III of the Reorganization Agreement and shall be automatically canceled as a
result thereof, and each outstanding share of the common stock of CBI shall
remain outstanding as a share of common stock of the Resulting Corporation.
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
OF THE RESULTING CORPORATION
4.1 Directors of Resulting Corporation. As of the Effective Time, the
following named persons shall serve as the Board of Directors of the Resulting
Corporation until the next annual meeting of the shareholders or until such time
as their successors have been elected and have qualified:
Ron E. Johnson Winifred P. Painter
Edwin J. Lee Frank L. Pattillo
Robert R. Mauldin Cecil W. Sewell
Dean E. Painter, Jr. William H. Wilkerson
4.2 Officers of Resulting Corporation. As of the Effective Time, the
following named persons shall serve as the officers of the Resulting
Corporation:
Dean E. Painter, Jr. Chairman & Chief
Executive Officer
Edwin J. Lee President & Chief
Operating Officer
William H. Wilkerson Executive Vice President
Joseph A. Smith, Jr. Secretary
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ARTICLE V
ARTICLES OF INCORPORATION AND
BYLAWS OF RESULTING CORPORATION
The Articles of Incorporation and the Bylaws of CLG in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and the Bylaws of the Resulting Corporation, until further amended in accordance
with applicable law.
ARTICLE VI
GENERAL PROVISIONS
6.1 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties with respect to the Merger, and supersedes any
and all prior arrangements or understandings with respect thereto. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
6.2 Amendment. At any time before the Effective Time, the Merging
Corporations may interpret or amend this Agreement.
6.3 Termination. At any time before the Effective Time, this Agreement
may be terminated, notwithstanding any prior shareholder vote or approval, by
written consent of the Boards of Directors of the Merging Corporations.
6.4 Shareholder Approval. This Agreement has been approved and
ratified by the shareholders of CLG, and by Centura, as the sole shareholder of
CBI.
6.5 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of North Carolina.
6.6 Headings, etc. The headings and captions contained in this
Agreement are for convenience of reference only and are not part of this
Agreement and shall not affect the construction or interpretation thereof.
6.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
A-4
<PAGE>
IN WITNESS WHEREOF, each of the Merging Corporations has caused this
Agreement to be executed by their respective duly authorized officers and their
corporate seals to be hereunto affixed and attested by their officers thereunto
duly authorized, all as of the day and year first above written.
CBI ACQUISITION COMPANY
By:_________________________________
President
ATTEST:
_________________________
Secretary
[SEAL]
CLG, INC.
By:__________________________________
Dean E. Painter, Jr.
President
ATTEST:
__________________________________
Secretary
[SEAL]
A-5
<PAGE>
Exhibit B
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
and made effective this _____ day of ____________, 1996, between Dean E.
Painter, Jr.
("Painter"), and CLG, Inc. ("CLG").
WHEREAS, Painter has been and is currently employed by CLG, a North
Carolina computer leasing corporation headquartered in Raleigh, North Carolina;
and
WHEREAS, Centura Banks, Inc., a North Carolina bank holding company
("Centura"), has acquired CLG (the "Acquisition") and will maintain CLG as a
wholly-owned subsidiary of Centura Bank, a North Carolina bank corporation
headquartered in Rocky Mount, North Carolina ("Bank"); and
WHEREAS, CLG desires to provide for Painter's continued employment with
CLG following the Acquisition; and
WHEREAS, CLG desires to enter into this Agreement with Painter to set
forth the terms of such employment; and
WHEREAS, Painter agrees that the terms of this Agreement will allow him
to be employed with and to devote his best efforts to CLG.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties agree as follows:
1. EMPLOYMENT.
CLG shall employ Painter as Chairman and Chief Executive Officer of
CLG, with the duties, responsibilities and powers of such office as assigned to
him and as customarily associated with such office. Painter shall faithfully and
diligently discharge his duties and responsibilities under this Agreement.
Nothing contained in this Section 1 or elsewhere in this Agreement, however,
will prevent or otherwise prohibit Painter from engaging in and pursuing
personal affairs not inconsistent with his duties and responsibilities under
this Agreement or prevent or prohibit Painter from managing and otherwise
tending to his personal investments, in each case so long as the same does not
interfere with the performance of his duties and responsibilities under this
Agreement.
2. TERM.
The Term of this Agreement shall be five (5) years, commencing on the
date hereof.
B-1
<PAGE>
3. COMPENSATION AND BENEFITS.
During the Term of this Agreement, CLG shall pay to Painter as
compensation for his services to CLG a base salary at the rate of $360,000 per
year, payable in equal monthly installments. The base salary payable hereunder
shall be increased from time to time over the Term of this Agreement in the
discretion of the Compensation Committee of the Board of Directors of Centura,
which committee shall consider in making such adjustments, among other pertinent
factors, industry standards and the profitability of CLG.
The above-stated compensation shall not be deemed inclusive nor prevent
Painter from receiving any other compensation provided by CLG, and he shall be
entitled in any event (either directly or through salary adjustment) to health
and hospitalization insurance (including major medical), long-term disability
insurance, and life insurance, all in accordance (except as otherwise expressly
provided herein) with CLG's insurance plans for officers and employees in
comparable positions as such plans may be modified from time to time. For so
long as Painter is an officer or employee of CLG, Painter shall be entitled to
participate in all current and future employee benefit plans and arrangements in
which officers and employees of CLG or Bank in comparable positions are
permitted to participate.
4. TERMINATION.
Painter's employment under this Agreement shall terminate:
(a) Death. Upon the death of Painter;
(b) Disability. Upon notice from CLG to Painter in the event
Painter becomes "permanently disabled." For purposes of this Agreement, Painter
shall be deemed "permanently disabled" six (6) months after the first date that
he has become disabled by bodily or mental illness, disease, or injury, to the
extent that he is prevented from performing his material and substantial duties
of employment, and such disability has continued uninterrupted for six (6)
months. If the parties or their representatives cannot agree as to whether
Painter is "permanently disabled," as defined herein, they shall choose a
physician to examine Painter for the purpose of determining or confirming the
existence or extent of any disability. If the parties or their representatives
cannot agree on the choice of a physician to make such examination, each party
or its representative shall select one physician to make such examination and
the two physicians selected shall select a third physician to make such
examination and the three examining physicians shall by majority vote determine
or confirm the existence or extent of any disability. Notwithstanding the
foregoing, before terminating Painter in the event of his permanent disability,
CLG shall offer Painter reasonable accommodation pursuant to the Americans with
Disabilities Act, in which case Painter's duties and compensation hereunder may
be adjusted in accordance with such accommodation. Painter shall have the right
to decline CLG's offer of accommodation and, in such case, Painter's employment
under this Agreement shall terminate as provided herein;
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(c) Cause. Upon notice from CLG to Painter for cause. For
purposes of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Painter to perform his duties in the capacities indicated
above (other than due to disability); or (ii) a material breach by Painter of
his fiduciary duties of loyalty or care to CLG, as established by the Board of
Directors of Centura (other than due to disability); or (iii) a willful
violation by Painter of any material provision of this Agreement; or (iv) a
conviction of, or the entering of a plea of nolo contendere by Painter for any
felony or any crime involving fraud or dishonesty; or (v) a willful violation of
any material federal or state laws or regulations applicable to CLG. In
addition, if Painter shall terminate his employment for a breach of this
Agreement by CLG in accordance with Section 4(d) hereof, and it is ultimately
determined that no reasonable basis existed for Painter's termination on account
of the alleged default of CLG, such event shall be deemed cause for termination
by CLG;
Any notice of termination of Painter's employment with CLG 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 (the "Termination Date"). If the
cause alleged by CLG shall be (i), (ii), or (iii) set forth above, Painter 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, unless such
breach is not reasonably susceptible to being corrected within thirty (30) days,
in which case Painter shall have the opportunity to cure such breach, provided
that Painter has commenced corrective action within such thirty (30) day period
and diligently pursues such action to completion;
(d) Breach. Upon notice from Painter to CLG of CLG's failure
to comply with any material provision of this Agreement, provided that CLG 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 CLG shall have taken steps
to cure the default within the thirty (30) day period and diligently pursues
such action to completion, Painter shall have no right to terminate his
employment under the provisions of this Section 4(d);y
(e) Expiration of Term. Upon the expiration of the Term of
this Agreement as set forth in Section 2 hereof; and
(f) No Monetary Damages. Notwithstanding any provision of this
Agreement to the contrary, and except to the extent provided otherwise in
Section 6 hereof, Painter shall not be liable to CLG for monetary damages in the
event of a violation or breach of any of the provisions or covenants of this
Agreement, except to the extent that any such violation or breach is of the
covenants set forth in Section 6 hereof.
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5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Painter's death during the Term of this Agreement,
CLG shall provide such death or insurance benefits as are provided in accordance
with the regular policy of CLG to similarly positioned employees and pursuant to
the terms of any benefit plans or arrangements maintained by CLG which provide
such benefits.
(b) In the event Painter becomes permanently disabled and is
terminated as set forth in Section 4(b) hereof, CLG shall pay to Painter or his
estate or beneficiaries for the balance of the Term of this Agreement, the
then-existing base salary set forth in Section 3 hereof, provided that such
payment shall be offset by any amounts received by Painter (i) under any long
term disability plan maintained for the employees of CLG, (ii) from any other
collateral source payable due to disability to the extent that such payments are
derived from insurance or direct payments furnished by CLG, and (iii) social
security benefits. Painter agrees to use reasonable efforts to obtain the
benefit of any disability plan or policy covering him as a result of his
employment by CLG in the circumstances contemplated by Section 4(b) and this
Section 5(b).
(c) If Painter's employment shall be terminated by Painter
pursuant to Section 4(d) hereof, CLG shall continue to pay to Painter or his
estate his full base salary in effect at the Termination Date and all applicable
benefits due hereunder (provided that the terms of any employee benefit plan
pursuant to which such benefits are provided permit participation by similarly
positioned former employees of Bank or CLG, as applicable) for the balance of
the Term of this Agreement, provided that such payments shall not be made after
the expiration of the Term of this Agreement; and provided further that such
payments shall be offset by any amounts paid to Painter under any severance or
salary continuation policy or plan of Bank or CLG applicable to Painter.
(d) In the event termination is for cause as described in
Section 4(c) hereof or is due to the expiration of the Term of this Agreement,
CLG shall pay Painter the compensation and benefits described in Section 3
hereof through the Termination Date and no other compensation or benefits shall
be paid to Painter hereunder; provided, however, that nothing herein shall be
deemed to terminate or limit the Painter's vested rights under any other
benefit, retirement, or pension plan of CLG applicable to Painter, and the terms
of those plans, programs, or arrangements shall govern.
6. CONFIDENTIALITY AND COVENANT NOT TO COMPETE.
Painter hereby acknowledges that, by virtue of his employment by CLG,
Painter has gained certain valuable knowledge and has developed certain
expertise with respect to the business of computer leasing, generally, and the
business of CLG, specifically, including certain confidential information and
trade secrets relating to such business and information relating to certain
customers and potential customers of CLG. In connection with and in view of the
foregoing, Painter hereby agrees as follows:
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(a) Painter agrees that, during the term of his employment
pursuant to this Agreement and for a period of three (3) years thereafter,
Painter will not, directly or indirectly, engage in, or participate in the
promotion, financing, ownership or management of, or otherwise provide services
to, any firm, corporation, or business (whether as an employee, officer,
director, agent, owner, partner, shareholder, consultant, or otherwise), the
purpose or result of which, in whole or in part, is to assist such firm,
corporation, or business in the buying, leasing, servicing, and selling of
computer and technology equipment throughout the United States in competition
with CLG.
(b) Painter agrees that, during the term of his employment
pursuant to this Agreement and for a period of three (3) years thereafter,
Painter will hold in a fiduciary capacity for the benefit of CLG, and shall not
directly or indirectly use or disclose, except as required in Painter's judgment
in connection with the performance of his duties, as required by law or judicial
or regulatory proceedings or as authorized by CLG, any "Company Information" (as
defined below) that Painter may have or acquire (whether or not developed or
compiled by Painter) 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 CLG or its programs or procedures, including without
limitation, information received by CLG from third parties under confidential
conditions. The term "Company Information" shall also include, without
limitation, CLG's computer data-base, 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 CLG.
(c) In addition to the foregoing and not in limitation
thereof, Painter agrees that, during the term of his employment pursuant to this
Agreement and for a period of three (3) years thereafter, Painter will hold in a
fiduciary capacity for the benefit of CLG and shall not directly or indirectly
use or disclose, except as required in Painter's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by CLG, any "Customer Information" (as defined
below) that Painter may have or acquire (whether or not developed or compiled by
Painter and whether or not Painter 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 confidential or proprietary
information, including technical and financial information and customer lists
received by CLG or Painter from any customer or potential customer of CLG, 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.
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(d) Painter 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 CLG, that the remedy at
law for any such violation or threatened violation will be inadequate and that
CLG shall be entitled to appropriate equitable relief.
(e) The covenants contained in this Section 6 shall inure to
the benefit of CLG, any successor of it, and every subsidiary of it.
(f) The restrictions contained 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 CLG.
(g) In the event of a termination of this Agreement by Painter
pursuant to Section 4(d) hereof, the restrictions contained in this Section 6
shall no longer apply to Painter from and after the Termination Date.
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 CLG, and CLG shall
require any such successor to expressly assume and agree to perform this
Agreement. As used in this Agreement, "CLG" shall mean CLG 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 Painter's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Painter 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 Painter'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:
Painter: 1211 Briar Patch Lane
Raleigh, North Carolina 27615
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CLG: CLG, Inc.
3001 Spring Forest Road
Raleigh, North Carolina 27604
Attention: President
With a copy to: Centura Banks, Inc.
Post Office Box 1220
134 North Church Street
Rocky Mount, North Carolina 27804
Attn: President
(b) References in this Agreement to "similarly positioned" or
"similarly situated" employees shall mean those employees of CLG of comparable
rank and level of responsibility and with comparable duties. The existence or
non-existence of a contract of employment with CLG shall not be relevant for the
purpose of identifying those employees (or, if appropriate, former employees) of
CLG who are "similarly positioned" or "similarly situated."
(c) 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.
(d) 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.
(e) 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.
(f) This Agreement shall be construed and enforced in
accordance with the laws of the State of North Carolina, except as preempted by
the Employee Retirement Income Security Act of 1974, as amended.
IN WITNESS WHEREOF, Painter has executed this Agreement under seal by
adopting the word "SEAL" beside his name and CLG has executed this Agreement
under seal through its duly authorized officers as of the day and year first
above written.
___________________________(SEAL)
Dean E. Painter, Jr.
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CLG, INC.
By: ____________________________
President
ATTEST:
____________________________
Secretary
(Corporate Seal)
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Exhibit C
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
and made effective this _____ day of ____________, 1996, between Edwin J. Lee
("Lee"), and CLG, Inc. ("CLG").
WHEREAS, Lee has been and is currently employed by CLG, a North
Carolina computer leasing corporation headquartered in Raleigh, North Carolina;
and
WHEREAS, Centura Banks, Inc., a North Carolina bank holding company
("Centura"), has acquired CLG (the "Acquisition") and will maintain CLG as a
wholly-owned subsidiary of Centura Bank, a North Carolina bank corporation
headquartered in Rocky Mount, North Carolina ("Bank"); and
WHEREAS, CLG desires to provide for Lee's continued employment with CLG
following the Acquisition; and
WHEREAS, CLG desires to enter into this Agreement with Lee to set forth
the terms of such employment; and
WHEREAS, Lee agrees that the terms of this Agreement will allow him to
be employed with and to devote his best efforts to CLG.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties agree as follows:
1. EMPLOYMENT.
CLG shall employ Lee as President and Chief Operating Officer of CLG,
with the duties, responsibilities and powers of such office as assigned to him
and as customarily associated with such office. Lee shall faithfully and
diligently discharge his duties and responsibilities under this Agreement.
Nothing contained in this Section 1 or elsewhere in this Agreement, however,
will prevent or otherwise prohibit Lee from engaging in and pursuing personal
affairs not inconsistent with his duties and responsibilities under this
Agreement or prevent or prohibit Lee from managing and otherwise tending to his
personal investments, in each case so long as the same does not interfere with
the performance of his duties and responsibilities under this Agreement.
2. TERM.
The Term of this Agreement shall be five (5) years, commencing on the
date hereof.
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3. COMPENSATION AND BENEFITS.
During the Term of this Agreement, CLG shall pay to Lee as compensation
for his services to CLG a base salary at the rate of $215,000 per year, payable
in equal monthly installments. The base salary payable hereunder shall be
increased from time to time over the Term of this Agreement in the discretion of
the Compensation Committee of the Board of Directors of Centura, which committee
shall consider in making such adjustments, among other pertinent factors,
industry standards and the profitability of CLG.
The above-stated compensation shall not be deemed inclusive nor prevent
Lee from receiving any other compensation provided by CLG, and he shall be
entitled in any event (either directly or through salary adjustment) to health
and hospitalization insurance (including major medical), long-term disability
insurance, and life insurance, all in accordance (except as otherwise expressly
provided herein) with CLG's insurance plans for officers and employees in
comparable positions as such plans may be modified from time to time. For so
long as Lee is an officer or employee of CLG, Lee shall be entitled to
participate in all current and future employee benefit plans and arrangements in
which officers and employees of CLG or Bank in comparable positions are
permitted to participate.
4. TERMINATION.
Lee's employment under this Agreement shall terminate:
(a) Death. Upon the death of Lee;
(b) Disability. Upon notice from CLG to Lee in the event Lee
becomes "permanently disabled." For purposes of this Agreement, Lee shall be
deemed "permanently disabled" six (6) months after the first date that he has
become disabled by bodily or mental illness, disease, or injury, to the extent
that he is prevented from performing his material and substantial duties of
employment, and such disability has continued uninterrupted for six (6) months.
If the parties or their representatives cannot agree as to whether Lee is
"permanently disabled," as defined herein, they shall choose a physician to
examine Lee for the purpose of determining or confirming the existence or extent
of any disability. If the parties or their representatives cannot agree on the
choice of a physician to make such examination, each party or its representative
shall select one physician to make such examination and the two physicians
selected shall select a third physician to make such examination and the three
examining physicians shall by majority vote determine or confirm the existence
or extent of any disability. Notwithstanding the foregoing, before terminating
Lee in the event of his permanent disability, CLG shall offer Lee reasonable
accommodation pursuant to the Americans with Disabilities Act, in which case
Lee's duties and compensation hereunder may be adjusted in accordance with such
accommodation. Lee shall have the right to decline CLG's offer of accommodation
and, in such case, Lee's employment under this Agreement shall terminate as
provided herein;
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(c) Cause. Upon notice from CLG to Lee for cause. For purposes
of this Agreement, "cause" shall be defined as (i) a willful and continued
failure by Lee to perform his duties in the capacities indicated above (other
than due to disability); or (ii) a material breach by Lee of his fiduciary
duties of loyalty or care to CLG, as established by the Board of Directors of
Centura (other than due to disability); or (iii) a willful violation by Lee of
any material provision of this Agreement; or (iv) a conviction of, or the
entering of a plea of nolo contendere by Lee for any felony or any crime
involving fraud or dishonesty; or (v) a willful violation of any material
federal or state laws or regulations applicable to CLG. In addition, if Lee
shall terminate his employment for a breach of this Agreement by CLG in
accordance with Section 4(d) hereof, and it is ultimately determined that no
reasonable basis existed for Lee's termination on account of the alleged default
of CLG, such event shall be deemed cause for termination by CLG;
Any notice of termination of Lee's employment with CLG 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 (the "Termination Date"). If the
cause alleged by CLG shall be (i), (ii), or (iii) set forth above, Lee 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, unless such breach
is not reasonably susceptible to being corrected within thirty (30) days, in
which case Lee shall have the opportunity to cure such breach, provided that Lee
has commenced corrective action within such thirty (30) day period and
diligently pursues such action to completion;
(d) Breach. Upon notice from Lee to CLG of CLG's failure to
comply with any material provision of this Agreement, provided that CLG 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 CLG shall have taken steps
to cure the default within the thirty (30) day period and diligently pursues
such action to completion, Lee shall have no right to terminate his employment
under the provisions of this Section 4(d); and
(e) Change in Control. Following a Change in Control (as
hereinafter defined), if there occurs:
(i) any reduction in Lee's base salary from the level
existing at the time of the Change in Control;
(ii) any material reduction in the level of
responsibility, position (including status, office, title,
reporting relationships or working conditions), authority or
duties of Lee immediately preceding the Change in Control; or
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(iii) any material reduction in Lee's health and
hospitalization insurance (including major medical), long-term
disability insurance, and life insurance, employee benefit
plans and arrangements or similar plans or benefits being
provided by CLG to Lee as of the effective date of the Change
in Control, other than a reduction constituting a part of a
broad-based change in such program or programs which is made
effective as to substantially all of CLG's and Bank's
executive officers; and
as a result of any of the foregoing, Lee voluntarily terminates his employment
with the CLG prior to the expiration of the term of this Agreement as set forth
in Section 2 hereof.
For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if, following the effective date of this Agreement, (i) Centura or CLG,
or their assets, are acquired by or combined with another corporation (other
than Centura or Bank) and less than thirty percent (30%) of the outstanding
voting shares of the surviving corporation after such acquisition or
combination, or the parent corporation of such surviving corporation, are owned,
immediately after such acquisition or combination, by the owners of voting
shares of Centura or CLG, as applicable, outstanding immediately prior to such
acquisition or combination; or (ii) any "person" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), or persons acting together or in concert is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities of Centura or CLG representing 20% or more of the combined voting
power of the then-outstanding securities of Centura or CLG, respectively, other
than a trustee or other fiduciary holding securities under an employee benefit
plan of Centura, Bank or CLG, and, in the case of securities of CLG, other than
Centura or Bank, and thereafter the membership of the board of directors of
Centura or CLG becomes such that less than thirty percent (30%) of the members
of either of such boards are persons who were directors immediately prior to the
change of beneficial ownership referred to in this clause (ii).
(f)Expiration of Term. Upon the expiration of the Term of
this Agreement as set forth in Section 2 hereof.
(g) No Monetary Damages. Notwithstanding any provision of this
Agreement to the contrary, and except to the extent provided otherwise in
Section 6 hereof, Lee shall not be liable to CLG for monetary damages in the
event of a violation or breach of any of the provisions or covenants of this
Agreement, except to the extent that any such violation or breach is of the
covenants set forth in Section 6 hereof.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Lee's death during the Term of this Agreement, CLG
shall provide such death or insurance benefits as are provided in accordance
with the regular policy of CLG to similarly positioned employees and pursuant to
the terms of any benefit plans or arrangements maintained by CLG which provide
such benefits; provided, however, in no event shall CLG
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provide death or insurance benefits payable upon Lee's death in an amount less
than $500,000.00, and provided further, however, that any options to purchase
Centura Common Stock held by Lee as of the date of his death not yet fully
vested shall become fully vested immediately as of the date of his death.
(b) In the event Lee becomes permanently disabled and is
terminated as set forth in Section 4(b) hereof, CLG shall pay to Lee or his
estate or beneficiaries for the balance of the Term of this Agreement, the
then-existing base salary set forth in Section 3 hereof, provided that such
payment shall be offset by any amounts received by Lee (i) under any long term
disability plan maintained for the employees of CLG, (ii) from any other
collateral source payable due to disability to the extent that such payments are
derived from insurance or direct payments furnished by CLG, and (iii) social
security benefits. Lee agrees to use reasonable efforts to obtain the benefit of
any disability plan or policy covering him as a result of his employment by CLG
in the circumstances contemplated by Section 4(b) and this Section 5(b). In
addition, any options to purchase Centura Common Stock held by Lee as of the
date of his permanent disability not yet fully vested shall become fully vested
immediately as of the date of his disability.
(c) If Lee's employment shall be terminated by Lee pursuant to
Section 4(d) hereof, CLG shall make a lump sum payment to Lee within 90 days
after the Termination Date in an amount equal the present value, determined as
provided herein, of his full base salary in effect at the Termination Date and
all applicable benefits due hereunder (provided that the terms of any employee
benefit plan pursuant to which such benefits are provided permit participation
by similarly positioned former employees of Bank or CLG, as applicable) for the
balance of the Term of this Agreement; provided however, that such payments
shall be offset by any amounts paid to Lee under any severance or salary
continuation policy or plan of Bank or CLG applicable to Lee. In addition, any
options to purchase Centura Common Stock held by Lee as of the date of
termination pursuant to Section 4(d) hereof but not yet fully vested shall
become fully vested immediately as of the date of such termination. For purposes
of this Section 5(c), the interest rate assumption for determining the present
value of the lump sum payment shall be equal to the annual rate of interest on
30-year Treasury securities for the second month before the calendar quarter
containing the date of the lump sum payment.
(d) In the event termination is for cause as described in
Section 4(c) hereof or is due to the expiration of the Term of this Agreement,
CLG shall pay Lee the compensation and benefits described in Section 3 hereof
through the Termination Date and no other compensation or benefits shall be paid
to Lee hereunder; provided, however, that nothing herein shall be deemed to
terminate or limit the Lee's vested rights under any other benefit, retirement,
or pension plan of CLG applicable to Lee, and the terms of those plans,
programs, or arrangements shall govern.
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(e) If Lee's employment shall be terminated pursuant to
Section 4(e) hereof, CLG shall make a lump sum payment to Lee within 90 days
after the Termination Date in an amount equal to (i) his full base salary in
effect at the Termination Date, and (ii) all applicable benefits due hereunder
(provided that the terms of any employee benefit plan pursuant to which such
benefits are provided permit participation by similarly positioned former
employees of CLG) for the balance of the Term of this Agreement. In addition,
any options to purchase Centura Common Stock held by Lee as of the date of
termination pursuant to Section 4(e) hereof but not yet fully vested shall
become fully vested immediately as of the date of such termination.
Notwithstanding the foregoing, the present value of any benefits provided or any
payments made under this Section 5(e) shall not exceed 2.99 times Lee's "base
amount", as that term is defined in Section 280G(b)(3)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"). It is the intent of CLG and Lee
that all payments made to Lee pursuant to the provisions of this Section 5(e) be
deductible by CLG or Centura for federal income tax purposes and not result in
the imposition of an excise tax on Lee. Notwithstanding anything contained in
this Agreement to the contrary, any payments to be made to or for the benefit of
Lee which are deemed to be "parachute payments", as that term is defined in
Section 280G(b)(2) of the Code, shall be modified or reduced to the extent
deemed necessary by CLG to avoid the imposition of excise taxes on Lee under
Section 4999 of the Code or the disallowance of a deduction to CLG or Centura
under Section 280G of the Code.
6. CONFIDENTIALITY AND COVENANT NOT TO COMPETE.
Lee hereby acknowledges that, by virtue of his employment by CLG, Lee
has gained certain valuable knowledge and has developed certain expertise with
respect to the business of computer leasing, generally, and the business of CLG,
specifically, including certain confidential information and trade secrets
relating to such business and information relating to certain customers and
potential customers of CLG. In connection with and in view of the foregoing, Lee
hereby agrees as follows:
(a) Lee agrees that, during the term of his employment
pursuant to this Agreement and for a period of three (3) years thereafter, Lee
will not, directly or indirectly, engage in, or participate in the promotion,
financing, ownership or management of, or otherwise provide services to, any
firm, corporation, or business (whether as an employee, officer, director,
agent, owner, partner, shareholder, consultant, or otherwise), the purpose or
result of which, in whole or in part, is to assist such firm, corporation, or
business in the buying, leasing, servicing, and selling of computer and
technology equipment throughout the United States in competition with CLG.
(b) Lee agrees that, during the term of his employment
pursuant to this Agreement and for a term of three (3) years thereafter, Lee
will hold in a fiduciary capacity for the benefit of CLG, and shall not directly
or indirectly use or disclose, except as required in Lee's judgment in
connection with the performance of his duties, as required by law or judicial or
regulatory proceedings or as authorized by CLG, any "Company Information" (as
defined below) that Lee may have or acquire (whether or not developed or
compiled by Lee) during the
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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 CLG or its
programs or procedures, including without limitation, information received by
CLG from third parties under confidential conditions. The term "Company
Information" shall also include, without limitation, CLG's computer data-base,
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 CLG.
(c) In addition to the foregoing and not in limitation
thereof, Lee agrees that, during the term of his employment pursuant to this
Agreement and for a term of three (3) years thereafter, Lee will hold in a
fiduciary capacity for the benefit of CLG and shall not directly or indirectly
use or disclose, except as required in Lee's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by CLG, any "Customer Information" (as defined
below) that Lee may have or acquire (whether or not developed or compiled by Lee
and whether or not Lee 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 confidential or proprietary information,
including technical and financial information and customer lists received by CLG
or Lee from any customer or potential customer of CLG, 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.
(d) Lee 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 CLG, that the remedy at
law for any such violation or threatened violation will be inadequate and that
CLG shall be entitled to appropriate equitable relief.
(e) The covenants contained in this Section 6 shall inure to
the benefit of CLG, any successor of it, and every subsidiary of it.
(f) The restrictions contained 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 CLG.
(g) In the event of a termination of this Agreement by Lee
pursuant to Section 4(d) hereof, the restrictions contained in this Section 6
shall no longer apply to Lee from and after the Termination Date.
C-7
<PAGE>
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 CLG, and CLG shall
require any such successor to expressly assume and agree to perform this
Agreement. As used in this Agreement, "CLG" shall mean CLG 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 Lee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If Lee
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 Lee'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:
Lee: 1709 Perscherone Place
Raleigh, NC 27613
CLG: CLG, Inc.
3001 Spring Forest Road
Raleigh, North Carolina 27604
Attention: President
With a copy to: Centura Banks, Inc.
Post Office Box 1220
134 North Church Street
Rocky Mount, North Carolina 27804
Attn: President
(b) References in this Agreement to "similarly positioned" or
"similarly situated" employees shall mean those employees of CLG of comparable
rank and level of responsibility and with comparable duties. The existence or
non-existence of a contract of employment with CLG shall not be relevant for the
purpose of identifying those employees (or, if appropriate, former employees) of
CLG who are "similarly positioned" or "similarly situated."
(c) 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-8
<PAGE>
(d) 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.
(e) 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.
(f) This Agreement shall be construed and enforced in
accordance with the laws of the State of North Carolina, except as preempted by
the Employee Retirement Income Security Act of 1974, as amended.
IN WITNESS WHEREOF, Lee has executed this Agreement under seal by
adopting the word "SEAL" beside his name and CLG has executed this Agreement
under seal through its duly authorized officers as of the day and year first
above written.
___________________________(SEAL)
Edwin J. Lee
CLG, INC.
By: ____________________________
Chairman and Chief
Executive Officer
ATTEST:
___________________________
Secretary
(Corporate Seal)
C-9
<PAGE>
Exhibit D
Form of Opinion of Satisky & Silverstein, L.L.P.,
Counsel to CLG
________________, 1996
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
Re: Agreement and Plan of Reorganization between
Centura Banks, Inc. and CLG, Inc., dated as
of August __, 1996 (the "Agreement")
Gentlemen:
We have acted as counsel to CLG, Inc., a North Carolina corporation
engaged in the business of buying, leasing, refurbishing, servicing, and selling
computer and technology equipment throughout the United States ("CLG"), in
connection with the acquisition of the outstanding shares of CLG Common Stock by
Centura Banks, Inc., a North Carolina bank holding company ("Centura"), in
exchange for shares of Centura Common Stock pursuant to the Merger and as
provided by the Agreement. These opinions are delivered to you pursuant to
Section 12.3 of the Agreement. Terms used herein which are defined in the
Agreement shall have the respective meanings set forth in the Agreement, unless
otherwise defined herein.
In giving the opinions set forth below, we have relied as to certain
factual matters upon (i) certificates presented at the closing or otherwise and
the statements of officers, employees, and independent accountants of CLG or of
Centura, (ii) the representations and warranties set forth in the Agreement, and
(iii) the state and federal governmental approvals of the transactions
contemplated in the Agreement which have been obtained by CLG and Centura. We
have not attempted to independently verify any factual matters in connection
with the giving of the opinions set forth below.
D-1
<PAGE>
Centura Banks, Inc.
_______________, 1996
Page 2
In giving the opinions set forth below, we have made the following
assumptions regarding facts that we do not know to be true:
a. Centura is duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina and all other
applicable laws to which it is subject, and, as of the Closing Date,
CBI Acquisition Company, a wholly-owned subsidiary of Centura ("CBI"),
has been duly organized and is validly existing and in good standing
under the laws of the State of North Carolina and all other applicable
laws to which it is subject. Each of Centura and CBI has full power and
authority to consummate the Merger as set forth in the Agreement. All
transactions described in the Agreement, and all acts required in
connection therewith, have been duly authorized by all necessary
corporate action on the part of each of Centura and CBI. All documents
and instruments executed by each of Centura and CBI in connection
therewith have been duly executed and delivered on behalf of, and are
binding and enforceable against, each of them in accordance with their
terms.
b. The signatures of all persons signing any document or
instrument delivered in connection with the consummation of the Merger
are genuine, and all such persons executing such documents, other than
persons executing documents on behalf of CLG, have been duly authorized
to execute and deliver such documents and instruments.
c. All natural persons executing any document or instrument
delivered in connection with the consummation of the Merger have legal
competency to do so.
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
which would cause any act taken in connection with the Merger to fail
to comply with any law, rule, regulation, order judgment, decree or
duty.
f. Each of Centura and CBI has complied or will comply with
all conditions of all regulatory approvals respecting the Merger and
the other transactions contemplated in the Agreement.
D-2
<PAGE>
Centura Banks, Inc.
_______________, 1996
Page 3
g. The minutes of the meeting of the Board of Directors of CLG
at which the Merger was approved accurately reflect the actions taken
at that meeting and the meeting was duly called and a quorum was
present at such meeting.
h. Any certificate, representation, or other document on which
we have relied that was given or dated on or prior to the date hereof
continues to remain accurate, insofar as relevant to such opinions from
such earlier date through and including the date of this letter.
On the basis of such assumptions, and subject to the qualifications as
set forth herein, we are of the opinion that:
1. CLG is a corporation duly organized under the laws of the State of
North Carolina, and, based solely on a written certification of the North
Carolina Secretary of State dated _______________, 1996, is validly existing and
in good standing thereunder.
2. CLG has all requisite corporate power and authority to enter into
and carry out the provisions of the Agreement and the Merger Agreement (subject
to receipt of all required regulatory approvals), and to conduct its business as
now conducted, to own and operate its property and assets, and to lease
properties used in its business. CLG is not in violation of its organizational
documents or bylaws, or, to the best of our Actual Knowledge, in default with
respect to any order, writ, injunction, or decree of any court or in default
under any order, license, regulation or demand of any governmental agency, any
of which violations or defaults would materially and adversely affect any of its
businesses, properties, financial position, or results of operations taken as a
whole.
3. The execution, delivery, and performance by CLG of the Agreement and
the Merger Agreement, and the transactions contemplated thereby, have been duly
authorized by the Board of Directors and shareholders of CLG in accordance with
the bylaws of CLG. Subject to the receipt of all required regulatory approvals,
the Agreement constitutes, and the Merger Agreement will constitute upon
execution and delivery by all parties thereto, valid and binding obligations of
CLG, enforceable against it in accordance with the terms of such documents,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including, without
limitation, specific performance) is within the discretion of the appropriate
court.
D-3
<PAGE>
Centura Banks, Inc.
_______________, 1996
Page 4
4. None of the execution and delivery of the Agreement or the Merger
Agreement, the consummation of the transactions contemplated thereby, or the
fulfillment of the terms thereof will (i) conflict with, or result in a breach
of the terms, conditions, or provisions of, or constitute a default under, the
Articles of Incorporation or Bylaws of CLG; (ii) to the best of our Actual
Knowledge, conflict with, result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any material agreement or
instrument under which CLG is obligated or (assuming receipt of the approvals
referred to in Section 2.2 of the Agreement) violate any existing statute or
regulation of any government or agency to which CLG is subject; or (iii) to the
best of our Actual Knowledge, violate any judgment, order, ruling or decree of
any court or other agency of any government applicable to CLG.
5. To the best of our Actual Knowledge, no action, suit, investigation,
or proceeding is pending or threatened against CLG before any court or
governmental agency, domestic or foreign, nor is there any basis for any other
material action, suit, investigation, or proceeding which has a reasonable
prospect for success. To the best of our Actual Knowledge, there is (a) no
action, suit, investigation, or proceeding brought by CLG which seeks damages in
excess of $25,000, and (b) there is no litigation, proceeding, or governmental
investigation pending or threatened against CLG relating to the Merger.
6. All regulatory approvals required to be obtained by CLG in
connection with the Merger have been received and all applicable waiting periods
with respect to such approvals have expired without adverse action.
All the opinions set forth in this letter are expressly limited and
qualified as follows:
1. The opinions expressed herein are limited to matters of North
Carolina law and the laws of the United States of America. No opinion is
expressed as to any issue which is governed by the laws of any other
jurisdiction.
2. As used in this opinion, the phrase "Actual Knowledge" means the
actual conscious awareness of information by Howard P. Satisky, who is the only
member of our firm who has given substantive attention to the transactions
contemplated by the Agreement. Except to the extent expressly stated herein, we
have not undertaken any independent investigation or inquiry to determine the
existence or absence of any facts, and no inference as to our knowledge of the
existence or absence of facts should be drawn from the fact of our
representation of CLG.
3. Our opinions are limited to the matters expressly stated herein, and
no opinion may be inferred or implied beyond the matters expressly stated.
D-4
<PAGE>
Centura Banks, Inc.
_______________, 1996
Page 5
4. Our opinions herein are being furnished to you pursuant to Section
12.3 of the Agreement and are solely for your benefit. No other person shall be
entitled to rely on such opinions, and you are not entitled to rely on such
opinions in any other context. No copy of this letter or our opinions herein may
be delivered to any other person without our prior written consent.
6. This letter is limited to matters in existence as of the date
hereof, and we undertake no responsibility to revise or supplement this letter
to reflect any change in the law or facts.
7. We have acted as counsel to CLG in the transactions described in the
Agreement and this letter is given solely in such capacity. We have not acted as
counsel to Centura, CBI, or any of Centura's other subsidiaries. As a result, no
opinion is expressed herein as to any matter relating to Centura or any of its
subsidiaries, and not to CLG.
Very truly yours,
SATISKY & SILVERSTEIN, L.L.P.
By:___________________________
Howard P. Satisky
D-5
<PAGE>
Exhibit E
Form of Opinion of Poyner & Spruill, L.L.P.,
Counsel to Centura
____________, 1996
CLG, Inc.
3001 Spring Forest Road
Raleigh, North Carolina 27604
Re: Agreement and Plan of Reorganization between
Centura Banks, Inc. and CLG, Inc., dated as
of August __, 1996 (the "Agreement")
Gentlemen:
We have acted as counsel to Centura Banks, Inc. ("Centura"), a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended, in connection with the Agreement and Plan of Reorganization by and
between Centura and CLG, Inc. ("CLG"), dated as of August __, 1996, in
connection with the acquisition of the outstanding shares of CLG Common Stock by
Centura in exchange for shares of Centura Common Stock pursuant to the Merger
and as provided by the Agreement. This opinion letter is delivered pursuant to
the provisions of Section 12.7 of the Agreement. Except to the extent otherwise
defined herein, capitalized terms used herein have the same meanings as those
set forth in the Agreement.
In giving the opinions set forth below, we have relied as to certain
factual matters upon (i) certificates presented at the closing or otherwise and
the statements of officers, employees, and independent accountants of Centura or
of CLG, (ii) the representations and warranties set forth in the Agreement, and
(iii) the state and federal governmental approvals of the transactions
contemplated in the Agreement which have been obtained by Centura and CLG. We
have not attempted to independently verify any factual matters in connection
with the giving of the opinions set forth below.
E-1
<PAGE>
CLG, Inc.
______________, 1996
Page 2
In giving the opinions set forth below, we have made the following
assumptions regarding facts that we do not know to be true:
a. CLG is duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina and all other
applicable laws to which it is subject. CLG has full power and
authority to consummate the Merger as set forth in the Agreement. All
transactions described in the Agreement, and all acts required in
connection therewith, have been duly authorized by all necessary
corporate action on the part of CLG. All documents and instruments
executed by CLG in connection therewith have been duly executed and
delivered on behalf of, and are binding and enforceable against, CLG in
accordance with their terms.
b. The signatures of all persons signing any document or
instrument delivered in connection with the consummation of the Merger
are genuine, and all such persons executing such documents, other than
persons executing documents on behalf of Centura, have been duly
authorized to execute and deliver such documents and instruments.
c. All natural persons executing any document or instrument
delivered in connection with the consummation of the Merger have legal
competency to do so.
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
which would cause any act taken in connection with the Merger to fail
to comply with any law, rule, regulation, order judgment, decree, or
duty.
f. CLG has complied or will comply with all conditions of all
regulatory approvals respecting the Merger and the other transactions
contemplated in the Agreement.
g. The minutes of the meetings of the Boards of Directors of
Centura and CBI at which the Merger was approved accurately reflect the
actions taken at such meetings and the meetings were duly called and a
quorum was present at each such meeting.
E-2
<PAGE>
CLG, Inc.
______________, 1996
Page 3
h. Any certificate, representation, or other document on which
we have relied that was given or dated on or prior to the date hereof
continues to remain accurate, insofar as relevant to such opinions from
such earlier date through and including the date of this letter.
Whenever any opinion herein with respect to the existence or absence of
facts is qualified by the phrase "to our knowledge," "to the knowledge of," "to
our actual knowledge," or "known to us," such phrase indicates only that based
on: (i) the actual knowledge (i.e., conscious awareness of facts) of Michael S.
Colo, John E. Troxel, M. Guy Brooks, III, John A. MacKethan, Craig G. Dalton,
Hugh W. Davis II, Nancy C. Brower, and Merridee P. Gibson, constituting the
attorneys in our firm who have given substantive attention to the transactions
contemplated by the Agreement; and (ii) inquiries of the officers of Centura and
Centura Bank whom we believe to be reasonably well-informed as to the factual
matters in question, as set forth in the certificates attached hereto -- we
believe that such opinions are factually correct. Except as otherwise noted
below, we have not examined any public records or undertaken any other special
or independent investigation in connection with any such opinion.
Based upon, and subject to, the foregoing and to the additional
qualifications set forth herein, it is our opinion that:
(i) Centura is a corporation duly incorporated and, based
solely on a written certificate of corporate existence of the North
Carolina Secretary of State dated ______________, 1996, is validly
existing and in good standing under the laws of the State of North
Carolina. Centura is a bank holding company duly registered pursuant to
the BHC Act and the North Carolina Bank Holding Company Act of 1984,
and it has all requisite corporate power and authority to enter into
and carry out the provisions of the Agreement. Centura is not in
violation of its Articles of Incorporation or bylaws, or, to our
knowledge, in default with respect to any order, writ, injunction, or
decree of any court, or, to our knowledge, in default under any order,
license, regulation, or demand of any governmental agency, it being
understood that the foregoing opinion is limited to violations or
defaults which would materially and adversely affect any of its
businesses, properties, financial position, or results of operations
taken as a whole.
(ii) CBI is a corporation duly incorporated and, based solely
on a written certificate of corporate existence of the North Carolina
Secretary of State dated ____________, 1996, is validly existing and in
good standing under the laws of the State of North Carolina, all of the
capital stock of which is held of record by Centura and, to our
knowledge, is free of any liens, claims, or assessments thereagainst.
CBI has all
E-3
<PAGE>
CLG, Inc.
______________, 1996
Page 4
requisite corporate power and authority to enter into and carry out the
provisions of the Merger Agreement. CBI is not in violation of its
Articles of Incorporation or bylaws, or, to our knowledge, in default
with respect to any order, writ, injunction, or decree of any court,
or, to our knowledge, in default under any order, license, regulation,
or demand of any governmental agency, it being understood that the
foregoing opinion is limited to violations or defaults which would
materially and adversely affect any of its businesses, properties,
financial position, or results of operation taken as a whole.
(iii) The execution, delivery, and performance by Centura and
CBI, as applicable, of the Agreement, the Merger Agreement, and the
transactions contemplated thereby, have been duly authorized by the
Boards of Directors of Centura and CBI, as applicable. Subject to the
receipt of all required regulatory approvals, the Agreement
constitutes, and the Merger Agreement will constitute upon execution
and delivery by all parties thereto, valid and binding obligations of
Centura and CBI, as applicable, enforceable against them in accordance
with the terms of such documents, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting creditors' rights generally, and except that the
availability of equitable remedies (including, without limitation,
specific performance) is within the discretion of the appropriate
court, and except that limitations on indemnification rights may be
imposed under various securities laws.
(iv) None of the execution or the delivery of the Agreement or
the Merger Agreement, the consummation of the transactions contemplated
thereby, or the fulfillment of the terms thereof will (i) conflict
with, or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, the Articles of Incorporation or Bylaws
of Centura or CBI, as applicable; (ii) to our knowledge, conflict with,
result in a breach of the terms, conditions, or provisions of, or
constitute a default under any material agreement or instrument under
which Centura or CBI is obligated, or (assuming receipt of the
approvals referred to in Section 2.2 of the Agreement) violate any
existing statute or regulation of any government or agency to which
Centura or CBI is subject; or (iii) to our knowledge, violate any
judgment, order, ruling, or decree of any court or other agency of any
government applicable to Centura or CBI. The opinion in clause (ii) of
this paragraph with respect to conflicts, breaches, or defaults under
any material agreement or instrument under which Centura or CBI is
obligated addresses itself to conflicts, breaches, and defaults that
are reasonably ascertainable from the face of the referenced agreements
or instruments. It does not require counsel to determine the aggregate
effect of outstanding agreements or instruments upon financial ratios
or aggregate dollar exceptions to financial covenants.
E-4
<PAGE>
CLG, Inc.
______________, 1996
Page 5
(v) Except as Previously Disclosed and to our actual
knowledge, there are no actions, suits, investigations, or proceedings
pending or threatened against Centura or CBI before any court or
governmental agency, domestic or foreign, which, if decided against
Centura or CBI, will have a material adverse effect on the financial
condition of Centura on a consolidated basis. To our actual knowledge,
there is no litigation, proceeding, or governmental investigation
pending or threatened against Centura or CBI relating to the Merger.
(vi) All shares of Centura Common Stock, when issued and
delivered pursuant to the Agreement, shall be duly and validly issued,
fully paid, and nonassessable. Shares of Centura Common Stock to be
issued pursuant to the Agreement have been approved for listing upon
notice of issuance on the New York Stock Exchange.
(vii) All regulatory approvals required to be obtained by
Centura or CBI in connection with the Merger have been received and all
applicable waiting periods have expired without adverse action.
Our opinions are limited to the matters expressly stated herein, and no
opinion may be inferred or implied beyond the matters expressly stated.
We express no opinion with respect to compliance by Centura or Centura
Bank with Environmental Laws or with any other 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 applicable pollution control or environmental contamination
statute, law, or regulation.
The opinions expressed herein are as of the date hereof only, and we
assume no undertaking to supplement such opinions if facts and circumstances
come to our attention or changes in law occur after the date hereof which could
affect such opinions. We express no opinion as to the laws of any jurisdiction
other than the laws of the State of North Carolina and the federal laws of the
United States. This opinion letter is rendered solely for your benefit and may
not be relied upon by any other person without our express written consent. No
copy of this letter or our opinions herein may be delivered to any other person
without our prior consent.
Yours very truly,
[POYNER & SPRUILL, L.L.P.]
E-5
<PAGE>
EXHIBIT C
<PAGE>
November 1, 1996
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
Attention: William H. Wilkerson
Re: Affiliate Agreement
Gentlemen:
The undersigned is a shareholder of CLG, Inc. ("CLG"), a corporation
organized and existing under the laws of the State of North Carolina, and will
become a shareholder of Centura Banks, Inc. ("Holding Company"), a corporation
organized and existing under the laws of the State of North Carolina, pursuant
to the transactions described in the Agreement and Plan of Reorganization, dated
as of August 21, 1996 (the "Agreement"), by and between CLG and Holding Company,
and the related Agreement and Plan of Merger to be entered into by and between
CBI Acquisition Company of Rocky Mount ("CBI"), a wholly-owned subsidiary of
Holding Company and CLG. Under the terms of the Agreement, CBI will be merged
with and into CLG (the "Merger") and all of the shares of common stock of CLG
("CLG Stock") issued and outstanding on the effective date of the Merger will be
converted into and exchanged for shares of the common stock of Holding Company
("Holding Company Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Holding Company regarding certain rights and
obligations of the undersigned in connection with the (i) shares of CLG Stock
beneficially owned by the undersigned, and (ii) shares of Holding Company Stock
into which such shares of CLG Stock are converted as a result of the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and Holding Company hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
CLG he may be considered an "affiliate" under Rule 145(c) as defined in Rule 405
of the Rules and Regulations of the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("1933 Act").
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 2
2. Restriction on Disposition. Except as contemplated by the Agreement,
the undersigned agrees that he will not sell, transfer, or otherwise dispose of
his interests in, or reduce his risk relative to, any of the (i) shares of CLG
Stock over which the undersigned has or shares voting or dispositive power, or
(ii) shares of Holding Company Stock into which such shares of CLG Stock are
converted upon consummation of the Merger until such time as Holding Company
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of CBI and CLG. Holding Company agrees that it will publish
such results within 45 days after the end of the first fiscal quarter of Holding
Company containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned represents,
warrants and agrees that:
(a) The Holding Company Stock received by the undersigned as a
result of the Merger will be taken for his own account and not with a view to
distribution.
(b) Holding Company has informed the undersigned that any
distribution by the undersigned of Holding Company Stock has not been registered
under the 1933 Act and that shares of Holding Company Stock received pursuant to
the Merger can only be sold by the undersigned (1) following registration under
the 1933 Act, or (2) in conformity with the applicable provisions of Rule 144
(which provisions do not include paragraph (d) of Rule 144 pertaining to
restricted securities) or Rule 145(d) promulgated by the SEC as the same now
exist or may hereafter be amended, or (3) to the extent some other exemption
from registration under the 1933 Act might be available. The undersigned
understands that Holding Company is under no obligation to file a registration
statement with the SEC covering the disposition of the undersigned's shares of
Holding Company Stock.
(c) The undersigned is aware that Holding Company, CLG, and
CBI intend to treat the Merger as a reorganization under Section 368 of the
Internal Revenue Code (the "Code") for federal income tax purposes. The
undersigned agrees to treat the transaction in the same manner as Holding
Company, CLG, and CBI for federal income tax purposes. The undersigned
acknowledges that Section 1.368-1(b) of the Income Tax Regulations requires
"continuity of interest" in order for the Merger to be treated as a
reorganization under Section 368 of the Code. This requirement is satisfied if,
taking into account any CLG shareholders who receive cash in lieu of fractional
shares or who dissent from the Merger, there is no plan or intention on the part
of the CLG shareholders to sell or otherwise dispose of the Holding Company
Stock to be received in the Merger that will reduce such shareholders' ownership
to a number of shares having, in the aggregate, a value at the time of the
Merger of less than 50%
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 3
of the total fair market value of the CLG Stock outstanding immediately prior to
the Merger. The undersigned has no plan or intention to sell or otherwise
dispose of an amount of his Holding Company Stock to be received in the Merger
which would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of Holding Company
Stock received by the undersigned pursuant to the Merger will be given to
Holding Company's transfer agent and that there will be placed on the
certificates for such shares, or shares issued in substitution thereof, a legend
stating in substance:
"The shares represented by this certificate were issued
pursuant to a business combination and may not be sold, nor
may the owner thereof reduce his risks relative thereto in any
way, until such time as Centura Banks, Inc. ("Holding
Company") has published the financial results covering at
least 30 days of combined operations after the effective date
of the merger through which the business combination was
effected. In addition, 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 Rule 144 of the Rules and
Regulations of such Act, or (3) in accordance with a legal
opinion satisfactory to counsel for Holding Company that such
sale or transfer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing Holding Company
securities issued subsequent to the original issuance of the Holding Company
Stock pursuant to the Merger as a result of any stock dividend, stock split, or
other recapitalization as long as the Holding Company Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner to
justify the removal of the legend therefrom. Upon the request of the
undersigned, Holding Company shall cause the certificates representing the
shares of Holding Company Stock issued to the undersigned in connection with the
Merger to be reissued free of any legend relating to restrictions on transfer by
virtue of ASR 130 and 135 as soon as practicable after the requirements of ASR
130 and 135 have been met. In addition, if the provisions of Rules 144 and 145
are amended to eliminate restrictions applicable to the Holding Company Stock
received by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), Holding Company, upon the request
of the undersigned, will cause the certificates representing the shares of
Holding Company Stock issued to the undersigned in connection with the Merger to
be reissued free of any legend relating to the restrictions set forth in Rules
144 or 145(d) upon receipt by Holding Company of an opinion of its counsel to
the effect that such legend may be removed.
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 4
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his ability to sell, transfer, or otherwise dispose
of the shares of Holding Company Stock received by the undersigned, to the
extent he believes necessary, with his counsel.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of Holding Company Stock received by him in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation letter
to the transfer agent for Holding Company Stock together with such additional
information as the transfer agent may reasonably request. If Holding Company's
counsel concludes that such proposed sale or transfer complies with the
requirements of Rule 145(d), Holding Company shall cause such counsel to provide
such opinions as may be necessary to Holding Company's transfer agent so that
the undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to (i) the undersigned's spouse, if that spouse
has the same home as the undersigned, (ii) any relative of the undersigned who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, such spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee,
executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, such spouse, and any such relative
collectively own at least 10% of any class of equity securities or of the equity
interest. The undersigned further recognizes that, in the event that the
undersigned is a director or officer of Holding Company or becomes a director or
officer of Holding Company upon consummation of the Merger, among other things,
any sale of Holding Company Stock by the undersigned within a period of less
than six months following the effective time of the Merger may subject the
undersigned to liability pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between Holding Company and the undersigned concerning the subject matter
hereof. Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties. This Affiliate Agreement shall be governed by the laws of the State of
North Carolina.
Very truly yours,
/s/ Dean E. Painter, Jr.
------------------------
Dean E. Painter, Jr.
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 5
AGREED TO AND ACCEPTED as of November 1, 1996.
CENTURA BANKS, INC.
By: /s/ William H. Wilkerson
---------------------------
William H. Wilkerson
Group Executive Officer
007426/115/146578
<PAGE>
EXHIBIT D
<PAGE>
November 1, 1996
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
Attention: William H. Wilkerson
Re: Affiliate Agreement
Gentlemen:
The undersigned is a shareholder of CLG, Inc. ("CLG"), a corporation
organized and existing under the laws of the State of North Carolina, and will
become a shareholder of Centura Banks, Inc. ("Holding Company"), a corporation
organized and existing under the laws of the State of North Carolina, pursuant
to the transactions described in the Agreement and Plan of Reorganization, dated
as of August 21, 1996 (the "Agreement"), by and between CLG and Holding Company,
and the related Agreement and Plan of Merger to be entered into by and between
CBI Acquisition Company of Rocky Mount ("CBI"), a wholly-owned subsidiary of
Holding Company and CLG. Under the terms of the Agreement, CBI will be merged
with and into CLG (the "Merger") and all of the shares of common stock of CLG
("CLG Stock") issued and outstanding on the effective date of the Merger will be
converted into and exchanged for shares of the common stock of Holding Company
("Holding Company Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Holding Company regarding certain rights and
obligations of the undersigned in connection with the (i) shares of CLG Stock
beneficially owned by the undersigned, and (ii) shares of Holding Company Stock
into which such shares of CLG Stock are converted as a result of the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and Holding Company hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
CLG she may be considered an "affiliate" under Rule 145(c) as defined in Rule
405 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 Act").
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 2
2. Restriction on Disposition. Except as contemplated by the Agreement,
the undersigned agrees that she will not sell, transfer, or otherwise dispose of
her interests in, or reduce her risk relative to, any of the (i) shares of CLG
Stock over which the undersigned has or shares voting or dispositive power, or
(ii) shares of Holding Company Stock into which such shares of CLG Stock are
converted upon consummation of the Merger until such time as Holding Company
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of CBI and CLG. Holding Company agrees that it will publish
such results within 45 days after the end of the first fiscal quarter of Holding
Company containing the required period of post-Merger combined operations and
that it will notify the undersigned promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned represents,
warrants and agrees that:
(a) The Holding Company Stock received by the undersigned as a
result of the Merger will be taken for her own account and not with a view to
distribution.
(b) Holding Company has informed the undersigned that any
distribution by the undersigned of Holding Company Stock has not been registered
under the 1933 Act and that shares of Holding Company Stock received pursuant to
the Merger can only be sold by the undersigned (1) following registration under
the 1933 Act, or (2) in conformity with the applicable provisions of Rule 144
(which provisions do not include paragraph (d) of Rule 144 pertaining to
restricted securities) or Rule 145(d) promulgated by the SEC as the same now
exist or may hereafter be amended, or (3) to the extent some other exemption
from registration under the 1933 Act might be available. The undersigned
understands that Holding Company is under no obligation to file a registration
statement with the SEC covering the disposition of the undersigned's shares of
Holding Company Stock.
(c) The undersigned is aware that Holding Company, CLG, and
CBI intend to treat the Merger as a reorganization under Section 368 of the
Internal Revenue Code (the "Code") for federal income tax purposes. The
undersigned agrees to treat the transaction in the same manner as Holding
Company, CLG, and CBI for federal income tax purposes. The undersigned
acknowledges that Section 1.368-1(b) of the Income Tax Regulations requires
"continuity of interest" in order for the Merger to be treated as a
reorganization under Section 368 of the Code. This requirement is satisfied if,
taking into account any CLG shareholders who receive cash in lieu of fractional
shares or who dissent from the Merger, there is no plan or intention on the part
of the CLG shareholders to sell or otherwise dispose of the Holding Company
Stock to be received in the Merger that will reduce such shareholders' ownership
to a number of shares having, in the aggregate, a value at the time of the
Merger of less than 50%
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 3
of the total fair market value of the CLG Stock outstanding immediately prior to
the Merger. The undersigned has no plan or intention to sell or otherwise
dispose of an amount of her Holding Company Stock to be received in the Merger
which would cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of Holding Company
Stock received by the undersigned pursuant to the Merger will be given to
Holding Company's transfer agent and that there will be placed on the
certificates for such shares, or shares issued in substitution thereof, a legend
stating in substance:
"The shares represented by this certificate were issued
pursuant to a business combination and may not be sold, nor
may the owner thereof reduce his risks relative thereto in any
way, until such time as Centura Banks, Inc. ("Holding
Company") has published the financial results covering at
least 30 days of combined operations after the effective date
of the merger through which the business combination was
effected. In addition, 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 Rule 144 of the Rules and
Regulations of such Act, or (3) in accordance with a legal
opinion satisfactory to counsel for Holding Company that such
sale or transfer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing Holding Company
securities issued subsequent to the original issuance of the Holding Company
Stock pursuant to the Merger as a result of any stock dividend, stock split, or
other recapitalization as long as the Holding Company Stock issued to the
undersigned pursuant to the Merger has not been transferred in such manner to
justify the removal of the legend therefrom. Upon the request of the
undersigned, Holding Company shall cause the certificates representing the
shares of Holding Company Stock issued to the undersigned in connection with the
Merger to be reissued free of any legend relating to restrictions on transfer by
virtue of ASR 130 and 135 as soon as practicable after the requirements of ASR
130 and 135 have been met. In addition, if the provisions of Rules 144 and 145
are amended to eliminate restrictions applicable to the Holding Company Stock
received by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), Holding Company, upon the request
of the undersigned, will cause the certificates representing the shares of
Holding Company Stock issued to the undersigned in connection with the Merger to
be reissued free of any legend relating to the restrictions set forth in Rules
144 or 145(d) upon receipt by Holding Company of an opinion of its counsel to
the effect that such legend may be removed.
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 4
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon her ability to sell, transfer, or otherwise dispose
of the shares of Holding Company Stock received by the undersigned, to the
extent she believes necessary, with her counsel.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of Holding Company Stock received by her in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation letter
to the transfer agent for Holding Company Stock together with such additional
information as the transfer agent may reasonably request. If Holding Company's
counsel concludes that such proposed sale or transfer complies with the
requirements of Rule 145(d), Holding Company shall cause such counsel to provide
such opinions as may be necessary to Holding Company's transfer agent so that
the undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to (i) the undersigned's spouse, if that spouse
has the same home as the undersigned, (ii) any relative of the undersigned who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, such spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee,
executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, such spouse, and any such relative
collectively own at least 10% of any class of equity securities or of the equity
interest. The undersigned further recognizes that, in the event that the
undersigned is a director or officer of Holding Company or becomes a director or
officer of Holding Company upon consummation of the Merger, among other things,
any sale of Holding Company Stock by the undersigned within a period of less
than six months following the effective time of the Merger may subject the
undersigned to liability pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between Holding Company and the undersigned concerning the subject matter
hereof. Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties. This Affiliate Agreement shall be governed by the laws of the State of
North Carolina.
Very truly yours,
/s/ Winifred P. Painter
-----------------------
Winifred P. Painter
<PAGE>
Centura Banks, Inc.
November 1, 1996
Page 5
AGREED TO AND ACCEPTED as of November 1, 1996.
CENTURA BANKS, INC.
By: /s/ William H. Wilkerson
----------------------------
William H. Wilkerson
Group Executive Officer
007426/115/150287
<PAGE>
