Filed On 12/21/98 · SEC File 333-65853 · Accession Number 950168-98-3923
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
12/21/98 Capital Bank Corp S-4/A 6:314 950168
Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction · Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4/A Capital Bank Corp. S-4/A 250 1,145K
2: EX-8 Exhibit 8.1 6 29K
3: EX-8 Exhibit 8.2 4 20K
4: EX-23 Exhibit 23.1 1 6K
5: EX-23 Exhibit 23.2 1 6K
6: EX-99 Ex-99.3 52 242K
EXHIBIT 8.1
PricewaterhouseCoopers (logo)
--------------------------------------------------------------------------------
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
December 18, 1998
Capital Bank Corporation
c/o Mr. James A. Beck
4400 Falls of Neuse Road
Raleigh, North Carolina 27609
Home Savings Bank of Siler City, Inc., SSB
c/o Mr. Edwin E. Bridges
300 East Raleigh Street
Siler City, North Carolina 27344
Re: Agreement and Plan of Reorganization and Share
Exchange by and among Capital Bank, Capital Bank
Corporation, and Home Savings Bank of Siler City, Inc.,
SSB.
Gentlemen:
Pursuant to your request and as required by Article VII, Section 7.01.F of the
Agreement and Plan of Reorganization and Share Exchange by and among Capital
Bank, Capital Bank Corporation, and Home Savings Bank of Siler City, Inc., SSB
dated as of September 29, 1998 (the "Agreement"), we are providing you our
opinion of the material federal income tax consequences of the transaction
described herein. Unless otherwise noted, all section references herein shall be
to the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder.
Facts
A. Parties to the Proposed Transaction
1. Capital Bank Corporation ("CBC")
CBC is a North Carolina corporation with its principal office
and place of business located at 4400 Falls of Neuse Road,
Raleigh, North Carolina. CBC is authorized by its Articles of
Incorporation to issue 20,000,000 shares of voting common
stock, each of no par value (the "CBC Common Stock"), of which
there was 1 share issued and outstanding as of
PricewaterhouseCoopers (logo)
Mr. James A. Beck
Mr. Edwin E. Bridges
Page 2
December 18, 1998
August 31, 1998.
2. Capital Bank ("Capital")
Capital is a North Carolina commercial bank with its principal
office and place of business located at 4400 Falls of Neuse
Road, Raleigh, North Carolina. Capital is authorized by its
Articles of Incorporation to issue 20,000,000 shares of common
stock, each of $5.00 par value (the "Capital Stock"), of which
there were 2,477,651 shares issued and outstanding as of June
30, 1998.
3. Home Savings Bank of Siler City, Inc., SSB ("Home")
Home is a North Carolina savings bank with its principal
office and place of business located at 300 East Raleigh
Street, Siler City, North Carolina. Home is authorized by its
Articles of Incorporation to issue 5,000,000 shares of common
stock, each of $1.00 par value (the "Home Stock"), of which
there were 922,686 shares issued and outstanding as of August
31, 1998.
4. Shareholders of Home Savings Bank of Siler City, Inc., SSB
("Home Shareholders")
Home is a publicly owned company. Home stock is reported
over-the-counter in the "pink sheets" by the National Daily
Quotation System published by the National Quotation Bureau,
Inc.
B. Proposed Transaction Between the Parties
Prior to the Effective Time (as defined below) of the Agreement, each
share of Capital Stock outstanding shall be exchanged for or converted
into one share of CBC Common Stock. As a result, Capital will be a
wholly-owned subsidiary of CBC.
Pursuant to the Agreement and in accordance with North Carolina law, Home
Shareholders and CBC shall consummate a share exchange (the "Exchange")
whereby each of the outstanding shares of Home Stock will be exchanged
solely for shares of CBC Common Stock. The separate corporate existence of
Home and CBC shall continue unaffected and unimpaired by the Exchange.
PricewaterhouseCoopers (logo)
Mr. James A. Beck
Mr. Edwin E. Bridges
Page 3
December 18, 1998
Subsequent to the Exchange and in accordance with North Carolina law, Home
shall be merged with and into Capital (the "Merger") with Capital
surviving the Merger. At this time, the separate corporate existence of
Home shall cease while the corporate existence of Capital, as the
surviving corporation, shall continue unaffected and unimpaired by the
Merger. The duration of the corporate existence of Capital, as the
surviving corporation, shall be perpetual and unlimited.
The Exchange and subsequent Merger (the "Proposed Transactions") are
expected to provide CBC with certain business advantages in comparison to
CBC's current structure, including increased ability to expand the
business and economies of scale.
Pursuant to the Agreement, the Home Shareholders will receive (through a
designated transfer agent) 1.28 shares of the CBC Common Stock, rounded to
the nearest whole share, for each share of Home Stock held immediately
prior to the Effective Time (as defined below) of the Exchange. No
fractional shares of CBC Common Stock will be issued to the Home
Shareholders. Instead, CBC Common Stock to be issued will be rounded to
the nearest whole share and any Home Shareholder who would otherwise be
entitled to receive five-tenths (.5) or more of a share will instead
receive an additional whole share; and any shareholder who would otherwise
be entitled to less than five-tenths (.5) of a share will not receive any
consideration for such fractional interest.
Pursuant to the Agreement, Home and Capital have entered into a certain
Stock Option Agreement (the "Stock Option Agreement") whereby Capital has
the option to acquire 183,615 shares of Home Stock at a price of $11.75
per share payable in cash (the "Option"). Capital may exercise the Option,
in whole or in part, at any time or from time to time if a Purchase Event
(as defined in the Stock Option Agreement) shall have occurred and be
continuing; provided that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force or effect upon
the earliest to occur of (i) the Effective Time of the Exchange or (ii)
termination of the Agreement in accordance with the provisions thereof
prior to the occurrence of a Purchase Event (other than a termination
resulting from a breach by Home of any covenant contained therein) or
(iii) six months after termination of the Agreement if such termination
follows the occurrence of a Purchase Event or is due to a breach by Home
of any covenant contained therein.
Any shareholder of Home who has and properly exercises the right of
dissent and appraisal with respect to the Exchange as provided in Article
13 of the North Carolina Business Corporation Act ("Dissenters Rights")
shall be entitled to receive cash payment of the fair value of all of his
or her shares of Home Stock from the Escrow Fund (defined below) in the
manner and pursuant to the procedures provided therein, subject further to
PricewaterhouseCoopers (logo)
Mr. James A. Beck
Mr. Edwin E. Bridges
Page 4
December 18, 1998
the conditions set forth in Article VII, Section 7.03.H of the Agreement.
Shares of Home Stock held by persons who exercise Dissenters Rights shall
not be exchanged for CBC Common Stock as provided above. However, if any
shareholder of Home who exercises Dissenters Rights shall fail to perfect
his or her right to receive cash payment as provided above, or effectively
shall waive or lose such right, then each of his or her shares of Home
Stock, at CBC's sole option, shall be deemed to have been converted into
the right to receive CBC Common Stock as of the Effective Time (as defined
below).
Upon its receipt of any notice of a Home Shareholder's intent to assert
Dissenters Rights pursuant to the North Carolina Business Corporation Act,
Home shall establish an escrow fund (the "Escrow Fund") with an
independent third party (the "Escrow Agent") reasonably satisfactory to
Capital and CBC, from which the Escrow Agent shall make all payments,
whether before or after the Effective Time, necessary with respect to the
exercise of such Dissenters Rights.
Neither CBC nor Capital nor any entity affiliated with either CBC or
Capital shall, directly or indirectly, contribute any funds to the Escrow
Fund. Home shall deposit in the Escrow Fund an amount, subject to
Capital's and CBC's approval, that Home reasonably believes is sufficient
to pay fully the claims of all Home Shareholders asserting Dissenters
Rights, and shall make additional deposits to the Escrow Fund as Home,
Capital, or CBC may reasonably determine to be necessary to satisfy such
claims. In the event funds remain in the Escrow Fund after all claims for
payment pursuant to Dissenters Rights have finally expired, terminated, or
have been finally satisfied or settled, then any balance remaining in the
Escrow Fund shall be returned to Home.
The "Effective Time" of the Exchange is defined in Article I, Section 1.04
of the Agreement as the date and time when the Exchange becomes effective
as set forth in the Articles of Share Exchange filed with the North
Carolina Secretary of State in accordance with North Carolina law. The
Articles of Share Exchange will be filed after the Agreement has been
approved by the required governmental and regulatory authorities and after
the required shareholder approvals.
At Capital's option and pursuant to Article VII, Section 7.03.J of the
Agreement, in the event that Capital is not a wholly-owned subsidiary of
CBC prior to the Effective Time of the Exchange, the transaction
contemplated by the Agreement may be restructured such that Home is merged
into Capital in consideration for the distribution by Capital to Home
Shareholders of 1.280 shares of Capital's common stock for each share of
Home Stock (other than any shares held by Capital or as to which rights of
dissent and appraisal are properly exercised).
PricewaterhouseCoopers (logo)
Mr. James A. Beck
Mr. Edwin E. Bridges
Page 5
December 18, 1998
Opinion
In rendering our opinion, we have relied upon (i) the Agreement; (ii) the
written representations given by the parties, which are annexed hereto; and
(iii) such other documents as we have deemed necessary or appropriate. We have
assumed the genuiness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified,
conformed or photostatic copies, and the authenticity of the originals of such
copies. We have also assumed that the documents identified in (i) through (iii)
above reflect all the material facts relating to CBC, Capital, and Home. Our
opinion is expressly conditioned on, among other things, the accuracy as of the
date hereof, and the continuing accuracy, of all such facts and representations.
If any of the representations annexed hereto are incorrect in whole or in part,
or if the terms of the Agreement are altered before consummation of the Proposed
Transactions, such inaccuracies or alterations may have a material effect upon
our opinion expressed in this letter.
Based upon the foregoing, and taking into consideration the statements contained
in the Section marked "Caveat" below, it is our opinion that:
1. The Proposed Transactions will qualify as a reorganization under Section
368(a) of the Code;
2. No gain or loss will be recognized by the Home Shareholders upon receipt
of the CBC Common Stock solely in exchange for shares of Home Stock;
3. The aggregate federal income tax basis of the CBC Common Stock received by
each Home Shareholder will be the same as the aggregate federal income tax
basis of the Home Stock surrendered in exchange therefor;
4. The holding period of the CBC Common Stock received by each Home
Shareholder will include the period for which the exchanged Home Stock was
held, provided the exchanged Home Stock was held as a capital asset by
each Home Shareholder on the date of the Exchange.
Caveat
The foregoing opinion addresses only the four items set forth herein and,
therefore, no tax opinion is hereby expressed regarding any other federal,
state, local, or other tax issues or about any other matter not specifically
mentioned herein.
PricewaterhouseCoopers (logo)
Mr. James A. Beck
Mr. Edwin E. Bridges
Page 6
December 18, 1998
No opinion is expressed regarding any tax consequences should Capital exercise
its option pursuant to Article VII, Section 7.03.J of the Agreement to merge
Home into Capital whereby the Home Shareholders receive Capital Stock.
No opinion is expressed regarding the Proposed Transactions if either CBC or
Capital exercises any rights to acquire Home Stock pursuant to the Stock Option
Agreement discussed above.
No opinion is expressed regarding the tax consequences of the conversion of
outstanding options to purchase common stock of Home into options to purchase
common stock of CBC. Holders of Home's outstanding options should consult their
own tax advisors regarding the effect of the proposed Exchange.
No opinion is expressed regarding the proposed exchange of Capital Stock for CBC
Common Stock.
No opinion is expressed regarding any tax consequences affecting recapture of
loan loss reserves and the related bad debt reserves for any of the parties to
the Exchange which may arise from the application of Section 585 of the Code.
Our opinion is based on the relevant provisions of the Code, the regulations
thereunder, and the judicial and administrative interpretations thereof. There
are no assurances that the conclusions reached herein will be accepted by the
Internal Revenue Service or judicial authorities if challenged. Any legislative,
regulatory, administrative, or judicial decisions subsequent to the date of this
opinion may have an impact on the validity of our conclusions. Unless you
specifically request otherwise, we will not update our opinion for changes to
the law, regulations, or the judicial and administrative interpretations
thereof.
This opinion is being furnished in connection with the Registration Statement on
Form S-4 to be filed by CBC. We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement. This opinion may not be circulated,
quoted, or otherwise referred to for any other purpose without our express
written consent.
Very truly yours,
PRICEWATERHOUSECOOPERS LLP
/s/ PRICEWATERHOUSECOOPERS LLP
Dates Referenced Herein and Documents Incorporated By Reference
| Referenced-On Page |
|---|
| This S-4/A Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 6/30/98 | | 2 |
| | 8/31/98 | | 2 |
| | 9/29/98 | | 1 |
| | 12/18/98 | | 1 | | 6 |
| Filed On / Filed As Of | | 12/21/98 |
| |
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