<PAGE> 1
As filed with the Securities and Exchange Commission on December 18, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------
CENTURA BANKS, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
NORTH CAROLINA 6712 56-1688522
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
</TABLE>
134 NORTH CHURCH STREET
ROCKY MOUNT, NORTH CAROLINA 27804
(252) 454-4400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
JOSEPH A. SMITH, JR.
GENERAL COUNSEL AND CORPORATE SECRETARY
CENTURA BANKS, INC.
134 NORTH CHURCH STREET
ROCKY MOUNT, NORTH CAROLINA 27804
(252) 454-4400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
WITH COPIES TO:
<TABLE>
<CAPTION>
<S> <C> <C>
FRANK M. CONNER III JOHN A.B. DAVIES, JR. JOHN J. SPIDI
ALSTON & BIRD LLP PRESIDENT AND CHIEF EXECUTIVE OFFICER MALIZIA, SPIDI, SLOANE & FISCH, P.C.
NORTH BUILDING, 11TH FLOOR FIRST COASTAL BANKSHARES, INC. ONE FRANKLIN SQUARE
601 PENNSYLVANIA AVENUE, N.W. 2101 PARKS AVENUE 1301 K STREET, N.W., SUITE 700 EAST
WASHINGTON, D.C. 20004 VIRGINIA BEACH, VIRGINIA 23451 WASHINGTON, D.C. 20005
(202) 756-3300 (757) 428-9331 (202) 434-4660
</TABLE>
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the merger described in this Registration Statement
becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value 2,011,439 shares $21.8125 $118,611,816 $32,975
--------- ----- ------------ ------
===================================================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of shares of
the common stock of the Registrant which is expected to be issued in
connection with the merger.
(2) Estimated solely for purposes of calculating the registration fee
and based, pursuant to Rule 457 (f) under the Securities Act of
1933, as amended, on the average of the high low sales prices of the
shares of common stock of First Coastal Bankshares, Inc. as quoted
on the Nasdaq National Market on December 15, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), SHALL
DETERMINE.
================================================================================
<PAGE> 2
PROXY STATEMENT
FOR THE SPECIAL MEETING PROSPECTUS
OF STOCKHOLDERS OF CENTURA BANKS, INC.
FIRST COASTAL BANKSHARES, INC.
PROPOSED MERGER
Your board of directors has agreed to a transaction which will result in
the acquisition of First Coastal Bankshares, Inc. by Centura Banks, Inc., a bank
holding company headquartered in Rocky Mount, North Carolina.
If we complete the proposed merger, you will receive .34 of a share of
Centura common stock for each of your shares of First Coastal common stock, this
multiple is subject to adjustment as described in this proxy statement-
prospectus. We refer to the .34 multiple, as it may be adjusted, as
the "exchange ratio."
Centura common stock is traded on the New York Stock Exchange under the
symbol "CBC." Based on the closing price of Centura common stock on ___________,
1998 of $_____ and the .34 exchange ratio, you will receive approximately $____
worth of Centura common stock for each of your shares of First Coastal common
stock.
The special meeting of First Coastal stockholders will be held on
__________________, 1999 at __:__ _.m., local time, at _______________, located
at __________________________________, Virginia Beach, Virginia. At the special
meeting, we will ask you to approve the merger agreement which describes the
merger. We cannot complete the merger unless the holders of more than two-thirds
of the outstanding shares of First Coastal common stock approve it.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE __ OF
THIS PROXY STATEMENT-PROSPECTUS.
The date of this proxy statement-prospectus is ___________, 1999. It is
first being mailed to you on ___________,
1999.
- --------------------------------------------------------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE SHARES OF CENTURA COMMON STOCK TO BE ISSUED IN THE MERGER OR
DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE> 3
PLEASE NOTE
We have not authorized anyone to provide you with any information other
than the information included in this document and the documents we refer you
to. If someone provides you with other information, please do not rely on it as
being authorized by First Coastal or Centura.
This proxy statement-prospectus has been prepared as of ___________,
1999. There may be changes in the affairs of Centura or First Coastal since that
date which are not reflected in this document.
As used in this proxy statement-prospectus, the terms "Centura" and
"First Coastal" refer to Centura Banks, Inc. and First Coastal Bankshares, Inc.,
respectively, and, where the context requires, to Centura and First Coastal and
their respective subsidiaries.
HOW TO OBTAIN ADDITIONAL INFORMATION
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT CENTURA THAT IS NOT INCLUDED IN OR DELIVERED WITH
THIS DOCUMENT. THIS INFORMATION IS DESCRIBED ON PAGE __ UNDER "WHERE YOU CAN
FIND MORE INFORMATION." YOU CAN OBTAIN FREE COPIES OF THIS INFORMATION BY
WRITING OR CALLING:
Joseph A. Smith, Jr.
General Counsel and Corporate Secretary
CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
(Telephone: (252) 454-4400)
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST
THE INFORMATION BY ___________, 1999.
<PAGE> 4
FIRST COASTAL BANKSHARES, INC.
2101 PARKS AVENUE
VIRGINIA BEACH, VIRGINIA 23451
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ____________, 1999
First Coastal Bankshares, Inc. will hold a special meeting of
stockholders at _________________, in Virginia Beach, Virginia, at ____ _.m.
local time on ____________, 1999, to vote on:
(1) Merger. The agreement and plan of merger, dated as of October
28, 1998, by and between First Coastal Bankshares, Inc. and
Centura Banks, Inc., and the transactions contemplated by that
agreement and plan of merger. These transactions include the
merger of First Coastal Bankshares, Inc. into Centura Banks,
Inc..
(2) Other Business. Any other matters that properly come before the
special meeting, or any adjournments or postponements of the
special meeting.
Record holders of First Coastal common stock at the close of business on
________, 1999, will receive notice of and may vote at the special meeting,
including any adjournments or postponements. The agreement and plan of merger
requires approval by the holders of more than two-thirds of the outstanding
shares of First Coastal common stock.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meeting, please take the time to vote by completing and mailing the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, we will vote your proxy in favor of the merger.
If you do not return your card or attend and vote in favor at the special
meeting, the effect will be a vote against the merger and the other proposals.
BY ORDER OF THE BOARD OF DIRECTORS
-------------------------
Allene S. Cheatham
Secretary
________________, 1999
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
AGREEMENT AND PLAN OF MERGER.
-i-
<PAGE> 5
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: You are being asked to approve the merger agreement which provides for
the merger of First Coastal into Centura.
Q: WHAT SHOULD I DO NOW?
A: Just indicate on your proxy card how you want to vote, and sign and mail
it in the enclosed envelope as soon as possible, so that your shares will be
represented at your meeting.
If you sign and send in your proxy and do not indicate how you want to
vote, your proxy will be voted in favor of the proposal to approve and adopt the
merger agreement. If you do not sign and send in your proxy or attend and vote
at the special meeting, it will have the effect of a vote against the merger.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: Your broker will vote your shares of First Coastal common stock only if
you provide instructions on how to vote. You should instruct your broker how to
vote your shares, following the directions your broker provides. If you do not
provide instructions to your broker, your shares will not be voted and this will
have the effect of voting against the merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: After the merger is completed, we will send you written instructions for
exchanging your First Coastal common stock certificates for Centura common stock
certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask
any questions about the merger, you should contact:
Suzanne Kolesha
Investor Relations Department
FIRST COASTAL BANKSHARES, INC.
2101 Parks Avenue
Virginia Beach, Virginia 23451
(757) 428-9331
<PAGE> 6
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements about Centura and
First Coastal following the merger. These statements can be identified by our
use of words like "expect," "may," "could," "intend," "project," "estimate" or
"anticipate." These forward-looking statements reflect our current views, but
they are based on assumptions and are subject to risks, uncertainties and other
factors. These factors include the following:
(1) we may not fully realize the expected cost savings from the
merger;
(2) deposit attrition, customer loss, or revenue loss following the
merger may be greater than we expect;
(3) competitive pressure in the banking industry may increase
significantly;
(4) costs or difficulties related to the integration of the
businesses of Centura and First Coastal may be greater than we
expect;
(5) changes in the interest rate environment may reduce margins;
(6) general economic conditions, either nationally or regionally,
may be less favorable than we expect, resulting in, among other
things, credit quality deteriorating;
(7) changes may occur in the regulatory environment;
(8) changes may occur in business conditions and inflation;
(9) changes may occur in the securities markets; and
(10) disruptions of the operations of Centura, First Coastal, or any
of their subsidiaries, or any other governmental or private
entity may occur as a result of the "Year 2000 Problem."
The forward-looking earnings estimates included in this proxy
statement-prospectus have not been examined or compiled by the independent
public accountants of Centura and First Coastal, nor have our independent
accountants applied any procedures to our estimates. Accordingly, such
accountants do not express an opinion or any other form of assurance on them.
Further information on other factors that could affect the financial results of
Centura after the merger is included in the SEC filings incorporated by
reference in this proxy statement-prospectus.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary............................................................................................1
The Companies................................................................................1
The Merger...................................................................................1
What You Will Receive in the Merger..........................................................1
Effect of the Merger on First Coastal Options................................................2
Certain Federal Income Tax Consequences of the Merger........................................2
Comparative Market Prices of Common Stock....................................................3
Our Reasons for the Merger...................................................................3
Fairness Opinion of First Coastal's Financial Advisor........................................3
Special Meeting of Stockholders..............................................................3
Stockholder Vote Required to Approve the Merger..............................................4
Voting Rights at the Special Meeting.........................................................4
Our Recommendation to Stockholders...........................................................4
Share Ownership of Management and Certain Stockholders.......................................4
Interests of Certain Persons in the Merger That May Be Different from Yours..................5
Effective Time...............................................................................5
Exchange of Stock Certificates...............................................................5
Regulatory Approval and Other Conditions.....................................................5
Waiver, Amendment, and Termination...........................................................6
Accounting Treatment.........................................................................6
Certain Differences in Stockholders' Rights..................................................7
Stock Option Agreement.......................................................................7
Historical and Pro Forma Comparative Per Share Data..........................................8
Selected Financial Data.....................................................................10
Risk Factors......................................................................................15
Special Meeting of First Coastal Stockholders.....................................................15
Purpose.....................................................................................15
Date, Place, and Time.......................................................................16
Record Date, Voting Rights, Required Vote, and Revocability of Proxies......................16
Solicitation of Proxies.....................................................................17
Dissenters' Rights..........................................................................18
Recommendation..............................................................................18
Description of Transaction........................................................................18
The Merger..................................................................................18
What You Will Receive in the Merger.........................................................18
Effect of the Merger on First Coastal Options...............................................20
Certain Federal Income Tax Consequences of the Merger.......................................21
Background of and Reasons for the Merger....................................................23
</TABLE>
-i-
<PAGE> 8
<TABLE>
<S> <C>
Opinion of First Coastal's Financial Advisor................................................26
Effective Time of the Merger................................................................34
Distribution of Centura Stock Certificates..................................................34
Conditions to Consummation of the Merger....................................................35
Regulatory Approval.........................................................................36
Waiver, Amendment, and Termination..........................................................37
Conduct of Business Pending the Merger......................................................39
Management and Operations After the Merger..................................................40
Interests of Certain Persons in the Merger..................................................40
Accounting Treatment........................................................................42
Expenses and Fees...........................................................................42
Resales of Centura Common Stock.............................................................42
Stock Option Agreement......................................................................44
Effect of the Merger on Rights of Stockholders....................................................47
Anti-Takeover Provisions Generally..........................................................48
Authorized Capital Stock....................................................................48
Amendment of Charter and Bylaws.............................................................50
Classified Board of Directors and Absence of Cumulative Voting..............................51
Director Removal and Vacancies..............................................................52
Limitations on Director Liability...........................................................52
Indemnification.............................................................................53
Special Meeting of Stockholders.............................................................55
Ability of Directors to Consider Interests other than Stockholders' Interests...............56
Actions by Stockholders Without a Meeting...................................................57
Stockholder Nominations and Proposals.......................................................57
Fair Price Provision........................................................................57
Stockholder Votes Required for Certain Actions..............................................59
Dissenters' Rights of Appraisal.............................................................63
Stockholders' Rights to Examine Books and Records...........................................64
Dividends...................................................................................64
Comparative Market Prices and Dividends...........................................................65
Business of First Coastal.........................................................................67
Business of Centura...............................................................................67
General.....................................................................................67
Recent Developments.........................................................................68
Certain Regulatory Considerations.................................................................68
General.....................................................................................68
Payment of Dividends........................................................................71
Capital Adequacy............................................................................71
Support of Subsidiary Institutions..........................................................73
</TABLE>
-ii-
<PAGE> 9
<TABLE>
<S> <C>
Prompt Corrective Action..........................................................................73
Description of Centura Capital Stock..............................................................76
Other Matters.....................................................................................76
Stockholder Proposals.............................................................................76
Experts...........................................................................................77
Opinions..........................................................................................77
Where You Can Find More Information...............................................................78
</TABLE>
APPENDICES:
Appendix A -- Agreement and Plan of Merger, dated as of October 28, 1998, by
and between First Coastal Bankshares, Inc. and Centura Banks,
Inc.
Appendix B -- Opinion of Trident Financial Corporation
-iii-
<PAGE> 10
SUMMARY
This summary highlights selected information from this proxy
statement-prospectus and may not contain all of the information that is
important to you. You should carefully read this entire document and the other
documents we refer to in this document. These will give you a more complete
description of the transaction we are proposing. For more information about
Centura, see "WHERE YOU CAN FIND MORE INFORMATION" on page __. We have included
page references in this summary to direct you to other places in this proxy
statement-prospectus where you can find a more complete description of the
topics we have summarized.
THE COMPANIES (SEE PAGE __ FOR FIRST COASTAL, PAGE __ FOR CENTURA)
FIRST COASTAL BANKSHARES, INC.
2101 Parks Avenue
Virginia Beach, Virginia 23451
(757) 428-9331
First Coastal is a registered thrift holding company headquartered in
Virginia Beach, Virginia. The company operates through its thrift subsidiary,
First Coastal Bank, which has 19 branches in the Hampton Roads region of
Virginia. On September 30, 1998, First Coastal had consolidated assets of
approximately $578 million, consolidated loans of approximately $443 million,
consolidated deposits of approximately $397 million, and consolidated
stockholders' equity of approximately $46 million.
CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
(252) 454-4400
Centura is a registered bank holding company headquartered in Rocky
Mount, North Carolina. Through Centura Bank, its principal bank subsidiary, and
various other banking and banking-related subsidiaries, Centura provides a
diversified range of financial services in the communities in which it operates.
It maintains 210 banking offices and 317 automated teller machines.
On September 30, 1998, Centura had consolidated assets of approximately
$7.8 billion, consolidated loans of approximately $5.0 billion, consolidated
deposits of approximately $5.6 billion, and consolidated stockholders' equity of
approximately $618 million.
THE MERGER (SEE PAGE __)
Centura will acquire First Coastal by means of the merger of First
Coastal into Centura. After the merger, First Coastal's business will continue
to be conducted by Centura as the surviving corporation from the merger.
WHAT YOU WILL RECEIVE IN THE MERGER (SEE PAGE __)
If we complete the merger, you will receive .34 of a share of Centura
common stock for each of your shares of First Coastal common stock.
Based on the closing price of Centura common stock on ___________, 1998
of $_____, you will receive $____ worth of Centura common stock for each of your
shares of First Coastal common stock. This exchange ratio is subject to change
as described in this proxy statement-prospectus. For more information about what
you will receive if the merger is completed, see "DESCRIPTION OF TRANSACTION -
What You Will Receive in the Merger" on page __ of this proxy
statement-prospectus.
Centura will not issue any fractions of a share of common stock. Rather,
Centura will pay cash (without interest) for any fractional share interest any
First Coastal stockholder would otherwise receive in
<PAGE> 11
the merger. The cash payment will be in an amount equal to the fraction
multiplied by the closing price of one share of Centura common stock on the New
York Stock Exchange on the last trading day before the merger is completed.
EFFECT OF THE MERGER ON FIRST COASTAL OPTIONS (SEE PAGE __)
First Coastal has granted certain options to acquire First Coastal
common stock under its stock option plans. If the merger is completed, Centura
will assume each outstanding option. Each option will then become an option to
purchase Centura common stock, and Centura will agree to deliver Centura common
stock on the exercise of each option. The number of Centura shares that may be
purchased and the exercise price under the option will be adjusted based on the
exchange ratio which determines the number of shares of Centura common stock
that First Coastal stockholders receive in the merger in exchange for each share
of First Coastal common stock. Centura will assume all outstanding options
whether or not the option holder then has the right to exercise the option.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE __)
We expect that, for federal income tax purposes, you will not recognize
any gain or loss upon the exchange of all of your First Coastal shares solely
for shares of Centura common stock. But you may recognize taxable gain or loss
related to any cash you receive in lieu of a fractional share of Centura common
stock. See the discussion above under "-- What You Will Receive in the Merger."
Before the merger can be completed, Centura and First Coastal expect to receive
an opinion of Alston & Bird LLP, with respect to certain federal income tax
consequences of the merger. If the merger does not qualify for this tax
treatment, neither Centura nor First Coastal will complete the merger.
Tax matters are very complicated and the tax consequences of the merger
to you will depend on your own situation. You should consult your own tax
advisors to determine the effect of the merger on you under federal, state,
local, and foreign tax laws.
-2-
<PAGE> 12
COMPARATIVE MARKET PRICES OF COMMON STOCK (SEE PAGE __)
Shares of Centura common stock are traded on the New York Stock Exchange
under the symbol "CBC." Shares of First Coastal common stock are traded on the
Nasdaq National Market under the symbol "FCBK." The table shows you the closing
sales prices for First Coastal and Centura common stock on October 27, 1998, the
last trading day before we announced the execution of the agreement, and on
___________, 1998, the latest practicable date before the mailing of this proxy
statement-prospectus. The table also shows you the "equivalent price per First
Coastal share" or the value you will receive in the merger for each share of
First Coastal common stock you own.
<TABLE>
<CAPTION>
Equivalent Price
First Coastal Centura Per First Coastal
Common Stock Common Stock Share(1)
------------- ------------ -----------------
<S> <C> <C> <C>
October 27, 1998 $18.625 $70.00 $23.80
__________, 1999
</TABLE>
- ----------------------------------
(1) The equivalent price per share of First Coastal common stock at each
specified date represents the closing sale price of a share of Centura
common stock on such date multiplied by an exchange ratio of .34. See
"COMPARATIVE MARKET PRICES AND DIVIDENDS," on page __.
You should obtain current stock price quotations for Centura common
stock and First Coastal common stock. In addition, as described below, the
number of shares of Centura common stock to be issued in connection with the
merger is subject to adjustment under certain very limited circumstances.
OUR REASONS FOR THE MERGER (SEE PAGE __)
We believe that the merger will result in a company with expanded
opportunities for profitable growth. In addition, we anticipate that the
combined resources and capital of First Coastal and Centura will improve our
ability to compete in the changing and competitive financial services industry.
FAIRNESS OPINION OF FIRST COASTAL'S FINANCIAL ADVISOR (SEE PAGE __)
In deciding to approve the merger, we have considered an opinion from
our financial advisor, Trident Financial Corporation, that the price to be paid
to First Coastal stockholders is fair, from a financial point of view. The full
text of this opinion is attached to this proxy statement-prospectus as Appendix
B. We encourage you to read this opinion.
SPECIAL MEETING OF STOCKHOLDERS (SEE PAGE __)
The special meeting will be held at ________, located at
_________________________________, Virginia Beach, Virginia, at __:__ _.m.,
local time, on ____________, 1999. At the special meeting, we will ask you:
(1) to approve the merger and the merger agreement; and
(2) to act on any other matters that may be put to a vote at the
special meeting.
-3-
<PAGE> 13
In order for the special meeting to be held, a quorum must be present. A
quorum is established when one-third of the shares of First Coastal common stock
are represented at the special meeting either in person or by proxy.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE __)
Assuming that a quorum is present at the special meeting, to approve the
merger, stockholders who own more than two thirds of the outstanding shares of
First Coastal common stock must vote for the merger. Centura stockholders will
not vote on the merger.
VOTING RIGHTS AT THE SPECIAL MEETING (SEE PAGE __)
You are entitled to vote at the special meeting if you owned shares as
of the close of business on ___________, 1999, the record date. On the record
date, _________ shares of First Coastal common stock were outstanding. You will
be entitled to one vote for each share of First Coastal common stock that was
validly issued and outstanding and that you owned on the record date. You may
vote either by attending the special meeting and voting your shares or by
completing the enclosed proxy card and mailing it to us in the enclosed
envelope.
We are seeking your proxy to use at the special meeting. We have
prepared this proxy statement-prospectus to assist you in deciding how to vote
and whether or not to grant your proxy to us. If you have elected not to attend
the meeting, please indicate on your proxy card how you want to vote. Then sign,
date and mail it to us as soon as possible so that your shares will be
represented at the special meeting. If you sign, date and mail your proxy card
without indicating how you wish to vote, your proxy will be counted as a vote
for the merger and the merger agreement. If you fail to return your proxy card
and fail to vote at the meeting, the effect will be a vote against the merger.
If you have elected to attend the meeting, you need to do nothing at this time.
If you sign a proxy, you may revoke it at any time before the special meeting or
by attending and voting at the special meeting. You cannot vote shares held in
"street name"; only your broker can. If you do not provide your broker with
instructions on how to vote your shares, your broker will not be permitted to
vote them, and your shares will be treated as votes against the merger.
OUR RECOMMENDATION TO STOCKHOLDERS (SEE PAGE __)
First Coastal's board of directors unanimously approved the merger
agreement. We believe that the proposed merger is fair to you and in your best
interests. We unanimously recommend that you vote to approve the merger and the
merger agreement.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS (SEE PAGES __ AND __)
On the record date, your directors and executive officers, their
immediate family members and entities they control owned _________ shares, or
approximately _____% of the outstanding shares of First Coastal common stock.
This number does not include stock that the First Coastal directors and
executive officers may acquire through exercising stock options.
On the record date, Centura's directors and executive officers owned no
shares of First Coastal common stock and Centura held no shares of First Coastal
common stock in a fiduciary capacity for others, or as a result of debts
previously contracted.
-4-
<PAGE> 14
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS
(SEE PAGE __)
First Coastal's directors and certain officers have employment
agreements, stock options and other benefit plans and other arrangements that
may provide them with interests in and benefits from the merger that are
different from yours. Your board of directors was aware of these interests and
considered them in approving and recommending the merger.
EFFECTIVE TIME (SEE PAGE __)
The merger will become final at the time specified in the articles of
merger reflecting the merger to be filed with the Secretaries of State in both
North Carolina and Virginia. If First Coastal stockholders approve the merger at
the special meeting, and Centura obtains all required regulatory approvals, we
currently anticipate that the merger will be completed on or about March 26,
1999.
Centura and First Coastal cannot assure you that they can obtain the
necessary stockholder and regulatory approvals or that the other conditions to
consummation of the merger can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (SEE PAGE __)
Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your First Coastal stock certificates in
exchange for Centura stock certificates. You will need to carefully review and
complete these materials and return them as instructed along with your stock
certificates for First Coastal common stock. Please do not send First Coastal,
Centura or Centura's transfer agent any stock certificates until you receive
these instructions. If you do not have stock certificates but hold shares of
First Coastal common stock in the form of a book entry with First Coastal's
transfer agent, the transfer agent will automatically exchange the shares.
Do not send in your stock certificates until you receive a letter and
instructions on how to surrender your First Coastal stock certificates.
REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGES __ AND __)
Centura is required to notify and obtain approvals from certain
government regulatory agencies before the merger may be completed, including the
Federal Reserve and other federal and state banking regulators. We expect that
Centura will obtain all required regulatory approvals before the special
meeting, but we cannot assure this will happen.
In addition to the required regulatory approvals, the merger will be
completed only if certain conditions, including, but not limited to the
following, are met or waived, if waivable:
(1) First Coastal stockholders approve the merger at the special
meeting;
(2) First Coastal and Centura receive an opinion of counsel that the
merger will qualify as a tax-free reorganization;
(3) First Coastal and Centura receive a letter from Centura's
accountants concerning the pooling-of-interests accounting
treatment of the merger (discussed below under "Accounting
Treatment"); and
(4) neither Centura nor First Coastal has breached any of its
representations or obligations under the merger agreement.
In addition to these conditions, the merger agreement, attached to this
proxy statement-prospectus
-5-
<PAGE> 15
as Appendix A, describes other conditions that must be met before the merger may
be completed.
WAIVER, AMENDMENT, AND TERMINATION (SEE PAGE __)
Centura and First Coastal may agree to terminate the merger agreement
and elect not to complete the merger at any time before the merger is completed.
Each of the parties also can terminate the merger in certain other
circumstances, including if the merger is not completed by April 30, 1999. But a
party may not terminate the merger agreement if (a) it willfully breached the
merger agreement and (b) its breach is the reason the merger has not been
completed. There are also some instances where the parties cannot use this
reason to terminate the merger if the delay results from actions of third
parties.
In addition, the parties may also terminate the merger if other
circumstances occur which are described in the merger agreement, attached to
this proxy statement-prospectus as Appendix A.
The merger agreement may be amended by the written agreement of Centura
and First Coastal. The parties can amend the merger agreement without
stockholder approval, even if you have already approved the merger. However, you
must approve any amendments that would modify in a material respect the type or
amount of consideration that you will receive in the merger.
ACCOUNTING TREATMENT (SEE PAGE __)
Centura intends to account for the merger as a pooling-of-interests
transaction for accounting and financial reporting purposes.
Pooling-of-interests is an accounting method that assumes that each
company's stockholders have combined their ownership interests in such a manner
that each group becomes an owner of the combined, enlarged business. The key
differences between this method of accounting and the more common purchase
accounting method fall into two areas: income measurement and asset valuation.
Under pooling-of-interests, the earnings of each company are combined as though
the combination had occurred at the beginning of the earliest financial period
presented. Under purchase accounting, the earnings of the acquired company are
included only after the closing of the merger. Under pooling-of-interests, the
assets of the acquired company are valued at their historical cost. Under the
purchase method, the assets are valued at their fair value at the time of the
merger. The excess of the consideration the acquiring company pays over the fair
value of the target's assets is recorded as goodwill on the acquiring company's
financial statements. The goodwill is amortized as an expense in the acquiring
company's financial statements for not more than 25 years.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS (SEE PAGE __)
When the merger is completed you will automatically become a Centura
stockholder. The rights of Centura stockholders differ from the rights of First
Coastal stockholders in certain important ways. Many of these have to do with
provisions in Centura's articles of incorporation and bylaws and North Carolina
law. Certain of these provisions are intended to make a takeover of Centura
harder if the Centura board of directors does not approve it.
-6-
<PAGE> 16
STOCK OPTION AGREEMENT (SEE PAGE __)
First Coastal and Centura entered into an option agreement under which
First Coastal granted Centura an option to purchase up to 992,321 shares of
First Coastal common stock under certain circumstances if the merger is not
consummated and a third party attempts to take control of First Coastal.
-7-
<PAGE> 17
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows certain comparative per share data relating to
net income, cash dividends, and book value. The equivalent pro forma information
is based on an exchange ratio of .34.
We present the pro forma and equivalent pro forma data for your
information only. It does not necessarily indicate the results of operations or
combined financial position that would have resulted had Centura completed the
merger or the other acquisitions at the times indicated, and it does not
necessarily indicate what future results of operations or combined financial
position will be.
You should read the information shown below in conjunction with the
historical consolidated financial statements of Centura and First Coastal and
the notes provided with them. See "-- Selected Financial Data," "BUSINESS OF
CENTURA -- Recent Developments" and "WHERE YOU CAN FIND MORE INFORMATION."
-8-
<PAGE> 18
CENTURA BANKS, INC.
AND FIRST COASTAL BANKSHARES, INC.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31 ENDED
-------------------------------------------- SEPTEMBER 30,
1995 1996 1997 1998
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
NET INCOME
Centura
Basic.................................... $2.50 $2.66 $3.22 $2.72
Diluted.................................. 2.45 2.60 3.15 2.67
First Coastal
Basic.................................... .24 .11 .82 .65
Diluted.................................. .24 .11 .81 .63
Pro forma (Centura and
First Coastal)
Basic................................. 2.39 2.52 3.17 2.67
Diluted............................... 2.38 2.47 3.11 2.62
First Coastal equivalent pro forma (1)
Basic.................................... .81 .86 1.08 .91
Diluted.................................. .81 .84 1.06 .89
CASH DIVIDENDS PER SHARE
Centura..................................... $ .85 $1.00 $1.06 $ .85
First Coastal............................... .16 .16 .20 .18
First Coastal equivalent pro forma (1) .29 .34 .36 .29
<CAPTION>
December 31, 1997 September 30, 1998
------------------------------ -----------------------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
Centura ......................................... $20.82 $23.28
First Coastal ................................... 8.86 9.25
Pro Forma (Centura First Coastal) ........... 21.14 23.52
First Coastal equivalent pro forma (1) .......... 7.19 8.00
</TABLE>
- ---------------------------------------
(1) The equivalent pro forma per share data for First Coastal is computed by
multiplying Pro Forma information by an exchange ratio of .34.
-9-
<PAGE> 19
SELECTED FINANCIAL DATA
The following tables present for Centura and for First Coastal, selected
consolidated financial data for the nine-month periods ended September 30, 1998
and 1997, and for the five-year period ended December 31, 1997. The information
is based on the consolidated financial statements contained in reports Centura
and First Coastal have filed with the SEC, including their September 30, 1998
Quarterly Reports on Form 10-Q. All of these documents are incorporated by
reference in this proxy statement-prospectus. See "WHERE YOU CAN FIND MORE
INFORMATION" on page __.
You should read the following tables in conjunction with the
consolidated financial statements of Centura and First Coastal described above
and with the notes to them.
Historical results are not necessarily indicative of results to be
expected for any future period. In the opinion of the respective managements of
Centura and First Coastal, all adjustments (which include only normal recurring
adjustments) necessary to arrive at a fair statement of interim results of
operations of Centura and First Coastal, respectively, have been included. With
respect to Centura and First Coastal, results for the nine-month period ended
September 30, 1998 are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
-10-
<PAGE> 20
CENTURA SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------------------
1993 1994 1995 1996 1997
-------------- ------------- ------------- -------------- ---------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net interest income........................ $ 170,513 $ 201,293 $ 224,645 $ 250,084 $ 267,905
Provision for loan losses.................. 9,151 7,220 7,904 9,596 13,418
Investment securities gains (losses)....... 2,634 (891) (614) 1,798 136
Other noninterest income................... 64,008 64,647 80,724 99,049 117,085
Noninterest expense........................ 157,040 170,207 195,777 233,981 246,230
-------------- ------------- ------------- -------------- ---------------
Earnings before income taxes, extra-
Ordinary item, and accounting changes... 70,964 87,622 101,074 107,354 125,478
Applicable income taxes.................... 26,688 31,849 36,421 39,203 42,420
-------------- ------------- ------------- -------------- ---------------
-------------- ------------- ------------- -------------- ---------------
Net income................................. 44,276 55,773 64,653 68,151 83,058
============== ============= ============= ============== ===============
PER COMMON SHARE DATA:
Basic
Net income................................. 1.92 2.23 2.50 2.66 3.22
Diluted
Net income................................. 1.90 2.19 2.45 2.60 3.15
Cash dividends............................. .69 .74 .85 1.00 1.06
Book value................................. 14.09 14.95 17.19 18.51 20.82
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................... $ 4,517,844 $ 4,658,432 $ 5,784,548 $ 6,293,972 $ 7,125,430
Loans, net of unearned income.............. 2,834,364 3,244,155 3,898,436 4,109,454 4,586,582
Allowance for losses on loans.............. 43,430 48,164 55,070 58,715 64,279
Investment securities...................... 1,201,049 965,500 1,328,625 1,577,880 1,828,056
Total deposits............................. 3,854,377 3,735,893 4,443,791 4,733,069 5,364,925
Short-term borrowings...................... 130,265 293,695 497,717 685,291 733,192
Long-term debt
Parent company.......................... 827 683 26,539 26,395 100,251
Subsidiary banks........................ 116,630 187,708 280,047 284,407 281,878
Total stockholders' equity................. 350,741 369,431 433,311 475,235 538,336
Average assets............................. 3,937,409 4,477,744 5,177,851 5,956,290 6,601,084
Average stockholders' equity............... 300,667 360,224 424,877 453,746 510,330
Average shares outstanding
Basic................................... 23,046,585 25,034,340 25,840,915 25,605,621 25,798,324
Diluted................................. 23,479,609 25,426,321 26,367,771 26,261,830 26,331,392
<CAPTION>
Nine Months Ended
September 30,
----------------------------------
1997 1998
--------------- ----------------
(Dollars in thousands,
except per share data)
<S> <C> <C>
INCOME STATEMENT DATA:
Net interest income........................ $ 196,810 $ 221,702
Provision for loan losses.................. 9,569 11,069
Investment securities gains (losses)....... 35 570
Other noninterest income................... 77,724 100,154
Noninterest expense........................ 173,852 202,996
--------------- ----------------
Earnings before income taxes, extra-
Ordinary item, and accounting changes... 91,148 108,361
Applicable income taxes.................... 31,594 36,695
--------------- ----------------
--------------- ----------------
Net income................................. 59,554 71,666
=============== ================
PER COMMON SHARE DATA:
Basic
Net income................................. 2.31 2.72
Diluted
Net income................................. 2.26 2.67
Cash dividends............................. .79 .85
Book value................................. 20.45 23.28
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................... $ 6,891,281 $ 7,804,848
Loans, net of unearned income.............. 4,511,074 5,012,758
Allowance for losses on loans.............. 62,282 67,105
Investment securities...................... 1,693,347 2,094,469
Total deposits............................. 5,209,836 5,568,980
Short-term borrowings...................... 732,013 1,006,809
Long-term debt
Parent company.......................... 100,287 100,143
Subsidiary banks........................ 237,688 382,636
Total stockholders' equity................. 529,464 618,388
Average assets............................. 6,461,140 7,445,842
Average stockholders' equity............... 503,049 583,710
Average shares outstanding
Basic................................... 25,779,234 26,364,975
Diluted................................. 26,303,968 26,873,328
</TABLE>
-11-
<PAGE> 21
CENTURA SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- ------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS:
Return on average assets................... 1.12% 1.25% 1.25% 1.14% 1.26%
Return on average equity................... 14.73 15.48 15.22 15.02 16.28
Net interest income (taxable-equivalent)/
Average earning assets................... 4.81 5.01 4.82 4.66 4.56
Loan/deposits.............................. 79.48 80.83 90.15 89.10 87.95
Equity/assets (period end)................. 7.76 7.93 7.49 7.55 7.56
Average stockholders' equity/average
Total assets............................. 7.64 8.04 8.21 7.62 7.73
Leverage ratio............................. 6.94 7.36 6.94 6.56 7.51
Tier 1 capital/risk-weighted assets........ 11.20 10.76 9.95 9.48 10.60
Total capital/risk-weighted assets......... 12.45 12.02 11.20 10.02 11.19
CREDIT QUALITY RATIOS:
Allowance/period-end loans................. 1.54% 1.48% 1.41% 1.43% 1.40%
Nonperforming loans/total loans........... .74 .57 .49 .47 .52
Allowance/nonperforming loans............. 2.07x 2.59x 2.86x 3.06x 2.71x
Nonperforming assets/loans and fore-
Closed properties........................ .94 .66 .57 .56 .61
Provision/average loans.................... .35 .24 .22 .24 .31
Net charge-offs/average loans.............. .22 .09 .12 .18 .25
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1997 1998
--------- --------
(Dollars in thousands,
except per share data)
<S> <C> <C>
PROFITABILITY AND CAPITAL RATIOS:
Return on average assets................... 1.23% 1.29%
Return on average equity................... 15.83 16.42
Net interest income (taxable-equivalent)/
Average earning assets................... 4.52 4.45
Loan/deposits.............................. 88.28 89.16
Equity/assets (period end)................. 7.68 7.92
Average stockholders' equity/average
Total assets............................. 7.79 7.84
Leverage ratio............................. 7.51 7.85
Tier 1 capital/risk-weighted assets........ 10.60 10.38
Total capital/risk-weighted assets......... 11.19 10.96
CREDIT QUALITY RATIOS:
Allowance/period-end loans................. 1.38% 1.34%
Nonperforming loans/total loans........... .52 .57
Allowance/nonperforming loans............. 2.66x 2.36x
Nonperforming assets/loans and fore-
Closed properties........................ .63 .64
Provision/average loans.................... .23 .23
Net charge-offs/average loans.............. .27 .28
</TABLE>
-12-
<PAGE> 22
FIRST COASTAL SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------------
1993 1994 1995 1996 1997
-------------- -------------- -------------- -------------- -------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net interest income........................ $ 11,483 $ 13,069 $ 15,014 $ 16,716 $ 18,962
Provision for losses on loans.............. 600 275 175 150 225
Other noninterest income................... 5,743 4,608 5,218 3,254 3,901
Noninterest expense........................ 16,433 18,661 18,250 18,929 15,981
-------------- -------------- -------------- -------------- -------------
Earnings before income taxes, extra-
ordinary item, and accounting changes.... 193 (1,259) 1,807 891 6,657
Applicable income taxes.................... (259) (688) 641 322 2,554
-------------- -------------- -------------- -------------- -------------
Earnings before extraordinary item and
accounting changes...................... 452 (571) 1,166 569 4,103
Extraordinary item and accounting
changes, net of taxes................... 700 -- -- -- --
-------------- -------------- -------------- -------------- -------------
Net earnings............................... $ 1,152 $ (571) $ 1,166 $ 569 $ 4,103
============== ============== ============== ============== =============
PER COMMON SHARE DATA:
Basic
Earnings (loss) before extraordinary
item and accounting changes.......... $ .09 $ (.12) $ .24 $ .11 $ .82
Net earnings........................... .23 (.12) .24 .11 .82
Diluted
Earnings (loss) before extraordinary
item and accounting changes.......... .09 (.12) .24 .11 .81
Net earnings........................... .23 (.12) .24 .11 .81
Cash dividends............................. .16 .16 .16 .16 .20
Book value................................. 8.48 7.50 8.28 8.21 8.86
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................... $ 682,017 $ 719,325 $ 698,962 $ 606,138 $ 616,188
Loans, net of unearned income.............. 430,904 432,776 447,582 449,840 462,833
Allowance for losses on loans.............. 4,173 4,328 3,968 4,390 4,297
Investment securities...................... 220,380 254,308 164,696 134,345 130,419
Total deposits............................. 472,728 505,070 492,971 423,389 407,443
Short-term borrowings...................... 155,872 170,510 158,010 138,125 160,117
Total stockholders' equity................. 41,514 36,885 41,032 40,827 44,149
Average assets............................. 685,517 714,545 696,119 617,034 607,924
Average stockholders' equity............... 41,557 38,766 38,948 40,737 41,769
Average shares outstanding (in thousands)
Basic................................... 4,894 4,899 4,936 4,962 4,973
Diluted................................. 4,897 4,934 4,955 4,979 5,066
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------------
1997 1998
-------------- --------------
(Dollars in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA:
Net interest income........................ $ 14,225 $ 14,437
Provision for losses on loans.............. 225 --
Other noninterest income................... 2,765 4,518
Noninterest expense........................ 11,917 13,767
-------------- --------------
Earnings before income taxes, extra-
ordinary item, and accounting changes.... 4,848 5,188
Applicable income taxes.................... 1,867 1,937
-------------- --------------
Earnings before extraordinary item and
accounting changes...................... 2,981 3,251
Extraordinary item and accounting
changes, net of taxes................... -- --
-------------- --------------
Net earnings............................... $ 2,981 $ 3,251
============== ==============
PER COMMON SHARE DATA:
Basic
Earnings before extraordinary item and
accounting changes................... $ .60 $ .65
Net earnings........................... .60 .65
Diluted
Earnings before extraordinary item and
accounting changes................... .59 .63
Net earnings........................... .59 .63
Cash dividends............................. .15 .18
Book value................................. 8.70 9.25
BALANCE SHEET DATA (AT PERIOD END):
Total assets............................... $ 605,486 $ 578,272
Loans, net of unearned income.............. 403,505 443,291
Allowance for losses on loans.............. 4,463 4,285
Investment securities...................... 115,772 98,896
Total deposits............................. 387,574 396,568
Short-term borrowings...................... 170,220 128,729
Total stockholders' equity................. 43,320 46,124
Average assets............................. 607,552 613,280
Average stockholders' equity............... 41,349 44,840
Average shares outstanding (in thousands)
Basic................................... 4,974 4,983
Diluted................................. 5,064 5,139
</TABLE>
-13-
<PAGE> 23
FIRST COASTAL SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------------
1993 1994 1995 1996 1997
------------- ------------- ------------- ------------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS:
Return on average assets...................... .17% ( .08)% .17% .09% .67%
Return on average common equity............... 2.77 (1.47) 2.99 1.39 9.82
Net interest income (taxable-equivalent)/
average earning assets...................... 1.75 1.91 2.23 2.78 3.21
Loan/deposits................................. 91.15 85.69 90.79 106.25 113.59
Equity/assets (period end).................... 6.09 5.13 5.87 6.74 7.16
Average stockholders' equity/average
total assets................................ 6.06 5.42 5.60 6.60 6.87
Leverage ratio................................ 5.80 5.40 5.80 6.60 7.00
Tier 1 capital/risk-weighted assets........... 12.09 11.29 10.20 11.36 11.61
Total capital/risk-weighted assets............ 12.90 12.30 11.10 12.50 12.60
CREDIT QUALITY RATIOS:
Allowance/period-end loans.................... .96 .99 .88 .97 .92
Nonperforming loans/total loans.............. 1.96 1.40 .84 .91 1.34
Allowance/nonperforming loans................ 48.84 70.90 104.56 106.40 68.79
Nonperforming assets/loans and fore-
closed properties........................... 4.16 2.94 2.11 1.37 1.85
Provision/average loans....................... .15 .07 .04 .03 .05
Net charge-offs (recovery)/average loans...... .26 .03 (.12) ( .06) .07
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1997 1998
------------- -------------
(Dollars in thousands,
except per share data)
<S> <C> <C>
PROFITABILITY AND CAPITAL RATIOS:
Return on average assets...................... .65% .71%
Return on average common equity............... 9.61 9.67
Net interest income (taxable-equivalent)/
average earning assets...................... 3.20 3.25
Loan/deposits................................. 104.11 111.78
Equity/assets (period end).................... 7.15 7.98
Average stockholders' equity/average
total assets................................ 6.81 7.31
Leverage ratio................................ 6.90 7.82
Tier 1 capital/risk-weighted assets........... 11.61 11.95
Total capital/risk-weighted assets............ 12.70 12.97
CREDIT QUALITY RATIOS:
Allowance/period-end loans.................... .95 .96
Nonperforming loans/total loans.............. .98 .88
Allowance/nonperforming loans................ 97.40 108.48
Nonperforming assets/loans and fore-
closed properties........................... 1.49 1.23
Provision/average loans....................... .05 --
Net charge-offs/average loans................. .04 --
</TABLE>
- -----------------------------------------------------
-14-
<PAGE> 24
RISK FACTORS
If the merger is consummated, you will receive shares of Centura common
stock in exchange for your shares of First Coastal common stock. You should be
aware of particular risks and uncertainties that are applicable to an investment
in Centura common stock. Specifically, there are risks and uncertainties that
bear on Centura's future financial results and that may cause Centura's future
earnings and financial condition to be less than Centura's expectations.
Some of the risks and uncertainties relate to economic conditions
generally and would affect other financial institutions in similar ways. These
aspects are discussed above under the heading "A WARNING ABOUT FORWARD-LOOKING
STATEMENTS." This section addresses particular risks and uncertainties that are
specific to Centura.
The merger involves the integration of two companies that have
previously operated independently. Successful integration of First Coastal's
operations will depend primarily on Centura's ability to consolidate operations,
systems and procedures and to eliminate redundancies and costs. We may not be
able to integrate our operations without encountering difficulties including,
without limitation, the loss of key employees and customers, the disruption of
our businesses, or possible inconsistencies in standards, controls, procedures,
and policies.
SPECIAL MEETING OF FIRST COASTAL STOCKHOLDERS
PURPOSE
Centura and First Coastal are furnishing this proxy statement-prospectus
to holders of First Coastal common stock, $.01 par value per share, in
connection with the proxy solicitation by First Coastal's board of directors.
The First Coastal board of directors will use the proxies at the special meeting
of stockholders of First Coastal to be held on ___________, 1999, and at any
adjournments.
At the special meeting, holders of First Coastal common stock will be
asked to vote upon a proposal to approve the Agreement and Plan of Merger, dated
as of October 28, 1998, by and between Centura and First Coastal, attached to
this proxy statement-prospectus as Appendix A. Pursuant to the agreement and
plan of merger, Centura will acquire First Coastal by means of the merger of
First Coastal with and into Centura. Centura will be the surviving corporation
in the merger. The outstanding shares of First Coastal common stock will be
converted into shares of Centura common stock, no par value per share. First
Coastal stockholders will receive cash in lieu of any fractional shares.
-15-
<PAGE> 25
DATE, PLACE, AND TIME
The special meeting of First Coastal's stockholders will be held at
__________________, located at _________________, Virginia Beach, Virginia, at
__:__ _.m., local time, on ___________, 1999.
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
First Coastal's board of directors fixed the close of business on
___________, 1999, as the record date for determining those First Coastal
stockholders who are entitled to notice of and to vote at the special meeting.
Only holders of First Coastal common stock of record on the books of First
Coastal at the close of business on the record date have the right to receive
notice of and to vote at the special meeting. On the record date, there were
_________ shares of First Coastal common stock issued and outstanding held by
approximately ___ holders of record.
At the special meeting, First Coastal stockholders will have one vote
for each share of First Coastal common stock owned on the record date. The
holders of one-third of the outstanding shares of First Coastal common stock
entitled to vote at the special meeting must be present in order for a quorum to
exist at the special meeting.
To determine if a quorum is present, First Coastal intends to count the
following:
- shares of First Coastal common stock present at the special
meeting either in person or by proxy;
- shares of First Coastal common stock present in person at the
special meeting but not voting; and
- shares of First Coastal common stock for which it has received
proxies but with respect to which holders of shares have
abstained on any matter.
Approval of the agreement and plan of merger requires the affirmative vote of
more than two-thirds of the votes entitled to be cast at the special meeting.
Brokers who hold shares in street name for customers who are the
beneficial owners of such shares may not give a proxy to vote those shares
without specific instructions from their customers. Any abstention, non-voting
share or "broker non-vote" will have the same effect as a vote AGAINST the
approval of the agreement and plan of merger.
Properly executed proxies that First Coastal receives before the vote at
the special meeting that are not revoked will be voted in accordance with the
instructions indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH
PROXIES WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE
-16-
<PAGE> 26
AGREEMENT AND PLAN OF MERGER, AND THE PROXY HOLDER MAY VOTE THE PROXY IN ITS
DISCRETION AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE SPECIAL
MEETING. IF NECESSARY, THE PROXY HOLDERS MAY VOTE IN FAVOR OF A PROPOSAL TO
ADJOURN THE SPECIAL MEETING IN ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES
IF THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE PROPOSAL AT THE TIME OF THE
SPECIAL MEETING. HOWEVER, NO PROXY HOLDER WILL VOTE ANY PROXIES VOTED AGAINST
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER IN FAVOR OF A PROPOSAL TO ADJOURN
THE SPECIAL MEETING.
A First Coastal stockholder who has given a proxy solicited by First
Coastal's board of directors may revoke it at any time prior to its exercise at
the special meeting by (1) giving written notice of revocation to the Secretary
of First Coastal, (2) properly submitting to First Coastal a duly executed proxy
bearing a later date, or (3) attending the special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of proxies should be sent to: First Coastal Bankshares, Inc., 2101
Parks Avenue, Virginia Beach, Virginia 23451, Attention: Allene S. Cheatham,
Secretary.
On the record date, First Coastal's directors and executive officers,
including their immediate family members and affiliated entities owned _________
shares or approximately _____% of the outstanding shares of First Coastal common
stock, or ____% of the shares required to approve the merger. This number does
not include shares subject to options to purchase First Coastal common stock. On
the record date, Centura's directors and executive officers owned no shares of
First Coastal common stock. We expect that the directors and executive officers
of First Coastal will vote their shares in favor of the merger.
On the record date, Centura held no shares of First Coastal common stock
other than in a fiduciary capacity for others, or as a result of debts
previously contracted, and First Coastal held no shares of First Coastal common
stock other than in a fiduciary capacity for others with respect to which it has
sole or shared voting power.
SOLICITATION OF PROXIES
Directors, officers and employees of First Coastal may solicit proxies
by mail, in person, or by telephone or telegraph. They will receive no
additional compensation for such services. First Coastal may, however, hire a
professional proxy solicitor who will receive a fee for its services. First
Coastal may also make arrangements with brokerage firms and other custodians,
nominees, and fiduciaries, if any, for the forwarding of solicitation materials
to the beneficial owners of First Coastal common stock held of record by such
persons. First Coastal will reimburse any such brokers, custodians, nominees,
and fiduciaries for the reasonable out-of-pocket expenses incurred by them for
such services. Centura and First Coastal will share all expenses associated with
the solicitation of proxies, including the fees and expenses of a professional
proxy solicitor, and the other expenses associated with the special meeting,
except that Centura will pay expenses related to the printing and mailing of
this proxy statement-prospectus, as provided in the Agreement. See "DESCRIPTION
OF TRANSACTION -- Expenses and Fees."
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<PAGE> 27
DISSENTERS' RIGHTS
You do not have dissenters' rights in the merger.
RECOMMENDATION
First Coastal's board of directors has unanimously approved the
agreement and plan of merger and believes that the proposal to approve the
agreement and plan of merger is in the best interests of First Coastal and its
stockholders. First Coastal's board of directors recommends that you vote FOR
approval of the agreement and plan of merger.
DESCRIPTION OF TRANSACTION
The following information describes material aspects of the merger. This
description does not provide a complete description of all the terms and
conditions of the agreement and plan of merger. It is qualified in its entirety
by the Appendices hereto, including the text of the agreement and plan of
merger, which is attached as Appendix A to this proxy statement-prospectus. The
agreement and plan of merger are incorporated herein by reference. You are urged
to read the Appendices in their entirety.
THE MERGER
The agreement and plan of merger provides for the acquisition of First
Coastal by Centura pursuant to the merger of First Coastal with and into
Centura. Centura will be the surviving corporation resulting from the merger.
WHAT YOU WILL RECEIVE IN THE MERGER
If we complete the merger, you will receive .34 of a share of Centura
common stock in exchange for each of your shares of First Coastal common stock
unless this exchange ratio is adjusted as described below.
If the average of the closing prices (the "average closing price") of
Centura common stock for the 10 consecutive full trading days ending at the
close of trading on the third trading day preceding the date on which the merger
is completed is less than $58.7563 and more than or equal to $51.8438, then each
share of First Coastal common stock will be converted into that multiple of a
Centura share equal to the number obtained by dividing the product of .34 and
$58.7563 by the average closing price.
Similarly, if the average of closing price of Centura common stock over
such trading period is greater than $79.4938 and less than or equal to $86.4063,
then each share of First Coastal common
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<PAGE> 28
stock will be converted into that multiple of a Centura share equal to the
number obtained by dividing the product of .34 and $79.4938 by the average
closing price.
The chart below shows the exchange ratio and the value you will receive
for each of your shares of First Coastal common stock as they relate to the
price of Centura common stock.
<TABLE>
<CAPTION>
Average Value per First Coastal
Closing Price Exchange Ratio share of common stock
----------------------- ------------------------ -------------------------------
<S> <C> <C>
$51.8438 .3853 $19.98
------------------------------------------------------------------------------------------
52 .3842 19.98
------------------------------------------------------------------------------------------
53 .3769 19.98
------------------------------------------------------------------------------------------
54 .3699 19.98
------------------------------------------------------------------------------------------
55 .3632 19.98
------------------------------------------------------------------------------------------
56 .3567 19.98
------------------------------------------------------------------------------------------
57 .3505 19.98
------------------------------------------------------------------------------------------
58 .3444 19.98
------------------------------------------------------------------------------------------
58.7563 .34 19.98
------------------------------------------------------------------------------------------
59 .34 19.98
------------------------------------------------------------------------------------------
60 .34 20.06
------------------------------------------------------------------------------------------
61 .34 20.74
------------------------------------------------------------------------------------------
62 .34 21.08
------------------------------------------------------------------------------------------
63 .34 21.42
------------------------------------------------------------------------------------------
64 .34 21.76
------------------------------------------------------------------------------------------
65 .34 22.10
------------------------------------------------------------------------------------------
66 .34 22.44
------------------------------------------------------------------------------------------
67 .34 22.78
------------------------------------------------------------------------------------------
68 .34 23.12
------------------------------------------------------------------------------------------
69 .34 23.46
------------------------------------------------------------------------------------------
70 .34 23.80
------------------------------------------------------------------------------------------
71 .34 24.14
------------------------------------------------------------------------------------------
72 .34 24.48
------------------------------------------------------------------------------------------
73 .34 24.82
------------------------------------------------------------------------------------------
74 .34 25.16
------------------------------------------------------------------------------------------
75 .34 25.50
------------------------------------------------------------------------------------------
76 .34 25.84
------------------------------------------------------------------------------------------
77 .34 26.18
------------------------------------------------------------------------------------------
78 .34 26.52
------------------------------------------------------------------------------------------
79 .34 26.86
------------------------------------------------------------------------------------------
79.4938 .34 27.03
------------------------------------------------------------------------------------------
80 .3378 27.03
------------------------------------------------------------------------------------------
81 .3337 27.03
------------------------------------------------------------------------------------------
82 .3296 27.03
------------------------------------------------------------------------------------------
83 .3256 27.03
------------------------------------------------------------------------------------------
84 .3218 27.03
------------------------------------------------------------------------------------------
85 .3180 27.03
------------------------------------------------------------------------------------------
86 .3143 27.03
------------------------------------------------------------------------------------------
86.4063 .3128 27.03
------------------------------------------------------------------------------------------
</TABLE>
If the average closing price of Centura common stock for the
10 consecutive full trading days ending at the close of the trading on the third
to last trading day preceding the date on which the merger is completed is
greater than $86.4063, the First Coastal board of directors may terminate the
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<PAGE> 29
agreement and plan of merger without another stockholder vote. Similarly, if
such average closing price is less than $51.8438, Centura may terminate the
agreement and plan of merger.
Based on an exchange ratio of .34, upon completion of the merger,
Centura will issue approximately 1,848,849 shares of its common stock to First
Coastal stockholders, assuming all options have been exercised. After the
merger, Centura would then have outstanding approximately 28,409,113 shares of
common stock based on the number of shares of Centura common stock outstanding
on September 30, 1998 (not including shares Centura may issue pursuant to the
exercise of Centura stock options or for other purposes).
Centura will not issue any fractional part of a share of common stock.
Rather, Centura will pay cash (without interest) in an amount equal to such
fractional part of a share of Centura common stock multiplied by the closing
price of Centura common stock on the New York Stock Exchange (as reported by The
Wall Street Journal) on the last trading day before the merger becomes
effective.
The actual market value of a share of Centura common stock at the
effective time of the merger and at the time certificates for those shares are
delivered to First Coastal stockholders may be more or less than the average
closing price used to determine the number of shares of Centura common stock
that you will receive in exchange for each of your shares of First Coastal
common stock. You are urged to obtain current market quotations for Centura
common stock. See "COMPARATIVE MARKET PRICES AND DIVIDENDS."
EFFECT OF THE MERGER ON FIRST COASTAL OPTIONS
When the merger becomes effective, each option granted under First
Coastal's stock option plan that is outstanding, whether or not exercisable,
will become an option to purchase Centura common stock. Centura will assume each
option in accordance with the terms of First Coastal's stock option plans and
stock option or other agreement that evidences the option and will deliver
Centura common stock upon the exercise of each option. After the merger becomes
effective,
(1) Centura and its Compensation Committee will be substituted for
First Coastal and the Committee of First Coastal's board of
directors administering First Coastal's plans;
(2) each option assumed by Centura may be exercised only for shares
of Centura common stock;
(3) the number of shares of Centura common stock subject to the
option will be equal to the number of shares of First Coastal
common stock subject to the option immediately before the merger
becomes effective multiplied by the exchange ratio and rounding
down to the nearest whole share; and
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<PAGE> 30
(4) the per share exercise price under each the option will be
adjusted by dividing it by the exchange ratio and rounding up to
the nearest cent.
Notwithstanding the foregoing, each First Coastal option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code.
For information with respect to stock options held by First Coastal's
management, see "-- Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Centura and First Coastal have not and do not intend to seek a ruling
from the Internal Revenue Service ("IRS") as to the federal income tax
consequences of the merger. Instead, Centura and First Coastal have agreed to
obtain the opinion of counsel, Alston & Bird LLP, as to certain of the expected
federal income tax consequences of the merger. A copy of this opinion is
attached as an exhibit to the registration statement.
The following is a discussion of the anticipated federal income tax
consequences of the merger to stockholders of First Coastal. This discussion
does not address, among other matters:
(1) state, local, or foreign tax consequences of the merger;
(2) federal income tax consequences to First Coastal stockholders
who are subject to special rules under the Internal Revenue
Code, such as foreign persons, tax-exempt organizations,
insurance companies, financial institutions, dealers in stocks
and securities, and persons who do not own such stock as a
capital asset;
(3) federal income tax consequences affecting shares of First
Coastal common stock acquired upon the exercise of stock
options, stock purchase plan rights, or otherwise as
compensation;
(4) the tax consequences to holders of warrants, options, or other
rights to acquire shares of such stock;
(5) the tax consequences of Centura and First Coastal of the
inclusion in income of the amount of the bad-debt reserve
maintained by First Coastal and/or its subsidiaries and any
other amounts resulting from any required change in accounting
methods; and
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<PAGE> 31
(6) the tax consequences of Centura and First Coastal of any income
and deferred gain recognized pursuant to Treasury Regulations
issued under Section 1502 of the Internal Revenue Code.
Assuming that the merger is consummated in accordance with the agreement
and plan of merger, it is anticipated that the following federal income tax
consequences will occur:
(1) The merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code.
(2) No gain or loss will be recognized by the stockholders of First
Coastal as a result of the exchange of all of the shares of
First Coastal common stock that they own solely for Centura
common stock pursuant to the merger, except that a gain or loss
will be recognized on the receipt of any cash in lieu of a
fractional share.
(3) The tax basis of Centura common stock to be received by the
stockholders of First Coastal, who exchange all of their First
Coastal common stock solely for Centura common stock in the
merger, will be the same as the tax basis of the First Coastal
common stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash
is received).
(4) The holding period of the Centura common stock to be received by
stockholders of First Coastal, who exchange all of their First
Coastal common stock solely for Centura common stock in the
merger, will include the holding period of the First Coastal
common stock surrendered in exchange therefor, provided the
First Coastal shares were held as a capital asset by the
stockholders of First Coastal on the date of the exchange.
(5) The payment of cash to stockholders of First coastal in lieu of
fractional share interests of Centura common stock will be
treated for federal income tax purposes as if the fractional
shares were distributed as part of the exchange and then were
redeemed by Centura. These cash payments will be treated as
having been received as distributions in full payment in
exchange for the Centura common stock redeemed, as provided in
Section 302 of the Internal Revenue Code.
The obligation of Centura and First Coastal to complete the merger is
conditioned on, among other things, receipt by Centura and First Coastal of an
opinion of Alston & Bird LLP, with respect to certain of the federal income tax
consequences of the merger. The conditions relating to the receipt of the tax
opinion may be waived by both Centura and First Coastal. Neither Centura nor
First Coastal currently intends to waive the conditions relating to the receipt
of the tax opinion. If the conditions relating to the receipt of the tax opinion
were waived and the material federal income tax consequences
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<PAGE> 32
of the merger were substantially different from those described in this proxy
statement-prospectus, First Coastal would resolicit the approval of its
stockholders prior to completing the merger.
Tax consequences of the merger may vary depending upon the particular
circumstances of each stockholder of First Coastal. Accordingly, stockholders of
First Coastal are urged to consult their own tax advisors as to the specific tax
consequences to them of the merger, including the applicability and effect of
state, local, and foreign tax laws.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND TO THE MERGER. As a unitary savings and loan holding company
that is incorporated under the laws of the Commonwealth of Virginia, First
Coastal periodically conducts a strategic review. During this review, First
Coastal regularly examines its strategic business alternatives, devoting
particular attention to the continuing consolidation and increasing competition
in the banking and financial services industries in the Virginia market. The
Virginia market is home to many large, aggressive regional commercial banking
entities, and the banking market in Virginia in particular has been subject to
significant consolidation in recent years. As a result, competition in the local
banking and financial services industries has intensified, especially for
thrifts like First Coastal where the bulk of its loan portfolio are 1-to-4
family residential real estate loans. In March 1998, when the price of First
Coastal's stock rose to a high of near $21.00 per share, First Coastal
recognized an opportunity for its stockholders to realize value in exchanging
shares of First Coastal for what could be relatively low priced shares of an
acquiror.
Consequently, in April 1998, First Coastal requested Trident Financial
Corporation (its investment advisor) to set up an initial meeting with Centura
regarding a possible business combination with Centura. On May 11, 1998, the
President of First Coastal and Trident met with Centura's management at
Centura's offices in Rocky Mount, North Carolina. Based on this meeting, First
Coastal instructed Trident to proceed further in the financial analysis as to
whether a business combination with Centura was economically feasible. On June
4, 1998, Trident met with First Coastal's ad hoc board committee (precursor to
planning committee) to discuss the state of the market, to provide a preliminary
valuation of First Coastal and to discuss strategic alternatives for First
Coastal. Specifically, at that meeting, Trident reported that because First
Coastal's funding mix included high percentages of wholesale funds (e.g., Jumbo
and brokered CD's, and borrowed funds), its future asset and earnings growth
would be limited. Although First Coastal stockholders have enjoyed healthy
returns on their investment in recent years, Trident surmised that it may be
difficult to continue to meet stockholder return expectations in the future.
On June 22, 1998, Trident met with the ad hoc committee to confirm the
valuation of First Coastal and to discuss the relative merits of negotiating a
merger with Centura. Based in part on this presentation, the ad hoc committee
determined to proceed with further examination of the potential business
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<PAGE> 33
combination. On June 25, 1998 First Coastal's board of directors created a
planning committee to continue exploring the potential business combination. In
early July 1998, First Coastal signed a confidentiality agreement with Centura
in order to exchange certain business and other confidential information. By
the end of July, Centura had delivered an initial indication of interest letter
to First Coastal. The planning committee then reviewed the letter including the
mechanics, operations, advantages and disadvantages of the proposal. Further
negotiations continued throughout August and September with the planning
committee meeting on August 4 and September 14, 1998, to discuss the status of
the negotiations. On October 1, 1998, at the recommendation of the planning
committee, the First Coastal board authorized the President of First Coastal to
negotiate the terms of a definitive merger agreement. During October 1998, the
parties continued negotiations on the terms of the agreement and plan of
merger, including the exchange ratio. On October 28, 1998, the agreement and
plan of merger was presented to the First Coastal board which unanimously
approved the agreement and plan of merger.
FIRST COASTAL'S REASONS FOR THE MERGER. The First Coastal board of
directors has determined that the merger is in the best interests of First
Coastal and its stockholders and has unanimously approved the agreement and plan
of merger. In reaching its determination, the First Coastal board of directors
considered a number of factors, without assigning any relative weights to such
factors, including, but not limited to, the following:
(1) First Coastal's board of directors analyzed information with
respect to the financial condition, results of operations,
business, and prospects of First Coastal and Centura.
(2) First Coastal's board of directors considered the written
opinion of Trident Financial Corporation that as of October 28,
1998, the exchange ratio of .34 of a share of Centura common
stock for each share of First Coastal common stock, as possibly
adjusted was fair to First Coastal stockholders from a financial
point of view. See "-- Opinion of First Coastal's Financial
Advisor" on page __.
(3) First Coastal's board of directors considered the current and
prospective economic environment and competitive and regulatory
constraints facing financial institutions of the size and nature
of First Coastal.
(4) First Coastal's board of directors considered the terms and
conditions of the agreement and plan of merger, including the
tax-free nature of the transaction, the stock option agreement,
and the other documents executed in connection with the merger.
(5) First Coastal's board of directors' review, based in part on
presentations by Trident Financial Corporation and the due
diligence reviews by management, as well as its financial and
legal advisors of the business, operations, financial condition,
earnings and prospects of Centura.
(6) First Coastal's board of directors' evaluation of the risks to
consummation of the merger, including, among others, the risks
associated with obtaining all necessary
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<PAGE> 34
regulatory approvals without the imposition of any condition
which differs from conditions customarily imposed in approving
acquisitions of the type contemplated by the agreement and plan
of merger and compliance with which would materially adversely
affect the reasonably anticipated benefits of the transactions
to Centura.
(7) First Coastal's board of directors considered the effect of the
merger on First Coastal's employees, customers, and the
communities it serves.
In view of the variety of factors considered in connection with its
evaluation of the merger, the First Coastal board of directors did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination.
THE BOARD OF DIRECTORS OF FIRST COASTAL HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND PLAN OF MERGER AND UNANIMOUSLY RECOMMENDS TO THE STOCKHOLDERS OF
FIRST COASTAL THAT YOU APPROVE AND ADOPT THE AGREEMENT AND PLAN OF MERGER AND
THE MERGER.
CENTURA'S REASONS FOR THE MERGER. In adopting the agreement and plan of
merger, and the merger, Centura's board of directors considered a number of
factors concerning the benefits of the merger. Without assigning any relative or
specific weights to the factors, Centura board of directors considered the
following additional material factors:
(1) a review, based in part on a presentation by Centura's
management, of
- the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of First
Coastal on an historical, prospective, and pro forma basis
and in comparison to other financial institutions in the
area,
- the demographic, economic, and financial characteristics
of the markets in which First Coastal operates, including
existing competition, history of the market areas with
respect to financial institutions, and average demand for
credit, on historical and prospective basis, and
- the results of Centura's due diligence review of First
Coastal; and
(2) a variety of factors affecting and relating to the overall
strategic focus of Centura.
Centura's board of directors determined that the merger was in the best
interests of Centura and its stockholders, and it unanimously approved the
proposed merger on August 19, 1998. Upon authorization of Centura's board of
directors, the executive committee of the board approved and adopted the
agreement and plan of merger on October 21, 1998, and the actions of the
executive committee were ratified by Centura's full board on November 18, 1998.
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<PAGE> 35
OPINION OF FIRST COASTAL'S FINANCIAL ADVISOR
First Coastal retained Trident Financial Corporation in July 1998 to act
as its financial advisor and to render a fairness opinion in connection with the
merger. As part of its engagement, Trident performed a valuation analysis of
First Coastal in an acquisition context. On June 4, 1998, Trident presented a
preliminary estimate of the acquisition value of First Coastal to the planning
committee of First Coastal's board of directors. On June 22, 1998, Trident
presented its complete valuation report to the planning committee. On October 1,
1998, Trident summarized the valuation report with the First Coastal's full
board of directors and discussed the indication of interest received from
Centura.
On October 28, 1998, Trident met with First Coastal's board of directors
to review the proposed terms of the agreement and plan of merger. At that time,
Trident presented a due diligence report to First Coastal's board of directors
summarizing the financial terms of the merger and providing updated market
information with respect to thrift mergers and acquisitions. Trident also
analyzed the advantages and disadvantages of the merger from a financial point
of view. In addition, Trident rendered its written opinion to First Coastal's
board of directors to the effect that, as of that date, the consideration to be
received by First Coastal's stockholders pursuant to the agreement and plan of
merger was fair to them from a financial point of view. The financial fairness
standard employed by Trident in rendering its opinion was whether such
consideration was within the range of the economic values of consideration that
companies having the characteristics of First Coastal and Centura might
negotiate in comparable circumstances, not whether the consideration proposed in
the agreement and plan of merger is at or approaching the higher end of such
range.
Trident confirmed and delivered its opinion to First Coastal's board of
directors as of the date of this proxy statement-prospectus that the
consideration to be received by the stockholders of First Coastal in the merger
is fair from a financial point of view, as of such date. A copy of the opinion,
which sets forth certain assumptions made, matters considered and limitations on
the reviews undertaken, is attached to this proxy statement-prospectus as
Appendix B. Trident has consented to the inclusion of such opinion and summaries
of the valuation report and due diligence report in this proxy
statement-prospectus.
TRIDENT'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF FIRST COASTAL
AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE
CONSIDERATION TO BE RECEIVED BY FIRST COASTAL'S STOCKHOLDERS BASED ON CONDITIONS
AS THEY EXISTED AND COULD BE EVALUATED AS OF THE DATE OF THE OPINION. TRIDENT'S
OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY FIRST COASTAL STOCKHOLDER AS
TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING, NOR DOES TRIDENT'S
OPINION ADDRESS THE UNDERLYING BUSINESS DECISION TO EFFECT THE MERGER. THIS
SUMMARY OF TRIDENT'S OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION, WHICH IS ATTACHED TO THIS PROXY STATEMENT-PROSPECTUS
AS APPENDIX B. STOCKHOLDERS ARE URGED TO READ TRIDENT'S OPINION IN ITS ENTIRETY
FOR A DESCRIPTION OF THE ASSUMPTIONS MADE AND MATTERS CONSIDERED AND THE LIMITS
ON THE REVIEW UNDERTAKEN IN RENDERING SUCH OPINION.
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<PAGE> 36
In connection with rendering its opinion, Trident reviewed and analyzed,
among other things, the following:
(1) The agreement and plan of merger;
(2) This proxy statement-prospectus;
(3) Certain publicly available information concerning First Coastal,
including the audited financial statements of First Coastal for
each of the years in the three-year period ended December 31,
1997, and the unaudited financial statements of First Coastal
for the nine months ended September 30, 1998;
(4) Certain publicly available information concerning Centura,
including the audited financial statements of Centura for each
of the years in the three-year period ended December 31, 1997,
and the unaudited financial statements of Centura for the nine
months ended September 30, 1998;
(5) Certain other internal information, primarily financial in
nature, concerning the business and operations of First Coastal
and Centura furnished to Trident by First Coastal and Centura
for purposes of Trident's analysis;
(6) Information with respect to the trading market for First Coastal
common stock and Centura common stock;
(7) Certain publicly available information with respect to other
companies that Trident believed to be comparable to First
Coastal and Centura and the trading markets for such other
companies' securities; and
(8) Certain publicly available information concerning the nature and
terms of other transactions that Trident considered relevant to
its inquiry.
Trident also met with certain officers and employees of First Coastal
and Centura to discuss the foregoing, as well as other matters which it believed
relevant to its inquiry, including the following:
(1) The current business operations, financial condition and future
prospects of First Coastal and Centura;
(2) The results of Trident's due diligence examination of Centura;
and
(3) The cost savings expected to result from the merger.
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<PAGE> 37
No limitations were imposed by either First Coastal or its board of
directors or management with respect to the investigation made or procedures
followed by Trident.
In its review and analysis and in arriving at its opinion, Trident
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to it by First Coastal, or that was publicly
available, the accuracy of the representations and warranties of the officers
and the employees of First Coastal and Centura with whom Trident held
discussions, and the accuracy of the representations and warranties of First
Coastal and Centura in the agreement and plan of merger, and did not attempt
independently to verify any such information. Trident further assumed that there
are no conditions in the regulatory approvals of the agreement and plan of
merger that will have a material adverse effect upon the contemplated economic
benefits of the merger. The financial information provided to Trident by First
Coastal was of the type normally produced by the management of First Coastal and
reviewed by First Coastal's board of directors at its regular meetings and the
board of directors, and management of First Coastal have represented to Trident
that they have no reason to believe that Trident's reliance thereon was
unreasonable. First Coastal's board of directors, however, did not specifically
review the information, assumptions and other information provided by management
to Trident for accuracy and completeness. Trident did not conduct a physical
inspection of the properties or facilities of First Coastal, nor did they make
or obtain any independent evaluations or appraisals of any of such properties or
facilities.
In conducting its analyses and arriving at its opinion as expressed
herein, Trident considered such financial and other factors as it deemed
appropriate under the circumstances including, among others, the following:
(1) The historical and current financial condition and results of
operations of First Coastal and Centura, including interest
income, interest expense, net interest income, net interest
margin, interest sensitivity, non-interest expense, earnings,
dividends, book value, return on assets, return on equity,
capitalization, the amount and type of non-performing assets and
the reserve for loan losses;
(2) The business prospects of First Coastal and Centura;
(3) The economies in First Coastal's and Centura's market areas;
(4) The historical and current market for First Coastal common stock
and for Centura common stock and for the equity securities of
certain other companies that Trident believed to be comparable
to First Coastal and Centura; and
(5) The nature and terms of certain other acquisition transactions
that Trident believed to be relevant.
-28-
<PAGE> 38
Trident also took into account its assessment of general economic,
market, financial and regulatory conditions and trends, as well as its knowledge
of the financial institutions industry, its experience in connection with
similar transactions, and its knowledge of securities valuation generally.
Trident's opinion necessarily was based upon conditions in existence and subject
to evaluation on the respective dates of its opinion. Trident's opinion is, in
any event, limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of First Coastal common stock in the
merger and does not address First Coastal's underlying business decision to
effect the merger.
The summaries set forth below reflect all the material analysis, factors
and assumptions considered by Trident and the material valuation methodologies
used by Trident in arriving at its opinion as to fairness described above. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial or summary description. Trident believes that its
analyses and the summary set forth below must be considered as a whole, and that
selecting portions of its analyses without considering all of the analyses, or
reviewing the summary without considering all factors and analyses, would create
an incomplete view of the processes underlying the analyses set forth in
Trident's reports and its opinion. Therefore, the ranges of valuations resulting
from any single analysis described below should not be taken to be Trident's
view of the actual value of First Coastal or the combined company. In performing
its analyses, Trident made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of First Coastal or Centura. The results of the
specific analyses performed by Trident may differ from First Coastal's or
Centura's actual values or actual future results as a result of changing
economic conditions, changes in company strategy and policies, as well as a
number of other factors. Such individual analyses were prepared to provide
valuation guidance solely as part of Trident's overall valuation analysis and
the determination of the fairness of the consideration to be paid to First
Coastal's stockholders. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at the present time or at any time in the future.
In addition, as described above, Trident's opinion and presentations to First
Coastal's board of directors were among the many factors taken into
consideration by First Coastal's board of directors in making its determination
to approve the agreement and plan of merger.
Trident met or engaged in discussions with First Coastal's board of
directors and its planning committee at various times between January 1998 and
October 1998 to present analyses contained in a series of reports which serve as
the basis for Trident's opinion. Two key reports presented by Trident were the
valuation report dated June 22, 1998, and the due diligence report dated October
28, 1998. The following is a brief summary of the valuation report presented by
Trident to the First Coastal's board of directors on June 22, 1998:
Financial Analysis of First Coastal. Trident examined First Coastal's
financial performance for the period December 31, 1995 through March 31, 1998,
by analyzing the composition of its balance sheet, adjusting and normalizing its
earnings, and calculating a variety of operating and financial ratios for First
Coastal. Trident compared First Coastal's deposit market share with other
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financial institutions operating in the same markets. Trident also studied the
trading market for First Coastal common stock and compared the performance of
First Coastal common stock over the preceding twelve months to the performance
of an index of thrift stocks and the Standard and Poor's 500 Index.
Peer Group Analysis. Trident evaluated First Coastal's strengths and
weaknesses by comparing the financial performance of First Coastal to that of
thrift institutions and commercial banks of similar size ($400 to $800 million
of assets) located in the Southeast based on regulatory financial information as
of December 31, 1997. This analysis compared a number of First Coastal's
historical financial ratios to those of the peer groups, including but not
limited to: (1) balance sheet composition; (2) asset quality and reserve
coverage; (3) income and expense ratios for the trailing four quarters; (4)
asset growth during the trailing four quarters; and (5) efficiency, measured in
assets per employee.
Comparison to Actively-Traded Thrifts. Trident compared First Coastal to
the following groups of actively-traded thrifts as of May 28, 1998: (1) all U.S.
thrifts; (2) Southeast thrifts; (3) Virginia thrifts; (4) thrifts with tangible
capital between 6% and 8%; (5) thrifts with a return on equity during the
trailing four quarters between 9% and 11%; (6) thrifts with a return on assets
during the trailing four quarters between .60% and .80%; (7) thrifts with a
total assets between $500 million and $700 million; and (8) thirteen
actively-traded thrifts Trident believed were most similar to First Coastal in
terms of size, capital structure, profitability and asset quality. Trident
compared First Coastal to the aforementioned groups of actively-traded thrifts
on the basis of its stock pricing, balance sheet composition, capital ratios,
asset quality and reserve coverage, asset and deposit growth, return on average
assets, return on average equity, and the components of earnings during the
trailing four quarters.
State of the Market. Trident briefly reviewed the current and historical
trading market for thrift and bank equities, and current and historical trends
in the acquisition markets for banks and thrifts. Trident focused on the
acquisition market for thrifts with particular attention to the segments of the
market which it believed to be the most relevant to First Coastal, such as
thrifts of similar size and profitability, thrifts with similar capital
structures and asset quality, and thrifts located in the same geographic region.
Control Valuation of First Coastal Common Stock. Trident estimated the
fair market value of First Coastal common stock in a merger. In valuing First
Coastal common stock, Trident utilized the income approach, the asset approach
and the market approach, and then reconciled the values derived therefrom.
Trident used an income method in its valuation of First Coastal by
capitalizing First Coastal's projected earnings contribution in a merger
context. In order to estimate First Coastal's earnings contribution, Trident
normalized First Coastal's reported earnings for the four quarters ended March
31, 1998, by excluding non-recurring income and expenses. Trident assumed cost
savings of 25% to 50% of total operating expenses could be realized as a result
of a merger. The
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earnings contribution is the sum of the normalized earnings and the after-tax
cost savings. The earnings contribution was then capitalized at rates between 5%
and 11%, to reflect discount rates between 13% and 17% and earnings growth rates
between 6% and 8%. The capitalization rates chosen were estimates of the
required rates of return for holders or prospective holders of shares of
financial institutions similar to the First Coastal, based on a number of
factors, including prevailing interest rates, the pricing ratios of publicly
traded financial institutions, the financial condition and operating results of
the First Coastal, as well as well as Trident's general knowledge of valuation,
the securities markets, and acquisition values in mergers of other financial
institutions. Trident adjusted the resulting values to reflect the cost of
terminating certain long-term contracts and benefit plans, and certain
merger-related expenses. Using the income approach, Trident established a
reference range of $14.25 to $24.75 per share.
The asset approach considers the market value of a company's assets and
liabilities, as well as any intangible value the company may have. Trident
estimated First Coastal's net asset value by adjusting the carrying value of its
assets and liabilities to reflect current market values. In addition, Trident
increased First Coastal's net asset value for the assumed exercise of
outstanding options to purchase First Coastal common stock, and reduced its net
asset value for the cost of terminating certain long-term contracts and benefit
plans, and other merger expenses. Based on the adjustments discussed above,
Trident estimated First Coastal's fully-diluted net asset value to be
approximately $53.9 million, or $9.92 per share. After determining First
Coastal's net asset value, Trident added an intangible premium to reflect the
estimated value of its customer relationships. Based on intangible ("core
deposit") premiums observed in the market for thrift acquisitions, as well as
Trident's knowledge of First Coastal, Trident applied premiums equal to 18% and
24% of core deposits to First Coastal's estimated fully-diluted net asset value.
Using the asset approach, Trident established a reference range of $19.75 to
$23.25 per share.
In the market approach, Trident analyzed certain median pricing ratios
(e.g., price to book value, price to tangible book value, price to reported
earnings, price to assets, and the premium paid over tangible book value as a
percentage of core deposits) resulting from selected completed thrift merger
transactions, as well as recently announced pending transactions. In applying
the market approach, Trident considered the pricing ratios for the following
groups of thrift merger transactions: (1) all pending thrift merger transactions
(57 transactions); (2) all pending thrift mergers announced during the 90 days
prior to June 15, 1998 (the date of the market data) (27 transactions); (3) all
pending thrift mergers involving thrifts located in the Southeast (7
transactions); (4) all pending thrift mergers in which the target thrift had
assets between $400 million and $800 million (8 transactions); (5) all pending
thrift mergers in which the aggregate consideration was between $80 million and
$120 million (5 transactions); (6) all pending thrift mergers in which the
target thrift had a return on assets of between .50% and .90% (23 transactions);
(7) all pending thrift mergers in which the target thrift had a return on equity
of between 8% and 12% (14 transactions); and (8) all pending thrift mergers in
which the target thrift had a tangible equity ratio of between 6% and 8% of
assets (20 transactions). Trident also considered the pricing ratios for seven
pending or completed thrift merger transactions in which the target thrift was
of similar size and capital structure as First Coastal,
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and in which the target thrift had similar profitability and asset quality.
Trident then compared a number of financial ratios for First Coastal to those of
the target thrift institutions.
Based on First Coastal's financial condition and results of operations,
as well as other factors, relative to the groups of thrift mergers noted above,
Trident chose ranges of pricing ratios to apply to First Coastal. Trident chose
price to book value ratios of 200% to 260%, resulting in per share values of
$18.00 to $23.25; price to tangible book value ratios of 200% to 260%, also
resulting in per share values of $18.00 to $23.25; price to earnings ratios of
22 to 26 times trailing four quarter earnings, resulting in per share values of
$18.75 to $22.00; price to assets ratios of 16% to 20%, resulting in per share
values of $20.00 to $25.00; and premiums over tangible book value as a
percentage of core deposits of 18% to 24%, resulting in per share values of
$19.75 to $23.50. Based on these derived ranges of value, Trident established a
reference range of $19.00 to $23.00 per share using the market approach.
Trident then reviewed the results from the three approaches, and after
consideration of all relevant facts, determined a final range of $19.00 to
$23.00 per share for the acquisition value of First Coastal. Trident did not
apply specific weights to the three individual approaches, but Trident gave
greater consideration to the asset and market approaches in its final range of
value for First Coastal.
Strategic Alternatives. Trident presented a list of the pros and cons of
various strategic alternatives open to First Coastal: (1) remain independent;
(2) merger of equals; (3) merger with a larger financial institution; and (4)
strategic alliance with Centura.
Prospective Acquirors. Trident presented First Coastal with a list of
other financial institutions with operations in the Southeast that it believed
to be prospective acquirors (a total of 14 companies). These prospective
acquirors were categorized based on Trident's perceived level of interest from
the acquiror and "fit" with First Coastal. Trident also presented summary
financial statements, stock price performance, peer group comparisons, a history
of mergers and acquisitions, and other information regarding Centura.
The following is a summary of the due diligence report presented to the
First Coastal's board of directors on October 28, 1998:
Summary of Proposed Transaction. Trident presented a summary of the
financial terms of the merger. Trident also compared the pricing ratios for the
merger with the median pricing ratios for selected groups of recently announced
thrift mergers and acquisitions. Trident discussed the advantages and
disadvantages of the merger from a financial point of view.
Review of Due Diligence Examination of Centura. Trident presented a
summary of its on-site due diligence examination of Centura. Centura's
historical balance sheets and income statements were presented, along with a
variety of financial ratios and graphs that analyzed Centura's financial
condition and operating results through September 30, 1998. Trident discussed
Centura's business strategy,
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strengths and weaknesses, profitability, growth, net interest margin,
non-interest income, operating expenses, intangible assets, borrowed funds,
market area, capital, asset quality and reserve coverage, concentrations of
credit and loan portfolio composition, use of derivatives, interest-rate risk,
foreign loans and investments, mortgage servicing rights, year 2000
preparations, regulatory exam results, subsidiary activities, culture,
technological expertise, stock pricing, recent bank analysts' reports, and other
issues.
Comparison to Actively-Traded Banks. Trident compared Centura to the
following groups of actively-traded banks as of October 26, 1998: (1) all U.S.
banks; (2) Southeast banks; (3) North Carolina banks; (4) banks with tangible
capital between 5% and 8%; (5) banks with a return on equity during the trailing
four quarters between 14% and 18%; (6) banks with a return on assets during the
trailing four quarters between 1.15% and 1.40%; (7) banks with a total assets
between $5 billion and $10 billion; and (8) twelve actively-traded banks Trident
believed were most similar to Centura in terms of size, capital structure,
profitability and asset quality. Trident compared Centura to the aforementioned
groups of actively-traded banks on the basis of its stock pricing, balance sheet
composition, capital ratios, asset quality and reserve coverage, asset and
deposit growth, return on average assets, return on average equity, and the
components of earnings.
Peer Group Analysis. Trident evaluated Centura's strengths and
weaknesses by comparing the financial performance of Centura to that of the
following groups of bank holding companies based on regulatory financial
information as of March 31, 1998: (1) all U.S. bank holding companies; (2) North
Carolina bank holding companies; (3) Southeast bank holding companies; (4) U.S.
bank holding companies of similar size ($5 to $10 billion of assets); and (5)
Southeast bank holding companies of similar size. This analysis compared a
number of Centura's historical financial ratios to those of the peer groups,
including but not limited to: (1) balance sheet composition; (2) key ratios; (3)
income and expense ratios for the trailing four quarters, the most recent
quarter, and the most recent calendar year; (4) historical ROAA and ROAE; and
(5) asset, loan, deposit and equity growth rates for selected periods.
Trident reported that during its investigation, Trident did not discover
any conditions that would prevent it from rendering its fairness opinion to
First Coastal's board of directors. As discussed above, Trident relied, without
independent verification, upon the accuracy and completeness of all of the
financial and other information provided by Centura.
Trident, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwriting, and valuations for corporate
and other purposes. Trident has extensive experience with the valuation of
financial institutions. First Coastal's board of directors selected Trident as
its financial advisor because Trident is a nationally recognized investment
banking firm specializing in financial institutions and because of its
substantial experience in transactions similar to the merger. Trident is not
affiliated with either First Coastal or Centura.
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For its services as financial advisor, First Coastal paid Trident a
retainer of $15,000 and a fee of $25,000 upon execution of the agreement and
plan of merger. An additional fee equal to .67% of the aggregate merger
consideration, less $40,000, will be payable to Trident upon consummation of the
merger (a balance due of approximately $796,500 based on a $70.00 per share
price for Centura). First Coastal has also agreed to reimburse Trident for its
reasonable out-of-pocket expenses and to indemnify Trident against certain
liabilities, including certain liabilities under federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the merger, the merger will become effective on the date and at the time
specified in the articles of merger reflecting the merger to be filed with the
Secretary of State in both North Carolina and Virginia. Unless Centura and First
Coastal agree otherwise, they will use reasonable efforts to cause the merger to
become effective on the date designated by Centura that is within 30 days after
the last to occur of:
(1) the effective date of the last consent of any regulatory
authority having authority over and approving or exempting the
merger (taking into account any required waiting period); and
(2) the date on which First Coastal's stockholders approve the
agreement and plan of merger.
Centura and First Coastal anticipate that the merger will become
effective on or about March 26, 1999. However, delays could occur.
Centura and First Coastal cannot assure you that the necessary
stockholder and regulatory approvals of the merger will be obtained or that
other conditions to consummation of the merger can or will be satisfied. Either
First Coastal's or Centura's board of directors may terminate the agreement and
plan of merger if the merger is not completed by April 30, 1999, unless it is
not completed because of the willful breach of the agreement and plan of merger
by the party seeking termination. See "-- Conditions to Consummation of the
Merger" and "-- Waiver, Amendment, and Termination."
DISTRIBUTION OF CENTURA STOCK CERTIFICATES
Promptly after the merger is completed, each former First Coastal
stockholder will be mailed a letter of transmittal and instructions for the
exchange of the certificates representing shares of First Coastal common stock
for certificates representing shares of Centura common stock.
You should not send in your certificates until you receive a letter of
transmittal and instructions.
After you surrender to the exchange agent certificates for First Coastal
common stock with a properly completed letter of transmittal, the exchange agent
will mail you a certificate or certificates
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representing the number of shares of Centura common stock to which you are
entitled and a check for the amount to be paid in lieu of any fractional share
(without interest), if any, together with all undelivered dividends or
distributions in respect of the shares of Centura common stock (without interest
thereon), if any. Centura will not be obligated to deliver the consideration to
you, as a former First Coastal stockholder, until you have surrendered your
First Coastal common stock certificates.
Whenever a dividend or other distribution is declared by Centura on
Centura common stock with a record date after the date on which the merger
became effective, the declaration will include dividends or other distributions
on all shares of Centura common stock that may be issued in the merger. However,
Centura will not pay any dividend or other distribution that is payable within
30 days after the effective date of the merger to any former First Coastal
stockholder who has not surrendered his or her First Coastal common stock
certificate until the holder surrenders the certificate. If any First Coastal
stockholder's common stock certificate has been lost, stolen, or destroyed, the
exchange agent will issue the shares of Centura common stock and any cash in
lieu of fractional shares upon the stockholder's submission of an affidavit
claiming the certificate to be lost, stolen, or destroyed by the stockholder of
record and the posting of a bond in such amount as Centura may reasonably direct
as indemnity against any claim that may be made against Centura with respect to
the certificate.
At the time the merger becomes effective, the stock transfer books of
First Coastal will be closed to First Coastal's stockholders and no transfer of
shares of First Coastal common stock by any stockholder will thereafter be made
or recognized. If certificates for shares of First Coastal common stock are
presented for transfer after the merger becomes effective, they will be canceled
and exchanged for shares of Centura common stock, a check for the amount due in
lieu of fractional shares, if any, and any undelivered dividends on the Centura
common stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
Centura and First Coastal are required to complete the merger only after
the satisfaction of various conditions. These conditions include:
(1) the holders of more than two-thirds of the outstanding shares of
First Coastal common stock must approve the agreement and plan
of merger;
(2) Centura and First Coastal must receive certain required
regulatory approvals;
(3) Centura and First Coastal must receive a written opinion of
counsel as to the tax-free nature of the merger;
(4) the SEC must declare the registration statement, registering the
shares of Centura common stock to be issued to First Coastal
stockholders in the merger, effective under the Securities Act
of 1933, as amended;
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(5) the shares of Centura common stock to be issued in the merger
must be approved for listing on the New York Stock Exchange,
subject to official notice of issuance;
(6) the representations and warranties of First Coastal and Centura
as set forth in the agreement and plan of merger must be
accurate as of the date of the agreement and plan of merger and
as of the date the merger becomes effective;
(7) First Coastal and Centura must perform all agreements and comply
with all covenants set forth in the agreement and plan of
merger,
(8) Centura and First Coastal must receive all other consents that
may be required to complete the merger or to prevent any default
under any contract or permit which would be reasonably likely to
have, individually or in the aggregate, a material adverse
effect on First Coastal or Centura;
(9) Centura and First Coastal must receive a letter as of the date
the merger becomes effective from KPMG Peat Marwick LLP to the
effect that the merger will qualify for pooling-of-interests
accounting treatment;
(10) the absence of any law or order or any action taken by any
court, governmental, or regulatory authority of competent
jurisdiction prohibiting or restricting the merger or making it
illegal;
(11) Centura must receive agreements from each person First Coastal
reasonably believes may be deemed an affiliate of First Coastal;
and
(12) certain other conditions must be satisfied, including the
receipt of various certificates from the officers of First
Coastal and Centura.
We cannot assure you as to when or if all of the conditions to the
merger can or will be satisfied or waived by the party permitted to do so. If
the merger is not effected on or before April 30, 1999, the board of directors
of either First Coastal or Centura may terminate the agreement and plan of
merger and abandon the merger. See "-- Waiver, Amendment, and Termination."
REGULATORY APPROVAL
Centura must receive certain regulatory approvals before the merger can
be completed. There is no assurance that these regulatory approvals will be
obtained or when they will be obtained.
It is a condition to the completion of the merger that Centura and First
Coastal receive all necessary regulatory approvals to the merger, without the
imposition by any regulator of any condition that, in the reasonable judgment of
the Centura board of directors, would so materially adversely
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impact the financial or economic benefits of the merger as to make consummation
of the merger inadvisable. There can be no assurance that the regulatory
approvals of the merger will not contain terms, conditions or requirements which
would have such an impact.
First Coastal and Centura are not aware of any material governmental
approvals or actions that are required to complete the merger, except as
described below. Should any other approval or action be required, Centura and
First Coastal contemplate that they would seek such approval or action.
The merger is subject to the prior approval of the Federal Reserve. In
evaluating the merger, the Federal Reserve must consider, among other factors,
the financial and managerial resources and future prospects of the institutions
and the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve from approving the merger if:
(1) it would result in a monopoly or be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize
the business of banking in any part of the United States; or
(2) its effect in any section of the country could be to
substantially lessen competition or to tend to create a
monopoly, or if it would result in a restraint of trade in any
other manner.
But, if the Federal Reserve should find that any anticompetitive effects
are outweighed clearly by the public interest and the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served, it may approve the merger. The merger may not be consummated until the
30th day (which the Federal Reserve may reduce to 15 days) following the date of
the Federal Reserve approval, during which time the United States Department of
Justice would be afforded the opportunity to challenge the transaction on
antitrust grounds. The commencement of any antitrust action would stay the
effectiveness of the approval of the agencies, unless a court of competent
jurisdiction should specifically order otherwise.
The merger is also subject to the prior approval of the Virginia Bureau
of Financial Institutions and the North Carolina Banking Commission.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the boards of directors of Centura and
First Coastal may agree in writing to amend the agreement and plan of merger,
whether before or after First Coastal's stockholders have approved it; provided,
however, that after such approval by the First Coastal stockholders, no
amendments may be made which modify the manner or basis of the consideration to
be received by the holders of the First Coastal common stock without further
approval of such stockholders. In addition, before or at the time the merger
becomes effective, either First Coastal or Centura, or both, may waive any
default in the performance of any term of the agreement and plan of merger by
the other party or may waive or extend the time for the compliance or
fulfillment by the
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other party of any and all of its obligations under the agreement and plan of
merger. In addition, either Centura or First Coastal may waive any of the
conditions precedent to its obligations under the agreement and plan of merger,
unless a violation of any law or governmental regulation would result. To be
effective, a waiver must be in writing and signed by an authorized officer of
First Coastal or Centura, as the case may be.
At any time before the merger becomes effective, the boards of directors
of Centura and First Coastal may agree to terminate the agreement and plan of
merger. In addition, either First Coastal's board of directors or Centura's
board of directors may terminate the agreement and plan of merger in the
following circumstances:
(1) in certain circumstances, upon the inaccuracy of any
representation or warranty of a party contained in the agreement
and plan of merger if the inaccuracy cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such inaccuracy and which inaccuracy would
provide the terminating party the ability to refuse to
consummate the merger under the applicable standards set forth
in the agreement and plan of merger (provided that the
terminating party is not then in breach of any representation or
warranty contained in the agreement and plan of merger under the
applicable standard set forth in the agreement and plan of
merger or in material breach of any covenant or other agreement
contained in the agreement and plan of merger);
(2) if a material breach by the other party of any covenant or
agreement contained in the agreement and plan of merger cannot
be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach (provided
that the terminating party is not then in breach of any
representation or warranty contained in the agreement and plan
of merger under the applicable standard set forth in the
Agreement or in material breach of any covenant or other
agreement contained in the agreement and plan of merger);
(3) if any consent of any regulatory authority required to complete
the merger or other transactions contemplated by the agreement
and plan of merger has been denied by final nonappealable
action, or if any action taken by such authority is not appealed
within the time limit for appeal;
(4) if the stockholders of First Coastal fail to approve the
agreement and plan of merger and the merger at the special
meeting; or
(5) if the merger is not consummated by April 30, 1999, provided
that the failure to consummate is not caused by any willful
breach of the agreement and plan of merger by the party electing
to terminate; and
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First Coastal's and Centura's board of directors may also terminate the
agreement and plan of merger pursuant to the relevant provisions of the
agreement and plan of merger described in " -- What You Will Receive in the
Merger" on page __.
If the merger is terminated, the agreement and plan of merger will
become void and have no effect, except that certain provisions of the agreement
and plan of merger, including those relating to the obligations to share certain
expenses and maintain the confidentiality of certain information obtained, will
survive. Termination of the agreement and plan of merger will not relieve any
breaching party from liability for any uncured willful breach of a
representation, warranty, covenant, or agreement. The Stock Option Agreement is
governed by its own terms as to its termination. See "-- Expenses and Fees" and
"-- Stock Option Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER
The Agreement obligates First Coastal to conduct its business only in
the usual, regular, and ordinary course before the merger becomes effective and
imposes certain limitations on the operations of First Coastal and its banking
subsidiaries. These items are listed in Article 7 of the Agreement which is
attached as Appendix A to this proxy statement-prospectus. The Agreement
authorizes First Coastal to declare and pay regular quarterly dividends on the
First Coastal common stock at a rate of $.06 per share with usual record and
payment dates which conform to past practice. The Agreement contemplates that
the merger will be timed to occur at such a time that the First Coastal
stockholders will not fail to receive a dividend during a quarterly period, nor
will they receive a dividend on both their First Coastal common stock and the
Centura common stock they receive in the merger during the same quarterly
period.
First Coastal has also agreed that neither it nor any of its
representatives will directly or indirectly solicit any proposal for the
acquisition of First Coastal or, except to the extent necessary to comply with
the fiduciary duties of First Coastal's board of directors as advised by its
counsel, furnish any non-public information concerning First Coastal that it is
not legally obligated to furnish, negotiate with respect to, or enter into any
contract with respect to, any proposal to acquire First Coastal.
Centura and First Coastal have also agreed not to take any action that
would (1) materially adversely affect their ability to obtain any consents
required for the merger, or (2) materially adversely affect their ability to
perform their covenants and agreements under the Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The merger will not change the present management team or board of
directors of Centura, except that Floyd E. Kellam, Jr., a member of First
Coastal's board of directors will join Centura's board of directors after the
merger. Information concerning the management of Centura is included in the
documents incorporated by reference in this proxy statement-prospectus. See
"WHERE YOU CAN
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FIND MORE INFORMATION." For additional information regarding the interests of
certain persons in the merger, see "-- Interests of Certain Persons in the
Merger."
Centura will be the surviving corporation resulting from the merger and
will continue to be governed by the laws of the state of North Carolina and
operate in accordance with its articles of incorporation. Also, immediately
following the merger, First Coastal Bank will merge into Centura Bank. As a
result of the bank merger, the operations of First Coastal Bank will be
conducted through Centura Bank.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of First Coastal's management and First
Coastal's board of directors may be deemed to have certain interests in the
merger that are in addition to their interests as stockholders of First Coastal
generally. First Coastal's board of directors was aware of these interests and
considered them, among other matters, in approving the agreement and plan of
merger.
STOCK OPTIONS. Certain directors and executive officers of First Coastal
hold options to purchase First Coastal common stock. These options were issued
under First Coastal's and First Coastal Bank's stock option plans. If the merger
is consummated, those options (whether or not they are exercisable at that time)
will be converted into options to purchase Centura common stock. Those options
which would not otherwise be exercisable at the effective time of the merger,
will become exercisable as a result of the merger.
The following table sets forth, with respect to (1) each executive
officer, (2) a group consisting of all the executive officers, and (3) First
Coastal's non-executive officer directors as a group, the number of shares of
First Coastal common stock covered by outstanding First Coastal options held by
such persons as of the record date.
<TABLE>
<CAPTION>
Options Currently Weighted Average Aggregate Value
Options Held Exerciseable Exercise Per Option of Option (1)
---------------- ------------------ ----------------------- -----------------
<S> <C>
John A.B. Davies, Jr. ..........
Dennis R. Stewart ..............
John M. Chattleton .............
John M. Reddecliff .............
Executive Officer Group
(four persons) ..............
Non-Executive Officer
Director Group (__ persons)..
</TABLE>
- --------------------------
(1) Based on the closing price of First Coastal common stock of $_____ as
quoted on the Nasdaq National Market on the record date.
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When the merger becomes effective, each option granted under First
Coastal's and First Coastal Bank's stock option plans that is outstanding,
whether or not exercisable will become an option to purchase Centura common
stock. See "-- Effect of the Merger on First Coastal Options."
EMPLOYMENT AGREEMENTS. John A.B. Davies, Jr., Dennis R. Stewart, John M.
Chattleton and John M. Reddecliff, each have employment agreements with First
Coastal Bank. Each employment agreement contains a provision stating that in the
event of termination of employment in connection with, or within one year after,
any change in control of First Coastal or First Coastal Bank, the employee will
be paid a termination payment in a lump sum amount based on the employee's
annual compensation. The merger will constitute a change in control of First
Coastal and, accordingly, if each individual's employment is terminated within
one year of the merger, these payments will be triggered. In addition, these
payments may be triggered by the voluntary termination of employment following
the merger under certain circumstances set forth in the employment agreements.
The following chart shows you the amount of the termination payment that each
First Coastal executive officer is entitled to:
<TABLE>
<CAPTION>
Executive Officer Payment Amount
--------------------- -----------------
<S> <C>
John A.B. Davis, Jr. $
Dennis R. Stewart $
John M. Chattleton $
John M. Reddecliff $
</TABLE>
Centura has offered employment to Messrs. Davies and Reddecliff.
Accordingly, it is anticipated that the termination payments will be made to the
other executive officers. In the event that Messrs. Davies and Reddecliff accept
Centura's offer, they will be required to enter into employment agreements with
Centura and to waive the termination payments provided for in their current
employment agreements.
The employment agreements that Mr. Davies and Mr. Reddecliff would
enter into if they choose to work with Centura provide the following benefits:
(1) A base salary of $250,000 for Mr. Davies and a base salary of
$125,000 for Mr. Reddecliff;
(2) A bonus for both Mr. Davies and Mr. Reddecliff targeted to be 20%
of the employee's base salary;
(3) Life insurance of not less than $550,000 for Mr. Davies and not
less than $400,000 for Mr. Reddecliff;
(4) Participation in Centura's Supplemental Executive Retirement Plan
and Centura's Discounted Stock Option/Deferred Compensation
Program; and
(5) Other standard employee benefits commensurate with the employee's
position.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. For a period of six
years after the completion of the merger, Centura has agreed to indemnify the
present and former directors, officers, employees, and agents of First Coastal
and its subsidiaries against certain liabilities arising out of actions or
omissions occurring at or prior to the time the merger becomes effective
(including the merger) to the full extent permitted under Virginia law, and
First Coastal's articles of incorporation and bylaws. Centura has also agreed to
use its reasonable efforts to maintain in effect for a period of one year after
completion of the merger, First Coastal's existing directors' and officers'
liability insurance policy.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
recorded amounts of the assets and liabilities of First Coastal will be carried
forward at their previously recorded amounts and the consolidated financial
statements of Centura for all periods presented will be restated to include the
financial condition and results of operations of First Coastal.
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In order for the merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding First Coastal
common stock must be exchanged for Centura common stock with substantially
similar terms. There are certain other criteria that must be satisfied in order
for the merger to qualify as a pooling-of-interests. Some of the criteria cannot
be satisfied until after the merger becomes effective. In addition, it is a
condition to closing the merger that KPMG Peat Marwick LLP deliver a letter to
Centura and First Coastal to the effect that the merger will qualify for
pooling-of-interests accounting treatment.
Certain conditions will be imposed on the exchange of First Coastal
common stock for Centura common stock in the merger by affiliates of First
Coastal. Certain restrictions will also be imposed on the transferability of the
Centura common stock received by those affiliates in the merger. These
conditions and restrictions will be imposed in order, among other things, to
ensure the availability of pooling-of-interests accounting treatment. For
information concerning these conditions and restrictions see "-- Resales of
Centura Common Stock."
EXPENSES AND FEES
Centura and First Coastal will each pay its own expenses in connection
with the merger, including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that Centura will bear and
pay the filing fees and printing costs incurred in connection with the
registration statement and this proxy statement-prospectus.
RESALES OF CENTURA COMMON STOCK
Centura common stock to be issued to stockholders of First Coastal in
the merger will be registered under the Securities Act of 1933, as amended. All
shares of Centura common stock received by stockholders of First Coastal in the
merger will be freely transferable after the merger by those stockholders of
First Coastal who are not considered to be "affiliates" of First Coastal or
Centura. "Affiliates" generally are defined as persons or entities who control,
are controlled by, or are under common control with First Coastal or Centura at
the time of the special meeting (generally, executive officers, directors, and
10% or greater stockholders).
Rule 145 promulgated, under the Securities Act of 1933, as amended,
restricts the sale of Centura common stock received in the merger by affiliates
of First Coastal and certain of their family members and related entities. Under
the rule, during the first calendar year after the merger becomes effective,
affiliates of First Coastal or Centura may resell publicly the Centura common
stock they receive in the merger but only within certain limitations as to the
amount of Centura common stock they can sell in any three-month period and as to
the manner of sale. After the one-year period, affiliates of First Coastal who
are not affiliates of Centura may resell their shares without restriction.
Centura must continue to satisfy its reporting requirements under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") in order for affiliates to
resell, under Rule 145, shares of Centura
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common stock received in the merger. Affiliates also would be permitted to
resell Centura common stock received in the merger pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or an
available exemption from the Securities Act of 1933, as amended, registration
requirements. This proxy statement-prospectus does not cover any resales of
Centura common stock received by persons who may be deemed to be affiliates of
First Coastal or Centura.
The SEC's guidelines regarding qualifying for the "pooling-of-interests"
method of accounting also limit sales of shares of Centura and First Coastal by
their affiliates in connection with the merger. The SEC's guidelines indicate
that the "pooling-of-interests" method of accounting generally will not be
challenged on the basis of sales by affiliates of the acquiring or acquired
company if such affiliates do not dispose of any of the shares of the
corporation they own, or shares of a corporation they receive in connection with
a merger, during the period beginning 30 days before the merger is consummated
and ending when financial results covering at least 30 days of post-merger
operations of the combined companies have been published.
First Coastal has agreed to use its reasonable efforts to cause each
person who may be deemed to be an affiliate of First Coastal to execute and
deliver to Centura not later than 30 days prior to the effective time of the
merger, an agreement intended to ensure compliance with the Securities Act of
1933, as amended, and to preserve the ability of the merger to be accounted for
as a "pooling-of-interests." Each First Coastal affiliate must agree not to
sell, pledge, transfer, or otherwise dispose of any First Coastal common stock
held by the affiliate except as contemplated by the Agreement or the affiliate
agreement. In addition, each First Coastal affiliate must agree not to sell,
pledge, transfer or otherwise dispose of any Centura common stock received in
the merger (1) except in compliance with the Securities Act of 1933, as amended,
and the rules and regulations under the Securities Act of 1933, as amended, and
(2) until such time as financial results covering 30 days of combined operations
of Centura and First Coastal have been published. Prior to publication of such
results, Centura will not transfer on its books any shares of Centura common
stock received by an affiliate in the merger. The stock certificates
representing Centura common stock issued to affiliates in the merger may bear a
legend summarizing these restrictions on transfer. See "-- Conditions to
Consummation of the Merger."
STOCK OPTION AGREEMENT
As an inducement and a condition to Centura entering into the agreement
and plan of merger, First Coastal and Centura entered into the stock option
agreement, under which First Coastal granted Centura an option to purchase up to
992,321 shares (representing 19.9% of the shares issued and outstanding before
giving effect to the exercise of such option) of First Coastal common stock
under the circumstances described below, at a cash price per share equal to
$18.65, subject to possible adjustment in certain circumstances. This
description of the stock option agreement and the option does not purport to be
complete and is qualified in its entirety by reference to the stock option
agreement, which is filed as an exhibit to the registration statement of which
this proxy statement-prospectus is a part and incorporated herein by reference.
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Subject to applicable law and regulatory restrictions, Centura may
exercise the option, in whole or in part, if, but only if, a Purchase Event (as
defined below) occurs prior to the option's termination; provided that Centura,
at the time, is not in material breach of the stock option agreement or the
agreement and plan of merger. As defined in the stock option agreement,
"Purchase Event" means either of the following events:
(1) without Centura's written consent, First Coastal authorizing,
recommending, publicly proposing, or publicly announcing an
intention to authorize, recommend, or propose or entering into
an agreement with any third party to effect any of the
following:
- a merger, consolidation, or similar transaction involving
First Coastal or any of its subsidiaries (other than
transactions solely between First Coastal's subsidiaries
or First Coastal and one or more of its subsidiaries, as
long as the First Coastal common stock outstanding before
the transaction equal at least 75% of the voting
securities of the surviving corporation in the
transaction),
- except as permitted by the agreement and plan of merger,
the disposition, by sale, lease, exchange, or otherwise,
of 25% or more of the consolidated assets of First Coastal
and its subsidiaries, or
- the issuance, sale, or other disposition (including by way
of merger, consolidation, share exchange or any similar
transaction) of securities representing 25% or more of the
voting power of First Coastal or any of its subsidiaries;
or
(2) any third party acquiring beneficial ownership, or the right
to acquire beneficial ownership of, or the formation of any
group (as defined under the Securities and Exchange Act of
1934) that beneficially owns or has the right to acquire
beneficial ownership of, 25% or more of the outstanding shares
of First Coastal common stock.
The option will terminate upon the earliest of the following:
(1) the effective time of the merger;
(2) termination of the agreement and plan of merger in accordance
with the terms thereof prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event (other than a
termination of the agreement and plan of merger under certain
circumstances involving a willful breach by First Coastal) (a
"Default Termination");
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(3) 12 months after termination of the agreement and plan of
merger by Centura pursuant to a Default Termination; and
(4) 12 months after termination of the agreement and plan of
merger (other than pursuant to a Default Termination)
following the occurrence of a Purchase Event or a Preliminary
Purchase Event.
As defined in the stock option agreement, "Preliminary Purchase Event"
includes either of the following events:
(1) any third party commencing or filing of a registration
statement under the Securities Act of 1933 pertaining to a
tender offer or exchange offer to purchase any shares of First
Coastal common stock if, upon consummation of that offer, that
person would own or control 25% or more of the
then-outstanding shares of First Coastal common stock; or
(2) the stockholders of First Coastal failing to approve the
agreement and plan of merger at the special meeting, the
failure to have the special meeting or the cancellation of the
meeting before the agreement and plan of merger is terminated,
or the withdrawal or modification by First Coastal's Board of
Directors in a manner adverse to Centura of the recommendation
of the Board of Directors with respect to the agreement and
plan of merger, in each case, after public announcement that a
third party has done any of the following:
- made a proposal to engage in an acquisition transaction,
- commenced a tender offer or filed a registration statement
under the Securities Act of 1933 with respect to an exchange
offer, or
- filed an application or given a notice under certain
federal statutes for approval or consent to engage in an
acquisition transaction.
In the event of any change in First Coastal common stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, or similar transaction, the type and number of securities subject to
the option, and the purchase price of the option securities would be adjusted
appropriately. In the event that First Coastal increases (other than pursuant to
an event described in the preceding sentence), the number of shares of First
Coastal common stock subject to the option will be adjusted so that, after such
issuance, it, together with any shares of First Coastal common stock previously
issued pursuant to the stock option agreement, equals the lesser of (1) 19.9% of
the number of shares then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the option, and (2) the minimum number
of
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shares of First Coastal common stock which when added to any other shares of
First Coastal common stock that Centura may own does not cause any Virginia
anti-takeover laws to be applied to the merger.
Upon the occurrence of a Repurchase Event (as defined below) that occurs
prior to the exercise or termination of the option, at the request of Centura,
First Coastal will, subject to regulatory restrictions, be obligated to
repurchase the option and any shares of First Coastal common stock therefor
purchased pursuant to the stock option agreement at a specified price. Centura
must deliver its request that First Coastal repurchase the option within 12
months of the first occurrence of a Repurchase Event, or First Coastal will not
be obligated to comply with the request.
As defined in the stock option agreement, "Repurchase Event" shall occur
if
(1) any person (other than Centura or any Centura subsidiary)
shall have acquired beneficial ownership or the right to
acquire beneficial ownership, or any "group" (as such term is
defined under the Securities and Exchange Act of 1934) shall
have been formed which beneficially owns or has the right to
beneficially own 50% or more of the then-outstanding shares of
First Coastal common stock, or
(2) any of the following transactions is consummated:
- First Coastal consolidates with or merges into any person,
other than Centura or one of Centura's subsidiaries, and
is not the continuing or surviving corporation of such
consolidation or merger;
- First Coastal permits any person, other than Centura or
one of Centura's subsidiaries, to merge into First Coastal
and First Coastal shall be the continuing or surviving
corporation, but, in connection with such merger, the
then-outstanding shares of First Coastal common stock
shall be changed into or exchanged for stock or other
securities of First Coastal or any other person or cash or
any other property or the outstanding shares of First
Coastal common stock immediately prior to such merger
shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged
company; or
- First Coastal sells or otherwise transfers all or
substantially all of its assets to any person, other than
Centura or one of Centura's subsidiaries.
In the event that prior to the exercise or termination of the option,
First Coastal enters into an agreement to engage in any of the transactions
described in clause (2) of the definition of Repurchase Event above, the
agreement governing such transaction must make proper provision
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so that Centura will receive for each share of First Coastal common stock
subject to the option an amount of consideration that would be received by a
holder of First Coastal common stock in such transaction less the purchase price
of the securities.
After the occurrence of a Purchase Event, Centura may assign its rights
under the stock option agreement in whole or in part.
Upon the occurrence of certain events, First Coastal has agreed to file
with the SEC and to cause to become effective certain registration statements
under the Securities Act of 1933 with respect to dispositions by Centura and its
assigns of all or part of the option and/or any shares of First Coastal common
stock into which the option is exercisable.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
In the merger, stockholders of First Coastal will exchange their shares
of First Coastal for shares of Centura. First Coastal is a registered thrift
holding company governed by Virginia law and First Coastal's articles of
incorporation and bylaws. Centura is a North Carolina corporation governed by
North Carolina law and Centura's articles of incorporation and bylaws. There are
significant differences between the rights of First Coastal stockholders and
Centura stockholders. The following is a summary of the principal differences
between the current rights of First Coastal stockholders and those of Centura's
stockholders.
The following summary is not intended to be complete and is qualified it
its entirety by reference to the, the Virginia Stock Corporation Act and the
North Carolina Business Corporation Act, as well as Centura's articles of
incorporation and bylaws and First Coastal's articles of incorporation and
bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
Centura's articles of incorporation and bylaws contain certain
provisions designed to assist the Centura board of directors in playing a role
if any group or person attempts to acquire control of Centura so that the
Centura board of directors can protect the interests of Centura and its
stockholders under the circumstances. These provisions may help the Centura
board of directors determine that a sale of control is in the best interests of
Centura's stockholders, or enhance the Centura board of directors' ability to
maximize the value to be received by the stockholders upon a sale of control of
Centura.
Although Centura's management believes that these provisions are
beneficial to Centura's stockholders, they also may tend to discourage some
takeover bids. As a result, Centura's stockholders may be deprived of
opportunities to sell some or all of their shares at prices that represent
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a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that these provisions discourage undesirable proposals,
Centura may be able to avoid those expenditures of time and money.
These provisions also may discourage open market purchases by a company
that may desire to acquire Centura. Those purchases may increase the market
price of Centura common stock temporarily, and enable stockholders to sell their
shares at a price higher than that they might otherwise obtain. In addition,
these provisions may decrease the market price of Centura common stock by making
the stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The provisions also may
make it more difficult and time consuming for a potential acquiror to obtain
control of Centura through replacing the board of directors and management.
Furthermore, the provisions may make it more difficult for Centura's
stockholders to replace the board of directors or management, even if a majority
of the stockholders believe that replacing the board of directors or management
is in the best interests of Centura. Because of these factors, these provisions
may tend to perpetuate the incumbent board of directors and management. For more
information about these provisions, see "--Authorized Capital Stock," "--
Amendment of Charter and Bylaws," "-- Classified Board of Directors and Absence
of Cumulative Voting," "-- Director Removal and Vacancies," "-- Limitations on
Director Liability," "-- Indemnification," "-- Special Meeting of Stockholders,"
"-- Actions by Stockholders Without a Meeting," "-- Stockholder Nominations and
Proposals," "-- Fair Price Provision" and "-- Business Combinations."
AUTHORIZED CAPITAL STOCK
CENTURA. Centura's articles of incorporation authorize the issuance of
up to (1) 50,000,000 shares of Centura common stock, of which 26,560,264 shares
were issued and outstanding as of September 30, 1998, and (2) 25,000,000 of no
par value preferred stock, of which no shares are issued. Centura's board of
directors may authorize the issuance of additional shares of Centura common
stock without further action by Centura's stockholders, unless such action is
required in a particular case by applicable laws or regulations or by any stock
exchange upon which Centura's capital stock may be listed. Centura's
stockholders do not have the preemptive right to purchase or subscribe to any
unissued authorized shares of Centura common stock or any option or warrant for
the purchase thereof.
Similarly, Centura's board of directors may issue, without any further
action by the stockholders, shares of Centura preferred stock, in one or more
classes or series, with such voting, conversion, dividend, and liquidation
rights as the board may specify. In establishing and issuing shares of Centura
preferred stock, Centura's board of directors may designate that Centura
preferred stock will have voting rights in excess of one vote per share or will
vote as a separate class on any or all matters, thus diluting the voting power
of the Centura common stock. The board also may designate that Centura preferred
stock will have dividend rights that are cumulative and that receive
preferential treatment compared to Centura common stock, and that
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Centura preferred stock will have liquidation rights with priority over Centura
common stock in the event of Centura's liquidation.
Subject to the payment of cash in lieu of fractional shares, Centura
will issue an estimated 1,848,849 shares of Centura common stock in connection
with the merger, including shares to be subject to assumed options and grants.
Based on the number of shares of Centura common stock outstanding on September
30, 1998, it is anticipated that, following the consummation of the merger, a
total of approximately 28,409,113 shares of Centura common stock will be
outstanding.
The authority to issue additional shares of Centura common stock
provides Centura with the flexibility necessary to meet its future needs without
the delay resulting from seeking stockholder approval. The authorized but
unissued shares of Centura common stock will be issuable from time to time for
any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Centura.
In addition, the sale of a substantial number of shares of Centura common stock
to persons who have an understanding with Centura concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Centura
common stock (or the right to receive Centura common stock) to Centura
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Centura.
FIRST COASTAL. First Coastal is currently authorized to issue (1)
10,000,000 shares of First Coastal common stock, of which _________ are
outstanding as of the record date and (2) 5,000,000 shares of preferred stock,
of which no shares are outstanding. The First Coastal board of directors may
authorize the issuance of additional shares of common and preferred stock
without further action by stockholders, unless required by applicable laws or
regulations.
AMENDMENT OF CHARTER AND BYLAWS
CENTURA. Centura's articles of incorporation provide that the
affirmative vote of the holders of at least two-thirds of all the issued and
outstanding voting shares of capital stock is required to amend them. However,
if such amendment has received the prior approval by an affirmative vote of a
majority of "Disinterested Directors," as defined therein, then the affirmative
vote of the holders of at least a majority of all the shares of capital stock of
Centura issued and outstanding and entitled to vote, or such greater percentage
approval as is required by North Carolina law, is sufficient to amend the
articles. A "Disinterested Director" is defined in the articles as any member of
the board of directors who is unaffiliated with, and not a nominee of, a Control
Person, as defined therein, and who was a member of the board of directors prior
to the time a Control Person became such, and any successor of a Disinterested
Director who is unaffiliated with, and not a nominee of, a Control Person, who
is recommended to succeed a
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Disinterested Director by a majority of Disinterested Directors then on the
board of directors. A "Control Person" is defined in Centura's articles of
incorporation as any corporation, person, group, or other entity, which together
with its affiliates, prior to a business combination (as described below)
beneficially owns 10% or more of the shares of any class of equity or
convertible securities of Centura, and any affiliate of any such corporation,
person, group, or other entity.
Subject to certain restrictions set forth below, either the board of
directors or the stockholders of Centura may amend Centura's bylaws. The board
of directors may amend the bylaws and adopt new bylaws except that:
(1) a bylaw adopted or amended by the stockholders may not be
readopted, amended, or repealed by the board of directors if
neither the articles nor a bylaw adopted by the stockholders
authorizes the board of directors to adopt, amend, or repeal
that particular bylaw or the bylaws generally;
(2) Centura's stockholders may adopt, amend, alter, change, or
repeal the bylaws; provided that, in addition to any
requirements of the North Carolina Business Corporation Act,
the affirmative vote of the holders of at least two-thirds of
the voting power of all shares then entitled to vote generally
in the election of directors, voting together as a single
class, is required for the stockholders to adopt, amend,
alter, change, or repeal the bylaws.
(3) A bylaw that fixes a greater quorum or voting requirement for
the board of directors may be amended or repealed:
- if originally adopted by the stockholders, only by the
stockholders, unless the bylaw permits amendment or repeal
by the board of directors; or
- if originally adopted by the board of directors, either by
the stockholders or by not less than a majority of the
board of directors and with a quorum and vote not less
than that established by the stockholders.
(4) the bylaws relating to officer succession may not be amended
or repealed except by the affirmative vote of 75% of the
members of Centura's board of directors.
FIRST COASTAL. First Coastal may amend its articles of incorporation if
the holders of at least two-thirds of the outstanding First Coastal common stock
of the stockholders approve such an amendment at a meeting called for the
purpose of amending the articles of incorporation, except that a simple majority
vote is required to amend the provision of the articles which determines the
number of authorized shares of First Coastal capital stock. The First Coastal
bylaws may be amended by the stockholders or the board of directors. Unless
otherwise provided by law, a majority of the total
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number of directors may amend the bylaws at any regular meeting of the
directors. The holders of two-thirds of the outstanding First Coastal common
stock can also amend the bylaws at a meeting called for the purpose of amending
the bylaws.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
CENTURA. Centura's articles of incorporation provide that Centura's
board of directors is divided into three classes, with each class to be as
nearly equal in number as possible. The directors in each class serve three-year
terms of office. The effect of Centura having a classified board of directors is
that only approximately one-third of the members of the board of directors are
elected each year, which effectively requires two annual meetings for Centura's
stockholders to change a majority of the members of the board of directors. The
purpose of dividing Centura's board of directors into classes is to facilitate
continuity and stability of leadership of Centura by ensuring that experienced
personnel familiar with Centura will be represented on Centura's board of
directors at all times, and to permit Centura's management to plan for the
future for a reasonable time. However, by potentially delaying the time within
which an acquirer could obtain working control of the board of directors, this
provision may discourage some potential mergers, tender offers, or takeover
attempts.
Pursuant to the bylaws, each stockholder generally is entitled to one
vote for each share of Centura common stock held and is not entitled to
cumulative voting rights in the election of directors as long as Centura common
stock is listed on the New York Stock Exchange or held by 2,000 record holders.
With cumulative voting, a stockholder has the right to cast a number of votes
equal to the total number of such holder's shares multiplied by the number of
directors to be elected. The stockholder has the right to distribute all of his
votes in any manner among any number of candidates or to accumulate such shares
in favor of one candidate. Directors are elected by a plurality of the total
votes cast by all stockholders. With cumulative voting, it may be possible for
minority stockholders to obtain representation on the board of directors.
Without cumulative voting, the holders of more than 50% of the shares of Centura
common stock generally have the ability to elect 100% of the directors. As a
result, the holders of the remaining Centura common stock effectively may not be
able to elect any person to the board of directors. The absence of cumulative
voting thus could make it more difficult for a stockholder who acquires less
than a majority of the shares of Centura common stock to obtain representation
on Centura's board of directors.
FIRST COASTAL. First Coastal's articles of incorporation provide for a
classified board of directors very similar to Centura's. First Coastal's
stockholders do not have cumulative voting rights.
DIRECTOR REMOVAL AND VACANCIES
CENTURA. Centura's articles of incorporation provide that: (1) a
director may be removed by the stockholders only upon the affirmative vote of
the holders of two-thirds of the voting
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power of all shares of capital stock entitled to vote generally in the election
of directors; and (2) vacancies on the board of directors may be filled only by
the board of directors. The purpose of this provision is to prevent a majority
stockholder from circumventing the classified board system by removing directors
and filling the vacancies with new individuals selected by that stockholder.
Accordingly, the provision may have the effect of impeding efforts to gain
control of the board of directors by anyone who obtains a controlling interest
in Centura common stock. The term of a director appointed to fill a vacancy
expires at the next meeting of stockholders at which directors are elected.
FIRST COASTAL. First Coastal's articles of incorporation also provide
that directors may be removed by the stockholders by the affirmative vote of
two-thirds of the voting stock. Vacancies on the First Coastal board of
directors may be filled by the vote of two-thirds of the directors then in
office.
LIMITATIONS ON DIRECTOR LIABILITY
CENTURA. Centura's articles of incorporation provide for the
elimination of the personal liability of each director arising out of an action
by Centura or otherwise for monetary damages for breach of his duty as a
director, except for liability with respect to (1) acts or omissions not made in
good faith that the director at the time of such breach knew or believed were in
conflict with the best interests of Centura, (2) any liability under Section
55-8-33 of the General Statutes of North Carolina, or (3) any transaction from
which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of his duties, if the action is among those as to
which liability is limited. This provision may reduce the likelihood of
stockholder derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duties, even though such action, if successful, might have benefited
Centura and its stockholders. The SEC has taken the position that similar
provisions added to other corporations' certificates of incorporation would not
protect those corporations' directors from liability for violations of the
federal securities laws.
FIRST COASTAL. First Coastal's articles of incorporation provide that
First Coastal's directors and officers will not be liable to the corporation or
its stockholders for any money damages resulting from any action of the
director. This limitation on liability will not apply if a director or officer
engages in willful misconduct or a knowing violation of criminal law or state or
federal securities law.
INDEMNIFICATION
CENTURA. Under the North Carolina Business Corporation Act, a
corporation may indemnify any director against liability if the director:
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- conducted himself or herself in good faith;
- reasonably believed, in the case of conduct in his or her official
capacity with the corporation, that his or her conduct was in the
best interests of the corporation, and in all other cases, that
his or her conduct was at least not opposed to the corporation's
best interests;
- and, in the case of any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
A North Carolina corporation may not indemnify a director:
- in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
- in connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him.
Unless limited by its articles of incorporation, a North Carolina
corporation must indemnify, against reasonable expenses incurred by him or her,
a director who was wholly successful, on the merits or otherwise, in defending
any proceeding to which he or she was a party because he or she is or was a
director of the corporation. Expenses incurred by a director in defending a
proceeding may be paid by the corporation in advance of the final disposition of
the proceeding if the director furnishes the corporation a written undertaking
by or on behalf of a director to repay such amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation
against such expenses. A director may apply for court-ordered indemnification
under certain circumstances.
Unless a corporation's articles of incorporation provide otherwise,
(1) an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered
indemnification to the same extent as a director,
(2) the corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same
extent as to a director, and
(3) a corporation may also indemnify and advance expenses to an
officer, employee, or agent who is not a director to the
extent, consistent with public policy, that may be provided by
its articles of incorporation, bylaws, general or specific
action of its board of directors, or contract.
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In addition and separate and apart from the indemnification rights
discussed above, the North Carolina law further provides that a corporation may
in its articles of incorporation or bylaws or by contract or resolution
indemnify or agree to indemnify any one or more of its directors, officers,
employees, or agents against liability and expenses in any proceeding (including
without limitation a proceeding brought by or on behalf of the corporation
itself) arising out of their status as such or their activities in any of the
foregoing capacities; provided, however, that a corporation may not indemnify or
agree to indemnify a person against liability or expenses he may incur on
account of his activities which were at the time taken known or believed by him
to be clearly in conflict with the best interests of the corporation. A
corporation may likewise and to the same extent indemnify or agree to indemnify
any person who, at the request of the corporation, is or was serving as a
director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, or other enterprise or
as a trustee or administrator under an employee benefit plan. Any such provision
for indemnification may also include provisions for recovery from the
corporation of reasonable costs, expenses, and attorneys' fees in connection
with the enforcement of rights to indemnification and may further include
provisions establishing reasonable procedures for determining and enforcing the
rights granted therein.
Centura's bylaws provide for the mandatory indemnification, to the
fullest extent permitted by law, of any person who at any time serves or has
served as a director or officer of Centura, or, at the request of Centura, is or
was serving as a director, officer, agent, partner, trustee, administrator, or
employee of another entity in the event such person is made or is threatened to
be made, a party to any threatened, pending, or completed civil, criminal,
administrative, investigative, or arbitrative action, suit, or proceeding and
any appeal therein (and any inquiry or investigation that could lead to such
action, suit, or proceeding), whether or not brought by or on behalf of Centura,
seeking to hold such person liable by reason of the fact that such person is or
was acting in such capacity. The indemnification provision in the Centura bylaws
covers reasonable expenses, including without limitation, all attorneys' fees
actually and necessarily incurred by such person in connection with any such
action, suit or proceeding, all reasonable payments made by such person in
satisfaction of any judgment, money decree, fine (including an excise tax
assessed with respect to an employee benefit plan), penalty, or settlement for
which such person may have become liable in such action, suit, or proceeding,
and all reasonable expenses incurred in enforcing the indemnification rights.
Furthermore, Centura may advance to such person his reasonable expenses incurred
in connection with any such action, suit or proceeding as authorized by the
board of directors in the specific case or as authorized or required under any
Bylaw upon receipt of an undertaking by or on behalf of such person to repay
such amount unless it is ultimately determined that such person is entitled to
be indemnified by Centura against such expenses.
Centura's bylaws further provide that Centura may, but is not required
to, indemnify any agent, employee, or other person as the board of directors
deems appropriate. The Centura board of directors must take all such action as
may be necessary and appropriate to authorize Centura to
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pay the indemnification required by the indemnification provision, including
without limitation, to the extent needed, making a good faith evaluation of the
manner in which the claimant for indemnity acted and of the reasonable amount of
indemnity to such claimant.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling Centura
pursuant to the foregoing provisions, Centura has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore unenforceable.
FIRST COASTAL. First Coastal's articles of incorporation provide that
it may indemnify any director who is party to a threatened, pending or completed
action, suit or proceeding as a result of his position with First Coastal for
all liability and expenses incurred, including attorneys' fees, judgments, fines
and amounts paid in settlement. However, First Coastal will not indemnify any
individual for liabilities and expenses incurred because of his willful
misconduct or knowing violation of criminal law.
SPECIAL MEETING OF STOCKHOLDERS
CENTURA. Centura's bylaws provide that only the board of directors, the
Chairman of the Board, or the President may call a special meeting of
stockholders. Centura's stockholders do not have the right to call a special
meeting or to require that Centura's board of directors call such a meeting. As
a result, this provision, taken together with the restriction on the removal of
directors, would prevent a substantial stockholder from compelling stockholder
consideration of any proposal (such as a proposal for a merger) over the
opposition of Centura's board of directors by calling a special meeting of
stockholders at which such stockholder could replace the entire board of
directors with nominees who were in favor of such proposal.
FIRST COASTAL. First Coastal's articles of incorporation provide that
only the board of directors, a duly empowered committee of the board of
directors, the Chairman of the Board or the President may call a special meeting
of stockholders. Accordingly, First Coastal's stockholders may not call a
special meeting of the stockholders.
ABILITY OF DIRECTORS TO CONSIDER INTERESTS OTHER THAN STOCKHOLDERS' INTERESTS
CENTURA. Centura's articles of incorporation expressly authorize the
board of directors of Centura, any committee of the board of directors, or any
individual director, in determining what is in the best interest of Centura and
its stockholders, to consider, in addition to the long-term and short-term
interests of the stockholders, the social and economic effects of the matter to
be considered on Centura and its subsidiaries, their employees, depositors,
customers, creditors, and the communities in which Centura and its subsidiaries
operate or are located. When evaluating a business combination or a proposal by
another person to make a business combination or a tender offer or any other
proposal relating to a potential change in control of Centura, the board of
directors may consider such matters as the business and financial condition and
earnings prospects
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of the acquiring person, including, but not limited to, debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person, and the possible effect of such conditions upon Centura and
its subsidiaries and the communities in which Centura and its subsidiaries
operate or are located, the competence, experience, and integrity of the
acquiring person and its management, and the prospects for successful conclusion
of the business combination, offer, or proposal. The consideration of any of the
above factors is completely discretionary with the Centura board of directors
and does not give any constituency other than stockholders the right to be so
considered.
The constituency provision of Centura's articles of incorporation may
discourage or make more difficult certain acquisition proposals or business
combinations and, therefore, may adversely affect the ability of stockholders to
benefit from certain transactions opposed by the Centura board of directors. The
constituency provision would allow the Centura board of directors to take into
account the effects of an acquisition proposal on a broad number of
constituencies and to consider any potential adverse effects in determining
whether to accept or reject such proposal.
FIRST COASTAL. First Coastal's articles of incorporation do not have a
provision allowing the directors to consider the effect of potential
transactions on any constituency other than the First Coastal stockholders.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
CENTURA. Centura's bylaws provide that the Centura stockholders may
effect any action required or permitted to be taken by Centura stockholders at a
duly called meeting of stockholders by the unanimous written consent of the
stockholders entitled to vote on such action.
FIRST COASTAL. The Virginia Stock Corporation Act grants the First
Coastal stockholders the ability to effect an action of the stockholders by a
unanimous written consent.
STOCKHOLDER NOMINATIONS AND PROPOSALS
CENTURA. Centura's articles of incorporation and bylaws provide that no
stockholder may nominate individuals for election to the board of directors.
FIRST COASTAL. First Coastal's articles of incorporation provide that
any stockholder can nominate individuals for election to the board of directors
and make proposals for new business to be taken up at an annual or special
meeting of stockholders. The articles of incorporation also provide that the
stockholders must give a written notice, which contains specific information
about such
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nomination or proposal, to the Secretary of First Coastal during a specified
time period prior to the meeting.
FAIR PRICE PROVISION
CENTURA. The fair price provision of the articles of incorporation
applies to business combinations that have not received the approval of
two-thirds of the full board of directors and is available only to stockholders
who vote against such business combinations and who elect to sell their shares
to Centura for cash at the fair price of such shares. The fair price provisions
requires that the consideration for such shares be paid in cash by Centura and
that the price per share be at least equal to the greater of the following:
(a) the highest price per share paid for Centura common stock
during the four years immediately preceding the business
combination vote by any stockholder who beneficially owned
5.0% or more of Centura common stock and who votes in favor of
the business combination;
(b) the cash value of the highest price per share previously
offered pursuant to a tender offer to the stockholders of
Centura within the four years immediately preceding the
business combination vote;
(c) the aggregate earnings per share of Centura common stock
during the four fiscal quarters immediately preceding the
business combination vote multiplied by the highest
price/earnings ratio of Centura common stock at any time
during the four fiscal quarters or up to the date the business
combination vote occurs;
(d) the highest price per share, including commissions and fees,
paid by a Control Person in acquiring any of its holdings of
Centura common stock; or
(e) the fair value per share of Centura common stock as determined
by an investment banking or appraisal firm chosen by a
majority of the members of the board of directors voting
against the business combination, such fair value not taking
into consideration the fact that the shares are held by a
majority of the Centura stockholders.
The fair price provision is designed primarily to discourage attempts
to acquire Centura in transactions utilizing two-tier pricing tactics, but the
provision may affect and potentially discourage other transactions that are not
two-tier structured. Transactions utilizing two-tier pricing tactics typically
involve the accumulation of a substantial block of a target corporation's stock
followed by a merger or other reorganization of the acquired corporation on
terms determined by the purchaser. In such two-tiered takeover attempts, the
purchaser generally pays cash to acquire a controlling interest in a corporation
and acquires the remaining interest by
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paying the remaining stockholders a price lower than that paid to acquire the
controlling interest. The board of directors believes that the fair price
provision may prevent some of the potential inequities of two-tiered takeover
attempts by encouraging persons interested in acquiring Centura to negotiate in
advance with the board of directors since, if two-thirds of the full board of
directors approves certain business combinations, the fair price provision would
be avoided. The board of directors believes that the interests of the
stockholders of Centura would be best served by such negotiation based on
careful consideration of all relevant factors. Despite this belief, however,
some stockholders may find the fair price provision disadvantageous to the
extent it discourages changes in control in which stockholders might receive,
for at least some of their shares, a substantial premium above the market price
paid to stockholders who vote against the business combination and then elect to
sell their shares to Centura for cash. Furthermore, the provision may encourage
stockholders to vote against a business combination, which has been approved by
a majority of a quorum but less than two-thirds of the full board of directors.
In addition, assets of Centura could be used to reacquire shares, possibly at a
substantial premium, from stockholders who voted against the transaction, which
may be to the detriment of stockholders who voted for the transaction. Finally,
if the fair price provision has the effect of giving management more bargaining
power in negotiation with a potential acquiror, it could result in management
using the bargaining power not only to try to negotiate a favorable price for an
acquisition, but also more favorable terms for management.
FIRST COASTAL. First Coastal's articles of incorporation do not contain
any comparable fair price provisions.
STOCKHOLDER VOTES REQUIRED FOR CERTAIN ACTIONS
CENTURA. Centura's articles of incorporation provide that, unless more
restrictively required by applicable law, any business combination, as defined
therein, must be approved by a majority of a quorum of the board of directors
and must receive one of the following levels of stockholder approval:
- at a special or annual meeting of stockholders by an affirmative
vote of the stockholders holding at least a majority of the shares
of Centura Common Stock issued and outstanding and entitled to
vote thereon, provided that such business combination has received
the prior approval by a resolution adopted by an affirmative vote
of at least two-thirds of the full board of directors before such
business combination is submitted for approval to the
stockholders; or
- at a special or annual meeting of stockholders by an affirmative
vote of the stockholders holding at least two-thirds of the shares
of Centura issued and outstanding and entitled to vote thereon
provided that such business combination has received the prior
approval by a resolution adopted by an affirmative vote of at
least a
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majority of a quorum of the board of directors (but less
than two-thirds of the board of directors).
In addition, if the business combination is approved by an affirmative
vote of at least two-thirds of the stockholders entitled to vote and by a
majority of a quorum of the board of directors but less than two-thirds of the
full board of directors, the business combination must grant to stockholders not
voting to approve the business combination certain fair price rights.
Under Centura's articles of incorporation, a "business combination" is
- any merger or consolidation of Centura into any other
corporation, person, group, or other entity where Centura is not
the surviving or resulting entity;
- any merger or consolidation of Centura with or into any "Control
Person" (as defined in the articles) or with any corporation,
person, group, or other entity where the merger or consolidation
is proposed by or on behalf of a Control Person;
- any sale, lease, exchange, or other disposition of all or
substantially all of the assets of Centura;
- any sale, lease, exchange, or other disposition of more than 10%
of the total assets of Centura (determined as of the end of the
most recent fiscal year) to a Control Person;
- the issuance of any securities of Centura to a Control Person;
- the acquisition by Centura of any securities of a Control Person
unless such acquisition begins prior to the person becoming a
Control Person or is an attempt to prevent the Control Person from
obtaining greater control of Centura;
- the acquisition by Centura of all or substantially all of the
assets of any Control Person or any entity where the acquisition
is proposed by or on behalf of a Control Person;
- the adoption of any plan or proposal for the liquidation or
dissolution of Centura which is proposed by or on behalf of a
Control Person;
- any reclassification of securities or recapitalization of Centura
which has the effect of increasing the proportionate share of the
outstanding shares of any class of equity or convertible
securities of Centura which is beneficially owned or controlled by
a Control Person;
- any of the above transactions which are between Centura and any of
its subsidiaries and which are proposed by or on behalf of any
Control Person; or
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- any agreement, plan, contract, or other arrangement providing for
any of the above transactions.
The requirement of a supermajority vote of stockholders to approve
certain business transactions, as described above, may discourage a change in
control of Centura by allowing a minority of Centura's stockholders to prevent a
transaction favored by the majority of the stockholders. Also, in some
circumstances, the board of directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of Centura and their positions with Centura. The primary
purpose of the supermajority vote requirement, however, is to encourage
negotiations with Centura's management by groups or corporations interested in
acquiring control of Centura and to reduce the danger of a forced merger or sale
of assets.
The North Carolina Shareholder Protection Act requires, under certain
circumstances and subject to certain exceptions, the affirmative vote of at
least 95% of the voting shares of a corporation to adopt or authorize certain
business combinations with any other entity. The 95% vote requirement does not
apply if all of certain fair price and procedural requirements are satisfied.
The North Carolina Shareholder Protection Act applies to corporations that have
a class of shares registered under Section 12 of the Exchange Act (a "public
corporation") and that have not opted out of the provisions of the North
Carolina Shareholder Protection Act. Centura's articles of incorporation provide
that Centura is not subject to the North Carolina Shareholder Protection Act.
The North Carolina Control Share Acquisition Act provides that in the
event any person or group acting in concert acquires certain designated
percentage interests of the total voting power of a corporation, the shares
acquired in the acquisition are not entitled to vote unless the right to vote
such shares is approved by a majority of all of the outstanding shares of the
corporation entitled to vote for the election of directors, excluding certain
interested shares, as that term is defined by the statute. If voting rights are
granted to the control shares, other stockholders may have their shares redeemed
by the corporation at their fair value. The North Carolina Control Share
Acquisition Act applies only to a North Carolina public corporation with certain
required contracts with North Carolina (a "covered corporation"), the bylaws or
articles of incorporation of which do not opt out of the North Carolina Control
Share Acquisition Act, and does not apply to acquisitions of stock pursuant to a
merger or tender offer approved by the board of directors. Centura's articles of
incorporation provide that Centura is not subject to the North Carolina Control
Share Acquisition Act.
FIRST COASTAL. The Virginia Stock Corporation Act generally requires
the approval of a majority of a corporation's board of directors, and the
holders of more than two-thirds of all the votes entitled to be cast thereon by
each voting group entitled to vote, on any plan of merger or consolidation, plan
of share exchange or sale of substantially all of the assets of a corporation
not in the
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ordinary course of business. The Virginia Stock Corporation Act also specifies
additional voting requirements for Affiliated Transactions (as defined below)
and transactions that would cause an acquiring person's voting power to meet or
exceed specified thresholds, as discussed below.
The Virginia Stock Corporation Act contains provisions governing
"Affiliated Transactions." These provisions, with several exceptions discussed
below, require approval of material acquisition transactions between a Virginia
corporation and any holder of more than ten percent of any class of its
outstanding voting shares (a "Virginia Interested Stockholder") by the holders
of at least two-thirds of the remaining voting shares. Affiliated Transactions
subject to the approval requirement include mergers, share exchanges, material
dispositions of corporation assets not in the ordinary course of business, any
dissolution of the corporation proposed by or on behalf of a Virginia Interested
Stockholder, or any reclassification, including reverse stock splits,
recapitalization or merger of the corporation with its subsidiaries which
increases the percentage of voting shares owned beneficially by a Virginia
Interested Stockholder by more than five percent.
For three years following the time that a Virginia Interested
Stockholder becomes an owner of ten percent of the outstanding voting shares, a
Virginia corporation cannot engage in an Affiliated Transaction with such
Virginia Interested Stockholder without approval of two-thirds of the voting
shares other than those shares beneficially owned by the Virginia Interested
Stockholder, and majority approval of the "Disinterested Directors." A
Disinterested Director means, with respect to a particular Virginia Interested
Stockholder, any member of a corporation's board of directors who was (1) a
member before the later of January 1, 1998, and the date on which a Virginia
Interested Stockholder became a Virginia Interested Stockholder, and (2)
recommended for election by, or was elected to fill a vacancy and received the
affirmative vote of, a majority of the Disinterested Directors then on the board
of directors. At the expiration of the three-year period, the statute requires
approval of Affiliated Transactions by two-thirds of the voting shares other
than those beneficially owned by the Virginia Interested Stockholder.
The principal exceptions to the special voting requirement apply to
transactions proposed after the three-year period has expired and require either
that the transaction be approved by majority of the corporation's Disinterested
Directors or that the transaction satisfy the fair-price requirements of the
Virginia Stock Corporation Act. In general, the fair-price requirement provides
that in a two-step acquisition transaction, the Virginia Interested Stockholder
must pay the stockholders in the second step either the same amount of cash or
the same amount and type of consideration paid to acquire the Virginia
corporation's shares in the first step.
The "Affiliated Transactions" provisions do not apply to transactions
with Virginia Interested Stockholders if a majority of the board of directors
approved the initial purchase of stock which made a person a Virginia Interested
Stockholder.
These provisions were designed to deter certain takeovers of Virginia
corporations. In addition, the statute provides that, by affirmative vote of a
majority of the voting shares other than
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shares owned by any Virginia Interested Stockholders, a corporation can adopt an
amendment to its articles of incorporation or bylaws providing that the
Affiliated Transactions provisions shall not apply to the corporation. First
Coastal has not "opted out" of (i.e., elected not to be governed by) the
Affiliated Transactions provisions.
Virginia law also provides that shares acquired in a transaction
("control shares") that would cause the acquiring person's voting rights to meet
or exceed any of three thresholds (20%, 33-1/3% or a majority) have no voting
rights unless granted by a majority vote of shares not owned by the acquiring
person or any officer or employee-director of the Virginia corporation. This
provision empowers an acquiring person (at its own expense) to require the
Virginia corporation to hold a special meeting of stockholders to consider the
matter with 50 days of the receipt of the request. This Virginia law provides
that, in the event control shares are accorded voting rights and, as a result,
the holder of the control shares has a majority of all voting power for the
election of directors, the stockholders, other than such holder, may cause the
corporation to redeem their shares at a price which meets certain fair value
criteria as determined in according with the Virginia Stock Corporation Act
None of the provisions of the Virginia Stock Corporation Act apply to
this merger.
DISSENTERS' RIGHTS OF APPRAISAL
CENTURA. Under the North Carolina Business Corporation Act, a
stockholder is generally entitled to dissent from, and obtain payment of the
fair value of his shares in the event of:
(1) consummation of a plan of merger to which the corporation is a
party, unless either
- stockholder approval is not required by the NCBCA or
- such shares are then redeemable by the corporation at a
price not greater than the cash to be received in exchange
for such shares;
(2) consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, unless such shares are then redeemable by the
corporation at a price not greater than the cash to be
received in exchange for such shares;
(3) consummation of a sale or exchange of substantially all of the
corporation's property other than in the usual and regular
course of business, including a sale in dissolution, but not
including a sale pursuant to court order or to a plan by which
substantially all of the net proceeds of the sale will be
distributed in cash to the stockholders within one year after
the date of sale;
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(4) an amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's
shares because it
- alters or abolishes a preferential right of the shares,
- creates, alters, or abolishes a right in respect of
redemption of the shares,
- alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities,
- excludes or limits the right of the shares to vote on any
matter, or to cumulate votes,
- reduces the number of shares owned by the stockholder to
a fraction of a share if the fractional share so created
is to be acquired for cash under the NCBCA, or
- changes the corporation into a nonprofit corporation or
cooperative organization; or
(5) any corporate action taken pursuant to a stockholder vote, to
the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provide that voting or
nonvoting stockholders are entitled to dissent and obtain
payment for their shares.
The dissenters' rights described above are generally not available to
stockholders of a corporation, like Centura, with its common stock listed on a
national securities exchange. Centura's articles of incorporation and bylaws do
not provide for any such additional dissenters' rights.
FIRST COASTAL. Article 15 of the Virginia Stock Corporation Act gives
stockholders of a Virginia corporation the right to dissent from, and obtain
payment of the fair value of their chares in the event of mergers,
consolidations and certain other corporation transactions. However, the rights
contained in Article 15 are not available to holders of common stock of Virginia
corporations when the common stock is listed on the Nasdaq National Market.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
CENTURA. The North Carolina Business Corporation Act gives that a
stockholder of a North Carolina corporation the right to inspect and copy books
and records of the corporation during regular business hours, if he or she gives
the corporation written notice of his or her demand at least five business days
before the date of the inspection. In order to inspect certain records, written
demand
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must also be made in good faith and for a proper purpose and must describe with
reasonable particularity the purpose of the request and the records the
stockholder desires to inspect.
FIRST COASTAL. The Virginia Stock Corporation Act gives stockholders
the same type of rights to inspect and copy books and records as the North
Carolina Business Corporation Act.
DIVIDENDS
CENTURA. Centura's ability to pay dividends on its common stock is
governed by North Carolina corporate law. Under North Carolina corporate law,
dividends may be paid so long as the corporation would be able to pay its debts
as they become due in the ordinary course of business and the corporation's
total assets would not be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution to
stockholders whose preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of the Centura's
banking subsidiaries to pay dividends to Centura. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
FIRST COASTAL. The Virginia Stock Corporation Act gives Virginia
corporations the ability to pay dividends on the same basis as North Carolina
law.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Centura common stock is traded on the New York Stock Exchange under the
symbol "CBC." First Coastal common stock is traded on the Nasdaq National Market
under the symbol "FCBK". The following table sets forth, for the indicated
periods, the high and low closing sale prices for the Centura and First Coastal
common stock as reported by the New York Stock Exchange and Nasdaq National
Market, and the cash dividends declared per share of Centura and First Coastal
common stock for the indicated periods. The stock prices do not include retail
mark-ups, mark-downs or commissions.
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<TABLE>
<CAPTION>
CENTURA FIRST COASTAL
-------------------------------------- ---------------------------------------
Cash Cash
Dividends Dividends
Price Range Declared Price Range Declared
------------------------ --------------------------
High Low Per Share High Low Per Share
---------- ---------- ----------- ------------ ----------- -----------
1996
- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter............... $ 36.75 $ 33.875 $ .25 $ 9.00 $ 6.8125 $ .04
Second Quarter.............. 37.50 36.00 .25 8.625 6.875 .04
Third Quarter............... 40.125 35.125 .25 8.75 6.875 .04
Fourth Quarter.............. 47.00 38.00 .25 9.625 8.625 .04
---------- -----------
Total..................... $ 1.00 $ .16
========== ===========
1997
- ------------------------------
First Quarter............... $ 44.875 $ 39.00 $ .25 $ 11.3125 $ 9.375 $ .05
Second Quarter ............. 47.625 35.75 .27 13.50 9.75 .05
Third Quarter............... 58.50 47.625 .27 16.75 13.25 .05
Fourth Quarter.............. 69.00 55.875 .27 18.75 15.00 .05
---------- -----------
Total..................... $ 1.06 $ .20
========== ===========
1998
- ------------------------------
First Quarter............... $ 72.1875 $ 64.6875 $ .27 $ 20.875 $ 17.00 $ .06
Second Quarter.............. 75.50 61.3125 .29 19.750 16.375 .06
Third Quarter............... 71.125 56.00 .29 18.750 13.25 .06
Fourth Quarter (through
___________, 1998)....... .29 .06
---------- -----------
Total................... 1.14 $ .24
========== ===========
</TABLE>
On ___________, 1998, the last sale price of Centura common stock as
reported on the New York Stock Exchange was $_____ per share and the last sale
price of First Coastal common stock as reported on the Nasdaq was $_____ per
share. On October 27, 1998, the last business day prior to public announcement
of the merger, the last sale price of Centura common stock as reported by the
New York Stock Exchange was $70 per share and the last sale price of First
Coastal common stock as reported on the Nasdaq was $18.625 per share.
The holders of Centura common stock are entitled to receive dividends
when and if declared by the board of directors out of funds legally available
therefor. Although Centura currently intends to continue to pay quarterly cash
dividends on the Centura common stock, there can be no assurance that Centura's
dividend policy will remain unchanged after completion of the merger. The
declaration and payment of dividends thereafter will depend upon business
conditions, operating results, capital and reserve requirements, and the Centura
board of directors' consideration of other relevant factors.
Centura and First Coastal are legal entities separate and distinct from
their subsidiaries and their revenues depend in significant part on the payment
of dividends from their respective subsidiary
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institutions. Centura's and First Coastal's subsidiary depository institutions
are subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "CERTAIN REGULATORY CONSIDERATIONS -- Payment of
Dividends."
BUSINESS OF FIRST COASTAL
First Coastal is a registered thrift holding company and owns one
institution, First Coastal Bank. First Coastal is headquartered in Virginia
Beach, Virginia, and was organized under the laws of the Commonwealth of
Virginia in June of 1991. First Coastal currently has 19 bank branches and
office facilities throughout the Hampton Roads area of Virginia.
First Coastal Bank provides a broad range of banking services to its
customers through its network of branch and ATM locations in the cities of
Chesapeake, Hampton Roads, Newport News, Norfolk, Virginia Beach and
Williamsburg, Virginia. First Coastal Bank also has a subsidiary First Coastal
Mortgage Corp., which originates residential mortgage loans from its offices in
Virginia Beach, Chesapeake and Newport News, Virginia.
The principal executive offices of First Coastal are located at 2101
Parks Avenue, Virginia Beach, Virginia 23451 and its telephone number at such
address is (757) 428-9331. Additional information with respect to First Coastal
and its subsidiaries is included in documents incorporated by reference in this
proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."
BUSINESS OF CENTURA
GENERAL
Centura, a North Carolina corporation, is a registered bank holding
company. On September 30, 1998, Centura had total consolidated assets of
approximately $7.8 billion, total consolidated loans of approximately $5.0
billion, total consolidated deposits of approximately $5.6 billion, and total
consolidated stockholders' equity of approximately $618 million.
Centura conducts its business activities through Centura Bank, its bank
subsidiary. Through Centura Bank and its various subsidiaries, Centura offers a
broad range of financial services, throughout North Carolina, South Carolina and
the Hampton Roads Region of Virginia.
Centura offers its customers a variety of services and delivery
channels including 210 full-service financial service offices; more than 317
ATMs at financial centers and retail stores; its telephone banking center; its
Internet site; and its online money management software packages.
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The principal executive offices of Centura are located at 134 North
Church Street, Rocky Mount, North Carolina 27804, and its telephone number at
such address is (252) 454-4400. Additional information with respect to Centura
and its subsidiaries is included in documents incorporated by reference in this
proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."
RECENT DEVELOPMENTS
LITIGATION. Centura Bank is a co-defendant in two actions consolidated
for discovery in the Superior Court of Forsyth County, North Carolina. The
plaintiffs in these actions allege that Centura Bank breached its duties and
committed other violations of law while acting as depository of substantial sums
of money allegedly converted by the personal and financial advisors of the
owners of such money and in connection with the creation of charitable trusts
established with a portion of the funds. The cases consolidated into the subject
case (Philip A.R. Staton, Ingeborg Staton, Mercedes Staton, et als. v. G. Thomas
Brame, Jerri Russell (formerly Jerri Brame), Centura Bank, et als.) were
originally brought in 1996. No claim for a specific amount of monetary damages
was made in the cases until 1998. Plaintiffs are seeking compensatory and treble
damages in amounts that are material to Centura and its subsidiaries taken as a
whole. Centura believes that Centura Bank has meritorious defenses to all claims
asserted in these cases and Centura Bank is defending the cases vigorously. In a
separate and related case instituted in 1996 (Piedmont Institute of Pain
management; T. Stuart Meloy, M.D.; Nancy J. Faller, D.O. v. Poyner & Spruill,
L.L.P. and Centura Bank, consolidated for discovery with the Staton cases in the
Superior Court of Forsyth County, North Carolina, Centura Bank is alleged to
have provided the plaintiffs with false information regarding the establishment
and funding of a medical clinic by failing to exercise reasonable care or
competence in obtaining such information, and to have committed other violations
of law. Plaintiffs allege that they were damaged as a result of Centura Bank's
actions and seek specific performance or recovery of money damages in an amount
that is material to Centura and its subsidiaries taken as a whole. Centura and
Centura Bank believe Centura Bank has meritorious defenses to all claims
asserted in this case and Centura Bank is defending the case vigorously.
ACQUISITIONS. Centura has entered into an agreement to acquire
Scotland Bancorp, Inc., a thrift holding company headquartered in Laurinburg,
North Carolina. At September 30, 1998, Scotland Bancorp had total assets of
approximately $60.6 million, total loans of approximately $42.5 million and
total deposits of approximately $44.3 million. Centura will pay approximately
$25 million in cash to acquire Scotland Bancorp.
In addition, Centura has entered into a definitive agreement to acquire
Capital Advisors of NC, L.L.C., Capital Advisors of South Carolina, Inc.,
Capital Advisors of Mississippi, Inc., Selken, Inc., and Capital Advisors, Inc.,
(the "Capital Advisors Group"). The members of the Capital Advisors Group are
in the commercial mortgage origination and servicing business. Centura will
acquire the members of the Capital Advisors Group with a combination of cash
and common stock. Neither the Scotland Bancorp nor the Capital Advisors Group
acquisitions are considered material to Centura individually or in the
aggregate.
STOCK REPURCHASE PROGRAM. In connection with the First Coastal
acquisition Centura is authorized to repurchase up to 167,000 shares of
outstanding Centura common stock which is not more than 9.9% of the shares of
Centura common stock to be issued in the First Coastal acquisition. In
addition, Centura is authorized to repurchase 126,000 shares of outstanding
common stock in connection with the Capital Advisors Group acquisitions, which
transactions will be accounted for as purchases. These purchases will be made
in the open market or in privately negotiated transactions in accordance with
Regulation M under the Securities Act of 1933 and may be discontinued at any
time.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
Centura is a bank holding company registered with the Federal Reserve.
As such, Centura and its non-bank subsidiaries are subject to the supervision,
examination, and reporting requirements of the Bank Holding Company Act and the
regulations of the Federal Reserve. The following discussion summarizes the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to Centura. Information relating to First
Coastal is included in First Coastal's 1997 Annual Report on Form 10-K. A more
complete discussion is included in Centura's 1997 Annual Report on Form 10-K.
See "WHERE YOU CAN FIND MORE INFORMATION."
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Bank holding companies are required to obtain the prior approval of the
Federal Reserve before they may:
- acquire direct or indirect ownership or control of more than 5% of
the voting shares of any bank;
- acquire all or substantially all of the assets of any bank; or
- merge or consolidate with any other bank holding company.
The Federal Reserve generally may not approve any transaction that
would result in a monopoly or that would further a combination or conspiracy to
monopolize banking in the United States. Nor can the Federal Reserve approve a
transaction that could substantially lessen competition in any section of the
country, that would tend to create a monopoly in any section of the country, or
that would be in restraint of trade. But the Federal Reserve may approve any
such transaction if it determines that the public interest in meeting the
convenience and needs of the community served clearly outweigh the
anticompetitive effects of the proposed transaction. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects
of the bank holding companies and banks concerned, as well as the convenience
and needs of the community to be served. Consideration of financial resources
generally focuses on capital adequacy, which is discussed below, and
consideration of convenience and needs includes the parties' performance under
the Community Reinvestment Act of 1977.
Another factor that is gaining increasing scrutiny in the application
process is the Year 2000 readiness of the parties involved in acquisition
transactions. Banking organizations whose Year 2000 readiness is in less than
satisfactory condition are undergoing special scrutiny in connection with
acquisition transactions requiring regulatory approval, and may not be eligible
to use expedited application procedures for acquisition transactions
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 ("Interstate Banking Act"), Centura and any other bank holding company
may now acquire a bank located in any state, subject to certain
deposit-percentage limitations, aging requirements, and other restrictions. The
Interstate Banking Act also generally permits a bank to branch interstate
through acquisitions of banks in other states. By adopting legislation prior to
June 1, 1997, a state had the ability either to "opt in" and accelerate the date
after which interstate branching is permissible or "opt out" and prohibit
interstate branching altogether. In accordance with the Interstate Banking Act
all of Centura's banking operations are conducted through Centura Bank. As a
result, that bank is now a multi-state bank with branches in North Carolina,
South Carolina and Virginia.
The Bank Holding Company Act prohibits Centura from:
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(1) engaging in activities other than banking, managing, or
controlling banks or other permissible subsidiaries; and
(2) acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be a proper
incident thereto.
In determining whether a particular activity is permissible, the
Federal Reserve must consider whether the performance of such an activity
reasonably can be expected to produce benefits to the public that outweigh
possible adverse effects. Possible benefits the Federal Reserve considers
include greater convenience, increased competition, or gains in efficiency.
Possible adverse effects include undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices. The
Federal Reserve has determined the following to be permissible activities of
bank holding companies:
- factoring accounts receivable;
- acquiring or servicing loans;
- leasing personal property;
- conducting discount securities brokerage activities;
- performing certain data processing services;
- acting as agent or broker in selling credit life insurance and
certain other types of insurance in connection with credit
transactions; and
- performing certain insurance underwriting activities.
There are no territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company may result from such activity.
The depository institutions owned by Centura and First Coastal are
members of the Federal Deposit Insurance Corporation. Their deposits are insured
by the Federal Deposit Insurance Corporation to the extent provided by law. Each
bank is also subject to numerous state and federal statutes and regulations that
affect its business, activities, and operations, and each is supervised and
examined by one or more state or federal bank regulatory agencies.
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The Federal Reserve supervises Centura Bank and the Office of Thrift
Supervision supervises First Coastal Bank. These agencies regularly examine the
operations of such institutions. They have authority to approve or disapprove
mergers, consolidations, the establishment of branches, and similar corporate
actions. The federal and state banking regulators also have the power to prevent
the continuance or development of unsafe or unsound banking practices or other
violations of law.
PAYMENT OF DIVIDENDS
Centura is a legal entity separate and distinct from its banking and
other subsidiaries. The principal sources of cash flow of Centura, including
cash flow to pay dividends to its stockholders, are dividends from its
subsidiary depository institution. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institution to Centura, as well as by Centura and First Coastal to their
stockholders.
As to the payment of dividends, Centura Bank is subject to the laws and
regulations of the state of North Carolina, and to the regulations of the
Federal Reserve as Centura Bank's primary federal regulator.
If the federal banking regulator determines that a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice, the regulator may require, after notice and hearing,
that the institution cease and desist from such practice. Depending on the
financial condition of the depository institution, an unsafe or unsound practice
could include the payment of dividends. The federal banking agencies have
indicated that paying dividends that deplete a depository institution's capital
base to an inadequate level would be an unsafe and unsound banking practice.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. See "-- Prompt
Corrective Action." The federal agencies have also issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At September 30,1998, under dividend restrictions imposed under federal
and state laws, Centura Bank, without obtaining governmental approvals, could
declare aggregate dividends to Centura of approximately $65.8 million.
The payment of dividends by Centura and its bank subsidiaries may also
be affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Centura and Centura Bank are required to comply with the capital
adequacy standards established by the Federal Reserve. There are two basic
measures of capital adequacy for bank holding companies and the depository
institutions that they own: a risk-based measure and a leverage measure.
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All applicable capital standards must be satisfied for a bank holding company to
be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among
depository institutions and bank holding companies, to account for
off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At September 30, 1998, Centura's consolidated Total Capital Ratio and its Tier 1
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
10.86% and 10.38%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis points.
Centura's Leverage Ratio at September 30, 1998, was 7.85%. The guidelines also
provide that bank holding companies that experience internal growth or make
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. The Federal Reserve will consider a "tangible Tier 1 Capital Leverage
Ratio" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.
Centura Bank is subject to risk-based and leverage capital requirements
adopted by the Federal Reserve. Those requirements are similar to those adopted
by the Federal Reserve for bank holding companies. Centura Bank was in
compliance with those minimum capital requirements as of September 30, 1998. No
federal banking agency has advised Centura or its bank subsidiaries of any
specific minimum capital ratio requirement applicable to it.
A bank or thrift that fails to meet its capital guidelines may be
subject to a variety of enforcement remedies and certain other restrictions on
its business. Remedies could include the issuance of a capital directive, the
termination of deposit insurance by the Federal Deposit Insurance Corporation,
and a prohibition on the taking of brokered deposits. As described below,
substantial
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additional restrictions can be imposed upon Federal Deposit Insurance
Corporation-insured depository institutions that fail to meet their capital
requirements. See "-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
the capital requirements that apply to banks beyond their current levels. The
Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of
the Comptroller of the Currency have proposed an amendment to the risk-based
capital standards that would calculate the change in a bank's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures. The Office of Thrift Supervision has
already included an interest-rate risk component in its risk-based capital
guidelines for savings associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Centura is expected to act as a source of
financial strength for, and commit its resources to support, Centura Bank. This
support may be required at times when Centura may not be inclined to provide it.
In addition, any capital loans by a bank holding company to any of its bank
subsidiaries are subordinate to the payment of deposits and to certain other
indebtedness. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a bank subsidiary will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, which became effective in
December 1992, the federal banking regulators are required to establish five
capital categories (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized). With respect
to institutions in the three undercapitalized categories, the regulators must
take certain supervisory actions, and are authorized to take other discretionary
actions. The severity of the actions will depend upon the capital category in
which the institution is placed. Generally, subject to a narrow exception, the
Federal Deposit Insurance Corporation Improvement Act of 1991 requires the
banking regulator to appoint a receiver or conservator for an institution that
is critically undercapitalized. The federal banking agencies have specified the
relevant capital level for each category.
An institution is deemed to be well capitalized if it:
- has a Total Capital Ratio of 10% or greater;
- has a Tier 1 Capital Ratio of 6.0% or greater;
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- has a Leverage Ratio of 5.0% or greater; and
- is not subject to any written agreement, order, capital directive,
or prompt corrective action directive issued by its federal
banking agency.
An institution is considered to be adequately capitalized if it has:
- a Total Capital Ratio of 8.0% or greater;
- a Tier 1 Capital Ratio of 4.0% or greater; and
- a Leverage Ratio of 4.0% or greater.
A depository institution is considered to be undercapitalized if it has:
- a Total Capital Ratio of less than 8.0%;
- a Tier 1 Capital Ratio of less than 4.0%; or
- a Leverage Ratio of less than 4.0%.
A depository institution is considered to be significantly undercapitalized if
it has:
- a Total Capital Ratio of less than 6.0%;
- a Tier 1 Capital Ratio of less than 3.0%; or
- a Leverage Ratio of less than 3.0%.
An institution that has a tangible equity capital to assets ratio equal to or
less than 2.0% is deemed to be critically undercapitalized. "Tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets, with certain exceptions. A depository institution may be deemed to be in
a capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
In addition, a bank holding company must guarantee that a subsidiary bank meet
its capital restoration plan. This obligation to fund a capital restoration plan
is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets or
the amount required to meet regulatory capital requirements. Except in
accordance with an accepted capital restoration plan or with the approval of
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the Federal Deposit Insurance Corporation, an undercapitalized institution is
also generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches, or engaging in any new line of
business. In addition, its federal banking agency is given authority with
respect to any undercapitalized institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution if it determines "that those actions are necessary to carry out the
purpose" of the Federal Deposit Insurance Corporation Improvement Act of 1991.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, its federal
banking agency must require the institution to:
(1) sell enough shares, including voting shares, to become
adequately capitalized;
(2) merge with (or be sold to) another institution (or holding
company), but only if grounds exist for appointing a
conservator or receiver;
(3) restrict certain transactions with its banking affiliates;
(4) restrict transactions with bank or non-bank affiliates;
(5) restrict interest rates that the institution pays on deposits
to "prevailing rates" in the institution's "region";
(6) restrict asset growth or reduce total assets;
(7) alter, reduce, or terminate activities;
(8) hold a new election of directors;
(9) dismiss any director or senior executive officer who held
office for more than 180 days immediately before the
institution became undercapitalized, provided that in
requiring dismissal of a director or senior officer, the
agency must comply with certain procedural requirements,
including the opportunity for an appeal in which the director
or officer will have the burden of proving his or her value to
the institution;
(10) employ "qualified" senior executive officers;
(11) cease accepting deposits from correspondent depository
institutions;
(12) divest certain nondepository affiliates which pose a danger to
the institution; or
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(13) be divested by a parent holding company. In addition, without
the prior approval of its federal banking agency, a
significantly undercapitalized institution may not pay any
bonus to any senior executive officer or increase the rate of
compensation for such an officer.
DESCRIPTION OF CENTURA CAPITAL STOCK
Centura is authorized to issue 50,000,000 shares of Centura common
stock, of which 26,560,264 shares were issued and outstanding as of September
30, 1998. Centura is also authorized to issue 25,000,000 shares of Centura no
par value preferred stock, none of which is issued and outstanding.
Holders of Centura common stock are entitled to receive such dividends
as may be declared by the Board of Directors out of funds legally available
therefore. The ability of Centura to pay dividends is affected by the ability of
its subsidiary depository institution to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At September 30,
1998, under such requirements and guidelines, Centura's subsidiary depository
institution had $65.8 million of undivided profits legally available for the
payment of dividends. See "CERTAIN REGULATORY CONSIDERATIONS -- Payment of
Dividends."
For a further description of Centura Capital Stock, See "EFFECT OF THE
MERGER ON RIGHTS OF STOCKHOLDERS" on page __.
OTHER MATTERS
As of the date of this proxy statement-prospectus, First Coastal's
board of directors knows of no matters that will be presented for consideration
at the special meeting other than as described in this proxy
statement-prospectus. However, if any other matters properly come before the
special meeting or any adjournment or postponement of the special meeting and
are voted upon, the enclosed proxy will be deemed to confer discretionary
authority to the individuals named as proxies to vote the shares represented by
such proxy as to any such matters.
STOCKHOLDER PROPOSALS
First Coastal will hold its 1999 annual meeting of stockholders only if
the merger is not consummated. In order to be eligible for inclusion in First
Coastal's proxy materials for the 1999 annual meeting, if held, any stockholder
proposal to take action at such meeting must have been received at First
Coastal's executive offices at 2101 Parks Avenue, Virginia Beach, Virginia
23451, no later than November 23, 1998. However, if the date of First Coastal's
1999 annual meeting changes
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by more than 30 days from the date of last year's meeting, then the deadline for
any such proposals is a reasonable time before First Coastal prints and mails
its proxy materials. Any such proposals shall be subject to the requirements of
the proxy rules adopted under the Securities and Exchange Act of 1934, Virginia
law and First Coastal's articles of incorporation and bylaws.
Centura expects to hold its next annual meeting of stockholders in
April 1999, after the merger. Under the SEC rules, proposals of Centura
stockholders intended to be presented at that meeting must have been received by
Centura at its principal executive offices no later than November 11, 1998, to
be included in the proxy statement for the meeting.
EXPERTS
The consolidated financial statements of Centura Banks, Inc. and
subsidiaries as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997, have been incorporated herein by
reference and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated herein
by reference, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of First Coastal Bankshares,
Inc. and subsidiaries as of December 31, 1997 and 1996, and for each of the
years in the three-year period ended December 31, 1997, have been incorporated
herein by reference and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated herein by reference, and upon the authority of said firm as
experts in accounting and auditing.
OPINIONS
The legality of the shares of Centura common stock to be issued in the
merger will be passed upon by Joseph A. Smith, Jr., General Counsel and
Corporate Secretary of Centura. Joseph A. Smith, Jr. is an officer of and
stockholder, and receives compensation from, Centura.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird LLP, Washington, D.C..
WHERE YOU CAN FIND MORE INFORMATION
Centura and First Coastal file annual, quarterly and current reports,
proxy and information statements, and other information with the SEC under the
Securities Exchange Act of 1934. You may
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read and copy this information at the Public Reference Section at the SEC at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information about issuers that file
electronically with the SEC. The address of that site is http://www.sec.gov. In
addition, you can read and copy this information at the regional offices of the
SEC at 7 World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can
also inspect reports, proxy and information statements, and other information
about Centura at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
Centura filed a registration statement with the SEC under the
Securities Act of 1933, as amended, relating to the Centura common stock offered
to the First Coastal stockholders. The registration statement contains
additional information about Centura and the Centura common stock. The SEC
allows Centura to omit certain information included in the registration
statement from this proxy statement-prospectus. The registration statement may
be inspected and copied at the SEC's public reference facilities described
above.
This proxy statement-prospectus incorporates important business and
financial information about Centura and First Coastal that is not included in or
delivered with this proxy statement-prospectus. The following documents filed
with the SEC by Centura are incorporated by reference in this proxy
statement-prospectus (SEC File No. 1-10646):
(1) Centura's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) Centura's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1998, June 30, 1998, and September 30, 1998;
(3) Centura's Current Reports on Form 8-K dated January 7, April
6, July 6, October 5 and November 3, 1998;
(4) The description of the current management and board of
directors of Centura contained in the proxy statement of
Centura filed pursuant to Section 14(a) of the Exchange Act
for Centura's Annual Meeting of Stockholders held on April 15,
1998;
The following documents filed with the SEC by First Coastal are
incorporated by reference in this proxy statement-prospectus (SEC File No.
0-19398):
(1) First Coastal's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) First Coastal's Quarterly Reports on Form 10-Q for the three
months ended March 31, 1998, June 30, 1998, and September 30,
1998;
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(3) First Coastal's Current Report on Form 8-K dated October 28,
1998;
This proxy statement-prospectus is accompanied by a copy of First
Coastal's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, and First Coastal's quarterly report on Form 10-Q for the quarter ended
September 30, 1998.
Centura and First Coastal also incorporate by reference additional
documents filed by them pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of this proxy statement-prospectus and prior to
final adjournment of the special meeting. Any statement contained in this proxy
statement-prospectus or in a document incorporated or deemed to be incorporated
by reference in this proxy statement-prospectus shall be deemed to be modified
or superseded to the extent that a statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement.
You may obtain copies of the information incorporated by reference in
this proxy statement-prospectus upon written or oral request. The inside front
cover of this proxy statement-prospectus contains information about how such
requests should be made.
All information contained in this proxy statement-prospectus or
incorporated herein by reference with respect to Centura was supplied by
Centura, and all information contained in this proxy statement-prospectus with
respect to First Coastal was supplied by First Coastal.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST COASTAL BANKSHARES, INC.
AND
CENTURA BANKS, INC.
DATED AS OF OCTOBER 28, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Parties ..............................................................................................A-6
Preamble ..............................................................................................A-6
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER..............................................................A-7
1.1 Merger.......................................................................................A-7
1.2 Time and Place of Closing....................................................................A-7
1.3 Effective Time...............................................................................A-7
1.4 Execution of Stock Option Agreement..........................................................A-7
1.5 Restructure of Transaction...................................................................A-7
ARTICLE 2 - TERMS OF MERGER...............................................................................A-8
2.1 Articles of Incorporation....................................................................A-8
2.2 Bylaws.......................................................................................A-8
2.3 Directors and Officers.......................................................................A-8
ARTICLE 3 - MANNER OF CONVERTING SHARES...................................................................A-8
3.1 Conversion of Shares.........................................................................A-8
3.2 Anti-Dilution Provisions.....................................................................A-9
3.3 Shares Held by First Coastal or Centura......................................................A-9
3.4 Fractional Shares............................................................................A-9
3.5 Conversion of Stock Rights..................................................................A-10
ARTICLE 4 - EXCHANGE OF SHARES...........................................................................A-11
4.1 Exchange Procedures.........................................................................A-11
4.2 Rights of Former First Coastal Stockholders.................................................A-12
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF FIRST COASTAL..............................................A-13
5.1 Organization, Standing, and Power...........................................................A-13
5.2 Authority; No Breach By Agreement...........................................................A-13
5.3 Capital Stock...............................................................................A-14
5.4 First Coastal Subsidiaries..................................................................A-14
5.5 SEC Filings; Financial Statements...........................................................A-15
5.6 Absence of Undisclosed Liabilities..........................................................A-16
5.7 Absence of Certain Changes or Events........................................................A-16
5.8 Tax Matters.................................................................................A-16
5.9 Assets......................................................................................A-17
5.10 Environmental Matters.......................................................................A-18
5.11 Compliance with Laws........................................................................A-19
5.12 Labor Relations.............................................................................A-20
5.13 Employee Benefit Plans......................................................................A-20
5.14 Material Contracts..........................................................................A-22
5.15 Legal Proceedings...........................................................................A-23
5.16 Reports.....................................................................................A-23
5.17 Statements True and Correct.................................................................A-24
5.18 Tax and Regulatory Matters..................................................................A-24
</TABLE>
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<TABLE>
<S> <C> <C>
5.19 State Takeover Laws.........................................................................A-24
5.20 Charter Provisions..........................................................................A-24
5.21 Derivatives.................................................................................A-25
5.22 Year 2000...................................................................................A-25
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF CENTURA....................................................A-25
6.1 Organization, Standing, and Power...........................................................A-25
6.2 Authority; No Breach By Agreement...........................................................A-25
6.3 Capital Stock...............................................................................A-26
6.4 Centura Subsidiaries........................................................................A-26
6.5 SEC Filings; Financial Statements...........................................................A-27
6.6 Absence of Undisclosed Liabilities..........................................................A-28
6.7 Absence of Certain Changes or Events........................................................A-28
6.8 Tax Matters.................................................................................A-28
6.9 Assets......................................................................................A-30
6.10 Environmental Matters.......................................................................A-30
6.11 Compliance with Laws........................................................................A-31
6.12 Labor Relations.............................................................................A-32
6.13 Legal Proceedings...........................................................................A-32
6.14 Reports.....................................................................................A-32
6.15 Statements True and Correct.................................................................A-33
6.16 Tax and Regulatory Matters..................................................................A-33
6.17 Derivatives.................................................................................A-33
6.18 Year 2000...................................................................................A-33
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION.....................................................A-33
7.1 Affirmative Covenants of First Coastal......................................................A-33
7.2 Negative Covenants of First Coastal.........................................................A-34
7.3 Covenants of Centura........................................................................A-36
7.4 Adverse Changes in Condition................................................................A-36
7.5 Reports.....................................................................................A-37
ARTICLE 8 - ADDITIONAL AGREEMENTS........................................................................A-37
8.1 Registration Statement; Proxy Statement; Stockholder Approval...............................A-37
8.2 Exchange Listing............................................................................A-37
8.3 Applications................................................................................A-38
8.4 Filings with State Offices..................................................................A-38
8.5 Agreement as to Efforts to Consummate.......................................................A-38
8.6 Investigation and Confidentiality...........................................................A-38
8.7 Press Releases..............................................................................A-39
8.8 Certain Actions.............................................................................A-39
8.9 Accounting and Tax Treatment................................................................A-40
8.10 State Takeover Laws.........................................................................A-40
8.11 Charter Provisions..........................................................................A-40
8.12 Agreement of Affiliates.....................................................................A-40
8.13 Employee Benefits and Contracts.............................................................A-41
8.14 Indemnification.............................................................................A-41
</TABLE>
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<TABLE>
<S> <C> <C>
8.15 Assumption of Agreement.....................................................................A-43
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................................A-43
9.1 Conditions to Obligations of Each Party.....................................................A-43
9.2 Conditions to Obligations of Centura........................................................A-45
9.3 Conditions to Obligations of First Coastal..................................................A-46
ARTICLE 10 - TERMINATION.................................................................................A-47
10.1 Termination................................................................................A-47
10.2 Effect of Termination......................................................................A-48
10.3 Non-Survival of Representations and Covenants..............................................A-48
ARTICLE 11 - MISCELLANEOUS...............................................................................A-48
11.1 Definitions................................................................................A-48
11.2 Expenses...................................................................................A-57
11.3 Brokers and Finders........................................................................A-58
11.4 Entire Agreement...........................................................................A-58
11.5 Amendments.................................................................................A-58
11.6 Waivers....................................................................................A-58
11.7 Assignment.................................................................................A-59
11.8 Notices....................................................................................A-59
11.9 Governing Law..............................................................................A-60
11.10 Counterparts...............................................................................A-60
11.11 Captions...................................................................................A-60
11.12 Interpretations............................................................................A-60
11.13 Enforcement of Agreement...................................................................A-60
11.14 Severability...............................................................................A-61
Signatures ...........................................................................................A-61
</TABLE>
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<PAGE> 92
LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
1. Form of Stock Option Agreement.
2. Form of Affiliate Agreement.
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<PAGE> 93
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of October 28, 1998, by and between FIRST COASTAL BANKSHARES,
INC. ("First Coastal"), a corporation organized and existing under the Laws of
the Commonwealth of Virginia, with its principal office located in Virginia
Beach, Virginia; and CENTURA BANKS, INC. ("Centura"), a corporation organized
and existing under the Laws of the State of North Carolina, with its principal
office located in Rocky Mount, North Carolina.
PREAMBLE
The Boards of Directors of First Coastal and Centura are of the
opinion that the transactions described herein are in the best interests of the
parties to this Agreement and their respective stockholders. This Agreement
provides for the acquisition of First Coastal by Centura pursuant to the merger
(the "Merger") of First Coastal with and into Centura. At the effective time of
the Merger, the outstanding shares of the capital stock of First Coastal shall
be converted into shares of the common stock of Centura (except as provided
herein). As a result, stockholders of First Coastal shall become stockholders of
Centura, and each of the subsidiaries of First Coastal shall continue to conduct
its business and operations as a subsidiary of Centura. The transactions
described in this Agreement are subject to the approvals of the stockholders of
First Coastal, the Board of Governors of the Federal Reserve System, and certain
state regulatory authorities, and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the Merger (i) for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and (ii) for accounting purposes shall qualify for treatment as a pooling
of interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to Centura's willingness to enter into this Agreement,
First Coastal and Centura are entering into a stock option agreement (the "Stock
Option Agreement"), in substantially the form of Exhibit 1, pursuant to which
First Coastal is granting to Centura an option to purchase shares of First
Coastal Common Stock ".
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties, intending to be legally bound, agree as follows:
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<PAGE> 94
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, First Coastal shall be merged with and into
Centura in accordance with the provisions of Section 13.1-722 of the VSCA and
with the effect provided in Section 13.1-721 of the VSCA and Section 55-11-07 of
the NCBCA and with the effect provided in Section 55-11-06 of the NCBCA (the
"Merger"). Centura shall be the Surviving Corporation resulting from the Merger
and shall continue to be governed by the Laws of the State of North Carolina.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of First
Coastal and Centura.
1.2 TIME AND PLACE OF CLOSING. The consummation of the Merger
(the "Closing") shall take place at 9:00 A.M. on the date that the Effective
Time occurs (or the immediately preceding day if the Effective Time is earlier
than 9:00 A.M.), or at such other time as the Parties, acting through their duly
authorized officers, may mutually agree. The place of Closing shall be at such
location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and the other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Virginia Articles of Merger reflecting the Merger shall become
effective with the Secretary of State of the Commonwealth of Virginia and the
North Carolina Articles of Merger shall become effective with the Secretary of
State of the State of North Carolina (the "Effective Time"). Subject to the
terms and conditions hereof, unless otherwise mutually agreed upon in writing by
the duly authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on or before the 30th
day (as designated by Centura) following the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger, and (ii) the date on which the stockholders of First
Coastal approve the matters relating to this Agreement required to be approved
by such stockholders by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement by the Parties and as a condition thereto, First
Coastal is executing and delivering to Centura the Stock Option Agreement,
pursuant to which First Coastal is granting to Centura an option to purchase
shares of First Coastal Common Stock.
1.5 RESTRUCTURE OF TRANSACTION. Centura shall, in its reasonable
discretion, have the unilateral right to revise the structure of the Merger
contemplated by this Agreement in order to achieve Tax benefits or for any other
reason which Centura may deem advisable; provided, however, that Centura shall
not have the right, without the approval of the Board of Directors of First
Coastal and, if required by applicable Law, the holders of First Coastal Common
Stock, to make any revision to the structure of the Merger which: (i) changes
the amount of the consideration which the holders of shares of First Coastal
Common Stock are
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<PAGE> 95
entitled to receive (determined in the manner provided in Section 4.1 of this
Agreement); (ii) changes the intended tax-free effects of the Merger to Centura,
First Coastal, or the holders of shares of First Coastal Common Stock or changes
the intended pooling-of-interests accounting treatment; (iii) would permit
Centura to pay the consideration other than by delivery of Centura Common Stock
registered with the SEC (in the manner described in Section 4.1 of this
Agreement); (iv) would be Materially adverse to the interests of First Coastal
or adverse to the holders of shares of First Coastal Common Stock; or (v) would
Materially impede or delay consummation of the Merger. Centura may exercise this
right of revision by giving written notice to First Coastal in the manner
provided in Section 11.8 of this Agreement which notice shall be in the form of
an amendment to this Agreement or in the form of an Agreement and Plan of
Merger.
ARTICLE 2
TERMS OF MERGER
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Centura in effect immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Centura in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Centura in office
immediately prior to the Effective Time, together with one current member of the
Board of Directors of First Coastal, to be jointly selected by First Coastal and
Centura, and such additional persons as thereafter elected, shall serve as the
directors of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation. The officers of Centura
in office immediately prior to the Effective Time, together with such additional
officers as thereafter elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Centura or First Coastal, or the stockholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
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<PAGE> 96
(a) Each share of Centura Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of First Coastal Common Stock (excluding shares held
by any First Coastal Company or any Centura Company, in each case other
than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall be
converted into .34 of a share of Centura Common Stock (subject to
adjustment as described below, the "Exchange Ratio"); provided, however,
that: (i) in the event the Average Closing Price is less than $58.7563
and greater than or equal to $51.8438, then the Exchange Ratio shall
equal the quotient obtained by dividing (a) the product obtained by
multiplying (1) the Exchange Ratio (as then in effect) and (2) $58.7563
by (b) the Average Closing Price; and (ii) in the event the Average
Closing Price is greater than $79.4938 and less than or equal to
$86.4063, then the Exchange Ratio shall equal the quotient obtained by
dividing (a) the product obtained by multiplying (1) the Exchange Ratio
(as then in effect) and (2) $79.4938 by (b) the Average Closing Price.
3.2 ANTI-DILUTION PROVISIONS. In the event First Coastal changes
the number of shares of First Coastal Common Stock issued and outstanding prior
to the Effective Time as a result of a stock split, stock dividend,
recapitalization, or similar transaction with respect to such stock, the
Exchange Ratio shall be proportionately adjusted. In the event Centura changes
the number of shares of Centura Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
or similar transaction with respect to such stock and the record date therefor
(in the case of a stock dividend) or the effective date thereof (in the case of
a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 SHARES HELD BY FIRST COASTAL OR CENTURA. Each of the shares of
First Coastal Common Stock held by any First Coastal Company or by any Centura
Company, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of First Coastal Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Centura Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Centura Common Stock multiplied by the market value of one share of Centura
Common Stock at the Effective Time. The market value of one share of Centura
Common Stock at the Effective Time shall be the closing price of Centura Common
Stock on the New York Stock Exchange - Composite Transaction List (as reported
by The Wall Street Journal or, if not reported thereby,
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<PAGE> 97
any other authoritative source selected by Centura) on the last trading day
preceding the Effective Time. No such holder will be entitled to dividends,
voting rights, or any other rights as a stockholder in respect of any fractional
shares.
3.5 CONVERSION OF STOCK RIGHTS.
(a) At the Effective Time, each award, option, or other right
to purchase or acquire shares of First Coastal Common Stock pursuant to stock
options, stock appreciation rights, or stock awards ("First Coastal Rights")
granted by First Coastal under the First Coastal Stock Plans, which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Centura Common Stock, and
Centura shall assume each First Coastal Right, in accordance with the terms of
the First Coastal Stock Plan and stock option agreement by which it is
evidenced, except that from and after the Effective Time, (i) Centura and its
Compensation Committee shall be substituted for First Coastal and the Committee
of First Coastal's Board of Directors (including, if applicable, the entire
Board of Directors of First Coastal) administering such First Coastal Stock
Plan, (ii) each First Coastal Right assumed by Centura may be exercised solely
for shares of Centura Common Stock (or cash in the case of stock appreciation
rights), (iii) the number of shares of Centura Common Stock subject to such
First Coastal Right shall be equal to the number of shares of First Coastal
Common Stock subject to such First Coastal Right immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iv) the per share exercise
price (or similar threshold price, in the case of stock awards) under each such
First Coastal Right shall be adjusted by dividing the per share exercise (or
threshold) price under each such First Coastal Right by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of clause (iii)
of the preceding sentence, Centura shall not be obligated to issue any fraction
of a share of Centura Common Stock upon exercise of First Coastal Rights and any
fraction of a share of Centura Common Stock that otherwise would be subject to a
converted First Coastal Right shall represent the right to receive a cash
payment equal to the product of such fraction and the difference between the
market value of one share of Centura Common Stock and the per share exercise
price of such Right. The market value of one share of Centura Common Stock shall
be the closing price of Centura Common Stock on the New York Stock Exchange
Composite Transactions List (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Centura) on the
last trading day preceding the date of exercise of the First Coastal Right. In
addition, notwithstanding the provisions of clauses (iii) and (iv) of the first
sentence of this Section 3.5, each First Coastal Right which is an "incentive
stock option" shall be adjusted as required by Section 424 of the Internal
Revenue Code, so as not to constitute a modification, extension, or renewal of
the option, within the meaning of Section 424(h) of the Internal Revenue Code.
Centura agrees to take all necessary steps to effectuate the foregoing
provisions of this Section 3.5.
(b) As soon as reasonably practicable after the Effective Time,
Centura shall deliver to the participants in each First Coastal Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants pursuant to such First Coastal Stock Plan
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<PAGE> 98
shall continue in effect on the same terms and conditions (subject to the
adjustments required by Section 3.5(a) after giving effect to the Merger), and
Centura shall comply with the terms of each First Coastal Stock Plan to ensure,
to the extent required by, and subject to the provisions of, such First Coastal
Stock Plan, that First Coastal Rights which qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options after
the Effective Time. At or prior to the Effective Time, Centura shall take all
corporate action necessary to reserve for issuance sufficient shares of Centura
Common Stock for delivery upon exercise of First Coastal Rights assumed by it in
accordance with this Section 3.5. As soon as reasonably practicable after the
Effective Time, Centura shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of Centura Common Stock subject to such options and shall
use its reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the 1934 Act, where applicable,
Centura shall administer the First Coastal Stock Plan assumed pursuant to this
Section 3.5 in a manner that complies with Rule 16b-3 promulgated under the 1934
Act.
(c) All restrictions or limitations on transfer with
respect to First Coastal Common Stock awarded under the First Coastal Stock
Plans or any other plan, program, or arrangement of any First Coastal Company,
to the extent that such restrictions or limitations shall not have already
lapsed, and except as otherwise expressly provided in such plan, program, or
arrangement, shall remain in full force and effect with respect to shares of
Centura Common Stock into which such restricted stock is converted pursuant to
Section 3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
Centura and First Coastal shall cause the exchange agent selected by Centura
(the "Exchange Agent") to mail to the former stockholders of First Coastal
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of First Coastal Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). After the Effective Time,
each holder of shares of First Coastal Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.4 of this Agreement, each holder
of shares of First Coastal Common Stock issued and outstanding at the Effective
Time also shall receive, upon surrender of the certificate or certificates
representing such shares, cash in lieu
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<PAGE> 99
of any fractional share of Centura Common Stock to which such holder may be
otherwise entitled (without interest). Centura shall not be obligated to deliver
the consideration to which any former holder of First Coastal Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of First Coastal Common
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of First Coastal Common Stock so surrendered shall be duly endorsed
as the Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither the Surviving Corporation nor the Exchange Agent shall
be liable to a holder of First Coastal Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER FIRST COASTAL STOCKHOLDERS. At the Effective
Time, the stock transfer books of First Coastal shall be closed as to holders of
First Coastal Common Stock immediately prior to the Effective Time and no
transfer of First Coastal Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1 of this Agreement, each certificate theretofore
representing shares of First Coastal Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by First Coastal in respect of
such shares of First Coastal Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. To the extent permitted
by Law, former stockholders of record of First Coastal shall be entitled to vote
after the Effective Time at any meeting of Centura stockholders the number of
whole shares of Centura Common Stock into which their respective shares of First
Coastal Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing First Coastal Common Stock for
certificates representing Centura Common Stock in accordance with the provisions
of this Agreement. Whenever a dividend or other distribution is declared by
Centura on the Centura Common Stock, the record date for which is at or after
the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but beginning
30 days after the Effective Time no dividend or other distribution payable to
the holders of record of Centura Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of First Coastal Common Stock issued and outstanding at the Effective
Time until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such First Coastal
Common Stock certificate, both the Centura Common Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
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<PAGE> 100
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST COASTAL
First Coastal hereby represents and warrants to Centura as follows:
5.1 ORGANIZATION, STANDING, AND POWER. First Coastal is a
corporation duly organized, validly existing, and in good standing under the
Laws of the Commonwealth of Virginia, and has the corporate power and authority
to carry on its business as now conducted and to own, lease, and operate its
Material Assets. First Coastal is duly qualified or licensed to transact
business as a foreign corporation in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First Coastal.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) First Coastal has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement, and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of First
Coastal, subject to the approval of this Agreement by the holders of a majority
of the outstanding shares of First Coastal Common Stock entitled to be cast
thereon, which is the only stockholder vote required for approval of this
Agreement and consummation of the Merger by First Coastal. Subject to such
requisite stockholder approval, this Agreement represents a legal, valid, and
binding obligation of First Coastal, enforceable against First Coastal in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
First Coastal, nor the consummation by First Coastal of the transactions
contemplated hereby, nor compliance by First Coastal with any of the provisions
hereof or thereof, will (i) conflict with or result in a breach of any provision
of First Coastal's Articles of Incorporation or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any First Coastal Company under, any
Contract or Permit of any First Coastal Company, where such Default or Lien, or
any failure to obtain such Consent, is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on First Coastal, or (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b) of
this
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Agreement, violate any Law or Order applicable to any First Coastal Company
or any of their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First Coastal, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by First Coastal of the Merger and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of First Coastal consists, as
of the date of this Agreement, of (i) 10,000,000 shares of First Coastal Common
Stock, of which 4,986,541 shares are issued and outstanding as of the date of
this Agreement and, not more than 5,437,791 shares will be issued and
outstanding at the Effective Time, and (ii) 5,000,000 shares of First Coastal
Preferred Stock, of which no shares are issued and outstanding as of the date of
this Agreement and no shares of First Coastal Preferred Stock will be issued and
outstanding as of the Effective Time. All of the issued and outstanding shares
of First Coastal Common Stock are duly and validly issued and outstanding and
are fully paid and nonassessable under the VSCA. None of the outstanding shares
of First Coastal Common Stock has been issued in violation of any preemptive
rights of the current or past stockholders of First Coastal.
(b) Except as set forth in Section 5.3(a) of this Agreement or
as provided pursuant to the First Coastal Stock Plans or the Stock Option
Agreement, there are no shares of capital stock or other equity securities of
First Coastal outstanding and no outstanding Rights relating to the capital
stock of First Coastal.
5.4 FIRST COASTAL SUBSIDIARIES. First Coastal has disclosed in
Section 5.4 of the First Coastal Disclosure Memorandum all of the First Coastal
Subsidiaries as of the date of this Agreement. First Coastal or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock of
each First Coastal Subsidiary. No equity securities of any First Coastal
Subsidiary are or may become required to be issued (other than to another First
Coastal Company) by reason of any Rights, and there are no Contracts by which
any First Coastal Subsidiary is bound to issue (other than to another First
Coastal Company) additional shares of its capital stock or Rights or by which
any First Coastal Company is or may be bound to transfer any shares of the
capital stock of any First Coastal Subsidiary (other than to another First
Coastal Company). There are no Contracts relating to the rights of any First
Coastal Company to vote or to dispose of any shares of the capital stock of any
First Coastal Subsidiary. All of the shares of capital stock of each First
Coastal Subsidiary held by a First Coastal Company are duly
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authorized, validly issued, and fully paid and, except as provided in statutes
pursuant to which depository institution Subsidiaries are organized,
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the First Coastal
Company free and clear of any Lien. Each First Coastal Subsidiary is either a
bank or a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each First Coastal Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First Coastal. Each First Coastal
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Savings Association
Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) First Coastal has filed and made available to Centura all
forms, reports, and documents required to be filed by First Coastal with the
SEC since December 31, 1994 (collectively, the "First Coastal SEC Reports").
The First Coastal SEC Reports (i) at the time filed, complied as to form in all
Material respects with the applicable requirements of the 1933 Act and the 1934
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a Material fact or
omit to state a Material fact required to be stated in such First Coastal SEC
Reports or necessary in order to make the statements in such First Coastal SEC
Reports, in light of the circumstances under which they were made, not
misleading. Except for First Coastal Subsidiaries that are registered as a
broker, dealer, or investment advisor or filings required due to fiduciary
holdings of the First Coastal Subsidiaries, none of First Coastal's
Subsidiaries is required to file any forms, reports, or other documents with
the SEC.
(b) Each of the First Coastal Financial Statements (including,
in each case, any related notes) contained in the First Coastal SEC Reports,
including any First Coastal SEC Reports filed after the date of this Agreement
until the Effective Time, complied or will comply as to form in all Material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared or will be prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements, or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented or will fairly present the consolidated financial position of First
Coastal and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements
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were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be Material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No First Coastal Company
has any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First Coastal, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of First
Coastal as of June 30, 1998, included in the First Coastal Financial Statements
or reflected in the notes thereto and except for Liabilities incurred in the
ordinary course of business subsequent to June 30, 1998. No First Coastal
Company has incurred or paid any Liability since June 30, 1998, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First Coastal.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1998,
except as disclosed in the First Coastal Financial Statements or Section 5.7 of
the First Coastal Disclosure Memorandum, (i) there have been no events,
changes, or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First Coastal,
and (ii) the First Coastal Companies have conducted their respective businesses
in the ordinary and usual course (excluding the incurrence of expenses in
connection with this Agreement and the transactions contemplated hereby).
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any
of the First Coastal Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for the three
tax years ended on or before December 31, 1997, and, to the Knowledge of First
Coastal, all Tax Returns filed are complete and accurate in all Material
respects. All Tax Returns for the three tax years ending on or before the date
of the most recent fiscal year end immediately preceding the Effective Time
will be timely filed or requests for extensions will be timely filed. All
Taxes shown on filed Tax Returns have been paid. There is no audit
examination, deficiency, or refund Litigation with respect to any Taxes, that
is reasonably likely to result in a determination that would have, individually
or in the aggregate, a Material Adverse Effect on First Coastal, except to the
extent reserved against in the First Coastal Financial Statements dated prior
to the date of this Agreement. All Taxes and other Liabilities due with
respect to completed and settled examinations or concluded Litigation have been
paid.
(b) None of the First Coastal Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the First Coastal Companies for the period or periods through and
including the date of the
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respective First Coastal Financial Statements has been made and is reflected on
such First Coastal Financial Statements.
(d) Each of the First Coastal Companies is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Coastal.
(e) Except as set forth in Section 5.8(e) of the First Coastal
Disclosure Memorandum, none of the First Coastal Companies has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement, or other arrangement that could obligate it to make any payments
that would be disallowed as a deduction under Section 280G or 162(m) of the
Internal Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any
of the Assets of the First Coastal Companies.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the First Coastal Companies that
occurred during or after any Taxable Period in which the First Coastal
Companies incurred a net operating loss that carries over to any Taxable Period
ending after December 31, 1997.
(h) No First Coastal Company has filed any consent under
Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with
respect to Taxes will be made without the prior consent of Centura, which
consent will not be unreasonably withheld.
(j) No First Coastal Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
5.9 ASSETS. The First Coastal Companies have marketable title
insurable at standard rates, free and clear of all Liens, to all of their
respective Assets. All tangible properties used in the businesses of the First
Coastal Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with First Coastal's
past practices. All Assets which are Material to First Coastal's business on a
consolidated basis, held under leases or subleases by any of the First Coastal
Companies, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The First
Coastal Companies currently maintain insurance in amounts, scope, and coverage
reasonably necessary for their operations. None of the First Coastal Companies
has received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. The Assets of the First Coastal Companies include all Assets
required to operate the business of the First Coastal Companies as presently
conducted.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of First Coastal, each First Coastal
Company, its Participation Facilities, and its Loan Properties are, and have
been, in compliance with all Environmental Laws, except those violations which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Coastal.
(b) There is no Litigation pending or, to the Knowledge of
First Coastal, threatened before any court, governmental agency, or authority,
or other forum in which any First Coastal Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may reasonably
be expected to be named as a defendant (i) for alleged noncompliance (including
by any predecessor) with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material, whether or not occurring at,
on, under, or involving a site owned, leased, or operated by any First Coastal
Company or any of its Participation Facilities, except for such Litigation
pending or threatened that is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First Coastal.
(c) There is no Litigation pending, or to the Knowledge of
First Coastal, threatened before any court, governmental agency, or board, or
other forum in which any of its Loan Properties (or First Coastal in respect of
such Loan Property) has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, or involving a Loan
Property, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First Coastal.
(d) To the Knowledge of First Coastal, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First Coastal.
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(e) To the Knowledge of First Coastal and except as disclosed
in Section 5.10(e) of the First Coastal Disclosure Memorandum, during the
period of (i) any First Coastal Company's ownership or operation of any of
their respective current properties, (ii) any First Coastal Company's
participation in the management of any Participation Facility, or (iii) any
First Coastal Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material in, on, under, or affecting
(or potentially affecting) such properties, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First Coastal. Prior to the period of (i) any First Coastal Company's
ownership or operation of any of their respective current properties, (ii) any
First Coastal Company's participation in the management of any Participation
Facility, or (iii) any First Coastal Company's holding of a security interest
in a Loan Property, to the Knowledge of First Coastal, except as disclosed in
Section 5.10(e) of the First Coastal Disclosure Memorandum, there were no
releases of Hazardous Material in, on, under, or affecting any such property,
Participation Facility, or Loan Property, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First Coastal.
5.11 COMPLIANCE WITH LAWS. First Coastal is duly registered as a
savings and loan holding company under the HOLA. Each First Coastal Company has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on its business as now conducted, except for those Permits
the absence of which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First Coastal, and there has occurred
no Default under any such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First Coastal. None of the First Coastal Companies:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on First Coastal; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any First
Coastal Company is not in compliance with any of the Laws or Orders which
such governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First Coastal, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First
Coastal, or (iii) requiring any First Coastal Company (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the payment of
dividends.
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5.12 LABOR RELATIONS. No First Coastal Company is the subject of any
Litigation asserting that it or any other First Coastal Company has committed
an unfair labor practice (within the meaning of the National Labor Relations
Act or comparable state Law) or seeking to compel it or any other First Coastal
Company to bargain with any labor organization as to wages or conditions of
employment, nor is any First Coastal Company a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other
labor dispute involving any First Coastal Company, pending, or to the Knowledge
of First Coastal, is there any activity involving any First Coastal Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) First Coastal has disclosed to Centura in writing prior to
the execution of the Agreement and in Section 5.13 of the First Coastal
Disclosure Memorandum, and has delivered or made available to Centura prior to
the execution of this Agreement correct and complete copies in each case of,
all First Coastal Benefits Plans. For purposes of this Agreement, "First
Coastal Benefit Plans" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is defined
in Section 3(3) of ERISA maintained by, sponsored in whole or in part by, or
contributed to by, any First Coastal Company for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate. Any of the First Coastal Benefit Plans which is an "employee
welfare benefit plan," as that term is defined in Section 3(l) of ERISA, or an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "First Coastal ERISA Plan." Any First Coastal
ERISA Plan which is also a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code or Section 3(35) of ERISA) is referred to herein
as a "First Coastal Pension Plan." Neither First Coastal nor any First Coastal
Company has an "obligation to contribute" (as defined in ERISA Section 4212) to
a "multi-employer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
Each "employee pension benefit plan," as defined in Section 3(2) of ERISA, ever
maintained by any First Coastal Company that was intended to qualify under
Section 401(a) of the Internal Revenue Code and with respect to which any First
Coastal Company has any Liability, is disclosed as such in Section 5.13 of the
First Coastal Disclosure Memorandum.
(b) First Coastal has delivered or made available to Centura
prior to the execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding arrangements for
such First Coastal Benefit Plans (including insurance contracts), and all
amendments thereto; (ii) with respect to any such First Coastal Benefit Plans
or amendments, all determination letters, rulings, opinion letters, information
letters,
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or Material advisory opinions issued by the Internal Revenue Service, the
United States Department of Labor, or the Pension Benefit Guaranty Corporation
after December 31, 1994; (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and summary annual
reports prepared for any First Coastal Benefit Plan with respect to the most
recent plan year; and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(c) All First Coastal Benefit Plans are in material compliance
with the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws, the breach or violation of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Coastal. Each First Coastal ERISA Plan currently maintained by First Coastal
which is intended to be qualified under Section 401(a) of the Internal Revenue
Code has received a favorable determination letter from the Internal Revenue
Service, and First Coastal is not aware of any circumstances which will or
could reasonably result in revocation of any such favorable determination
letter. Each trust created under any First Coastal ERISA Plan has been
determined to be exempt from Tax under Section 501(a) of the Internal Revenue
Code and First Coastal is not aware of any circumstance which will or could
reasonably result in revocation of such exemption. With respect to each First
Coastal Benefit Plan to the Knowledge of First Coastal, no event has occurred
which will or could reasonably give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under Section 511 of
the Internal Revenue Code that is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on First Coastal. There is no
Material pending or, to the Knowledge of First Coastal, threatened Litigation
relating to any First Coastal ERISA Plan.
(d) No First Coastal Company has engaged in a transaction with
respect to any First Coastal Benefit Plan that, assuming the Taxable Period of
such transaction expired as of the date of this Agreement, would subject any
First Coastal Company to a Material Tax or penalty imposed by either Section
4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts which
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Coastal. Neither First Coastal nor any administrator
or fiduciary of any First Coastal Benefit Plan (or any agent of any of the
foregoing) has engaged in any transaction, or acted or failed to act in any
manner which could subject First Coastal to any direct or indirect Liability
(by indemnity or otherwise) for breach of any fiduciary, co-fiduciary, or other
duty under ERISA, where such Liability, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on First Coastal. To its
Knowledge, no oral or written representation or communication with respect to
any aspect of the First Coastal Benefit Plans has been made to employees of any
First Coastal Company which is not in accordance with the written or otherwise
preexisting terms and provisions of such plans, where any Liability with
respect to such representation or disclosure is reasonably likely to have a
Material Adverse Effect on First Coastal.
(e) Since the date of the most recent actuarial valuation,
there has been (i) no Material change in the financial position or funded
status of any First Coastal Pension Plan,
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(ii) no change in the actuarial assumptions with respect to any First Coastal
Pension Plan, and (iii) no increase in benefits under any First Coastal Pension
Plan as a result of plan amendments or changes in applicable Law, any of which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Coastal. Neither any First Coastal Pension Plan nor
any "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any First Coastal Company, or the
single-employer plan of any entity which is considered one employer with First
Coastal under Section 4001 of ERISA or Section 414 of the Internal Revenue Code
or Section 302 of ERISA (whether or not waived) (a "First Coastal ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA. All
contributions with respect to a First Coastal Pension Plan or any
single-employer plan of a First Coastal ERISA Affiliate have or will be timely
made and there is no lien or expected to be a lien under Internal Revenue Code
Section 412(n) or ERISA Section 302(f) or Tax under Internal Revenue Code
Section 4971. No First Coastal Company has provided, or is required to
provide, security to a First Coastal Pension Plan or to any single-employer
plan of a First Coastal ERISA Affiliate pursuant to Section 401(a)(29) of the
Internal Revenue Code. All premiums required to be paid under ERISA Section
4006 have been timely paid by First Coastal, except to the extent any failure
would not have a Material Adverse Effect on First Coastal.
(f) No Liability under Title IV of ERISA has been or is
expected to be incurred by any First Coastal Company with respect to any
defined benefit plan currently or formerly maintained by any of them or by any
First Coastal ERISA Affiliate that has not been satisfied in full (other than
Liability for Pension Benefit Guaranty Corporation premiums, which have been
paid when due, except to the extent any failure would not have a Material
Adverse Effect on First Coastal).
(g) No First Coastal Company has any obligations for retiree
health and retiree life benefits under any of the First Coastal Benefit Plans
other than with respect to benefit coverage mandated by applicable Law.
(h) Except as disclosed in Section 5.13(h) of the First Coastal
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will, by themselves,
(i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of any First Coastal Company from any First Coastal
Company under any First Coastal Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any First Coastal Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit.
5.14 MATERIAL CONTRACTS. Except as disclosed in Section 5.14 of the
First Coastal Disclosure Memorandum, none of the First Coastal Companies, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment,
severance, termination, consulting, or retirement Contract
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providing for aggregate payments to any Person in any calendar year in excess
of $50,000, (ii) any Contract relating to the borrowing of money by any First
Coastal Company or the guarantee by any First Coastal Company of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables, and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
and (iii) any other Contract or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by First Coastal with the SEC as of
the date of this Agreement that has not been filed as an exhibit to First
Coastal's Form 10-K filed for the fiscal year ended December 31, 1997, or in
another SEC Document and identified to Centura (together with all Contracts
referred to in Sections 5.8 and 5.13 (a) of this Agreement, the "First Coastal
Contracts"). With respect to each First Coastal Contract: (i) the Contract is
in full force and effect; (ii) no First Coastal Company is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First Coastal;
(iii) no First Coastal Company has repudiated or waived any Material provision
of any such Contract; and (iv) no other party to any such Contract is, to the
Knowledge of First Coastal, in Default in any respect, other than Defaults
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First Coastal, or has repudiated or waived any
Material provision thereunder. Except for Federal Home Loan Bank advances, all
of the indebtedness of any First Coastal Company for money borrowed is
prepayable at any time by such First Coastal Company without penalty or
premium.
5.15 LEGAL PROCEEDINGS.
(a) There is no Litigation instituted or pending, or, to the
Knowledge of First Coastal, threatened against any First Coastal Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Coastal, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any First Coastal Company, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on First Coastal.
(b) Section 5.15 (b) of the First Coastal Disclosure Memorandum
includes a summary report of all Litigation as of the date of this Agreement to
which any First Coastal Company is a party and which names a First Coastal
Company as a defendant or cross-defendant and where the maximum exposure is
estimated to be $50,000 or more.
5.16 REPORTS. Since January 1, 1995, or the date of organization if
later, to its Knowledge, each First Coastal Company has timely filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with any Regulatory Authorities,
except failures to file which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on First Coastal. As of their
respective dates, each
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of such reports and documents, including the financial statements, exhibits,
and schedules thereto, complied in all Material respects with all applicable
Laws.
5.17 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by any First Coastal Company or any Affiliate thereof
regarding First Coastal or such Affiliate for inclusion in the Registration
Statement to be filed by Centura with the SEC will, when the Registration
Statement becomes effective, be false or misleading with respect to any
Material fact, or contain any untrue statement of a Material fact, or omit to
state any Material fact required to be stated thereunder or necessary to make
the statements therein not misleading. None of the information supplied or to
be supplied by any First Coastal Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to First Coastal's stockholders in
connection with the Stockholders' Meeting will, when first mailed to the
stockholders of First Coastal, be false or misleading with respect to any
Material fact, or contain any misstatement of Material fact, or omit to state
any Material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material
fact required to be stated thereunder or necessary to correct any Material
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any First Coastal
Company or any Affiliate thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all Material respects with the provisions of applicable Law.
5.18 TAX AND REGULATORY MATTERS. No First Coastal Company or any
Affiliate thereof has taken or agreed to take any action, and First Coastal has
no Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
5.19 STATE TAKEOVER LAWS. Each First Coastal Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any applicable "moratorium," "control share," "fair price," "business
combination," or other anti-takeover laws and regulations of the Commonwealth
of Virginia (collectively, "Takeover Laws").
5.20 CHARTER PROVISIONS. Each First Coastal Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and
will not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws, or other governing instruments of any First Coastal
Company or restrict or impair the ability of Centura or any of its Subsidiaries
to vote, or otherwise to exercise the rights of a stockholder with respect to,
shares of any First Coastal Company that may be directly or indirectly acquired
or controlled by it.
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5.21 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for First Coastal's own account, or for the
account of one or more the First Coastal Subsidiaries or their customers, were
entered into (i) in accordance with prudent business practices and all
applicable Laws, and (ii) with counterparties believed to be financially
responsible.
5.22 YEAR 2000. First Coastal has disclosed to Centura a complete
and accurate copy of First Coastal's plan, including an estimate of the
anticipated associated costs, for implementing modifications to First Coastal's
hardware, software, and computer systems, chips, and microprocessors, to ensure
proper execution and accurate processing of all date-related data, whether from
years in the same century or in different centuries. Between the date of this
Agreement and the Effective Time, First Coastal shall endeavor to continue its
efforts to implement such plan.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CENTURA
Centura hereby represents and warrants to First Coastal as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Centura is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of North Carolina, and has the corporate power and authority to carry on
its business as now conducted and to own, lease, and operate its Material
Assets. Centura is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Centura has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
Centura. This Agreement represents a legal, valid, and binding obligation of
Centura, enforceable against Centura in accordance with its terms (except in
all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and
except
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that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Centura, nor the consummation by Centura of the transactions contemplated
hereby, nor compliance by Centura with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Centura's Articles of
Incorporation or Bylaws, (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Centura Company under, any Contract or Permit of any Centura
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura, (iii) subject to receipt of the requisite Consents referred
to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any Centura Company or any of their respective Material Assets, or (iv) require
the approval of Centura stockholders.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the New York Stock Exchange, and other than Consents required from
Regulatory Authorities, and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Centura,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by Centura of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Centura
consists, as of the date of this Agreement, of (i) 50,000,000 shares of Centura
Common Stock, of which 26,536,602 shares were issued and outstanding as of June
30, 1998, and (ii) 25,000,000 shares of Centura Preferred Stock, none of which
are issued and outstanding. All of the issued and outstanding shares of
Centura Common Stock are, and all of the shares of Centura Common Stock to be
issued in exchange for shares of First Coastal Common Stock upon consummation
of the Merger, when issued in accordance with the terms of this Agreement, will
be, duly and validly issued and outstanding and fully paid and nonassessable
under the NCBCA. None of the outstanding shares of Centura Common Stock has
been, and none of the shares of Centura Common Stock to be issued in exchange
for shares of First Coastal Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
stockholders of Centura.
6.4 CENTURA SUBSIDIARIES. Except as set forth in Section 6.4 of the
Centura Disclosure Memorandum, Centura or one of its Subsidiaries owns all of
the issued and outstanding shares of capital stock of each Centura Subsidiary.
No equity securities of any Centura Subsidiary are or may become required to be
issued (other than to another Centura Company) by reason of any Rights, and
there are no Contracts by which any Centura Subsidiary is
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bound to issue (other than to another Centura Company) additional shares of its
capital stock or Rights or by which any Centura Company is or may be bound to
transfer any shares of the capital stock of any Centura Subsidiary (other than
to another Centura Company). There are no Contracts relating to the rights of
any Centura Company to vote or to dispose of any shares of the capital stock of
any Centura Subsidiary. All of the shares of capital stock of each Centura
Subsidiary held by a Centura Company are fully paid and, except as provided in
statutes pursuant to which depository institution Subsidiaries are organized,
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Centura
Company free and clear of any Lien. Each Centura Subsidiary is either a bank
or a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Centura Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Centura. Each Centura Subsidiary
that is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or Savings Association
Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Centura has filed and made available to First Coastal all
forms, reports, and documents required to be filed by Centura with the SEC
since December 31, 1994 (collectively, the "Centura SEC Reports"). The Centura
SEC Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the 1933 Act and the 1934 Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a Material fact or omit to state a Material
fact required to be stated in such Centura SEC Reports or necessary in order to
make the statements in such Centura SEC Reports, in light of the circumstances
under which they were made, not misleading. Except for Centura Subsidiaries
that are registered as a broker, dealer, or investment advisor or filings
required due to fiduciary holdings of the Centura Subsidiaries, none of Centura
Subsidiaries is required to file any forms, reports, or other documents with
the SEC.
(b) Each of the Centura Financial Statements (including, in
each case, any related notes) contained in the Centura SEC Reports, including
any Centura SEC Reports filed after the date of this Agreement until the
Effective Time, complied or will comply as to form in all Material respects
with the applicable published rules and regulations of the SEC with respect
thereto, was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes to such financial
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statements or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), and fairly presented or will fairly present the consolidated
financial position of Centura and its Subsidiaries as at the respective dates
and the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be Material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Centura Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Centura as of
June 30, 1998, included in the Centura Financial Statements or reflected in the
notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to June 30, 1998. No Centura Company has incurred or paid
any Liability since June 30, 1998, except for such Liabilities incurred or
paid in the ordinary course of business consistent with past business practice
and which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Centura.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1998,
except as disclosed in the Centura Financial Statements delivered prior to the
date of this Agreement, (i) there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura, and (ii) the Centura Companies
have conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any
of the Centura Companies have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for the three tax years
ended on or before December 31, 1997, and, to the Knowledge of Centura, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for the three tax years ending on or before the date of the most recent
fiscal year end immediately preceding the Effective Time will be timely filed
or requests for extensions will be timely filed. All Taxes shown on filed Tax
Returns have been paid. Except as set forth in Section 6.8 of the Centura
Disclosure Memorandum, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes, that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on Centura, except to the extent reserved against in the Centura
Financial Statements dated prior to the date of this Agreement. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) Except as set forth in Section 6.8 of the Centura
Disclosure Memorandum, none of the Centura Companies has executed an extension
or waiver of any statute
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of limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for
any of the Centura Companies for the period or periods through and including
the date of the respective Centura Financial Statements has been made and is
reflected on such Centura Financial Statements.
(d) Each of the Centura Companies is in compliance with, and
its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Centura.
(e) None of the Centura Companies has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any
of the Assets of the Centura Companies.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Centura Companies that occurred
during or after any Taxable Period in which the Centura Companies incurred a
net operating loss that carries over to any Taxable Period ending after
December 31, 1997.
(h) No Centura Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
(i) After the date of this Agreement, no Material election with
respect to Taxes will be made without the prior consent of First Coastal, which
consent will not be unreasonably withheld.
(j) Except as set forth in Section 6.8(j) of the Centura
Disclosure Memorandum, no Centura Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
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6.9 ASSETS. The Centura Companies have good and marketable title,
free and clear of all Liens, to all of their respective Assets. All tangible
properties used in the businesses of the Centura Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Centura's past practices. All Assets which
are Material to Centura's business on a consolidated basis, held under leases
or subleases by any of the Centura Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought), and each such Contract is in full
force and effect. The Centura Companies currently maintain insurance similar
in amounts, scope, and coverage reasonably necessary for their operations.
None of the Centura Companies has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. The Assets of the Centura Companies
include all Assets required to operate the business of the Centura Companies as
presently conducted.
6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Centura, each Centura Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura.
(b) There is no Litigation pending or, to the Knowledge of
Centura, threatened before any court, governmental agency, or authority, or
other forum in which any Centura Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may reasonably be expected
to be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material, whether or not occurring at, on,
under, or involving a site owned, leased, or operated by any Centura Company or
any of its Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura.
(c) There is no Litigation pending or, to the Knowledge of
Centura, threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or Centura in respect of such Loan
Property) has been or, with respect to threatened Litigation, may reasonably be
expected to be named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, or involving a Loan Property, except
for such Litigation
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pending or threatened that is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Centura.
(d) To the Knowledge of Centura, there is no reasonable basis
for any Litigation of a type described in subsections (b) or (c), except such
as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura.
(e) To the Knowledge of Centura, during the period of (i) any
Centura Company's ownership or operation of any of their respective current
properties, (ii) any Centura Company's participation in the management of any
Participation Facility, or (iii) any Centura Company's holding of a security
interest in a Loan Property, there have been no releases of Hazardous Material
in, on, under, or affecting (or potentially affecting) such properties, except
such as are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura. Prior to the period of (i) any Centura
Company's ownership or operation of any of their respective current properties,
(ii) any Centura Company's participation in the management of any Participation
Facility, or (iii) any Centura Company's holding of a security interest in a
Loan Property, to the Knowledge of Centura, there were no releases of Hazardous
Material in, on, under, or affecting any such property, Participation Facility,
or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura.
6.11 COMPLIANCE WITH LAWS. Centura is duly registered as a bank
holding company under the BHC Act. Each Centura Company has in effect all
Permits necessary for it to own, lease, or operate its Material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura. None
of the Centura Companies:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Centura; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Centura
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura, or
(iii) requiring any Centura Company (x) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking, which restricts
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materially the conduct of its business, or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
6.12 LABOR RELATIONS. No Centura Company is the subject of any
Litigation asserting that it or any other Centura Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state Law) or seeking to compel it or any other Centura Company
to bargain with any labor organization as to wages or conditions of employment,
nor is any Centura Company a party to or bound by any collective bargaining
agreement, Contract, or other agreement or understanding with a labor union or
labor organization, nor is there any strike or other labor dispute involving
any Centura Company, pending or threatened, or to the Knowledge of Centura, is
there any activity involving any Centura Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
6.13 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Centura, threatened against any Centura
Company, or against any Asset, employee benefit plan, interest, or right of any
of them, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Centura Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura.
6.14 REPORTS. Since January 1, 1995, or the date of organization if
later, each Centura Company has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any Regulatory Authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all Material respects with all applicable Laws.
6.15 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by any Centura Company or any Affiliate thereof regarding
Centura or such Affiliate for inclusion in the Registration Statement to be
filed by Centura with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any Material fact, or contain
any untrue statement of a Material fact, or omit to state any Material fact
required to be stated thereunder or necessary to make the statements therein
not misleading. None of the information supplied or to be supplied by any
Centura Company or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to First Coastal's stockholders in connection with the
Stockholders' Meeting, will, when first mailed to the stockholders of First
Coastal, be false or misleading with respect to any Material fact, or contain
any misstatement of Material fact, or omit to state any Material fact required
to be stated thereunder or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the
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Stockholders' Meeting, be false or misleading with respect to any Material
fact, or omit to state any Material fact required to be stated thereunder or
necessary to correct any Material statement in any earlier communication with
respect to the solicitation of any proxy for the Stockholders' Meetings. All
documents that any Centura Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects with the
provisions of applicable Law.
6.16 TAX AND REGULATORY MATTERS. No Centura Company or any Affiliate
thereof has taken or agreed to take any action, and Centura has no Knowledge of
any fact or circumstance that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
6.17 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Centura's own account, or for the
account of one or more the Centura Subsidiaries or their customers, were
entered into (i) in accordance with prudent business practices and all
applicable Laws, and (ii) with counterparties believed to be financially
responsible.
6.18 YEAR 2000. Centura has disclosed to First Coastal a complete
and accurate copy of Centura's plan, including an estimate of the anticipated
associated costs, for implementing modifications to Centura's hardware,
software, and computer systems, chips, and microprocessors, to ensure proper
execution and accurate processing of all date-related data, whether from years
in the same century or in different centuries. Between the date of this
Agreement and the Effective Time, Centura shall endeavor to continue its
efforts to implement such plan.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF FIRST COASTAL. Unless the prior
written consent of the duly authorized officer of Centura shall have been
obtained, and except as otherwise expressly contemplated herein, First Coastal
shall and shall cause each of its Subsidiaries to, from the date of this
Agreement until the Effective Time or termination of this Agreement, (i)
operate its business only in the usual, regular, and ordinary course, (ii)
preserve intact in all Material respects its business organization and Assets
and maintain its rights and franchises, and (iii) take no action which would
(x) materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) and (c) of this Agreement,
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or (y) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF FIRST COASTAL. Except as contemplated by
this Agreement or the Supplemental Letter, from the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
First Coastal covenants and agrees that it will not do or agree or commit to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following without the prior written consent of the chief executive officer
or chief financial officer of Centura, which consent shall not be unreasonably
withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any First Coastal Company or, except as expressly
contemplated by this Agreement, the First Coastal Rights Agreement, or
(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other
than indebtedness of a First Coastal Company to another First Coastal
Company) in excess of an aggregate of $350,000 (for the First Coastal
Companies on a consolidated basis), except in the ordinary course of
business and consistent with past practices (which shall include, for First
Coastal Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve
Bank or Federal Home Loan Bank, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any First Coastal Company of any Lien or permit
any such Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the
date hereof that are disclosed in the First Coastal Disclosure Memorandum);
or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any First Coastal Company, or declare or
pay any dividend or make any other distribution in respect of First
Coastal's capital stock, provided that First Coastal may (to the extent
legally and contractually permitted to do so), but shall not be obligated
to, declare and pay regular quarterly cash dividends on the shares of First
Coastal Common Stock at a rate of $0.06 per share with usual and regular
record and payment dates in accordance with past practice as disclosed in
Section 7.2(c) of the First Coastal Disclosure Memorandum and such dates
may not be changed without the prior written consent of Centura; provided,
that, notwithstanding the provisions of Section 1.3 of this Agreement, the
Parties shall cooperate in selecting the Effective Time to ensure that,
with respect to the quarterly period in which the Effective Time occurs,
the holders of First Coastal Common Stock do not receive both a
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dividend in respect of their First Coastal Common Stock and a dividend in
respect of Centura Common Stock or fail to receive any dividend; or
(d) except for this Agreement, or pursuant to the Stock Option
Agreement or pursuant to the exercise of Rights outstanding as of the date
of this Agreement and pursuant to the terms thereof in existence on the
date of this Agreement, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of First Coastal Common Stock or any other capital stock
of any First Coastal Company, or any stock appreciation rights, or any
option, warrant, conversion, or other right to acquire any such stock, or
any security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
First Coastal Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of First Coastal
Common Stock, or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber (i) any shares of capital stock of any First Coastal
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another First Coastal Company) or (ii) any Asset other than
in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any Material investment,
either by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a
wholly-owned First Coastal Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary capacity,
or (iii) the creation of new wholly-owned Subsidiaries organized to conduct
or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees
or officers of any First Coastal Company, except in accordance with past
practice and consistent with budget data previously provided to Centura or
as required by Law; pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the
date of this Agreement; enter into or amend any severance agreements with
officers of any First Coastal Company; grant any Material increase in fees
or other increases in compensation or other benefits to directors of any
First Coastal Company except in accordance with past practice disclosed in
Section 7.2(g) of the First Coastal Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(h) enter into or amend any employment Contract between any First
Coastal Company and any Person (unless such amendment is required by Law)
that the First Coastal
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Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(i) adopt any new employee benefit plan of any First Coastal Company
or make any Material change in or to any existing employee benefit plans of
any First Coastal Company other than any such change that is required by
Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than as necessary for the prudent
operation of its business or settle any Litigation involving any Liability
of any First Coastal Company for Material money damages or restrictions
upon the operations of any First Coastal Company; or
(l) except in the ordinary course of business, modify, amend, or
terminate any Material Contract or waive, release, compromise, or assign
any Material rights or claims.
7.3 COVENANTS OF CENTURA. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Centura
covenants and agrees that it shall and shall cause each of its Subsidiaries to
(i) continue to conduct its business and the business of its Subsidiaries in a
manner designed in its reasonable judgment to enhance the long-term value of
the Centura Common Stock and the business prospects of the Centura Companies,
(ii) take no action which would (x) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred to
in the last sentences of Section 9.1(b) and (c) of this Agreement, or (y)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any Centura Company from discontinuing or disposing of any of its
Assets or business if such action is, in the judgment of Centura, desirable in
the conduct of the business of Centura and its Subsidiaries, and (z) not amend
the Articles of Incorporation or Bylaws of Centura, in each case, in any manner
which is adverse to, and discriminates against, the holders of First Coastal
Common Stock.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
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7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements
are contained in any such reports filed with the SEC, such financial statements
will fairly present the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not Material). As
of their respective dates, such reports filed with the SEC will comply in all
Material respects with the Securities Laws and will not contain any untrue
statement of a Material fact or omit to state a Material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL.
As soon as reasonably practicable after execution of this Agreement, Centura
shall file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Centura Common Stock upon consummation of the Merger. First
Coastal shall furnish all information concerning it and the holders of its
capital stock as Centura may reasonably request in connection with such action.
First Coastal shall call a Stockholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is declared effective
by the SEC, for the purpose of voting upon approval of this Agreement and such
other related matters as it deems appropriate. In connection with the
Stockholders' Meeting, (i) First Coastal shall prepare and file with the SEC a
Proxy Statement and mail such Proxy Statement to its stockholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Proxy Statement, (iii) the Board
of Directors of First Coastal shall recommend to their respective stockholders
the approval of the matters submitted for approval, and (iv) the Board of
Directors and officers of First Coastal shall use their reasonable efforts to
obtain such stockholders' approval, provided that First Coastal may withdraw,
modify, or change in an adverse manner to Centura its recommendations if the
Board of Directors of First Coastal, after having consulted with and based upon
the advice of outside counsel, determines in good faith that the failure to so
withdraw, modify, or change its recommendation could constitute a breach of the
fiduciary duties of First Coastal's Board of Directors under applicable Law.
8.2 EXCHANGE LISTING. Centura shall use its reasonable efforts to
list, prior to the Effective Time, on the New York Stock Exchange, subject to
official notice of issuance, the
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shares of Centura Common Stock to be issued to the holders of First Coastal
Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Centura shall promptly prepare and file, and
First Coastal shall cooperate in the preparation and, where appropriate, filing
of, applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Centura shall execute and file the North
Carolina Articles of Merger with the Secretary of State of the State of North
Carolina and Centura shall execute and file the Virginia Articles of Merger
with the Secretary of State of the Commonwealth of Virginia in connection with
the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including, without limitation, using its
reasonable efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 9 of this Agreement; provided, that
nothing herein shall preclude either Party from exercising its rights under
this Agreement. Each Party shall use, and shall cause each of its Subsidiaries
to use, its reasonable efforts to obtain all Consents necessary or desirable
for the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all Material developments relevant to its business and
to consummation of the Merger and shall permit the other Party to make or cause
to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use such information for any
purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time, each
Party shall promptly
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return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a Material
breach of any representation, warranty, covenant, or agreement of the other
Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party.
(d) Neither Party nor any of their respective Subsidiaries
shall be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of its customers,
jeopardize the attorney-client or similar privilege with respect to such
information or contravene any Law, rule, regulation, Order, judgment, decree,
fiduciary duty, or agreement entered into prior to the date of this Agreement.
The Parties will use their reasonable efforts to make appropriate substitute
disclosure arrangements, to the extent practicable, in circumstances in which
the restrictions of the preceding sentence apply.
8.7 PRESS RELEASES. Prior to the Effective Time, Centura and First
Coastal shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no First Coastal Company nor any Affiliate
thereof nor any Representatives thereof retained by any First Coastal Company
shall directly or indirectly solicit or engage in negotiations concerning any
Acquisition Proposal, or provide any confidential information or assistance to,
or have any discussions with, any Person with respect to an Acquisition
Proposal. Notwithstanding the foregoing, First Coastal may, and may authorize
and permit its Representatives to, provide Persons with confidential
information, have discussions or negotiations with, or otherwise facilitate an
effort or attempt by such Person to make or implement an Acquisition Proposal
not solicited in violation of this Agreement if First Coastal's Board of
Directors, after having consulted with, and based upon the advice of, outside
counsel, determines in good faith that the failure to take such actions could
constitute a breach of the fiduciary duties of First Coastal's Board of
Directors under applicable Law; provided, that First Coastal shall promptly
advise Centura following the receipt of any Acquisition Proposal and the
Material details thereof; and, provided further, that prior to delivery of
confidential information relating to First Coastal or access to First Coastal's
books, records, or properties in connection herewith, the other Person shall
have entered into a confidentiality agreement substantially similar to the
Confidentiality Agreement previously entered into between First Coastal and
Centura.. Nothing contained in this Section 8.8 shall prohibit the Board of
Directors of First Coastal from
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complying with Rule 14e-2, promulgated under the 1934 Act. First Coastal shall
(i) immediately following the date of this Agreement cease and cause to be
terminated any existing activities, discussions, or negotiations with any
Persons conducted heretofore with respect to any of the foregoing, and (ii)
direct and use its reasonable efforts to cause of all its Representatives not
to engage in any of the foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for treatment as a pooling
of interests for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
8.10 STATE TAKEOVER LAWS. Each First Coastal Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable
Takeover Laws.
8.11 CHARTER PROVISIONS. Each First Coastal Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do
not and will not result in the grant of any rights to any Person under the
Articles of Incorporation, Bylaws, or other governing instruments of any First
Coastal Company or restrict or impair the ability of Centura or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of any First Coastal Company that may be directly or
indirectly acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. First Coastal has disclosed in Section
8.12 of the First Coastal Disclosure Memorandum each Person whom it reasonably
believes may be deemed an "affiliate" of First Coastal for purposes of Rule 145
under the 1933 Act. First Coastal shall use its reasonable efforts to cause
each such Person to deliver to Centura not later than 30 days prior to the
Effective Time, a written agreement, in substantially the form of Exhibit 2,
providing that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of First Coastal Common Stock held by such Person except
as contemplated by such agreement or by this Agreement 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 except in compliance
with applicable provisions of the 1933 Act and the rules and regulations
thereunder and until such time as financial results covering at least 30 days
of combined operations of Centura and First Coastal have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. Shares of Centura Common Stock issued to such affiliates of First
Coastal in exchange for shares of First Coastal Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Centura and First Coastal have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.12 (and Centura shall be entitled to
place restrictive legends upon certificates for shares of Centura Common Stock
issued to affiliates
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of First Coastal pursuant to this Agreement to enforce the provisions of this
Section 8.12). Centura shall not be required to maintain the effectiveness of
the Registration Statement under the 1933 Act for the purposes of resale of
Centura Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Centura shall provide generally to officers and employees of the First Coastal
Companies, who at or after the Effective Time become employees of a Centura
Company (the "Continuing Employees"), employee benefits under employee benefit
plans on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Centura Companies to their similarly
situated officers and employees. For purposes of eligibility, participation and
vesting (but not accrual of benefits) under such employee benefit plans, (i)
service under any qualified defined benefit plans of First Coastal shall be
treated as service under Centura's qualified defined benefit plans, (ii)
service under any qualified defined contribution plans of First Coastal shall
be treated as service under Centura's qualified defined contribution plans, and
(iii) service under any other employee benefit plans of First Coastal shall be
treated as service under any similar employee benefit plans maintained by
Centura. Centura shall cause the Centura welfare benefit plans that cover the
Continuing Employees and dependents of such employees after the Effective Time
to (i) waive any waiting period and restrictions and limitations for
preexisting conditions or insurability, and (ii) cause any deductible,
co-insurance, or maximum out-of-pocket payments made by the Continuing
Employees under First Coastal's welfare benefit plans for the plan year in
effect as of the Effective Time to be credited to such Continuing Employees
under the Centura welfare benefit plans, so as to reduce the amount of any
deductible, co-insurance, or maximum out-of-pocket payments payable by the
Continuing Employees under the Centura welfare benefit plans. The continued
coverage of the Continuing Employees under the employee benefits plans
maintained by First Coastal and/or any First Coastal Subsidiary immediately
prior to the Effective Time during a transition period shall be deemed to
provide the Continuing Employees with benefits that are no less favorable than
those offered to other employees of Centura and its Subsidiaries, provided that
after the Effective Time there is no Material reduction (determined on an
overall basis) in the benefits provided under the First Coastal employee
benefit plans. Centura shall, and shall cause First Coastal and its
Subsidiaries to, honor all employment, severance, consulting, and other
compensation Contracts disclosed in Section 8.13 of the First Coastal
Disclosure Memorandum to Centura between any First Coastal Company and any
current or former director, officer, or employee thereof, and all provisions of
the First Coastal Benefit Plans.
8.14 INDEMNIFICATION.
(a) Subject to the conditions set forth in paragraph (b) below,
for a period of six (6) years after the Effective Time, Centura shall, and
shall cause First Coastal to, indemnify, defend, and hold harmless each Person
entitled to indemnification from a First Coastal Company (each, an
"Indemnified Party") against all Liabilities arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the full
extent permitted by Virginia Law and First Coastal's
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Restated Articles of Incorporation and Bylaws, in each case as in effect on the
date hereof, including provisions relating to advances of expenses incurred in
the defense of any Litigation. Without limiting the foregoing, in any case in
which approval by First Coastal is required to effectuate any indemnification,
Centura shall cause First Coastal to direct, at the election of the Indemnified
Party, that the determination of any such approval shall be made by independent
counsel mutually agreed upon between Centura and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a), upon learning of any such Liability or Litigation, shall
promptly notify Centura thereof, provided, however, that the failure of an
Indemnified Party to provide such notice shall not relieve Centura of any of
its obligations under this Section 8.14, except to the extent the lack of such
notice may materially prejudice Centura's position with respect to the
underlying Liability or Litigation. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Centura or First
Coastal shall have the right to assume the defense thereof and Centura shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Centura or First Coastal
elects not to assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts of interest
between Centura or First Coastal and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Centura or First Coastal
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, however, that
Centura shall be obligated pursuant to this paragraph (b) to pay for only one
firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation, and
(iii) Centura shall not be liable for any settlement effected without its
prior written consent; and provided further that First Coastal shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(c) Centura shall use its reasonable efforts (and First Coastal
shall cooperate prior to the Effective Time in these efforts) to maintain in
effect for a period of one year after the Effective Time, First Coastal's
existing directors' and officers' liability insurance policy (provided that
Centura may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or events which
occurred prior to the Effective Time and covering persons who are currently
covered by such insurance.
(d) If Centura or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its Assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of Centura shall
assume the obligations set forth in this Section 8.14.
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(e) The provisions of this Section 8.14 are intended to be for
the benefit of and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
8.15 ASSUMPTION OF AGREEMENT. In the event Centura or any of its
successors or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) shall transfer all or
substantially all of its properties and assets to any individual, corporation,
or other entity, then, in each such case, Centura or such successor or assign
shall take such actions as shall be necessary for the successors or assigns of
Centura to assume the obligations of Centura under this Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and to consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) STOCKHOLDER APPROVAL. The stockholders of First Coastal shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law, by the provisions of any governing instruments, and by the rules of
the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger and the Bank Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods required
by Law shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (excluding
requirements relating to the raising of additional capital or the
disposition of Assets or deposits) which in the reasonable good faith
judgment of the Board of Directors of Centura would so materially adversely
impact the economic or business benefits of the transactions contemplated
by this Agreement so as to render inadvisable the consummation of the
Merger.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent obtained
which is necessary to consummate the transactions contemplated hereby shall
be
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conditioned or restricted in a manner which in the reasonable good faith
judgment of the Board of Directors of Centura would so materially adversely
impact the economic or business benefits of the transactions contemplated
by this Agreement so as to render inadvisable the consummation of the
Merger.
(d) LEGAL PROCEEDINGS. No court or governmental or Regulatory
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Centura Common Stock issuable
pursuant to the Merger shall have been received.
(f) EXCHANGE LISTING. The shares of Centura Common Stock issuable
pursuant to the Merger shall have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
(g) TAX MATTERS. Each Party shall have received a written opinion
or opinions from Alston & Bird LLP, in a form reasonably satisfactory to
such Party (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of First Coastal
Common Stock for Centura Common Stock will not give rise to gain or loss to
the stockholders of First Coastal with respect to such exchange (except to
the extent of any cash received), (iii) the tax basis of the Centura Common
Stock received by holders of First Coastal Common Stock in the Merger will
be the same as the tax basis of the First Coastal Common Stock surrendered
in exchange for the Centura Common Stock (reduced by an amount allocable to
a fractional share for which cash is received), and (iv) the holding period
of the Centura Common Stock received by holders who exchange their First
Coastal Common Stock for Centura Common Stock in the Merger will be the
same as the holding period of the First Coastal Common Stock surrendered in
exchange therefor. In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of First Coastal and
Centura reasonably satisfactory in form and substance to such counsel.
(h) POOLING LETTER. Each Party shall have received a letter, dated
as of the Effective Time, in a form reasonably acceptable to such Party,
from KPMG Peat Marwick to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
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9.2 CONDITIONS TO OBLIGATIONS OF CENTURA. The obligations of
Centura to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Centura pursuant to Section 11.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of First Coastal
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of First Coastal set forth in Section 5.3 of
this Agreement shall be true and correct (except for inaccuracies which are
de minimis in amount). The representations and warranties of First
Coastal set forth in Sections 5.18, 5.19, and 5.20 of this Agreement shall
be true and correct in all Material respects. There shall not exist
inaccuracies in the representations and warranties of First Coastal set
forth in this Agreement (including the representations and warranties set
forth in Sections 5.3, 5.18, 5.19, and 5.20) such that the aggregate effect
of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on First Coastal; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material," "Material," "Material Adverse Effect," or
variations thereof, or to the "Knowledge" of First Coastal or to a matter
being "known" by First Coastal shall be deemed not to include such
qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of First Coastal to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) CERTIFICATES. First Coastal shall have delivered to Centura (i)
a certificate, dated as of the Effective Time and signed on its behalf by
its duly authorized officers, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
First Coastal's Board of Directors and stockholders evidencing the taking
of all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Centura and its
counsel shall request.
(d) AFFILIATE AGREEMENTS. Centura shall have received from each
affiliate of First Coastal the affiliates agreement referred to in Section
8.12 of this Agreement, to the extent necessary to assure in the reasonable
judgment of Centura that the transactions contemplated hereby will qualify
for pooling-of-interests accounting treatment.
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9.3 CONDITIONS TO OBLIGATIONS OF FIRST COASTAL. The obligations of
First Coastal to perform this Agreement and consummate the Merger and the Bank
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by First Coastal
pursuant to Section 11.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
Centura set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as though
all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of Centura set forth in Section 6.3 of this
Agreement shall be true and correct (except for inaccuracies which are de
minimis in amount). The representations and warranties of Centura set
forth in Section 6.16 of this Agreement shall be true and correct in all
Material respects. There shall not exist inaccuracies in the
representations and warranties of Centura set forth in this Agreement
(including the representations and warranties set forth in Sections 6.3 and
6.16) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Centura; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material," "Material,"
"Material Adverse Effect," or variations thereof, or to the "Knowledge" of
Centura or to a matter being "known" by Centura shall be deemed not to
include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Centura to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) CERTIFICATES. Centura shall have delivered to First Coastal (i)
a certificate, dated as of the Effective Time and signed on its behalf by
its duly authorized officers, to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Centura's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as First Coastal and its
counsel shall request.
(d) FAIRNESS OPINION. First Coastal shall have received a letter
from Trident Financial Corp. dated not more than five (5) days prior to the
date of the Proxy Statement to the effect that in the opinion of such firm,
the Exchange Ratio is fair to the stockholders of First Coastal from a
financial point of view.
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ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of First Coastal or Centura, this Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Centura and the
Board of Directors of First Coastal; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First Coastal and Section
9.3(a) of this Agreement in the case of Centura or in Material breach of
any covenant or other agreement contained in this Agreement) in the event
of an inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of First Coastal
and Section 9.3(a) of this Agreement in the case of Centura; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First Coastal and Section
9.3(a) in the case of Centura) in the event of a Material breach by the
other Party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of First Coastal fail to vote their approval of the matters
submitted for the approval by such stockholders at the Stockholders'
Meeting where the transactions were presented to such stockholders for
approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by April 30, 1999, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
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(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First Coastal and Section
9.3(a) of this Agreement in the case of Centura or in Material breach of
any covenant or other agreement contained in this Agreement) in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of First Coastal, if it determines by a
vote of a majority of the members of its entire Board, at any time during
the three-day period ending immediately prior to the Effective Time, if the
Average Closing Price is greater than $86.4063; or
(h) By the Board of Directors of Centura, if it determines by a
vote of a majority of its entire Board, at any time during the three-day
period ending immediately prior to the Effective Time, that the Average
Closing Price is less than $51.8438.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement and the Supplemental Letter shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article 11 and Section
8.6(b) of this Agreement shall survive any such termination and abandonment,
and (ii) a termination pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) of
this Agreement shall not relieve the breaching Party from Liability for an
uncured willful breach of a representation, warranty, covenant, or agreement
giving rise to such termination. The Stock Option Agreement shall be governed
by its own terms.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.12 and 8.14 of this Agreement. The
terms of the Supplemental Letter shall survive the Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of
all of the stock or Assets of, or
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other business combination involving such Party or any of its Subsidiaries
or the acquisition of a substantial equity interest in, or a substantial
portion of the Assets of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling, controlled
by or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including
the Exhibits (and excepting the Stock Option Agreement) delivered pursuant
hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"AVERAGE CLOSING PRICE" shall mean the average of the daily last
sales prices of Centura Common Stock as reported on the New York Stock
Exchange - Composite Transactions List (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source as chosen
by Centura) for the ten consecutive full trading days in which such shares
are traded on the New York Stock Exchange - Composite Transactions List
ending at the close of trading on the third full trading day preceding the
Effective Time.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"CENTURA BANK" shall mean the wholly-owned banking subsidiary of
Centura.
"CENTURA COMMON STOCK" shall mean the no par value common stock of
Centura.
"CENTURA COMPANIES" shall mean, collectively, Centura and all
Centura Subsidiaries.
"CENTURA DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Centura Disclosure Memorandum" delivered prior to the execution
of this Agreement to First Coastal describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section or subsection of this
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Agreement under which such disclosure is being made. Information disclosed
with respect to one Section or subsection shall be deemed to be disclosed
for all purposes hereunder. The inclusion of any matter in this document
shall not be deemed an admission or otherwise to imply that any such matter
is Material for purposes of this Agreement.
"CENTURA FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Centura as of June 30, 1998, and as of December 31, 1997 and 1996, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1998, and for each of the three years ended December 31,
1997, 1996, and 1995, as filed by Centura in SEC Documents, and (ii) the
consolidated statements of condition of Centura (including related notes
and schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to June 30, 1998.
"CENTURA PREFERRED STOCK" shall mean the no par value preferred
stock of Centura.
"CENTURA SUBSIDIARIES" shall mean the Subsidiaries of Centura and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Centura in the future and owned by Centura at the Effective
Time.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain Confidentiality
Agreements, entered into prior to the date of this Agreement, between First
Coastal and Centura.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under,
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any Contract, Order, or Permit, where, in any such event, such Default is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on a Party.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 through 3, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FIRST COASTAL BANK" shall mean the wholly-owned banking subsidiary
of First Coastal.
"FIRST COASTAL CAPITAL STOCK" shall mean, collectively, First Coastal
Common Stock and First Coastal Preferred Stock.
"FIRST COASTAL COMMON STOCK" shall mean the $.01 par value common
stock of First Coastal.
"FIRST COASTAL COMPANIES" shall mean, collectively, First Coastal and
all First Coastal Subsidiaries.
"FIRST COASTAL DISCLOSURE MEMORANDUM" shall mean the written
information entitled "First Coastal Disclosure Memorandum" delivered prior
to the execution of this Agreement to Centura describing in reasonable
detail the matters contained therein and, with respect to each disclosure
made therein, specifically referencing each Section or subsection of this
Agreement under which such disclosure is being made. Information disclosed
with respect to one Section or subsection shall be deemed to be disclosed
for all purposes hereunder. The inclusion of any matter in this document
shall not be deemed an admission or otherwise to imply that any such matter
is Material for purposes of this Agreement.
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"FIRST COASTAL FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
First Coastal as of June 30, 1998, and as of December 31, 1997 and 1996,
and the related statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the six
months ended June 30, 1998, and for each of the three years ended December
31, 1997, 1996, and 1995, as filed by First Coastal in SEC Documents, and
(ii) the consolidated statements of condition of First Coastal (including
related notes and schedules, if any) and related statements of income,
changes in stockholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to June 30, 1998.
"FIRST COASTAL PREFERRED STOCK" shall mean the $.01 par value
preferred stock of First Coastal.
"FIRST COASTAL STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of First Coastal.
"FIRST COASTAL SUBSIDIARIES" shall mean the Subsidiaries of First
Coastal, which shall include the First Coastal Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of First
Coastal in the future and owned by First Coastal at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental Laws)
and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum
products, or oil (and specifically shall include asbestos requiring
abatement, removal, or encapsulation pursuant to the requirements of
governmental authorities and any polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean the personal
knowledge of the
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chairman, president, chief financial officer, chief accounting officer,
chief credit officer, general counsel, or any executive vice president of
such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for property Taxes not
yet due and payable, and (ii) for depository institution Subsidiaries of a
Party, pledges to secure deposits, and other Liens incurred in the ordinary
course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased, or operated
by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security or other interest (including an
interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Party
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and its Subsidiaries, taken as a whole, or (ii) the ability of such Party
to perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement, provided that
"Material Adverse Effect" shall not be deemed to include the impact of (a)
changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes
in GAAP or regulatory accounting principles generally applicable to banks
and their holding companies, (c) actions and omissions of a Party (or any
of its Subsidiaries) taken with the prior informed consent of the other
Party in contemplation of the transactions contemplated hereby, including
actions related to the increase of reserves, and (d) the Merger and
compliance with the provisions of this Agreement on the operating
performance of the Parties.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NCBCA" shall mean the North Carolina Business Corporation Act.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management (including, but not limited to, participating in a fiduciary
capacity) and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either First Coastal or Centura, and "PARTIES"
shall mean both First Coastal and Centura.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
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"PROXY STATEMENT" shall mean the proxy statement used by First
Coastal to solicit the approval of its stockholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
Centura relating to the issuance of the Centura Common Stock to holders of
First Coastal Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Centura under the 1933 Act with respect to the shares of Centura Common
Stock to be issued to the stockholders of First Coastal in connection with
the transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, the Office of
Thrift Supervision, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NASD, the New York Stock
Exchange, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"STOCKHOLDERS' MEETINGS" shall mean the respective meetings of the
stockholders of Centura and First Coastal to be held pursuant to Section
8.1 of this Agreement, including any adjournment or adjournments thereof.
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"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either directly
or through an unbroken chain of entities as to each of which 50% or more of
the outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SUPPLEMENTAL LETTER" shall mean the supplemental letter of even
date herewith between the Parties relating to certain understandings and
agreements in addition to those included in this Agreement.
"SURVIVING BANK" shall mean Centura Bank as the surviving bank
resulting from the Merger.
"SURVIVING CORPORATION" shall mean Centura as the surviving
corporation resulting from the Merger.
"TAX" OR "TAXES" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid-up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or any
state, local, or foreign government or subdivision or agency thereof,
including any interest, penalties, or additions thereto.
"TAXABLE PERIOD" shall mean any period prescribed by any governmental
authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is
required to be filed or Tax is required to be paid.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"VIRGINIA ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Centura and filed with the Secretary of State of the
Commonwealth of Virginia relating to the Merger as contemplated by Section
1.1 of this Agreement.
"VSCA" shall mean the Virginia Stock Corporation Act.
A - 56
<PAGE> 144
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Centura SEC Reports Section 6.5(a)
Closing Section 1.2
Effective Time Section 1.3
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
First Coastal Benefit Plans Section 5.13(a)
First Coastal Contracts Section 5.14
First Coastal ERISA Affiliate Section 5.13(e)
First Coastal ERISA Plan Section 5.13(a)
First Coastal Rights Section 3.6(a)
First Coastal Pension Plan Section 5.13(a)
First Coastal SEC Reports Section 5.5(a)
Indemnified Party Section 8.15
Merger Section 1.1
Takeover Laws Section 5.19
Tax Opinion Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that Centura shall bear and the printing and
mailing costs incurred in connection with the printing of the Registration
Statement and the mailing of the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Trident Financial Corporation as
to First Coastal, each of the Parties represents and warrants that neither it
nor any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees
A - 57
<PAGE> 145
in connection with this Agreement or the transactions contemplated hereby. In
the event of a claim by any broker or finder based upon his, her, or its
representing or being retained by or allegedly representing or being retained
by First Coastal or Centura, each of First Coastal and Centura, as the case may
be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral (including the
respective Confidentiality Agreements, but excluding the Supplemental Letter).
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Sections 8.12 and 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after stockholder approval of this Agreement has been obtained; provided, that
the provisions of this Agreement relating to the manner or basis in which
shares of First Coastal Common Stock will be exchanged for Centura Common Stock
shall not be amended after the Stockholders' Meeting without the requisite
approval of the holders of the issued and outstanding shares of Centura Common
Stock and First Coastal Common Stock, as the case may be, entitled to vote
thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Centura, acting through
its Board of Directors, chief executive officer, chief financial officer, or
other authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by First Coastal, to waive or extend
the time for the compliance or fulfillment by First Coastal of any and all of
its obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Centura under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of Centura.
(b) Prior to or at the Effective Time, First Coastal, acting
through its Board of Directors, chief executive officer, chief financial
officer, or other authorized officer, shall have the right to waive any Default
in the performance of any term of this Agreement by Centura, to waive or extend
the time for the compliance or fulfillment by Centura of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of First Coastal under this Agreement, except any
condition which, if not satisfied,
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<PAGE> 146
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of First Coastal.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
<TABLE>
<S> <C>
First Coastal: FIRST COASTAL BANKSHARES, INC.
2101 Parks Avenue
Virginia Beach, Virginia 23451
Telecopy Number: (757) 428-2452
Attention: John A. B. Davies, Jr.
President and Chief Executive Officer
Copy to Counsel: MALIZIA, SPIDI, SLOANE & FISCH, P.C.
One Franklin Square
Suite 700E
1301 K Street, N.W.
Washington, D.C. 20005
Telecopy Number: (202) 434-4661
Attention: John J. Spidi
</TABLE>
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<PAGE> 147
<TABLE>
<S> <C>
Centura: CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
Telecopy Number: (252) 977-4800
Attention: Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
Copy to Counsel: CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
Telecopy Number: (252) 977-8283
Attention: Joseph A. Smith, Jr.
</TABLE>
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of North Carolina, without
regard to any applicable conflicts of Laws, except to the extent that the Laws
of the Commonwealth of Virginia and federal Law relate to the consummation of
the Merger.
11.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
Party, whether under any rule of construction or otherwise. No Party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of the Parties.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
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<PAGE> 148
11.14 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<CAPTION>
ATTEST: FIRST COASTAL BANKSHARES, INC.
<S> <C>
By: /s/ Allene S. Cheatham By: /s/ John A.B. Davies, Jr.
------------------------------- ------------------------------------------
Allene S. Cheatham John A. B. Davies, Jr.
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
<CAPTION>
ATTEST: CENTURA BANKS, INC.
<S> <C>
By: /s/ Joseph A. Smith, Jr. By: /s/ Cecil W. Sewell, Jr.
------------------------------- ------------------------------------------
Joseph A. Smith, Jr. Cecil W. Sewell, Jr.
Corporate Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
</TABLE>
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<PAGE> 149
APPENDIX B
[LETTERHEAD OF TRIDENT FINANCIAL CORPORATION]
[FORM OF FAIRNESS OPINION]
Board of Directors
First Coastal Bankshares, Inc.
2101 Parks Avenue
Virginia Beach, Virginia
Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of shares of common stock (the "First Coastal Common
Stock"), of First Coastal Bankshares, Inc. ("First Coastal") of the
consideration to be received by such holders in a merger (the "Merger") of
First Coastal with Centura Banks, Inc. ("Centura") pursuant to the Agreement
and Plan of Merger (the "Agreement") dated October 28, 1998. Unless otherwise
noted, all terms used herein shall have the same meaning as defined in the
Agreement.
As more specifically set forth in the Agreement, and subject to a number
of conditions and procedures described in the Agreement, in the Merger each of
the issued and outstanding shares of First Coastal Common Stock shall be
exchanged for 0.3400 shares of Centura Common Stock ("the Exchange Ratio")
provided however that;
In the event the Average Closing Price is less than $58.7563 and greater
than or equal to $51.8438, then the Exchange Ratio shall equal the quotient
obtained by dividing (a) the product obtained by multiplying (1) the
Exchange ratio (as then in effect) and (2) $58.7563 by (b) the Average
Closing Price, and;
In the event the Average Closing Price is greater than $79.4938 and less
than or equal to $86.4063, then the Exchange Ratio shall equal the quotient
obtained by dividing (a) the product obtained by multiplying (1) the
Exchange Ratio (as then in effect) and (2) $79.4938 by (b) the Average
Closing Price.
Each outstanding option to purchase First Coastal Common Stock shall be
converted into options to purchase shares of Centura Common Stock, adjusted for
the Exchange Ratio.
Trident Financial Corporation ("Trident") is a financial consulting and
investment banking firm
B-1
<PAGE> 150
experienced in the valuation of business enterprises with considerable
experience in the valuation of thrift institutions. In the ordinary course of
our business we may actively trade the securities of First Coastal and Centura
for our own account and for the accounts of our customers and, accordingly, may
at any one time hold a long or short position in such securities. Trident is
not affiliated with First Coastal or Centura.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) this proxy statement-prospectus; (ii)
the Agreement; (iii) certain publicly available information concerning First
Coastal, including the audited financial statements for each of the years in
the three year period ended December 31, 1997 and unaudited financial
statements for the nine months ended September 30, 1998; (iv) certain publicly
available information concerning Centura, including the audited financial
statements for each of the years in the three year period ended December 31,
1997 and unaudited financial statements for the nine months ended September 30,
1998; (v) certain other internal information, primarily financial in nature,
concerning the business and operations of First Coastal and Centura furnished
to us by First Coastal and Centura for purposes of our analysis; (vi) certain
publicly available information with respect to other companies that we believe
to be comparable to First Coastal and Centura; and (vii) certain publicly
available information concerning the nature and terms of other transactions
that we consider relevant. We have also spoken with certain officers and
employees of First Coastal and Centura, to discuss the foregoing as well as
other matters we believe relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have not attempted
independently to verify any such information. We did not perform a review of
the loan portfolio, and we did not assess the adequacy of First Coastal's loan
loss reserves. We have not conducted a physical inspection of the properties
or facilities of First Coastal, nor have we made or obtained any independent
evaluations or appraisals of any of such properties or facilities.
In conducting our analysis and arriving at our opinion as expressed
herein, we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial condition and results of operations of
First Coastal and Centura, including interest income, interest expense, net
interest income, net interest margin, interest sensitivity, non-interest income
and expense, earnings, dividends, book value, return on assets, return on
equity, capitalization, the amount and type of non-performing assets and the
reserve for loan losses; (ii) the business prospects of First Coastal and
Centura; (iii) the economy of First Coastal's and Centura's market areas, and
(iv) the nature and terms of certain other merger transactions that we believe
to be relevant. We have also taken into account our assessment of general
economic, market, financial and regulatory conditions and trends, as well as
our knowledge of the financial services industry, our experience in connection
with similar transactions, and our knowledge of securities valuation generally.
Our opinion necessarily is based upon conditions as they exist and can be
evaluated on the date hereof. Our opinion is, in any event, limited to the
fairness, from a
B-2
<PAGE> 151
financial point of view, of the consideration to be received by First Coastal
in the Merger and does not address First Coastal's underlying business decision
to effect the Merger.
Based upon and subject to the foregoing, we are of the opinion that the
consideration to be received by First Coastal in the Merger is fair, as of the
date hereof, from a financial point of view, to the shareholders of First
Coastal.
This opinion is being delivered to the Board of Directors of First Coastal
for its use and is not to be reproduced, disseminated or delivered to any third
party without the express written consent of Trident, except as required by
law.
Very truly yours,
TRIDENT FINANCIAL CORPORATION
B-3
<PAGE> 152
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Articles of Incorporation of the Registrant provides as
follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by North Carolina law, the
Corporation may indemnify or purchase and maintain insurance to indemnify
any of its directors, officers, employees or agents and any persons who
may serve at the request of the Corporation as directors, officers,
employees, trustees or agents of any other corporation, firm, association,
national banking association, state-chartered bank, trust company,
business trust, organization or any other type of entity whether or not
the Corporation shall have any ownership interest in such entity. Such
indemnification(s) may be provided for in the Bylaws, or by resolution of
the board of directors or by appropriate contract with the person
involved.
Article IX, Section 4 of the Registrant's Amended and Restated Bylaws
provides as follows:
INDEMNIFICATION:
Any person who at any time serves or has served as a director or
officer of the Corporation, or at the request of the Corporation is or was
serving as an officer, director, agent, partner, trustee, administrator,
or employee for any other foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise, shall be
indemnified by the Corporation to the fullest extent from time to time
permitted by law in the event he is made, or is threatened to be made, a
party to any threatened, pending or completed civil, criminal,
administrative, investigative or arbitrative action, suit or proceeding
and any appeal therein (and any inquiry or investigation that could lead
to such action, suit or proceeding), whether or not brought by or on
behalf of the Corporation, seeking to hold him liable by reason of the
fact that he is or was acting in such capacity. In addition, the board
may provide such indemnification for the employees and agents of the
Corporation as it deems inappropriate.
The rights of those receiving indemnification hereunder shall,
to the fullest extent from time to time permitted by law, cover (i)
reasonable expenses, including without limitation all attorney's fees
actually and necessarily incurred by him in connection with any such
action, suit or proceeding, (ii) all reasonable payments made by him in
satisfaction of any judgment, money decree, fine (including an excise tax
assessed with respect to an employee benefit plan), penalty, or settlement
for which he may have become liable in such action, suit or proceeding;
and (iii) all reasonable expenses incurred in enforcing the
indemnification rights provided herein.
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<PAGE> 153
Expenses incurred by anyone entitled to receive indemnification
under this section in defending a proceeding may be paid by the
Corporation in advance of the final disposition of such proceeding as
authorized by the board of directors in the specific case or as authorized
or required under any provisions in the bylaws or by any applicable
resolution or contract upon receipt of an undertaking by or on behalf of
the director to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation against such
expenses.
The board of directors of the Corporation shall take all such
action as may be necessary and appropriate to authorize the Corporation to
pay the indemnification required by this bylaw, including without
limitation, to the extent needed, making a good faith evaluation of the
manner in which the claimant for indemnity acted and of the reasonable
amount of indemnity due him.
Any person who at any time serves or has served in any of the
aforesaid capacities for or on behalf of the Corporation shall be deemed
to be doing or to have done so in reliance upon, and as consideration for,
the right of indemnification provided herein. Any repeal or modification
of these indemnification provisions shall not affect any rights or
obligations existing at the time of such repeal or modification. The
rights provided for herein shall inure to the benefit of the legal
representatives of any such person and shall not be exclusive of any other
rights to which such person may be entitled apart from the provisions of
this bylaw.
The rights granted herein shall not be limited by the provisions
contained in N.C. Gen. Stat. Section 55-8-51 (or its successor).
ITEM 21. EXHIBITS.
The following exhibits are filed herein or have been, as noted, previously
filed:
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- ------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of October 28, 1998, by and between
First Coastal Bankshares, Inc. and Centura Banks, Inc. (Included as Appendix A
to the proxy statement-prospectus included in this Registration Statement).
5.1 Opinion of Joseph A. Smith, Jr., General Counsel and Corporate Secretary of
Centura Banks, Inc. as to the validity of the shares of Centura Banks, Inc.
common stock.
8.1 Opinion of Alston & Bird LLP as to federal income tax consequences.
23.1 Consent of KPMG Peat Marwick LLP (for Centura).
23.2 Consent of KPMG Peat Marwick LLP (for First Coastal).
</TABLE>
II - 2
<PAGE> 154
<TABLE>
<S> <C>
23.3 Consent of Joseph A. Smith, Jr., General Counsel and Corporate Secretary of
Centura Banks, Inc. (included in Exhibit 5.1).
23.4 Consent of Alston & Bird LLP (included in Exhibit 8.1).
23.5 Consent of Trident Financial Corporation (to be filed by amendment).
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of Proxy of First Coastal.
</TABLE>
II - 3
<PAGE> 155
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.
(7) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is
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<PAGE> 156
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(8) That every prospectus: (i) that is filed pursuant to Paragraph (7)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II - 5
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Rocky
Mount, State of North Carolina on this the 16th day of December, 1998.
REGISTRANT
CENTURA BANKS, INC.
By: /s/ Cecil W, Sewell, Jr.
----------------------------
Cecil W. Sewell, Jr.
Chairman of the Board and Chief Executive
Officer
We, the undersigned directors and officers of Centura Banks, Inc. do
hereby constitute and appoint Joseph A. Smith, Jr. and Frank L. Patillo, and
each of them, our true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for us and in our name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and we do
hereby ratify and confirm all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
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<PAGE> 158
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and at the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ CECIL W. SEWELL, JR. Chairman of the Board and December 16, 1998
- ------------------------ Chief Executive Officer -----------
Cecil W. Sewell, Jr.
/s/ FRANK L. PATTILLO Director and Vice Chairman December 16, 1998
- --------------------- -----------
Frank L. Pattillo
/s/ WILLIAM H. WILKERSON Director and President December 16, 1998
- ------------------------ -----------
William H. Wilkerson
/s/ STEVEN J. GOLDSTEIN Chief Financial Officer December 16, 1998
- ----------------------- -----------
Steven J. Goldstein
/s/ W. CAROL FULGHUM Principal Accounting Officer December 16, 1998
- -------------------- -----------
W. Carol Fulghum
/s/ RICHARD H. BARNHARDT Director December 16, 1998
- ------------------------ -----------
Richard H. Barnhardt
Director , 1998
- -------------------- ------------
C. Wood Beasley
/s/ THOMAS A. BETTS, JR. Director December 16, 1998
- ------------------------ ------------
Thomas A. Betts, Jr.
/s/ H. TATE BOWERS Director December 16, 1998
- -------------------- ------------
H. Tate Bowers
</TABLE>
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<PAGE> 159
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ ERNEST L. EVANS Director December 16, 1998
- -------------------- -----------
Ernest L. Evans
/s/ BERNARD W. FRANKLIN Director December 16, 1998
- ----------------------- -----------
Bernard W. Franklin
/s/ SUSAN E. GRAVELY Director December 16, 1998
- -------------------- -----------
Susan E. Gravely
/s/ JOHN H. HIGH Director December 16, 1998
- -------------------- -----------
John H. High
/s/ MICHAEL K. HOOKER Director December 16, 1998
- --------------------- -----------
Michael K. Hooker
/s/ ROBERT L. HUBBARD Director December 16, 1998
- --------------------- -----------
Robert L. Hubbard
/s/ WILLIAM H. KINCHELOE Director December 16, 1998
- ------------------------ -----------
William H. Kincheloe
/s/ CHARLES T. LANE Director December 16, 1998
- -------------------- -----------
Charles T. Lane
/s/ JOSEPH H. NELSON Director December 16, 1998
- -------------------- -----------
Joseph H. Nelson
/s/ DEAN E. PAINTER, JR. Director December 16, 1998
- ------------------------ -----------
Dean E. Painter, Jr.
</TABLE>
II - 8
<PAGE> 160
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ O. TRACY PARKS, III Director December 16, 1998
- ----------------------------
O. Tracy Parks, III
/s/ WILLIAM H. REDDING, JR. Director December 16, 1998
- ----------------------------
William H. Redding, Jr.
/s/ CHARLES M. REEVES, III Director December 16, 1998
- ----------------------------
Charles M. Reeves, III
/s/ GEORGE T. STRONACH, III Director December 16, 1998
- ----------------------------
George T. Stronach, III
/s/ ALEXANDER P. THORPE, III Director December 16, 1998
- ----------------------------
Alexander P. Thorpe, III
/s/ CHARLES P. WILKINS Director December 16, 1998
- ----------------------------
Charles P. Wilkins
</TABLE>
II - 9
<PAGE> 161
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- ------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of October 28, 1998, by and between
First Coastal Bankshares, Inc. and Centura Banks, Inc. (Included as Appendix A
to the proxy statement-prospectus included in this Registration Statement).
5.1 Opinion of Joseph A. Smith, Jr., General Counsel and Corporate Secretary of
Centura Banks, Inc. as to the validity of the shares of Centura Banks, Inc.
common stock.
8.1 Opinion of Alston & Bird LLP as to federal income tax consequences.
23.1 Consent of KPMG Peat Marwick LLP (for Centura).
23.2 Consent of KPMG Peat Marwick LLP (for First Coastal).
23.3 Consent of Joseph A. Smith, Jr., General Counsel and Corporate Secretary of
Centura Banks, Inc. (included in Exhibit 5.1).
23.4 Consent of Alston & Bird LLP (included in Exhibit 8.1).
23.5 Consent of Trident Financial Corporation (to be filed by amendment).
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of Proxy of First Coastal.
</TABLE>
II - 10
<PAGE> 1
[CENTURA BANKS, INC. LETTERHEAD]
December 18, 1998
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
Re: 2,011,439 SHARES OF THE COMMON STOCK, NO PAR VALUE
PER SHARE OF CENTURA BANKS, INC., A NORTH CAROLINA
CORPORATION ("CENTURA")
Ladies and Gentlemen:
The undersigned has participated in the preparation of a
registration statement on Form S-4 (the "Registration Statement") for filing
with the Securities and Exchange Commission in respect to not more than
2,011,439 shares of Centura's common stock, no par value per share ("Centura
Common Stock") which may be issued by Centura pursuant to an Agreement and Plan
of Merger, dated as of October 28, 1998, by and between Centura and First
Coastal Bankshares, Inc. (the "Agreement").
For purposes of rendering the opinion expressed herein, the
undersigned has examined Centura's articles of incorporation and all amendments
thereto; Centura's by-laws and amendments thereto; the Agreement and such of
Centura's corporate records as the undersigned has deemed necessary and
material to rendering the undersigned's opinion. The undersigned has relied
upon certificates of public officials and representations of Centura officials,
and has assumed that all documents examined by the undersigned as originals are
authentic, that all documents submitted to the undersigned as photocopies are
exact duplicates of original documents, and that all signatures on all
documents are genuine.
Further, the undersigned is familiar with, and has supervised
all corporate action taken in connection with the authorization of the issuance
and offering of the subject securities.
Based upon and subject to the foregoing and subsequent
assumptions, qualifications and exceptions, it is the undersigned's opinion
that:
1. Centura is a duly organized and validly existing
corporation in good standing under the laws of the State of North Carolina and
has all requisite power and authority to issue, sell and deliver the subject
securities, and to carry on its business and own its property; and
2. The shares of Centura Common Stock to be issued by
Centura pursuant to the Merger have been duly authorized and when issued by
Centura in accordance therewith, such shares of Centura Common Stock will be
fully paid and nonassessable.
3. The opinion expressed above is limited by the following
assumptions, qualifications, and exceptions.
(a) The undersigned is licensed to practice law only in
the State of North Carolina and expresses no opinion with respect to the
effect of the laws other than those of the State of North Carolina and of
the United States of America.
<PAGE> 2
Centura Banks, Inc.
December 18, 1998
(b) The opinion stated herein is based upon statutes,
regulations, rules, court decisions, and other authorities existing and
effective as of the date of this opinion, and the undersigned undertakes
no responsibility to update or supplement said opinion in the event of or
in response to any subsequent changes in the law or said authorities, or
upon the occurrence after the date hereof of events or circumstances
that, if occurring prior to the date hereof, might have resulted in a
different opinion.
(c) This opinion has been rendered solely for the
benefit of Centura and no other person or entity shall be entitled to
rely hereon without the express written consent of the undersigned.
(d) This opinion is limited to the legal matters
expressly set forth herein, and no opinion is to be implied or inferred
beyond the legal matters expressly so addressed.
The undersigned hereby consent to the undersigned being named
as a party rendering a legal opinion under the caption "Opinions" in the Proxy
Statement/Prospectus constituting part of the Registration Statement and to the
filing of this opinion with the Securities and Exchange Commission as well as
all state regulatory bodies and jurisdictions where qualification is sought for
the sale of the subject securities.
The undersigned is an officer of, and receives compensation
from Centura and therefore is not independent from Centura.
Very truly yours,
Centura Banks, Inc.
By: /s/ JOSEPH A. SMITH, JR.
-------------------------
Joseph A. Smith, Jr.
- 2 -
<PAGE> 1
EXHIBIT 8.1
[ALSTON & BIRD LLP LETTERHEAD]
December 18, 1998
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
First Coastal Bankshares, Inc.
2101 Parks Avenue
Virginia Beach, Virginia 23451
Re: Merger Involving Centura Banks, Inc. and First Coastal Bankshares,
Inc.
Ladies and Gentlemen:
We have served as counsel to Centura Banks, Inc., a corporation organized
under the laws of the State of North Carolina ("Centura"), in connection
with the reorganization of Centura and First Coastal Bankshares, Inc., a
corporation organized under the laws of the State of Virginia ("First
Coastal"), pursuant to the Agreement and Plan of Merger by and between First
Coastal and Centura dated as of October 28, 1998 (the "Agreement"), which
sets forth the terms of the merger of First Coastal with and into Centura
(the "Merger"). In our capacity as counsel to Centura, our opinion has been
requested with respect to certain of the federal income tax consequences of
the Merger.
Pursuant to the Merger, and as more fully described in the Agreement, at
the Effective Time, each share of First Coastal Common Stock issued and
outstanding at the Effective Time shall be converted into 0.34 of a share of
Centura Common Stock. As a result, shareholders of First Coastal shall
become shareholders of Centura, and each of the subsidiaries of First
Coastal shall continue to conduct its business and operations as a
subsidiary of Centura. All terms used herein without definition shall have
the respective meanings specified in the Agreement, and unless otherwise
specified, all section references herein are to the Internal Revenue Code of
1986, as amended (the "Code").
In rendering the opinions expressed herein, we have examined such
documents as we deemed appropriate, including (i) the Agreement and (ii) the
Registration Statement on Form S-4 filed by Centura with the Securities and
Exchange Commission under the Securities Act of 1933, on the date hereof, as
amended, including the Proxy Statement/Prospectus constituting part thereof
(together the "Registration Statement"). In rendering the opinions
<PAGE> 2
First Coastal Bankshares, Inc.
Page 2
expressed herein, we have assumed with the consent of Centura and First
Coastal, that the Agreement and the Registration Statement accurately and
completely describe the Merger and that the Merger will be consummated in
accordance with the Agreement and as described in the Registration
Statement.
In rendering the opinions expressed herein, we have relied with the
consent of Centura and First Coastal, upon the accuracy and completeness of
the factual statements and factual representations (which factual statements
and factual representations we have neither investigated nor verified)
contained in the certificates of Centura and First Coastal to us dated
as of the date hereof (together, the "Certificates"), which we have
assumed are complete and accurate as of the date hereof and will
be complete and accurate as of the date on which the Merger is
consummated.
Based on the foregoing, we are of the opinion that, under presently
applicable federal income tax law:
(1) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.
(2) No gain or loss will be recognized by holders of First Coastal Common
Stock upon the exchange in the Merger of all of their First Coastal Common
Stock solely for shares of Centura Common Stock (except with respect to any
cash received in lieu of a fractional share interest in Centura Common
Stock).
(3) The aggregate tax basis of the Centura Common Stock received by
holders of First Coastal Common Stock who exchange all of their First
Coastal Common Stock solely for Centura Common Stock in the Merger will be
the same as the aggregate tax basis of the First Coastal Common Stock
surrendered in exchange therefor, less the basis of any fractional share of
Centura Common Stock settled by cash payment.
(4) The holding period of the Centura Common Stock received by holders
who exchange all of their First Coastal Common Stock solely for Centura
Common Stock in the Merger will include the holding period of the First
Coastal Common Stock surrendered in exchange therefor, provided that such
First Coastal Common Stock is held as a capital asset at the Effective
Time.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. The federal income tax consequences described
herein may not apply to certain shareholders of First Coastal with special
situations, including, without limitation, shareholders who hold their First
Coastal Common Stock other than as a capital asset, who received their First
Coastal Common Stock upon the exercise of employee stock options or
otherwise as compensation,
<PAGE> 3
First Coastal Bankshares, Inc.
Page 3
who hold their First Coastal Common Stock as part of a "straddle" or
"conversion transaction" for federal income tax purposes, or are foreign
persons, insurance companies, or securities dealers.
In addition, our opinions are based solely on the documents that we have
examined, and the factual statements and factual representations set out in
the Certificates, which we have assumed were true on the date of the
Certificates, and are true on the date hereof. Our opinions cannot be
relied upon if any of the facts pertinent to the federal income tax
treatment of the Merger stated in such documents or any of the factual
statements or factual representations set out in the Certificates is, or
later becomes, inaccurate. Our opinions are limited to the tax matters
specifically covered thereby, and we have not been asked to address, nor
have we addressed, any other tax consequences of the Merger, including for
example any issues related to intercompany transactions, accounting methods,
or changes in accounting methods resulting from the Merger, the conversion
of options, or the consequences of the Merger under state, local or foreign
law. These opinions are provided solely for the benefit and use of
Centura and First Coastal. No other party or person is entitled to rely
on the opinions.
We hereby consent to the use of this opinion and to the references made to
Alston & Bird LLP in the Registration Statement under the captions
"Summary--Certain Federal Income Tax Consequences of the Merger" and
"Description of Transaction--Certain Federal Income Tax Consequences of the
Merger" and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ ALSTON & BIRD LLP
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Centura Banks, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Raleigh, North Carolina
December 18, 1998
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
First Coastal Bankshares, Inc.
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the proxy
statement-prospectus.
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
December 17, 1998
<PAGE> 1
EXHIBIT 99.1
FIRST COASTAL BANKSHARES, INC.
SPECIAL MEETING OF STOCKHOLDERS, _____________, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________________ and ___________________,
or either of them in case the other is unable or unwilling to act, as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of voting stock
of First Coastal Bankshares, Inc. held of record by the undersigned on
__________, 1999, at the Special Meeting of Stockholders to be held on
__________, 1999, or any adjournments thereof. The affirmative vote of a
majority of the shares represented at the meeting may authorize the adjournment
of the meeting; provided, however, that no proxy which is voted against the
Agreement will be voted in favor of adjournment to solicit further proxies for
such proposal.
1. Adoption of the Agreement and Plan of Merger, dated as of October 28,
1998 (the "Agreement"), by and between Centura Banks, Inc. and First
Coastal Bankshares, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AGREEMENT AND
PLAN OF MERGER.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER, BUT IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ADOPTION OF THE MERGER AGREEMENT.
The undersigned acknowledges receipt from First Coastal Bankshares, Inc.
prior to the execution of this Proxy of Notice of the Special Meeting and the
related proxy statement-prospectus.
DATED: ________________, 1999
<TABLE>
<S> <C>
----------------------------------------
Signature
----------------------------------------
Signature, if held jointly
Please sign exactly as name appears
on this Proxy Card. When shares are
held by joint tenants, both should
sign. When signing as
attorney-in-fact, executor,
administrator, personal
representative, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person
</TABLE>
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
