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Item 1.01
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Entry into a Material Definitive Agreement.
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On June 21, 2016, First
Bancorp (the “Company”), the holding company for First Bank, Southern Pines, North Carolina, entered into an Agreement
and Plan of Merger and Reorganization (the “Merger Agreement”) with Carolina Bank Holdings, Inc. (“CLBH”),
the holding company for Carolina Bank, Greensboro, North Carolina. Under the Merger Agreement, CLBH will merge with and into the
Company (the “Merger”) and Carolina Bank will merge with and into First Bank.
Subject to the terms
and conditions of the Agreement, CLBH’s shareholders will have the right to receive 1.002 shares of the Company’s common
stock or $20.00 in cash, or a combination thereof, for each share of CLBH common stock. The total merger consideration will be
prorated as necessary to ensure that 25% of the total outstanding shares of CLBH’s common stock will be exchanged for cash
and 75% of the total outstanding shares of CLBH’s common stock will be exchanged for shares of the Company’s common
stock in the Merger. The aggregate merger consideration equals $97.3 million. The parties anticipate closing the Merger during
the fourth quarter of 2016.
The Merger Agreement
has been approved by the boards of directors of each of the Company and CLBH. The closing of the Merger is subject to the required
approval of CLBH’s shareholders, requisite regulatory approvals, the effectiveness of the registration statement to be filed
by the Company with respect to the stock to be issued in the Merger, and other customary closing conditions.
The Merger Agreement
contains usual and customary representations and warranties that the Company and CLBH made to each other as of specific dates.
The assertions embodied in those representations and warranties were made solely for purposes of the contract between the Company
and CLBH, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating
its terms. Moreover, certain representations and warranties are subject to a contractual standard of materiality that may be different
from what may be viewed as material to shareholders, and the representations and warranties may have been used to allocate risk
between the Company and CLBH rather than establishing matters as facts.
The Merger Agreement
also provides that at the closing of the Merger, the Company will designate two specified members of CLBH’s board of directors
to join the boards of directors of First Bancorp and First Bank.
The Merger Agreement
may be terminated in certain circumstances, including: (i) by mutual written agreement of the parties; (ii) by either party in
the event of a breach by the other party of any representation, warranty, covenant, or other agreement contained in the Merger
Agreement which has not been cured within thirty days and where such breach is reasonably likely to permit such party to refuse
to consummate the Merger; (iii) by either party in the event that any consent of any required regulatory authority is denied by
final action or any law or order prohibiting the Merger shall become final and nonappealable; (iv) by either party if the requisite
CLBH shareholder approval is not obtained; (v) by either party in the event that the Merger shall not have been consummated by
March 31, 2017; (vi) by the Company in the event that the CLBH board of directors has not recommended for approval the Merger Agreement
to its shareholders; (vii) by CLBH, prior to CLBH shareholder approval, to enter into a superior proposal; or (viii) by CLBH or
the Company without penalty when certain events occur related to the Company’s stock price decreasing. Upon termination of
the Merger Agreement by (i) the Company if the CLBH board of directors has not recommended for approval the Merger Agreement to
its shareholders, or (ii) by CLBH to enter into a superior proposal, CLBH may be required to pay the Company a termination fee
of $3.5 million.
The foregoing summary
of the Merger Agreement is qualified in its entirety by reference to the complete text of such document, which is filed as Exhibit
2.1 to this Current Report on Form 8-K and which is incorporated herein by reference. The related press release is filed as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In connection with
entering into the Merger Agreement, each of the directors and certain executive officers of CLBH have entered into a voting and
support agreement (collectively, the “Support Agreements”). The Support Agreements generally require that the shareholder
party thereto vote all of his or her shares of CLBH common stock in favor of the Merger and against alternative transactions and
generally prohibit such shareholder from transferring his or her shares of CLBH common stock prior to the consummation of the Merger.
The Support Agreements will terminate upon the earlier of the consummation of the Merger and the termination of the Agreement in
accordance with its terms.
The foregoing summary
of the Support Agreements is qualified in its entirety by reference to the complete text of such document, which is included as
Exhibit A to the Merger Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated herein by
reference.
In connection with
entering into the Merger Agreement, CLBH has agreed to use its commercially reasonable efforts to cause each of the current option
holders of CLBH’s stock options to agree to cancel, effective upon and subject to the Merger, all of their respective CLBH
options in exchange for a cash payment of $20.00 minus the exercise price for each CLBH share subject to such stock option. Any
CLBH stock option not cancelled will convert into an option to acquire the Company’s stock.
Participants in the Merger Solicitation.
The Company and CLBH,
and certain of their respective directors, executive officers and other members of management and employees may be deemed to be
participants in the solicitation of proxies from the shareholders of CLBH in respect of the Merger. Information regarding the directors
and executive officers of the Company and CLBH and other persons who may be deemed participants in the solicitation of the shareholders
of CLBH in connection with the Merger will be included in the proxy statement/prospectus for CLBH’s special meeting of shareholders,
which will be filed by the Company with the SEC. Information about the Company’s directors and executive officers can also
be found in the Company’s definitive proxy statement in connection with its 2016 annual meeting of shareholders, as filed
with the SEC on April 4, 2016, and other documents subsequently filed by the Company with the SEC. Information about CLBH’s
directors and executive officers can also be found in CLBH’s definitive proxy statement in connection with its 2016 annual
meeting of shareholders, as filed with the SEC on April 5, 2016, and other documents subsequently filed by CLBH with the SEC. Additional
information regarding the interests of such participants will be included in the proxy statement/prospectus and other relevant
documents regarding the Merger filed with the SEC when they become available.