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Item 1.01
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Entry Into a Material Definitive Agreement.
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On May 1, 2017, ASB Bancorp, Inc. (the “Company”),
the holding company for Asheville Savings Bank, S.S.B., Asheville, North Carolina (the “Bank”), entered into an Agreement
and Plan of Merger and Reorganization (the “Merger Agreement”) with First Bancorp (“FBNC”), the holding
company for First Bank, Southern Pines, North Carolina. Under the Merger Agreement, the Company will merge with and into FBNC (the
“Merger”) and the Bank will merge with and into First Bank.
The aggregate merger consideration has a total
current value of approximately $175 million, or $43.12 per share.
Subject to the terms and conditions of the
Agreement, the Company’s shareholders will have the right to receive 1.44 shares of FBNC common stock or $41.90 in cash,
or a combination thereof, for each share of the Company’s common stock. The total merger consideration will be prorated as
necessary to ensure that 10% of the total outstanding shares of the Company’s common stock will be exchanged for cash, and
90% of the total outstanding shares of the Company’s common stock will be exchanged for shares of the FBNC common stock in
the Merger, provided that the number of shares of FBNC common stock to be issued will not exceed 19.9% of the number of shares
of FBNC common stock issued and outstanding immediately before the effective time of the Merger, and to the extent the total number
of shares of FBNC common stock would exceed 19.9%, the proration of the total merger consideration described above will be appropriately
adjusted. Additionally, at closing each outstanding and unexercised option to acquire shares of the Company’s common stock,
whether or not previously vested, will be cancelled in exchange for a cash payment of $41.90 minus the exercise price for each
Company share subject to such stock option.
The Merger Agreement has been unanimously approved
by the boards of directors of each of the Company and FBNC. The closing of the Merger is subject to the approval of the Company’s
shareholders, requisite regulatory approvals, the effectiveness of the registration statement to be filed by FBNC with respect
to the shares of FBNC common stock to be issued in the Merger, and other customary closing conditions. The parties anticipate closing
the Merger during the fourth quarter of 2017.
The Merger Agreement also provides that following
the closing of the Merger, FBNC will appoint Suzanne S. DeFerie, the Company’s current president and chief executive officer,
and one additional representative of the Company’s board of directors to the boards of directors of FBNC and First Bank.
In connection with entering into the Merger
Agreement, each of the directors and executive officers of the Company has entered into a voting and support agreement (collectively,
the “Support Agreements”). The Support Agreements generally require that each Company director and executive officer
votes all of his or her shares of the Company’s common stock in favor of the Merger and against alternative transactions
and generally prohibit the solicitation of an alternative transaction or the transfer of such shareholder’s shares of the
Company’s common stock prior to the consummation of the Merger. The Support Agreements will terminate upon the earliest of
the consummation of the Merger, in the event the Company’s board of directors fails to recommend approval of the Merger Agreement
to its shareholders, or upon the termination of the Merger Agreement in accordance with its terms.
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 30 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 becomes final and nonappealable; (iv) by either party if the required Company shareholder approval is not
obtained; (v) by either party in the event that the Merger is not consummated by December 31, 2017; (vi) by FBNC in the event that
the Company’s board of directors fails to recommend approval of the Merger Agreement to its shareholders; or (vii) by the
Company, prior to Company shareholder approval, in order to enter into a superior proposal. Upon termination of the Merger Agreement
under certain circumstances, the Company may be required to pay FBNC a termination fee of $6.8 million.
The foregoing description of the Merger Agreement
and the Support Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the
Merger Agreement and the Support Agreements, which are attached hereto as Exhibit 2.1 and are incorporated herein by reference.
The related joint press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for purposes
of, and were and are solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon
by the contracting parties, including being qualified by confidential disclosure memoranda made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject
to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly,
the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time,
and investors should not rely on them as statements of fact. In addition, such representations and warranties (i) will not survive
consummation of the Merger, unless otherwise specified therein, and (ii) were made only as of the date of the Merger Agreement
or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations
and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected
in the parties’ public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors
with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding
the Company or FBNC, their respective affiliates or their respective businesses. The Merger Agreement should not be read alone,
but should instead be read in conjunction with the other information regarding the Company, FBNC, their respective affiliates or
their respective businesses, the Merger Agreement and the Merger that will be contained in, or incorporated by reference into,
the registration statement on Form S-4 that will include a proxy statement of the Company and a prospectus of FBNC, as well as
in the Forms 10-K, Forms 10-Q, Forms 8-K and other filings that each of the Company and FBNC make with the Securities and Exchange
Commission (“SEC”).