SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 19, 1995
CCB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 0-12358 56-1347849
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
111 Corcoran Street, Post Office Box 931, Durham, NC 27702
(Address of principal executive offices)
Registrant's telephone number, including area code (919) 683-7777
N/A
(Former name or former address, if
changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On May 22, 1995 the Registrant issued a joint press release with
Security Capital Bancorp ("Security Capital"), a $1.2 billion bank
holding company, announcing the completion of their merger. The
transaction, which has an indicated value of approximately $244 million,
was consummated through a tax-free exchange of stock accounted for as a
pooling of interests. The former offices of Security Capital's
financial institution subsidiaries will operate as offices of Central
Carolina Bank and Trust Company, the Registrant's primary banking
subsidiary.
Item 5. Other Events
As of May 18, 1995, the Registrant completed the repurchase and
retirement of shares of its common stock under its previously announced
stock repurchase program which commenced in the fourth quarter of 1994.
A total of 518,069 shares were repurchased and retired.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
The following financial statements are filed with this Report on
Form 8-K:
(i) Audited consolidated financial
statements of Security Capital Bancorp and
subsidiaries for the three years ended
December 31, 1994.
(ii) Unaudited interim consolidated balance sheets
of Security Capital Bancorp and subsidiaries as
of March 31, 1995 and December 31, 1994 and the
related unaudited interim consolidated statements
of income and cash flows for the three-month periods
ended March 31, 1995 and 1994.
(b) Pro forma financial information
The following pro forma unaudited financial statements are filed with this
Report on Form 8-K:
(i) Pro forma combined condensed balance sheet of
CCB Financial Corporation and subsidiaries as of
March 31, 1995.
(ii) Pro forma combined condensed statement of income of
CCB Financial Corporation and subsidiaries for the
three-month period ended March 31, 1995.
(iii) Pro forma combined condensed statement of income of
CCB Financial Corporation and subsidiaries for the
years ended December 31, 1994, 1993 and 1992.
(b)(iv) Pro forma combined condensed statement of income of CCB
Financial Corporation and subsidiaries for the year ended
December 31, 1993.
(v) Pro forma combined condensed statement of income of CCB
Financial Corporation and subsidiaries for the year ended
December 31, 1992.
<PAGE>
(c) Exhibits
2 Amended and Restated Agreement of Combination among CCB
Financial Corporation, Security Capital Bancorp and New
Security Capital, Inc.
3 Amended and restated articles of incorporation
10.1 Employment agreement with David B. Jordan
10.2 Employment agreement with Ralph A. Barnhardt
10.3 Employment agreement with Lloyd G. Gurley
99 Press release by CCB Financial Corporation dated
May 22, 1995
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CCB FINANCIAL CORPORATION
Registrant
Date: June 2, 1995 By: W. HAROLD PARKER, JR.
W. Harold Parker, Jr.
Senior Vice President
and Controller
<PAGE>
FINANCIAL STATEMENT INDEX
(a)(1) CONSOLIDATED FINANCIAL STATEMENTS OF SECURITY CAPITAL BANCORP:
Independent Auditors' Report F-2
Consolidated Balance Sheets as of December 31, 1994 and
1993 F-3
Consolidated Statements of Income for the Years ended
December 31, 1994, 1993 and 1992 F-4
Consolidated Statements of Stockholders' Equity for
the Years ended December 31, 1994, 1993 and 1992 F-5
Consolidated Statements of Cash Flows for the Years
ended December 31, 1994, 1993 and 1992 F-6
Notes to Consolidated Financial Statements F-7
(a)(2) INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF SECURITY CAPITAL BANCORP
(unaudited):
Consolidated Balance Sheets as of March 31, 1995
and 1994 F-24
Consolidated Statements of Income for the Three-Months
ended March 31, 1995 and 1994 F-25
Consolidated Statements of Cash Flows for the
Three-Months ended March 31, 1995 and 1994 F-26
Notes to Consolidated Financial Statements F-27
(b) PRO FORMA FINANCIAL INFORMATION OF CCB FINANCIAL CORPORATION (unaudited):
Pro Forma Combined Condensed Balance Sheet as of
March 31, 1995 F-29
Pro Forma Combined Condensed Statements of Income
for the Three-Months ended March 31, 1995 F-31
Pro Forma Combined Condensed Statements of Income
for the year ended December 31, 1994 F-32
Pro Forma Combined Condensed Statements of Income
for the year ended December 31, 1993 F-33
Pro Forma Combined Condensed Statements of Income
for the year ended December 31, 1992 F-34
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Security Capital Bancorp
Salisbury, North Carolina
We have audited the accompanying consolidated balance sheets of Security Capital
Bancorp and subsidiaries (Security Capital) as of December 31, 1994 and 1993,
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1994. These consolidated financial statements are the responsibility of
Security Capital's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Security Capital
Bancorp and subsidiaries at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
As discussed in note 3 to the consolidated financial statements, Security
Capital adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," on January 1, 1994.
KPMG Peat Marwick LLP
Charlotte, North Carolina
January 20, 1995
F-2
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
[CAPTION]
<TABLE>
<CAPTION>
ASSETS 1994 1993
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash and due from banks $ 24,374 28,102
Interest-bearing balances in other banks 17,321 5,145
Federal funds sold 6,948 3,450
Investment securities available for sale (amortized cost of $266,299 at December
31, 1994) (note 3) 256,657 --
Investment securities held to maturity (market value of $149,790 and $375,046
at December 31, 1994 and 1993, respectively) (note 4) 155,597 368,353
Loans, net of unearned income ($2,691 in 1994 and $2,698 in 1993) (note 5) 648,231 473,202
Less allowance for loan losses (note 6) 9,317 7,227
Loans, net 638,914 465,975
Loans held for sale 2,697 18,409
Premises and equipment, net (note 7) 21,713 18,360
Intangible assets 16,634 --
Other assets (note 5) 24,759 21,141
Total assets $1,165,614 928,935
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts:
Demand, noninterest-bearing 67,203 67,830
Interest-bearing 856,530 653,614
Time deposits of $100 or more 88,412 63,012
Total deposit accounts 1,012,145 784,456
Advances from the Federal Home Loan Bank (note 8) 18,576 8,000
Other borrowed money 3,276 1,764
Other liabilities 11,857 10,495
Total liabilities 1,045,854 804,715
Stockholders' equity (notes 10, 12, and 13):
Preferred stock, no par value, 5,000,000 shares authorized;
none issued and outstanding -- --
Common stock, no par value, 25,000,000 shares authorized; 11,775,867 and
11,682,837 shares issued and outstanding at December 31, 1994 and 1993,
respectively 51,610 51,167
Retained earnings, substantially restricted 74,522 73,053
Unrealized loss on investment securities available for sale (note 3) (6,372) --
Total stockholders' equity 119,760 124,220
Commitments and contingencies (notes 11 and 14)
Total liabilities and stockholders' equity $1,165,614 928,935
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
[CAPTION]
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Interest income:
Loans $43,951 41,195 48,277
Investment securities
Taxable 21,280 21,299 21,165
Nontaxable 858 955 1,137
Other 1,447 774 1,274
Total interest income 67,536 64,223 71,853
Interest expense:
Deposit accounts 28,363 27,255 33,695
Borrowings 960 880 1,434
Total interest expense 29,323 28,135 35,129
Net interest income 38,213 36,088 36,724
Provision for loan losses (note 6) 359 653 1,848
Net interest income after provision for loan losses 37,854 35,435 34,876
Other income:
Loan servicing and other loan fees 1,485 1,396 1,351
Deposit and other service charge income 4,431 4,976 5,255
Brokerage commissions 1,653 1,404 993
Gain on sales of loans 190 1,384 738
Investment securities available for sale losses, net (note 3) (70) -- --
Investment securities held to maturity gains, net (note 4) -- 310 8
Other 667 1,049 603
Total other income 8,356 10,519 8,948
Other expense:
Personnel (notes 11 and 13) 14,768 13,314 14,536
Net occupancy 3,942 3,390 3,488
Telephone, postage, and supplies 1,820 1,564 1,579
Federal and other insurance premiums 2,230 1,832 2,026
Data processing fees 913 746 801
Professional and other services 1,029 793 1,683
Other 2,998 2,203 3,427
Total other expense 27,700 23,842 27,540
Income before income taxes 18,510 22,112 16,284
Income taxes (note 9) 11,876 7,273 6,323
Net income $ 6,634 14,839 9,961
Net income per share $ .57 1.26 .84
Weighted average shares outstanding 11,738,083 11,771,739 11,832,570
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
Unrealized
Gain
(Loss) on
Investment
Securities Total
Common Retained Obligations Available Stockholders'
Stock Earnings of ESOP for Sale Equity
<S> <C> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $54,471 56,559 (885) -- 110,145
Proceeds from stock options exercised
(note 12) 158 -- -- -- 158
Repayment of ESOP debt (note 13) -- -- 376 -- 376
Retirement of unallocated ESOP shares
(note 13) (509) -- 509 -- --
Dividends paid to stockholders
($.31 per share) -- (3,712) -- -- (3,712)
Net income -- 9,961 -- -- 9,961
Balance at December 31, 1992 54,120 62,808 -- -- 116,928
Proceeds from stock options exercised
(note 12) 606 -- -- -- 606
Retirement of common stock (3,559) -- -- -- (3,559)
Dividends paid to stockholders
($.39 per share) -- (4,594) -- -- (4,594)
Net income -- 14,839 -- -- 14,839
Balance at December 31, 1993 51,167 73,053 -- -- 124,220
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -- -- -- 4,036 4,036
PROCEEDS FROM OPTIONS EXERCISED (NOTE 12) 443 -- -- -- 443
DIVIDENDS PAID TO STOCKHOLDERS
($.44 PER SHARE) -- (5,165) -- -- (5,165)
CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AVAILABLE FOR
SALE -- -- -- (10,408) (10,408)
NET INCOME -- 6,634 -- -- 6,634
BALANCE AT DECEMBER 31, 1994 $51,610 74,522 -- (6,372) 119,760
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
[CAPTION]
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,634 14,839 9,961
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 359 653 1,848
Depreciation 1,991 1,456 1,422
Securities (gains) losses, net 70 (310) (8)
Amortization of securities, premiums and discounts, net 2,367 2,325 1,151
Amortization of intangible assets 227 -- --
Change in loans held for sale, net 15,712 (16,145) 1,478
Decrease (increase) in other assets 10,661 (270) 1,718
(Decrease) increase in other liabilities (3,964) 553 593
Net cash provided by operating activities 34,057 3,101 18,163
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 91,623 -- --
Proceeds from sale of investment securities available for sale 71,430 -- 1,991
Purchases of investment securities available for sale (41,410) -- --
Proceeds from maturities and issuer calls of investment securities
held to maturity 4,061 90,299 71,874
Proceeds from sales of investment securities held to maturity -- -- 11
Purchases of investment securities held to maturity (111,811) (122,063) (125,892)
(Increase) decrease in loans (42,349) 34,910 39,532
Capital expenditures for premises and equipment (2,131) (2,713) (1,313)
Proceeds from sale of Federal Home Loan Bank Stock 5,735 -- --
Purchase of First Federal, net of cash acquired 31,182 -- --
Net cash provided by (used in) investing activities 6,330 433 (13,797)
Cash flows from financing activities:
(Decrease) increase in deposits (23,383) 10,821 (1,505)
Proceeds from FHLB advances 12,451 14,740 8,000
Repayment of FHLB advances (14,299) (19,240) (15,000)
Increase in other borrowed money, net 1,512 1,058 68
Purchase and retirement of common stock, net -- (3,559) (509)
Dividends paid to stockholders (5,165) (4,594) (3,712)
Proceeds from stock options exercised 443 606 158
Purchase of ESOP stock -- -- 885
Net cash used in financing activities (28,441) (168) (11,615)
Net increase (decrease) in cash and cash equivalents 11,946 3,366 (7,249)
Cash and cash equivalents at beginning of year 36,697 33,331 40,580
Cash and cash equivalents at end of year $ 48,643 36,697 33,331
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 28,941 27,962 35,812
Income taxes 6,959 7,286 7,064
Supplemental schedule of noncash investing activities:
Loans receivable transferred to real estate owned $ 1,123 1,982 1,009
Investment securities held to maturity transferred to investment
securities available for sale 329,799 -- --
Effect of change in accounting principle (net of tax effect of
$2,039) 4,036 -- --
Decrease in unrealized gain on investment securities available for
sale (net of tax effect of $5,309) (10,408) -- --
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a description of the more significant accounting and
reporting policies which Security Capital Bancorp and subsidiaries
("Security Capital") follow in preparing and presenting their consolidated
financial statements:
(a) PRINCIPLES OF CONSOLIDATION AND REPORTING
The accompanying consolidated financial statements include the accounts of
Security Capital Bancorp, a North Carolina corporation organized as a
multi-bank holding company and its wholly owned subsidiaries, Security
Capital Bank, formerly Security Bank and Trust Company, Salisbury, North
Carolina ("Security Bank"), OMNIBANK, Inc., A State Savings Bank,
Salisbury, North Carolina ("OMNIBANK"), Citizens Savings, Inc., SSB,
Concord, North Carolina ("Citizens"), Home Savings Bank, Inc., SSB, Kings
Mountain, North Carolina ("Home Savings"), and Estates Development
Corporation, Salisbury, North Carolina ("EDC"). All significant
intercompany balances have been eliminated.
Certain amounts have been reclassified to conform with the statement
presentation for 1994. The reclassifications have no effect on
stockholders' equity or net income as previously reported.
All dollar amounts except share and per share amounts in the notes to the
consolidated financial statements are in thousands.
(b) SECURITIES
As more fully described in note 3 to the consolidated financial statements,
Security Capital adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," on January 1, 1994.
The classification of securities is determined at the date of purchase.
Investment securities available for sale are recorded at market value with
a corresponding adjustment net of tax recorded as a component of
stockholders' equity. Security Capital intends to hold these securities for
an indefinite period of time but may sell them prior to maturity.
Investment securities held to maturity are stated at cost, adjusted for
amortization of premiums and accretion of discounts. Security Capital
intends and has the ability to hold such securities until maturity.
Gains and losses on sales of securities are recognized when realized, with
cost being determined by the specific identification method. Premiums and
discounts are amortized into interest income using a level yield method.
Regulations require the savings bank subsidiaries (i.e. OMNIBANK, Citizens,
and Home Savings) to maintain cash and approved securities in an amount
equal to a prescribed percentage (10% at December 31, 1994) of total
assets.
(c) LOANS HELD FOR SALE
Loans held for sale are carried at the lower of aggregate cost or market as
determined by the outstanding commitments from investors or current
investor yield requirements calculated on the aggregate loan basis. Gains
or losses resulting from sales of loans are recognized when the proceeds
are received from the investors.
(d) LOAN INTEREST INCOME
Loan interest income is recognized on the accrual basis.
The accrual of interest is generally discontinued on all loans that become
90 days past due as to principal or interest unless collection of both
principal and interest is assured by way of both collateralization,
guarantees, or other security, and the loan is in the process of
collection. Security Capital provides an allowance for uncollected accrued
interest income if, in the opinion of management, collectibility of that
accrued interest income is doubtful. This allowance is netted against
accrued interest income, which is included in other assets in the
accompanying consolidated financial statements. Interest income foregone on
nonaccrual and restructured loans for each of the years in the three-year
period ended December 31, 1994 was not significant.
F-7
<PAGE>
(e) ALLOWANCE FOR LOAN LOSSES
Security Capital provides for loan losses on the allowance method.
Accordingly, all loan losses are charged to the related allowance and all
recoveries are credited to it. Additions to the allowance for loan losses
are provided by charges to operations based on various factors that, in
management's judgment, deserve current recognition in estimating losses
inherent in the portfolio. Such factors considered by management include
the market value of the underlying collateral, growth and composition of
the loan portfolio, the relationship of the allowance for loan losses to
outstanding loans, delinquency trends and economic conditions. Management
evaluates the carrying value of loans periodically and the allowance is
adjusted accordingly. While management uses the best information available
to make evaluations, future adjustments may be necessary if economic and
other conditions differ substantially from the assumptions used.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses.
Such regulatory agencies may require the financial institution subsidiaries
to recognize additions to the allowance for loan losses based on their
judgments about information available to them at the time of their
examination.
(f) REAL ESTATE OWNED
Real estate owned is included in other assets and represent other real
estate that has been acquired through loan foreclosures or deed received in
lieu of foreclosure. Such properties are generally appraised annually and
are recorded at the lower of cost or fair value, less applicable selling
costs. Costs relating to the development and improvement of property are
capitalized, whereas those relating to holding the property are charged to
expense.
(g) PREMISES AND EQUIPMENT
Premises and equipment are recorded at cost, and depreciation is provided
over the estimated useful lives of the related assets principally on a
straight-line basis. Estimated lives are ten to fifty years for buildings,
building components and improvements; five to ten years for furniture,
fixtures, and equipment; and three years for automobiles. Leasehold
improvements are amortized on a straight-line basis over the lesser of
their estimated life or the remaining lease term.
Maintenance and repairs are charged to expense as incurred and improvements
are capitalized. The costs and accumulated depreciation relating to
premises and equipment retired or otherwise disposed of are eliminated from
the accounts and any resulting gains or losses are credited or charged to
income.
(h) INTANGIBLE ASSETS
Goodwill is being amortized on a straight-line basis over a 20-year period.
Deposit base premiums and mortgage servicing rights are being amortized
over 10 years using the sum-of-the-years digits method.
(i) LOAN ORIGINATION FEES AND COSTS
Loan origination fees and certain direct loan origination costs are
deferred and amortized over the contractual life of the related loan as an
adjustment of the loan yield using a level yield method. Direct costs of
unsuccessful loans and indirect costs are expensed as incurred.
(j) INCOME TAXES
Security Capital adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("Standard No.
109") during 1993 and has applied the provisions of the statement without
restating prior years' financial statements. Prior to the adoption of
Standard No. 109, Security Capital accounted for income taxes using the
deferred method required by APB Opinion 11. Standard No. 109 has changed
Security Capital's method of accounting for income taxes from the
deferred method to the asset and liability method. The objective of the
asset and liability method is to establish deferred tax assets and
liabilities for the temporary differences between the financial reporting
basis and the tax basis of Security Capital's assets and liabilities at
enacted rates expected to be in effect when such amounts are realized or
settled. Deferred tax assets are reduced, if necessary, by the amount of
such benefits that are not expected to be realized based upon available
evidence.
The cumulative effect of adopting Standard No. 109 as of January 1, 1993
was not material, and therefore no cumulative effect was presented in the
consolidated statement of income for the year ended December 31, 1993.
F-8
<PAGE>
Pursuant to the deferred method under APB Opinion 11, which applied in 1992
and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year
of the calculation. Under the deferred method, deferred taxes are not
adjusted for subsequent changes in tax rates.
(k) NET INCOME AND DIVIDENDS PER SHARE
Net income per share has been computed by dividing net income by the
weighted average number of shares outstanding, as adjusted retroactively
for stock splits and stock dividends. Due to the pooling-of-interests
merger in 1992, as discussed in note 2, dividends per share for 1992 was
computed by dividing dividends paid by the weighted average number of
shares outstanding, as adjusted retroactively for stock splits and stock
dividends.
(l) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and due from banks, interest-bearing
balances in other banks, and federal funds sold. Generally, cash and cash
equivalents are considered to have maturities of three months or less.
(m) FAIR VALUE OF FINANCIAL INSTRUMENTS
In December 1991 the FASB issued Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Value of Financial Instruments"
("Statement No. 107"). Statement No. 107 requires disclosures about the
fair value of all financial instruments. Fair value estimates, methods, and
assumptions are set forth in note 17.
(n) POSTRETIREMENT BENEFITS
The FASB issued Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
(Statement No. 106), which requires during an employee's active years of
service, accrual of expected costs of providing postretirement benefits,
principally health care and life insurance, to employees and their
beneficiaries and dependents. Statement No. 106 was effective for 1993, but
there was no material impact on Security Capital's consolidated financial
statements since Security Capital generally does not provide such benefits.
(2) ACQUISITIONS AND PENDING MERGER
Effective September 23, 1994, Security Capital purchased the outstanding
stock of First Federal Savings & Loan Association of Charlotte ("First
Federal") from Fairfield Communities, Inc. for approximately $41,000,000 in
cash. The acquisition is being accounted for by the purchase method.
Concurrent with the purchase, First Federal was merged into Security Bank.
Immediately prior to the acquisition, First Federal had assets of
$302,163,000, net loans of $135,819,000, deposits of $250,929,000,
stockholders' equity of $29,434,000, and net income for the period from
January 1, 1994, through September 23, 1994, of $855,000. As a result of
the acquisition, goodwill, deposit base premium, and mortgage servicing
rights were increased by $12,597,000, $3,222,000, and $1,042,000,
respectively. These amounts are being amortized on a straight-line basis
over 20 years for goodwill and over 10 years using the sum-of-the-years
digits method for deposit base premium and mortgage servicing rights.
The information below indicates, on a pro forma basis, amounts as if First
Federal had been purchased as of the beginning of each period presented.
[CAPTION]
<TABLE>
<CAPTION>
Years Ended December 31,
<S> <C> <C>
1994 1993
<S> <C> <C>
<CAPTION>
(DOLLARS IN
THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net interest income $42,067 $39,447
Net income $ 4,754 $11,776
Net income per share $ 0.40 $ 1.00
</TABLE>
During the second quarter of 1994, Security Capital completed the purchase
of First Citizens Bank and Trust Co.'s ("First Citizens") Bessemer City
office and the sale of Home Savings' Gastonia office to First Citizens.
With the transaction, Home Savings assumed approximately $2,700 in deposits
in Bessemer City and First Citizens assumed approximately $6,400 in
deposits in Gastonia.
F-9
<PAGE>
On June 30, 1992, Omni Capital Group, Inc. ("Omni"), a multiple thrift
holding company incorporated under the laws of the State of North Carolina
and the former parent of OMNIBANK, Citizens, Home Savings, and EDC, merged
with and into First Security Financial Corporation ("FSFC"), a bank holding
company incorporated under the laws of the State of North Carolina and the
parent of Security Bank (the "Merger"). Upon the completion of the Merger,
FSFC's name was changed to "Security Capital Bancorp". Pursuant to the
Agreement of Combination and the related Plan of Merger, which were
approved by the stockholders of both FSFC and Omni, 5,681,216 shares of
Security Capital common stock, no par value per share, were issued in
exchange for the surrender of the issued and outstanding shares of common
stock of Omni, par value of $1.00 per share, at an exchange ratio of 2.25
shares of Security Capital common stock for each such share of Omni common
stock. The Merger was accounted for as a pooling-of-interests and,
accordingly, the consolidated financial statements for periods prior to the
Merger were restated to combine the accounts of FSFC and Omni.
On November 4, 1994, Security Capital and CCB Financial Corporation,
Durham, North Carolina ("CCB"), entered into a definitive Agreement of
Combination pursuant to which Security Capital will merge with and into
CCB, with CCB as the surviving corporation and continuing to operate under
its present name (the "Combination"). To effect the Combination, CCB will
issue .50 of a share of its common stock, par value $5.00 per share, in
exchange for each outstanding share of Security Capital's common stock, no
par value. In connection with the Combination, Security Capital's banking
subsidiaries will merge into Central Carolina Bank and Trust Company, a
subsidiary of CCB. The Combination is expected to be completed during the
second quarter of 1995.
(3) INVESTMENT SECURITIES AVAILABLE FOR SALE
A summary of investment securities available for sale follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
(Dollars in Thousands)
U.S. Government obligations $ 194,612 134 (6,106) 188,640
U.S. Government agency obligations 70,661 18 (3,688) 66,991
Mortgage-backed Securities 960 10 (43) 927
Other 66 33 -- 99
$ 266,299 195 (9,837) 256,657
</TABLE>
Total proceeds from sales or issuer calls of investment securities available
for sale during 1994 were $71,430. There were gross gains of $6 and gross
losses of $76 realized in 1994. Investment securities available for sale
with an aggregate par value of $1,075 were pledged to secure public deposits
and for other purposes as required by various agencies.
The Financial Accounting Standards Board (FASB) has issued Standard No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," that
requires debt and equity securities held: (i) to maturity be classified as
such and reported at amortized cost; (ii) for current resale be classified
as trading securities and reported at fair value, with unrealized gains and
losses included in current earnings; and (iii) for any other purpose be
classified as securities available for sale and reported at fair value, with
unrealized gains and losses excluded from current earnings and reported as a
separate component of stockholders' equity.
On January 1, 1994, Security Capital adopted the provisions of Standard No.
115 and classified approximately $329,799 of securities as investment
securities available for sale. Security Capital recorded a fair value
adjustment for this change in accounting principle amounting to $6,075 for
the unrealized gain on investment securities available for sale, an increase
to deferred income taxes of $2,039, and an increase to stockholders' equity
of $4,036.
At December 31, 1994, Security Capital recorded a fair value adjustment
amounting to ($15,717) for the change in unrealized gain (loss) on
investment securities available for sale during the year, a deferred tax
benefit of $5,309, and a decrease to stockholders' equity of $10,408.
F-10
<PAGE>
(4) INVESTMENT SECURITIES HELD TO MATURITY
A comparative summary of investment securities held to maturity follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
U.S. Government obligations $ 54,328 -- (1,953) 52,375
U.S. Government agency obligations 76,931 -- (3,412) 73,519
Mortgage-backed securities 8,659 6 (301) 8,364
State and municipal obligations 15,679 180 (327) 15,532
$ 155,597 186 (5,993) 149,790
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Government obligations $ 305,180 5,762 183 310,759
US Government agency obligations 40,409 304 345 40,368
Mortgage-backed securities 12,676 459 -- 13,135
State and municipal obligations 10,022 676 -- 10,698
Other 66 20 -- 86
$ 368,353 7,221 528 375,046
</TABLE>
There were no sales or issuer calls of investment securities held to
maturity during 1994. Total proceeds from sales or issuer calls of
investment securities held to maturity during 1993 and 1992 were $5,860, and
$11, respectively. There were gross realized gains of $310 and $8,
respectively, and no gross realized losses in 1993 and 1992, respectively.
Investment securities held to maturity with an aggregate par value of
$18,050 were pledged to secure public deposits and for other purposes as
required by various agencies.
(5) LOANS RECEIVABLE
A comparative summary of loans receivable follows:
[CAPTION]
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
1994 1993
<S> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Real estate mortgage (principally single family dwellings, 1-4 units) $447,452 338,562
Real estate construction 14,396 10,085
Commercial, financial, and agricultural 126,291 64,739
Installment 62,681 62,341
Unearned income (2,691) (2,698)
Premium on loans sold 102 173
$648,231 473,202
Nonaccrual and restructured loans included above $ 1,903 1,759
</TABLE>
Accruing loans past due 90 days were $2,402 and $420 at December 31, 1994
and 1993, respectively.
Accrued interest receivable at December 31, 1994 and 1993, consisted of the
following:
[CAPTION]
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
1994 1993
<S> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Loans $ 5,512 3,430
Investment securities 6,879 6,041
Other 94 70
$12,485 9,541
</TABLE>
Certain real estate loans are pledged as collateral for advances from the
Federal Home Loan Bank ("FHLB") as set forth in note 8.
F-11
<PAGE>
Loans serviced for others approximated $314,692, $203,403 and $174,884 at
December 31, 1994, 1993, and 1992, respectively.
Included in other assets are foreclosed properties (real estate owned) of
$1,704 and $951 at December 31, 1994 and 1993, respectively.
Security Capital's banking subsidiaries offer mortgage and consumer loans to
their officers, directors, and employees for the financing of their personal
residences and for other personal purposes. These loans are made in the
ordinary course of business and management believes they are made on
substantially the same terms, including interest rates and collateral,
prevailing at the time for comparable transactions with unaffiliated
persons. Management does not believe these loans involve more than the
normal risk of collectibility or present other unfavorable features.
The following is a reconciliation of loans outstanding in excess of $60 to
Security Capital's executive officers, directors, and their immediate
families for the year ended December 31, 1994:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Balance at December 31, 1993 $3,172
New loans 120
Repayments (1,219)
Balance at December 31, 1994 $2,073
</TABLE>
The FASB has issued Standard No. 114, "Accounting by Creditors for
Impairment of a Loan," which requires that all creditors value all
specifically reviewed loans for which it is probable that the creditor will
be unable to collect all amounts due according to the terms of the loan
agreement at either the present value of expected cash flows discounted at
the loan's effective interest rate, or if more practical, the market price
or value of collateral. This Standard is required to be implemented
prospectively for fiscal years beginning after December 15, 1994. The FASB
has also issued Standard No. 118 "Accounting by Creditors for Impairment of
a Loan-Income Recognition and Disclosures", that amends Standard No. 114 to
allow a creditor to use existing methods for recognizing interest income on
an impaired loan and by requiring additional disclosures about how a
creditor recognizes interest income related to impaired loans. This Standard
is to be implemented concurrently with Standard No. 114. At this time,
management does not anticipate a material impact to the consolidated
financial statements of Security Capital upon the adoption of these
Standards.
(6) ALLOWANCE FOR LOAN LOSSES
The following is a reconciliation of the allowance for loan losses for the
years ended December 31, 1994, 1993 and 1992:
[CAPTION]
<TABLE>
<CAPTION>
Years Ended December 31,
<S> <C> <C> <C>
1994 1993 1992
<S> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year $7,227 6,909 5,429
Charge-offs (581) (732) (1,024)
Recoveries 258 397 656
Net charge-offs (323) (335) (368)
Allowance of acquired institution 2,054 -- --
Provision for loan losses 359 653 1,848
Balance at end of year $9,317 7,227 6,909
</TABLE>
F-12
<PAGE>
(7) PREMISES AND EQUIPMENT
A comparative summary of premises and equipment follows:
[CAPTION]
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
1994 1993
<S> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land and land improvements $ 4,863 3,917
Office buildings and improvements 16,986 16,175
Furniture, fixtures, and equipment 14,788 11,910
Construction in progress 193 1,120
36,830 33,122
Accumulated depreciation (15,117) (14,762)
Premises and equipment, net $ 21,713 18,360
</TABLE>
(8) ADVANCES FROM THE FEDERAL HOME LOAN BANK
A comparative summary of advances from the FHLB follows:
[CAPTION]
<TABLE>
<CAPTION>
December 31,
<S> <C> <C> <C>
Date Due Interest Rate 1994 1993
<S> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
March 10, 1994 9.55% $ -- 1,000
March 31, 1995, variable rate 6.88 2,130 --
December 24, 1995 (Face amount of $1,000) 5.52 989 --
March 10, 1996 9.65 1,000 1,000
April 2, 1996 (Face amount of $2,000) 4.80 1,949 --
April 16, 1996 (Face amount of $1,000) 4.61 971 --
April 23, 1996 8.50 2,000 2,000
May 21, 1996 8.20 1,000 1,000
June 1, 1996 (Face amount of $1,500) 4.93 1,459 --
July 1, 1996 9.25 1,000 1,000
July 2, 1996 9.05 1,000 1,000
December 24, 1996 (Face amount of $1,000) 6.07 981 --
March 10, 1997 8.15 1,000 1,000
April 2, 1997 (Face amount of $3,000) 5.26 2,880 --
June 9, 2012 (Face amount of $330) 5.69 217 --
$18,576 8,000
</TABLE>
At December 31, 1994, stock owned by Security Bank and OMNIBANK in the FHLB,
totaling $2,890, certain securities and mortgage loans were pledged to
secure these advances.
F-13
<PAGE>
(9) INCOME TAXES
As discussed in the Summary of Significant Accounting Policies, Security
Capital adopted Standard No. 109 as of January 1, 1993. The cumulative
effect of this change in accounting for income taxes of $388 as of January
1, 1993 is reflected in the 1993 financial statements as a reduction of
income tax expense. Financial statements for the periods prior to 1993 have
not been restated to apply the provisions of Standard No. 109.
Income tax expense (benefit) for the years ended December 31, 1994, 1993,
and 1992, was as follows:
<TABLE>
<CAPTION>
Current Deferred Total
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
1994:
FEDERAL $6,824 4,010 10,834
STATE 506 536 1,042
$7,330 4,546 11,876
1993:
Federal 7,019 (132) 6,887
State 403 (17) 386
$7,422 (149) 7,273
1992:
Federal 6,745 (839) 5,906
State 417 -- 417
$7,162 (839) 6,323
</TABLE>
The income tax expense of Security Capital for the years ended December 31,
1994, 1993, and 1992, was different from the amount computed by applying the
federal income tax rate to income before income taxes because of the
following:
[CAPTION]
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at federal rate $6,479 35.0% $7,739 35.0% $5,537 34.0%
Increase (decrease) in income taxes
resulting from:
Adjustment to deferred tax assets and
liabilities for enacted changes in tax
laws and rates -- -- (48) (.2) -- --
Change in beginning-of-the-year deferred
tax assets valuation allowance (92) (.5) (46) (.2) -- --
Tax-exempt interest (247) (1.3) (301) (1.3) (361) (2.2)
Thrift bad debt provision for financial
reporting purposes in excess of current
year loan losses -- -- -- -- 504 3.1
Thrift bad debt reserve recapture 4,906 26.5 -- -- -- --
State income tax expense, net of federal
income tax benefit 677 3.7 251 1.1 275 1.7
Other, net 153 .8 (322) (1.5) 368 2.2
$11,876 64.2% $7,273 32.9% $6,323 38.8%
</TABLE>
For the year ended December 31, 1992, deferred income tax benefits resulted
from timing differences in the period in which revenues and expenses were
recognized for income tax and financial statement purposes. The sources of
these differences and the tax effects of each are presented below:
[CAPTION]
<TABLE>
<CAPTION>
1992
<S> <C>
(DOLLARS
IN
THOUSANDS)
<S> <C>
Deferred compensation $ (327)
Accrued expenses, not deductible until paid (258)
Other, net (254)
$ (839)
</TABLE>
F-14
<PAGE>
The sources and tax effects of temporary differences that give rise to
significant portions of the deferred tax liabilities (assets) at December
31, 1994 and 1993, are presented below:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
(Dollars in Thousands)
Deferred tax liabilities:
Depreciation $ 925 987
FHLB Stock -- book basis greater than tax basis 881 869
Prepaid FDIC premium 502 --
Prepaid pension expense 231 232
Bank bad debt recapture 116 204
FHLMC discount accretion 151 207
Thrift bad debt reserve recapture 5,627 --
Other 97 98
Total gross deferred tax liabilities 8,530 2,597
Deferred tax assets:
Unrealized loss on investment securities available for sale (3,886) --
Provision for loan losses, net (2,934) (1,687)
Net deferred loan fees (522) (603)
Accrued expenses, deductible when paid (1,902) (1,711)
Intangible assets tax basis greater than book basis (39) --
Other (197) (298)
Total gross deferred tax assets (9,480) (4,299)
Deferred tax assets valuation allowance 725 201
Net deferred tax asset $ (225) (1,501)
</TABLE>
A portion of the change in the net deferred tax asset relates to unrealized
losses on investment securities available for sale. The related current
period deferred tax benefit of $3,270, net of a charge of $616 to the
valuation allowance, has been recorded directly to stockholders' equity. The
balance of the change in the net deferred tax asset results from the current
period deferred tax expense of $4,546.
The realization of net deferred tax assets may be based on utilization of
carrybacks to prior taxable periods, anticipation of future taxable income
in certain periods, and the utilization of tax planning strategies.
Management has determined that it is more likely than not that the net
deferred tax asset can be supported by carrybacks to federal taxable income
and by expected future taxable income which will far exceed amounts
necessary to fully realize remaining deferred tax assets resulting from the
scheduling of temporary differences. The valuation allowance primarily
relates to certain state temporary differences. At January 1, 1993, the
valuation allowance was $247. The change in the valuation allowance during
1994 and 1993 was a net increase (decrease) of $524 and $(46), respectively.
Under the Internal Revenue Code of 1986, Security Capital's savings bank
subsidiaries are allowed a special bad debt deduction related to additions
to tax bad debt reserves established for the purpose of absorbing losses. A
reduction of such reserves for purposes other than bad debt losses will
create income for tax purposes only, which will be subject to the then
current corporate income tax rates. Under the provisions of APB Opinion 23,
a deferred tax liability is not currently recognized for temporary
differences resulting from a savings bank's base year tax bad debt reserve.
At December 31, 1993, the potential deferred tax liability related to the
recapture of this portion of the tax bad debt reserve was approximately
$5,600. As a result of the savings bank subsidiaries change in tax
accounting method to the specific charge-off method for bad debts during
1994, Security Capital has recorded an additional federal and state income
tax expense in 1994 of $5,600 to fully recapture prior amounts. At December
31, 1994, there are no remaining amounts included in retained earnings for
which a provision for federal or state income tax has not been made.
In 1994, the Internal Revenue Service examination of Security Capital's 1992
federal income tax return was settled with no material impact on Security
Capital's financial position or results of operations. Income tax returns
subsequent to 1992 are subject to examination by the taxing authorities.
F-15
<PAGE>
(10) STOCKHOLDERS' EQUITY
At the time of their conversions to stock ownership, liquidation accounts
were established for each of Security Capital's savings bank subsidiaries
in amounts equal to their respective regulatory capital. Each eligible
deposit account holder, as described in the respective plans of
conversion, is entitled to a proportionate share of this account in the
event of a complete liquidation of any of these subsidiaries, and only in
such event. This share will be reduced if the account holder's balance in
the related deposit account falls below the amount in such account on the
date(s) of record, and will cease to exist if the account is closed. The
liquidation accounts will never be increased despite any increase after
the conversions in the related balance of an account holder.
Security Capital and its banking subsidiaries must comply with certain
regulatory capital requirements established by the FRB and the FDIC. At
December 31, 1994, these standards required Security Capital and its
banking subsidiaries to maintain minimum ratios of Tier 1 capital (as
defined) to total risk-weighted assets and total capital (as defined) to
risk-weighted assets of 4.00% and 8.00%, respectively, and a minimum ratio
of Tier 1 capital to total assets (as defined) of 3.00% to 5.00%,
depending upon the specific institution's composite ratings as determined
by its regulators. At December 31, 1994, Security Capital and its banking
subsidiaries were in compliance with all of the aforementioned capital
requirements.
Security Capital also has authorized 5,000,000 shares of no par value
preferred stock, none of which is issued and outstanding at December 31,
1994.
(11) PENSION, PROFIT SHARING, AND INCENTIVE COMPENSATION PLANS
Security Capital had a profit sharing plan (the "Profit Sharing Plan")
covering certain of Security Bank's employees. In 1993 Security Capital
merged the Profit Sharing Plan into an Employees' Incentive Profit Sharing
and Savings (401k) Plan (the "Incentive Plan") for the benefit of the
eligible employees of Security Capital and its subsidiaries. As a result,
Security Capital made contributions to the Incentive Plan in 1993 rather
than to the Profit Sharing Plan. Contributions to the Incentive Plan are
based on a percentage of Security Capital's profits, as computed by a
formula set by the Board of Directors. The maximum allowable contribution
is 15% of the participating employee's compensation. Profit sharing costs
charged to expense approximated $360 in 1994, $694 in 1993, and $329 in
1992.
Security Bank sponsored a noncontributory defined benefit plan which
covered substantially all the employees of Security Bank and Security
Capital sponsored a noncontributory defined benefit plan for the benefit
of the employees of the savings bank subsidiaries (the "Plans"). The
Plans were merged into one defined benefit pension plan covering all
eligible employees of Security Capital and its subsidiaries as of January
1, 1993. Benefits for the Plan are based on years of service and the
employee's annual compensation during his or her term of employment.
Security Capital's funding policy is to contribute annually to the Plan
the maximum amount that can be deducted for federal income tax purposes.
Contributions are intended to provide for benefits attributed to service
to date but also for those expected to be earned in the future.
The following table sets forth the Plans' funded status and amounts
recognized in the consolidated balance sheets at December 31, 1994 and
1993.
[CAPTION]
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Plans' assets at fair value, primarily short-term investments and U.S.
Treasury securities $ 7,660 7,028
Actuarial present value of projected benefit obligation for service rendered
to date 7,921 9,503
Plans' assets less than projected benefit obligation (261) (2,475)
Unrecognized net transition asset being recognized over 18 years (443) (487)
Unrecognized net (gain) loss (349) 1,693
Unrecognized prior service cost 1,490 1,628
Prepaid pension cost included in other assets $ 437 359
</TABLE>
F-16
<PAGE>
The actuarial present value of the accumulated benefit obligation amounted
to $6,095 in 1994 and $6,341 in 1993, including vested benefits of $5,924 in
1994 and $6,135 in 1993.
Net periodic pension cost for the Plans for the three years ended December
31, 1994 included the following components:
[CAPTION]
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost -- benefits earned during the period $ 410 374 403
Interest cost on projected benefit obligation 596 586 367
Return on Plans' assets (334) (467) (390)
Net amortization and deferral (160) 14 --
Net periodic pension cost $ 512 507 380
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 8.0% in 1994, 7.0%
in 1993 and 7.75% in 1992. The expected rate of increase in future
compensation levels was 5.0% in 1994, 6.0% in 1993 and 6.5% to 8.0% in
1992. The expected long-term rate of return on assets was 8.0% in 1994 and
1993 and 7.0% to 8.0% in 1992.
Prior to the acquisition, First Federal had a defined contribution plan
where eligible employees would receive a contribution on their behalf in an
amount equal to 15% of annual compensation. Security Capital made a
contribution to this plan for remaining eligible employees in the amount of
$66 in 1994. Management plans to terminate this plan in early 1995.
(12) STOCK OPTION PLANS
Security Capital has continued in effect the Omni Capital Group, Inc. 1988
Incentive Stock Option Plan pursuant to which options to purchase Security
Capital common stock may be granted to certain full-time officers and
employees at an exercise price equal to the fair market value of the stock
on the date of grant. Such options are exercisable for a ten year period.
An aggregate of 675,000 shares of common stock is reserved for issuance
under this plan. In the case of an employee who owns more than 10% of
Security Capital's outstanding common stock at the time the option is
granted, the option price may not be less than 110% of the fair market
value of the shares on the date of grant, and shall be exercisable after
the expiration of six months and before the expiration of five years from
the date of grant.
Security Capital has also continued in effect the Omni Capital Group, Inc.
1988 Directors' Non-Qualified Stock Option Plan, pursuant to which certain
non-employee members of the boards of directors of Security Capital and its
subsidiaries have been granted options to purchase Security Capital common
stock at an exercise price equal to the fair market value of the common
stock on the date of grant. Options granted under this plan must be
exercised within five years from the date of grant.
On March 15, 1988, OMNIBANK adopted two stock option plans, the Home
Federal Savings Bank 1988 Amended and Restated Directors' Non-Qualified
Stock Option Plan and the Home Federal Savings Bank 1988 Incentive Stock
Option Plan (the "Home Option Plans"), which plans became effective upon
the completion of its conversion from a mutual savings and loan association
to a capital stock savings bank. Home Federal Savings Bank was subsequently
renamed OMNIBANK. Security Capital has continued the Home Option Plans. An
aggregate number of shares amounting to 337,500 has been reserved by
Security Capital to be issued upon the exercise of stock options which have
been granted to certain directors, officers, and employees of Security
Capital under the Home Option Plans. No more options may be granted under
the Home Option Plans.
All stock options outstanding at the time of the Merger were converted into
options to acquire common stock of Security Capital.
The shareholders of Security Capital approved an Omnibus Stock Ownership
and Long Term Incentive Compensation Plan at the 1994 annual meeting. The
plan added 300,000 shares of common stock available to be granted to key
employees and officers of Security Capital or its subsidiaries. Options are
priced at 100% or more of the fair market value of the stock at the time
the option is granted. These options are first subject to vesting on the
second anniversary of the date of grant and vest over the next five years
in annual increments of 20%.
F-17
<PAGE>
The following table reflects the combined status of all of the above stock
option plans at December 31, 1994:
<TABLE>
<CAPTION>
Available Shares
for Subject to Price
Future Outstanding per
Grants Options Exercisable Share
<S> <C> <C> <C> <C>
Directors' Non-Qualified Stock Option Plans:
(1)
Balance outstanding at December 31, 1992 72,947 108,016 -- $ 3.56-7.67
Granted -- -- -- --
Exercised -- (65,834) -- $ 3.56-5.78
Balance outstanding at December 31, 1993 72,947 42,182 42,182 3.56-7.67
GRANTED -- -- -- --
EXERCISED -- (35,095) -- 4.08-5.78
BALANCE OUTSTANDING AT DECEMBER 31, 1994 72,947 7,087 7,087 $ 7.67
Incentive Stock Option Plans: (2)
Balance outstanding at December 31, 1992 247,500 435,936 -- $ 3.56-7.11
Granted -- -- -- --
Exercised -- (71,031) -- 3.56-7.11
Balance outstanding at December 31, 1993 247,500 364,905 364,905 3.56-7.11
GRANTED -- -- -- --
EXERCISED -- (57,935) -- 3.56-7.11
BALANCE OUTSTANDING AT DECEMBER 31, 1994 247,500 306,970 306,970 $ 3.56-7.11
1994 Omnibus Stock Ownership and Long Term
Incentive Plan:
Balance outstanding at December 31, 1993 -- -- -- --
Common stock available to be granted 300,000 -- -- --
GRANTED (71,000 ) 71,000 -- $ 13.625-15.375
EXERCISED -- -- -- --
BALANCE OUTSTANDING AT DECEMBER 31, 1994 229,000 71,000 -- $ 13.625-15.375
</TABLE>
(1) INCLUDES THE HOME FEDERAL SAVINGS BANK AMENDED AND RESTATED 1988
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN AND THE OMNI CAPITAL GROUP,
INC. 1988 DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN.
(2) INCLUDES THE HOME FEDERAL SAVINGS BANK 1988 INCENTIVE STOCK OPTION PLAN
AND THE OMNI CAPITAL GROUP, INC, 1988 INCENTIVE STOCK OPTION PLAN.
(13) EMPLOYEE STOCK OWNERSHIP PLAN
Security Capital continued Omni's Employee Stock Ownership Plan (the
"ESOP") for the benefit of the former employees of Omni and its
subsidiaries. Contributions to the ESOP were made on a discretionary basis
and were allocated to each eligible employee based on his/her salary in
relation to total employee compensation expense. At retirement or
termination of employment, each employee will receive an amount equal to
his/her vested interest in the ESOP in the form of cash or common stock.
In connection with the mutual to stock conversions of the savings bank
subsidiaries, the ESOP borrowed funds to purchase Omni common stock for the
ESOP. Upon the Merger, the shares of Omni common stock held in the ESOP
were exchanged for shares of Security Capital common stock. During 1992,
Security Capital repurchased sufficient remaining unallocated shares of
Security Capital common stock held by the ESOP to eliminate the remaining
balance of the related debt. In 1994 and 1993, Security Capital made
contributions to the Incentive Plan discussed in Note 11 rather than to the
ESOP. Security Capital plans to officially terminate the ESOP in 1995.
ESOP costs charged to expense amounted to $5, $10 and $334 in 1994, 1993
and 1992, respectively.
(14) COMMITMENTS, CONTINGENCIES AND OFF BALANCE SHEET RISK
Security Capital is a defendent in various litigation arising in the normal
course of business. In the opinion of management, resolution of these
matters will not result in a material adverse effect on Security Capital's
financial position.
In the normal course of business, there are outstanding various commitments
to extend credit which are not reflected in the consolidated financial
statements. At December 31, 1994, outstanding loan commitments approximated
$2,591 (Fixed Rate -- $349, Variable Rate -- $2,242), preapproved but
unused lines of credit for loans
F-18
<PAGE>
totalled $95,198 and standby letters of credit aggregated $675. These
amounts represent Security Capital's exposure to credit risk, and in the
opinion of management have no more than the normal lending risk that
Security Capital's banking subsidiaries commit to their borrowers. If these
commitments are drawn, Security Capital's banking subsidiaries will obtain
collateral if it is deemed necessary based on management's credit
evaluation of the borrower. Collateral held varies but may include accounts
receivable, inventory, and commercial or residential real estate.
Management expects that these commitments can be funded through normal
operations. In addition, Security Capital has no off-balance sheet
derivative commitments.
Security Capital's banking subsidiaries make primarily commercial, real
estate and installment loans to customers throughout their market areas,
which consists primarily of the south central and western Piedmont regions
of North Carolina. These subsidiaries' real estate loan portfolios can be
affected by the condition of the local real estate markets and their
commercial and installment loan portfolios can be affected by local
economic conditions.
Average daily Federal Reserve balance requirements for Security Bank and
the savings bank subsidiaries for the two week period ended January 4, 1995
amounted to $6,765 and $525, respectively.
(15) SUMMARY OF QUARTERLY INCOME STATEMENT INFORMATION (UNAUDITED)
A summary of quarterly income information for the years ended December 31,
1994 and 1993, follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
<S> <C> <C> <C> <C>
THREE MONTHS ENDED
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME $ 15,068 15,430 15,988 21,050
INTEREST EXPENSE 6,443 6,342 6,739 9,799
NET INTEREST INCOME 8,625 9,088 9,249 11,251
PROVISION FOR LOAN LOSSES 87 84 97 91
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 8,538 9,004 9,152 11,160
OTHER INCOME 2,439 2,140 1,577 2,200
OTHER EXPENSE 5,753 6,100 8,269 7,578
INCOME BEFORE INCOME TAXES 5,224 5,044 2,460 5,782
INCOME TAXES 1,762 1,581 6,500 2,033
NET INCOME $ 3,462 3,463 (4,040) 3,749
NET INCOME PER SHARE $ .30 .30 (.34) .32
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1993
<S> <C> <C> <C> <C>
Three Months Ended
<CAPTION>
March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Interest income $ 16,498 16,279 15,933 15,513
Interest expense 7,248 7,104 6,986 6,797
Net interest income 9,250 9,175 8,947 8,716
Provision for loan losses 184 153 170 146
Net interest income after provision for loan
losses 9,066 9,022 8,777 8,570
Other income 2,611 2,600 2,785 2,523
Other expense 6,163 6,200 6,037 5,442
Income before income taxes 5,514 5,422 5,525 5,651
Income taxes 1,545 1,770 2,017 1,941
Net income $ 3,969 3,652 3,508 3,710
Net income per share $ .33 .31 .30 .32
</TABLE>
F-19
<PAGE>
(16) PARENT COMPANY FINANCIAL DATA
The primary assets of Security Capital (the "Parent Company") are its
investments in subsidiaries and its principal source of income is dividends
from these subsidiaries. Certain regulatory and other requirements restrict
the lending of funds by the subsidiaries to the Parent Company and the
amount of dividends which can be paid to the Parent Company. Subject to
restrictions imposed by state laws and federal regulations, the Boards of
Directors of the Parent Company's subsidiaries may declare dividends from
their retained earnings of up to approximately $36,900 at December 31,
1994. The subsidiaries are prohibited by law from paying dividends from
their capital stock and paid-in capital accounts totaling approximately
$38,100 at December 31, 1994.
The following is a summary of selected financial information for the Parent
Company:
[CAPTION]
<TABLE>
<CAPTION>
Balance Sheets December 31,
<S> <C> <C>
1994 1993
<S> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets:
Cash on deposit with subsidiaries $ 5,767 13,488
Investments in and advances to subsidiaries 113,617 110,762
Investment securities available for sale (amortized cost of $66 at December
31, 1994) 99 --
Investment securities (market value of $86 at December 31, 1993) -- 66
Other assets 417 --
Total assets $119,900 124,316
Liabilities and stockholders' equity:
Other liabilities 140 96
Total liabilities 140 96
Stockholders' equity:
Common stock 51,610 51,167
Retained earnings, substantially restricted 74,522 73,053
Unrealized loss on investment securities available for sale (6,372) --
Total stockholders' equity 119,760 124,220
Total liabilities and stockholders' equity $119,900 124,316
</TABLE>
[CAPTION]
<TABLE>
<CAPTION>
Statements of Income Years Ended December 31,
<S> <C> <C> <C>
1994 1993 1992
<S> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Dividends from subsidiaries $10,111 15,184 5,434
Management income from subsidiaries 1,105 639 1,552
Equity in undistributed net (loss) income of subsidiaries (3,478) (233) 4,393
Other income 19 165 145
Total income 7,757 15,755 11,524
Expenses 1,123 916 1,563
Net income $ 6,634 14,839 9,961
</TABLE>
F-20
<PAGE>
[CAPTION]
<TABLE>
<CAPTION>
Statements of Cash Flows Years Ended December 31,
<S> <C> <C> <C>
1994 1993 1992
<S> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,634 14,839 9,961
Adjustments to reconcile net income to net cash provided by operating
activities:
Decrease (increase) in other assets (417) 158 1,654
Equity in undistributed net loss (income) of subsidiaries 3,478 233 (4,393)
Increase in other liabilities 44 46 50
Net cash provided by operating activities 9,739 15,276 7,272
Cash flows from investing activities:
Decrease (increase) in advances to subsidiaries (12,738) 2,215 (2,532)
Purchases of investment securities -- (66) --
Net cash provided (used) by investing activities (12,738) 2,149 (2,532)
Cash flows from financing activities:
Purchase and retirement of common stock -- (3,559) (509)
Proceeds from stock options exercised 443 606 158
Dividends paid to stockholders (5,165) (4,594) (3,712)
Net cash used by financing activities (4,722) (7,547) (4,063)
Net increase (decrease) in cash and cash equivalents (7,721) 9,878 677
Cash and cash equivalents at beginning of year 13,488 3,610 2,933
Cash and cash equivalents at end of year $ 5,767 13,488 3,610
Supplemental schedule of noncash investing activities:
Unrealized gain on parent company investment securities available for
sale $ 33 -- --
Unrealized loss on subsidiaries investment securities available for
sale (6,405) -- --
</TABLE>
(17) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" ("Statement No. 107") was issued by
the FASB in December 1991. Statement No. 107 requires disclosures about the
fair value of all financial instruments. Fair value estimates, methods, and
assumptions are set forth below for each type of financial instrument.
CASH, FEDERAL FUNDS SOLD AND SHORT-TERM BORROWINGS
The carrying amount of cash, federal funds sold, short-term borrowings, and
accrued interest receivable or payable on all financial instruments
approximate fair value because of the short terms to maturity of these
financial instruments.
INVESTMENT SECURITIES AVAILABLE FOR SALE
The following table presents the carrying value and estimated fair value of
investment securities available for sale at December 31, 1994:
<TABLE>
<CAPTION>
1994
Estimated
Fair Value
Amortized and Carrying
Cost Value
<S> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
US Government Obligations:
Due in one year or less $ 63,227 62,976
Due after one year through five years 129,315 123,602
Due after five years through ten years 2,070 2,062
US Government agency obligations:
Due in one year or less 1,006 1,004
Due after one year through five years 49,882 46,384
Due after five years through ten years 19,773 19,603
Mortgage-backed securities: 960 927
Other:
Due after ten years 66 99
$266,299 256,657
</TABLE>
F-21
<PAGE>
The fair value of debt securities is established based on bid prices
published in financial newspapers or bid quotations received from securities
dealers.
INVESTMENT SECURITIES HELD TO MATURITY
The following table presents the carrying value and estimated fair value of
investment securities held to maturity at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
At December 31,
1994 1993
Amortized Amortized
Cost and Cost and
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
US Government obligations:
Due in one year or less $ 1,000 1,000 94,356 95,719
Due after one year through five years 53,328 51,375 210,824 215,040
US Government agency obligations:
Due in one year or less -- -- 500 505
Due after one year through five years 45,968 43,613 34,947 34,724
Due after five years through ten years 30,963 29,906 4,962 5,139
Mortgage-backed securities: 8,659 8,364 12,676 13,135
State and municipal obligations:
Due in one year or less 6,509 6,612 1,002 1,018
Due after one year through five years 2,484 2,561 9,020 9,680
Due after five years through ten years 1,276 1,243 -- --
Due after ten years 5,410 5,116 -- --
Other:
Due after ten years -- -- 66 86
$155,597 149,790 368,353 375,046
</TABLE>
The fair value of debt securities, except certain state and municipal
obligations, is estimated based on bid prices published in financial
newspapers or bid quotations received from securities dealers. The fair
value of certain state and municipal obligations is not readily available
through market sources other than dealer quotations, so fair value estimates
are based on quoted market prices of instruments similar to those being
valued, adjusted for differences between the quoted instruments and the
instruments being valued.
LOANS
For purposes of estimating fair value of loans, the portfolio is segregated
by type based on similar characteristics such as real estate mortgage, real
estate construction and installment and equity lines of credit.
The fair value of loans is calculated by discounting estimated cash flows
using current rates at which similar loans would be made to borrowers with
similar credit risk. Cash flows for fixed rate loans are based on the
weighted average maturity of the specific loan category. Adjustable rate
loans are either prime based and are repriced immediately or monthly as
prime changes, or are based on published indices and have relatively short
terms to their repricing dates.
The following table presents fair value information for loans:
<TABLE>
<CAPTION>
1994 1993
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Loans, net $638,914 615,451 465,975 472,092
Loans held for sale $ 2,697 2,697 18,409 18,411
</TABLE>
F-22
<PAGE>
DEPOSIT LIABILITIES
The fair value of demand deposits, savings accounts and money market
deposits is the amount payable on demand. The fair value of certificates of
deposit is based on the discounted value of contractual cash flows. The
discount rate is estimated using the rates currently offered for deposits of
similar remaining maturities.
The following table presents fair value information for deposits:
<TABLE>
<CAPTION>
At December 31,
1994 1993
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Demand deposit- noninterest-bearing $ 67,203 67,203 67,830 67,830
Demand deposit- interest bearing 91,071 91,071 76,130 76,130
Insured money market accounts 94,981 94,981 79,711 79,711
Savings deposits 165,107 165,107 151,360 151,360
Certificates of deposit 593,783 581,144 409,425 411,365
$1,012,145 999,506 784,456 786,396
</TABLE>
ADVANCES FROM THE FEDERAL HOME LOAN BANK AND OTHER BORROWED MONEY
The fair value of advances from the FHLB is based on quoted market prices
for the same or similar issues or on the current rates offered to Security
Capital for debt of the same remaining maturities. At December 31, 1994 and
1993, the carrying value of advances from the FHLB was $18,576 and $8,000,
respectively, and the fair value was $18,477 and $8,539, respectively.
The fair value of other borrowed money, consisting of securities sold under
agreements to repurchase, bearing a short term to maturity, is considered to
approximate carrying value.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
The large majority of commitments to extend credit and standby letters of
credit are at variable rates and/or have relatively short terms to maturity
and, therefore, are subject to minimal interest rate risk exposure.
LIMITATIONS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time Security Capital's entire holdings of a
particular financial instrument. Because no market exists for a significant
portion of Security Capital's financial instruments, fair value estimates
are based on judgments regarding future expected loss experience, current
economic conditions, risk characteristics of various financial instruments,
and other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect
the estimates.
Fair value estimates are based on existing on-and-off balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that are
not considered financial instruments. For example, a significant asset not
considered a financial asset is premises and equipment. In addition, tax
ramifications related to the realization of the unrealized gains and losses
can have a significant effect on fair value estimates and have not been
considered in any of the estimates.
F-23
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 1995 1994
(Dollars in Thousands)
Cash and due from banks $ 18,773 24,374
Interest-bearing balances in other banks 18,767 17,321
Federal funds sold 19,448 6,948
Investment securities held to maturity (market value
of $152,828 at March 31, 1995 and $149,790
at December 31, 1994) 154,197 155,597
Investment securities available for sale 259,332 256,657
Loans, net of unearned income ($2,554, at March
31, 1995 and $2,691, at December 31, 1994) (note 2) 657,372 648,231
Less allowance for loan losses (note 2) 9,409 9,317
Loans, net 647,963 638,914
Loans held for sale 1,086 2,697
Premises and equipment, net 21,300 21,713
Intangible assets 16,245 16,634
Other assets 23,704 24,759
Total assets $1,180,815 1,165,614
Liabilities and Stockholders' Equity
Deposit accounts:
Demand, noninterest-bearing 67,144 67,203
Interest-bearing 857,979 856,530
Time deposits of $100 or more 90,171 88,412
Total deposit accounts 1,015,294 1,012,145
Advances from the Federal Home Loan Bank 18,681 18,576
Other borrowed money 3,718 3,276
Other liabilities 17,354 11,857
Total liabilities 1,055,047 1,045,854
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, no par value, 25,000,000 shares
authorized; 11,780,086 and 11,775,867 shares
issued and outstanding at March 31, 1995
and December 31, 1994, respectively 51,625 51,610
Retained earnings, substantially restricted 77,096 74,522
Unrealized loss on investment securities available
for sale (2,953) (6,372)
Total stockholders' equity 125,768 119,760
Total liabilities and stockholders' equity $1,180,815 1,165,614
See accompanying notes to consolidated financial statements.
F-24
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
1995 1994
(Dollars in Thousands, Except Share Data)
Interest income:
Loans $14,197 9,621
Investment securities
Taxable 6,204 5,029
Nontaxable 267 192
Other 571 226
Total interest income 21,239 15,068
Interest expense:
Deposit accounts 10,099 6,262
Borrowings 357 181
Total interest expense 10,456 6,443
Net interest income 10,783 8,625
Provision for loan losses 120 87
Net interest income after provision
for loan losses 10,663 8,538
Other income:
Loan servicing and other loan fees 410 409
Deposit and other service charge income 1,235 1,240
Gain on sales of loans, net 97 108
Brokerage commissions 395 508
Other 333 174
Total other income 2,470 2,439
Other expense:
Personnel 3,562 3,165
Net occupancy 1,224 893
Telephone, postage, and supplies 578 420
Federal and other insurance premiums 652 512
Data processing fees 110 182
Professional and other services 174 138
Other 944 443
Total other expense 7,244 5,753
Income before income taxes 5,889 5,224
Income taxes 2,020 1,762
Net income $ 3,869 3,462
Net income per share (note 3) $ .33 .30
Dividends per share $ .11 .11
Weighted average shares outstanding 11,778,680 11,705,567
See accompanying notes to consolidated financial statements.
F-25
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
1995 1994
(Dollars in Thousands)
Cash flows from operating activities:
Net income $ 3,869 3,462
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120 87
Depreciation 574 442
Amortization of premiums on securities held to maturity 17 46
Amortization of premiums on securities available for sale 426 695
Change in loans held for sale, net 1,611 13,459
Amortization of intangible assets 389 -
Decrease in other assets 1,055 1,612
Increase (decrease) in other liabilities 3,774 (880)
Net cash provided by operating activities 11,835 18,923
Cash flows from investing activities:
Proceeds from maturities of investment securities
held to maturity 1,383 1,675
Proceeds from maturities of investment securities
available for sale 22,026 27,526
Purchases of investment securities held to maturity - (13,908)
Purchases of investment securities available for sale (19,985) (10,936)
Increase in loans, net (9,169) (12,590)
Capital expenditures for premises and equipment (161) (613)
Net cash used in investing activities (5,906) (8,846)
Cash flows from financing activities:
Increase (decrease) in deposits 3,149 (546)
Proceeds from Federal Home Loan Bank advances 3,235 -
Repayment of Federal Home Loan Bank advances (3,130) (1,000)
Increase in other borrowed money, net 442 217
Dividends paid to stockholders (1,295) (1,289)
Proceeds from stock options exercised 15 158
Net cash provided by (used in) financing activities 2,416 (2,460)
Net increase in cash and cash equivalents 8,345 7,617
Cash and cash equivalents at beginning of period 48,643 36,697
Cash and cash equivalents at end of period $ 56,988 44,314
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 8,536 5,927
Income taxes 298 220
Supplemental schedule of noncash investing activities:
Loans receivable transferred to real estate owned $ - 502
Investments transferred to available for sale - 329,799
Change in unrealized loss on available for sale
securities, net of tax effect of $1,723 and
$392, respectively 3,419 (739)
See accompanying notes to consolidated financial statements.
F-26
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1995
(Unaudited)
(1) Principles of Consolidation and Reporting
The accompanying unaudited consolidated financial statements
include the accounts of Security Capital Bancorp ("SCBC"), a
North Carolina corporation organized as a multi-bank holding
company, and its wholly- owned subsidiaries, Security Capital
Bank, formerly Security Bank and Trust Company ("Security
Bank"), OMNIBANK, Inc., A State Savings Bank ("OMNIBANK"),
Citizens Savings, Inc., SSB ("Citizens"), Home Savings Bank,
Inc., SSB ("Home Savings"), and Estates Development Corporation
("EDC"). All significant intercompany balances have been
eliminated.
Certain amounts have been reclassified to conform with the
statement presentation for 1995. The reclassifications have
no effect on stockholders' equity or net income as previously
reported.
(2) Loans
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standards ("SFAS") No. 114,
"Accounting by Creditors for Impairment of a Loan," which requires
that all creditors value all specifically reviewed loans for which
it is probable that the creditors will be unable to collect all
amounts due according to the terms of the loan agreement at
either the present value of expected cash flows discounted at
the loan's effective interest rate, or if more practical, the
market price or value of collateral. The FASB also issued SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan
- - Income Recognition and Disclosures," that amends SFAS No.
114 to allow a creditor to use existing methods for recognizing
interest income on an impaired loan and by requiring
additional disclosures about how a creditor recognizes interest
income related to impaired loans.
Effective January 1, 1995, the provisions of SFAS No. 114 and
No. 118 were adopted by SCBC. The adoption of these
Standards required no increase to the allowance for loan losses
and had no impact on net income in the first quarter of 1995. At
March 31, 1995, impaired loans amounted to $214,000. The related
allowance for loan losses on these loans was $50,000.
(3) Net Income Per Share
Net income per share has been computed by dividing net income
by the weighted average number of shares outstanding.
(4) Acquisition and Pending Merger
Effective September 23, 1994, Security Bank purchased the
outstanding stock of First Federal Savings and Loan Association of
Charlotte ("First Federal") from Fairfield Communities, Inc. for
approximately $41,000,000 in cash. The acquisition is being
accounted for by the purchase method. Concurrent with the
purchase, First Federal was merged into Security Bank.
On November 4, 1994, SCBC and CCB Financial Corporation, Durham,
North Carolina ("CCB"), entered into a definitive Agreement of
Combination pursuant to which SCBC will merge with and into CCB,
with CCB as the surviving corporation and continuing to operate
under its present name (the "Combination"). The Agreement was
amended and restated as of December 1, 1994. To effect the
Combination, CCB will issue .50 of a share of its common stock, par
value $5.00 per share, in exchange for each outstanding share of
SCBC's common stock, no par value. In connection with the
Combination, SCBC's banking subsidiaries will merge into Central
Carolina Bank and Trust Company, a subsidiary of CCB. The Combination
is expected to be completed during the second quarter of 1995.
F-27
<PAGE>
CCB Financial Corporation
Pro forma Combined Condensed Balance Sheet
As of March 31, 1995
(Unaudited)
The following unaudited pro forma combined condensed balance sheet
reflects (i) the consolidated condensed historical balance sheets of CCB
Financial Corporation ("CCBF") and Security Capital Bancorp ("SCBC") as of
March 31, 1995 and (ii) the pro forma combined condensed balance sheet of
CCBF as of March 31, 1995, giving effect to the merger on a pooling of
interests accounting basis. Accordingly, under generally accepted accounting
principles, the consolidated assets and liabilities of SCBC will be reported
on the books of CCBF at their respective book values at the date of merger
and CCBF's consolidated financial statements for prior periods will be restated
to reflect the consolidated assets, liabilities and operations of SCBC for
such periods. No goodwill or other intangible assets will be created
in connection with the merger. The pro forma data are not necessarily
indicative of the results of the future operations of the combined entity or
the actual results that would have occurred had the merger been consummated
prior to the periods indicated.
In the opinion of the respective management of CCBF and SCBC, all adjustments
necessary for a fair presentation of results of interim periods of CCBF and
SCBC (none of which were other than normal accruals) have been included.
The unaudited pro forma combined condensed balance sheet should be read in
conjunction with the previously filed consolidated historical financial
statements of CCBF and the consolidated historical financial statements of
SCBC, including the respective notes thereto, which are set forth herein.
The unaudited pro forma condensed retained earnings does not reflect the
recognition of any restructuring expenses incurred, transaction expenses
incurred or cost savings from operating efficiencies which may be realized
in connection with the merger.
F-28
<PAGE>
PRO FORMA COMBINED CONDENSED BALANCE SHEET
As of March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
CCBF
Pro Forma Pro Forma
CCBF SCBC Adjustments Combined
<S> <C> <C> <C> <C>
(Dollars in Thousands)
Assets
Cash and due from banks $ 152,023 18,773 - 170,796
Time deposits in other banks 25,676 18,767 - 44,443
Federal funds sold and other short-term investments 140,000 19,448 - 159,448
Investment securities:
Available for sale 503,418 259,332 - 762,750
Held for investment 81,525 154,197 - 235,722
Loans and lease financing 2,576,006 657,372 - 3,233,378
Less reserve for loan and lease losses 32,503 9,409 - 41,912
Net loans and lease financing 2,543,503 647,963 - 3,191,466
Premises and equipment 44,298 21,300 - 65,598
Other assets 80,527 41,035 - 121,562
Total assets $3,570,970 1,180,815 - 4,751,785
Liabilities
Deposits:
Noninterest-bearing $ 415,269 67,144 - 482,413
Interest-bearing 2,663,889 948,150 - 3,612,039
Total deposits 3,079,158 1,015,294 - 4,094,452
Federal funds purchased, master notes and securities
sold under agreements to repurchase 38,410 - - 38,410
Other short-term borrowed funds 33,390 3,718 - 37,108
Long-term debt 70,449 18,681 - 89,130
Other liabilities 82,462 17,354 - 99,816
Total liabilities 3,303,869 1,055,047 - 4,358,916
Shareholders' equity
Common stock 45,504 51,625 (22,170)(1) 74,959
Additional paid-in capital 69,851 - 22,170 (1) 92,021
Retained earnings 158,910 77,096 - 236,006
Unrealized loss on investment securities available
for sale, net of applicable taxes (4,455) (2,953) - (7,408)
Less: Unearned common stock held
by management recognition plans (2,709) - - (2,709)
Total shareholders' equity 267,101 125,768 - 392,869
Total liabilities and shareholders' equity $3,570,970 1,180,815 - 4,751,785
</TABLE>
(1) Based on the exchange ratio of .50 for conversion of Security Capital
Bancorp stock into CCB Financial Corporation stock. At March 31, 1995, CCB
Financial Corporation and Security Capital Bancorp had 9,100,895 and
11,780,086 shares outstanding, respectively.
F-29
<PAGE>
CCB Financial Corporation
Pro forma Combined Condensed Statements of Income
As of March 31, 1995
(Unaudited)
The following unaudited pro forma combined condensed statements of income
reflect (i) the consolidated condensed historical statements of income of
CCB Financial Corporation ("CCBF") and Security Capital Bancorp ("SCBC") and
(ii) the pro forma combined condensed statements of income of CCBF, giving
effect to the merger on a pooling of interests accounting basis. The data are
not necessarily indicative of the results of the future operations of the
combined entity or the actual results that would have occurred had the merger
been consummated prior to the periods indicated.
In the opinion of the respective management of CCBF and SCBC, all adjustments
necessary for a fair presentation of results of interim periods of CCBF and
SCBC (none of which were other than normal accruals) have been included.
The unaudited pro forma combined condensed statements of income should be read
in conjunction with the previously filed consolidated historical financial
statements of CCBF and the consolidated historical financial statements of
SCBC, including the respective notes thereto, which are set forth herein.
The unaudited pro forma combined financial information does not reflect the
recognition of any restructuring expenses incurred, transaction expenses
incurred or cost savings from operating efficiencies which may be realized in
connection with the merger. Current estimates of restructuring expenses for
1995 are $_____ million and transaction expenses are estimated to total $3
million. The cost savings associated with these possible operating efficiencies
and synergies have not been quantified, nor are any such savings assured. It
is anticipated that any such savings will not be achieved until the fiscal
quarters following the quarter in which the expenses of the merger
are recognized.
F-30
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
For the Three Months Ended March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
CCBF
Pro Forma
CCBF SCBC Combined(1)
<S> <C> <C> <C>
(Dollars in thousands, except per share data)
Interest income
Loan and leases $ 59,134 14,197 73,331
Investment securities 9,802 6,471 16,273
Other 2,552 571 3,123
Total interest income 71,488 21,239 92,727
Interest expense
Deposits 28,621 10,099 38,720
Long-term debt and other borrowings 2,593 357 2,950
Total interest expense 31,214 10,456 41,670
Net interest income 40,274 10,783 51,057
Provision for loan and lease losses 2,030 120 2,150
Net interest income after provision for loan and lease losse 38,244 10,663 48,907
Other income
Service charges on deposit accounts 5,081 410 5,491
Nondeposit fees and commissions 1,607 1,235 2,842
Other 4,557 825 5,382
Investment securities gains (losses), net (1,326) - (1,326)
Total other income 9,919 2,470 12,389
Other expenses
Personnel 16,407 3,562 19,969
Net occupancy and equipment 2,217 1,224 3,441
Federal deposit and other insurance 2,090 652 2,742
Other operating 10,988 1,806 12,794
Total other expenses 31,702 7,244 38,946
Income before income taxes 16,461 5,889 22,350
Income taxes 5,431 2,020 7,451
Net income $ 11,030 3,869 14,899
Net income per share $ 1.21 .33 .99
Weighted average shares outstanding 9,108,804 11,778,680 14,998,144(2)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma
Condensed Statements of Income.
(2) Based on the Exchange Ratio of .50 for conversion of SCBC Stock
into CCBF Stock.
F-31
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
CCBF
Pro Forma
CCBF SCBC Combined(1)
<S> <C> <C> <C>
(Dollars in thousands, except per share data)
Interest income
Loans and leases $ 199,014 43,951 242,965
Investment securities 35,817 22,138 57,955
Other 6,899 1,447 8,346
Total interest income 241,730 67,536 309,266
Interest expense
Deposits 89,045 28,363 117,408
Long-term debt and other borrowings 7,930 960 8,890
Total interest expense 96,975 29,323 126,298
Net interest income 144,755 38,213 182,968
Provision for loan and lease losses 8,920 359 9,279
Net interest income after provision for loan 135,835 37,854 173,689
Other income
Service charges on deposit accounts 19,307 4,431 23,738
Nondeposit fees and commissions 11,833 1,485 13,318
Other 8,967 2,510 11,477
Investment securities gains (losses), net 427 (70) 357
Total other income 40,534 8,356 48,890
Other expenses
Personnel 58,600 14,768(2) 73,368
Net occupancy and equipment 17,446 3,942 21,388
Federal deposit and other insurance 2,230 2,230
Other operating 42,879 6,760(2) 49,639
Total other expenses 118,925 27,700 146,625
Income before income taxes 57,444 18,510 75,954
Income taxes 18,967 11,876(3) 30,843
Net income $ 38,477 6,634 45,111
Net income per share $ 4.06 .57 2.94
Weighted average shares outstanding 9,485,259 11,738,083 15,354,301(4)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Condensed
Statements of Income.
(2) SCBC recognized non-recurring expenses of approximately $1,100,000
in connection with the acquisition of First Federal, which related
to severance, professional fees, marketing and discontinued contracts.
(3) Includes a one-time charge of approximately $5,600,000 as a result of
SCBC's savings bank subsidiaries change in tax accounting method to the
specific charge-off method for bad debts during 1994.
(4) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
F-32
<PAGE>
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loans and leases................................................................... $155,394 41,195 196,589
Investment securities.............................................................. 30,757 22,254 53,011
Other.............................................................................. 4,538 774 5,312
Total interest income........................................................... 190,689 64,223 254,912
INTEREST EXPENSE
Deposits........................................................................... 69,939 27,255 97,194
Long-term debt and other borrowings................................................ 3,882 880 4,762
Total interest expense.......................................................... 73,821 28,135 101,956
Net interest income.................................................................. 116,868 36,088 152,956
Provision for loan and lease losses.................................................. 6,453 653 7,106
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 110,415 35,435 145,850
OTHER INCOME
Service charges on deposit accounts................................................ 18,208 4,976 23,184
Nondeposit fees and commissions.................................................... 13,343 2,800 16,143
Other.............................................................................. 4,857 2,433 7,290
Investment securities gains, net................................................... 2,652 310 2,962
Total other income.............................................................. 39,060 10,519 49,579
OTHER EXPENSES
Personnel.......................................................................... 53,404 13,314 66,718
Net occupancy and equipment........................................................ 16,644 3,390 20,034
Federal deposit and other insurance................................................ 5,468 1,832 7,300
Other operating.................................................................... 30,094 5,306 35,400
Total other expenses............................................................ 105,610 23,842 129,452
Income before income taxes........................................................... 43,865 22,112 65,977
Income taxes......................................................................... 14,640 7,273 21,913
NET INCOME (2) (3)................................................................... 29,225 14,839 44,064
NET INCOME PER SHARE (2) (3)
Primary............................................................................ $ 3.50 1.26 3.10
Fully diluted...................................................................... 3.41 1.26 3.05
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 8,344,540 11,771,739 14,230,410(4)
Fully diluted...................................................................... 8,726,133 11,771,739 14,612,003(4)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Net income and primary and fully diluted net income per share for the year
ended December 31, 1993 do not include the cumulative effect of changes in
accounting principles resulting from the adoption by CCBF on January 1, 1993
of SFAS 106 and SFAS No. 109. The impact of adoption of SFAS 106 and SFAS
109 on net income, primary net income per share and fully diluted net income
per share was a net charge of $1,371,000, $(.17) and $(.16), respectively,
for the year ended December 31, 1993.
(3) The cumulative effect of SCBC's adoption on January 1, 1993 of SFAS 106 and
SFAS 109 was not material for the year ended December 31, 1993.
(4) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
F-33
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loan and leases.................................................................... $138,420 48,277 186,697
Investment securities.............................................................. 26,549 22,302 48,851
Other.............................................................................. 4,767 1,274 6,041
Total interest income......................................................... 169,736 71,853 241,589
INTEREST EXPENSE
Deposits........................................................................... 67,232 33,695 100,927
Long-term debt and other borrowings................................................ 3,405 1,434 4,839
Total interest expense........................................................ 70,637 35,129 105,766
Net interest income.................................................................. 99,099 36,724 135,823
Provision for loan and lease losses.................................................. 5,983 1,848 7,831
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 93,116 34,876 127,992
OTHER INCOME
Service charges on deposit accounts................................................ 16,624 5,255 21,879
Nondeposit fees and commissions.................................................... 11,861 2,344 14,205
Other.............................................................................. 2,144 1,341 3,485
Investment securities gains, net................................................... 2,066 8 2,074
Total other income............................................................ 32,695 8,948 41,643
OTHER EXPENSES
Personnel.......................................................................... 46,104 14,536 60,640
Net occupancy and equipment........................................................ 15,671 3,488 19,159
Federal deposit and other insurance................................................ 4,206 2,026 6,232
Other operating.................................................................... 22,593 7,490 30,083
Total other expenses.......................................................... 88,574 27,540 116,114
Income before income taxes........................................................... 37,237 16,284 53,521
Income taxes......................................................................... 11,915 6,323 18,238
NET INCOME........................................................................... $ 25,322 9,961 35,283
NET INCOME PER SHARE
Primary............................................................................ $ 3.30 .84 2.60
Fully diluted...................................................................... 3.10 .84 2.52
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 7,663,659 11,832,570 13,579,944(2)
Fully diluted...................................................................... 8,577,782 11,832,570 14,494,067(2)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
F-34
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Page No.
Amended and Restated Agreement of Combination
among CCB Financial Corporation, Security Capital
Bancorp and New Security Capital, Inc.(incorporated
by reference from Exhibit 2 to Registration
Statement No. 33-57005 on Form S-4) 2
Amended and restated articles of incorporation 3
Employment agreement with David B. Jordan 10.1
Employment agreement with Ralph A. Barnhardt 10.2
Employment agreement with Lloyd G. Gurley 10.3
Press release by CCB Financial Corporation
dated May 22, 1995 99
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CCB FINANCIAL CORPORATION
The undersigned corporation, pursuant to action by its
board of directors and without a vote of its shareholders, hereby
executes these Amended and Restated Articles of Incorporation for
the purpose of integrating into one document its original Articles
of Incorporation and all amendments thereto:
1. The name of the corporation is CCB Financial
Corporation.
2. The period of duration of the corporation is
perpetual.
3. The purposes for which the corporation is organized
are:
(a) To operate as a one-bank or as a multi-bank
holding company.
(b) To operate and engage in the wholesale and
retail sale of real and personal property of all types.
(c) To operate and engage in the business of
renting and leasing real and personal property of all types.
(d) To operate and engage in the business of
providing services of all types without limitation.
(e) To operate and engage in the business of
manufacturing goods and products of all types and kinds.
(f) To operate and engage in the business of
making investments in and the developing of real and personal
property of all types.
(g) To operate and engage in any directly,
indirectly, horizontally or vertically related business,
enterprise or venture.
<PAGE>
(h) To engage in any lawful act or activity for
which corporations may be organized under Chapter 55 of the
General Statutes of North Carolina.
4. The total number of shares of capital stock which
the corporation has authority to issue is 55,000,000, of which
50,000,000 shall be common stock, $5.00 par value, and 5,000,000
shall be serial preferred stock. The shares may be issued from
time to time as approved by the board of directors without further
approval of the shareholders, except as otherwise provided in this
Paragraph 4 or to the extent that such approval is required by
North Carolina law. The consideration for the issuance of the
shares shall be paid in full before their issuance and shall not
be less than the par value per share, or if designated as no par
value, the stated value as determined by the board of directors.
Neither promissory notes nor future services shall constitute
payment or part payment for the issuance of shares of the
corporation. The consideration for the shares shall be cash,
tangible or intangible property, labor or services actually
performed for the corporation or any combination of the foregoing.
In the absence of actual fraud in the transaction, the value of
such property, labor or services, shall be conclusive. Upon
payment of such consideration, such shares shall be deemed to be
fully paid and nonassessable. In the case of a stock dividend,
that part of the surplus of the corporation which is transferred
to stated capital upon the issuance of shares as a stock dividend
shall be deemed to be the consideration for their issuance.
A description of the different classes and series
(if any) of the corporation's capital stock and a statement of the
2
<PAGE>
designations, relative rights, preferences and limitations of the
shares of each class and series of capital stock are as follows:
A. Common Stock. Except as provided in this
Paragraph 4 (or in any supplementary sections hereto), the holders
of the common stock exclusively shall possess all voting power.
Each holder of shares of common stock shall be entitled to one (1)
vote for each share held by such holder, except as to the
cumulation of votes for the election of directors as may be
permitted under North Carolina law.
Whenever there shall have been paid, or declared and set
aside for payment, to the holders of the outstanding shares of any
class of stock having preference over the common stock as to the
payment of dividends, the full amount of dividends and of sinking
fund or retirement fund or other retirement payments, if any, to
which such holders are respectively entitled in preference to the
common stock, then dividends may be paid on the common stock and
on any class or series of stock entitled to participate therewith
as to dividends out of any assets legally available for the
payment of dividends.
In the event of any liquidation, dissolution or winding
up of the affairs of the corporation, the holders of the common
stock (and the holders of any class or series of stock entitled to
participate with the common stock in the distribution of assets)
shall be entitled to receive, in cash or in kind, the assets of
the corporation available for distribution remaining after (i)
payment or provision for payment of the corporation's debts and
liabilities, and (ii) distributions or provision for distributions
to holders of any class or series of stock having preference over
3
<PAGE>
the common stock in the liquidation, dissolution or winding up of
the affairs of the corporation. Each share of common stock shall
have the same relative rights as, and be identical in all respects
with, all other shares of common stock.
B. Preferred Stock. The corporation may
provide in supplementary sections to the Articles for one or more
classes of preferred stock, each of which shall be separately
identified. The shares of any class may be divided into and
issued in series, with each series separately designated so as to
distinguish the shares thereof from the shares of all other series
and classes. The terms of each series shall be set forth in a
supplementary section to the Articles. All shares of the same
class shall be identical except as to the following designations,
relative rights, preferences and limitations, as to which there
may be variations between different series:
(1) The distinctive serial designation
and the number of shares constituting such series;
(2) The dividend rates or the amount of
dividends to be paid on the shares of such series, whether
dividends shall be cumulative and, if so, from which date or
dates, the payment date or dates for dividends and the
participating or other special rights, if any, with respect to
dividends;
(3) The voting powers, full or limited,
if any, of shares of such series;
(4) Whether the shares of such series
shall be redeemable and, if so, the price or prices at which, and
the terms and conditions on which, such shares may be redeemed;
4
<PAGE>
(5) The amount or amounts payable upon
the shares of such series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
corporation;
(6) Whether the shares of such series
shall be entitled to the benefit of a sinking or retirement fund
to be applied to the purchase or redemption of such shares, and if
so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares
may be redeemed or purchased through the application of such fund;
(7) Whether the shares of such series
shall be convertible into, or exchangeable for, shares of any
other class or classes of stock of the corporation and, if so, the
conversion price or prices, or the rate or rates of exchange, and
the adjustments thereof, if any, at which such conversion or
exchange may be made and any other terms and conditions of such
conversion or exchange;
(8) The price or other consideration for
which the shares of such series shall be issued; and,
(9) Whether the shares of such series
which are redeemed or converted shall have the status of
authorized but unissued shares of serial preferred stock and
whether such shares may be reissued as shares of the same or any
other series of serial preferred stock.
Each share of each series of serial
preferred stock shall have the same designations, relative rights,
preferences and limitations as, and be identical in all respects
with, all the other shares of the same series.
5
<PAGE>
The directors shall have authority
to divide, by the adoption of supplementary Articles sections, any
authorized class of preferred stock into series and, within the
limitations set forth in this Paragraph 4 or otherwise in the
Articles, to fix and determine the designations, relative rights,
preferences and limitations of the shares of any series so
established.
Prior to the issuance of any
preferred shares of a series established by a supplementary
Articles section adopted by the directors, the corporation shall
file with the North Carolina Secretary of State a dated copy of
that supplementary section of the Articles establishing and
designating the series and fixing and determining the
designations, relative rights, preferences and limitations
thereof.
C. Series A Junior Participating Preferred
Stock.
(i) Designation and Amount. The shares of
such series shall be designated as "Series A Junior Participating
Preferred Stock," and the number of shares constituting such
series shall be 200,000. Such number of shares may be increased
or decreased by resolution of the board of directors of the
corporation; provided, that no decrease shall reduce the number of
shares of Series A Junior Participating Preferred Stock to a
number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the corporation convertible
into Series A Junior Participating Preferred Stock.
(ii) Dividends and Distributions.
6
<PAGE>
(a) Subject to the rights of the holders
of any shares of any series of preferred stock (or any similar
stock) ranking prior and superior to the Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of common stock, par value
$5.00 per share of the corporation, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the
board of directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (1) $1.00 or
(2) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions, other than a
dividend payable in shares of common stock or subdivision of the
outstanding shares of common stock (by reclassification or
otherwise), declared on the common stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the corporation shall at any time
declare or pay any dividend on the common stock payable in shares
7
<PAGE>
of common stock, or effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares
of common stock, then in each such case the amount to which
holders of shares of Series A Junior Participating Preferred Stock
were entitled immediately prior to such event under clause (2) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of
shares of common stock outstanding immediately after such event
and the denominator of which is the number of shares of common
stock that were outstanding immediately prior to such event.
(b) The corporation shall declare a
dividend or distribution on the Series A Junior Participating
Preferred Stock as provided in paragraph (a) of this subsection
(ii) immediately after it declares a dividend or distribution on
the common stock (other than a dividend payable in shares of
common stock); provided that, in the event no dividend or
distribution shall have been declared on the common stock during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and
be cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the
8
<PAGE>
date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive quarterly
dividends and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The board of directors may fix a record date for the
determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall
be not more than 60 days prior to the date fixed for the payment
thereof.
(iii) Voting Rights. The holders of
shares of Series A Junior Participating Preferred Stock shall have
the following voting rights.
(a) Subject to the provision for
adjustment hereinafter set forth, each share of Series A Junior
Participating Preferred stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders
9
<PAGE>
of the corporation. In the event the corporation shall at any
time declare or pay any dividend on the common stock payable in
shares of common stock, or effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares
of common stock, then in each such case the number of votes per
share to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein,
in any other resolution creating a series of preferred stock or
any similar stock, in any amendment to the Articles of the
corporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock and any other capital stock of the
corporation having general voting rights shall vote together as
one class on all matters submitted to a vote of shareholders of
the corporation.
(c) Except as set forth herein, or as
otherwise provided by law, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they
are entitled to vote with holders of common stock as set forth
herein) for taking any corporate action.
10
<PAGE>
(iv) Certain Restrictions.
(a) Whenever quarterly dividends or the
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in subsection (ii) are
in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been
paid in full, the corporation shall not:
(1) declare or pay dividends, or
make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(2) declare or pay dividends, or
make any other distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(3) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock,
provided that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the corporation ranking junior (either as
11
<PAGE>
to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(4) redeem or purchase or otherwise
acquire for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the board of directors) to all
holders of such shares upon such terms as the board of directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The corporation shall not permit any
subsidiary of the corporation to purchase or otherwise acquire for
consideration any shares of stock of the corporation unless the
corporation could, under paragraph (a) of this subsection (iv),
purchase or otherwise acquire such shares at such time and in such
manner.
(v) Reacquired Shares. Any shares of Series
A Junior Participating Preferred Stock purchased or otherwise
acquired by the corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All
such shares upon their cancellation become authorized but unissued
shares of preferred stock and may be reissued as part of a new
series of preferred stock subject to the conditions and
restrictions on issuance set forth herein, in a resolution of the
board of directors, in the Articles of the corporation, or in any
12
<PAGE>
other supplement or amendment creating a series of preferred stock
or any similar stock or as otherwise required by law.
(vi) Liquidation, Dissolution of Winding Up.
Upon any liquidation, dissolution or winding up of the
corporation, no distribution shall be made (a) to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall
have received $100.00 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders
of shares of Series A Junior Participating Preferred Stock shall
be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders
of shares of common stock, or (b) to the holders of shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except distributions made ratably
on the Series A Junior Participating Preferred Stock and all such
parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the corporation shall at
any time declare or pay any dividend on the common stock payable
in shares of common stock, or effect a subdivision or combination
or consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in
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shares of common stock) into a greater or lesser number of shares
of common stock, then in each such case the aggregate amount to
which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under the
proviso in clause (a) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which
is the number of shares of common stock outstanding immediately
after such event and the denominator of which is the number of
shares of common stock that were outstanding immediately prior to
such event.
(vii) Consolidation, Merger, etc. In case
the corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of common
stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case each share
of Series A Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be,
into which or for which each share of common stock is changed or
exchanged. In the event the corporation shall at any time declare
or pay any dividend on the common stock payable in shares of
common stock, or effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by
reclassification or otherwise than by payment of a dividend in
shares of common stock) into a greater or lesser number of shares
of common stock, then in each such case the amount set forth in
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the preceding sentence with respect to the exchange or change of
shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of common stock outstanding
immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately
prior to such event.
(viii) No Redemption. The shares of Series
A Junior Participating Preferred Stock shall not be redeemable,
except as otherwise provided herein.
(ix) Rank. The Series A Junior
Participating Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all
series of any other class of this corporation's preferred stock.
(x) Amendment. The Articles of the
corporation shall not be amended in any manner, nor shall the
board of directors take any action, which would materially alter
or change the powers, preferences or special rights of the Series
A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Junior
Participating Preferred Stock, voting together as a single class.
(xi) Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of
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all other rights of holders of Series A Junior Participating
Preferred Stock.
Holders of the capital stock of the
corporation shall not be entitled to preemptive rights with
respect to any shares of the corporation which may be issued.
5. The stated capital of the corporation is Twenty-Five
Million Seventy-Four Thousand Thirty and No/100 Dollars
($25,074,030.00).
6. The shareholders of the corporation shall have no
preemptive right to acquire additional shares of the corporation.
7. The address of the registered office of the
corporation in the State of North Carolina is 111 Corcoran Street,
Durham, Durham County, North Carolina 27702; and the name of its
registered agent at such address is W. L. Burns, Jr.
8. The number of directors of the corporation may be
fixed by the bylaws.
9. (The corporation's original Articles of
Incorporation did not contain an Article 9.)
10. The name and address of the incorporator are
Anthony Gaeta, Jr., 1001 College Court, New Bern, Craven County,
North Carolina 28560.
11. In addition to the general powers granted
corporations under the laws of the State of North Carolina, the
corporation shall have full power and authority to do any and all
lawful acts of any nature whatsoever.
12. Except for certain business combinations that fall
within the requirements of Paragraph 13 of the Articles, any
agreement, plan or arrangement providing for the merger or
consolidation of the corporation with any other corporation,
foreign or domestic, or the sale, lease or exchange of all or
substantially all of the assets of the corporation which require
prior shareholder approval under North Carolina law shall only be
effected after the prior approval of the holders of at least a
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majority of the outstanding shares of all classes of capital stock
of the corporation, voting together as a single class, unless
class voting rights are specifically permitted for any class of
capital stock of the corporation.
13. The requirements with respect to certain business
combinations are as follows:
A. Vote Required for Certain Business
Combinations.
(1) Higher Vote for Certain Business
Combinations. In addition to any affirmative vote required by
Paragraph 12 of the Articles, and except as otherwise expressly
provided in subparagraph (B) of this Paragraph 13:
a. any merger or consolidation of
the corporation or any subsidiary (as hereinafter defined), into
or with (i) any Interested Shareholder (as hereinafter defined),
or (ii) any other corporation (whether or not itself an Interested
Shareholder) which immediately before is, or after such merger or
consolidation would be, an Affiliate or an Associate (as
hereinafter defined) of an Interested Shareholder; or
b. any sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with any Interested
Shareholder or any Affiliate or Associate of any Interested
Shareholder of all or substantially all, or any Substantial Part
(as hereinafter defined), of the assets or businesses of the
corporation or any subsidiary (including, without limitation, any
securities issued by a subsidiary); or
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c. any purchase, exchange, lease
or other acquisition by the corporation or any subsidiary (in one
transaction or a series of transactions) of all or substantially
all, or any Substantial Part, of the assets or businesses of any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
d. the issuance or transfer by the
corporation or any subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or any
subsidiary to any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate Fair Market Value (as hereinafter defined) of $5,000,000
or more; or
e. the adoption of any plan or
proposal for the liquidation or dissolution of the corporation
proposed by or on behalf of an Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder; or
f. any reclassification of
securities (including any reverse stock split), or
recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its subsidiaries or
any other transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect,
directly or indirectly, of increasing the proportionate share of
the outstanding shares of any class of equity or convertible
securities of the corporation or any subsidiary which is directly
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or indirectly owned by any Interested Shareholder or any Affiliate
or Associate of any Interested Shareholder; or
g. any agreement, contract or
other arrangement providing for any of the transactions described
in clauses (a) through (f) above; shall require the affirmative
vote of both (i) the holders of at least 85% of each class of
outstanding shares of capital stock of the corporation entitled to
vote generally in the election of directors (the "Voting Stock"),
each voting separately as a class, and (ii) a majority in interest
of the holders of the issued and outstanding Voting Stock of the
corporation held by persons other than any Interested Shareholder
or any Affiliate or Associate of any Interested Shareholder.
Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be
specified, by law or in any agreement with any national securities
exchange or otherwise.
(2) Definition of "Business
Combination". The term "Business Combination" as used in this
Paragraph 13 shall mean any transaction which is referred to in
any one or more of clauses (a) through (g) of section (1) of this
subparagraph (A).
B. When Higher Vote is Not Required.
The provisions of subparagraph (A) of this Paragraph 13 shall not
be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote as
is required by Paragraph 12 hereof, if all of the conditions
specified in either of the following sections (1) and (2) are met:
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(1) Approval by Disinterested Directors.
The Business Combination shall have been approved by a
majority of the Disinterested Directors (as hereinafter defined);
or
(2) Price and Procedure Requirements.
All of the following conditions shall have been met:
a. The aggregate amount of the
cash and the Fair Market Value as of the date of the consummation
of the Business Combination of consideration other than cash to be
received per share by holders of common stock in such Business
Combination shall be at least equal to the higher of the
following:
(i) (if applicable) the highest
per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested
Shareholder for any shares of common stock acquired by it (a)
within the two-year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
"Announcement Date"), or (b) in the transaction in which it became
an Interested Shareholder, whichever is higher; and
(ii) the Fair Market Value per
share of common stock on the Announcement Date or on the date on
which the Interested Shareholder became an Interested Shareholder
(such latter date is referred to in this Paragraph 13 as the
"Determination Date"), whichever is higher.
b. The aggregate amount of the
cash and the Fair Market Value (as of the date of the consummation
of the Business Combination) of consideration other than cash to
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be received per share by holders of shares of any other class of
outstanding Voting Stock shall be at least equal to the highest of
the following (it being intended that the requirements of this
subsection (2)b shall be required to be met with respect to every
class of outstanding Voting Stock, whether or not the Interested
Shareholder has previously acquired any shares of a particular
class of Voting Stock):
(i) (if applicable) the highest
per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested
Shareholder for any shares of such class of Voting Stock acquired
by it (a) within the two-year period immediately prior to the
Announcement Date, or (b) in the transaction in which it became an
Interested Shareholder, whichever is higher;
(ii) (if applicable) the
highest preferential amount per share to which the holders of
shares of such class of Voting Stock are entitled in the event of
any voluntary or involuntary liquidation, dissolution or winding
up of the corporation; and
(iii) the Fair Market Value per
share of such class of Voting Stock on the Announcement Date or on
the Determination Date, whichever is higher.
c. The consideration to be
received by holders of a particular class of outstanding Voting
Stock (including common stock) shall be in cash or in the same
form as the Interested Shareholder has previously paid for shares
of such class of Voting Stock. If the Interested Shareholder has
paid for shares of any class of Voting Stock with varying forms of
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consideration, the form of consideration for such class of Voting
Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired
by it.
d. After such Interested
Shareholder has become an Interested Shareholder and prior to the
consummation of such Business Combination: (i) except as approved
by a majority of the Disinterested Directors, there shall have
been no failure to declare and pay at the regular date therefor
any quarterly dividends (whether or not cumulative) on any class
or series within a class of issued and outstanding preferred
stock: (ii) there shall have been (a) no reduction in the annual
rate of dividends paid on the common stock (except as necessary to
reflect any subdivision of the common stock), except as approved
by a majority of the Disinterested Directors, and (b) an increase
in such rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of the
common stock, unless the failure so to increase such annual rate
is approved by a majority of the Disinterested Directors; and
(iii) such Interested Shareholder shall have not become the
beneficial owner of any additional shares of Voting Stock except
as part of the transaction which results in such Interested
Shareholder becoming an Interested Shareholder.
e. After such Interested
Shareholder has become an Interested Shareholder, such Interested
Shareholder shall not have received the benefit, directly or
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<PAGE>
indirectly (except proportionately as a shareholder), of any
loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
corporation or any subsidiary of the corporation, whether in
anticipation of or in connection with such Business Combination or
otherwise.
f. A proxy or information
statement, furnished by the Interested Shareholder, describing the
proposed Business Combination and complying with the requirements
of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions replacing
such Act, rules or regulations) shall be mailed to shareholders of
the corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or
subsequent provisions). To facilitate the mailing of the proxy or
information statement, the corporation would either (i) provide a
list of shareholders to the Interested Shareholder so that he can
distribute the materials, or (ii) distribute the proxy or
information statement itself, in which case the Interested
Shareholder would reimburse the corporation for expenses.
C. Certain Definitions. For the purpose
of this Paragraph 13:
(1) A "person" shall mean any individual,
firm, corporation or other entity.
(2) "Interested Shareholder" shall mean
any person (other than the corporation or any subsidiary) who or
which:
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a. is the beneficial owner,
directly or indirectly, of 20% or more of any class of outstanding
Voting Stock; or
b. is an Affiliate of the
corporation and at any time within the two-year period immediately
prior to the date in question was the beneficial owner, directly
or indirectly, of 20% or more of any class of outstanding Voting
Stock; or
c. is an assignee of or has
otherwise succeeded to any shares of any class of outstanding
Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by
any Interested Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of
the Securities Act of 1933.
(3) A person shall be a "beneficial
owner" of any Voting Stock:
a. which such person or any of its
Affiliates or Associates beneficially owns, directly or
indirectly; or
b. which such person or any of its
Affiliates or Associates has (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise, or (ii) the right to vote pursuant to
any agreement, arrangement or understanding; or
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c. which are beneficially owned,
directly or indirectly, by any other person with which such person
or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(4) For the purposes of determining
whether a person is an Interested Shareholder pursuant to section
(2) of this subparagraph (C), the number of shares of Voting Stock
deemed to be outstanding shall include shares deemed owned through
application of section (3) of this subparagraph (C) but shall not
include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(5) "Affiliate" or "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as in effect on February 20, 1987.
(6) A "subsidiary" means any corporation
of which a majority of any class of equity security is owned,
directly or indirectly, by the corporation; provided, however,
that for the purposes of the definition of Interested Shareholder
set forth in section (2) of this subparagraph (C), the term
"subsidiary" shall mean only a corporation of which a majority of
each class of equity security is owned, directly or indirectly, by
the corporation.
(7) "Disinterested Director" means any
member of the board of directors of the corporation who is
unaffiliated with the Interested Shareholder and was a member of
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the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Disinterested Director
by a majority of Disinterested Directors then on the board of
directors.
(8) "Fair Market Value" means (i) in the
case of stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a share of
such stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing bid quotation with respect to
a share of such stock during the 30-day period preceding the date
in question on the National Association of Securities Dealers,
Inc. Automated Quotation System or any system then in use, or if
no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the
board of directors in good faith; and (ii) in the case of property
other than cash or stock, the fair market value of such property
on the date in question as determined by the board of directors in
good faith.
(9) "Substantial Part" as used with
reference to the assets of the corporation, of any subsidiary or
of an Interested Shareholder or any Affiliate or Associate of any
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Interested Shareholder, means assets having a value of more than
10% of the total consolidated assets of the corporation and its
subsidiaries as of the end of the corporation's most recent fiscal
year ending prior to the time the determination is made.
(10) In the event of any Business
Combination in which the corporation survives, the phrase
"consideration other than cash to be received" as used in sections
(2)a and (2)b of subparagraph (B) of this Paragraph 13 shall
include the shares of common stock and/or the shares of any other
class of outstanding Voting Stock retained by the holders of such
shares.
D. Powers of the Board of Directors. A
majority of the directors of the corporation shall have the power
and duty (a) to determine for the purposes of this Paragraph 13,
on the basis of information known to them after reasonable
inquiry, (i) whether a person is an Interested Shareholder, (ii)
the number of shares of Voting Stock beneficially owned by any
person, (iii) whether a person is an Affiliate or Associate of
another, (iv) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for
the issuance or transfer of securities by the corporation or any
subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5,000,000 or more; and (b) to take into account,
for purposes of determining whether the conditions set forth in
subparagraph (B) of this Paragraph 13 have been satisfied, stock
dividends, reclassifications, combinations and the like that have
occurred since the date the Interested Shareholder became an
Interested Shareholder.
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E. No Effect on Fiduciary Obligations of
Interested Shareholders. Nothing contained in this Paragraph 13
shall be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
F. Amendment, Repeal, etc. Notwithstanding
any other provisions of these Articles or the Bylaws of the
corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, these Articles or the Bylaws of the
corporation), the affirmative vote of both (i) the holders of 85%
or more of each class of outstanding Voting Stock, each voting
separately as a class, and (ii) a majority in interest of the
holders of outstanding Voting Stock of the corporation held by
persons other than any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder, shall be required to
amend or repeal, or adopt any provisions inconsistent with this
Paragraph 13; provided that this subparagraph (F) shall not apply
to, and such vote shall not be required for, any such amendment,
repeal or adoption recommended to the shareholders by the
favorable vote of at least 75% of the Disinterested Directors and
any such amendment, repeal or adoption so recommended shall
require only the vote, if any, required by law or under the
applicable provisions of these Articles (exclusive of this
Paragraph 13).
14. To the fullest extent permitted by the North
Carolina Business Corporation Act as it exists or may hereinafter
be amended, a director of the corporation shall not be liable to
the corporation or any of its shareholders for monetary damages
for breach of any duty as a director.
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15. These Articles purport merely to restate but not to
change the provisions of the original Articles of Incorporation as
supplemented and amended; and there is no discrepancy, other than
as expressly permitted by Section 55-10-07 of the General Statutes
of North Carolina, between the said provisions and the provisions
of these Articles.
IN WITNESS WHEREOF, the corporation has caused this
instrument to be executed in its corporate name by its President
all by order of its board of directors duly given, this the ______
day of ____________, 1995.
CCB FINANCIAL CORPORATION
By:______________________________
Ernest C. Roessler, President
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed
effective as of May 19, 1995 (the "Agreement"), by and among CCB
Financial Corporation, a North Carolina corporation ("CCBF"),
Central Carolina Bank and Trust Company, a wholly-owned subsidiary
of CCBF ("CCB"), and David B. Jordan, a resident of Salisbury,
Rowan County, North Carolina (the "Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements
with Security Capital Bancorp ("SCBC") and various of its
subsidiaries (the "Prior Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with
SCBC as the surviving corporation, and SCBC subsequently merged
into CCBF (collectively, the "Merger"); and
WHEREAS, through a series of transactions, the financial
institution subsidiaries of SCBC have merged into CCB (the "Bank
Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations
of SCBC and its subsidiaries under the Prior Agreements, and the
Officer consents to such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined
that, upon the consummation of the Merger and the Bank Mergers, the
allocation of responsibilities among the senior management officers
of CCBF and CCB should be revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the
Prior Agreements in a single agreement among them in order to set
forth the terms and conditions of the Officer's continued
employment upon the consummation of the Merger and the Bank
Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, IT IS AGREED as follows:
1. Employment; Consulting; and Directorship.
(a) Employment. The Officer shall be employed by CCBF and
CCB upon the terms and conditions set forth herein and in
continuation of his employment by SCBC and certain of its
subsidiaries. He shall serve in an executive capacity as
Vice-Chairman of the Boards of Directors of CCBF and CCB. In
the event that the Officer shall not be a member of either
such Board at any time during the Term (as defined below), he
shall be appointed Senior Executive Vice President -
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Special Projects and Acquisitions of the applicable company
and shall hold such office for such period or periods of the
Term that he is not a member and Vice Chairman of the Board of
Directors of such company.
The Officer shall actively promote the business, and shall perform
such duties on behalf, of CCBF, CCB and the other subsidiaries of
CCBF as are customarily performed by persons employed in the
banking industry who have such executive positions, such duties and
responsibilities shall be those set forth in Appendix A which is
incorporated herein by reference. At his election, the Officer may
maintain his principal residence and place of business in
Salisbury, North Carolina throughout the Term (as defined below).
He shall perform his duties primarily from the main office of CCB
in Salisbury, North Carolina and secondarily from the principal
offices of CCBF, and in each case shall be provided with such
office, working facilities and staff as are necessary for the
Officer to perform his obligations under this Agreement.
(b) Directorship. It is the agreement of the parties hereto that
the Officer shall be appointed to the Boards of Directors of CCBF
(the "Board") and CCB (the "Bank Board") upon the consummation of
the Merger, shall be nominated for election to such Boards at the
first shareholders meetings of such companies at which directors
are elected following the Merger, and shall continue to be
nominated for election to such Boards, when and as necessary to
remain a director of such companies, throughout the Term of this
Agreement. The Officer shall be a member of the Executive
Committee of each of the Boards of Directors of CCBF and CCB at all
times that he is a member of such Board.
2. Employment Compensation.
(a) Pre-Election Date Compensation. Subject to the provisions of
Section 2(b), CCBF and CCB shall pay the Officer during the Term as
compensation for the services rendered by the Officer to CCBF and
CCB an initial base salary per annum equal to his total annualized
base salary from SCBC and its subsidiaries in effect immediately
prior to the Merger (the "Base Salary"), payable in cash (in as
equal installments as possible) not less frequently than monthly;
provided, however, that the amount of the Base Salary shall be
reviewed by the Executive Committee of the Board not less often
than annually for the purpose of considering such increases therein
as are appropriate to reflect the duties, responsibilities and
performance of the Officer. In reviewing the Officer's salary, the
Board shall consider the employee compensation policies established
by the Compensation Committee of the Board for application to the
employees of CCBF and its subsidiaries, the duties and
responsibilities of the Officer, and the overall performance of the
Officer, CCBF and CCB, as well as increases in the cost of living,
and may also consider the appropriateness of performance or merit
increases. Neither participation in, or receipt of payment from,
any incentive compensation, deferred compensation, incentive bonus,
discretionary bonus, pension, life insurance, group life insurance,
health benefit, medical coverage, disability coverage, dental
insurance, stock option, restricted stock, stock appreciation
rights, incentive compensation unit, profit sharing, employee stock
ownership, pension, retirement, or other employee welfare or
benefit plans of CCBF or CCB (collectively "Benefit Plans"), nor
receipt of any fringe benefits from CCBF
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or CCB granted to the Officer ("Fringe Benefits") shall reduce, or
be deemed an offset against, the Base Salary payable to the
Officer.
(b) Post-Election Date Compensation. At any time on or after the
Officer's sixtieth (60th) birthday, he may elect to reduce the
number of his business hours to be expended in furtherance of his
duties and responsibilities under this Agreement to such amount as
he shall determine, but, except as provided in the following
proviso, in no event to less than one thousand (1,000) hours per
calendar year (the date on which he gives notice to CCBF and CCB of
such election shall be the "Election Date"); provided, further,
that he may designate a lesser number of hours per year should he
elect to forego the right to participate in Benefit Plans requiring
a minimum of one thousand (1,000) hours of service per calendar
year to qualify for participation.
On the first anniversary of the Election Date, the Officer's Base
Salary shall be reduced to $150,000 per annum (the "Reduced Base
Salary"), payable in cash (in as equal installments as possible)
not less frequently than monthly; provided, however, that the
amount of such Reduced Base Salary shall be reviewed by the
Executive Committee of the Board not less often than annually for
the purpose of considering such increases therein as are deemed
appropriate. Neither participation in, or receipt of payments
from, any Benefit Plan, nor receipt of any Fringe Benefit shall
reduce, or be deemed an offset against, such Reduced Base Salary
payable to the Officer.
(c) Allocation of Compensation. The portion of the Officer's Base
Salary or Reduced Base Salary, as applicable, allocable to, and to
be paid by, each of CCBF and CCB shall be determined from time to
time by the Board. In making such allocations, the Board shall
consider the portion of the Officer's time spent in fulfilling his
respective duties to CCBF and CCB, appropriate tax and accounting
principles, and such other factors as it shall deem relevant.
3. Participation in Benefit Plans; Fringe Benefits. During the
Term, the Officer shall be entitled to participate in all Benefit
Plans, including the "CCB Financial Corporation Long-Term Incentive
Plan" (the "LTIP") and any other executive incentive compensation
plan for key employees of CCBF and/or CCB, as the same may be
amended, modified or terminated from time to time by the Board or
the Bank Board, as applicable, on the same basis as the other
senior executive officers of CCBF and CCB; provided, however, that
on and after the Election Date, the Officer shall no longer be
eligible to receive additional annual incentive bonuses under
CCBF's Management Performance Incentive Plan (the "Incentive Plan")
or to receive additional grants or awards of options, performance
units or restricted stock under the LTIP, but previously granted or
awarded bonuses, options, performance units and/or restricted stock
awards shall continue in existence and shall accrue, vest and be
distributed to the Officer pursuant to applicable terms established
upon their grant or award. With respect to the Incentive Plan,
during the Term and until the Election Date, the Officer shall have
a target bonus of at least 15% of Base Salary. In addition to, and
not in lieu of, any other provisions hereof, CCBF shall annually
pay to the Officer an allowance equal to three percent (3%) of his
Base Salary or Reduced Base Salary, as applicable, for such
calendar year (with such allowance for 1995 being prorated for the
number of days in 1995 during which this Agreement
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is in effect). Such allowance shall be payable in cash (in as equal
installments as possible) not less frequently than monthly.
During the Term, the Officer shall also be entitled to receive any
Fringe Benefits which are now or may be or become applicable to the
executive employees of CCBF and/or CCB, including the payment
of reasonable expenses for attending (i) annual and periodic
meetings of trade associations and (ii) continuing education
courses necessary for the Officer to maintain professional
certifications, and any other Fringe Benefits which are
commensurate with the duties and responsibilities to be performed
by the Officer under this Agreement. Additionally, the Officer
shall be entitled to such customary Fringe Benefits, including such
vacation and sick leave, as are consistent with the normal
practices and established policies of CCBF and CCB. CCBF or CCB,
as applicable, shall reimburse the Officer for all out-of-pocket
reasonable and necessary business expenses which the Officer may
incur during the Term in connection with the Officer's services on
behalf of CCBF or CCB, as applicable, or any activities the Officer
is requested to undertake on behalf of any of the subsidiaries of
CCBF.
During the Term, CCBF or CCB shall provide a car (of such make,
model and year as is commensurate with the Officer's senior
executive status) owned by it to the Officer for the Officer's use
(with the Officer reimbursing CCBF or CCB, as applicable, for the
proportionate operational costs attributable to the Officer's
personal use of the car), shall pay fifty percent (50%) of the
periodic dues and assessments for all country clubs and similar
organizations of which the Officer is a member immediately prior to
the Merger and which SCBC currently pays or reimburses (or
otherwise compensates) to the Officer (including future increases
thereof), and shall pay fifty percent (50%) of all initiation fees,
periodic dues and assessments of all such organizations that CCBF
and/or CCB request the Officer to join after the Merger.
4. Loyalty; Noncompetition; Confidentiality.
(a) Full Efforts. During the Term, but subject to Section 2(b)
and the provisions of Appendix A, the Officer shall devote his full
efforts and entire business time to the performance of the
Officer's duties and responsibilities under this Agreement.
(b) Noncompetition. In consideration of employment of the Officer
under the Prior Agreements and the continuation of such employment
by CCBF and CCB hereunder, during the Term, and for a period of
two (2) years after the termination of this Agreement, the Officer
agrees that he will not, within any county in which CCBF, CCB, or
any other financial institution subsidiary of CCBF, or any
subsidiary of CCB or such other financial institution subsidiary,
maintains offices, directly or indirectly, own, manage, operate,
join, control or participate in the management, operation or
control of, or be employed by or connected in any manner with, any
Person (as defined in Section 6(i)) which competes with CCBF, CCB
or any of the other direct or indirect subsidiaries of CCBF,
without the prior written consent of CCBF; provided, however, that
the provisions of this Section 4(b) shall not apply prospectively
in the event this Agreement is terminated by CCBF and CCB without
Cause (as is defined in Section 6(e) hereof).
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Notwithstanding the foregoing, the Officer shall be free, without
such consent, to purchase or hold as an investment or otherwise up
to five percent (5%) of the outstanding stock or other securities
of any Person which has its securities listed on any national
securities exchange or which has transactions in its securities
quoted on The Nasdaq Stock Market or other over-the-counter market
or inter-dealer quotation system.
(c) Confidentiality. The Officer will hold in strict confidence,
during the Term and at all times thereafter, all knowledge or
information of a confidential or proprietary nature with respect to
the business of CCBF, CCB and/or the other direct or indirect
subsidiaries of CCBF received by the Officer during the Term, and,
except in the performance of his duties, will not disclose or make
use of such information without the prior written consent of CCBF.
(d) Injunctive Relief. The Officer acknowledges that it would not
be possible to ascertain the amount of monetary damages suffered in
the event of a breach by the Officer of the provisions of this
Section 4. Accordingly, the Officer agrees that, in the event of a
breach of this Section, injunctive relief enforcing the terms of
this Section is an appropriate remedy.
5. Employment Standards. Subject to Section 2(b) and the
provisions of Appendix A, the Officer shall perform his duties and
responsibilities as an employee of CCBF and CCB during the Term in
accordance with the standards imposed by applicable financial
institution statutes, regulations and rules or by applicable
financial institution regulatory agencies, such reasonable
standards expected of employees with comparable positions in
comparable organizations, and CCBF's and CCB's policies and
procedures, and such other standards and guidelines as may be
established from time to time by the Board or the Bank Board, as
applicable.
6. Term and Termination.
(a) Term. Notwithstanding the provisions of the Prior Agreements,
the term hereof (the "Term") shall be deemed to have commenced on
May 19, 1995 (the "Commencement Date") and, unless earlier
terminated as provided herein or modified as provided in the last
sentence of this Section 6(a), shall continue through March 15,
2001 (the "Expiration Date"); provided, however, that upon the
termination of this Agreement for any reason, all provisions hereof
requiring actions or the fulfillment of obligations by the Officer,
CCBF and/or CCB after the effectiveness of such termination shall
remain binding upon, or enforceable by, the Officer, CCBF and/or
CCB, as the case may be.
(b) Termination by Death. Subject to the remaining provisions of
this Section 6(b), this Agreement shall be terminated upon the
death of the Officer. If the Officer's death shall occur during
the Term but prior to the Election Date, (i) the Officer's estate
shall be entitled to receive all compensation and benefits payable
to, or accruable or vested for the benefit of, the Officer under
this Agreement through the end of the second calendar month
following the calendar month in which the Officer's death shall
have occurred, and (ii) an amount equal to three (3) times the
Reduced Base Salary the Officer would have received yearly during
the remainder of the Term had the Election
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Date occurred on the date of his death shall be payable to the
Officer's spouse (or, if she predeceases him, to his estate) in
three (3) equal annual installments beginning on the first day of
the third calendar month in which the Officer's death shall have
occurred. If the Officer's death shall occur during the Term but
on or after the Election Date, an amount equal to the Reduced Base
Salary that would have been paid to the Officer during the
remainder of the Term had he not died shall be paid each year to
the Officer's spouse (or, if she predeceases him, to his estate) as
and when provided in Section 2(b).
(c) Termination by Total Disability. This Agreement shall be
terminated upon the Total Disability (as defined below) of the
Officer during the Term. In the event of his Total Disability, the
Officer shall receive all compensation and benefits payable to, or
accruable or vested for the benefit of, the Officer under this
Agreement through the date of the determination of his Total
Disability and for a period of ninety (90) days thereafter. The
Officer shall be deemed to have suffered Total Disability upon the
determination of his total permanent disability by the United
States Social Security Administration or CCBF's receipt of a
certification to such effect by the Officer's regular physician, in
each case such total permanent disability meaning the Officer's
loss of ability to perform at least the majority of his then
applicable duties hereunder.
(d) Termination by Officer. This Agreement may be terminated at
any time by the Officer upon sixty (60) days prior written notice
to CCBF and CCB. Unless the provisions of Sections 6(g)(ii) or
6(h) are applicable and the Officer elects to apply those
provisions, upon such termination, the Officer shall be entitled to
receive the compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through
the effective date of such termination.
(e) Termination for Cause. Subject to confirmation by the Bank
Board, the Board may terminate this Agreement for Cause, in which
event the Officer shall have no right to receive, or to have
accrued or vested for his benefit, compensation or other benefits
hereunder for any period after such termination. Termination for
Cause shall mean termination of this Agreement because of the
Officer's (i) breach of fiduciary duty involving personal profit,
(ii) intentional and material failure to perform stated duties
(after written notice thereof and a reasonable opportunity to cure
such failure), (iii) willful and material violation of any law
(other than traffic violations or other similar misdemeanor
offenses), rule, regulation or final cease-and-desist order, or
(iv) a material and continuing breach of any provision of this
Agreement (after written notice thereof and a reasonable
opportunity to cure such breach).
(f) Termination Without Cause. Subject to confirmation by the
Bank Board, the Board may terminate this Agreement without Cause at
any time upon sixty (60) days prior written notice to the Officer;
provided, however, that in the event of such termination, unless
the provisions of Sections 6(g) or 6(h) are applicable and the
Officer elects to apply those provisions, the Officer shall be
entitled to receive all compensation and fees payable to, or
accruable or vested for the benefit of, the Officer under this
Agreement as and when due and payable (or, at the election of the
Officer, in a lump sum payable within ten (10) days of the date of
termination), and shall be entitled
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to continue to participate in all Benefit Plans described in
Section 3 not specifically requiring for participation therein one
thousand (1,000) hours of service per calendar year) through the
Expiration Date.
(g) Unapproved Change In Control Termination. In the event of (i)
the termination of this Agreement without Cause, or (ii) the
voluntary termination of this Agreement by the Officer, in each
case in connection with, or within one (1) year after, any Change
In Control which has not been approved in advance by a formal
resolution of two-thirds (2/3) of the Continuing Members of the
Board (excluding the Officer), which shall be deemed a termination
without Cause, the Officer shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times
the Officer's then applicable "base amount" (as such term is
defined in Internal Revenue Code Section 280); and
(B) until the Expiration Date, to continue to participate in
all Benefit Plans described in Section 3 not requiring for
participation therein one thousand (1,000) hours of service
per calendar year.
The Officer shall be paid the applicable lump sum described in item
(A) of this Section 6(g) within ten (10) days of the date of such
termination. Notwithstanding the foregoing, the Officer, at his
sole option, may elect to reduce the payments and/or benefits
otherwise receivable pursuant to item (A) and/or (B) of this
Section 6(g) to the extent the Officer in his sole discretion may
determine, in order to avoid classification of such payment and/or
benefits as "parachute payments" within the meaning of Internal
Revenue Code Section 280G or for any other or no reason.
(h) Approved Change In Control Termination. Upon ten (10) days
prior written notice, the Officer may declare this Agreement to
have been terminated without Cause by CCBF and CCB, upon the
occurrence of any of the following events, which have not been
consented to in advance by the Officer in writing, following a
Change In Control, whether or not approved in advance by a formal
resolution of at least two-thirds (2/3) of the Continuing Members
of the Board (excluding the Officer): (i) if the Officer is
required to move his personal residence or perform his principal
executive functions more than twenty (20) miles from the city
limits of Salisbury, North Carolina; (ii) if in the organizational
structure of CCBF (or its successor pursuant to the Change In
Control), the Officer in his executive officer capacity would be
subject to the supervision of, or required to report to, any
Persons other than the President and Chief Executive Officer of
CCBF and/or the Board; (iii) if CCBF and/or CCB should fail to
maintain Benefit Plans providing at least the same level of
benefits afforded the Officer as of the date of the Change In
Control; (iv) if the Officer would be assigned duties and
responsibilities other than those described in Section 1(a); or (v)
if the Officer's responsibilities or authority in the executive
capacity described in Section 1(a) have in any way been diminished.
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Upon such termination, the Officer shall be entitled to receive the
lump sum payment and to continue to participate in the Benefit
Plans, when and as provided in Section 6(f) or, at his election,
when and as provided in Section 6(g), but shall also have the right
to reduce such payment and/or benefits as stated in Section 6(g).
(i) Definitions. For purposes of this Agreement, a Change in
Control shall mean: (i) the merger of CCBF with any other
corporation as a result of which the holders of CCBF's voting
securities outstanding immediately prior to such event would
receive or retain less than fifty percent (50%) of the outstanding
voting securities of the resulting or surviving corporation of such
merger; (ii) the acquisition of more than twenty percent (20%) of
the outstanding voting securities of CCBF (calculated on a fully
diluted basis) by any Person; (iii) the ownership of fifty percent
(50%) or more of the outstanding voting securities of CCB by any
Person other than CCBF; (iv) the sale of more than fifty percent
(50%) in value of the assets of CCBF; or (v) the sale of more than
fifty percent (50%) in value of the assets of CCB to any Person
other than CCBF.
For purposes of this Agreement, a Person shall mean: (i) an
individual or a corporation, partnership (limited or general),
trust, limited liability company, business trust, association
(mutual or stock, and including a mutual holding company), joint
venture, pool, syndicate, unincorporated organization or any other
form of entity; and (ii) any Affiliate of any individual or entity
listed in item (i). Affiliate shall mean any Person who controls,
is under common control with, or is controlled by the Person to
whom reference is being made; and for the purposes of the
definition of Affiliate, control shall be deemed to exist in a
Person who beneficially owns ten percent (10%) or more of the
outstanding equity interests (or options, warrants or other rights
to acquire such equity interests) of another Person.
For purposes of this Agreement, the Continuing Members of the Board
shall mean those individuals elected to the Board prior to, and
continuing to serve thereon at, the time a Change In Control shall
occur.
(j) Joint Termination. Any termination of this Agreement under
this Section 6 shall be a termination of the Officer's employment
by CCBF and CCB; i.e., the Officer's employment by both CCBF and
CCB must be terminated, and not with respect to one and not the
other.
(k) Damages. In addition to the provisions of Sections 6(f),
6(g)(i) and 6(h), in the event this Agreement is terminated without
Cause on or prior to the Officer's sixtieth (60th) birthday, the
Officer shall be entitled to receive as additional damages a lump
sum amount calculated by:
(A) Determining the difference (the "Difference") in the
monthly early retirement benefit between: (i) the monthly
early retirement benefit of the Officer, or his spouse (if
applicable), would have received under the provisions of the
"Security Capital Bancorp Employees' Pension Plan" (the "SCBC
Pension Plan") had the Officer remained an employee of SCBC
until the Officer had attained his 60th birthday and died or
retired from employment on or after the
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first day of the calendar month following his 60th birthday;
and (ii) the monthly early retirement benefit the Officer, or
his spouse (if applicable), is entitled to receive as of his
date of termination of employment (if prior to his attainment
of the age of 60) under the CCB Financial Corporation Pension
Plan, assuming payment of his early retirement monthly benefit
would start on the first day of the calendar month following
his date of termination of employment; and
(B) Determining the present value of the Difference based on
the actuarial assumptions for lump sum payments as defined in
the SCBC Pension Plan.
(l) Resolution of Disputes. In the event any dispute shall arise
between the Officer, on the one hand, and CCBF and CCB, on the
other, as to the terms or interpretation of, or calculations made
under, this Agreement, including this Section 6, whether instituted
by formal legal proceedings or otherwise, including any action taken
by the Officer to enforce any term of this Agreement or in defending
against any action taken by CCBF and/or CCB, CCBF shall reimburse
the Officer for all of his costs and expenses, including reasonable
attorneys' fees, in the event the Officer prevails in any such
action.
7. Assumption of Prior Agreement; Successors and Assigns.
(a) Assumption of Prior Agreements. CCBF and CCB, jointly and
severally, assume all rights and obligations of SCBC and its
subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; provided, however, that such assumption and consent
shall not relieve SCBC of such obligations.
(b) Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, any corporate or other successor of
CCBF, including any Person who shall acquire, directly or
indirectly, by merger, share exchange, purchase or otherwise, the
outstanding stock or all or substantially all of the assets of CCBF,
as applicable. This Agreement also shall inure to the benefit of,
and be binding upon, any corporate or other successor of CCB,
including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock
or all or substantially all of the assets of CCB, as applicable.
(c) The Officer. Because CCBF and CCB are contracting for the
unique and personal skills of the Officer, the Officer shall be
precluded from assigning or delegating his rights or duties
hereunder; provided, however, that the Officer's spouse and/or
estate are expressly intended to have such rights upon and following
the Officer's death as are specifically provided to each of them
herein.
8. Modification; Waiver; Amendments. 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
Officer and signed on behalf of CCBF and CCB by such officers
thereof as may be
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specifically designated by the Board and the Bank
Board, respectively. No waiver by any party hereto at any time of
any breach by any 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 any similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No amendments or additions to this Agreement shall be
binding unless in writing and signed by all parties hereto, except
as herein otherwise provided.
9. Applicable Law. This Agreement shall be governed in all
respects whether as to validity, construction, capacity,
performance or otherwise, by the laws of the State of North
Carolina.
10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the
other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Employment Agreement to be effective as of the day and
year first hereinabove written.
CCB FINANCIAL CORPORATION
ATTEST:
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
CENTRAL CAROLINA BANK AND
ATTEST: TRUST COMPANY
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
/s/ David B. Jordan
David B. Jordan
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APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each
case with the title of "Vice Chairman - Special Projects and
Acquisitions." He shall report to the President and Chief
Executive Officer of CCBF.
His duties and responsibilities prior to the Election Date shall be:
1. To coordinate the integration of SCBC and its
subsidiaries into CCBF and its subsidiaries, and, in
connection therewith, to exercise oversight authority to
effect economies of scale and scope, to effect appropriate
management placement and succession activities, and to effect
common operations systems for the merged financial institution
subsidiaries;
2. As a member of the Board and the Bank Board, to serve as
a member of the Executive Committees of such Boards, assist in
familiarizing the members of such Boards who were members of
the SCBC Board of Directors with the policies and guidelines
of CCBF and CCB, and facilitate the presentation of the
collective views, as and when appropriate, of such former
members of the SCBC Board;
3. To actively participate in communicating with key
customers of SCBC's financial institution subsidiaries with
the goals of maintaining with them banking relationships and
broadening such relationships;
4. To actively participate in identifying prospective new
members of the Board and the Bank Board residing in SCBC's
former market areas, as and when appropriate;
5. To assist the Chairman of the Board and the Bank Board in
identifying merger and acquisition candidates in North
Carolina and in soliciting their agreements to effect such
transactions;
6. To participate actively in the North Carolina Alliance of
Community Financial Institutions, the North Carolina Bankers
Association and other similar groups and to represent CCBF and
CCB in such groups; and
7. To direct or assist in the executive management of
appropriate special projects designated by the President and
Chief Executive Officer of CCBF.
Subject to Section 2(b), the Officer's duties and responsibilities
on and after the Election Date shall be those set forth in items
(2) through (7) above and such other matters as he and the
President and Chief Executive Officer of CCBF may designate by
agreement.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed
effective as of May 19, 1995 (the "Agreement"), by and among CCB
Financial Corporation, a North Carolina corporation ("CCBF"), Central
Carolina Bank and Trust Company, a wholly-owned subsidiary of CCBF
("CCB"), and Ralph A. Barnhardt, a resident of Concord, Cabarrus
County, North Carolina (the "Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements
with Security Capital Bancorp ("SCBC") and various of its subsidiaries
(the "Prior Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with
SCBC as the surviving corporation and SCBC subsequently merged into CCBF
(collectively, the "Merger"); and
WHEREAS, through a series of transactions, the financial
institution subsidiaries of SCBC have merged into CCB (the "Bank
Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations
of SCBC and its subsidiaries under the Prior Agreements, and the Officer
consents to such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined
that, upon the consummation of the Merger and the Bank Mergers, the
allocation of responsibilities among the senior management officers of
CCBF and CCB should be revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the
Prior Agreements in a single agreement among them in order to set forth
the terms and conditions of the Officer's continued employment upon the
consummation of the Merger and the Bank Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, IT IS AGREED as follows:
1. Employment. The Officer shall be employed by CCBF and CCB upon
the terms and conditions set forth herein and in continuation of his
employment by SCBC and certain of its subsidiaries. He shall serve as
an Executive Vice President of CCBF and CCB.
The Officer shall actively promote the business, and shall perform
such duties on behalf, of CCBF, CCB and the other subsidiaries of CCBF
as are customarily performed by persons employed in the banking industry
who have such executive positions, such duties and responsibilities
shall be
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those set forth in Appendix A which is incorporated herein by
reference. At his election, the Officer may maintain his principal
residence and place of business in Concord, North Carolina throughout
the Term (as defined below). He shall be provided with such office,
working facilities and staff at the offices of CCB in Concord, North
Carolina as are necessary for the Officer to perform his obligations
under this Agreement.
2. Compensation.
(a) Pre-Adjustment Date Compensation. Subject to the
provisions of Section 2(b), CCBF and CCB shall pay the Officer during
the Employment Term as compensation for the services rendered by the
Officer to CCBF and CCB an initial base salary per annum equal to his
total annualized base salary from SCBC and its subsidiaries in effect
immediately prior to the Merger (the "Base Salary"), payable in cash (in
as equal installments as possible) not less frequently than monthly;
provided, however, that the amount of the Base Salary shall be reviewed
by the Executive Committee of the Board of Directors of CCBF (the
"Board") not less often than annually for the purpose of considering
such increases therein as are appropriate to reflect the duties,
responsibilities and performance of the Officer. In reviewing the
Officer's salary, the Board shall consider the employee compensation
policies established by the Compensation Committee of the Board for
application to the employees of CCBF and its subsidiaries, the duties
and responsibilities of the Officer, and the overall performance of the
Officer, CCBF and CCB, as well as increases in the cost of living, and
may also consider the appropriateness of performance or merit increases.
Neither participation in, or receipt of payment from, any incentive
compensation, deferred compensation, incentive bonus, discretionary
bonus, pension, life insurance, group life insurance, health benefit,
medical coverage, disability coverage, dental insurance, stock option,
restricted stock, stock appreciation rights, incentive compensation
unit, profit sharing, employee stock ownership, pension, retirement, or
other employee welfare or benefit plans of CCBF or CCB (collectively
"Benefit Plans"), nor receipt of any fringe benefits from CCBF or CCB
granted to the Officer ("Fringe Benefits") shall reduce, or be deemed an
offset against, the Base Salary payable to the Officer.
(b) Post-Adjustment Date Compensation. On and after the
Adjustment Date (as defined below), the Officer's annual base
compensation for services rendered shall be his Base Salary as of
December 31, 1995 per annum (the "Adjusted Base Salary"), payable in
cash (in as equal installments as possible) not less frequently than
monthly; provided, however, that the amount of the Adjusted Base Salary
shall be reviewed by the Executive Committee of the Board not less often
than annually for the purpose of considering such increases therein as
are deemed appropriate. Neither participation in, or receipt of
payments from, any Benefit Plan, nor receipt of any Fringe Benefit shall
reduce, or be deemed an offset against, the Adjusted Base Salary payable
to the Officer.
(c) Allocation of Compensation. The portion of the Officer's
Base Salary or Adjusted Base Salary, as applicable, allocable to, and to
be paid by, each of CCBF and CCB shall be determined from time to time
by the Board. In making such allocations, the Board shall consider the
portion of the Officer's time spent in fulfilling his respective duties
to CCBF and CCB, appropriate tax and accounting principles, and such
other factors as it shall deem relevant.
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3. Participation in Benefit Plans; Fringe Benefits. During the
Term, the Officer shall be entitled to participate in all Benefit Plans,
including the "CCB Financial Corporation Long-Term Incentive Plan" (the
"LTIP") and any other executive incentive compensation plan for key
employees of CCBF and/or CCB, as the same may be amended, modified or
terminated from time to time by the Board or the Bank Board, as
applicable, on the same basis as the other senior executive officers of
CCBF and CCB; provided, however, that at and after the Adjustment Date,
the Officer shall no longer be eligible to receive additional annual
incentive bonuses under CCBF's Management Performance Incentive Plan
(the "Incentive Plan") or to receive additional grants or awards of
options, performance units or restricted stock under the LTIP, but
previously granted or awarded bonuses, options, performance units and/or
restricted stock awards shall continue in existence and shall accrue,
vest and be distributed to the Officer pursuant to applicable terms
established upon their grant or award. With respect to the Incentive
Plan, during the Term until the Adjustment Date, the Officer shall have
a target bonus of at least 15% of Base Salary. In addition to, and not
in lieu of, any other provisions hereof, CCBF shall annually pay to the
Officer an allowance equal to three percent (3%) of his Base Salary or
Adjusted Base Salary, as applicable, for such calendar year (with such
allowance for 1995 being prorated for the number of days in 1995 during
which this Agreement is in effect). Such allowance shall be payable in
cash (in as equal installments as possible) not less frequently than
monthly.
During the Term, the Officer shall also be entitled to receive any
Fringe Benefits which are now or may be or become applicable to the
executive employees of CCBF and/or CCB, including the payment of
reasonable expenses for attending (i) annual and periodic meetings of
trade associations and (ii) continuing education courses necessary for
the Officer to maintain professional certifications, and any other
Fringe Benefits which are commensurate with the duties and
responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such customary Fringe
Benefits, including such vacation and sick leave, as are consistent with
the normal practices and established policies of CCBF and CCB. CCBF or
CCB, as applicable, shall reimburse the Officer for all out-of-pocket
reasonable and necessary business expenses which the Officer may incur
during the Term in connection with the Officer's services on behalf of
CCBF or CCB, as applicable, or any activities the Officer is requested
to undertake on behalf of any of the subsidiaries of CCBF.
During the Term, CCBF or CCB shall provide a car (of such make,
model and year as is commensurate with the Officer's senior executive
status) owned by it to the Officer for the Officer's use (with the
Officer reimbursing CCBF or CCB, as applicable, for the proportionate
operational costs attributable to the Officer's personal use of the
car), shall pay fifty percent (50%) of the periodic dues and assessments
for all country clubs and similar organizations of which the Officer is
a member immediately prior to the Merger and which SCBC currently pays
or reimburses (or otherwise compensates) to the Officer (including
future increases thereof), and shall pay fifty percent (50%) of all
initiation fees, periodic dues and assessments of all such organizations
that CCBF and/or CCB request the Officer to join after the Merger.
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4. Loyalty; Noncompetition; Confidentiality.
(a) Full Efforts. During the Term, but subject to the
provisions of Appendix A, the Officer shall devote his full efforts and
entire business time to the performance of the Officer's duties and
responsibilities under this Agreement.
(b) Noncompetition. In consideration of employment of the
Officer under the Prior Agreements and the continuation of such
employment by CCBF and CCB hereunder, during the Term, and for a period
of two (2) years after the termination of this Agreement, the Officer
agrees that he will not, within any county in which CCBF, CCB, or any
other financial institution subsidiary of CCBF, or any subsidiary of CCB
or such other financial institution subsidiary, maintains offices,
directly or indirectly, own, manage, operate, join, control or
participate in the management, operation or control of, or be employed
by or connected in any manner with, any Person (as defined in Section
6(i)) which competes with CCBF, CCB or any of the other direct or
indirect subsidiaries of CCBF, without the prior written consent of
CCBF; provided, however, that the provisions of this Section 4(b) shall
not apply prospectively in the event this Agreement is terminated by
CCBF and CCB without Cause (as is defined in Section 6(e) hereof).
Notwithstanding the foregoing, the Officer shall be free, without such
consent, to purchase or hold as an investment or otherwise up to five
percent (5%) of the outstanding stock or other securities of any Person
which has its securities listed on any national securities exchange or
which has transactions in its securities quoted on The Nasdaq Stock
Market or other over-the-counter market or inter-dealer quotation
system.
(c) Confidentiality. The Officer will hold in strict
confidence, during the Term and at all times thereafter, all knowledge
or information of a confidential or proprietary nature with respect to
the business of CCBF, CCB and/or the other direct or indirect
subsidiaries of CCBF received by the Officer during the Term, and,
except in the performance of his duties, will not disclose or make use
of such information without the prior written consent of CCBF.
(d) Injunctive Relief. The Officer acknowledges that it
would not be possible to ascertain the amount of monetary damages
suffered in the event of a breach by the Officer of the provisions of
this Section 4. Accordingly, the Officer agrees that, in the event of a
breach of this Section, injunctive relief enforcing the terms of this
Section is an appropriate remedy.
5. Employment Standards. Subject to the provisions of Appendix A,
the Officer shall perform his duties and responsibilities as an employee
of CCBF and CCB during the Term in accordance with the standards imposed
by applicable financial institution statutes, regulations and rules or
by applicable financial institution regulatory agencies, such reasonable
standards expected of employees with comparable positions in comparable
organizations, and CCBF's and CCB's policies and procedures, and such
other standards and guidelines as may be established from time to time
by the Board or the Board of Directors of CCB (the "Bank Board"), as
applicable.
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6. Term and Termination.
(a) Term. Notwithstanding the provisions of the Prior
Agreements, the term hereof (the "Term") shall be deemed to have
commenced on May 19, 1995 (the "Commencement Date") and, unless earlier
terminated as provided herein or modified as provided in the last
sentence of this Section 6(a), shall continue through March 15, 1998
(the "Expiration Date"); provided, however, that upon the termination of
this Agreement for any reason, all provisions hereof requiring actions
or the fulfillment of obligations by the Officer, CCBF and/or CCB after
the effectiveness of such termination shall remain binding upon, or
enforceable by, the Officer, CCBF and/or CCB, as the case may be. The
"Adjustment Date" shall be January 1, 1996.
(b) Termination by Death. Subject to the remaining
provisions of this Section 6(b), this Agreement shall be terminated upon
the death of the Officer. If the Officer's death shall occur during the
Term but before the Adjustment Date, the Officer's estate shall be
entitled to receive all compensation and benefits payable to, or
accruable or vested for the benefit of, the Officer under this Agreement
through the end of the second calendar month following the calendar
month in which the Officer's death shall have occurred. If the
Officer's death shall occur during the Term but after the Adjustment
Date, the Officer's estate shall be entitled to receive all compensation
and benefits payable to, or accruable or vested for the benefit of, the
Officer through the end of the month in which such death shall occur.
(c) Termination by Total Disability. This Agreement shall be
terminated upon the Total Disability (as defined below) of the Officer
during the Term. In the event of his Total Disability, the Officer
shall receive all compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through the
date of the determination of his Total Disability and for a period of
ninety (90) days thereafter. The Officer shall be deemed to have
suffered Total Disability upon the determination of his total permanent
disability by the United States Social Security Administration or CCBF's
receipt of a certification to such effect by the Officer's regular
physician, in each case such total permanent disability meaning the
Officer's loss of ability to perform at least the majority of his then
applicable duties hereunder.
(d) Termination by Officer. This Agreement may be terminated
at any time by the Officer upon sixty (60) days prior written notice to
CCBF and CCB. Unless the provisions of Sections 6(g)(ii) or 6(h) are
applicable and the Officer elects to apply those provisions, upon such
termination, the Officer shall be entitled to receive the compensation
and benefits payable to, or accruable or vested for the benefit of, the
Officer under this Agreement through the effective date of such
termination.
(e) Termination for Cause. Subject to confirmation by the
Bank Board, the Board may terminate this Agreement for Cause, in which
event the Officer shall have no right to receive, or to have accrued or
vested for his benefit, compensation or other benefits hereunder for any
period after such termination. Termination for Cause shall mean
termination of this Agreement because of the Officer's (i) breach of
fiduciary duty involving personal profit, (ii) intentional and material
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failure to perform stated duties (after written notice thereof and a
reasonable opportunity to cure such failure), (iii) willful and material
violation of any law (other than traffic violations or other similar
misdemeanor offenses), rule, regulation or final cease-and-desist order,
or (iv) a material and continuing breach of any provision of this
Agreement (after written notice thereof and a reasonable opportunity to
cure such breach).
(f) Termination Without Cause. Subject to confirmation by
the Bank Board, the Board may terminate this Agreement without Cause at
any time upon sixty (60) days prior written notice to the Officer;
provided, however, that in the event of such termination, unless the
provisions of Sections 6(g) or 6(h) are applicable and the Officer
elects to apply those provisions, the Officer shall be entitled to
receive all compensation and fees payable to, or accruable or vested for
the benefit of, the Officer under this Agreement as and when due and
payable (or, at the election of the Officer, in a lump sum payable
within ten (10) days of the date of termination), and shall be entitled
to continue to participate in all Benefit Plans described in Section 3
not specifically requiring for participation therein one thousand
(1,000) hours of service per calendar year, through the Expiration Date.
(g) Unapproved Change In Control Termination. In the event
of (i) the termination of this Agreement without Cause, or (ii) the
voluntary termination of this Agreement by the Officer, in each case in
connection with, or within one (1) year after, any Change In Control
which has not been approved in advance by a formal resolution of
two-thirds (2/3) of the Continuing Members of the Board (excluding the
Officer), which shall be deemed a termination without Cause, the Officer
shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times
the Officer's then applicable "base amount" (as such term
is defined in Internal Revenue Code Section 280); and
(B) until the Expiration Date, to continue to participate in
all Benefit Plans described in Section 3 not requiring
for participation therein one thousand (1,000) hours of
service per calendar year.
The Officer shall be paid the applicable lump sum described in item
(A) of this Section 6(g) within ten (10) days of the date of such
termination. Notwithstanding the foregoing, the Officer, at his sole
option, may elect to reduce the payments and/or benefits otherwise
receivable pursuant to item (A) and/or (B) of this Section 6(g) to the
extent the Officer in his sole discretion may determine, in order to
avoid classification of such payment and/or benefits as "parachute
payments" within the meaning of Internal Revenue Code Section 280G or
for any other or no reason.
(h) Approved Change In Control Termination. Upon ten (10)
days prior written notice, the Officer may declare this Agreement to
have been terminated without Cause by CCBF and CCB, upon the occurrence
of any of the following events, which have not been consented to in
advance by the Officer in writing, following a Change In Control,
whether or not approved in
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advance by a formal resolution of at least two-thirds (2/3) of the
Continuing Members of the Board (excluding the Officer): (i) if the
Officer is required to move his personal residence or perform his
principal executive functions more than twenty (20) miles from the city
limits of Concord, North Carolina; (ii) if in the organizational
structure of CCBF (or its successor pursuant to the Change In Control),
the Officer would be subject to the supervision of, or required to
report to, any Persons other than the President and Chief Executive
Officer of CCBF and/or the Board; (iii) if CCBF and/or CCB should fail
to maintain Benefit Plans providing at least the same level of benefits
afforded the Officer as of the date of the Change In Control; (iv) if
the Officer would be assigned duties and responsibilities other than
those described in Section 1(a); or (v) if the Officer's
responsibilities or authority in the executive capacity described in
Section 1(a) have in any way been diminished.
Upon such termination, the Officer shall be entitled to receive the
lump sum payment and to continue to participate in the Benefit Plans,
when and as provided in Section 6(f) or, at his election, when and as
provided in Section 6(g), but shall also have the right to reduce such
payment and/or benefits as stated in Section 6(g).
(i) Definitions. For purposes of this Agreement, a Change in
Control shall mean: (i) the merger of CCBF with any other corporation as
a result of which the holders of CCBF's voting securities outstanding
immediately prior to such event would receive or retain less than fifty
percent (50%) of the outstanding voting securities of the resulting or
surviving corporation of such merger; (ii) the acquisition of more than
twenty percent (20%) of the outstanding voting securities of CCBF
(calculated on a fully diluted basis) by any Person; (iii) the ownership
of fifty percent (50%) or more of the outstanding voting securities of
CCB by any Person other than CCBF; (iv) the sale of more than fifty
percent (50%) in value of the assets of CCBF; or (v) the sale of more
than fifty percent (50%) in value of the assets of CCB to any Person
other than CCBF.
For purposes of this Agreement, a Person shall mean: (i) an
individual or a corporation, partnership (limited or general), trust,
limited liability company, business trust, association (mutual or stock,
and including a mutual holding company), joint venture, pool, syndicate,
unincorporated organization or any other form of entity; and (ii) any
Affiliate of any individual or entity listed in item (i). Affiliate
shall mean any Person who controls, is under common control with, or is
controlled by the Person to whom reference is being made; and for the
purposes of the definition of Affiliate, control shall be deemed to
exist in a Person who beneficially owns ten percent (10%) or more of the
outstanding equity interests (or options, warrants or other rights to
acquire such equity interests) of another Person.
For purposes of this Agreement, the Continuing Members of the
Board shall mean those individuals elected to the Board prior to, and
continuing to serve thereon at, the time a Change In Control shall
occur.
(j) Joint Termination. Any termination of this Agreement
under this Section 6 shall be a termination of the Officer's employment
by CCBF and CCB; i.e., the Officer's employment by both CCBF and CCB
must be terminated, and not with respect to one and not the other.
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(k) Damages. In addition to the provisions of Sections 6(f),
6(g)(i) and 6(h), in the event this Agreement is terminated without
Cause on or prior to the Officer's sixtieth (60th) birthday, the Officer
shall be entitled to receive as additional damages a lump sum amount
calculated by:
(A) Determining the difference (the "Difference") in the
monthly early retirement benefit between: (i) the monthly
early retirement benefit of the Officer, or his spouse
(if applicable), would have received under the provisions
of the "Security Capital Bancorp Employees' Pension Plan"
(the "SCBC Pension Plan") had the Officer remained an
employee of SCBC until the Officer had attained his 60th
birthday and died or retired from employment on or after
the first day of the calendar month following his 60th
birthday; and (ii) the monthly early retirement benefit
the Officer, or his spouse (if applicable), is entitled
to receive as of his date of termination of employment
(if prior to his attainment of the age of 60) under the
CCB Financial Corporation Pension Plan, assuming payment
of his early retirement monthly benefit would start on
the first day of the calendar month following his date of
termination of employment; and
(B) Determining the present value of the Difference based on
the actuarial assumptions for lump sum payments as
defined in the SCBC Pension Plan.
(l) Resolution of Disputes. In the event any dispute shall
arise between the Officer, on the one hand, and CCBF and CCB, on the
other, as to the terms or interpretation of, or calculations made under,
this Agreement, including this Section 6, whether instituted by formal
legal proceedings or otherwise, including any action taken by the
Officer to enforce any term of this Agreement or in defending against
any action taken by CCBF and/or CCB, CCBF shall reimburse the Officer
for all of his costs and expenses, including reasonable attorneys' fees,
in the event the Officer prevails in any such action.
7. Assumption of Prior Agreement; Successors and Assigns.
(a) Assumption of Prior Agreements. CCBF and CCB, jointly
and severally, assume all rights and obligations of SCBC and its
subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; provided, however, that such assumption and consent
shall not relieve SCBC of such obligations.
(b) Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, any corporate or other successor of
CCBF, including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock or
all or substantially all of the assets of CCBF, as applicable. This
Agreement also shall inure to the benefit of, and be binding upon, any
corporate or other successor of CCB, including any Person who shall
acquire, directly or indirectly, by merger, share exchange, purchase or
otherwise, the outstanding stock or all or substantially all of the
assets of CCB, as applicable.
(c) The Officer. Because CCBF and CCB are contracting for
the unique and personal skills of the Officer, the Officer shall be
precluded from assigning or delegating his rights or duties
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hereunder; provided, however, that the Officer's estate is expressly
intended to have such rights upon and following the Officer's death as
are specifically provided to it herein.
8. Modification; Waiver; Amendments. 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 Officer
and signed on behalf of CCBF and CCB by such officers thereof as may be
specifically designated by the Board and the Bank Board, respectively.
No waiver by any party hereto at any time of any breach by any 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 any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all parties
hereto, except as herein otherwise provided.
9. Applicable Law. This Agreement shall be governed in all
respects whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of North Carolina.
10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof.
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Employment and Consulting Agreement to be effective as of the
day and year first hereinabove written.
CCB FINANCIAL CORPORATION
ATTEST:
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
CENTRAL CAROLINA BANK AND
ATTEST: TRUST COMPANY
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
/s/ Ralph A. Barnhardt
Ralph A. Barnhardt
<PAGE>
APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each
case with the title of "Executive Vice President." He shall report to
the President and Chief Executive Officer of CCBF with regard to his
activities as an officer of CCBF, and he shall report to the Executive
Vice President - Regional Banking of CCB with regard to his activities
as an officer of CCB.
His duties and responsibilities prior to the Adjustment Date shall
be:
1. To assist in the integration of SCBC and its subsidiaries into
CCBF and its subsidiaries;
2. To actively participate in communicating with key customers of
SCBC's financial institution subsidiaries with the goals of
maintaining with them banking relationships and broadening
such relationships;
3. To assist in representing CCBF and CCB in the activities of
the North Carolina Alliance of Community Financial Institution
and similar groups; and
4. To assist in effecting appropriate management placement and
succession activities.
After the Adjustment Date, the Officer shall continue to perform
such duties and responsibilities, but shall not be obligated to provide
such services for more than twenty (20) hours per week or one thousand
(1,000) hours per calendar year.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed
effective as of May 19, 1995 (the "Agreement"), by and among CCB
Financial Corporation, a North Carolina corporation ("CCBF"), Central
Carolina Bank and Trust Company, a wholly-owned subsidiary of CCBF
("CCB"), and Lloyd G. Gurley, a resident of Salisbury, Rowan County,
North Carolina (the "Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements
with Security Capital Bancorp ("SCBC") and various of its subsidiaries
(the "Prior Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with
SCBC as the surviving corporation, and SCBC subsequently merged into
CCBF (collectively, the "Merger"); and
WHEREAS, through a series of transactions, the financial
institution subsidiaries of SCBC have merged into CCB (the "Bank
Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations
of SCBC and its subsidiaries under the Prior Agreements, and the Officer
consents to such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined
that, upon the consummation of the Merger and the Bank Mergers, the
allocation of responsibilities among the senior management officers of
CCBF and CCB should be revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the
Prior Agreements in a single agreement among them in order to set forth
the terms and conditions of the Officer's continued employment upon the
consummation of the Merger and the Bank Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, IT IS AGREED as follows:
1. Employment.
(a) Employment. The Officer shall be employed by CCBF and
CCB upon the terms and conditions set forth herein and in continuation
of his employment by SCBC and certain of its subsidiaries. He shall
serve in an executive capacity as an Executive Vice President of CCBF
and as an Executive Vice President and Regional Executive of CCB.
The Officer shall actively promote the business, and shall perform
such duties on behalf, of CCBF, CCB and the other subsidiaries of CCBF
as shall from time to time be prescribed by the Board of Directors of
CCBF (the "Board") and as are customarily performed by persons employed
in the banking industry who have such executive positions, and with
respect to his duties on behalf of CCB, as confirmed by CCB's Board of
Directors (the "Bank Board"). The Officer's primary duties and
responsibilities shall be those set forth in Appendix A which is
incorporated herein by
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reference. Except as provided in Section 1(b), the Officer may maintain
his principal residence and place of business in Salisbury, North
Carolina throughout the Term (as defined below). He shall be provided
with such office, working facilities and staff at the offices of CCB in
Salisbury, North Carolina as are necessary for the Officer to perform
his obligations under this Agreement.
(b) Certain Terminations; Change In Duties; Location. The
parties hereto agree that they shall consider whether the Officer shall
be transferred to CCBF's principal office and assigned duties other than
those described herein. In the event such a transfer is proposed by
CCBF and CCB, and the Officer agrees thereto, the parties hereto agree
as follows: (i) the Officer and his spouse shall exercise reasonable
efforts to obtain offers to purchase their residence in Salisbury, North
Carolina; and (ii) in the event that no written purchase offers are
received within forty-five (45) days of such residence being placed on
the market or that no written offer is received during such period, in
each case which would result in the Officer and his spouse receiving net
sales proceeds equal to the greater of (A) the total land and
construction costs of the residence expended by the Officer and his
spouse (as evidenced by appropriate documentation) or (B) the fair
market value of the residence (as determined by an independent
appraisal), then CCB shall purchase the residence from the Officer and
his spouse for the greater of the amounts described in the preceding
items (ii)(A) and (ii)(B). Further, in the event this Agreement is
terminated under Sections 6(f), (g) or (h), the foregoing provisions
shall become operative as of the date of termination.
2. Compensation.
(a) Employment Compensation. CCBF and CCB shall pay the
Officer during the Term as compensation for the services rendered by the
Officer to CCBF and CCB an initial base salary per annum equal to his
total annualized base salary from SCBC and its subsidiaries in effect
immediately prior to the Merger (the "Base Salary"), payable in cash (in
as equal installments as possible) not less frequently than monthly;
provided, however, that the amount of the Base Salary shall be reviewed
by the Executive Committee of the Board not less often than annually for
the purpose of considering such increases therein as are appropriate to
reflect the duties, responsibilities and performance of the Officer. In
reviewing the Officer's salary, the Board shall consider the employee
compensation policies established by the Compensation Committee of the
Board for application to the employees of CCBF and its subsidiaries, the
duties and responsibilities of the Officer, and the overall performance
of the Officer, CCBF and CCB, as well as increases in the cost of
living, and may also consider the appropriateness of performance or
merit increases. Neither participation in, or receipt of payment from,
any incentive compensation, deferred compensation, incentive bonus,
discretionary bonus, pension, life insurance, group life insurance,
health benefit, medical coverage, disability coverage, dental insurance,
stock option, restricted stock, stock appreciation rights, incentive
compensation unit, profit sharing, employee stock ownership, pension,
retirement, or other employee welfare or benefit plans of CCBF or CCB
(collectively "Benefit Plans"), nor receipt of any fringe benefits from
CCBF or CCB granted to the Officer ("Fringe Benefits") shall reduce, or
be deemed an offset against, the Base Salary payable to the Officer.
(b) Allocation of Compensation. The portion of the Officer's
Base Salary allocable to, and to be paid by, each of CCBF and CCB shall
be determined from time to time by the Board. In making such
allocations, the Board shall consider the portion of the Officer's time
spent in fulfilling his respective duties to CCBF and CCB, appropriate
tax and accounting principles, and such other factors as it shall deem
relevant.
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3. Participation in Benefit Plans; Fringe Benefits. During the
Term, the Officer shall be entitled to participate in all Benefit Plans,
including the "CCB Financial Corporation Long-Term Incentive Plan" (the
"LTIP") and any other executive incentive compensation plan for key
employees of CCBF and/or CCB, as the same may be amended, modified or
terminated from time to time by the Board or the Bank Board, as
applicable, on the same basis as the other senior executive officers of
CCBF and CCB. With respect to CCBF's Management Performance Incentive
Plan, the Officer shall have a target bonus of at least 15% of Base
Salary. In addition to, and not in lieu of, any other provisions
hereof, CCBF shall annually pay to the Officer, an allowance equal to
three percent (3%) of his Base Salary for such calendar year (with such
allowance for 1995 being prorated for the number of days this Agreement
is in effect). Such allowance shall be payable in cash (in as equal
installments as possible) not less frequently than monthly.
During the Term, the Officer shall also be entitled to receive any
Fringe Benefits which are now or may be or become applicable to the
executive employees of CCBF and/or CCB, including the payment of
reasonable expenses for attending (i) annual and periodic meetings of
trade associations and (ii) continuing education courses necessary for
the Officer to maintain professional certifications, and any other
Fringe Benefits which are commensurate with the duties and
responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such customary Fringe
Benefits, including such vacation and sick leave, as are consistent with
the normal practices and established policies of CCBF and CCB. CCBF or
CCB, as applicable, shall reimburse the Officer for all out-of-pocket
reasonable and necessary business expenses which the Officer may incur
during the Term in connection with the Officer's services on behalf of
CCBF or CCB, as applicable, or any activities the Officer is requested
to undertake on behalf of any of the subsidiaries of CCBF.
During the Term, CCBF or CCB shall provide a car (of such make,
model and year as is commensurate with the Officer's senior executive
status) owned by it to the Officer for the Officer's use (with the
Officer reimbursing CCBF or CCB, as applicable, for the proportionate
operational costs attributable to the Officer's personal use of the
car), shall pay fifty percent (50%) of the periodic dues and assessments
for all country clubs and similar organizations of which the Officer is
a member immediately prior to the Merger and which SCBC currently pays
or reimburses to the Officer (including future increases thereof), and
shall pay fifty percent (50%) of all initiation fees, periodic dues and
assessments of all such organizations that CCBF and/or CCB request the
Officer to join after the Merger.
4. Loyalty; Noncompetition; Confidentiality.
(a) Full Efforts. During the Term, the Officer shall devote
his full efforts and entire business time to the performance of the
Officer's duties and responsibilities under this Agreement.
(b) Noncompetition. In consideration of employment of the
Officer under the Prior Agreements and the continuation of such
employment by CCBF and CCB hereunder, during the Term, and for a period
of two (2) years after the termination of this Agreement, the Officer
agrees that he will not, within any county in which CCBF, CCB, or any
other financial institution subsidiary of CCBF, or any subsidiary of CCB
or such other financial institution subsidiary, maintains offices,
directly or indirectly, own, manage, operate, join, control or
participate in the management, operation or control of, or be employed
by or connected in any manner with, any Person (as defined in Section
6(i)) which competes with CCBF, CCB or any of the other direct or
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indirect subsidiaries of CCBF, without the prior written consent of
CCBF; provided, however, that the provisions of this Section 4(b) shall
not apply prospectively in the event this Agreement is terminated by
CCBF and CCB without Cause (as is defined in Section 6(e) hereof).
Notwithstanding the foregoing, the Officer shall be free, without such
consent, to purchase or hold as an investment or otherwise up to five
percent (5%) of the outstanding stock or other securities of any Person
which has its securities listed on any national securities exchange or
which has transactions in its securities quoted on The Nasdaq Stock
Market or other over-the-counter market or inter-dealer quotation
system.
(c) Confidentiality. The Officer will hold in strict
confidence, during the Term and at all times thereafter, all knowledge
or information of a confidential or proprietary nature with respect to
the business of CCBF, CCB and/or the other direct or indirect
subsidiaries of CCBF received by the Officer during the Term, and,
except in the performance of his duties, will not disclose or make use
of such information without the prior written consent of CCBF.
(d) Injunctive Relief. The Officer acknowledges that it
would not be possible to ascertain the amount of monetary damages
suffered in the event of a breach by the Officer of the provisions of
this Section 4. Accordingly, the Officer agrees that, in the event of a
breach of this Section, injunctive relief enforcing the terms of this
Section is an appropriate remedy.
5. Employment Standards. The Officer shall perform his duties and
responsibilities as an employee of CCBF and CCB during the Term in
accordance with the standards imposed by applicable financial
institution statutes, regulations and rules or by applicable financial
institution regulatory agencies, such reasonable standards expected of
employees with comparable positions in comparable organizations, and
CCBF's and CCB's policies and procedures, and such other standards and
guidelines as may be established from time to time by the Board or the
Bank Board, as applicable.
6. Term and Termination.
(a) Term. Notwithstanding the provisions of the Prior
Agreements, the term hereof (the "Term") shall be deemed to have
commenced on May 19, 1995 (the "Commencement Date") and, unless earlier
terminated as provided herein, shall continue through the fifth
anniversary of the Commencement Date (the "Expiration Date"); provided,
however, that upon the termination of this Agreement for any reason, all
provisions hereof requiring actions or the fulfillment of obligations by
the Officer, CCBF and/or CCB after the effectiveness of such
termination shall remain binding upon, or enforceable by, the Officer,
CCBF and/or CCB, as the case may be.
(b) Termination by Death. This Agreement shall be terminated
upon the death of the Officer. Upon the Officer's death, the Officer's
estate shall be entitled to receive all compensation and benefits
payable to, or accruable or vested for the benefit of, the Officer under
this Agreement through the end of the second calendar month following
the calendar month in which the Officer's death shall have occurred.
(c) Termination by Total Disability. This Agreement shall be
terminated upon the Total Disability (as defined below) of the Officer
during the Term. In the event of his Total Disability, the Officer
shall receive all compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through the
date of the determination of his Total
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Disability and for a period of ninety (90) days thereafter. The Officer
shall be deemed to have suffered Total Disability upon the determination
of his total permanent disability by the United States Social Security
Administration or CCBF's receipt of a certification to such effect by
the Officer's regular physician, in each case such total permanent
disability meaning the Officer's loss of ability to perform at least
the majority of his then applicable duties hereunder.
(d) Termination by Officer. This Agreement may be terminated
at any time by the Officer upon sixty (60) days prior written notice to
CCBF and CCB. Unless the provisions of Sections 6(g)(ii) or 6(h) are
applicable and the Officer elects to apply those provisions, upon such
termination, the Officer shall be entitled to receive the compensation
and benefits payable to, or accruable or vested for the benefit of, the
Officer under this Agreement through the effective date of such
termination.
(e) Termination for Cause. Subject to confirmation by the
Bank Board, the Board may terminate this Agreement for Cause, in which
event the Officer shall have no right to receive, or to have accrued or
vested for his benefit, compensation or other benefits hereunder for any
period after such termination. Termination for Cause shall mean
termination of this Agreement because of the Officer's (A) breach of
fiduciary duty involving personal profit, (B) intentional and material
failure to perform stated duties (after written notice thereof and a
reasonable opportunity to cure such failure), (C) willful and material
violation of any law (other than traffic violations or other similar
misdemeanor offenses), rule, regulation or final cease-and-desist order,
or (D) a material and continuing breach of any provision of this
Agreement (after written notice thereof and a reasonable opportunity to
cure such breach).
(f) Termination Without Cause. Subject to confirmation by
the Bank Board, the Board may terminate this Agreement without Cause at
any time upon sixty (60) days prior written notice to the Officer;
provided, however, that in the event of such termination, unless the
provisions of Sections 6(g) or 6(h) are applicable and the Officer
elects to apply those provisions, the Officer shall be entitled to
receive all compensation and fees payable to, or accruable or vested for
the benefit of, the Officer under this Agreement as and when due and
payable (or, at the election of the Officer, in a lump sum payable
within ten (10) days of the date of termination), and shall be entitled
to continue to participate in all Benefit Plans described in Section 3
not specifically requiring for participation therein one thousand (1,000
hours of service per calendar year), through the Expiration Date.
(g) Unapproved Change In Control Termination. In the event
of (i) the termination of this Agreement without Cause, or (ii) the
voluntary termination of this Agreement by the Officer, in each case in
connection with, or within one (1) year after, any Change In Control
which has not been approved in advance by a formal resolution of
two-thirds (2/3) of the Continuing Members of the Board (excluding the
Officer), which shall be deemed a termination without Cause, the Officer
shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times
the Officer's then applicable "base amount" (as such term
is defined in Internal Revenue Code Section 280);
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(B) until the Expiration Date, to continue to participate in
all Benefit Plans described in Section 3 not requiring
for participation therein one thousand (1,000) hours of
service per calendar year); and
(C) to immediate vesting of full participation rights and to
immediately begin participation in, CCBF's defined
contribution retiree health and life insurance plan
(whether or not the Officer shall then have ten (10)
years of service under such plan).
The Officer shall be paid the lump sum described in item (A) of
this Section 6(g) within ten (10) days of the date of such termination.
Notwithstanding the foregoing, the Officer, at his sole option, may
elect to reduce the payments and/or benefits otherwise receivable
pursuant to item (A) and/or (B) of this Section 6(g) to the extent the
Officer in his sole discretion may determine, in order to avoid
classification of such payment and/or benefits as "parachute payments"
within the meaning of Internal Revenue Code Section 280G or for any
other or no reason.
(h) Approved Change In Control Termination. Upon ten (10)
days prior written notice, the Officer may declare this Agreement to
have been terminated without Cause by CCBF and CCB, upon the occurrence
of any of the following events, which have not been consented to in
advance by the Officer in writing, following a Change In Control,
whether or not approved in advance by a formal resolution of at least
two-thirds (2/3) of the Continuing Members of the Board (excluding the
Officer): (i) if the Officer is required to move his personal residence
or perform his principal executive functions more than twenty (20) miles
from the city limits of Salisbury, North Carolina; (ii) if in the
organizational structure of CCBF (or its successor pursuant to the
Change In Control), the Officer would be subject to the supervision of,
or required to report to, any Persons other than the President and Chief
Executive Officer of CCBF and/or the Board; (iii) if CCBF and/or CCB
should fail to maintain Benefit Plans providing at least the same level
of benefits afforded the Officer as of the date of the Change In
Control; (iv) if the Officer would be assigned duties and
responsibilities other than those described in Section 1(a); or (v) if
the Officer's responsibilities or authority in the executive capacity
described in Section 1(a) have in any way been diminished.
Upon such termination, the Officer shall be entitled to receive the
lump sum payment and to continue to participate in the Benefit Plans,
when and as provided in Section 6(f) or, at his election, when and as
provided in Section 6(g), but shall also have the right to reduce such
payment and/or benefits as stated in Section 6(g).
(i) Definitions. For purposes of this Agreement, a Change in
Control shall mean: (i) the merger of CCBF with any other corporation as
a result of which the holders of CCBF's voting securities outstanding
immediately prior to such event would receive or retain less than fifty
percent (50%) of the outstanding voting securities of the resulting or
surviving corporation of such merger; (ii) the acquisition of more than
twenty percent (20%) of the outstanding voting securities of CCBF
(calculated on a fully diluted basis) by any Person; (iii) the ownership
of fifty percent (50%) or more of the outstanding voting securities of
CCB by any Person other than CCBF; (iv) the sale of more than fifty
percent (50%) in value of the assets of CCBF; or (v) the sale of more
than fifty percent (50%) in value of the assets of CCB to any Person
other than CCBF.
For purposes of this Agreement, a Person shall mean: (i) an
individual or a corporation, partnership (limited or general), trust,
limited liability company, business trust,
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association (mutual or stock, and including a mutual holding company),
joint venture, pool, syndicate, unincorporated organization or any other
form of entity; and (ii) any Affiliate of any individual or entity
listed in item (i). Affiliate shall mean any Person who controls, is
under common control with, or is controlled by the Person to whom
reference is being made; and for the purposes of the definition of
Affiliate, control shall be deemed to exist in a Person who beneficially
owns ten percent (10%) or more of the outstanding equity interests (or
options, warrants or other rights to acquire such equity interests) of
another Person.
For purposes of this Agreement, the Continuing Members of the
Board shall mean those individuals elected to the Board prior to, and
continuing to serve thereon at, the time a Change In Control shall
occur.
(j) Joint Termination. Any termination of this Agreement
under this Section 6 occurring during the Employment Term shall be a
termination of the Officer's employment by CCBF and CCB; i.e., the
Officer's employment by both CCBF and CCB must be terminated, and not
with respect to one and not the other.
(k) Damages. In addition to the provisions of Sections 6(f),
6(g)(i) and 6(h), in the event this Agreement is terminated without
Cause on or prior to the Officer's completion of five (5) years of
vested service or such other period of service necessary for the Officer
to be one hundred percent (100%) vested in his "accrued benefits" under
the CCB Financial Corporation Pension Plan (the "Pension Plan"), the
Officer shall be entitled to receive as additional damages a lump sum
calculated by
(A) Determining the amount of "accrued benefits" of the
Officer under the Pension Plan that will be forfeited in
such circumstances; and
(B) Determining the present value of the amount described in
item (A) based on the actuarial assumptions for lump sum
payment contained in the Pension Plan.
(l) Resolution of Disputes. In the event any dispute shall
arise between the Officer, on the one hand, and CCBF and CCB, on the
other, as to the terms or interpretation of, or calculations made under,
this Agreement, including this Section 6, whether instituted by formal
legal proceedings or otherwise, including any action taken by the
Officer to enforce any term of this Agreement or in defending against
any action taken by CCBF and/or CCB, CCBF shall reimburse the Officer
for all of his costs and expenses, including reasonable attorneys' fees,
in the event the Officer prevails in any such action.
7. Assumption of Prior Agreement; Successors and Assigns.
(a) Assumption of Prior Agreements. CCBF and CCB, jointly
and severally, assume all rights and obligations of SCBC and its
subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; provided, however, that such assumption and consent
shall not relieve SCBC of such obligations.
(b) Successors and Assigns. This Agreement shall inure to
the benefit of, and be binding upon, any corporate or other successor of
CCBF, including any Person who shall acquire,
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directly or indirectly, by merger, share exchange, purchase or
otherwise, the outstanding stock or all or substantially all of the
assets of CCBF, as applicable. This Agreement also shall inure to the
benefit of, and be binding upon, any corporate or other successor of
CCB, including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock or
all or substantially all of the assets of CCB, as applicable.
(c) The Officer. Because CCBF and CCB are contracting for
the unique and personal skills of the Officer, the Officer shall be
precluded from assigning or delegating his rights or duties hereunder;
provided, however, that the Officer's estate is expressly intended to
have such rights upon and following the Officer's death as are
specifically provided to it herein.
8. Modification; Waiver; Amendments. 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 Officer
and signed on behalf of CCBF and CCB by such officers thereof as may be
specifically designated by the Board and the Bank Board, respectively.
No waiver by any party hereto at any time of any breach by any 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 any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No amendments or additions to this
Agreement shall be binding unless in writing and signed by all parties
hereto, except as herein otherwise provided.
9. Applicable Law. This Agreement shall be governed in all
respects whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of North Carolina.
10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof.
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IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Employment Agreement to be effective as of the day and year
first hereinabove written.
CCB FINANCIAL CORPORATION
ATTEST:
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
CENTRAL CAROLINA BANK AND
ATTEST: TRUST COMPANY
/s/ Richard W. Every By:/s/ Ernest C. Roessler
Richard W. Every, Secretary Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
/s/ Lloyd G. Gurley
Lloyd G. Gurley
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APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each
case with the title "Executive Vice President - Regional Executive." He
shall report to the President and Chief Executive Officer of CCBF with
regard to his activities as an officer of CCBF, and he shall report to
the Executive Vice President - Banking Group of CCB with regard to his
activities as an officer of CCB.
His duties and responsibilities shall be:
1. To assist in the integration of SCBC and its subsidiaries into
CCBF and its subsidiaries; and
2. To exercise executive oversight and to manage the operations
of the offices of CCB located in the North Carolina counties
of Rowan, Cabarrus, Cleveland, Union, Stanley, Montgomery,
Anson and Richmond.
Exhibit 99
News Release
For further information please contact:
W. Harold Parker, Jr. (919) 683-7631
FOR IMMEDIATE RELEASE May 22, 1995
CCB FINANCIAL CORPORATION AND SECURITY
CAPITAL BANCORP ANNOUNCE COMPLETION OF MERGER
Durham and Salisbury, North Carolina------CCB Financial Corporation and
Security Capital Bancorp jointly announced today the completion of their
merger. Based on the closing price of CCB Financial Corporation's
common stock on May 19, 1995, the transaction has an indicated value of
approximately $244 million. Effective with the opening of business on
May 22, 1995, the former offices of Security Capital Bancorp's
subsidiaries, Security Capital Bank and OMNIBANK, SSB, Salisbury, N.C.;
Citizens Savings, SSB, Concord, N.C.; and Home Savings Bank, SSB, Kings
Mountain, N.C., will operate as offices of Central Carolina Bank and
Trust Company, the lead bank subsidiary of CCB Financial Corporation.
Ernest C. Roessler, President and Chief Executive Officer of CCB stated
that "We are very pleased to close our merger with Security Capital,
including the conversion of major data processing systems. Due to the
combined efforts of both companies, we were able to complete this
process in just over six months from date of announcement. We are
excited about the combination and moving forward in achieving the
opportunities available to
<PAGE>
us. The merger has significantly increased CCB's share of the critical
Charlotte and Metrolina banking market and provides us with a
substantial presence in a number of the important market areas in the
south central and western Piedmont Regions of North Carolina."
David B. Jordan, Vice Chairman and Chief Executive Officer of Security
Capital commented, "We are also excited about the completion of the
combination and the significant ownership our shareholders have achieved
in a company with CCB's financial strength. Going forward, our combined
company will have the resources, market presence, breadth of products
and services and opportunities for operating efficiencies necessary to
compete successfully in the increasingly concentrated financial services
industry."
As a result of the merger, CCB has assets of more than $4.7 billion,
serves over 50% of North Carolina's population and has the fourth
largest market share in the Charlotte Metropolitan Statistical Area.
Nasdaq National Market Symbol: CCBF
