AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
August 26, 1998 between Centura Banks, Inc. a North Carolina bank holding
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company with its principal office in Rocky Mount, North Carolina ("Centura");
and Scotland Bancorp, Inc., a North Carolina business corporation with its
principal office and place of business located in Laurinburg, North Carolina
("Scotland"); and which will be joined in by Scotland Acquisition Corporation
("Acquisition").
W I T N E S S E T H
WHEREAS, Scotland is the sole shareholder of Scotland Savings Bank,
SSB ("SSB") a North Carolina savings bank with its principal office and place of
business located in Laurinburg, North Carolina;
WHEREAS, Centura is the sole shareholder of Centura Bank, a North
Carolina banking corporation with its principal office and place of business
located in Rocky Mount, North Carolina;
WHEREAS, Acquisition is a proposed North Carolina business corporation
to be formed as a wholly-owned subsidiary of Centura solely for the purpose of
merging with Scotland to effect Centura's acquisition of Scotland and which,
following its incorporation, will execute this Agreement to join as a party
hereto;
WHEREAS, Centura and Scotland have agreed that it is in their mutual
best interests and in the best interests of their respective shareholders for
Acquisition to be merged with and into Scotland (the "Merger") with the effect
that each of the outstanding shares of Scotland's common stock will be converted
into the right to receive cash as described in Section 2.05 below, all in the
manner and upon the terms and conditions contained in this Agreement (all of the
transactions contemplated herein, including the Merger and the Exchange (as
defined herein) are referred to collectively as the "Reorganization");
WHEREAS, Centura and Scotland have mutually agreed that subject to
consummation of the Merger and to receipt of all required approvals of the
Regulatory Authorities (as defined herein), at the Effective Time (as defined
herein), or at such time thereafter as Centura shall determine in its sole
discretion, SSB shall be merged with and into Centura Bank (the "Bank Merger");
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WHEREAS, Centura and Scotland have mutually agreed that subject to the
consummation of the Merger and to receipt of all required approvals of
Regulatory Authorities, at the Effective Time, or at such time thereafter as
Centura shall determine in its sole discretion, Scotland shall be merged with
and into Centura (the "Corporate Merger").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided in this Agreement, the capitalized terms set
forth below (in their singular and plural forms, as applicable,) shall have the
following meanings:
"Administrator" shall mean the Administrator of the Savings Institutions
Division of the North Carolina Department of Commerce.
"Bank Merger" shall mean the merger of SSB with and into Centura Bank, as
provided in this Agreement.
"BHC Act" shall mean the Bank Holding Company Act of 1956, as amended.
"Centura Bank" shall mean Centura Bank, a North Carolina chartered
commercial bank and the principal banking subsidiary of Centura.
"Centura Common Stock" shall mean the existing class of common stock of
Centura, without par value.
"Closing Date" shall mean the date specified pursuant to Section 2.07
hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Commissioner of Banks" shall mean the Commissioner of Banks of the State
of North Carolina.
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"Corporate Merger" shall mean the merger of Scotland with and into Centura,
as provided in this Agreement.
"Directors' Deferred Compensation Plans" shall mean the Retirement Payment
Plans between SSB and certain directors of SSB.
"Effective Time" shall mean the date and time specified pursuant to Section
2.09 hereof as the effective date of the Merger, Bank Merger and Corporate
Merger.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange" shall mean the exchange of all of the issued and outstanding
shares of Scotland's capital stock for shares of Centura Common Stock in
connection with the Merger as provided in Section 2.05 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
"Exchange Agent" shall mean Registrar and Transfer Company, Cranford, New
Jersey.
"Exhibits" shall mean the Exhibits referenced herein, which Exhibits are
hereby incorporated by reference and made a part hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System and the Federal Reserve Bank of Richmond.
"Financial Statements" shall mean (a) with respect to Centura, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Centura as of December 31, 1997 and 1996 and the related consolidated statements
of income, shareholders' equity, and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1997, 1996,
and 1995 as filed by Centura in the SEC Documents, and (ii) the consolidated
balance sheets of Centura (including related notes and schedules, if any) and
related statements of income, shareholders' equity, and cash flows (including
related notes and schedules, if any) included in the SEC Documents filed with
respect to periods ended subsequent to December 31, 1997, and (b) with respect
to Scotland, (i) the consolidated statements of financial condition (including
related notes and schedules, if any) of Scotland as of September 30, 1997, and
1996 and the related statements of income, stockholders' equity and cash flows
(including related notes and schedules, if any) for each of the three years
ended September 30, 1997, 1996, and 1995, as have been Previously Disclosed,
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and (ii) the consolidated statements of Scotland's financial condition
(including related notes and schedules, if any) and related statements of
income, stockholders' equity and cash flows (including related notes and
schedules, if any) of Scotland with respect to periods ended subsequent to
September 30,1997, as have been Previously Disclosed, all of which Financial
Statements shall be prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP").
"Merger" shall mean the merger of Acquisition with and into Scotland, as
provided in this Agreement.
"Previously Disclosed" shall mean information disclosed (i) in a letter
delivered prior to the date of this Agreement from the party making such
disclosure to the other party, or (ii) in an SEC Document filed or delivered
prior to the execution of this Agreement by the party making such disclosure to
the other party.
"Proxy Statement" shall mean the proxy statement to be furnished to
Scotland's shareholders soliciting proxies for shareholder approval of this
Agreement and the Reorganization.
"Regulatory Authorities" shall mean, as the context requires, any or all of
the Federal Reserve, the FDIC, the Commissioner of Banks, the Administrator,
the North Carolina Secretary of State, the Commission, North Carolina Banking
Commission, and the United States Department of Justice.
"Scotland Common Stock" shall mean the existing class of common stock of
Scotland, without par value.
"SEC Documents" shall mean all reports and documents filed, or required to
be filed, by Centura or Scotland pursuant to the Securities Laws or the
regulations of the Administrator which incorporate certain of the requirements
of the Securities Laws.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations promulgated thereunder,
all as the same shall be in effect at the time.
"Securities Laws" shall mean the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission promulgated thereunder.
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ARTICLE II
PLAN OF MERGER
2.01. Names of Merging Corporations. The names of the business
corporations proposed to be merged are Scotland Bancorp, Inc. and Scotland
Acquisition Corporation.
2.02. Nature of Transaction. Subject to the provisions of this
Agreement, at the Effective Time, Acquisition will be merged into and with
Scotland.
2.03. Effect of Merger; Surviving Corporation. At the Effective Time
and by reason of the Merger, the separate corporate existence of Acquisition
shall cease while the corporate existence of Scotland as the surviving
corporation in the Merger shall continue with all of its purposes, objects,
rights, privileges, powers and franchises, all of which shall be unaffected and
unimpaired by the Merger. The duration of the corporate existence of Scotland,
as the surviving corporation, shall be perpetual and unlimited.
2.04. Assets and Liabilities of Acquisition. At the Effective Time and
by reason of the Merger, and in accordance with applicable law, all of the
property, assets and rights of every kind and character of Acquisition
(including without limitation all real, personal or mixed property, all debts
due on whatever account, all other choses in action and every other interest of
or belonging to or due to Acquisition, whether tangible or intangible) shall be
transferred to and vest in Scotland, and Scotland shall succeed to all the
rights, privileges, immunities, powers, purposes and franchises of a public or
private nature of Acquisition, all without any conveyance, assignment or further
act or deed; and Scotland shall become responsible for all the liabilities,
duties and obligations of every kind, nature and description of Acquisition as
of the Effective Time.
2.05. Conversion and Exchange of Stock.
a. Conversion of Scotland Stock. Except as otherwise provided
herein, at the Effective Time all rights of Scotland's shareholders with respect
to all then outstanding shares (not to exceed an aggregate of 1,913,600 shares
plus such number of shares, if any, that are issued between the date of this
Agreement and the Effective Time upon the exercise of options granted prior to
the date of this Agreement pursuant to the terms of Scotland's stock option
plan) of Scotland Common Stock shall cease to exist and the holders of shares of
Scotland Common Stock shall cease to be, and shall have no further rights as,
shareholders of Scotland. As consideration for and to effectuate the Merger
(and except as otherwise provided herein), each such outstanding share of
Scotland Common Stock, other than shares held by Scotland, Centura or any of
their subsidiary corporations, shall be converted, without any action on the
part of the holder of such share, Centura or Scotland, into the right to receive
$11.75 in cash (the "Exchange Rate") as provided below, and
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the shares of Scotland Common Stock formerly held by Scotland's shareholders
shall be deemed to have been transferred and assigned to Centura.
b. Scotland Stock After Effective Time. At the Effective Time,
and without any action by Scotland or Centura, Scotland's Common stock transfer
books shall be closed and there shall be no further transfers of Scotland Common
Stock on its stock transfer books or the registration of any transfer of a
certificate evidencing Scotland Common Stock (a "Scotland Certificate") by any
holder thereof. Following the Effective Time, Scotland Certificates shall
evidence only the right of the registered holder thereof to receive, and, upon
their surrender as described below, may be exchanged for a check for cash in the
amount of $11.75 to which holders shall have become entitled on the basis set
forth above.
c. Exchange and Payment Procedures. At the Effective Time,
Centura shall cause to be issued and delivered to Exchange Agent one check for
the aggregate amount of cash to which all holders of Scotland Common Stock shall
have become entitled as provided above, and Scotland shall issue and deliver to
Centura, and register in its name, one stock certificate evidencing all of the
shares of Scotland Common Stock formerly held by its shareholders. As promptly
as practicable, but not more than five business days, following receipt by
Centura from Scotland's Common stock transfer agent of a certified listing of
the names and addresses of Scotland's shareholders immediately prior to the
Effective Time, Centura shall send or cause to be sent to each former
shareholder of Scotland of record immediately prior to the Effective Time
written instructions and transmittal materials (a "Transmittal Letter") for use
in surrendering Scotland Certificates to the Exchange Agent. Upon the proper
surrender and delivery to the Exchange Agent (in accordance with Centura's above
instructions, and accompanied by a properly completed Transmittal Letter) by a
former shareholder of Scotland of his or her Scotland Certificate(s), and in
exchange therefor, the Exchange Agent shall as soon as practicable issue and
deliver to the shareholder a check for the amount of cash to which the
shareholder is entitled.
d. Surrender of Certificates. Subject to Section 2.05(e)
below, no check shall be delivered to any former shareholder of Scotland unless
and until such shareholder shall have properly surrendered to the Exchange Agent
the Scotland Certificate(s) formerly representing his or her shares of Scotland
Common Stock, together with a properly completed Transmittal Letter in such form
as shall be provided to the shareholder by Centura for that purpose. Neither
Scotland, Centura nor the Exchange Agent shall have any obligation to pay any
interest on the cash to which a former Scotland shareholder is entitled for any
period prior to payment.
e. Lost Certificates. Any Scotland shareholder whose Scotland
Certificate has been lost, destroyed, stolen or otherwise is missing shall be
entitled to receive a check for the cash to which he or she is entitled in
accordance with and upon compliance with reasonable conditions imposed by the
Exchange Agent or Centura (including without limitation a requirement that the
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shareholder provide a lost instruments indemnity or surety bond in form,
substance and amount satisfactory to the Exchange Agent and Centura).
f. Treatment of Scotland's Stock Options. At the Effective
Time, each option to purchase shares of Scotland Common Stock (not to exceed
177,000 shares) granted by Scotland and outstanding on the date of this
Agreement pursuant to the Scotland Bancorp, Inc. Stock Option Plan (the
"Scotland Option Plan") automatically shall be converted into the right to
receive cash in the amount equal to the Exchange Rate (subject to adjustment as
provided in Section 2.05(a) above) less the exercise price for each outstanding
option to acquire Scotland Common Stock.
g. Outstanding Centura Stock. The status of Centura's equity
securities which are outstanding immediately prior to the Effective Time shall
not be affected by the Merger.
2.06. Articles of Incorporation, Bylaws and Management. The Articles
of Incorporation and Bylaws of Scotland in effect at the Effective Time shall be
the Articles of Incorporation and Bylaws of Scotland as the surviving
corporation. The officers and directors of Scotland in office at the Effective
Time shall continue to hold such offices until removed as provided by law or
until the election or appointment of their respective successors. At or
following the Effective Time, Centura, in its capacity as the sole shareholder
of Scotland, shall elect new directors of Scotland to replace its previous
directors, and the directors so appointed shall elect new officers of Scotland
to replace its previous officers.
2.07 Bank Merger. Immediately following the Merger, SSB shall be merged
with and into Centura Bank pursuant to N.C. Gen. Stat. (S) 53-12 and in
accordance with the Agreement and Plan of Bank Merger attached hereto as
Exhibit A.
2.08 Corporate Merger. Immediately following the Merger and the Bank
Merger, Scotland shall be merged with and into Centura pursuant to N.C. Gen.
Stat. (S) 55-11-04 and in accordance with the Agreement and Plan of Holding
Company Merger attached hereto as Exhibit B.
2.09. Closing; Effective Time. The closing of the transactions
contemplated by the Agreement (the "Closing") shall take place at the offices of
Centura in Rocky Mount, North Carolina, or at such other place as Centura shall
designate, on a date mutually agreeable to Scotland and Centura (the "Closing
Date") after the expiration of any and all required waiting periods following
the effective date of required approvals of the Merger, Bank Merger and
Corporate Merger by the Regulatory Authorities (but in no event more than 60
days following the expiration of all such required waiting periods). At the
Closing Centura and Scotland shall take such actions (including without
limitation the delivery of certain closing documents and the execution of
Articles of Merger under North Carolina law) as are required herein and as
otherwise shall be required by law to
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consummate the Merger, Bank Merger and Corporate Merger and cause each such
merger to become effective.
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of the Regulatory Authorities),
the Merger, Bank Merger and Corporate Merger shall become effective on the date
and at the time (the "Effective Time") specified in each respective Articles of
Merger filed with the appropriate governmental body in accordance with law;
provided, however, that the Effective Time shall in no event be more than ten
days following the Closing Date.
2.10. Cooperation to Consummate Mergers. In connection with the
foregoing, Scotland and Centura each shall take all reasonable and necessary
steps and actions to comply with and to secure all approvals for the Merger,
Bank Merger and Corporate Merger as may be required by all applicable state and
federal law, rules, and regulations, including those of the Regulatory
Authorities and shall execute such documents and take such actions as are
reasonably considered necessary or advisable to facilitate or effectuate the
Merger, Bank Merger and Corporate Merger.
ARTICLE III
GENERAL COVENANTS
3.01. Preparation of Proxy Statement; Approval of Scotland Shareholders.
Scotland shall prepare the Proxy Statement to be furnished to Scotland's
shareholders soliciting proxies for shareholder approval of this Agreement and
the transactions contemplated hereby and thereby. The Proxy Statement shall be
filed with the appropriate Regulatory Authorities as soon as reasonably
practicable and this Agreement and the transactions contemplated hereby and
thereby shall be submitted by Scotland to its shareholders at a special meeting
of its shareholders called for such purpose (the "Special Meeting") as soon as
practicable after the Proxy Statement is approved by the appropriate Regulatory
Authorities. Subject to the reasonable exercise of their fiduciary duties by its
members, the Board of Directors of Scotland shall recommend approval of this
Agreement and the transactions contemplated hereby and thereby at the Special
Meeting.
3.02. Reasonable Efforts; Cooperation. Centura and Scotland shall
each use all reasonable efforts to satisfy the conditions to the effectiveness
of the transactions contemplated by this Agreement as soon as is reasonably
practicable. Centura and Scotland will cooperate in the preparation by Centura
or Scotland, as the case may be, of such applications, articles of merger,
petitions, proxy statements, and other documents and materials as Centura or
Scotland, as the case may be, may deem necessary or desirable to submit to the
Regulatory Authorities and, where appropriate, to the various state securities
law authorities and to any other regulatory authority in order to obtain all
approvals of, consents to, and permissions for, the consummation of the
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transactions contemplated by this Agreement. Each party shall have the right to
review and approve, in advance, all data and characterizations of or relating to
it or any of its subsidiaries which appear in any such applications, petitions,
or other documents or materials prepared by the other party and each party shall
promptly advise the other of comments received from any of the Regulatory
Authorities, whether oral or written, in respect to any such filings or which
may affect the timing or consummation of the transactions contemplated by this
Agreement.
3.03. Confidential Information. Any information obtained by Centura
and Scotland concerning the other in the course of negotiating this Agreement or
of effecting the transactions contemplated hereby shall be kept confidential by
the recipient; provided, however, that (i) any of such information may be
disclosed to the directors, officers, employees, agents, and representatives of
Centura, Centura Bank, Scotland and SSB who need to know such information in
connection with such negotiations or transactions (it being understood that such
persons will be informed of the confidential nature of such information and
shall be directed to keep such information confidential), (ii) any of such
information may be disclosed to the extent necessary (subject to court seal or
other confidential treatment to the extent reasonably available) to a court or
other governmental body having jurisdiction or in any registration statement,
application, or related or similar document filed with any governmental body,
and (iii) and other disclosure of any such information may be made to which the
other consents in writing. Upon termination of this Agreement, all such written
information (including all copies thereof) obtained hereunder by either party
from the other party shall be returned to such party as soon as possible. This
Section 3.03 shall become inoperative with respect to any of such information
that (x) becomes generally available to the public other than as a result of
disclosure not otherwise permitted hereby by the party obtaining such
information or by its directors, employees, agents, or representatives, or (y)
was available to such party on a nonconfidential basis prior to its disclosure
by the other party, or (z) becomes available to such party by any
confidentiality agreement or duty of confidentiality regarding such information.
3.04. Existing Employment Agreement. Centura shall honor and Centura
shall cause SSB and its successors to honor the employment agreement currently
in effect between SSB and Xxxxxxx X. Xxxxxxxxxx, III, amended as provided in
Exhibit C to this Agreement.
3.05. Existing Termination Agreement. Centura shall honor and Centura
shall cause SSB and its successors to honor the Special Termination Agreement
currently in effect between SSB and Xxxx X. Xxxxx according to the terms of that
Agreement.
3.06. Existing Severance Plan. Centura shall honor and Centura shall
cause SSB and its successors to honor the Scotland Savings Bank, SSB Severance
Plan currently in effect as to all employees of SSB who are employed at the
Effective Time. That plan shall continue in effect as to such employees for a
period of two (2) years following the Effective Time as the plan provides, but
shall not apply to other persons and shall be deemed terminated as to any
change-of-control transaction other than the transactions contemplated by this
Agreement.
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3.07. Stock Options. Scotland shall have obtained and delivered to
Centura a written agreement, in form and substance satisfactory to Centura, of
each holder of a then-outstanding option to purchase shares of Scotland Common
Stock pursuant to the Scotland Option Plan to the effect that the stock option
held by such holder is terminated, canceled and released as of the Effective
Time.
3.08. Management Recognition Plan. Centura and Scotland mutually agree
that all awards granted prior to the date of this Agreement pursuant to the
Scotland Savings Bank, Inc., SSB Management Recognition Plan and Trust that
remain outstanding, to the extent they shall not previously have become vested,
shall become vested in full at the Effective Time.
3.09. Employee Stock Ownership Plan. The Employee Stock Ownership
Plan of Scotland Savings Bank, Inc., SSB ("Scotland ESOP") will be terminated
expeditiously following the Effective Time and plan assets shall be distributed
to participants in accordance with applicable law.
3.10. Directors' Deferred Compensation Plans. Following the Effective
Time, no further deferrals or contributions will be made under the terms of any
Directors' Deferred Compensation Plans. Existing entitlements under such plans,
as to present and future benefits, shall be honored according to the terms of
such plans.
3.11. Employees; Employment; Employee Benefits. All Scotland and SSB
employees shall continue to be employees at the Effective Time and shall become
employees of Centura or Centura Bank following the Effective Time for purposes
of ensuring that all Scotland and SSB employees qualify for the rights provided
to terminated employees under the Consolidated Omnibus Budget Reconciliation Act
of 1985. Except as otherwise expressly provided in this Agreement, however,
neither Centura nor Centura Bank shall have any obligation to employ or continue
to employ any Scotland or SSB employee for any period of time. Centura Bank may
offer continuing employment following the Effective Time to some persons now
employed by Scotland or SSB. Any employee of Scotland who accepts such offer and
becomes employed by Centura Bank (the "Retained Employees"), will be provided
with the employee welfare benefits generally available to all similarly situated
employees of Centura Bank, including the group insurance plan of Centura Bank
(including hospitalization, life and disability, and dental coverage) on the
same terms and at the same cost as similarly situated employees of Centura Bank
with no interruption in benefits and with acceptance of all pre-existing
conditions accepted under the comparable plan or plans maintained by Scotland to
the extent coverage is provided for such conditions under Centura's plans. Such
benefits shall be provided for dependents and/or families of such employees as
permitted by Centura Bank's employee benefits plans on the same terms and at the
same cost as for dependents and/or families of similarly situated Centura Bank
employees.
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At the Effective Time, benefit accruals under any employee pension benefit
plan (including any employee stock ownership plan or 401(k) plan) maintained by
Scotland or SSB shall cease. The Scotland ESOP will be terminated and, subject
to Internal Revenue Service approval, the benefits therein distributed or
transferred in accordance with the elections of participants thereunder made in
a manner consistent with the terms of such plan and the Code. Any 401(k) plan
maintained by Scotland or SSB may at Centura's election be merged into Centura's
or Centura Bank's 401(k) plan or terminated. All Retained Employees will be
eligible to participate in the pension and 401(k) plans of Centura or Centura
Bank, as applicable, in accordance with the terms of such plans and will be
credited for purposes of vesting and eligibility (but not for purposes of
benefit accruals) under such plans with one year of service to Centura Bank for
each year of service to Scotland prior to the Effective Time. In the event that
Scotland has any other qualified plan in effect at the Effective Time, such
qualified plan of Scotland shall be terminated with full vesting, and the assets
therein distributed or transferred in accordance with the elections of
participants thereunder made in a manner consistent with the terms of such plan
and the Code. It is expressly agreed by the parties hereto that the obligations
under this Section 3.11 with respect to qualified plans shall be performed in
accordance with the requirements of the Code and ERISA, including without
limitation Sections 404 and 415 of the Code, and any other applicable federal or
state statutes or regulations or decisions of any administrative agency or court
interpreting the same.
By acceptance of employment with Centura Bank, each Retained Employee
agrees to be bound by the terms and conditions of this Agreement and the terms
and conditions of the employee benefit plans of Centura Bank on an ongoing basis
and further agrees that the merger or other disposition of the benefit plans and
the treatment of benefits as specified in this Agreement shall be binding upon
said employee and said employee releases any claims for continuation of past
benefits.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY SCOTLAND
Except as Previously Disclosed, which disclosures shall be by specific
reference to the applicable section or sections of this Article IV, Scotland
represents and warrants as follows:
4.01. Organization, Good Standing, and Authority. Scotland and SSB
each are duly organized, validly existing and in good standing (as a business
corporation or savings bank) under the laws of North Carolina. All of SSB's
outstanding capital shares are owned by Scotland, free of any liens, claims, or
assessments thereagainst. In all respects material to the business of Scotland
and SSB taken as a whole, each of Scotland and SSB have all requisite corporate
power and authority to enter into and carry out the provisions of this
Agreement, to conduct their respective businesses as now conducted, to own and
operate their respective properties and assets, and to lease properties used in
their businesses. Neither Scotland nor SSB is in violation of its
organizational
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documents or bylaws, or, except as Previously Disclosed, of any applicable
federal or state law or regulation in any material respect, or in default with
respect to any order, writ, injunction, or decree of any court, or in default
under any order, license, regulation, or demand of any governmental agency, any
of which violations or defaults would materially and adversely affect the
businesses, properties, financial positions, or result of operations of Scotland
and SSB taken as a whole. SSB's deposits are insured by the FDIC pursuant to the
provisions of the Federal Deposit Insurance Act (the "FDI Act") and SSB has paid
all assessments and filed all reports and statements required to be paid or
filed under the FDI Act.
4.02. Binding Obligations; Due Authorization. Subject to all requisite
shareholder and regulatory approvals, this Agreement constitutes a valid and
binding obligation of Scotland, enforceable against it in accordance with the
terms of such documents, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court. The execution, delivery, and performance of this Agreement
and the transactions contemplated hereby and thereby have been duly authorized
by Scotland's Board of Directors.
4.03. Absence of Default. None of the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby or thereby,
or the fulfillment of the terms hereof or thereof, will conflict with, or result
in a breach of the terms, conditions, or provisions of, or constitute a default
under, the articles of incorporation or bylaws of Scotland or SSB. Except as
Previously Disclosed, none of such execution, consummation, or fulfillment will
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a default under (i) any material agreement or instrument under
which Scotland or the SSB is obligated or (ii) (assuming receipt of required
approvals by Regulatory Authorities and the approval of the shareholders of
Scotland) violate any statute or regulation of any Regulatory Authorities to
which Scotland or the SSB is subject, any of which conflicts, breaches,
defaults, or violations will prevent consummation of the Merger or have a
material adverse effect on the business or operations of Scotland and SSB taken
as a whole.
4.04. Capitalization. Scotland's authorized capital stock consists of
(i) 5,000,000 shares of preferred stock, no par value, none of which have been
issued and (ii) 20,000,000 shares of Scotland Common Stock, no par value, of
which 1,913,600 shares are issued and outstanding. All such outstanding shares
of Scotland Common stock are duly authorized, validly issued, fully paid, and
nonassessable. None of the capital stock of Scotland is subject to any
restrictions upon the transfer thereof under the terms of its Articles of
Incorporation or Bylaws. To the best of Scotland's knowledge and except as
Previously Disclosed, no shareholder is, as of March 31, 1998, the beneficial
owner of or has the contractual right to own beneficially more than five percent
(5%) of the issued and outstanding Scotland Common Stock. For purpose of this
Section 4.04, the term "beneficial owner" shall have the meaning provided in
Rule 13d-3 (17 C.F.R. (S) 240.13d-3) of the
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Commission, as in effect on the date hereof. Except as Previously Disclosed
there are no outstanding options, rights, securities, or warrants binding upon
Scotland that enable the holder thereof to purchase or otherwise acquire shares
of any class of the capital stock of Scotland or SSB. As of the date hereof,
there were options to acquire 177,000 shares of Scotland Common Stock issued
pursuant to the Scotland Option Plan. The Scotland Common Stock is listed on the
American Stock Exchange and Scotland is in compliance with applicable provisions
of the American Stock Exchange Company Guide where the failure to be so listed
and compliant could have a material adverse effect on Scotland's assets,
properties, liabilities or businesses.
4.05. Subsidiaries; Investments. Scotland owns all of the issued and
outstanding capital stock of SSB. Except as Previously Disclosed, Scotland does
not, directly or indirectly, own, control, or hold with the power to vote any
shares of the capital stock of any "company," as that term is defined by the BHC
Act, other than SSB.
4.06. Filing of Reports. To the best knowledge of Scotland's
management, Scotland and SSB have timely filed all material reports required to
be filed with the applicable Regulatory Authorities and such reports complied in
all material respects with applicable law and regulations.
4.07. Financial Statements. Scotland has Previously Disclosed copies
of Scotland's Financial Statements and such Financial Statements are true,
complete, and correct in all material respects and fairly present the
consolidated financial position of Scotland and SSB as of the dates indicated
and the consolidated results of operations, retained earnings and changes in
financial position or cash flows for the periods then ended in conformity with
generally accepted accounting principles applied on a consistent basis.
4.08. Absence of Certain Developments. Since September 30, 1997 and
prior to the date hereof, except as Previously Disclosed, there has been (i) no
material adverse change in the condition, financial or otherwise, of Scotland or
SSB or in the respective assets, properties, liabilities, or businesses of
Scotland or SSB; (ii) no incurrence by or subjection of Scotland or SSB to any
obligation or liability (whether fixed, accrued, or contingent) or commitment
material to Scotland or SSB not referred to in this Agreement or Previously
Disclosed, except such obligations or liabilities as were or may be incurred in
the ordinary course of business; (iii) except as referred to in Section 9.05
herein, no declarations, setting aside, or payment of any special dividend or
other distribution with respect to any class of capital stock of Scotland; (iv)
no material loss, destruction, or damage to any property of Scotland or SSB,
which loss, destruction, or damage is not adequately covered by insurance; and
(v) no material acquisition or disposition of any asset or contract nor any
other transaction by Scotland or SSB other than for fair value in the ordinary
course of business. Since such date and prior to the date hereof, except as
Previously Disclosed, Scotland and SSB have conducted their respective
businesses in all material respects only in the ordinary course and in
substantial compliance with all laws which govern the ownership of their
respective properties and the conduct of their respective businesses.
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4.09. Loan Loss Allowances. The allowances for loan losses set forth
in Scotland's most recent Financial Statements are adequate in the opinion of
Scotland's management, as of the date thereof, to absorb reasonably anticipated
losses in the loan portfolio of Scotland in view of the size and character of
such portfolio, current economic conditions, and other pertinent factors.
4.10. Books of Account; Corporate Records. The books of account of
Scotland and SSB are maintained in substantial compliance with all applicable
legal and accounting requirements and in such a manner as to reflect accurately
their respective income and expenses and all of their respective assets,
liabilities, and shareholders' equity. To the best knowledge of Scotland's
management, Scotland and SSB have filed all material reports and returns
required by any law or regulation to be filed by it or them, and it or they have
duly paid or accrued on their books of account all taxes and charges due
pursuant to such reports and returns, or assessed against it or them, including,
without limitation, all such reports and statements, and all such assessments
which Scotland and SSB are required to have filed or paid pursuant to the Act,
none of which reports, statements, or assessments has been the subject of any
material objection by the applicable Regulatory Authorities. Except as
Previously Disclosed, the minute books of Scotland and SSB contain complete and
accurate records in all material respects of the corporate actions of their
respective shareholders and Boards of Directors and of all committees thereof.
4.11. Taxes. Scotland and SSB have filed all material tax returns,
reports, lists, and statements required to be filed by any federal, state,
local, foreign, or other taxing jurisdiction of any nature whatsoever, and paid
all taxes, assessments, and other governmental charges due upon them or any of
their respective income, property, assets, or net worth (other than taxes or
charges which are not yet delinquent, are being contested in good faith, have
not been finally determined, or for which there are adequate reserves that were
established on or before September 30, 1997), and no extensions for the time of
any such payment have been requested or granted. No material additional
assessments of tax by any governmental authority are, as of the date hereof,
pending or, to the best knowledge of Scotland's management, known to be pending,
threatened, or in process of proposal, and no unexpired waivers or other
extensions of the statute of limitations executed by or binding upon Scotland or
SSB with respect to federal or other income taxes or any other taxes are in
effect as of the date hereof. In the opinion of Scotland's management, the
accruals and reserves made for tax liabilities in the September 30, 1997 audited
consolidated balance sheet and subsequent unaudited interim period balance
sheets are adequate for the payment of all federal, state, local, foreign, and
other tax liabilities of any nature whatsoever of Scotland and SSB or with
respect to their assets and properties whether or not proposed, pending,
threatened, or disputed, for all periods ending on or prior to such dates.
4.12. Qualification to Do Business. Except as Previously Disclosed,
Scotland and SSB are duly qualified and licensed to do business and in good
standing in all jurisdictions where the conduct of either's business requires it
to be qualified and licensed to do such business and where
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the failure to be so qualified and licensed could result in liability or
adversely affect the operations and properties of Scotland or SSB in any
material respect.
4.13. Insurance. Scotland and SSB have in effect insurance coverage
with reputable insurers, including blanket bond coverage, which coverage in
respect of amounts, types, and risks insured is, in the opinion of Scotland's
management, adequate for the businesses conducted by them.
4.14. Litigation. No action, suit, investigation, or proceeding is
pending against, nor has the threat of such been communicated to, Scotland or
SSB before any court or governmental agency, domestic or foreign, nor, to the
best knowledge of Scotland's management, is there any basis for any other
material action, suit, investigation, or proceeding which, in the judgment of
legal counsel for Scotland, has a reasonable prospect for success. On the date
hereof, there is no action, suit, investigation, or proceeding brought by
Scotland or SSB (other than suits to collect on extensions of credit) which
seeks damages in excess of $50,000. On the date hereof, there is no litigation,
proceeding, or governmental investigation pending or, to the best knowledge of
Scotland's management, threatened against Scotland or SSB relating to any of
the transactions contemplated by this Agreement.
4.15. Brokerage; Advisors. Except as Previously Disclosed, neither
Scotland nor any of its officers, directors or employees has employed any
broker, finder, or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein. There are
no claims for brokerage commissions, finder's fees, or similar compensation
arising out of or due to any act of Scotland in connection with the transactions
contemplated by this Agreement or based upon any agreement or arrangement made
by or on behalf of Scotland. Except as Previously Disclosed, Scotland has not
entered into any agreement or understanding with any party relating to financial
advisory services provided or to be provided with respect to the transactions
contemplated by this Agreement. Scotland shall indemnify and hold Centura
harmless against any liability or expenses arising out of such a claim,
agreement, or understanding.
4.16. Real and Personal Property. Except as Previously Disclosed, and
except for property and assets disposed of in the ordinary course of business,
Scotland and SSB own, free and clear of any mortgage, pledge, lien, charge, or
other encumbrance which would materially interfere with the business or
operations of Scotland, all of their respective real or personal property and
the assets reflected in Scotland's most recent Financial Statements or acquired
by them subsequent to the date thereof. The real and personal property, if any,
leased by Scotland or SSB is free from any adverse claim which would materially
interfere with the respective businesses or operations of Scotland and SSB. All
of the properties and equipment owned or leased by Scotland and SSB are in
normal operating condition, free from any known defects, except such minor
defects as do not materially interfere with the continued use thereof in the
conduct of the normal operations of Scotland and SSB.
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4.17. Fiduciary Activities. Except with respect to retirement
accounts, and except as Previously Disclosed, neither Scotland nor SSB is
directly or indirectly engaged, nor has been so engaged, in any activities
traditionally associated with bank trust activity. Except as Previously
Disclosed and except for pending or threatened legal actions or other
proceedings which are not individually or in the aggregate material to Scotland
, neither Scotland nor SSB have been, nor are, parties to or threatened with any
legal action or other proceeding which sought to surcharge Scotland or SSB or to
obtain any other remedy against either of them or any of their respective
properties relating to the exercise of any such fiduciary and custodial powers.
4.18. Intangible Property. To the best knowledge of Scotland's
management, Scotland and SSB own or possess the right, free of the claims of any
third party, to use the trademarks, service marks, trade names, copyright,
patents, and licenses currently used by them in the conduct of their respective
businesses. To the best knowledge of Scotland's management, no material product
or service offered and no material trademark, service xxxx, or similar right
used by them infringes any rights of any other person or entity, and, as of the
date hereof, neither Scotland nor SSB have received written or oral notice of
any claim of such infringement.
4.19. Employee Relations and Employee Benefit Plans.
(a) As of the date hereof, Scotland and SSB are in all material respects in
compliance with all federal and state laws, regulations, and orders respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and are not engaged in any unfair labor practice. As of the
date hereof, no dispute exists between Scotland or SSB and any of its or their
employees regarding any employee organization, wages, hours, or conditions of
employment which would materially interfere with the respective businesses or
operations of Scotland or SSB. Except as Previously Disclosed, as of the date
hereof, there are no employment, consulting, labor, or collective bargaining
agreements binding upon Scotland or SSB. As of the date hereof, neither
Scotland nor SSB is aware of any attempts to organize a collective bargaining
unit to represent any of their respective employees. All contributions due on
or prior to the date hereof to any pension, profit-sharing, or similar plan of
Scotland or SSB, if any, have been paid or provided for in accordance with ERISA
and all other applicable federal and state statutes and regulations. As of
April 30, 1998, the cash surrender value of the life insurance policies used to
fund Scotland's obligations under the Directors' Deferred Compensation Plans was
approximately $10,000 less than the accumulated obligations under such plans at
June 30, 1998; however, Scotland anticipates that over the term of the plans the
cash surrender value will be sufficient to fund the obligations as they become
due and payable.
(b) Scotland has Previously Disclosed true and complete copies of all
qualified pension or profit sharing plans, any deferred compensation,
consultant, bonus or group insurance contract, or any other incentive, welfare,
or employee benefit plan or agreement maintained for the benefit of employees or
former employees of Scotland or SSB (for purposes of this Section 4.19, the
"Benefit
16
Plans"), together with (i) the most recent actuarial and financial reports
prepared with respect to any Benefit Plans, (ii) the three most recent annual
reports filed with any government agency, and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
to any Benefit Plan. Neither Scotland nor SSB are obligated to provide any post-
retirement welfare benefits to their respective employees, including post-
retirement health or life insurance coverage.
(c) Scotland and SSB have fully complied in all material respects with
all provisions of ERISA and any and all other laws, rules, and regulations
applicable to the Benefit Plans. All reports and descriptions of any Benefit
Plans, required by ERISA have been timely filed and distributed and all notices
required by ERISA, the Code, or any state or federal law or any ruling or
regulation of any state or federal administrative agency with respect to all
Benefit Plans have been appropriately given.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) of Scotland and SSB to the effect that such a plan is
qualified under Section 401 of the Code and tax exempt under Section 501 of the
Code. No such letter has been revoked or is threatened to be revoked and
Scotland knows of no ground on which such revocation may be based. Neither
Scotland nor SSB has any material liability under any such plan that is not
reflected in the Financial Statements of Scotland as of September 30, 1997.
Each such plan is and has been administered in all material respects in
accordance with its provisions and applicable law.
(e) Neither Scotland nor SSB (or any pension plan maintained by either
of them) has incurred any material liability to the Pension Benefit Guaranty
Corporation or the Internal Revenue Service with respect to any pension plan
qualified under Section 401 of the Code except liabilities to the Pension
Benefit Guaranty Corporation pursuant to Section 4007 of ERISA, all of which
have been fully paid. No reportable event under Section 4043(b) of ERISA has
occurred with respect to any such pension plan and there exists no condition or
set of circumstances presenting a material risk of the termination or partial
termination of any such plan which could result in a material liability on the
part of Scotland or SSB to the Pension Benefit Guaranty Corporation or any other
person.
(f) Neither Scotland nor SSB participates in, or has incurred any
liability under Section 4201 of ERISA for a complete or partial withdrawal from,
a multi-employer plan (as such term is defined in ERISA).
(g) No "prohibited transaction" (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any Benefit Plan (i) which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
Code, or (ii) the correction of which would have an adverse effect on the
financial condition, results of operations, or business of Scotland and SSB
taken as a whole.
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(h) Except as Previously Disclosed, the present value of all benefits,
whether or not vested, under each pension plan maintained by Scotland or SSB did
not exceed as of the most recent actuarial valuation date, and will not exceed
as of the Closing Date, the then current fair market value of the assets of such
plan. For purposes of determining the present value of benefits under any such
plan, the actuarial assumptions and methods used under such plan for the most
recent actuarial valuation shall be used, other than any assumptions relating to
employee turnover (as to which it shall be assumed there will be none).
(i) None of Scotland, SSB, or, to the best knowledge of Scotland 's
management, any administrator or fiduciary of any of such Benefit Plans (or
agent or delegate of any of the foregoing) has engaged in any transaction or
acted or failed to act in any manner which could subject Scotland or SSB to any
direct or indirect liability for a breach of any fiduciary, co-fiduciary, or
other duty under ERISA. No oral or written representation or communication with
respect to any aspect of the Benefit Plans has been made to employees of
Scotland or SSB prior to the Effective Time which is not in accordance with the
written or otherwise preexisting terms and provisions of such Benefit Plans in
effect immediately prior to the Effective Time. There are no unresolved claims
or disputes under the terms of, or in connection with, the Benefit Plans and no
action, legal or otherwise, has been commenced with respect to any claim.
4.20. Contracts and Commitments. Scotland has Previously Disclosed or
made available to Centura or granted access to originals or copies of the
following documents or summary descriptions of the following information
relating to Scotland and SSB, which copies or summary descriptions are complete
and accurate as of the date hereof, except as otherwise expressly provided
hereunder:
(i) all regulatory approvals relating to all acquisitions or the
establishment of de novo operations;
(ii) organizational documents, and bylaws and any amendments thereto, as
well as minutes of all meetings of the respective shareholders and Boards of
Directors and committees thereof since January 1, 1993, except certain minutes
of meetings of Scotland's Board of Directors held since March 31, 1998;
(iii) all employment contracts, deferred compensation, non-competition,
bonus, stock option, profit-sharing, pension, retirement, consultation after
retirement, incentive, insurance arrangements or plans, (including medical,
disability, group life, or other similar insurance plans), and any other
remuneration arrangements applicable to employees of Scotland or SSB,
accompanied by any agreements, including trust agreements, embodying such
contracts, plans, or arrangements, and any actuarial reports and audits relating
to such plans;
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(iv) any pending application, including any documents or materials
related thereto, which has been filed with any federal or state regulatory
agency with respect to the establishment of a new branch office or the
acquisition or establishment of an additional regulated activity or subsidiary;
and
(v) all federal and state tax returns filed for the years 1995, 1996,
and 1997 (if available), copies of the most recent federal and state revenue
agency examinations, and all tax rulings received from the Internal Revenue
Service since January 1, 1990.
4.21. No Materially Adverse Contracts or Other Types of Agreements.
Without limiting any of the foregoing representations and warranties and except
as Previously Disclosed, on the date hereof:
(i) All policies of insurance (including surety and blanket bonds)
insuring any material risks of Scotland and SSB taken as a whole are in force on
the date hereof and neither Scotland nor SSB is in any material default with
respect to any such policies;
(ii) To the best knowledge of Scotland's management, each material lease,
contract, mortgage, promissory note, deed of trust, loan, credit arrangement, or
other commitment or arrangement of Scotland and SSB is in all material respects
valid and enforceable in accordance with its terms (except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting creditors rights generally and except that the availability of
equitable remedies is within the discretion of the appropriate court) and is not
subject to termination as a result of the Merger without the consent of any
other party, and neither Scotland nor SSB is in default in any material respect
under any such lease, contract, mortgage, promissory note, deed of trust, loan,
or other commitment or arrangement, which default would materially and adversely
affect the business and operations of Scotland and SSB taken as a whole;
(iii) Except in the ordinary course of the business of taking deposits and
extending credit and except as Previously Disclosed, neither Scotland nor SSB is
obligated under (x) any contract, lease, mortgage, or other commitment,
arrangement, or agreement, or subject to any law, regulation, or decree or to
any restriction in its organizational documents or bylaws which materially and
adversely affects their respective businesses, properties, prospects, assets, or
conditions, financial or otherwise, or (y) any lease, contract, promissory note,
deed of trust, or any other commitment which involves an aggregate annual
payment by Scotland or SSB of more than $50,000 or which extends beyond 24
months.
4.22. Environmental Matters.
(a) For purposes of this Section and Section 4.22, the "Premises" means
and includes, collectively, all the real property owned in fee or leased by
Scotland or SSB and Previously Disclosed.
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(b) For purposes of this Section, "Hazardous Materials" means and
includes petroleum products, any flammable explosives, asbestos or any material
containing asbestos, and/or any hazardous or toxic waste, substance or material
defined as such by the United States Environmental Protection Agency, the North
Carolina Department of Environment, Health, and Natural Resources, or for the
purpose of or by any Environmental Laws as may now or at any time hereafter be
in effect.
(c) For purposes of this section, "Environmental Laws" means and
includes the Comprehensive Environmental Response, Compensation and Liability
Act, the Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic Substances
Control Act, the Coastal Area Management Act, any "Superfund" or "Superlien"
law, the North Carolina Oil Pollution and Hazardous Substances Control Act, or
any other decree regulating, relating to, or imposing liability, responsibility
or standards of conduct applicable to environmental conditions and/or releases
(or potential releases) of Hazardous Materials in, on, at or affecting the
Premises, as such may now or at any time hereafter be defined or in effect.
(d) Scotland hereby represents and warrants to Centura for the purposes
of this Agreement and the contemplated transfer, sale and conveyance of the
Premises that:
(i) No Hazardous Materials have been used or placed in, on or at
the Premises in violation of, and the Premises are presently in compliance
with, all applicable Environmental Laws, and there are no circumstances
presently existing in, on, at or relating to the Premises which would
result in violation of any applicable Environmental Law;
(ii) Except as Previously Disclosed, neither Scotland nor SSB have
caused or permitted the installation, storage, treatment, disposal,
discharge, release or threatened release of Hazardous Materials in, on, at
or from the Premises in violation of any Environmental Law nor have engaged
in, or have knowledge of, any activity on or in the vicinity of the
Premises which resulted in, the presence or release of any Hazardous
Materials which may impact the condition of the Premises;
(iii) As of the Closing Date, the Premises shall be free of the
presence of Hazardous Materials, except for those materials used in the
ordinary course of business by Scotland or SSB;
(iv) Scotland and SSB have complied in all material respects with,
and have caused the Premises to comply in all material respects with, all
applicable Environmental Laws relating to or affecting the Premises, and
the Premises are free and clear of any liens imposed pursuant to any
applicable Environmental Laws;
20
(v) Scotland and SSB have, and at all times have had and/or
maintained, all licenses, permits and other governmental or regulatory
authority necessary for compliance with all applicable Environmental Laws;
(vi) Scotland and SSB have complied in all material respects with
all Environmental Laws relating specifically to notification, registration,
record keeping, installation, financial responsibility, leak detection,
equipment, facilities, activities and operations on the Premises;
(vii) There is not now pending or threatened, to Scotland's
knowledge, any action, suit investigation or proceeding against Scotland,
SSB, or the Premises (or against any other party relating to the Premises)
seeking to enforce any right or remedy under any Environmental Laws;
(viii) Neither Scotland nor SSB is now, nor has been, subject to any
order, threatened with any enforcement action, received any notice, or
received any request for information or any other demand or inquiry
pursuant to any Environmental Law with respect to the Premises or any
activity or condition in, or, at or relating to the Premises;
(ix) Scotland immediately shall give Centura oral and written
notice in the event that Scotland or SSB receives any notice from any
governmental agency, entity or any other party with regard to Hazardous
Materials in, on, at or affecting the Premises; and
(x) Scotland shall provide to Centura on or before the Closing
Date, and Scotland has a continuing obligation to provide to Centura,
copies of all information in its possession, under its control or available
to it concerning the environmental condition of the Premises and any and
all properties adjacent to the Premises, the condition of which would
affect the condition of the Premises.
4.23. Proxy Statement Information. When the Proxy Statement or any
amendment thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the Closing Date, such Proxy Statement and all
amendments or supplements thereto, with respect to all information set forth
therein furnished by Scotland relating to Scotland and SSB, (i) shall comply in
all material respects with the applicable provisions of the Securities Laws, and
(ii) shall not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein not false or misleading.
4.24. Information Furnished. Each representation and warranty in this
Article IV and all information furnished or to be furnished to Centura pursuant
to the terms of this Agreement, as of the date hereof or the date furnished, are
and shall be true, accurate, and complete in all material respects.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES BY CENTURA
Except as Previously Disclosed, which disclosures shall be by specific
reference to the applicable section or sections of this Article V, Centura
represents and warrants as follows:
5.01. Organization, Good Standing, and Authority. Centura is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of North Carolina. Centura is a bank holding company duly
registered pursuant to the BHC Act and the North Carolina Bank Holding Company
Act of 1984, and it has all requisite corporate power and authority to enter
into and carry out the provisions of this Agreement. Centura is not in
violation of its organizational documents or bylaws, or of any applicable
federal or state law or regulation in any material respect, or in default with
respect to any order, writ, injunction, or decree of any court, or in default
under any order, license, regulation, or demand of any governmental agency, any
of which violations or defaults would materially and adversely affect any of its
businesses, properties, financial position, or results of operations taken as a
whole. Centura has all requisite corporate power and authority to conduct its
business as now conducted or proposed to be conducted, and to own and operate
and lease the properties and assets used in such business.
5.02. Centura Bank. Centura Bank is a bank corporation duly organized,
validly existing, and in good standing under the laws of the State of North
Carolina, all of the capital stock of which is owned by Centura, free and clear
of any liens, claims, or assessments thereagainst. Centura Bank is not in
violation of its charter documents or bylaws, or of any applicable federal or
state law or regulation in any material respect, or in default with respect to
any order, writ, injunction, or decree of any court, or in default under any
order, license, regulation, or demand of any governmental agency, and of which
violations or defaults would materially and adversely affect the businesses,
properties, financial position, or results of operation of Centura and Centura
Bank taken as a whole. Centura Bank has all requisite corporate power and
authority to conduct its business as now conducted or proposed to be conducted,
and to own and operate and lease the properties and assets used in such
business.
5.03. Binding Obligations; Due Authorization. This Agreement
constitutes a valid and binding obligation of Centura, and, subject to required
regulatory approvals, will be enforceable against it in accordance with the
terms of such documents, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court. The execution, delivery, and performance of this Agreement,
and the transactions contemplated hereby have been, or will be prior to the
Effective Time, duly authorized by the Board of Directors of Centura.
22
5.04. Absence of Default. None of the execution or the delivery of
this Agreement, the consummation of the transactions contemplated hereby or
thereby, or the fulfillment of the terms hereof or thereof, will conflict with,
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, the Articles of Incorporation or Bylaws of Centura or Centura
Bank, as applicable. None of such execution, consummation, or fulfillment will
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a default under (i) any agreement or instrument under which
Centura or Centura Bank is obligated, or (ii) (assuming receipt of required
approvals of Regulatory Authorities) violate any statute or regulation of any
government or agency to which Centura or Centura Bank is subject, any of which
conflicts, breaches, defaults, or violations will prevent consummation of the
Merger or have a material adverse effect on the business or operations of
Centura or Centura Bank.
5.05. Financial Statements. Centura has Previously Disclosed copies of
Centura's Financial Statements and such Financial Statements are true, complete,
and correct in all material respects and fairly present the consolidated
financial position of Centura and Centura Bank as of the dates indicated and the
consolidated results of operations, retained earnings and changes in financial
position or cash flows for the periods then ended in conformity with generally
accepted accounting principles applied on a consistent basis.
5.06. Filing of Reports. Centura has timely filed all reports required
to be filed with the applicable Regulatory Authorities and such reports, as
filed, complied in all material respects with applicable law and regulations.
Centura has filed all SEC Documents required to be filed by the Securities Laws
and all documents required by any applicable state securities laws and such SEC
Documents and other documents, as filed, complied in all material respects with
the Securities Laws and such state securities laws.
5.07. Proxy Statement Information. When the Proxy Statement, or any
amendment thereto, shall become effective, and at all time subsequent to such
effectiveness up to and including the Closing Date, all information set forth or
incorporated therein furnished by Centura relating to Centura and Centura Bank,
(i) shall comply in all material respects with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not false or misleading.
5.08. Information Furnished. Each representation and warranty in this
Article V, all information Previously Disclosed to Scotland, and all information
otherwise furnished or to be furnished to Scotland pursuant to the terms of this
Agreement, as of the date hereof or the date furnished, are and shall be true,
accurate, and complete in all material respects.
5.09. No Shareholder Approval. No approval of Centura's shareholders
is required in order to consummate the Merger.
23
5.10. Litigation and Compliance with Law. There are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or, to the
best knowledge and belief of the executive officers of Centura, any facts or
circumstances which reasonably could result in such), including without
limitation any such action by any governmental or regulatory authority, which
currently exist or are ongoing, pending or, to the best knowledge of the
executive officers of Centura, threatened, contemplated or probable of
assertion, against, relating to or otherwise affecting Centura or its
subsidiaries or any of their properties, assets or employees which, if
determined adversely, could have a material adverse effect on the ability of
Centura to consummate the Merger.
5.11. Obstacles to Regulatory Approval. To the best knowledge of
Centura, no fact or condition (including Centura's or Centura Bank's record of
compliance with the Community Reinvestment Act) relating to Centura or Centura
Bank exists that may reasonably be expected to prevent or materially impede or
delay Centura or Scotland from obtaining the regulatory approvals required in
order to consummate the transactions described herein; and, if any such fact or
condition becomes known to the executive officers of Centura, Centura promptly
(and in any event within three days after obtaining such knowledge) shall
communicate such fact or condition to the President of Scotland.
ARTICLE VI
ACCESS TO AND INFORMATION CONCERNING
PROPERTIES AND RECORDS
6.01. Access by Centura. For purposes of this Section 6.01 and Section
6.03 below, the term "Scotland" shall include Scotland and SSB. Scotland, to
the extent permitted by law and except for certain information covered by
confidentiality agreements between Scotland and other parties relating to a
possible acquisition of Scotland by such parties, shall give Centura, its
counsel, accountants, investment bankers, and other representatives full access,
at reasonable times and upon reasonable notice throughout the period through the
Effective Time, to all of Scotland's properties, books, contracts, commitments,
and records, and Scotland shall furnish to Centura during such period all such
information concerning Scotland and its affairs as Centura may reasonably
request. In addition, Scotland shall also make its officers available to discuss
with Centura's representatives the substance of all documents, financial
statements, and other information provided by Scotland to Centura and such other
matters as Centura shall deem pertinent to the transactions contemplated by this
Agreement.
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6.02. Access by Scotland. For purposes of this Section 6.02, the term
"Centura" shall include Centura and Centura Bank. Centura, to the extent
permitted by law, shall give Scotland, its counsel, accountants, investment
bankers, and other representatives access, at reasonable times and upon
reasonable notice throughout the period through the Effective Time, to such
information relating to Centura and to be specified by Scotland as shall be
reasonably necessary and appropriate under the then circumstances for Scotland
to confirm the accuracy of the representations and warranties set forth in
Article IV hereof and to carry out the transactions contemplated by this
Agreement. In addition, Centura shall also make its officers available to
discuss with Scotland's representatives the substance of all documents,
financial statements, and other information provided by Centura to Scotland and
such other matters as Scotland shall deem pertinent to the transactions
contemplated by this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS OF SCOTLAND
Except as otherwise consented to or waived by Centura in writing, Scotland
covenants that, throughout the pendency of this Agreement, it will:
7.01. Operation of Business. Maintain and operate its business only in
the usual, regular, and ordinary manner appropriate to entities of comparable
size and character and comply in all material respects with all applicable laws,
regulations, orders, judgments, and decrees except where Scotland is contesting
the validity of any of the foregoing; and, to the extent consistent with such
operation and sound business practices as determined in good faith by Scotland,
make all reasonable efforts to preserve intact its present business organization
(including, but not limited to, Scotland's status as a North Carolina chartered
stock savings bank), keep available the services of its present officers and
employees, and preserve its present relationships with depositors, suppliers,
customers, and others having business dealings with it.
7.02. Payment of Taxes. Punctually pay and discharge all taxes,
assessments, and other governmental charges lawfully imposed upon Scotland or
SSB or any of their property, or upon the income and profits thereof; provided,
however, that nothing herein contained shall prohibit Scotland from contesting
in good faith and by appropriate proceedings the validity of any tax,
assessment, or governmental charge; and, provided further, that any such
contested assessment or charge be reported to Centura.
7.03. Substantial Litigation; Adverse Condition. Promptly upon receipt
of notice, notify Centura of (i) the commencement of any litigation against
Scotland seeking damages in excess of $50,000 or threatening the consummation of
the Merger, or (ii) the existence of severe and adverse business conditions
threatening the continued, normal business operations of Scotland.
25
7.04. Properties. At all times maintain, preserve, and keep all
properties in a satisfactory condition so as to ensure their normal use in the
business operations of Scotland, except where failure to do so would not
materially and adversely affect the business or operations of Scotland.
7.05. Contracts. Perform all obligations under all material contracts,
leases, and documents relating to or affecting assets, properties, and business,
except where failure to do so would not materially and adversely affect the
business or operations of Scotland.
7.06. Insurance. Maintain in full force and effect insurance in
amount and scope of coverage which, in the judgment of Scotland's management, is
consistent with the nature and scope of all activities as conducted now or in
the future by Scotland.
7.07. Regulatory Filings and Financial Statements. Provide Centura
promptly with (i) a copy of any and all filings made with the Regulatory
Authorities from the date hereof through the Effective Time, and (ii) each
quarterly consolidated balance sheet, statement of income, statement of changes
in financial position, and statement of changes in shareholders' equity prepared
by Scotland.
7.08. Accounting Principles and Practices. Maintain all of the books
and records, including all financial statements, in accordance with accounting
principles and practices consistent with those used for the most recent
financial statements, except for changes in such principles and practices
required by federal or state regulation or under generally accepted accounting
principles.
7.09. Special Meeting and Approval of Shareholders. Scotland will duly
call and convene the Special Meeting of its shareholders to act upon this
Agreement and the transactions contemplated hereby. Scotland shall assist in
the preparation of, and mail (or otherwise provide) to its shareholders, the
Proxy Statement to solicit the approval of this Agreement, the Merger Agreement,
and the transactions contemplated hereby by the shareholders of Scotland.
Scotland will use its best efforts to obtain the required approval by its
shareholders, including, subject to their legal obligations as directors of
Scotland, a recommendation of a favorable vote on the transactions contemplated
hereby by Scotland's Board of Directors.
7.10. Environmental Assessment. Scotland shall permit Centura to have
performed a Phase II Environmental Site Assessment and any other investigation
and exploration that Centura, in its sole discretion and cost, deems necessary,
of each parcel of the Premises by an individual or organization acceptable to
Centura. Such assessment, investigation or exploration shall include, without
limitation, such matters as shall be applicable to each parcel of the Premises,
and as may be specified by Centura in a writing referring specifically to this
Section 7.10.
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ARTICLE VIII
AFFIRMATIVE COVENANTS OF CENTURA
Except as otherwise consented to or waived by Scotland in writing, Centura
covenants that, throughout the pendency of this Agreement, it will:
8.01. Maintenance of Existence. Maintain its existence as a bank
holding company under the BHC Act and applicable state laws regarding bank
holding companies, and cause Centura Bank to maintain its existence as a North
Carolina bank.
8.02. Filings with Commission. Provide Scotland promptly with a copy
of any and all filings made with the Commission subsequent to the date of this
Agreement and prior to the Closing Date.
8.03. Accounting Principles and Practices. Maintain all of its books
and records, and cause Centura Bank to maintain all of its books and records,
including all financial statements, in accordance with accounting principles and
practices consistent with those used for its December 31, 1997 financial
statements, except for changes in such principles and practices required under
generally accepted accounting principles.
8.04. Substantial Litigation; Adverse Condition. Promptly upon receipt
of notice, notify Scotland of (i) the commencement of any litigation against
Centura or Centura Bank seeking damages threatening the consummation of the
Merger, or (ii) the existence of severe and adverse business conditions
threatening the continued, normal business operations of Centura or Centura
Bank.
ARTICLE IX
NEGATIVE COVENANTS OF SCOTLAND
Scotland covenants that, throughout the pendency of this Agreement, neither
it nor SSB, unless (i) specifically provided herein or permitted hereunder, or
(ii) Centura shall have consented in writing to an exception to any such
covenant, will:
9.01. Amendments. Amend Scotland's charter or bylaws.
9.02. Capitalization. Authorize or establish any other class of
capital stock; issue, sell, or otherwise dispose of any shares of any class of
capital stock or any of its securities convertible into or representing a right
or option to purchase any such shares of any class of capital stock, or
27
change the presently outstanding shares of any class of capital stock into a
greater or lesser number of shares either by way of a stock dividend, stock
split, reclassification, combination, recapitalization, reorganization,
consolidation of shares or the like, or by way of a merger or consolidation.
9.03. Long-Term Indebtedness. Incur any indebtedness for money
borrowed that becomes due and payable more than one year after such occurrence;
provided, however, that the foregoing shall not prohibit Scotland from incurring
such indebtedness (i) in the ordinary course of the taking of deposits or the
funding of a particular loan, (ii) for the purpose of financing capital
expenditures permitted by Section 9.08 hereof, and (iii) for the purpose of
refinancing any indebtedness existing on the date hereof or permitted by this
Agreement on terms at least as favorable to Scotland, so long as the
consummation of the Merger or any related transaction will not constitute a
violation of any term of any such indebtedness.
9.04. Hypothecations. Except in the ordinary course of conducting
operations, purchase, redeem, retire, or otherwise acquire, or hypothecate,
pledge, or otherwise encumber, any shares of any class of its capital stock.
9.05. Dividends. Declare, set aside, or pay dividends on any shares of
any class of capital stock or make any other distribution of assets to the
holders of any shares of any class of capital stock, except for the payment of
regular, quarterly dividends, not to exceed $.05 per share on Scotland Common
Stock, consistent with past practice, to Scotland's shareholders.
9.06. Employee Benefits. Enter into or institute any employment
contract, deferred compensation, bonus, stock option, profit-sharing, pension,
retirement, or insurance plan, or similar employee benefit plan or program, or
terminate or materially amend any such employee benefit or stock option plan or
program now in existence, grant any stock option under any stock option plan or
program now in existence, or except in the ordinary course of business and
consistent with past practices, increase the salaries and other compensation
payable to its directors, officers, and employees. Historically, SSB has paid
an annual bonus to its employees, which bonus is accrued on a monthly basis.
Scotland and SSB intend to continue accruing for such bonus consistent with past
practices through the Effective Time.
9.07. Inconsistent Agreements. Enter into any agreement,
understanding, or commitment, written or oral, with any other party which is
inconsistent in any material respect with Scotland's obligations arising under
this Agreement.
9.08. Capital Improvements. Effect any single capital improvement or
single purchase of equipment or furnishings involving an expenditure in excess
of $50,000. All expenditures in excess of such amount contemplated by Scotland
of the date hereof are Previously Disclosed and
28
are hereby consented to by Centura, provided that the aggregate expenditures for
all projects Previously Disclosed shall not exceed $150,000.
9.09. Acquisition of Control. Acquire direct or indirect ownership or
control of voting shares or securities convertible into voting shares of, or any
other interest in, any presently non-affiliated corporation, and newly-organized
business entity, any joint venture or other entity, other than shares or
interests acquired in the ordinary course of business in a fiduciary or
custodial capacity or as a result of debts previously contracted.
9.10. Other Acquisitions and Mergers. Initiate, propose, or otherwise
solicit from any person, corporation, or other group acting in concert any bids
or offers to purchase or acquire Scotland or SSB, cause Scotland or SSB to merge
into or consolidate with any other corporation or person or permit any other
corporation to be merged or consolidated with it, or acquire all or any
substantial part of the assets of any other corporation or person not affiliated
with Scotland of the date hereof, except where such acquisition relates to
foreclosure procedures, or deeds or transfers in lieu of foreclosure, or
extensions of credit of Scotland or SSB.
9.11. Sale of Assets. Sell or lease all or any material portion of its
assets or business other than in the ordinary course of business.
ARTICLE X
NEGATIVE COVENANTS OF CENTURA
Centura covenants that, throughout the pendency of this Agreement, unless
(i) specifically provided herein or permitted hereunder, or (ii) Scotland shall
have consented in writing to an exception to any such covenant, it will not:
10.01. Dividends. Declare, set aside, or pay dividends on any shares of
any class of capital stock or make any other distribution of assets to the
holders of any shares of any class of capital stock if the payment of such
dividends might cause Centura to be unable to meet its obligations under this
Agreement.
10.02. Inconsistent Agreements. Enter into any agreement, understanding,
or commitment, written or oral, with any other party which is inconsistent in
any material respect with the obligations of Centura arising under this
Agreement or which would prevent Centura or Centura Bank from completing the
transactions contemplated by this Agreement; provided; however, nothing in this
29
Agreement shall preclude Centura or Centura Bank from negotiating and concluding
transactions with respect to a merger or other form of business combination with
any other corporation or entity, so long as such transaction or transactions
would not prevent, obstruct or delay completing the transactions contemplated by
this Agreement.
ARTICLE XI
INDEMNIFICATION
Each party represents and warrants that all information concerning it which
is included in any statement and application made to any governmental agency in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects and shall not omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. The party so
representing and warranting will indemnify and hold harmless the other, each of
its directors and officers, and each person, if any, who controls the other
within the meaning of the Securities Act, from and against any and all losses,
claims, damages, expenses, or liabilities to which any of them may become
subject under applicable laws (including, but not limited to, the Securities Act
and the Exchange Act) and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
actions whether or not resulting in liability, insofar as such losses, claims,
damages, expenses, liabilities, or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
such application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each party agrees at any time upon
the request of the other to furnish to the other a written letter or statement
confirming the accuracy of the information provided by such person and contained
in any proxy statement, registration statement, report, or other application or
statement, or in any draft of any such document, and confirming that the
information contained in such document or draft was furnished expressly for use
therein or, if such is not the case, indicating the inaccuracies contained in
such document or draft or indicating the information not furnished expressly for
use therein. The indemnity agreement contained in this Article XI shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the other party.
30
ARTICLE XII
CONDITIONS PRECEDENT TO THE CLOSING
In addition to the general conditions contained in Section 2.07 hereof, the
following are conditions to the consummation of the Merger and the closing of
the Reorganization, except that (i) any of such conditions may be waived, to the
extent permitted by law, by the mutual consent in writing of Centura and
Scotland; (ii) Centura may unilaterally waive in writing, on behalf of all
parties hereto, to the extent permitted by law, the conditions set forth in
Sections 12.04, 12.05 and 12.06 and (iii) Scotland may unilaterally waive in
writing, on behalf of all parties hereto, to the extent permitted by laws, the
conditions set forth in Sections 12.07, 12.08 and 12.09.
12.01. Restraining Orders. No order, judgment, or decree shall be
outstanding whether against a party hereto or a third party that would have the
effect of preventing completion of the Reorganization; no suit, action, or other
proceeding shall be pending or threatened by any governmental body in which it
is sought to restrain or prohibit the Reorganization; and no suit, action, or
other proceeding shall be pending before any court or governmental agency in
which it is sought to restrain or prohibit the Reorganization or obtain other
substantial monetary or other relief against one or more of the parties hereto
in connection with this Agreement, unless in the reasonable opinion of counsel
to the party wishing to proceed (which opinion shall be satisfactory in
substance to the other party in its reasonable judgment), such suit, action, or
proceeding is likely to be resolved in such a way as not to deprive either party
of any of the material benefits to it of the Merger and not to materially
adversely affect the business or financial condition of the party subject
thereto.
12.02. Approval by Regulatory Authorities; Disadvantageous Conditions.
(i) The transactions contemplated by this Agreement shall have been approved, to
the extent required by law, by the Regulatory Authorities having jurisdiction
over such transactions, (ii) no Regulatory Authority shall have withdrawn it
approval of such transactions or imposed any condition on such transactions or
its approval thereof, which condition is reasonably deemed by Centura to so
adversely impact the economic or business benefits of this Agreement to Centura
as to render it inadvisable for it to consummate the Merger, (iii) any
applicable waiting periods following regulatory approvals shall have expired,
and in connection with such approvals, no objections to the Merger shall have
been raised; and (iv) all other consents, approvals and permissions, and the
satisfaction of all of the requirements prescribed by law or regulation,
necessary to the carrying out of the transactions contemplated by this Agreement
shall have been procured.
12.03 Approval by Boards of Directors and Shareholders. The Boards of
Directors of Scotland and Centura shall have duly approved, adopted and ratified
this Agreement by appropriate resolutions, and the shareholders of Scotland
shall have duly approved, ratified and adopted this Agreement at the Special
Meeting, all to the extent required by and in accordance with the provisions
31
of this Agreement, applicable law, and applicable provisions of their respective
Articles or Certificate of Incorporation and ByLaws.
12.04. Scotland's Representations. The representations and warranties
of Scotland with respect to Scotland and SSB contained herein shall have been
true and correct in all material respects on the date made and shall be true and
correct in all material respects at the Effective Time as though made at such
time, excepting any changes occurring in the ordinary course of business, none
of which individually or in the aggregate has been materially adverse, and
excepting any changes contemplated or permitted by this Agreement. Scotland
shall have in all material respects duly performed all covenants, not otherwise
waived by Centura in writing, required by this Agreement to be performed by it
prior to or at the Effective Time. Centura shall have received a certificate of
appropriate officers of Scotland dated such date and certifying in such detail
as Centura may reasonably request to the fulfillment of the foregoing
conditions.
12.05. Opinion of Counsel to Scotland. Centura shall have received an
opinion satisfactory in form and substance to it from Brooks, Pierce, XxXxxxxx,
Xxxxxxxx & Xxxxxxx, L.L.P., counsel to Scotland, dated the Effective Time and
addressed to Centura, in substantially the form attached hereto as Exhibit D,
which opinion may provide that it is given in reasonable reliance upon
information provided by such other counsel as they feel necessary in giving such
opinion.
12.06. Letter of Counsel to Scotland. Centura shall have received a
letter satisfactory in form and substance to it from Brooks, Pierce, XxXxxxxx,
Xxxxxxxx & Xxxxxxx, L.L.P., counsel to Scotland, dated the Effective Time and
addressed to Centura, in substantially the form attached hereto as Exhibit E,
relating to the information contained in the Proxy Statement.
12.07. Accountants' Letter. Centura shall have received from McGladrey
& Xxxxxx, independent public accountants, a letter dated the Effective Time and
addressed to Centura in form and substance satisfactory to Centura to the effect
that:
(i) they are independent public accountants with respect to Scotland;
(ii) in their opinion the audited financial statements of Scotland,
dated September 30, 1998, examined by them and included in the Independent
Certified Public Accountants Report, comply as to form in all material respects
with the applicable requirements of the Securities Act and the applicable
published rules and regulations of the Administrator and FDIC with respect to
the preparation of such reports; and
(iii) they have read the unaudited interim financial statements of
Scotland for the period from the date of the most recent audited financial
statements thought the date of the most recent interim financial statements
available in the ordinary course of business and, based on such review and
except as disclosed in such letter, nothing has come to their attention which
would cause them
32
to believe that such financial statements are not presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements of
Scotland dated September 30, 1998.
12.08. Centura's Representations. The representations and warranties of
Centura contained herein shall have been true and correct in all material
respects on the date made and shall be true and correct in all material respects
at the Effective Time, as though made at such time, excepting any changes
occurring in the ordinary course of business, none of which either individually
or in the aggregate has been materially adverse, and excepting for any changes
contemplated or permitted by this Agreement. Centura shall have in all material
respects duly performed all covenants, not otherwise waived by Scotland in
writing, required by this Agreement or by the Merger Agreement to be performed
by its prior to or at the Effective Time. Scotland shall have received a
certificate of appropriate officers of Centura dated such date and certifying in
such detail as Scotland may reasonably request to the fulfillment of the
foregoing conditions.
12.09. Opinion of Counsel to Centura. Scotland shall have received an
opinion satisfactory in form and substance to it from counsel to Centura, dated
the Effective Time and addressed to Scotland , in substantially the form
attached hereto as Exhibit F.
12.10. Fairness Opinion. Scotland shall have received from Trident
Financial Corporation, an independent financial advisory firm, a letter, dated
as of the date of this Agreement and updated as of the date of the Proxy
Statement and the Closing Date, in form and substance satisfactory to Scotland,
to the effect that, in the opinion of such firm, the Exchange is fair to the
shareholders of Scotland from a financial point of view.
ARTICLE XIII
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, AND COVENANTS
Centura and Scotland agree that no representation, warranty, or covenant
contained in this Agreement or in any exhibit, schedule, letter, certificate, or
other instrument referred to in this Agreement or delivered or made by or on
behalf of any party to either this Agreement or in
33
connection with any transactions contemplated by this Agreement shall survive
either the Effective Time or any termination of this Agreement pursuant to
Article XV hereof, except for (i) the covenants set forth in Sections 3.04,
3.05, 3.06, 3.08, 3.09, 3.10, 3.11, and 16.01, and Article XI hereof which shall
survive the Effective Time, and (ii) the covenants set forth in Sections 3.03
and 16.01 hereof which shall survive the termination of this Agreement and (iii)
Article II of this Agreement which shall survive the Effective Time. Nothing in
this Agreement shall be construed to alter the effectiveness of any legal
opinion, accountant's certificate, or any other letter or report rendered in
connection with the transactions contemplated by this Agreement or the Merger
Agreement.
ARTICLE XIV
ENTIRE AGREEMENT
This Agreement, all exhibits, appendices, schedules, or supplements to
either of such documents, and all other agreements contemplated by either of
such documents, embody the entire agreement between the parties hereto with
respect to the transactions contemplated hereby, and except as expressly
provided herein, this Agreement shall not be affected by reference to any other
document. All prior negotiations, discussions, and agreements by and between
the parties hereto with respect to the transactions contemplated hereby which
are not reflected or set forth in this Agreement therefore have no force or
effect. Each representation, warranty, covenant, condition, or agreement
contained in this Agreement made by any of the parties hereto shall have
independent force and effect and shall not be affected by any other
representation except by specific reference.
ARTICLE XV
TERMINATION OF AGREEMENT
15.01. Mutual Consent; Absence of Shareholder Approval Termination Date.
This Agreement shall terminate at any time when the parties hereto mutually
agree in writing. This Agreement shall terminate at the election of either
Centura or Scotland, upon written notice from the party electing to terminate at
the election of either Centura or Scotland, upon written notice from the party
electing to terminate this Agreement to the other party if this Agreement is not
ratified, confirmed, and approved by the legally required affirmative vote of
the shareholders of Scotland at the Special Meeting or at any continuations of
such Special Meeting after the adjournment thereof or there has been a denial
which is not appealable of any material regulatory approval or consent required
to consummate the Merger.
34
15.02. Election by Centura. Notwithstanding the approval of this
Agreement, and the transactions contemplated hereby by the shareholders of
Scotland, this Agreement shall terminate at Centura's election, upon written
notice from Centura to Scotland, if either or both of the following events shall
occur and shall not have been remedied to the satisfaction of Centura within
thirty (30) days after written notice is delivered to Scotland: (i) there shall
have been any material breach of any of the obligations, covenants, or
warranties of Scotland hereunder, or (ii) there shall have been any
representation or statement furnished by Scotland hereunder or under the Merger
Agreement which is false or misleading in any material respect at the time
furnished; provided, however, that Centura shall not have the right to terminate
this Agreement if the breach as defined in subsection (i) of this Section 15.02
or the misstatement as defined in subsection (ii) of this Section 15.02 shall
have been as a result of the alteration of any procedural steps taken to
consummate the acquisition of Scotland as contemplated by this Agreement.
15.03. Election by Scotland. This Agreement shall terminate at
Scotland's election, upon written notice from Scotland to Centura, if either or
both of the following events shall occur and shall not have been remedied to the
satisfaction of Scotland within thirty (30) days after written notice is
delivered to Centura (a) there shall have been any material breach of any of the
obligations, covenants, or warranties of Centura hereunder or (b) there shall
have been any representation or statement furnished by Centura hereunder which
is false or misleading in any material respect at the time furnished. In
addition, this Agreement shall terminate at Scotland's election, upon written
notice from Scotland to Centura, in the event that Centura shall enter into an
agreement in principle or a definitive agreement with respect to a separate
transaction with a third party that would result in the circumstances described
in Section 10.02 of this Agreement.
15.04. Termination Upon Failure to Consummate. This Agreement shall
terminate at any party's election, upon written notice from the terminating
party to the others, if the Merger shall not have been consummated on or before
March 31, 1999.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.01. Expenses. Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated in this
Agreement, including the fees and expenses of its own financial consultants,
accountants, and counsel.
16.02. Publicity. Except as may be required to comply with disclosure
obligations imposed by federal or state law or regulation and after reasonable
attempts have been made to comply with this Section 16.02, the form, content,
and timing of all announcements, communications, and press
35
releases of any kind concerning this Agreement or any of the transactions
contemplated hereby or thereby shall be subject to the prior approval of Centura
and Scotland.
16.03. Amendment. This Agreement may not be amended, modified, or
supplemented except by an instrument in writing signed by duly authorized
representatives of each of Centura and Scotland, as applicable. No covenant,
condition, or other provision of this Agreement may be waived, and no exception
may be consented to, except by an instrument in writing by a duly authorized
representative of the party entitled to grant such waiver or consent.
16.04. Governing Law. This Agreement and the transactions contemplated
hereby and thereby shall be governed by and construed in accordance with the
laws of the State of North Carolina, except as otherwise expressly provided in
this Agreement or as federal law may be applicable to the transactions
contemplated by this Agreement.
16.05. Communications. All notices, requests, demands, consents,
waivers, and other communications hereunder shall be in writing and shall be
delivered by hand or sent by certified or registered mail, postage prepaid,
return receipt requested, or by a confirmed telegram, as follows:
If to Centura: With a copy to:
Xxxxxx Xxxxxxxxx Xxxxxx X. Xxxxx, Xx.
Chief Financial Officer General Counsel
Centura Banks, Inc. Centura Banks, Inc.
P. O. Xxx 0000 X. X. Xxx 0000
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000 Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
or
If to Scotland: With a copy to:
Xxxxxxx X. Xxxxxxxxxx, III Xxxxxx X. Xxxxxxx III, Esq.
President and CEO Xxxxxx, Pierce, McLendon,
Scotland Bancorp, Inc. Xxxxxxxx & Xxxxxxx, L.L.P.
P. O. Box 1468 Suite 0000, Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 000 Xxxxx Xxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Any such notice or other communication so addressed shall be deemed to have been
received by the addresses as of the date of such receipt to confirmation.
36
16.06 Successors and Assigns. The rights and obligations of the
parties hereto shall inure to the benefit of and shall be binding upon the
successors and assigns of each of them; provided, however, that this Agreement
and any of the rights, interests, or obligations hereunder and thereunder shall
not be assigned by either of the parties hereto without the prior written
consent of the other party hereto.
16.07 Cover, Table of Contents, and Headings. The cover, the table of
contents, and the headings of the Articles and Sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of either such document.
16.08 Counterparts. This Agreement may be executed in several
identical counterparts, each of which when executed by the parties hereto and
delivered shall be an original, but all of which together shall constitute a
single instrument. In making proof of this Agreement, it shall not be necessary
to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CENTURA BANKS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
ATTEST:
/s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------
Secretary
(SEAL)
SCOTLAND BANCORP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx III
-------------------------------
Xxxxxxx X. Xxxxxxxxxx, III
ATTEST: President and CEO
Xxxx X. Xxxxx
-------------------------------
Secretary
(SEAL)
37
IN WITNESS WHEREOF, Scotland Acquisition Corporation has caused this Agreement
and Plan of Reorganization and Merger to be executed on its behalf by its
undersigned officer thereunto duly authorized for the purpose of joining as a
party hereto and by such execution, Scotland Acquisition Corporation hereby
adopts and agrees to each of the terms and conditions herein as its own.
SCOTLAND ACQUISITION CORPORATION
By:
-----------------------------
ATTEST:
-------------------------
Secretary
[Corporate Seal]
38
EXHIBIT A
STATE OF NORTH CAROLINA
AGREEMENT AND PLAN OF BANK MERGER
COUNTY OF XXXX
THIS AGREEMENT AND PLAN OF BANK MERGER (the "Merger Agreement"), is made
and entered into as of the _______ day of _______, 199__ by and between CENTURA
BANK, a North Carolina banking corporation having its principal office at Rocky
Mount, North Carolina ("Centura Bank"), and SCOTLAND SAVINGS BANK, INC., SSB, a
North Carolina-chartered savings bank having its principal office at Laurinburg,
North Carolina ("Scotland Savings").
W I T N E S S E T H:
WHEREAS, Centura Banks, Inc. ("Centura") and Scotland Bancorp, Inc.
("Scotland") have entered into an Agreement and Plan of Reorganization and
Merger dated as of August 26, 1998 (the "Reorganization Agreement") whereby
---------
Scotland Acquisition Corporation ("Scotland Acquisition"), a wholly-owned
subsidiary of Centura, will be merged with an into Scotland (the "Acquisition")
with Scotland as the surviving entity; and
WHEREAS, the complete terms of the Acquisition are set forth in the
Reorganization Agreement, the terms of which are incorporated herein by
reference; and
WHEREAS, the Reorganization Agreement contemplates that, after the
Acquisition, Scotland will be merged with and into Centura (the "Corporate
Merger"); and
WHEREAS, the Reorganization Agreement also contemplates that, after the
Acquisition, Scotland's wholly-owned savings bank subsidiary, Scotland Savings,
will be merged with and into Centura's wholly-owned banking corporation
subsidiary, Centura Bank (the "Bank Merger"); and
WHEREAS, the parties desire to enter into this Merger Agreement to provide
for the Bank Merger; and, Centura and Scotland desire to join in the execution
of this Merger Agreement to evidence their approval of the Bank Merger in their
respective capacities as the sole shareholders of Centura Bank and Scotland
Savings.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I. PLAN OF MERGER
1.1 Names of Merging Corporations. The names of the entities proposed to
-----------------------------
be merged are CENTURA BANK, a North Carolina banking corporation which is the
wholly-owned subsidiary of Centura, and SCOTLAND SAVINGS BANK, INC., SSB, a
North Carolina savings bank which is the wholly-owned subsidiary of Scotland.
1.2 Nature of Transaction. Subject to and in accordance with the
---------------------
provisions of this Plan of Merger, at the effective time of the transactions
described herein (the "Effective Time") Scotland Savings shall be merged into
and with Centura Bank pursuant to N.C. Gen. Stat. (S) 53-12.
1.3 Effect of Merger; Surviving Corporation. By reason of the Merger, at
---------------------------------------
the Effective Time and as provided in N.C.Gen. Stat. (S) 53-13, the separate
corporate existence of Scotland Savings shall cease and all of its outstanding
shares shall be canceled, while the corporate existence of Centura Bank as the
surviving corporation in the Bank Merger shall continue with all of its
purposes, objects, rights, privileges, powers and franchises, all of which shall
be unaffected and unimpaired by the Bank Merger. Following the Effective Time,
Centura Bank shall operate as the wholly-owned banking subsidiary of Centura
and, as a North Carolina banking corporation, will continue to conduct its
business and the business of Scotland Savings at all legally established branch
and main offices of Centura Bank and Scotland Savings. The duration of the
corporate existence of Centura Bank as the surviving corporation shall be
perpetual and unlimited.
1.4 Assets and Liabilities of Centura Bank and Scotland Savings. By
-----------------------------------------------------------
reason of the Bank Merger, at the Effective Time and in accordance with
N.C.Gen.Stat. (S)(S) 53-13, 53-17 and 55-11-06, all of Scotland Savings'
property, assets and rights of every kind and character (including without
limitation all real, personal or mixed property, all debts due on whatever
account, all other choses in action and all and every other interest of or
belonging to or due to Scotland Savings, whether tangible or intangible) shall
be transferred to and vest in Centura Bank, and Centura Bank shall succeed to
all the rights, privileges, immunities, powers, purposes and franchises of a
public or private nature (including all trust and fiduciary properties, powers
and rights) of Scotland Savings, all without any conveyance, assignment or
further act or deed; and, Centura Bank shall become responsible for all of the
liabilities, duties and obligations of every kind, nature and description
(including duties as trustee or fiduciary) of Scotland Savings as of the
Effective Time.
1.5 Cancellation of the Shares. At the Effective Time all rights of
--------------------------
Scotland, as the sole shareholder of Scotland Savings, with respect to the
outstanding shares of Scotland Savings' common stock shall cease to exist and
the shares shall be canceled. No cash or shares or other securities or
obligations will be distributed upon cancellation of the shares.
1.6 Articles, Bylaws and Management. The Articles of Incorporation and
-------------------------------
Bylaws of Centura Bank in effect at the Effective Time shall be the Articles of
Incorporation and Bylaws of Centura Bank as the surviving corporation. The
officers and directors of Centura Bank in office at the Effective Time shall
serve in the same capacities as the officers and directors of Centura Bank
2
as the surviving entity in the Bank Merger until removed as provided by law or
until the election or appointment of their respective successors.
ARTICLE II. CLOSING; EFFECTIVE TIME OF MERGER
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the principal office of Centura in Rocky Mount,
North Carolina, or at such other place as the parties shall designate, on the
same date and immediately following, the closing of the Acquisition (the
"Closing Date"). At the Closing, Centura Bank and Scotland Savings shall take
such actions (including without limitation the delivery of certain closing
documents and the execution of Articles of Merger under North Carolina law) as
are required herein and as otherwise shall be required by law to consummate the
Bank Merger and cause it to become effective.
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of governmental and regulatory
authorities), the Bank Merger shall become effective on the date and at the time
specified in Articles of Merger filed with the North Carolina Commissioner of
Banks and the North Carolina Secretary of State in accordance with law;
provided, however, that the Effective Time shall in no event be more than ten
days following the Closing Date.
ARTICLE III. CONDITIONS TO CLOSING
The Closing and the obligations of Centura Bank and Scotland Savings to
consummate the Bank Merger are conditioned upon fulfillment of each of the
following conditions:
3.1 Regulatory Approvals. Centura, Scotland, Centura Bank, and Scotland
--------------------
Savings shall have received all approvals of banking regulators required in
order (i) to consummate the Acquisition, (ii) to consummate the Bank Merger,
(iii) to consummate the Corporate Merger, and (iv) for Centura Bank to establish
branch offices at the location of Scotland Savings' current banking offices.
3.2 Expiration of Waiting Periods. All required waiting periods following
-----------------------------
receipt of required regulatory approvals shall have expired.
3.3 Satisfaction of Conditions to Acquisition. All other conditions to
-----------------------------------------
consummation of the Acquisition as specified in the Reorganization Agreement
shall have been satisfied or effectively waived by the party for whose benefit
such condition is provided.
3.4 Consummation of Acquisition. Centura, Scotland, and Scotland
---------------------------
Acquisition shall have consummated the Acquisition in accordance with the terms
of the Reorganization Agreement.
3
ARTICLE IV. TERMINATION
4.1 Methods of Termination. This Agreement may be terminated at any time
----------------------
prior to the Effective Date under the same conditions and in the same manner as
is provided in the Reorganization Agreement for its termination.
4.2 Effect of Termination. In the event this Agreement shall be
---------------------
terminated pursuant to Section 4.1 hereof, written notice thereof shall be given
by the terminating party to the other party. In such event, each party will take
such actions as may be necessary to restore the status of the parties as existed
before the date of this Merger Agreement, which actions shall be limited to the
return of contracts, documents and other written instruments as may have been
exchanged by the parties and which may be deemed confidential and not of a
public nature. The parties will keep all such contracts, documents, written
instruments and all such information exchanged, oral or written, in strict
confidence and agree not to use such confidential information to unfair
advantage, in competition or otherwise.
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1 Waiver. Any term or condition of this Merger Agreement may be waived
------
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is entitled to the
benefits thereof; provided, that no waiver of any term or condition of this
Merger Agreement by any party shall be effective unless such waiver is in
writing and signed by the waiving party, nor shall any such waiver be construed
to be a waiver of any succeeding breach of the same or any other term or
condition. No failure or delay of any party to exercise any power, or to insist
upon a strict compliance by any other party of any obligation, and no custom or
practice at variance with any terms hereof, shall constitute a waiver of the
right of any party to demand full and complete compliance with such terms.
5.2 Amendment. This Merger Agreement may be amended, modified or
---------
supplemented at any time or from time to time prior to the Effective Time, by an
agreement in writing signed by an authorized officer of each of Centura Bank,
Scotland Savings, Centura and Scotland.
5.3 Inconsistencies with Reorganization Agreement. In the case of any
---------------------------------------------
inconsistencies or conflicts between the language of this Merger Agreement and
that of the Reorganization Agreement, the Reorganization Agreement shall
control.
5.4 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered personally or
by courier or facsimile, or mailed by certified mail, return receipt required,
postage prepaid, and addressed as follows:
4
If to Scotland Savings, to: With a copy to:
Scotland Bancorp, Inc. Xxxxxx X. Xxxxxxx III, Esq.
000 Xxxxx Xxxx Xxxxxx Xxxxxx, Pierce, XxXxxxxx, Xxxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 & Xxxxxxx, L.L.P.
Attention: Xxxxxxx X. Xxxxxxxxxx, III Suite 2000, 000 X. Xxx Xxxxxx
Xxxxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to Centura, to: With copy to:
Centura Bank Xxxxxx X. Xxxxx
Post Office Box 1220 General Counsel
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000 Centura Banks, Inc.
Attention: Xxxxxx X. Xxxxxxxxx Post Office Box 1220
Chief Financial Officer Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
and General Counsel
5.5 Further Assurances. Centura Bank and Scotland Savings each agree to
------------------
furnish to the other such further assurances with respect to the matters
contemplated herein as such other party may reasonably request.
5.6 Headings and Captions. Headings and captions of the sections and
---------------------
paragraphs of this Merger Agreement have been inserted for convenience of
reference only and do not constitute a part hereof.
5.7 Entire Agreement. This Merger Agreement (together with the
----------------
Reorganization Agreement incorporated herein by reference) contains the entire
agreement of the parties with respect to the transactions described herein.
5.8 Severability of Provisions. The invalidity or unenforceability of any
--------------------------
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision hereof shall in no way affect the validity or enforceability of any
other provision or part thereof.
5.9 Assignment. This Merger Agreement may not be assigned by any party
----------
hereto except with the prior written consent of the other parties hereto.
5.10 Counterparts. Any number of counterparts of this Merger Agreement may
------------
be signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
5.11 Governing Law. This Merger Agreement is made in and shall be
-------------
construed and enforced in accordance with the laws of North Carolina.
5
IN WITNESS WHEREOF, Centura Bank and Scotland Savings each has caused this
Merger Agreement to be executed in its name by its duly authorized officers and
its corporate seal to be affixed hereto as of the date first above written.
CENTURA BANK
[CORPORATE SEAL]
By:
----------------------------
-------------------------
-------------------------
ATTEST:
---------------------
Secretary
-------
SCOTLAND SAVINGS BANK, INC., SSB
[CORPORATE SEAL]
By:
--------------------------
Xxxxxxx X. Xxxxxxxxxx, III
President and CEO
ATTEST:
---------------------
Secretary
-------
6
IN WITNESS WHEREOF, CENTURA BANKS, INC. and SCOTLAND BANCORP, INC. have
caused this Merger Agreement to be executed on their respective behalves by
their undersigned officers thereunto duly authorized for the purpose of
approving this Merger Agreement in their respective capacities as the sole
shareholders of Centura Bank and Scotland Savings.
CENTURA BANKS, INC.
[CORPORATE SEAL]
By:
----------------------------
-------------------------
-------------------------
ATTEST:
---------------------
Secretary
-------
SCOTLAND BANCORP, INC.
[CORPORATE SEAL]
By:
--------------------------
Xxxxxxx X. Xxxxxxxxxx, III
President and CEO
ATTEST:
---------------------
Secretary
-------
0
XXXXXXX X
XXXXX XX XXXXX XXXXXXXX
AGREEMENT AND PLAN OF
COUNTY OF XXXX HOLDING COMPANY MERGER
THIS AGREEMENT AND PLAN OF HOLDING COMPANY MERGER (the "Merger Agreement"),
is made and entered into as of the _______ day of ________, 199__, by and
between CENTURA BANKS, INC., a North Carolina bank holding company having its
principal office at Rocky Mount, North Carolina ("Centura"), and SCOTLAND
BANCORP, INC., a North Carolina bank holding company having its principal office
at Laurinburg, North Carolina ("Scotland").
W I T N E S S E T H:
WHEREAS, Centura and Scotland have entered into an Agreement and Plan of
Reorganization and Merger dated as of August 26, 1998 (the "Reorganization
---------
Agreement") whereby Scotland Acquisition Corporation ("Scotland Acquisition"), a
wholly owned subsidiary of Centura, will be merged with and into Scotland (the
"Acquisition") with Scotland as the surviving entity; and
WHEREAS, the complete terms of the Acquisition are set forth in the
Reorganization Agreement, the terms of which are incorporated herein by
reference; and
WHEREAS, the Reorganization Agreement contemplates that, after the
Acquisition, Scotland will be merged with and into Centura (the "Merger"); and
WHEREAS, the Reorganization Agreement also contemplates that, after the
Acquisition, Scotland's wholly-owned savings bank subsidiary, Scotland Savings
Bank, Inc., SSB ("Scotland Savings"), will be merged with and into Centura's
wholly-owned banking corporation subsidiary, Centura Bank (the "Bank Merger");
and
WHEREAS, the parties desire to enter into this Merger Agreement to provide
for the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I. PLAN OF MERGER
1.1 Names of Merging Corporations. The names of the entities proposed to
-----------------------------
be merged are CENTURA BANKS, INC., a North Carolina bank holding company, and
SCOTLAND BANCORP, INC., a North Carolina bank holding company.
1.2 Nature of Transaction. Subject to and in accordance with the
---------------------
provisions of this Plan of Merger, at the effective time of the transactions
described herein (the "Effective Time") Scotland shall be merged into and with
Centura pursuant to N.C. Gen. Stat. (S) 55-11-04.
1.3 Effect of Merger; Surviving Corporation. By reason of the Merger, at
---------------------------------------
the Effective Time and as provided in N.C.Gen. Stat. (S) 55-11-06, the separate
corporate existence of Scotland shall cease and all of its outstanding shares
shall be canceled, while the corporate existence of Centura as the surviving
corporation in the Merger shall continue with all of its purposes, objects,
rights, privileges, powers and franchises, all of which shall be unaffected and
unimpaired by the Merger. The duration of the corporate existence of Centura as
the surviving corporation shall be perpetual and unlimited.
1.4 Assets and Liabilities of Centura and Scotland. By reason of the
----------------------------------------------
Merger, at the Effective Time and in accordance with N.C.Gen.Stat. (S) 55-11-06,
all of Scotland's property, assets and rights of every kind and character
(including without limitation all real, personal or mixed property, all debts
due on whatever account, all other choses in action and all and every other
interest of or belonging to or due to Scotland, whether tangible or intangible)
shall be transferred to and vest in Centura, and Centura shall succeed to all
the rights, privileges, immunities, powers, purposes and franchises of a public
or private nature of Scotland, all without any conveyance, assignment or further
act or deed; and, Centura shall become responsible for all of the liabilities,
duties and obligations of every kind, nature and description of Scotland as of
the Effective Time.
1.5 Cancellation of the Shares. At the Effective Time all rights of the
--------------------------
sole shareholder of Scotland with respect to the outstanding shares of
Scotland's common stock shall cease to exist and the shares shall be canceled.
No cash or shares or other securities or obligations will be distributed upon
cancellation of the shares.
1.6 Articles, Bylaws and Management. The Articles of Incorporation and
-------------------------------
Bylaws of Centura in effect at the Effective Time shall be the Articles of
Incorporation and Bylaws of Centura as the surviving corporation. The officers
and directors of Centura in office at the Effective Time shall serve in the same
capacities as the officers and directors of Centura as the surviving entity in
the Merger until removed as provided by law or until the election or appointment
of their respective successors.
ARTICLE II. CLOSING; EFFECTIVE TIME OF MERGER
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the principal office of Centura in Rocky Mount,
North Carolina, or at such other place as the parties shall designate, on the
same date and immediately following, the closing of the Acquisition (the
"Closing Date"). At the Closing, Centura and Scotland shall take such actions
(including without limitation the delivery of certain closing documents and the
execution of Articles of Merger under North Carolina law) as are required herein
and as otherwise shall be required by law to consummate the Merger and cause it
to become effective.
2
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of governmental and regulatory
authorities), the Merger shall become effective on the date and at the time
specified in Articles of Merger filed with the North Carolina Secretary of State
in accordance with law; provided, however, that the Effective Time shall in no
event be more than ten days following the Closing Date.
ARTICLE III. CONDITIONS TO CLOSING
The Closing and the obligations of Centura and Scotland to consummate the
Merger are conditioned upon fulfillment of each of the following conditions:
3.1 Regulatory Approvals. Centura and Scotland shall have received all
--------------------
approvals of banking regulators required in order (i) to consummate the
Acquisition, (ii) to consummate the Merger, (iii) to consummate the Bank Merger,
and (iv) for Centura Bank to establish branch offices at the location of
Scotland Savings' current banking offices.
3.2 Expiration of Waiting Periods. All required waiting periods following
-----------------------------
receipt of required regulatory approvals shall have expired.
3.3 Satisfaction of Conditions to Acquisition. All other conditions to
-----------------------------------------
consummation of the Acquisition as specified in the Reorganization Agreement
shall have been satisfied or effectively waived by the party for whose benefit
such condition is provided.
3.4 Consummation of Acquisition. Centura, Scotland, and Scotland
---------------------------
Acquisition shall have consummated the Acquisition in accordance with the terms
of the Reorganization Agreement.
ARTICLE IV. TERMINATION
4.1 Methods of Termination. This Agreement may be terminated at any time
----------------------
prior to the Effective Date under the same conditions and in the same manner as
is provided in the Reorganization Agreement for its termination.
4.2 Effect of Termination. In the event this Agreement shall be
---------------------
terminated pursuant to Section 4.1 hereof, written notice thereof shall be given
by the terminating party to the other party. In such event, each party will take
such actions as may be necessary to restore the status of the parties as existed
before the date of this Merger Agreement, which actions shall be limited to the
return of contracts, documents and other written instruments as may have been
exchanged by the parties and which may be deemed confidential and not of a
public nature. The parties will keep all such contracts, documents, written
instruments and all such information exchanged, oral or written, in strict
confidence and agree not to use such confidential information to unfair
advantage, in competition or otherwise.
3
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1 Waiver. Any term or condition of this Merger Agreement may be waived
------
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is entitled to the
benefits thereof; provided, that no waiver of any term or condition of this
Merger Agreement by any party shall be effective unless such waiver is in
writing and signed by the waiving party, nor shall any such waiver be construed
to be a waiver of any succeeding breach of the same or any other term or
condition. No failure or delay of any party to exercise any power, or to insist
upon a strict compliance by any other party of any obligation, and no custom or
practice at variance with any terms hereof, shall constitute a waiver of the
right of any party to demand full and complete compliance with such terms.
5.2 Amendment. This Merger Agreement may be amended, modified or
---------
supplemented at any time or from time to time prior to the Effective Time, by an
agreement in writing signed by an authorized officer of each of Centura and
Scotland.
5.3 Inconsistencies with Reorganization Agreement. In the case of any
---------------------------------------------
inconsistencies or conflicts between the language of this Merger Agreement and
that of the Reorganization Agreement, the Reorganization Agreement shall
control.
5.4 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered personally or
by courier or facsimile, or mailed by certified mail, return receipt required,
postage prepaid, and addressed as follows:
If to Scotland, to: With a copy to:
Scotland Bancorp, Inc. Xxxxxx X. Xxxxxxx III, Esq.
000 Xxxxx Xxxx Xxxxxx Xxxxxx, Pierce, XxXxxxxx, Xxxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 & Xxxxxxx, L.L.P.
Attention: Xxxxxxx X. Xxxxxxxxxx, III Suite 2000, 000 X. Xxx Xxxxxx
Xxxxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to Centura, to: With copy to:
Centura Banks, Inc. Xxxxxx X. Xxxxx
Post Office Box 1220 General Counsel
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000 Centura Banks, Inc.
Attention: Xxxxxx X. Xxxxxxxxx Post Office Box 1220
Chief Financial Officer Xxxxx Xxxxx, Xxxxx
xxx Xxxxxxx Xxxxxxx Xxxxxxxx 00000
4
5.5 Further Assurances. Centura and Scotland each agree to furnish to the
------------------
other such further assurances with respect to the matters contemplated herein as
such other party may reasonably request.
5.6 Headings and Captions. Headings and captions of the sections and
---------------------
paragraphs of this Merger Agreement have been inserted for convenience of
reference only and do not constitute a part hereof.
5.7 Entire Agreement. This Merger Agreement (together with the
----------------
Reorganization Agreement incorporated herein by reference) contains the entire
agreement of the parties with respect to the transactions described herein.
5.8 Severability of Provisions. The invalidity or unenforceability of any
--------------------------
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision hereof shall in no way affect the validity or enforceability of any
other provision or part thereof.
5.9 Assignment. This Merger Agreement may not be assigned by any party
----------
hereto except with the prior written consent of the other parties hereto.
5.10 Counterparts. Any number of counterparts of this Merger Agreement may
------------
be signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
5.11 Governing Law. This Merger Agreement is made in and shall be
-------------
construed and enforced in accordance with the laws of North Carolina.
5
IN WITNESS WHEREOF, Centura and Scotland each has caused this Merger
Agreement to be executed in its name by its duly authorized officers and its
corporate seal to be affixed hereto as of the date first above written.
CENTURA BANKS, INC.
[CORPORATE SEAL]
By:
--------------------------------------
--------------------------------------
ATTEST:
---------------------
Secretary
--------
SCOTLAND BANCORP, INC.
[CORPORATE SEAL]
By:
--------------------------------------
ATTEST: Xxxxxxx X. Xxxxxxxxxx, III
President and CEO
---------------------
Secretary
--------
6
EXHIBIT C
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT to that Employment Agreement dated March 29, 1996, between
Scotland Savings Bank, Inc., SSB and Xxxxxxx X. Xxxxxxxxxx, III (the Officer),
and joined in by Scotland Bancorp, Inc., is entered into by the foregoing
parties and by Centura Banks, Inc., on the 26th day of August, 1998.
---- ------ ----
WHEREAS, the Employment Agreement (the Agreement) provides that in the
event of a Change in Control as defined in the Agreement, the acquirer shall be
bound by the terms of the Agreement subject to certain provisions for
adjustments contained in the Agreement;
WHEREAS, Centura Banks, Inc. (Centura) has agreed to acquire Scotland
Bancorp Inc. (Scotland) and Scotland Savings Bank, Inc., SSB (SSB) in a
transaction that will constitute a Change in Control as provided in the
Agreement;
WHEREAS, the parties wish to provide for the Agreement to continue in full
force and effect except as modified in this Addendum; and
WHEREAS, the parties wish to clarify the Agreement and in some instances
amend it as set forth herein to be effective only at such time as Centura
consummates its acquisition of Scotland;
NOW THEREFORE, the undersigned parties hereby agree as follows,
1. Amendment Only Effective Upon Acquisition. This Amendment shall
become effective only when Centura consummates its acquisition of Scotland. If
the agreement between Centura and Scotland is terminated, then this Amendment
shall be terminated also.
2. Agreement Shall Continue. The Agreement shall continue in full force
and effect, except as otherwise provided herein.
3. Restated Agreement. The Agreement is amended and restated to read in
its entirety as follows:
****
1. Employment. SSB or its successor (hereinafter "the Bank") and
Centura hereby agree to employ the Officer and the Officer hereby agrees to
accept employment upon the terms and conditions stated herein, as an
officer of the Bank. The Officer shall render such administrative and
management services to the Bank as are customarily performed by persons
situated in a similar executive capacity. The Officer shall promote the
business of the Bank and perform such other duties as shall, from time to
time, be reasonably prescribed by the Bank. The Officer shall not be
transferred to a location outside Scotland County, North Carolina or
assigned duties outside Scotland County, without the Officer's written
consent.
2. Compensation. The Bank or Centura shall pay the Officer
$418,752.00, which shall be paid in cash in equal monthly installments
during the term of this Agreement.
3. Annual Bonus. The Officer shall participate in Centura's Economic
Value Added Bonus Program with a maximum annual benefit of $13,018.00
during the three-year period following the effective time of Centura's
acquisition of Scotland.
4. Term. The term of employment under this Agreement shall be for
the period commencing at the effective time of Centura's acquisition of
Scotland and ending that number of months, not less than 36, that is
necessary to provide that the Officer shall have served the Bank (including
predecessors and successors) for ten calendar years.
5. Retirement, Employee Benefit Plans, Fringe Benefits. The Officer
will receive benefits as follows during the term described in Section 4
above:
(a) Life insurance will be provided pursuant to Centura's flex
credit program. The Officer will receive flex credits
sufficient to purchase coverage equal to 2 1/2 times base
salary. For purposes of this Agreement, base salary shall be
equal to 12 times the monthly installment determined pursuant
to Section 2 above.
(b) The Officer will participate in medical and hospitalization
insurance and benefits and plans, and disability insurance and
benefits and plans on the same terms as all Centura employees.
(c) The Bank or Centura will pay the Officer's regular month dues
for the Officer's membership in the Scotch Xxxxxxx Country
Club and the Laurinburg Rotary Club for three calendar years
following the effective time of Centura's acquisition of
Scotland.
(d) The Bank will transfer title to the Officer of the automobile
currently provided for his use by SSB, provided that that book
value of such automobile does not exceed $6,000.
(e) Centura will provide to the Officer the same benefits as are
provided to other Centura officers and employees of the same
rank regarding vacation, sick leave and reimbursement of
expenses.
6. Loyalty. The Officer shall devote sufficient efforts and business
time to the performance of his duties and responsibilities under this
Agreement to ensure that such duties are faithfully and timely performed.
The Officer agrees that he will hold in confidence all knowledge or
information of a confidential nature with respect to the respective
businesses of the Bank and Centura, if any, received by him during the term
of this Agreement and will not disclose or make use of such
2
information, except in the ordinary course of his duties under this
Agreement, without the prior written consent of the Bank or Centura.
7. Standards. The Officer shall perform his duties and
responsibilities under this Agreement in accordance with such reasonable
standards expected of employees with comparable positions in comparable
organizations and as may be established from time to time by the Bank. The
Bank will provide the Officer with the working facilities and staff
customary for similar executives and necessary for him to perform his
duties.
8. Termination and Termination Pay.
(a) The Officer's employment under this Agreement shall be
terminated upon the death of the Officer during the term of this
Agreement, in which event, the Officer's estate shall be entitled
to receive the compensation due the Officer through the last day
of the calendar month in which his death shall have occurred and
for a period of one month thereafter.
(b) The Officer's employment under this Agreement may be
terminated at any time by the Officer upon sixty (60) days'
written notice to the Board of Directors. Upon such termination,
the Officer shall be entitled to receive compensation through the
effective date of such termination.
(c) The Bank may terminate the Officer's employment at any time,
but any termination by the Bank, other than termination for cause,
shall not prejudice the Officer's right to compensation or other
benefits under this Agreement for the remaining period which would
have been covered by this Agreement if such termination had not
occurred. The Officer shall have no right to receive compensation
or other benefits for any period after termination for "cause."
Termination for "cause" shall include termination because of the
Officer's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law,
rule, regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of
any provisions of this Agreement.
9. Additional Regulatory Requirements.
(a) If the Officer is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a
notice served under Section 8(e)(3) or Section 8(g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)),
the Bank's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank shall (i) pay
the Officer all of the compensation withheld while its contract
obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
3
(b) If the Officer is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or Section 8(g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(c) If the Bank is in default as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act (12 U.S.C. (S) 1818(x)(1)), all
obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of
the contracting parties.
(d) All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of the Agreement
is necessary for the continued operation of the Bank, (i) by the
Federal Deposit Insurance Corporation (the "Corporation"), at the
time the Corporation enters into an agreement to provide
assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act
(12 U.S.C. (S) 1818(c)); or (ii) by the North Carolina
Commissioner of Banks ("the Commissioner"), at the time the
Commissioner approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by
the Commissioner to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not
be affected by such action.
10. Disputes.
In the event any dispute shall arise between the Officer and the Bank
or Centura as to the terms or interpretation of this Agreement whether
instituted by formal legal proceedings or otherwise, including any action
taken by the Officer to enforce the terms of this Agreement or in defending
against any action taken by the Bank or Centura, the Bank or Centura shall
reimburse the Officer for all costs and expenses incurred in such
proceedings or actions, including attorney's fees, in the event the Officer
prevails in any such action.
11. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank or Centura which
shall acquire, directly or indirectly, by conversion, merger,
consolidation, purchase or otherwise, all or substantially all of the
assets of Centura or the Bank.
(b) Since the Bank is contracting for the unique and personal
skills of the Officer, the Officer shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining
the written consent of the Bank.
12. Modification; Waiver; Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in
4
writing, signed by the Officer and on behalf of the Bank. No waiver by
either party hereto, at any time, of any breach by the other party hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise,
by the laws of North Carolina, except to the extent that federal law shall
be deemed to apply.
14. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first above written.
SCOTLAND SAVINGS BANK, INC., SSB
By:
----------------------------------------
Chairman of the Board:
SCOTLAND BANCORP, INC.
By:
----------------------------------------
Chairman of the Board
CENTURA BANKS, INC.
By:
----------------------------------------
Authorized Officer
(SEAL)
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx, III
5
EXHIBIT D
Opinion of Scotland Bancorp, Inc.'s Counsel
-------------------------------------------
_________, 1998
Board of Directors
Centura Banks, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Re: Agreement and Plan of Reorganization between Centura Banks, Inc.
and Scotland Bancorp, Inc.
Gentlemen:
We have served as special counsel to Scotland Bancorp, Inc. (the
"Company"), a North Carolina corporation, and Scotland Savings Bank, Inc., SSB
(the "Bank"), in connection with the transactions described in that certain
Agreement and Plan of Reorganization and Merger dated _____________ (the
"Agreement" including the Agreement and Plan of Bank Merger and the Agreement
and Plan of Corporate Merger referenced therein), by and between the Company and
Centura Banks, Inc. ("Centura"). These opinions are delivered to you pursuant
to Section 12.05 of the Agreement. Terms used herein which are defined in the
Agreement shall have the respective meanings set forth in the Agreement, unless
otherwise defined herein.
In giving the opinions set forth below, we have relied upon certifications
and letters provided to us by government officials. As to matters of fact set
forth below, and matters of fact which form the basis for any opinion set forth
below, we have relied upon (i) certificates presented at the closing or
otherwise and the statements of officers, employees, and independent accountants
of the Company and the Bank or of Centura and Centura Bank, (ii) the
representations and warranties set forth in the Agreement, and (iii) the state
and federal governmental approvals of the transactions contemplated in the
Agreement which have been obtained by the Company, the Bank, Centura and Centura
Bank. We have not attempted to independently verify any factual matters in
connection with the giving of the opinions set forth below.
In giving the opinions set forth below, we have made the following
assumptions regarding facts that we do not know to be true:
a. Centura is duly incorporated, validly existing and in good
standing under the laws of the State of North Carolina and all other
applicable laws to which it is subject. Centura Bank has been duly
organized, is validly existing and in good standing under the laws of
the State of North Carolina and all other applicable laws
Centura Banks, Inc.
_____________, 1998
Page 2
to which it is subject. Scotland Acquisition Corporation
("Acquisition") has been duly organized and is validly existing and in
good standing under the laws of the State of North Carolina and all
other applicable laws to which it is subject. Each of Centura, Centura
Bank and Acquisition has full power and authority to consummate the
Merger, the Bank Merger and the Corporate Merger and other
transactions as set forth in the Agreement. All transactions described
in the Agreement, and all acts required in connection therewith, have
been duly authorized by all necessary corporate action on the part of
each of Centura, Centura Bank and Acquisition. All documents and
instruments executed by each of Centura, Centura Bank and Acquisition
in connection therewith have been duly executed and delivered on
behalf of, and are binding and enforceable against, each of them.
b. Other than persons executing documents on behalf of the
Company and the Bank, the signatures of all persons signing any
document or instrument delivered in connection with the consummation
of the Merger, the Bank Merger and the Corporate Merger are genuine,
and all such persons executing such documents, have been duly
authorized to execute and deliver such documents and instruments.
c. All natural persons executing any document or instrument
delivered in connection with the consummation of the Merger, the Bank
Merger and the Corporate Merger have legal competency to do so.
d. All documents submitted to us as originals are authentic and
all documents submitted to us as certified or photostatic copies
conform to the original documents, which are themselves authentic.
e. No event will take place subsequent to the date hereof which
would cause any act taken in connection with the Merger, the Bank
Merger and the Corporate Merger to fail to comply with any law, rule,
regulation, order, judgment, decree or duty.
f. Each of Centura, Centura Bank and Acquisition has complied or
will comply with all conditions of all regulatory approvals respecting
the Merger, the Bank Merger and the Corporate Merger and the other
transactions contemplated in the Agreement.
Centura Banks, Inc.
_____________, 1998
Page 3
g. The minutes of the meetings of the Boards of Directors of the
Company and the Bank accurately reflect the actions taken at those
meetings and the meetings were duly called and a quorum was present in
each case.
h. Any certificate, representation, telegram, or other document
on which we have relied that was given or dated on or prior to the
date hereof continues to remain accurate, insofar as relevant to such
opinions from such earlier date through and including the date of this
letter.
i. All certificates of public officials have been properly given
and are accurate and complete.
j. There has been no mutual mistake of fact, fraud, duress or
undue influence in connection with the Agreement or the transactions
described therein, and the conduct of the parties to the Agreement has
complied with any requirement of good faith, fair dealing and
conscionability. Each party to the Agreement has acted without notice
of any defense against the enforcement of any rights created thereby;
and there are no agreements or understanding, or any usage of trade or
course of dealing, among the parties that, in either case, would
define, supplement or qualify the terms of the Agreement.
On the basis of such assumptions, and subject to the qualifications as set
forth herein, we are of the opinion that, except as described in the Proxy
Statement or the Agreement or as Previously Disclosed to Centura by the Company
and the Bank:
1. The Company and the Bank are duly organized and incorporated (as a
business corporation and a state-chartered savings bank, respectively) and,
based solely on written certifications of the North Carolina Secretary of State
and the North Carolina Administrator dated __________, 1998, _________, 1998 and
________, 1998, respectively, are validly existing and in good standing under
the laws of North Carolina.
2. In all respects material to its business, each of the Company and the
Bank has all requisite corporate power and authority to enter into and carry out
the provisions of the Agreement (subject to receipt of all required shareholder
and regulatory approvals), and to conduct its business as now conducted, to own
and operate its property and assets, and to lease properties used in its
business. Neither the Company nor the Bank is in violation of its Articles of
Incorporation or Bylaws, or, to our Actual Knowledge, in default with respect to
any order, writ, injunction, or decree of any court or in default under any
order, license, regulation or demand of any governmental
Centura Banks, Inc.
_____________, 1998
Page 4
agency, any of which violations or defaults would materially and adversely
affect the businesses or properties of the Company and the Bank taken as a
whole.
3. The execution, delivery and performance by the Company and the Bank of
the Agreement, and the consummation by the Company and the Bank of the
transactions contemplated thereby, have been authorized by the Boards of
Directors of the Company and the Bank in accordance with their respective
Bylaws. Subject to the receipt of all required shareholder and regulatory
approvals, the Agreement constitutes, and the Agreement and Plan of Bank Merger
and Agreement and Plan of Corporate Merger will constitute upon execution and
delivery by all parties thereto, valid and binding obligations of the Company
and the Bank, enforceable against them in accordance with their respective
terms, subject, as to enforceability as set forth below.
4. Neither the execution and delivery of the Agreement, the consummation
of the transactions contemplated thereby, nor compliance by the Company and the
Bank with any of the provisions thereof will (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of the
Company or the Bank; (ii) to our Actual Knowledge, conflict with, or constitute
or result in a material breach of, or constitute a default under any material
agreement or instrument to which the Company or the Bank is a party or by which
the Company or the Bank is bound or (assuming receipt of the approvals referred
to in Section ____ of the Agreement and the approval of the shareholders of the
Company) violate in any material respect any existing statute or regulation of
any government or agency to which the Company or the Bank is subject, or be
reasonably likely to materially impair consummation of the transaction
contemplated by the Agreement; or (iii) to our Actual Knowledge, violate any
judgment, order, ruling or decree of any court or other agency or any government
applicable to the Company or the Bank and, it being understood that our opinion
contained in this Paragraph 4 is limited to conflicts, breaches, defaults or
violations which would materially and adversely affect any of the Company's or
the Bank's business or properties or would prevent or be reasonably likely to
materially impair consummation of the Merger or have a material adverse effect
upon the business operations of the Company or the Bank taken as a whole.
5. To our Actual Knowledge, no action, suit, investigation or proceeding
is pending or threatened against the Company or the Bank before any court or
governmental agent, domestic or foreign. To our Actual Knowledge, there is (a)
no action, suit, investigation, or proceeding brought by the Company or the Bank
(other than suits to collect on extensions of credit) which seeks damages in
excess of $50,000, and (b) there is no litigation, proceeding, or governmental
investigation pending or threatened against the Company or the Bank relating to
any of the transactions contemplated by the Agreement.
Centura Banks, Inc.
_____________, 1998
Page 5
6. All regulatory approvals required to be obtained by the Company and
the Bank in connection with the Merger, the Bank Merger and the Corporate Merger
have been received and all applicable waiting periods with respect to such
approvals have expired without adverse action.
7. Based solely on the certificate of the Inspector of Voting appointed
to tabulate and certify the votes of the shareholders of the Company at their
meeting on _______________, 1998, the shareholders of the Company have approved
the Agreement and the consummation of the transactions contemplated thereby.
All the opinions set forth in this letter are expressly limited and
qualified as follows:
1. The opinions expressed herein are limited to matters of North Carolina
law and the laws of the United States of America. No opinion is
expressed as to any issue which is governed by the laws of any other
jurisdiction or to the effect of any such laws on the matters dealt with
in this opinion letter.
2. As used in this opinion, the phrase "Actual Knowledge" means the actual
conscious awareness of information by the following members of our firm:
Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx, or __________________, constituting
the attorneys in our firm who have given substantive attention to the
transactions contemplated by the Agreement. Except to the extent
expressly stated herein, we have not undertaken any independent
investigation or inquiry to determine the existence or absence of any
facts, and no inference as to our knowledge of the existence or absence
of facts should be drawn from the fact of our representation of the
Company and the Bank.
3. Our opinions are limited to the matters expressly stated herein, and no
opinion may be inferred or implied beyond the matters expressly stated.
4. We express no opinion with respect to compliance by the Company and the
Bank with Environmental Laws or with any other federal, state or local
law, rule, regulation, ordinance, order or decree relating to hazardous
substances, hazardous wastes, hazardous materials or the protection of
the environment, or with respect to any applicable pollution control or
environmental contamination statute, law or regulation.
5. The enforceability of all or various provisions of the Agreement may be
limited by (A) the effect of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, arrangement, moratorium or
similar laws from time to time in effect
Centura Banks, Inc.
_____________, 1998
Page 6
relating to or limiting the enforcement of creditors' rights generally,
(B) legal and equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, (C) general
principles of equity and applicable law or court decisions limiting the
availability of specific performance, injunctive relief and other
equitable remedies (including the enforceability of indemnification
provisions, regardless of whether such enforceability is considered in a
proceeding in equity or at law), (D) federal and/or state bank holding
company, commercial bank, savings bank and deposit insurance laws and
regulations and the application of principles of public policy
underlying such laws and regulations, and (E) limitations on
indemnification rights imposed under various securities laws.
6. Our opinions are being furnished to you pursuant to Section 12.05 of the
Agreement and are solely for your benefit. No other person shall be
entitled to rely on such opinions, and you are not entitled to rely on
such opinions in any other context or for any other purpose. No copy of
this letter or our opinions herein may be delivered to any other person
without our prior written consent.
7. This letter is limited to matters in existence as of the date hereof,
and we undertake no responsibility to revise or supplement this letter
to reflect any change in the law or facts.
8. We have acted as special counsel to the Company and the Bank in the
transactions described in the Agreement and this letter is given solely
in our capacity as special counsel to the Company and the Bank. We have
not acted as counsel to Centura, Centura Bank, Acquisition or any of
Centura's other subsidiaries. As a result, no opinion is expressed
herein as to any matter relating to Centura or any of its subsidiaries,
and not to the Company or the Bank.
Very truly yours,
BROOKS, PIERCE, XxXXXXXX,
XXXXXXXX & XXXXXXX, L.L.P.
By:
--------------------------------
Xxxxxx X. Xxxxxxx III, Partner
EXHIBIT E
___________, 1998
(000) 000-0000
The Board of Directors
Centura Banks, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
We have acted as special counsel to Scotland Bancorp, Inc. (the "Company"),
a North Carolina corporation, and Scotland Savings Bank, Inc., SSB (the "Bank"),
a North Carolina-chartered savings bank and the wholly-owned subsidiary of the
Company, in connection with the transactions described in that certain Agreement
and Plan of Reorganization and Merged dated August __, 1998 (the "Agreement"
including the Agreement and Plan of Bank Merger and the Agreement and Plan of
Corporate Merger referenced therein), by and between the Company and Centura
Banks, Inc. ("Centura"). Pursuant to and in accordance with the terms and
conditions of the Agreement, the Agreement and Plan of Bank Merger and the
Agreement and Plan of Corporate Merger, Scotland Acquisition Corporation, a
wholly-owned subsidiary of Centura, is proposed to be merged into and with the
Company, the Bank is proposed to be merged into and with Centura Bank and the
Company is proposed to be merged into and with Centura, respectively (such
transactions are referred to herein as the "Mergers") and pursuant to and in
accordance with the terms and conditions of the Agreement, each of the
outstanding shares of the Company's common stock will be converted into the
right to receive a cash payment from Centura of $11.75. This letter is
delivered in connection with the consummation and closing of the Mergers and
other transactions described in the Agreement (the "Closing"). Capitalized
terms appearing herein and not otherwise defined are used as defined in the
Agreement. In connection herewith, we have taken such actions and examined,
reviewed and relied upon such documents as are described in our opinion letter
to you of even date herewith.
The Board of Directors
__________________, 1998
Page 2
While we cannot opine as to factual matters, we have participated, in the
course of serving as special counsel to the Company and the Bank, in discussions
and conferences with certain officers and other representatives of the Company
and the Bank, representatives of the independent accounts of the Company and the
Bank, and your representatives and counsel, at which times the contents of the
Proxy Statement were discussed and drafts of the document were reviewed and
revised.
We can advise you that, although we have not independently investigated or
verified the accuracy and completeness of all of the information included in the
Proxy Statement, we have obtained no actual knowledge in the course of our
review of the Proxy Statement and participation in the discussions in connection
with the preparation of that document or otherwise which has led us to believe
that the Proxy Statement, at the time it was distributed to the Company's
stockholders, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein not misleading. We express no view or belief as to any
financial statements, notes to financial statements, financial tables and other
financial and statistical data contained in the Proxy Statement.
This letter does not address any matters other than those expressly
addressed herein. It is given solely for your benefit. No one else is entitled
to rely upon this letter. This letter speaks only as of the date hereof, and we
undertake no responsibility to update or supplement it after such date.
Sincerely yours,
BROOKS, PIERCE, XxXXXXXX,
XXXXXXXX & XXXXXXX, L.L.P.
By:
------------------------
Xxxxxx X. Xxxxxxx III
ECWIII/clv
EXHIBIT F
Opinion of Centura's General Counsel
------------------------------------
_____________, 1998
Board of Directors
Scotland Bancorp, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Re: Agreement and Plan of Reorganization by and between
Centura Banks, Inc. and Scotland Bancorp, Inc.
Gentlemen:
You have requested my opinion as General Counsel to Centura Banks, Inc.
("Centura") as to certain matters in connection with the acquisition by Centura
of Scotland Bancorp, Inc. ("Scotland") pursuant to an Agreement and Plan of
Reorganization and Merger, dated as of ____________, 1998 (the "Agreement"
including the Agreement and Plan of Bank Merger and the Agreement and Plan of
Holding Company Merger), by and between Centura and Scotland. This letter is
provided to you pursuant to Section 12.08 of the Agreement. Capitalized terms
used herein without definition shall have the meanings attributed to such terms
in the Agreement.
In rendering the opinions set forth below, I have examined the Agreement
and the Exhibits and Schedules attached thereto. I also have examined the
Articles of Incorporation of Centura, as amended, and Bylaws of Centura as
currently in effect, the minutes of the Centura Board of Directors meeting(s)
held on ________________________, and such other corporate records and documents
and certifications of government officials, and I have made such investigations
of law, as I have deemed appropriate for the purposes of the opinions set forth
below.
In rendering these opinions, I have assumed without independent
verification:
(a) The genuineness of all signatures (other than the signatures of
persons executing documents on behalf of Centura and Centura Bank), the
authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us
as certified, conformed, or photostatic copies;
(b) That the Agreement constitutes the valid, legal and binding
obligations of Scotland enforceable against it in accordance with their
terms; and
Scotland Bancorp, Inc.
______________, 1998
Page 2
(c) That Scotland has complied and will comply with all conditions of
all regulatory approvals respecting the Merger, the Bank Merger and
Corporate Merger and the other transactions contemplated by the Agreement.
Based upon, and subject to, the foregoing and to the additional
qualifications set forth herein, I am of the opinion that:
(i) All regulatory approvals required to be obtained by Centura or
Centura Bank in connection with the Merger, Bank Merger and Corporate
Merger have been received and all applicable waiting periods have expired
without adverse action.
(ii) Centura is a corporation duly incorporated and is validly
existing and in good standing under the laws of the State of North
Carolina. Centura is a bank holding company duly registered pursuant to
the BHC Act and the North Carolina Bank Holding Company Act of 1984, and it
has all requisite corporate power and authority to enter into and carry out
the provisions of the Agreement. Centura is not in violation of its
Articles of Incorporation or Bylaws, or in default with respect to any
order, writ, injunction, or decree of any court, or in default under any
order, license, regulation, or demand of any governmental agency, it being
understood that the foregoing opinion is limited to violations or defaults
which would materially and adversely affect any of Centura's businesses,
properties, financial position, or results of operations taken as a whole
or would prevent or be reasonably likely to materially impair consummation
of the transactions contemplated by the Agreement. In all respects
material to the business of Centura taken as a whole, Centura has all
requisite corporate power and authority to conduct its business as now
conducted, and to own and operate and lease the properties and assets used
in such business.
(iii) Centura Bank is a bank corporation duly incorporated and, based
solely on a written certificate of corporate existence of the North
Carolina Secretary of State dated __________, 1998, is validly existing and
in good standing under the laws of the State of North Carolina, all of the
capital stock of which is held of record by Centura and is free of any
liens, claims, or assessments thereagainst (subject to the right of
assessment permitted pursuant to Section 53-42 of the North Carolina
General Statutes). Centura Bank is not in violation of its Articles of
Incorporation or Bylaws, or in default with respect to any order, writ,
injunction, or decree of any court, or in default under any order, license,
regulation, or demand of any governmental agency, it being understood that
the foregoing opinion is limited to violations or defaults which would
materially and adversely affect the businesses, properties, financial
position, or results of operation of Centura and Centura Bank taken as a
whole or would prevent or be reasonably likely to materially impair
consummation of the
Scotland Bancorp, Inc.
______________, 1998
Page 3
transactions contemplated by the Agreement. In all respects material to the
business of Centura Bank taken as a whole, Centura Bank has all requisite
corporate power and authority to conduct its business as now conducted, and
to own and operate and lease the properties and assets used in such
business.
(iv) Subject to the receipt of regulatory approvals, the Agreement
constitutes, and the Agreement and Plan of Bank Merger and the Agreement
and Plan of Corporate Merger will constitute upon execution and delivery of
by all parties thereto valid and binding obligations of Centura and Centura
Bank, as applicable, and, will be enforceable against them in accordance
with the terms of such documents, except as limited by applicable
bankruptcy, insolvency, arrangement, fraudulent conveyance, reorganization,
moratorium, or other similar laws affecting creditors' rights generally,
except that the availability of equitable remedies (including, without
limitation, specific performance, injunctive relief, and other equitable
remedies) is within the discretion of the appropriate court (regardless of
whether such enforceability is considered in a proceeding in equity or at
law), and except that limitations on indemnification rights may be imposed
under various securities laws. The execution, delivery, and performance of
the Agreement and the transactions contemplated thereby have been duly
authorized by the Boards of Directors of Centura and Centura Bank, as
applicable.
(v) None of the execution or the delivery of the Agreement, the
consummation of the transactions contemplated thereby, or compliance by
Centura or Centura Bank with any of the provisions thereof, will conflict
with, or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, the Articles of Incorporation or Bylaws of
Centura or Centura Bank, as applicable. None of such execution, delivery,
consummation, or compliance will conflict with, or result in a material
breach of the terms, conditions, or provisions of, or constitute a default
under (i) any material agreement or instrument under which Centura or
Centura Bank is obligated, or (ii) (assuming receipt of the approvals
referred to in Section 12.02 of the Agreement) violate in any material
respect any existing statute or regulation of any governmental agency to
which Centura or Centura Bank is subject, it being understood that the
foregoing opinion is limited to conflicts, breaches, defaults or violations
which would prevent or be reasonably likely to materially impair
consummation of the transactions contemplated by the Agreement or have a
material adverse effect on the business or operations of Centura or Centura
Bank.
(vi) Except as Previously Disclosed, there are no actions, suits,
investigations, or proceedings pending or threatened against Centura or
Centura Bank before any court or governmental agency, domestic or foreign,
which, if decided against Centura or Centura
Scotland Bancorp, Inc.
______________, 1998
Page 4
Bank, will have a material adverse effect on the financial condition of
Centura on a consolidated basis or would prevent or be reasonably likely to
materially impair consummation of the transactions contemplated by the
Agreement, and there is no litigation, proceeding, or governmental
investigation pending or threatened against Centura or Centura Bank
relating to any of the transactions contemplated by the Agreement.
These opinions are limited to the matters expressly stated herein, and no
opinion may be inferred or implied beyond the matters expressly stated.
The opinions expressed herein are as of the date hereof only, and I assume
no undertaking to supplement such opinions if facts and circumstances come to my
attention or changes in law occur after the date hereof which could affect such
opinions. This letter does not express any opinions as to the laws of any
jurisdiction other than the laws of the State of North Carolina and the federal
laws of the United States. These opinions are rendered solely for your benefit
and may not be relied upon by any other person without Centura's express written
consent. No copy of this letter or my opinions herein may be delivered to any
other person without Centura's prior consent.
Yours very truly,
By:
-------------------------------------
Xxxxxx X. Xxxxx, Xx., General Counsel
