BOC FINANCIAL CORP.
107 S. CENTRAL AVENUE
LANDIS, NORTH CAROLINA 28088
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual Meeting of Shareholders of BOC Financial
Corp. (the "Company") will be held as follows:
PLACE: Bank of the Carolinas
107 South Central Avenue
Landis, North Carolina
DATE: Tuesday, May 9, 2000
TIME: 2:00 p.m.
The purposes of the meeting are:
1. To elect five directors of the Company for one-year terms.
2. To ratify the appointment of Dixon Odom PLLC as the Company's
independent public accountants for 2000; and
3. To transact such other business as may properly be presented
for action at the meeting.
YOU ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. HOWEVER, EVEN IF YOU
PLAN TO ATTEND, YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED
APPOINTMENT OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT
PURPOSE TO ENSURE THAT A QUORUM IS PRESENT AT THE MEETING. THE GIVING OF AN
APPOINTMENT OF PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE IT OR TO ATTEND THE
MEETING AND VOTE IN PERSON.
By Order of the Board of Directors
Stephen R. Talbert
President and Chief Executive Officer
March 31, 2000
<PAGE>
BOC FINANCIAL CORP.
107 S. CENTRAL AVENUE
LANDIS, NORTH CAROLINA 28088
(800) 543-7250
PROXY STATEMENT
MAILING DATE: ON OR ABOUT MARCH 31, 2000
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 2000
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of BOC Financial Corp. (the "Company") of
appointments of proxy for use at the annual meeting of the Company's
shareholders (the "Annual Meeting") to be held on Tuesday, May 9, 2000, at 2:00
p.m., in the lobby of Bank of the Carolinas, 107 S. Central Avenue, Landis,
North Carolina, and at any adjournments thereof. The Company's proxy
solicitation materials are being mailed to shareholders on or about March 31,
2000. In this Proxy Statement, the Company's subsidiary bank, Bank of the
Carolinas, is referred to as the "Bank".
VOTING OF PROXIES
Persons named in the enclosed appointment of proxy as proxies (the
"Proxies") to represent shareholders at the Annual Meeting are Stephen R.
Talbert, Henry H. Land and Susan Linn Norvell. Shares represented by each
appointment of proxy which is properly executed, returned and not revoked, will
be voted in accordance with the directions contained therein. If no directions
are given, such shares will be voted "FOR" the election of each of the five
nominees for director named in Proposal 1, and "FOR" Proposal 2. If, at or
before the time of the Annual Meeting, any nominee named in Proposal 1 has
become unavailable for any reason, the proxies will be authorized to vote for a
substitute nominee. On such other matters as may come before the meeting, the
proxies will be authorized to vote in accordance with their best judgment. An
Appointment of Proxy may be revoked by the shareholder giving it at any time
before it is exercised by filing with Henry H. Land, Secretary of the Company, a
written instrument revoking it or a duly executed Appointment of Proxy bearing a
later date, or by attending the Annual Meeting and announcing his or her
intention to vote in person.
RECORD DATE
The close of business on March 10, 2000, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only those shareholders of record
on that date will be eligible to vote on the proposals described herein.
<PAGE>
VOTING SECURITIES
The Company's voting securities are the shares of its Common Stock, par
value $1.00 per share, of which 805,000 shares were issued and outstanding on
the Record Date.
VOTING PROCEDURES; VOTES REQUIRED FOR APPROVAL
At the Annual Meeting, each shareholder will be entitled to one vote
for each share held of record on the Record Date on each matter submitted for
voting and, in the election of directors, for each director to be elected. In
accordance with North Carolina law, shareholders will not be entitled to vote
cumulatively in the election of directors.
In the case of Proposal 2 below, for such proposal to be approved, the
proposal must be approved by a majority of the votes cast. Abstentions and
broker nonvotes will have no effect.
REVOCATION OF APPOINTMENT OF PROXY
Any shareholder who executes an appointment of proxy has the right to
revoke it at any time before it is exercised by filing with the Secretary of the
Company either an instrument revoking it or a duly executed appointment of proxy
bearing a later date, or by attending the Annual Meeting and announcing his or
her intention to vote in person.
EXPENSES OF SOLICITATION
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement. Appointments of proxy also may be solicited personally or by
telephone by the Company's and the Bank's directors, officers and employees
without additional compensation. The Company will reimburse banks, brokers, and
other custodians, nominees and fiduciaries for their costs in sending the proxy
materials to the beneficial owners of the Company's Common Stock.
BENEFICIAL OWNERSHIP OF SECURITIES BY MANAGEMENT AND NOMINEES
As of March 10, 2000, there were no persons who were known to
management of the Company to beneficially own more than 5% of the Company's
Common Stock other than those listed below.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENTAGE
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- ------------------- ------------------------ --------
<S> <C> <C>
Stephen R. Talbert, Trustee 84,232 9.58%
Landis, North Carolina
John A. Drye, Trustee 89,817 10.21%
Landis, North Carolina
</TABLE>
2
<PAGE>
(1) Includes 67,917 shares of Common Stock held by Mr. Talbert and Mr.
Drye as trustees of the Company's Employee Stock Ownership Plan (the "ESOP") all
of which are unallocated and the voting of which is therefore directed by
Messrs. Talbert and Drye. Unallocated shares and allocated shares for which no
timely direction is received will be voted by these trustees or their
substitutes in the same proportion as the participant - directed voting of
allocated shares. The ESOP may be terminated at any time by the Company.
The following table lists the individual beneficial ownership of the
Company's Common Stock as of March 10, 2000, by the Company's current directors
and nominees for director, and by all current directors, nominees and executive
officers of the Company as a group.
NAME OF AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2)(3) OF CLASS(4)
- ---------------- ----------------------------- -----------
John A. Drye (5) 89,817 10.21
Henry H. Land 22,400 2.55
Susan Linn Norvell 17,300 1.97
Lynne Scott Safrit 26,400 3.00
Stephen R. Talbert (5) 84,232 (6) 9.58
All current directors,
nominees for director and 240,149 27.30
executive officers as a group
(5 persons)
(1) Except as otherwise noted, to the best knowledge of management of
the Company, the individuals named or included in the group above exercise sole
voting and investment power over the amount of shares disclosed above except for
the following over which voting and investment power is shared. Ms. Norvell -
1,400 shares; Ms. Safrit - 6,000 shares; and Mr. Talbert - 3,200 shares.
(2) Included in the beneficial ownership tabulations are the following
shares of Common Stock awarded under the Bank's Management Recognition Plan as
approved by shareholders on May 4, 1999: Mr. Drye - 6,400 shares, Mr. Land -
6,400 shares, Ms. Norvell - 6,400 shares, Ms. Safrit - 6,400 shares and Mr.
Talbert - 10,929 shares. While none of the shares have vested, the shares may be
voted by the recipients.
(3) Included in the beneficial ownership tabulations are the following
options to purchase shares of Common Stock: Mr. Drye - 9,500 shares, Mr. Land -
9,500 shares, Mr. Norvell - 9,500 shares and Ms. Safrit - 9,500 shares. These
options are capable of being exercised within 60 days of the Record Date and
therefore under the beneficial ownership rules of the Securities and Exchange
Commission are deemed to be owned by the holder.
(4) The calculations of the percentage of class beneficially owned by
each individual or group is based on a total of 805,000 shares currently
outstanding plus the number of shares
3
<PAGE>
capable of being issued to that individual within 60 days of the Record Date,
upon the exercise of options.
(5) Includes 67,917 shares of Common Stock held jointly by Mr. Talbert
and Mr. Drye as trustees of the Company's Employee Stock Ownership Plan all of
which are unallocated and the voting of which is therefore directed by Messrs.
Talbert and Drye. Unallocated shares and allocated shares for which no timely
direction is received, will be voted by these trustees or their substitutes in
the same proportion as the participant - directed voting of allocated shares.
The ESOP may be terminated at any time by the Company.
(6) Includes 400 shares owned by Mr. Talbert's spouse, 300 shares owned
by Mr. Talbert's daughter, 600 shares owned by Mr. Talbert's spouse and
mother-in-law, and 884 shares vested to Mr. Talbert's account under the Bank's
ESOP.
REPORTS OF CHANGES IN BENEFICIAL OWNERSHIP
Directors and executive officers of the Company are required by federal
law to file reports with the Securities and Exchange Commission regarding the
amount of and changes in their beneficial ownership of the Company's Common
Stock. To the knowledge of the management of the Company based upon information
supplied to the Company by the directors and executive officers, all required
reports of directors and executive officers of the Company have been timely
filed.
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws provide for a Board of Directors composed of not
less than five (5) nor more than eighteen (18) directors as from time to time
may be fixed or changed within the minimum and maximum by the shareholders or by
a majority of the full Board of Directors. The Board of Directors has set the
current number of Directors at five and nominates the five persons named below
for election by shareholders at the Annual Meeting as directors of the Company
for one-year terms or until their respective successors are duly elected and
qualified.
<TABLE>
<CAPTION>
YEAR IN WHICH
POSITIONS FIRST ELECTED/
WITH YEAR PROPOSED PRINCIPAL OCCUPATION
NAME AND AGE COMPANY TERM EXPIRES (1) AND BUSINESS EXPERIENCE FOR THE PAST 5 YEARS
- ------------ ------- ----------------- --------------------------------------------
<S> <C> <C> <C>
John A. Drye Director 1993 / 2001 Co-owner, Clay Wright Insurance Agency, Inc.
(36) (independent insurance agency)
Henry H. Land Director 1986 / 2001 Certified Public Accountant, Partner, McClary,
(58) Stocks, Smith & Land (accounting firm)
Susan Linn Norvell Director 1994 / 2001 Homemaker
(45)
4
<PAGE>
YEAR IN WHICH
POSITIONS FIRST ELECTED/
WITH YEAR PROPOSED PRINCIPAL OCCUPATION
NAME AND AGE COMPANY TERM EXPIRES (1) AND BUSINESS EXPERIENCE FOR THE PAST 5 YEARS
- ------------ ------- ----------------- --------------------------------------------
Lynne Scott Safrit Director 1995 / 2001 President, Atlantic American Properties, Inc.
(41) (development and property management firm)
Stephen R. Talbert Director, 1986 / 2001 Chairman of the Board, President and Chief
(54) President and Executive Officer of the Company and the Bank
Chief
Executive
Officer
</TABLE>
(1) The year first elected indicates the year in which each individual
was first elected a director of the Bank or the Company, as applicable, and does
not necessarily reflect a continuous tenure.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR" EACH OF
THE NOMINEES NAMED ABOVE
DIRECTOR RELATIONSHIPS
With the exception of Ms. Safrit, who is a director of Castle & Cooke,
Inc., Los Angeles, California, no director is a director of any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 (the "Exchange Act") or subject to the requirements of Section 15(d)
of the Exchange Act, or any company registered as an investment company
registered as an investment company under the Investment Company Act of 1940.
DIRECTOR COMPENSATION
During 1999, each nonemployee director was paid a fee of $300 for
each Board of Directors meeting attended and $100 for attendance at each meeting
of a committee. Each director also received an annual retainer of $600. The
Chairman of the Board of Directors received $400 for each Board of Directors
meeting attended.
STOCK OPTIONS AND GRANTS
The shareholders of the Company ratified the 1999 Nonstatutory Stock
Option Plan for Directors (the "Nonstatutory Option Plan") and the 1999
Management Recognition Plan for Directors and executive officers (the "MRP
Plan") at the 1999 Annual Meeting of Shareholders. Pursuant to the Nonstatutory
Option Plan, each director, except Mr. Talbert, was granted options to purchase
9,500 shares in 1999. Pursuant to the MRP Plan, each director, except Mr.
Talbert, was awarded 6,400 shares. Mr. Talbert, as President and Chief Executive
Officer, was awarded 10,929 shares under the MRP Plan and 18,515 options under
the 1999 Incentive Stock Option Plan (the "Incentive Option Plan") approved by
the shareholders at the 1999 Annual Meeting of Shareholders.
5
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held twelve regular meetings and
five special meetings during 1999. Each current director attended 75% or more of
the aggregate number of meetings of the Board of Directors and of any committees
on which he or she served.
The Company's Board of Directors has several standing committees,
including an Audit Committee and a Compensation, Pension and Benefits Committee.
The current members of the Audit Committee are Henry H. Land - Chairman and John
A. Drye. The Audit Committee reviews the annual audit reports of the Company's
independent auditors and the examination reports issued by bank regulatory
agencies, and oversees the work of the Company's internal auditor. Although the
Audit Committee did not meet during 1999, the whole Board met with the Company's
independent auditors.
The current members of the Compensation, Pension and Benefits Committee
are Henry H. Land - Chairman, John A. Drye and Lynne Scott Safrit. The
Compensation, Pension and Benefits Committee is authorized to consider and make
recommendations to the Board of Directors for action on matters pertaining to
the compensation, pension and fringe benefits of employees of the Company and
the Bank. The Compensation, Pension and Benefits Committee met five times during
1999.
The Company does not have a standing nominating committee. Such
functions typically performed by a nominating committee, such as nominating
candidates to stand for election as directors, are performed by the Board as a
whole.
EXECUTIVE OFFICER
The following table contains information about the current executive
officer of the Company and the Bank.
<TABLE>
<CAPTION>
EMPLOYED BY
NAME AND AGE CURRENT POSITIONS WITH COMPANY AND/OR BANK BANK SINCE
- ------------ ------------------------------------------ -----------
<S> <C> <C>
Stephen R. Talbert Chairman of the Board, President and Chief Executive Officer of the 1971
(54) Company and the Bank
</TABLE>
EXECUTIVE COMPENSATION
The following table shows, for 1999, 1998 and 1997, the compensation
received or deferred by the Company's chief executive officer.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
OTHER ALL
ANNUAL OTHER
COMPEN- RESTRICTED COMPEN-
SATION STOCK LTIP SATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) AWARDS OPTIONS PAYOUTS (2)
- ----------------------------- ---- ------ ----- ---- ------ ------- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen R. Talbert, President 1999 $93,000 -0- -0- 10,929 18,515 -0- $1,672
and Chief Executive Officer of 1998 $88,200 -0- -0- -0- -0- -0- -0-
the Company and the Bank 1997 $70,080 -0- $11,600 -0- -0- -0- -0-
</TABLE>
(1) In 1999, the aggregate value of non-cash benefits received by Mr.
Talbert did not exceed 10% of cash compensation paid to him. The amount listed
as received in 1997 represents directors fees. In 1998 and 1999 Mr. Talbert did
not receive fees for his service as a director and will not receive fees for his
service as a director in 2000.
(2) Represents commission from sale of credit life insurance.
In 1998, the Bank entered into an employment agreement with Mr. Talbert
as its President and Chief Executive Officer to establish his duties and
compensation and to provide for his continued employment with the Bank. The
employment agreement provides for an initial term of employment of three years
that is expected for one additional year on the anniversary of the execution of
the agreement unless proper written notice is received. The agreement provides
for an annual base salary of $88,200 to be reviewed not less often than
annually. In addition, the employment agreement provides for participation in
employee benefit programs and compensation plans mentioned by the Bank for all
employees as well as fringe benefits normally associated with Mr. Talbert's
position as President and Chief Executive Officer. The agreement provides that
Mr. Talbert may be terminated for "cause" as defined therein, or otherwise, and
that Mr. Talbert may terminate the agreement upon ninety days written notice to
the Bank. The employment agreement also provides that upon the occurrence of a
"termination event" within twenty-four months of a "change in control", Mr.
Talbert may terminate the employment agreement and receive, among other things,
an amount equal to 299% of Mr. Talbert's "base amount" as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended. A "termination
event" will occur if (i) the employee is assigned any duties or responsibilities
that are inconsistent with his position, duties, responsibilities or status at
the time of the change in control or with his reporting responsibilities or
title with the Bank in effect at the time of the change in control; (ii) the
employee's annual base salary rate is reduced below the annual amount in effect
as of the change in control; (iii) the employee's life insurance, medical or
hospitalization insurance, disability insurance, disability insurance, stock
option plans, stock purchase plans, deferred compensation plans, management
retention plans, retirement plans or similar plans or benefits being provided by
the Bank to the employee as of the date of the change in control are reduced in
their level, scope or coverage, or any such insurance, plans or benefits are
eliminated, unless such reduction or elimination applies proportionately to all
salaried employees of the Bank who participated in such benefits prior to the
change in control; or (iv) the employee is transferred to a location outside of
Rowan County, North Carolina, without Mr. Talbert's express written consent. A
change in control
7
<PAGE>
of the Bank will occur if (i) any "person" (as such term is defined in Section
7(j)(8)(A) of the Change in Bank Control Act of 1978), other than the Bank's
holding company, directly or indirectly, acquires beneficial ownership of voting
stock, or acquires irrevocable proxies or any combination of voting stock and
irrevocable proxies, representing twenty-five percent (25%) or more of any class
of voting securities of the Bank, or its holding company, or acquires control of
in any manner the election of a majority of the directors of the Bank or its
holding company (ii) the Bank or its holding company consolidates (ii) the Bank
or its holding company consolidates or merges with or into another corporation,
association, or entity, or is otherwise reorganized, where the Bank or its
holding company, as the case may be, is not the surviving corporation in such
transaction; (iii) all or substantially all of the assets of the Bank or its
holding company are sold or otherwise transferred to or are acquired by any
other corporation, association, or other person, entity, or group; or (iv) when,
during any consecutive two-year period, directors of the Bank or its holding
company at the beginning of such period cease to constitute a majority of the
Board of Directors of the Bank or its holding company, unless the election of
replacement directors was approved by a majority vote of the initial directors
then in office.
STOCK OPTIONS
The shareholders approved the Incentive Option Plan at the 1999 Annual
Meeting of Shareholders pursuant to which options on 87,974 shares of the
Company's Common Stock are available for issuance to employees of the Company
and of any subsidiary of the Company. The following table contains information
with regard to grants of stock options during 1999 to Stephen R. Talbert,
President and Chief Executive Officer.
OPTION GRANTS IN 1999
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES BASE PRICE
NAME GRANTED IN FISCAL YEAR PER SHARE EXPIRATION DATE
---- ---------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Stephen R. Talbert 18,515 47% $6.625 2009
</TABLE>
8
<PAGE>
The following table shows the option exercises in 1999 and the year end
option values for Stephen R. Talbert.
AGGREGATED OPTION EXERCISES IN 1999
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT 12/31/99 AT 12/31/99
SHARES
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
Stephen R. Talbert -0- -0- -0- / 18,515 -0- / -0-
</TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN
On January 1, 1998, the Bank's Board of Directors adopted an Employee
Stock Ownership Plan (the "ESOP") pursuant to which 74,059 shares were placed in
trust with Mr. Talbert and Mr. Drye as trustees. In 1999, 3,489 shares were
allocated making a total of 6,142 shares allocated in the aggregate under the
ESOP.
PROFIT SHARING PLAN
The Bank has instituted a Profit Sharing Plan which is open to all
employees at least 21 years of age who have been employed for one year and
completed 1,000 hours of service. Under the Profit Sharing Plan, allocations
vest at a rate of 20% per year after three years of employment with the Bank and
fully vests after seven years of employment with the Bank. In 1999, the Bank
made a contribution of $27,563.37 to the Profit Sharing Plan.
TRANSACTIONS WITH MANAGEMENT
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with certain of the Company's
and the Bank's directors and executive officers and their associates. All loans
included in such transactions were made on substantially the same terms,
including interest rates, repayment terms and collateral, as those prevailing at
the time for comparable transactions with other persons, and do not involve more
than the normal risk of collectibility or present other unfavorable features.
9
<PAGE>
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors has appointed the firm of Dixon Odom PLLC,
Certified Public Accountants, as the Company's independent accountants for 2000,
and a proposal to ratify that appointment will be submitted for shareholder
approval at the Annual Meeting.
A representative of Dixon Odom PLLC is expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
the opportunity to make a statement if he desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL
2 RATIFICATION OF THE APPOINTMENT OF DIXON ODOM PLLC AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR 2000
OTHER MATTERS
The Board of Directors knows of no other business that will be brought
before the Annual Meeting. Should other matters be properly presented for action
at the Annual Meeting, the Proxies, or their substitutes, will be authorized to
vote shares represented by appointments of proxy according to their best
judgment.
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder which is intended to be presented at the
Company's 2001 Annual Meeting must be received by the Company at its main office
in Landis, North Carolina, no later than November 15, 2000, to be considered
timely received for inclusion in the proxy statement and appointment of proxy to
be distributed in connection with that meeting. If a proposal for the 2001
Annual Meeting is not expected to be included in the proxy statement for that
meeting, the proposal must be received by the Company by February 15, 2001 for
it to be timely received for consideration. The Company will use its
discretionary authority for any proposals received thereafter.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S 1999 ANNUAL REPORT ON FORM 10-KSB WILL BE
PROVIDED WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL
MEETING UPON THAT SHAREHOLDER'S WRITTEN REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO STEPHEN R. TALBERT, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BOC
FINANCIAL CORP., 107 S. CENTRAL AVENUE, LANDIS, NORTH CAROLINA 28088.
10
