UNITED STATES
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) October 21, 1997
CCB Financial Corporation
(Exact name of registrant as specified in its charter)
North Carolina 0-12358 56-1347849
(State or other (Commission File (IRS Employer
jurisdiction of Number) 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)
Item 5. Other Events.
On October 21, 1997, the Board of Directors of the
Registrant adopted a severance plan (the "Plan") for
employees that would be implemented in the event of a change
in control. The Plan was adopted in recognition of the
consolidations being experienced in the banking industry
which might generate uncertainties about a potential future
merger in which the Registrant might not be the surviving
entity. Such uncertainties might prevent the Registrant
from attracting and retaining qualified personnel. The
Board believes that the adoption of a severance compensation
plan of this kind will assure fair treatment of all
employees and reduce the distractions and other adverse
effects on employees' performance which are inherent in a
change in control. Severance payments would be based on
employee classification and years of service. Management of
the Registrant estimates that if the severance provision of
the Plan were effected under the most severe scenario, an in-
market merger, severance payments would total approximately
$.70 per share after-tax.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1 CCB Financial Corporation Plan for Severance
Compensation After A Change in Control
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CCB FINANCIAL CORPORATION
Date: November 20, 1997 By: /s/ ROBERT L. SAVAGE, JR.
Robert L. Savage, Jr.
Senior Vice President and
Chief Financial Officer
CCB FINANCIAL CORPORATION
PLAN FOR SEVERANCE COMPENSATION AFTER
A CHANGE IN CONTROL
Introduction
The Board of Directors of CCB Financial Corporation ("CCB") has
affirmed that CCB can better serve the interests of its
customers, shareholders and employees as an independent
institution. The financial performance of CCB has been excellent
and future prospects look excellent also. As long as CCB can
remain strong financially there is no reason why it cannot remain
independent. However, the Board also realizes that the financial
services industry is changing rapidly and that the future can not
always be guaranteed.
The Board of Directors of CCB has evaluated the potential
economic and social impact of a change in control of CCB on its
employees. Many employees have invested their lives in their
jobs and have made significant contributions to the growth and
success of CCB. The stress on the employees and their families
caused by the uncertainties of the pre-takeover publicity and by
the post-takeover changes in operations resulting from the change
in control are widely recognized. Branch closings, elimination
of duplicate positions, different management, change of company
culture, and reduced employee benefits all may flow from a change
in control and all impose costs which must be borne by the
employee and the employee's family.
The Board of Directors recognizes that, after a change in control
of CCB, it may no longer have the power to protect the interests
of the employees. The Board believes it is in CCB's interest to
provide employees with the right to compensation to assist them
in bearing the costs imposed by a change in control.
The Board believes a severance compensation plan of this kind
will aid CCB in attracting and retaining the highly qualified
individuals who are essential to its success. The plan's
assurance of fair treatment will reduce the distractions and
other adverse effects on employees' performance which are
inherent in a change in control.
Accordingly, the following plan has been developed and is hereby
adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
1.1 Establishment of Plan
As of the Effective Date, CCB hereby establishes a severance
compensation plan to be known as the "Severance Compensation Plan
After a Change in Control" (the "Plan"), as set forth in this
document. The purposes of the Plan are as set forth in the
Introduction.
1.2 Applicability of Plan
The benefits provided by this Plan shall be available to all full-
time and part-time employees of CCB who, at or after the
Effective Date, meet the eligibility requirements of Article III
and who work regularly scheduled hours with an Employer.
1.3 Contractual Right to Benefits
This Plan establishes and vests in each Participant a contractual
right to the benefits to which he or she is entitled hereunder,
enforceable by the Participant against his or her Employer or
CCB, or both.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the
initial letter of the term is capitalized.
(a) "Change in Control" of CCB means and includes each and
all of the following occurrences:
(i) After the Effective Date of this Plan, any Person
(as defined in Section 7(j)(8)(A) of the Change in Bank Control
Act of 1978), directly or indirectly, acquires beneficial
ownership of voting stock, acquires irrevocable proxies, or any
combination of voting stock and irrevocable proxies, representing
25% or more of any class of voting securities of CCB, or acquires
control of in any manner the election of a majority of the
directors of CCB.
(ii) CCB merges with or into another corporation,
association, or entity, or is otherwise reorganized, where CCB is
not the surviving corporation in such transaction.
(iii) All or substantially all of the assets of CCB
are sold or otherwise transferred to or acquired by any other
corporation, association, or other Person, entity or group.
Notwithstanding the other provisions of this Article II, for
purposes of this Plan the term "Change in Control" shall not
include a transaction approved by CCB's Board of Directors which
results in CCB merging with, transferring its assets to or
becoming the subsidiary of a corporation newly formed at the
direction of CCB's Board of Directors for the purpose of such
transaction or serving as a bank holding company for CCB, and in
connection with such transaction, CCB's shareholders (other than
those who exercise statutory rights of dissent and appraisal)
become the holders of substantially all of the voting stock of
such corporation.
(b) "CCB" means CCB Financial Corporation, Durham, North
Carolina, a North Carolina corporation, and any successor as
provided in Article VII hereof.
(c) "Compensation" of a Participant means and includes base
monthly salary paid by an Employer as consideration for the
Participant's service during the month ended that immediately
precedes the date as of which Compensation is to be determined
plus an amount equal to one-twelfth of all other short-term cash
compensation paid by an Employer to an Employee during the 12
months immediately preceding the date as of which compensation is
to be determined.
(d) "Division/Region Executives" and "Other Senior
Officers" shall mean those Employees holding such titles as
designated from time to time by the Board of Directors of CCB.
(e) "Effective Date" as to Employees of an Employer means
the date the Plan is approved by the Board of Directors of that
Employer, or such other date as the Board shall designate in its
resolution approving the Plan.
(f) "Employee" means a common law employee of an Employer
employed by Employer on a full-time or part-time basis who work
regularly scheduled hours.
(g) "Employer" means CCB or a direct or indirect subsidiary
of CCB which has adopted the Plan pursuant to Article VI hereof.
(h) "Just Cause" means the termination of employment of an
Employee shall have taken place as a result of: (i) Participant's
continued failure (following reasonable notice of such failure
and an opportunity to correct performance deficiencies) to
perform or discharge the duties of his employment in a reasonably
competent and satisfactory manner, or a determination by the
Participant's Employer, in good faith, that Participant is
engaging or has engaged in willful misconduct or conduct which is
detrimental to the business prospects of CCB or which has had or
likely will have a material adverse effect on CCB's business or
reputation; (ii) the violation by Participant of any applicable
federal or state law, or any applicable rule, regulation, order
or statement of policy promulgated by any governmental agency or
authority having jurisdiction over CCB or any of its affiliates
or subsidiaries (any of the foregoing being hereinafter referred
to as a "Regulatory Authority", which will include, without
limitation, the Federal Deposit Insurance Corporation, the North
Carolina Banking Commissioner, the North Carolina Banking
Commission, the Board of Governors of the Federal Reserve System,
the Federal Reserve Bank of Richmond, the Securities and Exchange
Commission or any other banking or securities regulatory
authority), which results from Participant's gross negligence,
willful misconduct or intentional disregard of such law, rule,
regulation, order or statement of policy and results in any
substantial damage, monetary or otherwise, to CCB or any of its
affiliates or subsidiaries or to its reputation; (iii) the
commission in the course of Participant's employment with the
Participant's Employer of an act of fraud, embezzlement, theft or
proven personal dishonesty (whether or not resulting in criminal
prosecution or conviction); (iv) the conviction of Participant of
any felony or any criminal offense involving dishonesty or breach
of trust, or the occurrence of any event described in Section 19
of the Federal Deposit Insurance Act or any other event or
circumstance which disqualifies Participant from serving as an
employee of, or a party affiliated with, CCB; or, in the event
Participant becomes unacceptable to, or is removed, suspended or
prohibited from participating in the conduct of CCB's affairs (or
if proceedings for that purpose are commenced) by, any Regulatory
Authority; or (v) the occurrence of any event believed by CCB, in
good faith, to have resulted in Participant being excluded from
coverage, or having coverage limited as to Participant as
compared to other covered employees, under CCB's then current
"blanket bond" or other fidelity bond or insurance policy
covering its directors, officers or employees.
(i) "Severance Payment" means the payment of severance
compensation as provided in Article IV hereof.
(j) "Participant" means an Employee who meets the
eligibility requirements of Section 3.1.
(k) "Plan" means the Plan for Severance Compensation After
Change in Control.
2.2 Applicable Law
To the extent not preempted by the laws of the United States, the
laws of the State of North Carolina shall be the controlling law
in all matters relating to the Plan.
2.3 Severability
If a provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of
the Plan and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
ARTICLE III
ELIGIBILITY
3.1 Participation
Except as to the one (1) year minimum employment requirement as
set forth in Section 4.3(d) hereof, each Employee who, as of the
Effective Date, shall be in the employment by an Employer shall
become a Participant on the date the Plan becomes effective for
his or her Employer. Thereafter, each Employee who becomes
employed by an Employer shall become a Participant on the day of
such employment. Notwithstanding the foregoing, the Plan shall
not apply to any Employee who, at the time of a Change in
Control, shall have in effect an Employment Agreement with
provisions allowing for a Severance Payment at least equivalent
to the Severance Payments set forth herein.
3.2 Duration of Participation
A Participant shall cease to be a Participant in the Plan when he
or she ceases to be an Employee of an Employer, unless such
Participant is then entitled to payment of a Severance Payment as
provided in the Plan. A Participant entitled to payment of a
Severance Payment shall remain a Participant in this Plan until
the full amount of the Severance Payment has been paid to the
Participant.
ARTICLE IV
SEVERANCE PAYMENTS
4.1 Right to Severance Payment
A Participant shall be entitled to receive from CCB a Severance
Payment in the amount provided in Section 4.3 if there has been a
Change in Control of CCB and if, within two (2) years thereafter,
the Participant's employment by an Employer shall terminate for
any reason specified in Section 4.2, whether the termination is
voluntary or involuntary. A Participant shall not be entitled to
a Severance Payment if termination occurs by reason of his or her
death, voluntary retirement at or after age 65, total and
permanent disability, or for Just Cause.
4.2 Good Reasons for Termination
Following a Change in Control, a Participant shall be entitled to
a Severance Payment if his or her employment by an Employer is
terminated, voluntarily or involuntarily, for any one or more of
the following reasons:
(a) The Employer reduces the Participant's base salary or
rate of compensation as in effect immediately prior to the Change
in Control, or as the same may have been increased thereafter.
(b) The Employer fails to continue any incentive plans in
which the Participant was entitled to participate immediately
prior to the Change in Control, substantially in the forms then
in effect.
(c) The Employer assigns to the Participant any duties or
responsibilities not comparable with his or her duties or
responsibilities with the Employer immediately prior to the
Change in Control.
(d) The Employer requires the Participant to change the
location of his or her job or office, so that he or she will be
based at a location more than thirty-five (35) miles from the
location of his or her job or office immediately prior to the
Change in Control.
(e) Unless any reduction or elimination applies
proportionately to all other Participants, the Employer fails to
continue in effect any benefit or compensation plan, stock
purchase plan, stock option plan, life insurance plan, health,
accident or disability plan or any other material fringe benefit
in which the Participant is participating immediately prior to
the Change in Control (or plans providing substantially similar
benefits), or the Employer takes any action which would adversely
affect his or her participation or reduce his or her benefits
under any of such plans or benefits.
(g) A successor company fails or refuses to assume CCB's
obligations under this Plan, as required by Article VII.
(h) CCB or any successor company breaches any of the
provisions of this Plan.
(i) The Employer terminates the employment of a Participant
at or after a Change in Control other than for Just Cause.
4.3 Amount of Severance Payment
Each Participant entitled to a Severance Payment under this Plan
shall receive from CCB a lump sum cash payment in an amount based
upon his or her length of continuous employment by one or more
Employers, as follows:
(a) Division/Region Executives shall receive an amount
equal to twelve (12) months of Compensation for employment with
one or more Employers of an aggregate period of less than ten
(10) years; eighteen (18) months of Compensation for employment
with one or more Employers of an aggregate of at least ten (10)
years but not more than fifteen (15) years; and twenty-four (24)
months of Compensation for employment with one or more Employers
of an aggregate period of more than fifteen (15) years.
Additionally, Employees in this category shall be provided
outplacement employment services at their request.
(b) Other Senior Officers shall receive three-fourths (.75)
of a month's Compensation for each year of service with an
Employer with a minimum of nine (9) months of Compensation and a
maximum of eighteen (18) months of Compensation.
(c) Other "exempt" managers/professionals shall receive one-
half of one month's Compensation for each year of employment with
one or more Employers provided, however, that each Employee in
this category shall receive a minimum of six (6) months'
Compensation and no Employee in this category shall receive more
than twelve (12) months' Compensation.
(d) All other Employees, provided they have continuously
remained in employment with an Employer for twelve (12)
consecutive months, shall receive one-fourth of one month's
Compensation per year of employment with an Employer; provided
that all such Employees in this category shall receive a minimum
of two (2) months' Compensation and a maximum of six (6) months'
Compensation.
(e) At the discretion of CCB, an additional bonus may be
provided to any employee in categories (a), (b), (c) and (d)
above to encourage continued employment by such Employee with the
Employer for such period of time as CCB and/or the Employer
determines that such Employee's contributions would be critical
to the ongoing operations and affairs of CCB. Additionally, all
Employees set forth in categories (a), (b), (c) and (d) above
shall be entitled to the continuation, for such number of months
used to calculate his or her Compensation, of all employee
benefit plans at the then current level at the time of his or her
termination of employment (e.g., if an Employee is entitled to
six (6) months' Compensation due to his or her years of
employment, he or she shall additionally be entitled to six (6)
months of continued employee benefits, including medical and life
insurance and payout of accrued benefits such as vacation and
sick leave, etc., for the six month period following the
termination of employment.)
(f) Notwithstanding the provisions of (a), (b), (c) and (d)
above, if a Severance Payment to a Participant who is a
Disqualified Individual shall be in an amount which includes an
"Excess Parachute Payment", the payment hereunder to that
Participant shall be reduced to the maximum amount which does not
include an "Excess Parachute Payment". The terms "Disqualified
Individual" and "Excess Parachute Payment" shall have the same
meaning as defined in Section 280G of the Internal Revenue Code
of 1986, or any successor section of similar import.
The Participant shall not be required to mitigate damages of the
amount of his or her Severance Payment by seeking other
employment or otherwise, nor shall the amount of such payment be
reduced by any compensation earned by the Participant as a result
of employment after his or her termination of employment by an
Employer. Notwithstanding the foregoing, however, if an Employee
secures new employment after terminating his or her employment as
a result of a Termination Event, all employee benefit insurance
coverages will be mitigated and reduced to the extent that other
insurance coverages are secured.
4.4 Time of Severance Payment
The Severance Payment to which a Participant is entitled shall be
paid by CCB to the Participant, in cash and in full, not later
than thirty (30) days after the termination of the Participant's
employment. If such a Participant should die before all amounts
payable to him or her have been paid, such unpaid amounts shall
be paid to the Participant's spouse, if living, otherwise to the
personal representative of the Participant's estate.
ARTICLE V
OTHER RIGHTS AND BENEFITS NOT AFFECTED
5.1 Other Benefits
Neither the provisions of this Plan nor the Severance Payment
provided for hereunder shall reduce any amounts otherwise
payable, or in any way diminish the Participant's rights as an
Employee of an Employer, whether existing now or hereafter, under
any benefit, incentive, retirement, stock option, stock bonus or
stock purchase plan, or any employment agreement or other plan or
arrangement.
5.2 Employment Status
This Plan does not constitute a contract of employment or impose
on the Participant or the Participant's Employer any obligation
to retain the Participant as an Employee, to change the status of
the Participant's employment, or to change CCB's policies
regarding termination of employment.
ARTICLE VI
PARTICIPATING EMPLOYERS
6.1 Upon approval by the Board of Directors of CCB, this Plan
may be adopted by any Subsidiary of CCB. Upon such adoption, the
Subsidiary shall become an Employer hereunder and the provisions
of the Plan shall be fully applicable to the Employees of that
Subsidiary. The term "Subsidiary" means any corporation in which
CCB, directly or indirectly, holds a majority of the voting power
of its outstanding shares of capital stock.
ARTICLE VII
SUCCESSOR TO CCB
7.1 CCB shall require any successor or assignee, whether direct
or indirect, by merger, consolidation or otherwise, or by
purchase of all or substantially all the business or assets of
CCB, expressly and unconditionally to assume and agree to perform
CCB's obligations under this Plan, in the same manner and to the
same extent that CCB would be required to perform if no such
succession or assignment had taken place. In such event, the
reference to "CCB," as used in this Plan, shall mean CCB as
hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by the
terms and provisions of this Plan.
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION
8.1 Duration
If a Change in Control has not occurred, this Plan will expire
fifteen (15) years from the Effective Date designated by the
Board of Directors of CCB, unless sooner terminated as provided
in Section 8.2, or unless extended for an additional period or
periods by resolution adopted by the Board of Directors of CCB at
any time during the fifteenth year of the Plan.
If a Change in Control occurs, this Plan shall continue in full
force and effect, and shall not terminate or expire until after
all Participants who become entitled to Severance Payments
hereunder shall have received such payments in full.
8.2 Amendment and Termination
The Plan may be terminated or amended in any respect by
resolution adopted by the Board of Directors of CCB, unless a
Change in Control has previously occurred. If a Change in
Control occurs, the Plan no longer shall be subject to amendment,
change, substitution, deletion, revocation or termination in any
respect whatsoever.
8.3 Form of Amendment
The form of any proper amendment or termination of the Plan shall
be a written instrument signed by a duly authorized officer or
officers of CCB, certifying that the amendment or termination has
been approved by the Board of Directors. A proper amendment of
the Plan automatically shall effect a corresponding amendment to
all Participants' rights hereunder. A proper termination of the
Plan automatically shall effect a termination of all
Participants' rights and benefits hereunder.
ARTICLE IX
LEGAL FEES AND EXPENSES
9.1 CCB shall pay all legal fees, costs of litigation, and other
expenses incurred by each Participant as a result of CCB's
refusal to make the Severance Payment to which the Participant
becomes entitled under this Plan, or as a result of CCB's
contesting the validity, enforceability or interpretation of the
Plan.
ARTICLE X
ARBITRATION
10.1 Each Participant shall have the right and option to elect
(in lieu of litigation) to have any dispute or controversy
arising under or in connection with the Plan settled by
arbitration, conducted before a panel of three arbitrators
sitting in a location selected by the Participant within fifty
(50) miles from the location of his or her job with an Employer,
in accordance with rules of the American Arbitration Association
then in effect. Judgment may be entered on the award of the
arbitrator in any court having jurisdiction. All expenses of
such arbitration, including the fees and expenses of the counsel
for the Participant, shall be borne by CCB.
Approved by CCB Board of Directors
October 21, 1997
