UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 29, 2005
1st State Bancorp, Inc.
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(Exact Name of Registrant as Specified in Charter)
Virginia 0-25859 56-2130744
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
445 S. Main Street, Burlington, North Carolina 27215
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (336) 227-8861
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[X] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[X] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement
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Agreement and Plan of Merger
On June 29, 2005, Capital Bank Corporation, a North Carolina corporation
("CBC"), and 1st State Bancorp, Inc., a Virginia corporation ("FSBC"), entered
into a definitive merger agreement (the "Agreement"), pursuant to which FSBC
will merge with and into CBC (the "Merger").
Under the terms of the Agreement, each share of FSBC common stock will be
automatically converted into the right to receive, at the election of the
holder, either: (i) 0.691829 shares of CBC common stock multiplied by an
exchange ratio plus an amount equal to $11.4486 in cash, (ii) 1.0 share of CBC
common stock multiplied by an exchange ratio, or (iii) an amount equal to $37.15
in cash. The exchange ratio is equal to $37.15 divided by the average of the
daily closing sales price of CBC common stock on Nasdaq during the 20 trading
day period ending three business days prior to the closing date (the "Average
Closing Price"). Pursuant to the Agreement, the Average Closing Price can be no
higher than $18.00 per share and if it is less than $15.00 per share, CBC will
have the option to (x) consummate the transaction using the lower Average
Closing Price, (y) set the Average Closing Price at $15.00 per share and pay the
holders of FSBC common stock receiving shares of CBC common stock in the Merger
an amount in cash equal to $15.00 minus the lower Average Closing Price, or (z)
set the Average Closing Price at $15.00 per share and pay no additional
consideration to the holders of FSBC common stock receiving CBC common stock in
the transaction. If CBC chooses the option set forth in (z) above, FSBC will
have the right to terminate the transaction. Finally, certain allocation
procedures will be used to cause the mix of stock and cash consideration to be
paid to FSBC shareholders to be approximately 65%/35%, respectively.
The completion of the Merger is subject to approval by the shareholders of
both companies, regulatory approvals and normal and customary closing
conditions. At the same time that the Agreement was signed, officers, directors
and certain shareholders of FSBC entered into an agreement with CBC pursuant to
which each such person agreed, among other things, to vote his or her shares in
favor of the Merger. The Merger is expected to close in January 2006.
Under the terms of the Agreement, CBC has agreed to appoint four FSBC
representatives to its board of directors and to the board of directors of
Capital Bank, CBC's wholly owned subsidiary.
The above description of the Agreement does not purport to be a complete
statement of the parties' rights and obligations under the Agreement and the
transactions contemplated thereby. The above description is qualified in its
entirety by reference to the Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 2.1 and incorporated herein by reference.
On June 29, 2005, CBC and FSBC issued a joint press release announcing
the execution of the Agreement. A copy of the joint press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by
reference.
FORWARD-LOOKING STATEMENTS
Information in this Current Report or in the information filed or
furnished with this Current Report contains forward-looking statements. These
statements involve risks and uncertainties that could cause actual results to
differ materially, including without limitation, the possibility that fewer than
the required number of CBC and FSBC shareholders vote to approve the Merger; the
occurrence of events that would have a material adverse effect on CBC or FSBC as
described in the Agreement, including the risk of adverse operating results,
delays in obtaining or failure to receive required regulatory approvals; the
risk that the Agreement could be terminated under circumstances that would
require FSBC to pay a termination fee of $2 million; the risk that the Merger
will not be consummated; the actual operations of the acquired branches after
the acquisition; the ability of CBC to integrate the operations of FSBC into its
operations and other uncertainties arising in connection with the proposed
Merger. Additional factors that could cause actual results to differ materially
are discussed in documents filed with the Securities and Exchange Commission
(the "SEC") by CBC and FSBC, including without limitation Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except as
required by law, FSBC does not undertake a duty to update any forward looking
statements in this Current Report or in the information filed or furnished with
this Current Report.
The proposed transaction will be submitted to CBC's and FSBC's
shareholders for their consideration. CBC and FSBC will file a registration
statement, a joint proxy statement/prospectus, and other relevant documents
concerning the proposed transaction with the SEC. SHAREHOLDERS OF CBC AND FSBC
ARE NOT BEING ASKED TO TAKE ANY ACTION AT THIS TIME, BUT ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. You will be able to obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing information about CBC
and FSBC, at the SEC's Web site (http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the SEC filings that will be incorporated by reference
in the joint proxy statement/prospectus can be obtained, without charge, by
directing a request to Richard W. Edwards at PO Box 18949, Raleigh, NC 27619
(800) 308-3971 or A. Christine Baker at 445 S. Main Street, PO Box 1797,
Burlington, NC 27216-1797 (336)-227-8861.
Each of CBC and FSBC and its respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
shareholders of CBC and FSBC, as the case may be, in connection with the Merger.
Information about the directors and executive officers of FSBC and their
ownership of FSBC common stock is set forth in the proxy statement, dated
January 5, 2005, for FSBC's 2005 annual meeting of shareholders held on February
8, 2005, as filed with the SEC on a Schedule 14A. Information about the
directors and executive officers of CBC and their ownership of CBC common stock
is set forth in the proxy statement, dated April 28, 2005, for CBC's 2005 annual
meeting of shareholders held on May 26, 2005, as filed with the SEC on a
Schedule 14A. Additional information regarding the interests of such
participants may be obtained by reading the joint proxy statement/prospectus
when it becomes available.
Item 9.01 Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired: Not applicable
(b) Pro Forma Financial Information: Not applicable
(c) Exhibits
Number Description
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2.1 Merger Agreement, dated June 29, 2005, by and among Capital
Bank Corporation and 1st State Bancorp, Inc.
2.2 List of Schedules Ommitted from Merger Agreement included in
Exhibit 2.1 above.
99.1 Joint Press Release of Capital Bank Corporation and 1st State
Bancorp, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
1st STATE BANCORP, INC.
Date: June 29, 2005 By: /s/ James C. McGill
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James C. McGill
President and Chief Executive Officer