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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File Number 0-27307
M&F BANCORP, INC.
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(Name of small business issuer in its charter)
NORTH CAROLINA 56-1980549
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2634 CHAPEL HILL BLVD., P.O. BOX 1932, DURHAM, NORTH CAROLINA 27702
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(Address of principal executive offices)
(919) 683-1521
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months ( or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's class of common
equity, as of the latest practicable date:
COMMON STOCK NO PAR VALUE 569,200
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Outstanding at September 30, 1999
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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M&F BANCORP, INC.
<TABLE>
<CAPTION>
INDEX PAGE
<S> <C>
PART I. FINANCIAL INFORMATION (unaudited) 3
Item 1. Consolidated Condensed Financial Statements 3
Consolidated Condensed Balance Sheet as of December 31, 1998 and
September 30, 1999 3
Consolidated Condensed Statements of Income for the nine months ended
September 30, 1999 and September 30, 1998 4
Consolidated Condensed Statements of Income for the three months ended
September 30, 1999 and September 30, 1998 5
Consolidated Condensed Statement of Comprehensive Income for the
periods ended September 30, 1999 and September 30, 1998 6
Consolidated Condensed Statements of Comprehensive Income and
Shareholders' Equity for the nine months ended September 30,
1999 and September 30, 1998 6
Consolidated Condensed Statements of Cash flows for the periods ended
September 30, 1999 and September 30, 1998 7
Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
</TABLE>
2
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PART I: FINANCIAL INFORMATION
ITEM 1
Financial Statements
M&F BANCORP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
(in thousands)
December 31, September 30,
1998 1999
--------- ---------
<S> <C> <C>
Cash and due from financial institutions $ 6,314 $ 6,715
Interest-earning deposits in financial institutions 1,099 2,025
Federal funds sold 13,550 2,590
--------- ---------
Cash and cash equivalents 20,963 11,330
Securities available for sale 32,751 34,313
Securities held to maturity 1,411 1,412
Loans:
Commercial Loans 5,871 7,166
Real Estate -Construction Loans 874 5,680
Real Estate-Mortgage Loans 82,481 82,815
Consumer Loans 5,574 5,245
Other Loans 1,004 931
--------- ---------
Total Loans 95,804 101,837
Unearned income (337) (342)
Allowance for Loan Losses (1,150) (1,277)
--------- ---------
Net Loans 94,317 100,218
Bank premises and equipment, net 3,030 5,344
Other assets 1,493 1,948
--------- ---------
TOTAL ASSETS $ 153,965 $ 154,565
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits $ 28,451 $ 24,566
Savings, NOW, and MMDA 55,084 59,728
Time Deposits 41,759 41,992
--------- ---------
Total Deposits 125,294 126,286
Other Borrowings 10,000 10,000
Other Liabilities 2,174 2,070
--------- ---------
Total Liabilities 137,468 138,356
Shareholders' Equity:
Common Stock 2,846 2,846
Capital Surplus 3,154 3,154
Retained Earnings 9,580 10,160
Accumulated Other Comprehensive Gain 917 49
--------- ---------
Shareholders' Equity 16,497 16,209
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 153,965 $ 154,565
========= =========
</TABLE>
3
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M&F BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share data)
September 30, September 30,
Nine months ending: 1999 1998
------ ------
<S> <C> <C>
Interest Income:
Interest on Loans $6,416 $6,376
Securities :
Taxable 1,066 1,040
Tax exempt 388 184
Federal Funds Sold 135 113
Other Interest 55 26
------ ------
Total Interest Income $8,060 $7,739
Interest Expense:
Interest-bearing Demand 95 153
Savings 779 798
Time Deposits 1,449 1,447
Interest on Federal Funds & Borrowings 360 28
------ ------
Total Interest Expense $2,683 $2,426
Net Interest Income 5,377 5,313
Provision for Loan Losses 208 275
------ ------
Net Interest Income After Provision for Loan Losses 5,169 5,038
Non-interest Income 1,124 1,085
Non-interest Expense 5,053 4,852
Income before Taxes 1,240 1,271
Income Tax Expense 350 458
------ ------
Net Income $ 890 $ 813
====== ======
Earnings per share common equivalent shares:
Basic $ 1.56 $ 1.43
Diluted $ 1.56 $ 1.43
Weighted average shares outstanding:
Basic 569 569
Diluted 569 569
</TABLE>
4
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M&F BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share data)
September 30, September 30,
Quarter ending: 1999 1998
------ ------
<S> <C> <C>
Interest Income:
Interest on Loans $2,197 $2,178
Securities :
Taxable 380 329
Tax exempt 128 66
Federal Funds Sold 17 11
Other Interest 28 4
------ ------
Total Interest Income $2,750 $2,588
Interest Expense:
Interest-bearing Demand 31 46
Savings 254 258
Time Deposits 487 494
Interest on Federal Funds & Borrowings 118 26
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Total Interest Expense $ 890 $ 824
Net Interest Income 1,860 1,764
Provision for Loan Losses 12 118
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Net Interest Income After Provision for Loan Losses 1,848 1,646
Non-interest Income 412 365
Non-interest Expense 1,617 1,595
Income before Taxes 646 416
Income Tax Expense 188 185
------ ------
Net Income $ 458 $ 231
====== ======
Earnings per share common equivalent shares:
Basic $ .80 $ .41
Diluted $ .80 $ .41
Weighted average shares outstanding:
Basic 569 569
Diluted 569 569
</TABLE>
5
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M&F BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
<TABLE>
<CAPTION>
(in thousands)
Nine months ended: September 30 September 30,
1999 1998
-------- --------
<S> <C> <C>
Net Income $ 890 $ 813
Other Comprehensive Income, Net of Tax
Unrealized Holdings Gains during period 49 963
Less Reclassification adjustments for gains
included in net income
Other Comprehensive Income 49 963
Comprehensive Income $ 939 $ 1,776
</TABLE>
M&F BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
(in thousands)
December 31, September 30,
1998 1999
-------- --------
<S> <C> <C>
Beginning Balance $ 15,523 $ 16,497
Net Income 1,214 890
Change in Net Unrealized Gain(Loss) AFS 204 (868)
Dividends (444) (310)
Ending Balance $ 16,497 $ 16,209
</TABLE>
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M&F BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended: September 30, September 30,
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 890,470 $ 813,445
Adjustments to reconcile net income
to net cash from operating activities:
Provision for possible loan losses 207,804 274,653
Provision for depreciation 99,300 280,641
Deferred income taxes 513,433 143,946
Gain on sale or disposal of assets (16,850)
Loss on sale of OREO 3,522
Deferred loan fees 4,819 511
Income Taxes Payable 5,096 331,683
Interest Receivable 55,198 97,623
Prepaid expenses and other assets 26,258 20,884
Accrued expenses and other liabilities (158,237) (105,560)
Other 361,596 356,158
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Net Cash from Operating Activities 1,992,409 2,213,984
Cash flows used in Investing Activities:
Proceeds from sales and maturities of securities (AFS) 9,303,814 6,676,588
Purchase of securities (AFS) (13,044,850) (4,748,234)
Proceeds from maturities of securities held to maturity 500,000
Net increase in loans (6,034,411) (7,216,970)
Purchase of premises and equipment (2,732,502) (495,130)
Proceeds from sale of assets 133,415
Proceeds from sale of real estate owned 24,474
------------ -----------
Net Cash Used in Investing Activities (12,350,060) (5,283,746)
Net Cash Provided by Investing Activities
Net increase (decrease) in demand and savings deposits 833,059 3,411,547
Net increase (decrease) in certificates of deposit 202,138
3,172,614
Cash dividends (310,225) (335,840)
------------ -----------
Net Cash Provided By (Used) Financing Activities 724,972 6,248,321
Net Increase (Decrease) in Cash and Cash Equivalents (9,632,679) 3,178,559
Cash and Cash Equivalents at the Beginning of the Year 20,962,802 6,184,141
------------ -----------
Cash and Cash Equivalents at the End of the Year $ 11,330,123 $ 9,362,700
============ ===========
</TABLE>
7
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M&F BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts and transactions of
M&F Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, Mechanics &
Farmers Bank ("M&F Bank"). All significant intercompany accounts and
transactions have been eliminated in consolidation. The accompanying unaudited
Consolidated Condensed Financial Statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and instructions from Regulation S-B.
In the opinion of management, all adjustments consisting of normal recurring
adjustments necessary for a fair presentation have been included. M&F Bancorp,
Inc. became the parent holding company of Mechanics & Farmers Bank on September
1, 1999; therefore, prior periods reflect the balance of the single bank, M&F
Bank and its subsidiary.
2. Investment Securities
The Company accounts for investment securities using Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities (SFAS 115). Under SFAS 115, the accounting for investment
securities held as an asset is dependent upon their classification as held to
maturity, available for sale, or trading assets.
3. Loans
Loans are carried at their principal amount outstanding , net of the allowance
for possible loan losses and deferred fees. Interest on commercial, mortgage and
installment loans is accrued and credited to operating income based upon the
principal amount outstanding. The Company's policy is to discontinue the accrual
of interest when, in management's judgment, circumstances indicate that
collection is doubtful. Effective January 1, 1995, M&F Bank adopted Statement of
Financial Accounting Standards No. 114, Accounting by Creditors for Impairment
of a Loan (SFAS 114) and Statement of Financial Accounting Standards No. 118,
Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures (SFAS 118). The effect of adopting both SFAS 114 and SFAS 118 did
not have a significant impact on the Company's financial position or results of
operations.
4. Earnings Per Share
Earnings per share is calculated on the basis of the weighted-average number of
common shares outstanding. There were no dilutive potential common shares
outstanding for the periods ended September 30, 1999 and September 30, 1998.
5. Regulatory Capital Requirements
The Company is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary- actions by
regulators that, if undertaken, could have a direct material effect on the
Company's financial statements. As of September 30, 1999, the Company had the
following capital levels.
Capital
Risk Based Tier 1 Tier 2
17.00% 10.46% 11.31%
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6. Comprehensive Income
Effective January 1, 1998, M&F Bank adopted the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS 130"). Adoption of this standard requires the
Company to (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position.
7. Accounting Change Pending Implementation
The Financial Accounting Standards Board has issued Statement of Financial
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"). This Statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 2000.
8. Common Stock Cash Dividends
On September 21, 1999 the Board of Directors of the Company declared a quarterly
cash dividend of $.11 per share to all shareholders of record September 21, 1999
payable October 15, 1999. The accrual of the cash dividend reduced shareholders'
equity by $62,612.
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The following discussion, analysis of earnings and related financial data should
be read in conjunction with the unaudited financial statements and related notes
to the consolidated condensed statements. It is intended to assist you in
understanding the financial condition and the results of operations for the nine
months ended September 30, 1999 and quarter ended September 30, 1999.
Forward-Looking Statements
When used in this report, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project" or other
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the market area,
and competition that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The Company
wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any opinions or statements expressed
with respect to future periods in any current statements.
The Company does not undertake, and specifically disclaims any obligation, to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or occurrences after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
9
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Financial Condition
Total assets increased 11.37 percent to $154,565,000 at September 30, 1999 from
$138,779,000 for the same period 1998. Total assets increased less than one
percent from $153,965,000 on December 31, 1998. The increase in assets from the
prior year was primarily due to $10,000,000 borrowed from the Federal Home Loan
Bank. The borrowings were used to purchase securities and provide liquidity. The
investment portfolio balance as of September 30, 1999 was $35,725,000 compared
with $28,398,000 for the same period 1998. The portfolio increased 4.58 percent
from the December 1998 level of $34,162,000. The portfolio can be liquidated to
meet loan demand if necessary. Approximately 96 percent of the bonds in the
portfolio are classified as available-for-sale. All bonds purchased during 1999
were placed in the available-for-sale category.
The increase of 3.96 percent in net loans from the prior year was represented by
an increase in loans for construction and land development. Management continues
its effort to add more adjustable rate loans to the portfolio in an effort to
reduce the interest rate sensitivity of our loans. This effort is normally
achieved in the commercial loans most of which are secured by real estate.
Deposits increased 5.36 percent to $126,286,000 at September 30, 1999 from
$119,926,000 for the same period 1998. Management believes that deposit growth
may be difficult to maintain as we move forward as customers continue to look
for alternative investment opportunities with higher yields. Because of
availability of future deposits the Company will continue to seek other sources
of liquidity to meet loan demand.
Total shareholders' equity decreased .28 percent to $16,209,000 on September 30,
1999 from $16,254,000 for the same period 1998. The decrease in this account
income was due to the decrease in the adjustment from unrealized appreciation of
securities which resulted from higher yields in the current bond market.
Shareholders' equity decreased 1.75 percent from the December 1998 level of
$16,497,000.
Results of Operations - Comparison of September 30, 1999 with September 30, 1998
Net income increased 9.47 percent to $890,000 on September 30, 1999 compared
with $813,000 for the same period 1998. The increase in net income was primarily
due to a decrease in the loan loss provision of $67,000 and the elimination of
an accrual for incentive compensation of $135,000. The incentive plan was based
on profitability and management does not anticipate reaching the minimum net
income to pay incentive compensation for the calendar year. Net interest income
increased $87,000 primarily due to the borrowings from the Federal Home Loan
Bank which was partially off-set by increased interest income in the securities
portfolio. The increase in noninterest expense was caused by higher security
costs to provide uniformed officers for the Charlotte Branch, increased
equipment maintenance, and Y2K costs of $7,750 not incurred in the prior year.
The Company also experienced a large number of check and deposit account losses,
including a $43,000 loss on a single account. The Company recognized a loss of
$37,000 on the sale of a building which was owned by the subsidiary of M&F Bank,
Mechanics & Farmers, Realty Services, Inc.
Net income increased 98.27 percent from the same quarter in the prior year
from $231,000 to $458,000. The increase in net income was primarily due to a
decrease in the loan loss provision. Management evaluated the adequacy of the
loan loss reserves and reduced the provision based on the loans outstanding,
decrease in delinquencies, and non-accrual loans and the improved collection
efforts. Management will continue its assessment of the reserves and adjust the
provision as required. Management also discontinued accrual for incentive
compensation based on profitability. The profits are not projected to reach the
minimum amount to pay incentive pay. This adjustment resulted in a reduction of
$135,000 from expenses.
Non-performing assets and allowance for loan losses
The allowance for loan losses is calculated based upon an evaluation of
pertinent factors underlying the types and qualities of the Company's loans.
Management considers such factors as the repayment status of a loan, the
estimated net realizable value of the underlying collateral, the borrower's
ability to repay the loan, current and
10
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anticipated economic conditions which might affect the borrower's ability to
repay the loan and the Company's past statistical history concerning
charge-offs. The September 30, 1999 allowance for loan losses was 1,277,000 or
1.25 percent of total loans outstanding compared with $1,150,000 or 1.20 percent
of total loans outstanding on December 31, 1998. Management has considered
non-performing assets and total classified assets in establishing the allowance
for loan losses.
The ratio of non-performing assets to total assets is one indicator of the
exposure to credit risk. Non-performing assets of the Company consist of
non-accruing loans, accruing loans delinquent 90 days or more, and foreclosed
assets, which have been acquired as a result of foreclosure or deed-in-lieu of
foreclosure.
<TABLE>
<CAPTION>
09/30/99 12/31/98 09/30/98
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Non-Accruing Loans $544 $ 539 $ 519
Accruing Loans Delinquent 90 days or more 136 1,163 1,371
Foreclosed Assets 71 45 45
Total Non-Performing Assets $756 $1,747 $1,935
---- ------ ------
Percentage of total assets .49% 1.13% 1.39%
</TABLE>
The improvement in non-performing assets resulting from enhanced practices and
procedures put in place by management. Improving the credit quality was a
primary focus for the institution for 1999.
Disclosure of Year 2000 Issues ("Y2K") and Consequences by Public Companies,
Investment Advisors, Investment Companies, and Municipal Securities Issuers.
The Company established a Y2K Committee consisting of senior officers of the
Company as well as representatives from all departments within the Company. This
committee, with the assistance of an outside consultant, developed a Y2K plan
which was subsequently approved by the Board of Directors of the Company. The
purpose of the committee and the plan were to identify the systems that could be
affected by Y2K and to determine the necessary activities required to prepare
for processing the Company's data on and after January 1, 2000. As provided for
in the guidance from the Financial Institutions Examination Council there are
five phases with which the Company must comply to ensure its readiness for Y2K:
awareness, assessment, renovation, validation, and implementation.
The Company has conducted a comprehensive review of its computer systems,
including its core processing systems to identify the systems that could be
affected by the Y2K issue. The Company, along with its software provider for its
core system, completed renovation of its core system in July 1998. This included
program changes and other modifications. The Company has completed the
validation phase which included testing of changes to hardware and software,
including all vendor provided software and hardware. The Company completed the
implementation phase by September 30, 1999. The Company has developed a
comprehensive Business Continuation Plan to provide for such contingencies as
the failure of our mission critical computer systems due to Y2K or other related
equipment or software failures.
The Company has evaluated third party business relationships, including vendors
and borrowers. The significant dependence on providers of service creates
potential exposure for the Company; however management fully expects providers
of service to meet the schedule timetable for all mission critical items. The
Company has analyzed the extent Y2K issues could adversely impact their
borrowers' business operations, particularly its commercial borrowers. The
Company has performed an initial assessment of each major borrower and has
established an ongoing assessment as part of the Company's credit underwriting
process. A substantial portion of the Company's loan portfolio consists of loans
to individuals and churches rather than pure commercial companies, therefore,
management believes that Y2K issues will not impair the ability of the borrowers
to repay their debt.
11
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The Company completed an inventory of all non-embedded technology under the
assessment phase. Upon the completion of the assessment the Company upgraded or
replaced the necessary equipment.
The Company has estimated that the cost to replace computer equipment, software
programs or other equipment containing embedded microprocessors that are not Y2K
compliant in addition to expanding and enhancing services or equipment due to
its assessment phase to be approximately $500,000. The Company believes this
amount will be adequate because it has been continuously upgrading its
technology with Y2K compliant hardware and software as previously indicated by
the larger technology related expenditures over the past four years. System
maintenance or modification costs are charged to expense as incurred, while the
cost of new hardware, software, or other equipment is capitalized and amortized
over their estimated useful lives. The Company does not track the internal costs
and time that its own personnel devote to Y2K issues, which are primarily
payroll costs. For the twelve months ended December 31, 1998, the Company had
recorded $11,803 in expenses and capitalized $78,751 related to the Y2K issues.
For the first nine months 1999 the Company has expensed $7,750 and capitalized
$22,665 related to Y2K issues. Amounts recorded for Y2K in previous periods were
insignificant. The Company's Internal Audit Department conducted a simulation
exercise of the Business Continuation Plan and found the procedures provided
adequate response from management in executing and responding to the Y2K issues
tested.
Because the Company depends substantially on its computer systems and the
software support of other vendors, the failure of these systems to be Y2K
compliant could cause substantial disruption of the Company's business and could
have a material adverse financial impact on the company. Failure to resolve Y2K
issues presents numerous risks such as: (1) loss of customers to other financial
institutions, resulting in a loss of revenue, if the Company is unable to
properly process customer transactions; (2) correspondent banks, the Federal
Reserve Bank and the Federal Home Loan company could fail to provide funds to
the Company, which could materially impair liquidity and affect the ability of
the Company to fund loans and deposit withdrawals; (3) concern on the part of
depositors that Y2K issues could impair access to their deposit account balances
which could result in the Company experiencing significant deposit outflows
prior to December 31, 1999; and (4) the Company could incur increase personnel
cost if additional staff is required to perform functions that inoperative
systems would have otherwise performed.
Management can not estimate the potential loss of revenue due to the Y2K issue
because neither the extent nor the longevity of any potential problem can be
predicted.
There can not be any assurances that the Company's Y2K plan will effectively
address all of the Y2K issues, or that the Company's estimates of the timing and
costs of completing the plan will ultimately be accurate or that the impact of
any failure of the Company or of its software and hardware vendors or service
providers to be Y2K compliant will not have a material adverse impact on the
Company's business, financial condition or the results of its operations.
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings: Not applicable
ITEM 2. Changes in Securities: Not applicable
ITEM 3. Defaults upon Senior Securities: Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders:
Not applicable
ITEM 5. Other Information: Not applicable
12
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ITEM 6. Exhibits and Report on Form 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
3(i) Amended and Restated Articles of Incorporation
3(ii) Bylaws
10 Material Contracts:
(a) Executive Employment Agreement dated April 1, 1999
between Mechanics and Farmers Bank and Julia W.
Taylor.
(b) Retention Bonus Agreement dated April 1, 1999 between
Mechanics and Farmers Bank and Lee Johnson.
(c) Retention Bonus Agreement dated April 1, 1999 between
Mechanics and Farmers Bank and Donald Harrington.
(d) Retention Bonus Agreement dated April 1, 1999 between
Mechanics and Farmers Bank and Fohliette W. Becote.
(e) Retention Bonus Agreement dated April 1, 1999 between
Mechanics and Farmers Bank and Harold Sellers.
(f) Retention Bonus Agreement dated April 1, 1999 between
Mechanics and Farmers Bank and E. Elaine Small
27 Financial Data Schedule
(b) Reports on Form 8-K: On September 13, 1999, the Company filed a report
on Form 8-K1263 in order to register the Company as the successor
issuer to M&F Bank pursuant to Rule 12g-3.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to signed on its behalf by the undersigned, thereunto duly
authorized.
M&F Bancorp, Inc.
(Registrant)
Date: November 12, 1999 By: /s/ J.W. Taylor
-------------------------------------
J.W. Taylor
Chairman, President/CEO
Date: November 12, 1999 By: /s/ Lee Johnson, Jr.
-------------------------------------
Lee Johnson, Jr.
Vice President
14
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EXHIBIT 3(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
M&F BANCORP, INC.
ARTICLE I
The name of the corporation is M&F Bancorp, Inc. (the "Corporation").
ARTICLE II
Section 2.1. Total Authorized Shares of Capital Stock. The Corporation
shall have authority to issue a total of 1,000,000 shares of capital stock, none
of which shall have any par value, divided into such classes as follows:
Class Number of Shares
----- ----------------
Common Stock 1,000,000
Section 2.2. Common Stock. The shares of Common Stock shall be one and
the same class. Subject to the rights of holders of any Preferred Stock as
determined by the Board of Directors pursuant to the North Carolina Business
Corporation Act ("NCBCA") as now constituted or hereafter amended, the holders
of shares of Common Stock shall have one vote per share on all matters on which
holders of shares of Common Stock are entitled to vote and shall be entitled to
participate pro rata after preferential rights of holders of any Preferred Stock
in the distribution of the net assets of the corporation upon dissolution.
ARTICLE III
The street address and county of the current registered office of the
Corporation is 116 West Parrish Street, Durham County, Durham, North Carolina
27702. The mailing address of the current registered office of the Corporation
is Post Office Box 1932, Durham, North Carolina 27702. The name of the current
registered agent is J.W. Taylor.
ARTICLE IV
The name and address of the incorporator is as follows:
J.W. Taylor
116 West Parrish Street
Post Office Box 1932
Durham, North Carolina 27702
ARTICLE V
The provisions of Article 9 and Article 9A of the NCBCA entitled "The
North Carolina Shareholder Protection Act" and "The North Carolina Control Share
Acquisition Act", respectively, shall not be applicable to the Corporation.
ARTICLE VI
Section 6.1. Board of Directors. The number of directors of the
Corporation shall not be less than three (3) nor more than nine (9), with the
exact number to be fixed from time to time as provided in the Corporation's
Bylaws.
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Section 6.2. Initial Board of Directors. The number of directors
constituting the initial Board of Directors of the Corporation shall be nine
(9).
Section 6.3. Cumulative Voting. The shareholders of the Corporation
shall have cumulative voting rights in the election of directors.
ARTICLE VII
Shareholders shall have preemptive rights in this Corporation.
This the 8th day of February, 1999.
/s/ J. W. Taylor
----------------------------------------
J. W. Taylor
Incorporator
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Exhibit 3(ii)
BYLAWS
OF
M&F BANCORP, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be located at such place as the Board of Directors may fix from time to
time.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of North Carolina may be, but need
not be, identical with the principal office.
Section 3. Other Offices. The corporation may have offices at such
other places, either within or without the State of North Carolina, as the Board
of Directors may designate or as the affairs of the corporation may require from
time to time.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. All meetings of shareholders shall be
held at the principal office of the corporation, or at such other place, either
within or without the State of North Carolina, as shall in each case be (i)
fixed by the Chief Executive Officer, the President, the Chairman of the Board,
or the Board of Directors and designated in the notice of the meeting or (ii)
agreed upon by a majority of the shareholders entitled to vote at the meeting.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held during the first six (6) calendar months following the end of the
corporation's fiscal year, on any day (except Saturday, Sunday, or a legal
holiday) during that period as shall be determined by the Board of Directors,
for the purpose of electing directors of the corporation and for the transaction
of such other business as may be properly brought before the meeting.
Section 3. Substitute Annual Meeting. If the annual meeting shall not
be held within the time designated by these Bylaws, a substitute annual meeting
may be called in accordance with the provisions of Section 4 of this Article II.
A meeting so called shall be designated and treated for all purposes as the
annual meeting.
Section 4. Special Meetings. Special meetings of the shareholders may
be called at any time by the Chief Executive Officer, the President, the
Chairman of the Board of Directors or the Board of Directors.
Section 5. Notice of Meetings. Written notice stating the date, time,
and place of the meeting shall be given not less than ten (10) nor more than
sixty (60) days before the date of any shareholders' meeting, either by personal
delivery, or by mail by or at the direction of the Chief Executive Officer, the
President, the Chairman of the Board of Directors or the Board of Directors, to
each shareholder entitled to vote at such meeting, provided that such notice
must be given to all shareholders with respect to any meeting at which a merger
or share exchange is to be considered and in such other instances as required by
law. If mailed, such notice shall be deemed to be effective when deposited in
the United States mail, correctly addressed to the shareholder at the
shareholder's address as it appears on the current record of shareholders of the
corporation, with postage thereon prepaid.
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In the case of a special meeting, the notice of meeting shall include a
description of the purpose or purposes for which the meeting is called; but, in
the case of an annual or substitute annual meeting, the notice of meeting need
not include a description of the purpose or purposes for which the meeting is
called unless such a description is required by the provisions of Chapter 55 of
the North Carolina General Statutes.
When a meeting is adjourned to a different date, time or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before adjournment and if a new record date is not
fixed for the adjourned meeting. If a new record date is fixed for the adjourned
meeting (which must be done if the new date is more than 120 days after the date
of the original meeting), notice of the adjourned meeting must be given as
provided in this Section 5 to persons who are shareholders as of the new record
date.
Section 6. Waiver of Notice. Any shareholder may waive notice of any
meeting before or after the meeting. The waiver must be in writing, signed by
the shareholder, and delivered to the corporation for inclusion in the minutes
or filing with the corporate records. A shareholder's attendance, in person or
by proxy, at a meeting (i) waives objection to lack of notice or defective
notice of the meeting, unless the shareholder or his proxy at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting, and (ii) waives objection to consideration of a particular matter at
the meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder or his proxy objects to considering the matter
before it is voted upon.
Section 7. Shareholders' List. Before each meeting of shareholders, the
Secretary of the corporation shall prepare an alphabetical list of the
shareholders entitled to notice of such meeting. The list shall be arranged by
voting group (and within each voting group by class or series of shares) and
show the address of and number of shares held by each shareholder. The list
shall be kept on file at the principal office of the corporation, or at a place
identified in the meeting notice in the city where the meeting will be held, for
the period beginning two (2) business days after notice of the meeting is given
and continuing through the meeting, and shall be available for inspection by any
shareholder, his agent or attorney, at any time during regular business hours.
The list shall also be available at the meeting and shall be subject to
inspection by any shareholder, his agent or attorney, at any time during the
meeting or any adjournment thereof.
Section 8. Voting Groups. All shares of one (1) or more classes or
series that, under the Articles of Incorporation or the North Carolina Business
Corporation Act, are entitled to vote and be counted together collectively on a
matter at a meeting of shareholders constitute a voting group. All shares
entitled by the Articles of Incorporation or the North Carolina Business
Corporation Act to vote generally on a matter are for that purpose a single
voting group. Classes or series of shares shall not be entitled to vote
separately by voting group unless expressly authorized by the Articles of
Incorporation or specifically required by law.
Section 9. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at the meeting only if a quorum of those shares
exist. A majority of the votes entitled to be cast on the matter by the voting
group constitutes a quorum of that voting group for action on that matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
In the absence of a quorum at the opening of any meeting of
shareholders, such meeting may be adjourned from time to time by the vote of a
majority of the votes cast on the motion to adjourn; and, subject to the
provisions of Section 5 of this Article II, at any adjourned meeting any
business may be transacted that might have been transacted at the original
meeting if a quorum exists with respect to the matter proposed.
Section 10. Proxies. Shares may be voted either in person or by one (1)
or more proxies authorized by a written appointment of proxy signed by the
shareholder or by his duly authorized attorney in fact. An appointment of proxy
is valid for eleven months from the date of its execution unless a different
period is expressly provided in the appointment form.
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Section 11. Voting of Shares. Subject to the provisions of the Articles
of Incorporation, each outstanding share shall be entitled to one (1) vote on
each matter voted on at a meeting of shareholders.
Except in the election of directors as governed by the provisions of
Section 4 of Article III, if a quorum exists, action on a matter by a voting
group is approved if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless a greater vote is required by
law or the Articles of Incorporation or these Bylaws.
Absent special circumstances, shares of the corporation are not
entitled to vote if they are owned, directly or indirectly, by a second
corporation in which the corporation owns, directly or indirectly, a majority of
the shares entitled to vote for directors of the second corporation; provided
that this provision does not limit the power of the corporation or such second
corporation to vote shares held by it in a fiduciary capacity.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation shall
be managed under the direction of, the Board of Directors.
Section 2. Number and Qualification. The number of directors of the
Corporation shall not be less than three (3) nor more than nine (9), with the
exact number to be fixed from time to time by the Board of Directors.
Section 3. Nominations. At any meeting of shareholders at which
directors are to be elected, nominations for election to the Board of Directors
may be made by the Board of Directors or, subject to the conditions described
below, by any holder of shares entitled to be voted at that meeting in the
election of directors. To be eligible for consideration at the meeting of
shareholders, all nominations, other than those made by the Board of Directors,
shall be in writing and must be delivered to the Secretary of the corporation
not less than thirty (30) days nor more than fifty (50) days prior to the
meeting at which such nominations will be made; provided, however, that if less
than twenty-one (21) days' notice of the meeting is given to shareholders, such
nominations must be delivered to the Secretary of the corporation not later than
the close of business on the seventh day following the day on which the notice
of meeting was mailed.
Section 4. Election. Except as provided in Section 7 of this Article
III, the directors shall be elected at the annual meeting of shareholders. Those
persons who receive the highest number of votes at a meeting at which a quorum
is present shall be deemed to have been elected.
Section 5. Terms of Directors. Each initial director shall hold office
until the earliest of the first shareholders' meeting at which directors are
elected, or until such director's death, resignation, or removal.
At all times that the number of directors is less than nine (9), each
director shall be elected to a term ending as of the next succeeding annual
meeting of shareholders or until his or her earlier death, resignation,
retirement, removal or disqualification or until his or her successor shall be
elected and shall qualify.
Notwithstanding the provisions of this Section 5, a decrease in the
number of directors does not shorten an incumbent director's term. Despite the
expiration of a director's term, such director shall continue to serve until a
successor shall be elected and qualified or until there is a decrease in the
number of directors.
Section 6. Removal. Any director may be removed from office at any
time, with or without cause, by a vote of the shareholders if the number of
votes cast to remove such director exceeds the number of votes cast not to
remove him. If a director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove him. A
director may not be removed by the shareholders at a meeting unless the notice
of that meeting states that the purpose, or one (1) of the purposes, of the
meeting is removal of the director. If any directors are so removed, new
directors may be elected at the same meeting.
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Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including without limitation a vacancy resulting from an increase in the number
of directors or from the failure by the shareholders to elect the full
authorized number of directors, may be filled by the shareholders or by the
Board of Directors, whichever group shall act first. If the directors remaining
in office do not constitute a quorum, the directors may fill the vacancy by the
affirmative vote of a majority of the remaining directors or by the sole
remaining director. If the vacant office was held by a director elected by
voting group, only the remaining director or directors elected by that voting
group or the holders of shares of that voting group are entitled to fill the
vacancy.
Section 8. Chairman of the Board of Directors. There may be a Chairman
of the Board of Directors elected by the directors from their number at any
meeting of the Board of Directors. The Chairman shall serve in such position at
the pleasure of the Board of Directors and shall preside at all meetings of the
Board of Directors and shareholders, serve as a member of the Executive
Committee, and perform such other duties as may be directed by the Board of
Directors.
In the absence of the Chairman, the President shall preside at meetings
of directors or shareholders.
Section 9. Compensation. The Board of Directors may provide for the
compensation of directors for their services as such and for the payment or
reimbursement of any or all expenses incurred by them in connection with such
services.
ARTICLE IV
MEETINGS AND COMMITTEES OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of
Directors shall be held immediately after, and at the same place as, the annual
meeting of shareholders. In addition, the Board of Directors may provide, by
resolution, the time and place, either within or without the State of North
Carolina, for the holding of additional regular meetings.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board or the President
if such officer is also a director, or by any three (3) or more directors. Such
a meeting may be held either within or without the State of North Carolina, as
fixed by the person or persons calling the meeting.
Section 3. Notice of Meetings. Regular meetings of the Board of
Directors may be held without notice. The person or persons calling a special
meeting of the Board of Directors shall, at least two (2) days before the
meeting, give or cause to be given notice thereof by any usual means of
communication. Such notice need not specify the purpose for which the meeting is
called. Any duly convened regular or special meeting may be adjourned by the
directors to a later time without further notice.
Section 4. Waiver of Notice. Any director may waive notice of any
meeting before or after the meeting. The waiver must be in writing, signed by
the director entitled to the notice, and be delivered to the corporation for
inclusion in the minutes or for filing with the corporate records. A director's
attendance at or participation in a meeting waives any required notice of such
meeting unless the director at the beginning of the meeting, or promptly upon
arrival, objects to holding the meeting or to transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting.
Section 5. Quorum. Unless the Articles of Incorporation or these Bylaws
provide otherwise, a majority of the number of directors fixed by or pursuant to
these Bylaws shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, or if no number is so fixed, a majority of
the number of directors in office immediately before the meeting begins shall
constitute a quorum.
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Section 6. Manner of Acting. Except as otherwise provided in the
Articles of Incorporation or these Bylaws, including Section 9 of this Article
IV, the affirmative vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 7. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors when
corporate action is taken is deemed to have assented to the action taken unless
(i) he objects at the beginning of the meeting, or promptly upon his arrival, to
holding it or to transaction business at the meeting, or (ii) his assent or
abstention from the action taken is entered in the minutes of the meeting, or
(iii) he files written notice of his dissent or abstention with the presiding
officer of the meeting before its adjournment or with the corporation
immediately after the adjournment of the meeting. Such right of dissent or
abstention is not available to a director who votes in favor of the action
taken.
Section 8. Action Without Meeting. Action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members of the Board of Directors. The action must be
evidenced by one (1) or more written consents signed by each director before or
after such action, describing the action taken, and included in the minutes or
filed with the corporate records.
Section 9. Committees of the Board of Directors. The Board of Directors
may create such committees of the Board of Directors as it shall consider
appropriate, including without limitation those committees specifically provided
for in these Bylaws. The creation of a committee of the Board of Directors and
appointment of members to it must be approved by the greater of (i) a majority
of the number of directors in office when the action is taken or (ii) the number
of directors required to take action pursuant to Section 6 of this Article IV.
Each committee of the Board of Directors must have two (2) or more members and,
to the extent authorized by law, shall have such duties and authority as may be
described in these Bylaws or otherwise specified by the Board of Directors. Each
committee member shall serve at the pleasure of the Board of Directors. The
provisions in these Bylaws governing meetings, actions without meeting and other
requirements of the Board of Directors shall also apply to any committees of the
Board of Directors established pursuant to these Bylaws.
Section 10. Executive Committee. There may be a standing committee of
the Board of Directors to be known as the Executive Committee and consisting of
not fewer than three (3) directors, one (1) of whom shall be the Chairman of the
Board of Directors and one (1) of whom shall be the President of the
corporation, if such officer is also a director. Except as limited by Section 9
of this Article IV or otherwise limited by law, the Executive Committee is
empowered to act for and on behalf of the Board of Directors in any and all
matters in the interim between meetings of the Board of Directors. Within the
powers conferred upon it, action by the Executive Committee shall be as binding
upon the corporation as if performed by the full Board of Directors. Such
actions shall be reported to the Board of Directors for review at its next
meeting following such action. The committee shall meet as often as it considers
necessary or advisable.
Section 11. Audit Committee. There may be a standing committee of the
Board of Directors to be known as the Audit Committee and consisting of not
fewer than three (3) directors. The Audit Committee shall supervise examination
of the assets and the liabilities and the internal audit program of the
corporation and its subsidiaries, cause outside audits to be performed on the
financial statements of the corporation, and shall make periodic reports to the
Board of Directors.
ARTICLE V
OFFICERS
Section 1. Officers of the Corporation. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer, and such Vice Presidents
or other officers (including assistant officers) as may from time to time be
appointed by or under the authority of the Board of Directors. Any two (2) or
more offices may be held by the same person, but no officer may act in more than
one (1) capacity where action of two (2) or more officers is required.
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Section 2. Appointment and Term. The officers of the corporation shall
be appointed by the Board of Directors or by a duly appointed officer authorized
by the Board of Directors to appoint one (1) or more officers. Each officer
shall hold office until his death, resignation, retirement, removal,
disqualification, or his successor shall have been appointed.
Section 3. Compensation of Officers. The compensation of all officers
of the corporation shall be fixed by or under the authority of the Board of
Directors, and no officer shall serve the corporation in any other capacity and
receive compensation therefor unless such additional compensation shall be duly
authorized. The appointment of an officer does not itself create contract
rights.
Section 4. Removal. Any officer may be removed by the Board of
Directors at any time with or without cause; but such removal shall not itself
affect the officer's contract rights, if any, with the corporation except to the
extent, if any, specified in any such contract.
Section 5. Resignation. An officer may resign at any time by
communicating his resignation to the corporation, orally or in writing. A
resignation is effective when communicated unless it specifies in writing a
later effective date. If a resignation is made effective at a later date that is
accepted by the corporation, the Board of Directors may fill the pending vacancy
before the effective date if the Board of Directors provides that the successor
does not take office until the effective date. An officer's resignation does not
affect the corporation's contract rights, if any, with the officer except to the
extent, if any, specified in any subcontract.
Section 6. Bonds. The Board of Directors may by resolution require any
officer, agent, or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned on the faithful performance of the duties
of his respective office or position, and to comply with such other conditions
as may from time to time be required by the Board of Directors.
Section 7. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall sign, with the Secretary, an Assistant
Secretary, or any other proper officer of the corporation thereunto authorized
by the Board of Directors, certificates for shares of the corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed, and in general he shall
perform all duties incident to the office of the President and such other duties
as may be prescribed by the Board of Directors from time to time. The President
shall be entitled to attend all regular and special meetings and meetings of
committees of the Board of Directors. If the President of the corporation is
also a director of the corporation, he shall serve as a member of the Executive
Committee.
Section 8. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice Presidents, unless
otherwise determined by the Board of Directors, shall perform the duties of the
President, and when so acting shall have all the powers of and be subject to all
the restrictions upon the President. Any Vice President (or Assistant Vice
President) may sign, with the Secretary, an Assistant Secretary, or any other
proper officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any other instruments
which may be signed by the President, and shall perform such other duties as
from time to time may be prescribed by the President or Board of Directors.
Section 9. Secretary. The Secretary shall: (i) keep the minutes of the
meetings of shareholders, of the Board of Directors, and of all committees of
the Board of Directors, in one or more books provided for that purpose; (ii) see
that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (iii) maintain and authenticate the records of the
corporation and be custodian of the seal of the corporation and see that the
seal of the corporation is affixed to all documents the execution of which on
behalf of the corporation under its seal is duly authorized; (iv) sign with the
President or a Vice President, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (v) maintain or cause to be maintained, and have general charge of,
the stock transfer books of the corporation; (vi) prepare or cause to be
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prepared shareholder lists prior to each meeting of shareholders as required by
law; (vii) attest the signature or certify the incumbency or signature of any
officer of the corporation; and (viii) in general perform all duties incident to
the office of Secretary and such other duties as from time to time may be
prescribed by the President or by the Board of Directors.
Section 10. Treasurer. The Treasurer shall be, and may be designated as
such as, the corporation's Chief Financial Officer, and shall: (i) have charge
and custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such depositories as shall be selected in accordance with
the provisions of Section 4 of Article VI of these Bylaws; (ii) maintain, or
cause to be maintained, appropriate accounting records as required by law; (iii)
prepare, or cause to be prepared, annual financial statements of the corporation
that include a balance sheet as of the end of the fiscal year and income and
cash flow statement for that year, which statements, or a written notice of
their availability, shall be mailed to each shareholder within 120 days after
the end of such fiscal year; and (iv) in general perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be prescribed by the President or by the Board of Directors.
Section 11. Assistant Officers. In the absence of a duly appointed
officer of the corporation, or in the event of his death, inability or refusal
to act, any person appointed by the Board of Directors, and designated by title
as an assistant to that officer, unless otherwise determined by the Board of
Directors, may perform the duties of, and when so acting shall have all the
powers of and be subject to all the restrictions upon, that officer. Such
assistant officers shall perform such other duties as from time to time may be
prescribed by the President or by the Board of Directors.
ARTICLE VI
CONTRACTS, LOANS, CHECK, AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances. Also, the Board
of Directors may limit, condition, restrict or deny such authority to any
officer or officers, or any agent or agents.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the Board of Directors. Such authority may be general or confined
to specific instances.
Section 3. Checks and Drafts. All checks, drafts, or other orders for
the payment of money, issued in the name of the corporation, shall be signed by
such officer or officers, agent or agents of the corporation and in such manner
as shall from time to time be determined by the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such depositories as may be selected by or under the authority of the Board
of Directors.
ARTICLE VII
SHARES AND THEIR TRANSFER
Section 1. Certificate for Shares. The Board of Directors may authorize
the issuance of some or all of the shares of the corporation's classes or series
without issuing certificates to represent such shares. If shares are represented
by certificates, the certificates shall be in such form as required by law and
as determined by the Board of Directors. Certificates shall be signed, either
manually or in facsimile, by the President or a Vice President, and by the
Secretary or Treasurer or an Assistant Secretary or an Assistant Treasurer. All
certificates for shares shall be consecutively numbered or otherwise identified
and entered into the stock transfer books of the corporation. When
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shares are represented by certificates, the corporation shall issue and deliver,
to each shareholder to whom such shares have been issued or transferred,
certificates representing the shares owned by him. When shares are not
represented by certificates, then within a reasonable time after the issuance or
transfer of such shares, the corporation shall send the shareholder to whom such
shares have been issued or transferred a written statement of the information
required by law to be on certificates.
Section 2. Stock Transfer Books. The corporation shall keep or cause to
be kept a book or set of books, to be known as the stock transfer book of the
corporation, containing the name of each shareholder of record, together with
such shareholder's address and the number of class or series of shares held by
him. Transfers of shares of the corporation shall be made only on the stock
transfer books of the corporation (i) by the holder of record thereof or by his
legal representative, who shall provide proper evidence of authority to
transfer; (ii) by his attorney authorized to effect such transfer by power of
attorney duly executed and filed with the Secretary; and (iii) on surrender for
cancellation of the certificate for such shares (if the shares are represented
by certificates).
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
corporation claimed to have been lost or destroyed, upon receipt of an affidavit
of such fact from the person claiming the certificate to have been lost or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors shall require that the owner of such lost or destroyed certificate, or
his legal representative, give the corporation a bond in such sum and with such
surety or other security as the Board of Directors may direct as indemnity
against any claims that may be made against the corporation with respect to the
certificate claimed to have been lost or destroyed, except where the Board of
Directors by resolution finds that in the judgment of the Board of Directors the
circumstances justify omission of a bond.
Section 4. Fixing Record Date. The Board of Directors may fix a future
date as the record date for one (1) or more voting groups in order to determine
the shareholders entitled to notice of a shareholders' meeting, to demand a
special meeting, to vote, or to take any other action. Such record date may not
be more than seventy (70) days before the meeting or action requiring a
determination of shareholders. A determination of shareholders entitled to
notice of or to vote at a shareholders' meeting is effective for an adjournment
of the meeting unless the Board of Directors fixes a new record date for the
adjourned meeting, which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
If no record date is fixed by the Board of Directors for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, the close of business on the day before the first notice of the
meeting is delivered to shareholders shall be the record date for such
determination of shareholders.
The Board of Directors may fix a date as the record date for
determining shareholders entitled to a distribution or share dividend. If no
record date is fixed by the Board of Directors for such determination, it is the
date of the Board of Directors authorizes the distribution or share dividend.
Section 5. Holder of Record. Except as otherwise required by law, the
corporation may treat the person in whose name the shares stand of record on its
books as the absolute owner of the shares and the person exclusively entitled to
receive notification and distributions, to vote, and to otherwise exercise the
rights, powers, and privileges of ownership of such shares.
Section 6. Shares Hold by Nominees. The corporation shall recognize the
beneficial owner of shares registered in the name of the nominee as the owner
and shareholder of such shares for certain purposes if the nominee in whose name
such shares are registered files with the Secretary a written certificate in a
form prescribed by the corporation, signed by the nominee, indicating the
following: (i) the name, address, and taxpayer identification number of the
nominee; (ii) the name, address, and taxpayer identification number of the
beneficial owner; (iii) the number and class or series of shares registered in
the name of the nominee as to which the beneficial owner shall be recognized as
the shareholder; and (iv) the purposes for which the beneficial owner shall be
recognized as the shareholder.
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The purposes for which the corporation shall recognize the beneficial
owner as the shareholder may include the following: (i) receiving notice of,
voting at, and otherwise participating in shareholders' meetings; (ii) executing
consents with respect to the shares; (iii) exercising dissenters' rights under
the North Carolina Business Corporation Act; (iv) receiving distributions and
share dividends with respect to the shares; (v) exercising inspection rights;
(vi) receiving reports, financial statements, proxy statements, and other
communications from the corporation; (vii) making any demand upon the
corporation required or permitted by law; and (viii) exercising any other rights
or receiving any other benefits of a shareholder with respect to the shares.
The certificate shall be effective ten (10) business days after its
receipt by the corporation and until it is changed by the nominee, unless the
certificate specifies a later effective time or an earlier termination date.
If the certificate affects less than all of the shares registered in
the name of the nominee, the corporation may require the shares affected by the
certificate to be registered separately on the books of the corporation and be
represented by a share certificate that bears a conspicuous legend stating that
there is a nominee certificate in effect with respect to the shares represented
by that share certificate.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Distributions. The Board of Directors may from time to time
authorize, and the corporation may grant, distributions and share dividends to
its shareholders pursuant to law and subject to the provisions of its Articles
of Incorporation.
Section 2. Seal. The corporate seal of the corporation shall consist of
two concentric circles between which is the name of the corporation and in the
center of which is inscribed SEAL; and such seal, as impressed or affixed on the
margin hereof, is hereby adopted as the corporate seal of the corporation.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors.
Section 4. Amendments. Except as otherwise provided in the Articles of
Incorporation or by law, these Bylaws may be amended or repealed and new Bylaws
may be adopted by the Board of Directors.
No Bylaw adopted, amended, or repealed by the shareholders shall be
readopted, amended, or repealed by the Board of Directors, unless the Articles
of Incorporation or a Bylaw adopted by the shareholders authorizes the Board of
Directors to adopt, amend, or repeal that particular Bylaw or the Bylaws
generally.
Section 5. Definitions. Unless the context otherwise requires, terms
used in these Bylaws shall have the meanings assigned to them in the North
Carolina Business Corporation Act to the extent defined therein.
ARTICLE IX
INDEMNIFICATION
In addition to any indemnification required or permitted by law, and
except as otherwise provided in these Bylaws, any person who at any time serves
or has served as a director, officer, employee or agent of the corporation and
any such person who serves or has served at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or as a trustee or administrator under an
employee benefit plan, shall have a right to be indemnified by the corporation
to the full extent allowed by applicable law against liability and litigation
expense arising out of such status or activities in such capacity. "Liability
and litigation expense" shall include costs and expenses of litigation
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement which are actually and reasonably incurred in connection with or as a
consequence of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including appeals.
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Promptly after the final disposition or termination of any matter which
involves liability or litigation expense as described above or at such earlier
time as it sees fit, the corporation shall determine whether any person
described in this Article IX is entitled to indemnification thereunder. Such
determination shall be limited to the following issues: (i) whether the persons
to be indemnified are persons described in this Article IX, (ii) whether the
liability or litigation expense incurred arise out of the status or activities
of such persons as described in this Article IX, (iii) whether liability was
actually incurred and/or litigation expense was actually and reasonably
incurred, and (iv) whether the indemnification requested is permitted by
applicable law. Such determination shall be made by a majority vote of directors
who were not parties to the action, suit or proceeding (or, in connection with
"threatened" actions, suits or proceedings, who were not "threatened parties").
If at least two such disinterested directors are not obtainable, or, even if
obtainable, if at least half of the number of disinterested directors so direct,
such determination shall be made by independent legal counsel in written
opinion.
Litigation expense incurred by a person described in this Article IX in
connection with a matter described in this Article IX may be paid by the
corporation in advance of the final disposition or termination of such matter,
if the corporation receives an undertaking, dated, in writing and signed by the
person to be indemnified, to repay all such sums unless such person is
ultimately determined to be entitled to be indemnified by the corporation as
provided in this Article IX. Requests for payments in advance of final
disposition or termination shall be submitted in writing unless this requirement
is waived by the corporation.
Notwithstanding the foregoing, no advance payment shall be made as to
any payment or portion of a payment for which the determination is made that the
person requesting payment will not be entitled to indemnification. Such
determination may be made only by a majority vote of disinterested directors or
by independent legal counsel as next provided. If there are not at least two
disinterested directors, the notice of all requests for advance payment shall be
delivered for review to independent legal counsel for the corporation. Such
counsel shall have the authority to disapprove any advance payment or portion of
a payment for which it appears that the person requesting payment will not be
entitled to indemnification.
The corporation shall not be obligated to indemnify persons described
in this Article IX for any amounts paid in settlement unless the corporation
consents in writing to the settlement. The corporation shall not unreasonably
withhold its consent to proposed settlements. The corporation's consent to a
proposed settlement shall not constitute an agreement by the corporation that
any person is entitled to indemnification hereunder. The corporation may waive
the requirement of this section for its written consent as fairness and equity
may require.
A person described in this Article IX may apply to the corporation in
writing for indemnification or advance expenses. Such applications shall be
addressed to the Secretary or, in the absence of the Secretary, to any officer
of the corporation. The corporation shall respond in writing to such
applications as follows: to a request for indemnity under this Article IX,
within ninety days after receipt of the application; to a request for advance
expenses under this Article IX within fifteen days after receipt of the
application.
If any action is necessary or appropriate to authorize the corporation
to pay the indemnification required by these Bylaws, the Board of Directors
shall take such action, including (i) making a good faith evaluation of the
indemnification request, (ii) giving notice to, and obtaining approval by, the
shareholders of the corporation, and (iii) taking any other action.
The right of indemnification or advance expenses provided herein shall
be enforceable in any court of competent jurisdiction. A legal action may be
commenced if a claim for indemnity or advance expenses is denied in whole or in
part, or upon the expiration of the time periods provided above. In any such
action, if the claimant establishes the right to indemnification, he or she
shall also have the right to be indemnified against the litigation expense
(including, without limitation, reasonable attorneys' fees) of such action.
As provided by N.C. Gen. Stat. ss.55-8-57, the corporation shall have
the power to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation, or who is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation,
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partnership, joint venture, trust or other enterprise, or as a trustee or
administrator under an employee benefit plan, against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation has the power to indemnify him
against such liability.
The right to indemnification provided herein shall not be deemed
exclusive of any other rights to which any persons seeking indemnity may be
entitled apart from the provisions of this bylaw, except there shall be no right
to indemnification as to any liability or litigation expense for which such
person is entitled to receive payment under any insurance policy other than a
directors' and officers' liability insurance policy maintained by the
corporation. Such right inures to the benefit of the heirs and legal
representatives of any persons entitled to such right. Any person who at any
time after the adoption of this bylaw serves or has served in any status or
capacity described in this Article IX, shall be deemed to be doing or to have
done so in reliance upon, and as consideration for, the right of indemnification
provided herein. Any repeal or modification hereof shall not affect any rights
or obligations then existing. The right provided herein shall not apply as to
persons serving institutions which are hereafter merged into or combined with
the corporation, except after the effective date of such merger or combination
and only as to status and activities after such date.
If this Article or any portion hereof shall be invalidated on any
ground by any court or agency of competent jurisdiction, then the corporation
shall nevertheless indemnify each person described in this Article IX to the
full extent permitted by the portion of this Article that is not invalidated and
also to the full extent (not exceeding the benefits described herein) permitted
or required by other applicable law.
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Exhibit 10(a)
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and effective as of this 1st day of April, 1999 by and
between Mechanics and Farmers Bank, a North Carolina banking corporation with
its principal location in Durham, North Carolina (the "Bank"), and Julia W.
Taylor (the "Executive").
RECITALS:
A. The Bank recognizes the value of the Executive's services and
desires to insure the Executive's continued employment with the Bank.
B. The Executive wishes to continue in the employment of the Bank.
C. The Bank and the Executive mutually desire that their employment
relationship be set forth under the terms of a written employment agreement.
NOW, THEREFORE, in consideration of the foregoing and of the promises and mutual
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. EMPLOYMENT. The Bank agrees to continue to employ the Executive, and
the Executive agrees to continue to serve and be employed by the Bank,
on the terms and conditions, set forth herein.
2. TERM OF EMPLOYMENT. The employment of the Executive by the Bank as
provided under Section 1 shall commence on the effective date hereof
and end on April 1, 2000, unless further extended or sooner terminated
as hereinafter provided. On April 1, 2000 and on April 1st of each year
thereafter, the term of the Executive's employment hereunder shall be
extended automatically one (1) additional year, unless prior to the
date of such automatic extension the Bank shall have delivered to the
Executive a Notice of Termination (as defined in Section 6(a)(vii)) or
the Executive shall have delivered to the Bank a Notice of Termination
that the term of the Executive's employment hereunder shall not be
extended.
3. POSITION AND DUTIES. The Executive shall serve as President and Chief
Executive Officer of the Bank with responsibilities and authority as
may from time to time be assigned to her by the Board of Directors of
the Bank. The Executive shall devote substantially all of her working
time and efforts to the business affairs of the Bank. In addition, the
Executive shall serve on the Board of Directors of the Bank during the
term of this Agreement for so long as she is elected to such Board by
the shareholders of the Bank.
4. PLACE OF PERFORMANCE. In connection with the Executive's employment
hereunder, the Executive shall be based at the Bank's principal offices
located in Durham, North Carolina, subject to reasonable travel on the
business of the Bank.
5. COMPENSATION AND BENEFITS. In consideration of the Executive's
performance of her duties hereunder, the Bank shall provide the
Executive with the following compensation and benefits during the term
of her employment hereunder.
(a) Base Salary. The Bank shall pay to the Executive an aggregate
base salary at a rate of not less than One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) per annum, payable
in accordance with the Bank's normal payroll practices. Such
base salary may be increased from time to time by the Board of
Directors in accordance with the normal business practices of
the Bank and, if so increased, shall not thereafter during the
term of the Executive's employment hereunder be decreased
unless the decrease is generally applicable to substantially
all similarly situated Bank employees (or employees of a
successor or controlling entity of the Bank) formerly
benefited.
<PAGE> 2
Compensation of the Executive by base salary payments shall
not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit
program of the Bank. Such base salary payments (including
increases or decreases thereto) shall not in any way limit or
reduce any other obligation of the Bank hereunder, and no
other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Bank with respect to
such base salary.
(b) Performance Bonus. The Bank shall pay to the Executive with
respect to each fiscal year during the term of the Executive's
employment hereunder, a discretionary performance bonus
according to the Bank's then existing bonus plan.
(c) Expenses. The Bank, as applicable, shall promptly reimburse
the Executive for reasonable out-of-pocket expenses incurred
by the Executive in her performance of services hereunder,
including reasonable expenses of travel and living expense
while away from home on business of the Bank, provided that
such expenses are incurred, accounted for and documented in
accordance with the regular policies and procedures
established by the Bank from time to time.
(d) Employee Benefits. The Executive shall be entitled to continue
to participate in all Bank employee benefit plans and
arrangements in effect on the date hereof in which the
Executive participates, (including, but not limited to, any
employee benefit pension plan, stock option plan, life
insurance plan, vacation plan, disability plan, and the group
health-and-accident and medical insurance plans) as such plans
may continue or be altered by the Bank Board of Directors from
time to time at the Board's discretion.
(e) Vacation. The Executive shall be entitled to vacation in each
calendar year during the term of this Agreement, in accordance
with the Bank's vacation policies, as well as to all paid
holidays provided by the Bank to its employees.
(f) Services. The Bank shall furnish the Executive with office
space, secretarial and administrative assistance, and such
other facilities and services as shall be suitable to her
position and adequate for the performance of her duties
hereunder.
6. COMPENSATION AND BENEFITS IN THE EVENT OF TERMINATION OR ACQUISITION OF
THE BANK. In the event of the termination of the Executive's employment
by the Bank during the term of this Agreement, compensation and
benefits shall be paid as set forth below.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
(i) "Cause" means any one or more of the following:
(A) Willful malfeasance or gross negligence in
the performance of Executive's duties;
(B) Conviction of a crime other than minor
traffic offenses; or
(C) Conduct which is or could be demonstrably
and significantly harmful to the Bank, as
reasonably determined by the Bank's Board of
Directors on the advice of legal counsel.
(ii) "Change in Control" shall mean either:
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(A) the acquisition, directly or indirectly, by
any person or group of persons other than in
the formation of the Bank's holding company
of shares in the Bank other than by M&F
Bancorp, Inc. in connection with the
formation of Bank's holding company or
otherwise, or, if formed, the Bank's holding
company, which, when added to any other
shares the beneficial ownership of which is
held by such acquiror(s), shall result in
ownership by any person(s) of greater than
50 percent (50%) of such stock or which
would require prior notification under any
federal or state banking law or regulation;
or
(B) the occurrence of any merger, consolidation,
exchange or reorganization to which the Bank
or, if formed, the Bank's holding company is
a party and to which the Bank, or the Bank's
holding company (or an entity controlled
thereby) is not a surviving entity, or the
sale of all or substantially all of the
assets of the Bank or the Bank's holding
company.
(C) For purposes of this sub-paragraph (ii), the
definition of "person" shall be as defined
in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934.
(iii) "Compensation" shall mean the total compensation paid
to Executive as reported or reportable in her W-2 and
1099 Forms from Bank for that year, excluding any
interest or dividends received, plus tax sheltered
compensation including, but not limited to, 401(k)
contributions, insurance premiums and the like.
(iv) "Coincident With" shall mean any time within nine
months prior to the occurrence of a Change in Control
of the Bank.
(v) "Date of Termination" shall mean: (A) if the
Executive's employment is terminated by reason of her
death, her date of death; (B) if the Executive's
employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided
that the Executive shall not have returned to the
performance of her duties as provided under
sub-paragraph (vi) of this paragraph (a)); or (C) if
the Executive's employment is terminated by action of
either party for any other reason, the date specified
in the Notice of Termination.
(vi) "Disability" shall mean the Executive's failure to
satisfactorily perform her regular duties on behalf
of the Bank on a full-time basis for ninety (90)
consecutive days or such lesser period of time as
provided under the disability insurance policy
provided through Bank, by reason of the Executive's
incapacity due to physical or mental illness, except
where within thirty (30) days after Notice of
Termination is given following such absence, the
Executive shall have returned to the satisfactory,
full-time performance of such duties. Any
determination of Disability hereunder shall be made
by the Board of Directors in good faith and on the
basis of the certificates of at least three (3)
qualified physicians chosen by it for such purpose,
one (1) of whom shall be the Executive's regular
attending physician.
(vii) "Good Reason" means any one or more of the following:
(A) Reduction, without Executive's consent, of
Executive's salary or elimination of any
compensation or benefit plan benefiting
Executive, unless the reduction or
elimination is generally applicable to
substantially all similarly situated Bank
employees (or employees of a successor or
controlling entity of the Company) formerly
benefited;
(B) The assignment to Executive without her
consent of any authority or duties
materially inconsistent (excluding
promotions entailing greater authority or
duties) with Executive's position as of the
date of this Agreement; or
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(C) A relocation or transfer of Executive's
principal place of employment that would
require Executive to commute on a regular
basis more than 25 miles each way from her
current business office at the Bank on the
date of this Agreement, unless Executive
consents to the relocation or transfer.
(viii) "Notice of Termination" shall mean a written notice
which shall include the specific termination
provision under this Agreement relied upon, and shall
set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of the Executive's employment including
any termination resulting from the nonrenewal of this
Agreement. Any purported termination of the
Executive's employment hereunder by action of either
party shall be communicated by delivery of a Notice
of Termination to the other party. Any purported
termination of the Executive's employment hereunder
which is not effected in accordance with the
foregoing shall be ineffective for purposes of the
Agreement.
(ix) "Retirement" shall mean termination of the
Executive's employment pursuant to the Bank's regular
retirement policy applicable to the position held by
the Executive at the time of such termination.
(x) "Termination" shall mean any action, event or series
of events that causes the Executive to no longer be
employed by the Bank, for any reason, including the
failure to renew or extend this Agreement.
(b) Termination by Bank Not for Cause Prior to a Change of Control
or Termination by Executive for Good Reason Prior to a Change
in Control. If prior to, but not Coincident With, a Change in
Control there is a Termination of Executive's employment, (A)
by action of the Bank without Cause or (B) by action of the
Executive for Good Reason, the Executive shall be entitled to
receive payments under this Agreement as though the Agreement
was in effect through the end of the period set forth in
Section 2 hereof without further automatic extensions, but
such payment shall, under no circumstances, be less than the
Executive's base salary then in effect as provided under
paragraph (a) of Section 5 as calculated for a period of eight
(8) months plus directors' fees. Executive acknowledges that
such payments serve as total satisfaction of Executive's claim
under this Agreement.
(c) Termination at Any Time by Reason of the Executive's Death,
Disability or Retirement. In the event of the Executive's
death, Disability or Retirement at any time, the following
compensation and benefits shall be paid and provided the
Executive (or her beneficiary):
(i) The Executive's base salary under paragraph (a) of
Section 5 through the last day of the month in the
Date of Termination occurs, at the annual rate in
effect at the time Notice of Termination is given (or
death occurs), to the extent unpaid prior to such
Date of Termination;
(ii) Any benefits to which the Executive (or her
beneficiary) may be entitled as a result of such
termination (or death), under the terms and
conditions of the pertinent plans or arrangements in
effect at the time of the Notice of Termination under
paragraph (d) of Section 5; and
(iii) Any amounts due the Executive with respect to
paragraph (c), paragraph (e) or paragraph (h) of
Section 5 as of the Date of Termination.
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<PAGE> 5
(d) Termination By the Bank at Any Time for Cause or by the
Executive at Any Time Without Good Reason. If there is a
Termination of Executive's employment before, Coincident With,
or after a Change in Control (A) by action of the Bank for
Cause or (B) by action of the Executive without Good Reason,
the following compensation and benefits shall be paid and
provided the Executive:
(i) The Executive's base salary provided under paragraph
(a) of Section 5 through the last day of the month in
which the Date of Termination occurs, at the annual
rate in effect at the time Notice of Termination is
given, to the extent unpaid prior to such Date of
Termination;
(ii) Any benefits to which the Executive may be entitled
as a result of such termination, under the terms and
conditions of the pertinent plans or arrangements in
effect at the time of the Notice of Termination under
paragraph (d) of Section 5; and
(iii) Any amounts due the Executive with respect to
paragraph (c) or paragraph (e) of Section 5 as of the
Date of Termination.
(e) Termination by Bank Not For Cause Coincident With or Following
a Change In Control or by Executive for Good Reason Coincident
With or Following a Change in Control. If Coincident With or
following a Change in Control there is a Termination of
Executive's employment (A) by action of the Executive for Good
Reason or (B) by action of the Bank not for Cause, the Bank
shall pay and provide the Executive the compensation and
benefits stipulated under sub-paragraph (d) immediately above
plus the pro rata portion of any bonus under paragraph (b) of
Section 5 which has been earned prior to the Date of
Termination, to the extent unpaid prior to such date;
provided, however, in addition thereto, the following
compensation and benefits shall be paid and provided the
Executive:
(i) If such Termination occurs Coincident With a Change
in Control or within 12 months following a Change in
Control, the Bank shall pay to the Executive in a
lump sum, in cash, within 30 days following the Date
of Termination or on the effective date of the Change
in Control, whichever occurs later, an amount equal
to 2.99 times the Compensation paid in the preceding
calendar year, or scheduled to be paid to the
Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount paid;
(ii) If such Termination occurs after 12 months from the
Change in Control but before the end of 24 months
following the Change in Control, the Bank shall pay
to the Executive in a lump sum, in cash, within 30
days following the Date of Termination an amount
equal to 2.0 times the Compensation paid in the
preceding calendar year, or scheduled to be paid to
the Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount so paid;
(iii) If such Termination occurs after 24 months following
the Change in Control but before the end of the 36th
month following the Change in Control, the Bank shall
pay to the Executive in a lump sum, in cash, within
30 days following the Date of Termination an amount
equal to 1.0 times the Compensation paid in the
preceding calendar year, or scheduled to be paid to
the Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount so paid; or
(iv) If such Termination occurs after the 36th month
following the Change in Control, the Bank shall pay
to the Executive in a lump sum, in cash, within 30
days following the Date of Termination the amount
provided in paragraph (b) of Section 7 hereof.
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<PAGE> 6
If any lump sum payment under this paragraph (e) of Section 7,
either alone or together with other payments which the
Executive has the right to receive from the Company, would
constitute a "parachute payment" [as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the
"Code")], such lump sum severance payment shall be reduced to
the largest amount as will result in no portion of the lump
sum severance payment under this Section 7 being subject to
the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum severance
payment under this Section, pursuant to the foregoing
provision, shall be made by the Bank in good faith.
(f) Termination of Employment by Executive/Non-Competition
Agreement. In the event the Executive is no longer employed by
the Bank such that Executive receives payment pursuant to the
provisions of Section 6(e) of this Agreement, for a period of
12 months for each payment of 1.0 times Executive's previous
year's compensation, the Executive agrees not to compete,
directly or indirectly, with the Bank or any successor as an
employee, officer, director, independent contractor,
consultant, or shareholder of any financial services company
or any other entity providing financial services, including
but not limited to lending, securities, brokerage, trust or
insurance products or services within a one hundred (100) mile
radius of the main office of the Bank, or such other office of
the Bank at which such Executive was physically located during
the majority of Executive's work tenure for the Company.
(g) Continuation of Benefits. Following the Termination of
Executive's employment hereunder, the Executive shall have the
right to continue in the Bank's group health insurance plan
and other Bank benefit program as may be required by COBRA or
any other federal or state law or regulation.
(h) Compensation During Disability. In the event of the
Executive's failure to satisfactorily perform her duties
hereunder on a full-time basis by reason of her incapacity due
to physical or mental illness (as determined by the
Executive's regular attending physician) for any period not
otherwise constituting Disability as defined under
sub-paragraph (vi) of paragraph (a) of this Section 7, the
Executive's employment hereunder shall not be deemed
terminated and she shall continue to receive the compensation
and benefits provided under Section 5 in accordance with the
terms thereof.
7. RETURN OF COMPANY PROPERTY. If and when Executive ceases, for any
reason, to be employed by Bank, Executive must return to Bank all keys,
pass cards, identification cards, Bank-owned credit or debit cards, and
any other property of Bank. At the same time, Executive also must
return to Bank all originals and copies (whether in hard copy,
electronic or other form) of any documents, drawings, notes, memoranda,
designs, devices, diskettes, tapes, manuals, and specifications which
constitute proprietary information or material of Bank. The obligations
in this Section 8 include the return of documents and other materials
which may be in Executive's desk at work, in Executive's car or place
of residence or any in other location under Executive's control.
8. NON-DISCLOSURE. During the term of her employment hereunder, or at any
time thereafter, the Executive shall not disclose or use (except in the
course of his employment hereunder) any confidential or proprietary
information or data of the Bank or any of their subsidiaries or
affiliates regardless of whether such information or data is embodied
in writing or other physical form.
9. WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, all payments made by the Bank hereunder to the
Executive or her estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Bank may reasonably determine should be withheld
pursuant to any applicable law or regulation. In lieu of withholding
such amounts, the Bank may accept other provisions to the end that they
have sufficient funds to pay all taxes required by law to be withheld
in respect of any or all such payments.
10. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing, the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
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Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of the Change in Control by the
acquiror, then this Agreement shall be deemed valid only to the extent
that the pooling of interests accounting method can be used, provided,
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
method for accounting purposes shall be supported by an opinion letter
from the acquiror's independent accounting firm or the Securities and
Exchange Commission.
11. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by registered or certified mail, or personally delivered to the party
entitled thereto, at the address stated below or to such changed
address as the addressee may have given by a similar notice:
To the Bank: Mechanics and Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
To the Executive:
12. SUCCESSORS; BINDING AGREEMENT. The Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Bank, by agreement in the form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Bank would be required
to perform it if no such succession had taken place. Failure of the
Bank to obtain such agreement prior to or at the time of the
effectiveness of any such succession shall be a breach of this
Agreement. For purposes of this Agreement, "Bank" shall mean the Bank
as defined above, and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in
this Section or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If the Executive should die while any amount would still be payable to
her hereunder if she had continued to live, all such amounts, except to
the extent otherwise provided under this Agreement, shall be paid in
accordance with the terms of this Agreement to her devisee, legatee or
other designee, or if there be no such designee, to the Executive's
estate.
13. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and an
authorized officer of the Bank. No waiver by either party hereto at
anytime of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof had been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the right, duties or obligations that the Executive or the
Bank may have under any other written agreement between such parties,
under any employee pension benefit plan or employee welfare benefit
plan as defined under the Employee Retirement Income Security Act of
1974, as amended, and maintained by the Bank, or under any established
personnel practice or policy applicable to the Executive.
14. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
7
<PAGE> 8
15. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
16. MISCELLANEOUS.
(a) No Adequate Remedy At Law. The Bank and the Executive
recognize that each party will have no adequate remedy at law
for breach by the other of any of the agreements contained
herein and, in the event of any such breach, the Bank and the
Executive hereby agree and consent that the other shall be
entitled to decree of specific performance, mandamus, or other
appropriate remedy to enforce performance of such agreements.
(b) Non-Assignability. No right, benefit, or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
setoff in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude the
Executive from designating one or more beneficiaries to
receive any amount that may be payable after her death, and
shall not preclude the legal representative of the Executive's
estate from assigning any right hereunder to the person or
persons entitled thereto under her will or, in the case of
intestacy applicable to her estate.
(c) Primary Obligor on Contract. Bank and, when formed, M&F
Bancorp, Inc., the Bank's holding company, although jointly
and severally liable for all payments under this Agreement,
between themselves, acknowledge that Bank is the primary
obligor and is primarily responsible for fulfilling the
financial obligations of this Agreement. In the event the Bank
is unable, for regulatory or financial reasons, to fulfill the
obligations under this Agreement, the terms of the Agreement
shall become the primary obligation of the Bank's holding
company. Nothing in this paragraph shall be deemed to bar
Executive from recovering under this Agreement from either
Bank or the Bank's holding company if the Agreement is
breached by either Bank or Bank's holding company.
(d) Headings and Titles. The headings and titles used in this
Agreement are for reference purposes only and are not a part
of this Agreement.
17. MEDIATION/ARBITRATION CLAUSE. In the event of any dispute, claim,
question, or disagreement arising from or relating to this Agreement or
the breach thereof ("Dispute"), the parties hereto shall use their best
efforts to resolve the Dispute in manner satisfactory to both parties
through consultation and negotiation with each other in good faith. If
the Dispute cannot be resolved through direct negotiations within a
period of sixty (60) days, the parties agree to attempt to settle the
Dispute in an amicable manner by mediation before resorting to
arbitration. Thereafter, any unresolved dispute shall be resolved by
arbitration. Any mediation or arbitration hereunder shall be conducted
in accordance with the Commercial Mediation Rules or the Commercial
Arbitration Rules, as appropriate, of the American Arbitration
Association ("AAA"), as in effect at the time of the mediation or
arbitration. In the event of arbitration, the final award of the
commercial Arbitration Tribunal shall be binding on the parties. Unless
the parties agree otherwise, such mediation or arbitration shall also
be conducted under the auspices of, and administered by, the AAA.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but of
which together will constitute one and the same instrument.
8
<PAGE> 9
IN WITNESS WHEREOF, the Executive and the Bank (by action of their duly
authorized officers) have executed this Agreement on the date first above
written.
MECHANICS AND FARMERS BANK
By: /s/ Benjamin S. Ruffin
---------------------------------------
Benjamin S. Ruffin, Chairman
Compensation and Management Development
Committee, at the direction of the
Board of Directors
Attest:
------------------------
EXECUTIVE:
/s/ Julia W. Taylor
-------------------------------------------
Julia W. Taylor
Attest:
------------------------
9
<PAGE> 1
Exhibit 10(b)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and Lee Johnson, a resident of Durham,
North Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some
point it may be appropriate for the Bank to participate in this
industry consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in
the employment of the Bank.
C. Given the current consolidation occurring within the financial
institutions industry, Executive desires to continue in the employment
of the Company with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment
against Executive by a court of competent jurisdiction, which
is not subject to further appeal, for the willful and
continued failure by Executive to substantially perform his or
her duties to the Bank, the Bank's policies or federal and/or
state law (other than any such failure resulting from his or
her incapacity due to physical or mental illness); which
breach of duty has materially and adversely affected the
safety and soundness of the Bank; or (B) Executive's
conviction of a felony which is not subject to further appeal.
For purposes of this definition, no act, or failure to act on
Executive's part, shall be considered "willful" unless done,
or omitted to be done, by him or her not in good faith and
without reasonable belief that his or her action or omission
is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any
person or group of persons of shares in the Bank
other than by M&F Bancorp, Inc. in connection with
the formation of the Bank's holding company or
otherwise, which, when added to any other shares the
beneficial ownership of which is held by such
acquiror(s), shall result in ownership by any
person(s) of greater than 50% of such stock or which
would require prior notification under any federal or
state banking law or regulation; or
(B) the occurrence of any merger, consolidation, exchange
or reorganization to which the Bank or, if formed,
the Bank's holding company is a party and to which
the Bank, or the Bank's holding company (or an entity
controlled thereby) is not a surviving entity, or the
sale of all or substantially all of the assets of the
Bank or the Bank's holding company.
For purposes of this definition, "person" shall be as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934.
<PAGE> 2
(c) "Coincident With" shall mean any time within nine months prior
to the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the
Bank is consummated and on the date of the consummation of the Change
in Control, Executive is employed by Bank, Bank shall pay to Executive
in a lump sum, in cash, within five days following the consummation
date of the Change in Control, a Retention Bonus of twelve (12) months
base salary.
If the lump sum payment under this Section 2, either alone or together
with other payments which Executive has the right to receive from the
Company, would constitute a "parachute payment" [as defined in Section
280G of the Internal Revenue Code of 1986, as amended, (the "Code")],
such lump sum payment shall be reduced to the largest amount as will
result in no portion of the lump sum payment under this Section 2 being
subject to the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum payment under this
Section 2, pursuant to the foregoing provision, shall be made by the
Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL.
In the event Executive's employment is terminated by action of the Bank
not for Cause Coincident With a Change in Control, the Bank shall pay
Executive within five days following the consummation date of the
Change in Control the same Retention Bonus in amount and manner
described in Section 2 above. In the event of Executive's termination
pursuant to this Section 3, Executive shall not be subject to any
non-compete or similar restrictions that exist with regard to
Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In
the event Executive voluntarily terminates his or her own employment at
any time subsequent to receipt of the Retention Bonus provided for in
paragraph 2 above, Executive agrees not to compete, directly or
indirectly, with the Bank or any successor as an employee, officer,
director, independent contractor, consultant, or shareholder of any
financial services company or any other entity providing financial
services, including but not limited to lending, securities, brokerage,
trust or insurance products or services within a sixty (60) mile radius
of the main office of the Bank, or such other office of the Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Company, for a period of 12 months
following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Bank may reasonably determine
should be withheld pursuant to any applicable law or regulation.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive
by the Bank. At all times, Executive shall remain an "At Will" employee
of the Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or
at any time thereafter, Executive shall not disclose or use (except in
the course of his or her employment hereunder) any confidential or
proprietary information or data of the Bank or any of its subsidiaries
or affiliates, including any such information with respect to a sale or
merger of the Bank, regardless of whether such information or data is
embodied in writing or other physical form.
8. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of such Change in Control by
the acquiror, then this Agreement shall be deemed valid only to the
extent that
2
<PAGE> 3
the pooling of interests accounting method can be used; provided
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
accounting method shall be supported by an opinion letter from the
acquiror's independent accounting firm or from the Securities and
Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to him or
her hereunder if she had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to his or her
devisee, legatee or other designee, or if there be no such designee, to
Executive's estate.
10. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and
authorized officers of the Bank. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the rights, duties, or obligations that Executive or the Bank
may have under any other written agreement between such parties, under
any employee pension benefit plan or Executive welfare benefit plan as
defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5)
years from the date first listed above.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
14. MEDIATION/ARBITRATION. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach
thereof ("Dispute"), the parties hereto shall use their best efforts to
resolve the Dispute in a manner satisfactory to both parties through
consultation and negotiation with each other in good faith. If the
Dispute cannot be resolved through direct negotiations within a period
of sixty (60) days, the parties agree to attempt to settle the dispute
in an amicable manner by arbitration. Any mediation or arbitration
hereunder shall be conducted in accordance with the Commercial
Mediation Rules or the Commercial Arbitration Rules, as appropriate, of
the American Arbitration Association ("AAA"), as in effect at the time
of the mediation or arbitration. In the event of arbitration, the final
award of the Commercial Arbitration Tribunal shall be binding on the
parties. Unless the parties agree otherwise, such mediation or
arbitration shall also be conducted under the auspices of, and
administered by, the AAA.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize
that each party shall have no adequate remedy at law for
breach by the other of any of the agreements contained herein,
and in the
3
<PAGE> 4
event of any such breach, the Bank and Executive hereby agree
and consent that the other shall be entitled to a decree of
specific performance, mandamus, injunction or other
appropriate remedy to enforce performance of such agreements.
(b) Non-assignability. No right, benefit or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude Executive
from designating one or more beneficiaries to receive any
amount that may be payable after his or her death, and shall
not preclude the legal representative of Executive's estate
from assigning any right hereunder to the person or persons
entitled thereto under his or her will or, in the case of
intestacy, as applicable, to his or her estate.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which
together will constitute one and the same instrument.
17. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by Registered or Certified Mail, or personally delivered to the party
entitled thereto at the address stated below or to such changed address
as the addressee may have given by similar notice:
to the Bank: Mechanics & Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
Attn: Ms. Julia W. Taylor, Chairman,
President and CEO
to Executive:
------------------------
------------------------
------------------------
Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Julia W. Taylor
-----------------------------------------------
Julia W. Taylor, Chairman, President & CEO
By: /s/ Benjamin S. Ruffin
-----------------------------------------------
Benjamin S. Ruffin, Compensation and
Management Development Committee
EXECUTIVE
/s/ Lee Johnson
--------------------------------------------------
Lee Johnson
4
<PAGE> 1
Exhibit 10(c)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and W. Donald Harrington, a resident of
Durham, North Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some
point it may be appropriate for the Bank to participate in this
industry consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in
the employment of the Bank.
C. Given the current consolidation occurring within the financial
institutions industry, Executive desires to continue in the employment
of the Company with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment
against Executive by a court of competent jurisdiction, which
is not subject to further appeal, for the willful and
continued failure by Executive to substantially perform his or
her duties to the Bank, the Bank's policies or federal and/or
state law (other than any such failure resulting from his or
her incapacity due to physical or mental illness); which
breach of duty has materially and adversely affected the
safety and soundness of the Bank; or (B) Executive's
conviction of a felony which is not subject to further appeal.
For purposes of this definition, no act, or failure to act on
Executive's part, shall be considered "willful" unless done,
or omitted to be done, by him or her not in good faith and
without reasonable belief that his or her action or omission
is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any
person or group of persons of shares in the Bank
other than by M&F Bancorp, Inc. in connection with
the formation of the Bank's holding company or
otherwise, which, when added to any other shares the
beneficial ownership of which is held by such
acquiror(s), shall result in ownership by any
person(s) of greater than 50% of such stock or which
would require prior notification under any federal or
state banking law or regulation; or
(B) the occurrence of any merger, consolidation, exchange
or reorganization to which the Bank or, if formed,
the Bank's holding company is a party and to which
the Bank, or the Bank's holding company (or an entity
controlled thereby) is not a surviving entity, or the
sale of all or substantially all of the assets of the
Bank or the Bank's holding company.
For purposes of this definition, "person" shall be as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934.
<PAGE> 2
(c) "Coincident With" shall mean any time within nine months prior
to the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the
Bank is consummated and on the date of the consummation of the Change
in Control, Executive is employed by Bank, Bank shall pay to Executive
in a lump sum, in cash, within five days following the consummation
date of the Change in Control, a Retention Bonus of twelve (12) months
base salary.
If the lump sum payment under this Section 2, either alone or together
with other payments which Executive has the right to receive from the
Company, would constitute a "parachute payment" [as defined in Section
280G of the Internal Revenue Code of 1986, as amended, (the "Code")],
such lump sum payment shall be reduced to the largest amount as will
result in no portion of the lump sum payment under this Section 2 being
subject to the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum payment under this
Section 2, pursuant to the foregoing provision, shall be made by the
Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL.
In the event Executive's employment is terminated by action of the Bank
not for Cause Coincident With a Change in Control, the Bank shall pay
Executive within five days following the consummation date of the
Change in Control the same Retention Bonus in amount and manner
described in Section 2 above. In the event of Executive's termination
pursuant to this Section 3, Executive shall not be subject to any
non-compete or similar restrictions that exist with regard to
Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In
the event Executive voluntarily terminates his or her own employment at
any time subsequent to receipt of the Retention Bonus provided for in
paragraph 2 above, Executive agrees not to compete, directly or
indirectly, with the Bank or any successor as an employee, officer,
director, independent contractor, consultant, or shareholder of any
financial services company or any other entity providing financial
services, including but not limited to lending, securities, brokerage,
trust or insurance products or services within a sixty (60) mile radius
of the main office of the Bank, or such other office of the Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Company, for a period of 12 months
following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Bank may reasonably determine
should be withheld pursuant to any applicable law or regulation.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive
by the Bank. At all times, Executive shall remain an "At Will" employee
of the Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or
at any time thereafter, Executive shall not disclose or use (except in
the course of his or her employment hereunder) any confidential or
proprietary information or data of the Bank or any of its subsidiaries
or affiliates, including any such information with respect to a sale or
merger of the Bank, regardless of whether such information or data is
embodied in writing or other physical form.
8. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of such Change in Control by
the acquiror, then this Agreement shall be deemed valid only to the
extent that
2
<PAGE> 3
the pooling of interests accounting method can be used; provided
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
accounting method shall be supported by an opinion letter from the
acquiror's independent accounting firm or from the Securities and
Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to him or
her hereunder if she had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to his or her
devisee, legatee or other designee, or if there be no such designee, to
Executive's estate.
10. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and
authorized officers of the Bank. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the rights, duties, or obligations that Executive or the Bank
may have under any other written agreement between such parties, under
any employee pension benefit plan or Executive welfare benefit plan as
defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5)
years from the date first listed above.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
14. MEDIATION/ARBITRATION. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach
thereof ("Dispute"), the parties hereto shall use their best efforts to
resolve the Dispute in a manner satisfactory to both parties through
consultation and negotiation with each other in good faith. If the
Dispute cannot be resolved through direct negotiations within a period
of sixty (60) days, the parties agree to attempt to settle the dispute
in an amicable manner by arbitration. Any mediation or arbitration
hereunder shall be conducted in accordance with the Commercial
Mediation Rules or the Commercial Arbitration Rules, as appropriate, of
the American Arbitration Association ("AAA"), as in effect at the time
of the mediation or arbitration. In the event of arbitration, the final
award of the Commercial Arbitration Tribunal shall be binding on the
parties. Unless the parties agree otherwise, such mediation or
arbitration shall also be conducted under the auspices of, and
administered by, the AAA.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize
that each party shall have no adequate remedy at law for
breach by the other of any of the agreements contained herein,
and in the
3
<PAGE> 4
event of any such breach, the Bank and Executive hereby agree
and consent that the other shall be entitled to a decree of
specific performance, mandamus, injunction or other
appropriate remedy to enforce performance of such agreements.
(b) Non-assignability. No right, benefit or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude Executive
from designating one or more beneficiaries to receive any
amount that may be payable after his or her death, and shall
not preclude the legal representative of Executive's estate
from assigning any right hereunder to the person or persons
entitled thereto under his or her will or, in the case of
intestacy, as applicable, to his or her estate.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which
together will constitute one and the same instrument.
17. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by Registered or Certified Mail, or personally delivered to the party
entitled thereto at the address stated below or to such changed address
as the addressee may have given by similar notice:
to the Bank: Mechanics & Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
Attn: Ms. Julia W. Taylor, Chairman,
President and CEO
to Executive:
------------------------
------------------------
------------------------
Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Julia W. Taylor
-----------------------------------------------
Julia W. Taylor, Chairman, President & CEO
By: /s/ Benjamin S. Ruffin
-----------------------------------------------
Benjamin S. Ruffin, Compensation and
Management Development Committee
EXECUTIVE
/s/ W. Donald Harrington
---------------------------------------------------
W. Donald Harrington
4
<PAGE> 1
Exhibit 10(d)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and Fohliette W. Becote, a resident of
Apex, North Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some
point it may be appropriate for the Bank to participate in this
industry consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in
the employment of the Bank.
C. Given the current consolidation occurring within the financial
institutions industry, Executive desires to continue in the employment
of the Company with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment
against Executive by a court of competent jurisdiction, which
is not subject to further appeal, for the willful and
continued failure by Executive to substantially perform his or
her duties to the Bank, the Bank's policies or federal and/or
state law (other than any such failure resulting from his or
her incapacity due to physical or mental illness); which
breach of duty has materially and adversely affected the
safety and soundness of the Bank; or (B) Executive's
conviction of a felony which is not subject to further appeal.
For purposes of this definition, no act, or failure to act on
Executive's part, shall be considered "willful" unless done,
or omitted to be done, by him or her not in good faith and
without reasonable belief that his or her action or omission
is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any
person or group of persons of shares in the Bank
other than by M&F Bancorp, Inc. in connection with
the formation of the Bank's holding company or
otherwise, which, when added to any other shares the
beneficial ownership of which is held by such
acquiror(s), shall result in ownership by any
person(s) of greater than 50% of such stock or which
would require prior notification under any federal or
state banking law or regulation; or
(B) the occurrence of any merger, consolidation, exchange
or reorganization to which the Bank or, if formed,
the Bank's holding company is a party and to which
the Bank, or the Bank's holding company (or an entity
controlled thereby) is not a surviving entity, or the
sale of all or substantially all of the assets of the
Bank or the Bank's holding company.
For purposes of this definition, "person" shall be as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934.
<PAGE> 2
(c) "Coincident With" shall mean any time within nine months prior
to the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the
Bank is consummated and on the date of the consummation of the Change
in Control, Executive is employed by Bank, Bank shall pay to Executive
in a lump sum, in cash, within five days following the consummation
date of the Change in Control, a Retention Bonus of twelve (12) months
base salary.
If the lump sum payment under this Section 2, either alone or together
with other payments which Executive has the right to receive from the
Company, would constitute a "parachute payment" [as defined in Section
280G of the Internal Revenue Code of 1986, as amended, (the "Code")],
such lump sum payment shall be reduced to the largest amount as will
result in no portion of the lump sum payment under this Section 2 being
subject to the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum payment under this
Section 2, pursuant to the foregoing provision, shall be made by the
Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL.
In the event Executive's employment is terminated by action of the Bank
not for Cause Coincident With a Change in Control, the Bank shall pay
Executive within five days following the consummation date of the
Change in Control the same Retention Bonus in amount and manner
described in Section 2 above. In the event of Executive's termination
pursuant to this Section 3, Executive shall not be subject to any
non-compete or similar restrictions that exist with regard to
Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In
the event Executive voluntarily terminates his or her own employment at
any time subsequent to receipt of the Retention Bonus provided for in
paragraph 2 above, Executive agrees not to compete, directly or
indirectly, with the Bank or any successor as an employee, officer,
director, independent contractor, consultant, or shareholder of any
financial services company or any other entity providing financial
services, including but not limited to lending, securities, brokerage,
trust or insurance products or services within a sixty (60) mile radius
of the main office of the Bank, or such other office of the Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Company, for a period of 12 months
following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Bank may reasonably determine
should be withheld pursuant to any applicable law or regulation.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive
by the Bank. At all times, Executive shall remain an "At Will" employee
of the Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or
at any time thereafter, Executive shall not disclose or use (except in
the course of his or her employment hereunder) any confidential or
proprietary information or data of the Bank or any of its subsidiaries
or affiliates, including any such information with respect to a sale or
merger of the Bank, regardless of whether such information or data is
embodied in writing or other physical form.
8. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of such Change in Control by
the acquiror, then this Agreement shall be deemed valid only to the
extent that
2
<PAGE> 3
the pooling of interests accounting method can be used; provided
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
accounting method shall be supported by an opinion letter from the
acquiror's independent accounting firm or from the Securities and
Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to him or
her hereunder if she had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to his or her
devisee, legatee or other designee, or if there be no such designee, to
Executive's estate.
10. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and
authorized officers of the Bank. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the rights, duties, or obligations that Executive or the Bank
may have under any other written agreement between such parties, under
any employee pension benefit plan or Executive welfare benefit plan as
defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5)
years from the date first listed above.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
14. MEDIATION/ARBITRATION. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach
thereof ("Dispute"), the parties hereto shall use their best efforts to
resolve the Dispute in a manner satisfactory to both parties through
consultation and negotiation with each other in good faith. If the
Dispute cannot be resolved through direct negotiations within a period
of sixty (60) days, the parties agree to attempt to settle the dispute
in an amicable manner by arbitration. Any mediation or arbitration
hereunder shall be conducted in accordance with the Commercial
Mediation Rules or the Commercial Arbitration Rules, as appropriate, of
the American Arbitration Association ("AAA"), as in effect at the time
of the mediation or arbitration. In the event of arbitration, the final
award of the Commercial Arbitration Tribunal shall be binding on the
parties. Unless the parties agree otherwise, such mediation or
arbitration shall also be conducted under the auspices of, and
administered by, the AAA.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize
that each party shall have no adequate remedy at law for
breach by the other of any of the agreements contained herein,
and in the
3
<PAGE> 4
event of any such breach, the Bank and Executive hereby agree
and consent that the other shall be entitled to a decree of
specific performance, mandamus, injunction or other
appropriate remedy to enforce performance of such agreements.
(b) Non-assignability. No right, benefit or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude Executive
from designating one or more beneficiaries to receive any
amount that may be payable after his or her death, and shall
not preclude the legal representative of Executive's estate
from assigning any right hereunder to the person or persons
entitled thereto under his or her will or, in the case of
intestacy, as applicable, to his or her estate.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which
together will constitute one and the same instrument.
17. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by Registered or Certified Mail, or personally delivered to the party
entitled thereto at the address stated below or to such changed address
as the addressee may have given by similar notice:
to the Bank: Mechanics & Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
Attn: Ms. Julia W. Taylor, Chairman,
President and CEO
to Executive:
------------------------
------------------------
------------------------
Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Julia W. Taylor
-----------------------------------------------
Julia W. Taylor, Chairman, President & CEO
By: /s/ Benjamin S. Ruffin
-----------------------------------------------
Benjamin S. Ruffin, Compensation and
Management Development Committee
EXECUTIVE
/s/ /s/ Fohliette W. Becote
---------------------------------------------------
Fohliette W. Becote
4
<PAGE> 1
Exhibit 10(e)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and Harold Sellers, a resident of
Durham, North Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some
point it may be appropriate for the Bank to participate in this
industry consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in
the employment of the Bank.
C. Given the current consolidation occurring within the financial
institutions industry, Executive desires to continue in the employment
of the Company with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment
against Executive by a court of competent jurisdiction, which
is not subject to further appeal, for the willful and
continued failure by Executive to substantially perform his or
her duties to the Bank, the Bank's policies or federal and/or
state law (other than any such failure resulting from his or
her incapacity due to physical or mental illness); which
breach of duty has materially and adversely affected the
safety and soundness of the Bank; or (B) Executive's
conviction of a felony which is not subject to further appeal.
For purposes of this definition, no act, or failure to act on
Executive's part, shall be considered "willful" unless done,
or omitted to be done, by him or her not in good faith and
without reasonable belief that his or her action or omission
is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any
person or group of persons of shares in the Bank
other than by M&F Bancorp, Inc. in connection with
the formation of the Bank's holding company or
otherwise, which, when added to any other shares the
beneficial ownership of which is held by such
acquiror(s), shall result in ownership by any
person(s) of greater than 50% of such stock or which
would require prior notification under any federal or
state banking law or regulation; or
(B) the occurrence of any merger, consolidation, exchange
or reorganization to which the Bank or, if formed,
the Bank's holding company is a party and to which
the Bank, or the Bank's holding company (or an entity
controlled thereby) is not a surviving entity, or the
sale of all or substantially all of the assets of the
Bank or the Bank's holding company.
For purposes of this definition, "person" shall be as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934.
<PAGE> 2
(c) "Coincident With" shall mean any time within nine months prior
to the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the
Bank is consummated and on the date of the consummation of the Change
in Control, Executive is employed by Bank, Bank shall pay to Executive
in a lump sum, in cash, within five days following the consummation
date of the Change in Control, a Retention Bonus of twelve (12) months
base salary.
If the lump sum payment under this Section 2, either alone or together
with other payments which Executive has the right to receive from the
Company, would constitute a "parachute payment" [as defined in Section
280G of the Internal Revenue Code of 1986, as amended, (the "Code")],
such lump sum payment shall be reduced to the largest amount as will
result in no portion of the lump sum payment under this Section 2 being
subject to the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum payment under this
Section 2, pursuant to the foregoing provision, shall be made by the
Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL.
In the event Executive's employment is terminated by action of the Bank
not for Cause Coincident With a Change in Control, the Bank shall pay
Executive within five days following the consummation date of the
Change in Control the same Retention Bonus in amount and manner
described in Section 2 above. In the event of Executive's termination
pursuant to this Section 3, Executive shall not be subject to any
non-compete or similar restrictions that exist with regard to
Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In
the event Executive voluntarily terminates his or her own employment at
any time subsequent to receipt of the Retention Bonus provided for in
paragraph 2 above, Executive agrees not to compete, directly or
indirectly, with the Bank or any successor as an employee, officer,
director, independent contractor, consultant, or shareholder of any
financial services company or any other entity providing financial
services, including but not limited to lending, securities, brokerage,
trust or insurance products or services within a sixty (60) mile radius
of the main office of the Bank, or such other office of the Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Company, for a period of 12 months
following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive shall
be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Bank may reasonably determine
should be withheld pursuant to any applicable law or regulation.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive
by the Bank. At all times, Executive shall remain an "At Will" employee
of the Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or
at any time thereafter, Executive shall not disclose or use (except in
the course of his or her employment hereunder) any confidential or
proprietary information or data of the Bank or any of its subsidiaries
or affiliates, including any such information with respect to a sale or
merger of the Bank, regardless of whether such information or data is
embodied in writing or other physical form.
8. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of such Change in Control by
the acquiror, then this Agreement shall be deemed valid only to the
extent that
2
<PAGE> 3
the pooling of interests accounting method can be used; provided
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
accounting method shall be supported by an opinion letter from the
acquiror's independent accounting firm or from the Securities and
Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to him or
her hereunder if she had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to his or her
devisee, legatee or other designee, or if there be no such designee, to
Executive's estate.
10. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and
authorized officers of the Bank. No waiver by any party hereto at any
time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the rights, duties, or obligations that Executive or the Bank
may have under any other written agreement between such parties, under
any employee pension benefit plan or Executive welfare benefit plan as
defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5)
years from the date first listed above.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
14. MEDIATION/ARBITRATION. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach
thereof ("Dispute"), the parties hereto shall use their best efforts to
resolve the Dispute in a manner satisfactory to both parties through
consultation and negotiation with each other in good faith. If the
Dispute cannot be resolved through direct negotiations within a period
of sixty (60) days, the parties agree to attempt to settle the dispute
in an amicable manner by arbitration. Any mediation or arbitration
hereunder shall be conducted in accordance with the Commercial
Mediation Rules or the Commercial Arbitration Rules, as appropriate, of
the American Arbitration Association ("AAA"), as in effect at the time
of the mediation or arbitration. In the event of arbitration, the final
award of the Commercial Arbitration Tribunal shall be binding on the
parties. Unless the parties agree otherwise, such mediation or
arbitration shall also be conducted under the auspices of, and
administered by, the AAA.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize
that each party shall have no adequate remedy at law for
breach by the other of any of the agreements contained herein,
and in the
3
<PAGE> 4
event of any such breach, the Bank and Executive hereby agree
and consent that the other shall be entitled to a decree of
specific performance, mandamus, injunction or other
appropriate remedy to enforce performance of such agreements.
(b) Non-assignability. No right, benefit or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude Executive
from designating one or more beneficiaries to receive any
amount that may be payable after his or her death, and shall
not preclude the legal representative of Executive's estate
from assigning any right hereunder to the person or persons
entitled thereto under his or her will or, in the case of
intestacy, as applicable, to his or her estate.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which
together will constitute one and the same instrument.
17. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by Registered or Certified Mail, or personally delivered to the party
entitled thereto at the address stated below or to such changed address
as the addressee may have given by similar notice:
to the Bank: Mechanics & Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
Attn: Ms. Julia W. Taylor, Chairman,
President and CEO
to Executive:
Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Julia W. Taylor
-----------------------------------------------
Julia W. Taylor, Chairman, President & CEO
By: /s/ Benjamin S. Ruffin
-----------------------------------------------
Benjamin S. Ruffin, Compensation and
Management Development Committee
EXECUTIVE
/s/ Harold Sellers
---------------------------------------------------
Harold Sellers
4
<PAGE> 1
Exhibit 10(f)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and E. Elaine Small, a resident of North
Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some point
it may be appropriate for the Bank to participate in this industry
consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in the
employment of the Bank.
C. Given the current consolidation occurring within the financial institutions
industry, Executive desires to continue in the employment of the Company
with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment against
Executive by a court of competent jurisdiction, which is not subject
to further appeal, for the willful and continued failure by Executive
to substantially perform his or her duties to the Bank, the Bank's
policies or federal and/or state law (other than any such failure
resulting from his or her incapacity due to physical or mental
illness); which breach of duty has materially and adversely affected
the safety and soundness of the Bank; or (B) Executive's conviction of
a felony which is not subject to further appeal. For purposes of this
definition, no act, or failure to act on Executive's part, shall be
considered "willful" unless done, or omitted to be done, by him or her
not in good faith and without reasonable belief that his or her action
or omission is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any person or group
of persons of shares in the Bank other than by M&F Bancorp, Inc.
in connection with the formation of the Bank's holding company or
otherwise, which, when added to any other shares the beneficial
ownership of which is held by such acquiror(s), shall result in
ownership by any person(s) of greater than 50% of such stock or
which would require prior notification under any federal or state
banking law or regulation; or
(B) the occurrence of any merger, consolidation, exchange or
reorganization to which the Bank or, if formed, the Bank's
holding company is a party and to which the Bank, or the Bank's
holding company (or an entity controlled thereby) is not a
surviving entity, or the sale of all or substantially all of the
assets of the Bank or the Bank's holding company.
For purposes of this definition, "person" shall be as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934.
<PAGE> 2
(c) "Coincident With" shall mean any time within nine months prior to
the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the Bank
is consummated and on the date of the consummation of the Change in
Control, Executive is employed by Bank, Bank shall pay to Executive in a
lump sum, in cash, within five days following the consummation date of the
Change in Control, a Retention Bonus of twelve (12) months base salary.
If the lump sum payment under this Section 2, either alone or together with
other payments which Executive has the right to receive from the Company,
would constitute a "parachute payment" [as defined in Section 280G of the
Internal Revenue Code of 1986, as amended, (the "Code")], such lump sum
payment shall be reduced to the largest amount as will result in no portion
of the lump sum payment under this Section 2 being subject to the excise
tax imposed by Section 4999 of the Code. The determination of any reduction
in the lump sum payment under this Section 2, pursuant to the foregoing
provision, shall be made by the Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL. In
the event Executive's employment is terminated by action of the Bank not
for Cause Coincident With a Change in Control, the Bank shall pay Executive
within five days following the consummation date of the Change in Control
the same Retention Bonus in amount and manner described in Section 2 above.
In the event of Executive's termination pursuant to this Section 3,
Executive shall not be subject to any non-compete or similar restrictions
that exist with regard to Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In the
event Executive voluntarily terminates his or her own employment at any
time subsequent to receipt of the Retention Bonus provided for in paragraph
2 above, Executive agrees not to compete, directly or indirectly, with the
Bank or any successor as an employee, officer, director, independent
contractor, consultant, or shareholder of any financial services company or
any other entity providing financial services, including but not limited to
lending, securities, brokerage, trust or insurance products or services
within a sixty (60) mile radius of the main office of the Bank, or such
other office of the Bank at which such Employee was physically located
during the majority of Employee's work tenure for the Company, for a period
of 12 months following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive shall be
subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Bank may reasonably determine should be
withheld pursuant to any applicable law or regulation.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive by
the Bank. At all times, Executive shall remain an "At Will" employee of the
Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or at
any time thereafter, Executive shall not disclose or use (except in the
course of his or her employment hereunder) any confidential or proprietary
information or data of the Bank or any of its subsidiaries or affiliates,
including any such information with respect to a sale or merger of the
Bank, regardless of whether such information or data is embodied in writing
or other physical form.
8. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing the use of the pooling of
interests accounting method by an acquiror in a Change in Control of Bank
and the use of the pooling of interests accounting method is a condition
precedent to the consummation of such Change in Control by the acquiror,
then this Agreement shall be deemed valid only to the extent that the
pooling of interests accounting method can be used; provided however, that
any determination that this Agreement would prevent, or have the effect of
preventing, the use of the pooling of interests accounting
2
<PAGE> 3
method shall be supported by an opinion letter from the acquiror's
independent accounting firm or from the Securities and Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If Executive
should die while any amount would still be payable to him or her hereunder
if she had continued to live, all such amounts shall be paid in accordance
with the terms of this Agreement to his or her devisee, legatee or other
designee, or if there be no such designee, to Executive's estate.
10. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and authorized
officers of the Bank. No waiver by any party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement; provided, however, that this Agreement shall not supersede
or in any way limit the rights, duties, or obligations that Executive or
the Bank may have under any other written agreement between such parties,
under any employee pension benefit plan or Executive welfare benefit plan
as defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5) years
from the date first listed above.
12. GOVERNING LAW. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of North
Carolina to the extent federal law does not apply.
13. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in full
force and effect.
14. MEDIATION/ARBITRATION. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach
thereof ("Dispute"), the parties hereto shall use their best efforts to
resolve the Dispute in a manner satisfactory to both parties through
consultation and negotiation with each other in good faith. If the Dispute
cannot be resolved through direct negotiations within a period of sixty
(60) days, the parties agree to attempt to settle the dispute in an
amicable manner by arbitration. Any mediation or arbitration hereunder
shall be conducted in accordance with the Commercial Mediation Rules or the
Commercial Arbitration Rules, as appropriate, of the American Arbitration
Association ("AAA"), as in effect at the time of the mediation or
arbitration. In the event of arbitration, the final award of the Commercial
Arbitration Tribunal shall be binding on the parties. Unless the parties
agree otherwise, such mediation or arbitration shall also be conducted
under the auspices of, and administered by, the AAA.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize that each
party shall have no adequate remedy at law for breach by the other of
any of the agreements contained herein, and in the event of any such
breach, the Bank and Executive hereby agree and consent that the other
shall be entitled to a decree of specific performance, mandamus,
injunction or other appropriate remedy to enforce performance of such
agreements.
3
<PAGE> 4
(b) Non-assignability. No right, benefit or interest hereunder shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or set-off in respect of any claim,
debt or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately
preceding sentence shall, to the full extent permitted by law, be
null, void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude Executive from
designating one or more beneficiaries to receive any amount that may
be payable after his or her death, and shall not preclude the legal
representative of Executive's estate from assigning any right
hereunder to the person or persons entitled thereto under his or her
will or, in the case of intestacy, as applicable, to his or her
estate.
16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but which together will
constitute one and the same instrument.
17. NOTICES. All notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be sufficiently given
if and when mailed in the continental United States by Registered or
Certified Mail, or personally delivered to the party entitled thereto at
the address stated below or to such changed address as the addressee may
have given by similar notice:
to the Bank: Mechanics & Farmers Bank
116 West Parrish Street
Durham, NC 27701-3321
Attn: Ms. Julia W. Taylor, Chairman, President and CEO
to Executive: ________________________
________________________
________________________
Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Julia W. Taylor
---------------------------------------------------
Julia W. Taylor, Chairman, President & CEO
By: /s/ Benjamin S. Ruffin
---------------------------------------------------
Benjamin S. Ruffin, Compensation and Management
Development Committee
EXECUTIVE
/s/ E. Elaine Small
---------------------------------------------------------
E. Elaine Small
4
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<PERIOD-START> JAN-01-1999
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