Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ to _________
Commission file number 0-15083
CAROLINA FIRST CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 57-0824914
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 South Main Street, Greenville, South Carolina 29601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (864) 255-7900
- --------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of outstanding shares of the issuer's $1.00 par value common stock as
of May 11, 1998 was 17,715,356.
<PAGE>
Carolina First Corporation and Subsidiaries
CONSOLIDATED
BALANCE SHEETS
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
------------------------ -----------
Assets 1998 1997 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash and due from banks.........................................................$ 67,095 $ 62,11 $ 73,326
Interest-bearing bank balances.................................................. 47,229 16,809 34,703
Federal funds sold and resale agreements........................................ 105,000 -- --
Securities
Trading...................................................................... 3,991 1,262 2,349
Available for sale........................................................... 353,083 230,536 262,329
Held for investment (market value $33,468, $29,643 and
$34,494, respectively)....................................................... 32,877 29,578 33,855
---------- ---------- ----------
Total securities........................................................... 389,951 261,376 298,533
---------- ---------- ----------
Loans held for sale............................................................. 139,033 20,056 235,151
Loans held for investment....................................................... 1,366,018 1,178,276 1,379,039
Less unearned income......................................................... (10,461) (14,889) (11,775)
Less allowance for loan losses............................................... (15,349) (12,039) (16,211)
---------- ---------- ----------
Net loans.................................................................. 1,479,241 1,171,404 1,586,204
---------- ---------- ----------
Premises and equipment.......................................................... 38,774 30,509 39,682
Accrued interest receivable..................................................... 15,657 11,195 15,484
Intangible assets............................................................... 56,885 16,204 58,228
Other assets.................................................................... 50,915 44,298 50,186
========== ========== ==========
$2,250,747 $1,613,906 $2,156,346
========== ========== ==========
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing.........................................................$ 228,866 $ 210,350 $ 206,938
Interest-bearing............................................................ 1,597,163 1,046,655 1,539,604
---------- ---------- ----------
Total deposits............................................................ 1,826,029 1,257,005 1,746,542
Borrowed funds................................................................ 124,263 172,462 153,369
Subordinated notes............................................................ 25,522 25,393 25,489
Accrued interest payable...................................................... 16,192 8,624 13,518
Other liabilities............................................................. 15,358 45,083 15,769
---------- ---------- ----------
Total liabilities.......................................................... 2,007,364 1,508,567 1,954,687
---------- ---------- ----------
Shareholders' Equity
Preferred stock-no par value; authorized 10,000,000 shares;
issued and outstanding none................................................. -- -- --
Common stock-par value $1 per share; authorized 100,000,000
shares; issued and outstanding 17,709,935, 11,355,443, and
15,659,338 shares, respectively............................................. 17,710 11,355 15,659
Surplus....................................................................... 201,967 84,721 164,517
Retained earnings............................................................. 23,337 10,337 20,059
Guarantee of employee stock ownership plan debt and
nonvested restricted stock................................................ (3,617) (697) (3,129)
Accumulated other comprehensive income, net of tax............................ 3,986 (377) 4,553
---------- ---------- ----------
Total shareholders' equity................................................. 243,383 105,339 201,659
---------- ---------- ----------
$2,250,747 $1,613,906 $2,156,346
========== ========== ==========
</TABLE>
1
<PAGE>
Carolina First Corporation and Subsidiaries
CONSOLIDATED
STATEMENTS OF INCOME
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest Income
Interest and fees on loans............................. $ 36,229 $ 26,918
Interest and dividends on securities................... 4,815 3,260
Interest on short-term investments..................... 1,083 214
----------- -----------
Total interest income................................ 42,127 30,392
----------- -----------
Interest Expense
Interest on deposits................................... 19,275 12,701
Interest on borrowed funds............................. 2,625 2,239
----------- -----------
Total interest expense............................... 21,900 14,940
----------- -----------
Net interest income.................................. 20,227 15,452
Provision for Loan Losses................................ 2,136 2,952
----------- -----------
Net interest income after provision for loan losses.. 18,091 12,500
----------- -----------
Noninterest Income
Service charges on deposit accounts.................... 1,876 1,629
Mortgage banking income................................ 1,493 528
Fees for trust services................................ 352 383
Loan securitization income............................. (81) (59)
Gain on sale of securities............................. 140 84
Sundry................................................. 833 527
----------- -----------
Total noninterest income............................. 4,613 3,092
----------- -----------
Noninterest Expenses
Personnel expense...................................... 7,493 6,253
Occupancy.............................................. 1,469 1,244
Furniture and equipment................................ 1,095 920
Sundry................................................. 5,202 4,449
----------- ----------
Total noninterest expenses........................... 15,259 12,866
----------- ----------
Income before income taxes........................... 7,445 2,726
Income taxes........................................... 2,751 1,009
----------- ----------
Net income .......................................... $ 4,694 $ 1,717
=========== ==========
Net Income per Common Share:
Basic................................................ $ 0.28 0.15
Diluted.............................................. 0.28 0.15
Average Common Shares Outstanding:
Basic................................................ 16,588,163 11,304,437
Diluted.............................................. 16,922,202 11,478,383
Cash Dividends Declared per Common Share................. $ 0.08 $ 0.07
</TABLE>
2
<PAGE>
Carolina First Corporation and Subsidiaries
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
Retained Accumulated
Shares of Earnings Other
Common Preferred Common and Comprehensive
Stock Stock Stock Surplus Other* Income Total
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996................................. 11,225,568 $943 $11,226 $83,598 $8,714 $483 $104,964
Net income............................................... -- -- -- -- 1,717 -- 1,717
Other comprehensive income, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $506..................... -- -- -- -- -- (807) --
Less: reclassification adjustment for gains
included in net income, net of taxes of $31...... -- -- -- -- -- (53) --
-------------
Other comprehensive income........................... -- -- -- -- -- (860) (860)
------------- ---------
Comprehensive income................................... -- -- -- -- -- -- 857
---------
Common stock issued pursuant to:
Dividend reinvestment plan............................. 12,598 -- 12 198 -- -- 210
Employee stock purchase plan........................... 2,344 -- 2 37 -- -- 39
Exercise of stock options and stock warrants........... 6,592 -- 7 53 -- -- 60
Conversion and redemption of preferred stock........... 108,341 (943) 108 835 -- -- --
Cash dividends paid/accrued:
Common stock........................................... -- -- -- -- (926) -- (926)
Miscellaneous........................................... -- -- -- -- 135 -- 135
========================================================================
Balance, March 31, 1997.................................... 11,355,443 -- $11,355 $84,721 $9,640 ($377) $105,339
========================================================================
Balance, December 31, 1997................................. 15,659,338 -- $15,659 $164,517 $16,930 $4,553 $201,659
Net income............................................... -- -- -- -- 4,694 -- 4,694
Other comprehensive income, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $345..................... -- -- -- -- -- (479) --
Less: reclassification adjustment for gains
included in net income, net of taxes of $52 .... -- -- -- -- -- (88) --
-------------
Other comprehensive income........................... -- -- -- -- -- (567) (567)
------------- ---------
Comprehensive income................................... -- -- -- -- -- -- 4,127
---------
Common stock issued pursuant to:
Regulation S offering.................................. 2,000,000 -- 2,000 36,381 -- -- 38,381
Dividend reinvestment plan............................. 18,216 -- 19 374 -- -- 393
Restricted stock plan.................................. 28,945 -- 29 593 622
Employee stock purchase plan........................... 2,244 -- 2 44 -- -- 46
Exercise of stock options and stock warrants........... 1,192 -- 1 24 -- -- 25
Cash dividends paid/accrued:
Common stock........................................... -- -- -- -- (1,417) -- (1,417)
Miscellaneous........................................... -- -- -- 34 (487) -- (453)
------------------------------------------------------------------------
Balance, March 31, 1998.................................... 17,709,935 -- $17,710 $201,967 $19,720 $3,986 $243,383
========================================================================
</TABLE>
* Other includes guarantee of employee stock ownership plan debt and nonvested
restricted stock.
3
<PAGE>
Carolina First Corporation and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
-----------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income ...................................................................... $ 4,694 $ 1,717
Adjustments to reconcile net income to net cash provided by
(used for) operations
Depreciation................................................................. 936 703
Amortization of intangibles.................................................. 874 30
Provision for loan losses.................................................... 2,136 2,952
Gain on sale of securities................................................... (140) (84)
Unrealized loss on trading securities........................................ 16 8
Originations of mortgage loans held for sale................................. (118,867) (37,710)
Sale of mortgage loans held for sale......................................... 248,298 24,224
Proceeds from sale of trading securities..................................... 288,254 244,731
Proceeds from maturity of trading securities................................. 6,671 1,337
Purchase of trading securities............................................... (296,480) (245,250)
(Increase) decrease in accrued interest receivable........................... (173) 718
Increase (decrease) in accrued interest payable.............................. 2,674 (1,048)
Increase in other assets..................................................... (137) (1,480)
(Decrease) increase in other liabilities..................................... (15) 549
-----------------------
Net cash provided by (used for) operating activities........................... 138,741 (8,603)
-----------------------
Cash Flows From Investing Activities
Net (increase) decrease in interest-earning deposits with banks.................. (12,526) 9,228
Net increase in federal funds sold and resale agreements......................... (105,000) --
Proceeds from sale of securities available for sale.............................. 1,180 --
Proceeds from maturity of securities available for sale.......................... 122,379 51,459
Proceeds from maturity of securities held for investment......................... 3,030 714
Purchase of securities available for sale........................................ (215,089) (69,364)
Purchase of securities held for investment....................................... (2,052) (827)
Purchase of loans................................................................ -- (10,510)
Net increase in loans............................................................ (24,709) (52,137)
Capital expenditures............................................................. (28) (475)
-----------------------
Net cash used for investing activities ........................................ (232,815) (71,912)
-----------------------
Cash Flows From Financing Activities
Net increase in deposits......................................................... 79,487 30,563
(Decrease) increase in borrowed funds............................................ (29,106) 26,192
Cash dividends paid.............................................................. (1,567) (786)
Issuance of common stock to foreign investors.................................... 38,381 --
Other common stock activity...................................................... 648 335
-----------------------
Net cash provided by financing activities...................................... 87,843 56,304
-----------------------
Net change in cash and due from banks.............................................. (6,231) (24,211)
Cash and due from banks at beginning of period..................................... 73,326 86,322
-----------------------
Cash and due from banks at end of period........................................... $ 67,095 $ 62,111
=======================
</TABLE>
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CAROLINA FIRST CORPORATION AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of these policies is included in the 1997 Annual Report to
Shareholders.
Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting comprehensive income and its components in a full set of
general purpose financial statements. The objective of SFAS 130 is to
report a measure of all changes in equity of an enterprise that result
from transactions and other economic events during the period other
than transactions with owners. Comprehensive income is divided into net
income and other comprehensive income. Adoption of SFAS 130 will not
change total shareholders' equity as previously reported. In accordance
with the provisions of SFAS 130, comparative financial statements
presented for earlier periods have been reclassified to reflect the
provisions of this Statement.
(2) STATEMENTS OF CASH FLOWS
Cash includes currency and coin, cash items in process of collection
and due from banks. Interest paid, net of interest capitalized as a
part of the cost of construction, amounted to approximately $19,226,000
for the three months ended March 31, 1998. Income tax payments of $1.1
million and $509,000 were made for the three months ended March 31,
1998 and March 31, 1997, respectively.
(3) BUSINESS COMBINATIONS
In February 1998, Carolina First Bank signed a definitive agreement to
sell three branches located in Belton, Calhoun Falls and Honea Path,
South Carolina with approximately $45 million in deposits. The branches
are being sold to two bank subsidiaries of Community Capital
Corporation. This transaction is expected to be completed in the second
quarter and is subject to regulatory approval, among other conditions.
In March 1998, the Company signed a definitive merger agreement with
Resource Processing Group, Inc. ("RPG"), a privately-held credit card
services company located in Columbia, South Carolina. Under the terms
of the agreement, the Company will issue shares of the Company's common
stock valued at approximately $11.3 million. Additional shares may
become issuable if certain credit quality criteria are met. At December
31, 1997, RPG had approximately $19.3 million in assets and total
equity of approximately $10.6 million. RPG will become a wholly-owned
subsidiary of the Company. The transaction is expected to occur in the
second quarter and will be accounted for under the purchase method of
accounting.
5
<PAGE>
(4) SECURITIES
The net unrealized gain on securities available for sale decreased
$567,000 for the three months ended March 31, 1998.
(5) COMMON STOCK
Basic earnings per share is based on the weighted average number of
common shares outstanding during each period. Basic earnings per share
also reflects provisions for dividend requirements on all outstanding
shares of preferred stock.
Diluted earnings per share is based on the weighted average number of
common shares outstanding during each period, including the assumed
conversion of convertible preferred stock into common stock and the
assumed exercise of dilutive stock options using the treasury stock
method.
(6) COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to various legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of
management based on consultation with legal counsel, any outcome of
such pending litigation would not materially affect the Company's
consolidated financial position or results of operations.
On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, the
majority of the Company's and Carolina First Bank's directors and
certain executive and other officers. The named plaintiffs are the
Company by and through certain minority shareholders. The Company filed
a motion to dismiss with respect to all claims in this complaint, which
was granted in December 1997. Plaintiffs have filed a motion for
reconsideration and have the right to appeal the grant of the motion to
dismiss. Plaintiffs allege as causes of action the following:
conversion of corporate opportunity; fraud and constructive fraud; and
negligent management. The factual basis upon which these claims are
made generally involves the payment to Company officers and other
individuals of a bonus in stock held by the Company in Affinity (as
reward for their efforts in connection with the Company's procurement
of stock in Affinity), statements to former shareholders in connection
with the Company's acquisition of Midlands National Bank ("MNB"),
alleged mismanagement by certain executive officers involving financial
matters and employee matters. The complaint seeks damages for the
benefit of the Company aggregating $41 million and recision of the
Affinity bonus.
In an action brought by the same attorneys who brought the
above-mentioned derivative action, on December 31, 1996, certain
individuals filed a class action lawsuit against the Company, Carolina
First Bank, and a number of officers and directors of the Company and
Carolina First Bank. In connection with the judge's granting the motion
to dismiss in the above-referenced derivative action, the plaintiffs'
attorneys withdrew this lawsuit, without prejudice.
(7) MANAGEMENT'S OPINION
The financial statements in this report are unaudited. In the opinion
of management, all adjustments necessary to present a fair statement of
the results for the interim periods have been made. All such
adjustments are of a normal, recurring nature.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the consolidated financial statements and related notes and with the
statistical information and financial data appearing in this report as well as
the Annual Report of Carolina First Corporation (the "Company") on Form 10-K for
the year ended December 31, 1997. Results of operations for the three month
period ended March 31, 1998 are not necessarily indicative of results to be
attained for any other period.
OVERVIEW
The Company, a South Carolina corporation headquartered in Greenville,
South Carolina, is a financial institution, which commenced banking operations
in December 1986, and currently conducts business through 64 locations in South
Carolina. The Company operates through three principal subsidiaries: Carolina
First Bank, a state-chartered commercial bank, Carolina First Mortgage Company
("CF Mortgage"), a mortgage banking operation, and Blue Ridge Finance Company,
Inc. ("Blue Ridge"), a consumer finance company. Through its subsidiaries, the
Company provides a full range of banking services, including mortgage, trust and
investment services, designed to meet substantially all of the financial needs
of its customers. At March 31, 1998, the Company had approximately $2.3 billion
in assets, $1.5 billion in loans, $1.8 billion in deposits, $243.4 million in
shareholders' equity and $449.4 million in market capitalization.
The Company reported the highest net income in its history with first
quarter 1998 net income of $4.7 million, a substantial increase over 1997's
first quarter net income of $1.7 million. The Company increased first quarter
1998 net income per diluted share by 87% to $0.28 compared with $0.15 for the
first quarter of 1997 although the number of shares used in the calculation
increased dramatically. Cash earnings (which exclude intangible amortization)
for the first quarter of 1998 were $0.32, compared with $0.15 for the same
period one year ago. The increase in net income during the first quarter of 1998
was primarily attributable to increases in net interest income and noninterest
income. The increase in net interest income was a result of a 42% increase in
average earning assets which was partially offset by a decline in the net
interest margin. The increase in noninterest income was attributable to higher
mortgage banking income and service charges on deposit accounts partially offset
by lower loan securitization income. In addition, the provision for loan losses
declined during the first quarter of 1998, due primarily to lower credit card
charge-offs.
On February 13, 1998, the Company completed the sale of 2.0 million
shares of its Common Stock to certain overseas investors (the "Regulation S
Offering"). The shares were offered and sold only to non-U.S. persons under an
exemption from registration provided by Regulation S under the Securities Act of
1933. In connection with this offering, the Company received net proceeds of
approximately $39 million which will be used to support internal growth,
acquisitions, the expansion of its finance subsidiary and for general corporate
purposes. Subsequent to the consummation of the Regulation S Offering, the
Company filed a registration statement with the Securities and Exchange
Commission registering the further sale of such shares by the institutional
investors which purchased the shares in the Regulation S Offering. This
registration statement became effective on March 11, 1998.
In February 1998, Carolina First Bank signed a definitive agreement to
sell three branches located in Belton, Calhoun Falls and Honea Path, South
Carolina with approximately $45 million in
7
<PAGE>
deposits. The branches are being sold to two bank subsidiaries of Community
Capital Corporation. This transaction is expected to be completed in the second
quarter and is subject to regulatory approval, among other conditions.
In March 1998, the Company signed a definitive merger agreement with
RPG, a privately-held credit card services company located in Columbia, South
Carolina. Under the terms of the agreement, the Company will issue shares of the
Company's common stock valued at approximately $11.3 million. Substantially all
of RPG's activities are related to the origination and servicing of credit cards
on behalf of third parties, one of which is Carolina First Bank. Additional
shares may become issuable if certain credit quality criteria are met. At
December 31, 1997, RPG had approximately $19.3 million in assets and total
equity of approximately $10.6 million. RPG will become a wholly-owned subsidiary
of the Company. The transaction is expected to occur in the second quarter and
will receive purchase accounting treatment.
EQUITY INVESTMENTS
Investment in Net.B@nk, Inc.
At March 31, 1998, the Company owned 1,175,000 shares of Net.B@nk
common stock, or approximately 18% of the outstanding shares. These shares are
carried on the Company's books (as securities available for sale) at a basis of
approximately $979,000. Net.B@nk owns and operates the Atlanta Internet Bank,
FSB ("Atlanta Internet Bank"), a FDIC-insured federal savings bank that provides
banking services to consumers utilizing the Internet for their commercial and
financial services. Under the terms of the Office of Thrift Supervision's
approval of Atlanta Internet Bank, certain affiliates of Net.B@nk, including the
Company, may not sell their shares in Net.B@nk until July 31, 2000.
Investment in Affinity Technology Group, Inc.
At March 31, 1998, the Company (through its subsidiary CF Investment
Company) owned 2,528,366 shares of common stock of Affinity Technology Group,
Inc. ("Affinity") and a warrant to purchase an additional 3,471,340 shares for
approximately $0.0001 per share ("Affinity Warrant"). These Affinity shares and
the shares represented by the Affinity Warrant constitute approximately 17% of
Affinity's outstanding common stock. The investment in Affinity's common stock,
included in securities available for sale, was recorded at its market value of
approximately $5.7 million. The Affinity Warrant was not reported on the
Company's balance sheet as of March 31, 1998.
The Company's shares in Affinity and the shares issuable upon the
exercise of the Affinity Warrant are "restricted" securities, as that term is
defined in federal securities laws.
Investments in Community Banks
The Company has also made equity investments in six community banks in
South Carolina and North Carolina. In each case, the Company owns less than 5%
of the community bank's outstanding common stock. The Company has made these
investments to develop correspondent banking relationships and to promote
community banking in the Carolinas.
8
<PAGE>
CF Investment Company
In September 1997, the Company's subsidiary, CF Investment Company,
became licensed through the Small Business Administration to operate as a Small
Business Investment Company. CF Investment Company is a wholly-owned subsidiary
of Blue Ridge. CF Investment Company's principal focus is on companies that
offer bank-related products, technology or services. In 1997, the Company
capitalized CF Investment Company with a contribution of $3.0 million. CF
Investment Company made its first investment in December 1997 investing in ITS,
Inc. ("ITS"), a privately-held company specializing in electronic document
management. CF Investment Company has agreed to lend up to $1.2 million to ITS
and has received a 49% equity ownership position.
EARNINGS REVIEW
Net Interest Income
The largest component of the Company's net income is Carolina First
Bank's net interest income. Net interest income is the difference between the
interest earned on assets and the interest paid for the liabilities used to
support such assets. Fully tax-equivalent net interest income adjusts the yield
for assets earning tax-exempt income to a comparable yield on a taxable basis.
Fully tax equivalent net interest income increased $4.8 million, or 31%, to
$20.4 million for the first three months of 1998 from $15.6 million for the
first three months of 1997. The increase resulted principally from a higher
level of average earning assets. The growth in average earning assets, which
increased $583.6 million, or 42%, to approximately $2.0 billion in the first
three months of 1998 from $1.4 billion in the first three months of 1997,
resulted from an increase in both loans and investment securities. Average loans
and average investment securities increased $424.9 million and $87.5 million,
respectively, in the first quarter of 1998 compared with the first quarter of
1997.
The net interest margin for the three months ended March 31, 1998 of
4.17% was lower than the margin of 4.52% for the same period of 1997. The lower
net interest margin in the first quarter of 1998 resulted primarily from lower
loan yields and higher funding costs. The yield on loans was lower in the first
quarter of 1998 as a result of a change in the mix of loans. Approximately 89%
of the loans acquired in the First Southeast Financial Corporation ("First
Southeast") acquisition were mortgage loans which typically have a lower yield
than commercial or consumer loans. During the first quarter of 1998, the Company
made significant progress in restructuring the balance sheet through mortgage
loan sales. Mortgage loans totaling approximately $248 million were sold during
the first quarter of 1998. Going forward, the Company plans to redeploy the
proceeds from these mortgage loan sales into higher yielding assets. The cost of
funds was higher in 1998 as a result of the large number of certificates of
deposit acquired from First Southeast. Approximately 73% of First Southeast's
total deposits were certificates of deposit or individual retirement accounts.
Certificates of deposit typically have higher rates than transaction accounts.
The Company is currently focusing on shifting the deposit mix to more closely
resemble a commercial bank by increasing deposit transaction accounts.
Provision for Loan Losses
The provision for loan losses was $2.1 million for the first three
months of 1998 and $3.0 million
9
<PAGE>
for the first three months of 1997. The higher 1997 provision for loan losses
reflected higher levels of net credit card charge-offs than previously
experienced. During the first quarter of 1998, credit card charge-offs totaled
$1.1 million compared with $1.9 million in the first quarter of 1997. During the
first quarter of 1998, past due trends in the credit card portfolio improved.
Management currently anticipates that loan growth will continue in
1998. New market areas are expected to contribute to 1998 portfolio growth.
Management intends to closely monitor economic trends and the potential effect
on Carolina First Bank's loan portfolio.
Noninterest Income
Noninterest income increased $1.5 million, or 49%, to $4.6 million in
the first quarter of 1998 from $3.1 million in the first quarter of 1997. The
increase was attributable to increases in service charges on deposit accounts
and mortgage banking income partially offset by lower loan securitization
income.
Service charges on deposit accounts, the largest contributor to
noninterest income, rose 15% to $1.9 million in the first three months of 1998
from $1.6 million in the first three months of 1997. Average deposits for the
same period increased 38.4%. The increase in service charges was attributable to
attracting new transaction accounts and improved collection results. In
addition, effective March 1, 1997, Carolina First Bank implemented increases in
some of its existing service charges.
Mortgage banking income includes origination fees, gains from the sale
of loans and servicing fees (which are net of the related amortization for the
mortgage servicing rights and subservicing payments). Mortgage banking income in
the first three months of 1998 increased $965,000 to $1.5 million compared with
$528,000 in the first three months of 1997. The increase is attributable to
higher origination and servicing volumes and higher gains on the sale of loans
originated by CF Mortgage.
Income from originations and sales of mortgage loans, including sales
of loans originated by Carolina First Bank, totaled $1.3 million in the first
three months of 1998, up from $449,000 for the first three months of 1997. The
increase in the first quarter of 1998 resulted from higher gains on mortgage
loans sold as well as increased origination volumes resulting from the positive
mortgage rate environment. Mortgage originations totaled approximately $140
million in the first quarter of 1998 compared with $39 million in the first
quarter of 1997. Mortgage loans totaling approximately $248 million and $24
million were sold in the first three months of 1998 and 1997, respectively.
Approximately $153 million of the loans sold in 1998 were First Southeast loans.
The gain on the sale of these loans was not included in the gain on sale of
mortgage loans but instead reduced the goodwill associated with the First
Southeast acquisition.
CF Mortgage's mortgage servicing operations consist of servicing loans
that are owned by Carolina First Bank and subservicing loans, to which the
rights to service are owned by Carolina First Bank or other non-affiliated
financial institutions. At March 31, 1998, CF Mortgage was servicing or
subservicing 20,504 loans having an aggregate principal balance of approximately
$1.8 billion.
Servicing income from non-affiliated companies, net of the related
amortization for the mortgage servicing rights and subservicing payments, was
$174,000, compared with $79,000 for the first three months of 1997. The volume
of loans serviced increased to $1.8 billion at March 31, 1998 from $1.3
10
<PAGE>
billion at March 31, 1997 which contributed to an increase in servicing income.
The servicing income does not include the benefit of interest-free escrow
balances related to mortgage loan servicing activities.
Fees for trust services in the first three months of 1998 of $352,000
were 8% below the $383,000 earned in the same period of 1997. At March 31, 1998,
Carolina First Bank's trust department had assets under management of
approximately $310 million. The trust department is continuing to concentrate on
improving the profitability of its accounts and has elected to terminate some
relationships and certain trust products.
During the first quarter of 1998, the Company had a loss of $81,000
from its interests in the credit card and commercial real estate loan trusts,
compared with a loss of $59,000 for the same period in 1997. Loan securitization
income is net of charge-offs associated with the loans in the trusts. Loan
securitization income related to credit cards improved to a loss of $35,000 for
the first quarter of 1998, compared to a loss of $206,000 for the first quarter
of 1997. The loan securitization income was negatively impacted by charge-offs
in the credit card securitization, however, credit card charge-offs during the
first quarter of 1998 showed improvement over previous quarters. The commercial
real estate loan trust showed a loss of $46,000 for the first quarter of 1998
compared with income of $147,000 in the first quarter of 1997. Total balances in
the commercial real estate loan trust decline as loans are paid off, resulting
in lower income. At March 31, 1998, the off-balance sheet balance in the
commercial real estate loan trust was approximately $35 million. In addition,
expenses related to the formation of this trust are being amortized over the
life of the loans. As a result, the Company expects the loss associated with the
commercial real estate loan trust to continue.
Sundry noninterest income was $306,000 higher for the first three
months of 1998 than for the same period of 1997. This increase was due to higher
insurance commissions and appraisal fee income as well as additional servicing
fee income received from NetB@nk for loans purchased from Carolina First Bank
during 1997 which continue to be serviced by Carolina First Bank.
During the second quarter of 1998, the Company expanded its brokerage
service offerings through Carolina First Securities, Inc. ("CF Securities"), a
subsidiary of Carolina First Bank. CF Securities offers a complete line of
investment products and services, including mutual funds, stocks, bonds and
annuities. Income from these investment activities is not expected to be
significant in 1998.
Noninterest Expenses
Noninterest expenses increased $2.4 million, or 19%, to $15.3 million
in the first three months of 1998 from $12.9 million in the first three months
of 1997. With the acquisitions of Lowcountry Savings Bank, Inc. ("Lowcountry")
and First Southeast, intangible amortization for the first quarter of 1998
increased significantly over first quarter of 1997. Excluding intangible
amortization, noninterest expenses on a cash basis increased $1.5 million, or
12%, to $14.4 million for the first quarter of 1998 from $12.9 million for the
first quarter of 1997. The increase in expenditures reflects operation costs
associated with acquired branches, new markets and additional automated teller
machines ("ATMs").
Salaries and wages and employee benefits increased $1.2 million to $7.5
million in the first three months of 1998 compared with $6.3 million in the
first three months of 1997. Full-time equivalent employees increased to 697 as
of March 31, 1998 from 593 at March 31, 1997. The staffing cost increases were
primarily due to the costs of expanding in existing and new markets (including
the
11
<PAGE>
Lowcountry and First Southeast acquisitions) and back office support functions
to support growth.
Occupancy and furniture and equipment expenses increased $400,000, or
18%, to $2.6 million for the three months ended March 31, 1998 from $2.2 million
for the three months ended March 31, 1997. This increase resulted principally
from additional costs associated with the Lowcountry and First Southeast
branches and the addition of nine new ATMs since the beginning of 1997 setting
the total number of ATMs at 39.
Sundry noninterest expenses increased $753,000, or 17%, to $5.2 million
in the first three months of 1998 from $4.4 million in the first three months of
1997. Excluding intangible amortization (a non-cash item), sundry noninterest
expenses decreased $121,000 to $4.3 million for the first quarter of 1998. The
decrease in sundry noninterest expense was principally attributable to lower
professional and legal fees and advertising. The largest items of sundry
noninterest expense were stationery, supplies, printing, telephone and
advertising.
Year 2000
The Company recognizes that there is a business risk in computerized
systems as the calendar rolls over into the next century. If the computer
systems misinterpret the date, items such as interest calculations on loans and
deposits will be incorrect. This problem is commonly called the "Year 2000
Problem." A number of computer systems used by the Company in its day-to-day
operations will be affected by this problem. Management has established a
committee (the "Y2K Project Team") which has identified all affected systems and
is currently working to ensure that this event will not disrupt operations. The
Y2K Project Team reports regularly to the Audit Committee of the Company's Board
of Directors. The Company is also working closely with outside computer vendors
to ensure that all software corrections and warranty commitments are obtained
and to arrange mock conversion testing. The estimated cost to the Company for
these corrective actions is $250,000, all of which is included in the Company's
1998 budget. Incomplete or untimely compliance, however, would have a material
adverse effect on the Company, the dollar amount of which cannot be accurately
quantified at this time because of the inherent variables and uncertainties
involved.
BALANCE SHEET REVIEW
Loans
The Company's loan portfolio consists of commercial mortgage loans,
commercial loans, consumer loans and one-to-four family residential mortgage
loans. A substantial majority of these borrowers are located in South Carolina
and are concentrated in the Company's market areas. The Company has no foreign
loans or loans for highly leveraged transactions. The loan portfolio does not
contain any industry concentrations of credit risk exceeding 10% of the
portfolio. At March 31, 1998, the Company had total loans outstanding of $1.5
billion which equaled approximately 82% of the Company's total deposits and
approximately 66% of the Company's total assets. The composition of the
Company's loan portfolio at March 31, 1998 follows: commercial and commercial
mortgage 63%, residential mortgage 16%, consumer 10%, lease receivables 4%,
credit card 4% and construction 3%.
The Company's loans increased $311.1 million, or 26%, to approximately
$1.5 billion at March 31, 1998 from $1.2 billion at March 31, 1997 and decreased
$107.8 million from approximately $1.6
12
<PAGE>
billion at December 31, 1997. This decrease was net of mortgage loan sales of
$248 million. Adjusting for the 1998 mortgage loan sales, internal loan growth
was approximately $140.5 million, or an annualized rate of 35%, during the
quarter.
The Company had loans to 65 borrowers having principal amounts ranging
from $2 million to $5 million, which loans accounted for $201.2 million, or 13%,
of the Company's loan portfolio in the first quarter of 1998. The Company had
loans to 18 borrowers having principal amounts in excess of $5 million, which
loans accounted for $116.7 million, or 8%, of the Company's loan portfolio in
the first quarter of 1998. During the first quarter of 1997, the Company had
loans to 92 borrowers with principal amounts ranging from $2 million to $5
million, which accounted for $281.0 million, or 24%, of the Company's loan
portfolio. The Company had loans to 13 borrowers having principal amounts in
excess of $5 million, which loans accounted for $87.0 million, or 7%, of the
Company's loan portfolio in the first quarter of 1997. Any material
deterioration in the quality of these larger loans could have a significant
impact on the Company's earnings.
For the first three months of 1998, the Company's loans averaged $1.6
billion with a yield of 9.28%, compared with $1.2 billion and a yield of 9.42%
for the same period of 1997. The decline in loan yield was primarily
attributable to a shift in the composition of the loan portfolio to a higher
concentration of mortgage loans, related to the 1997 acquisition of First
Southeast. Mortgage loans made up approximately 22% of the average loan
portfolio in the first quarter of 1998 compared with 7% during the first quarter
of 1997. During the first quarter of 1998, the Company sold approximately $248
million in mortgage loans. The proceeds from these sales are being deployed into
higher yielding assets. The interest rates charged on loans vary with the degree
of risk and the maturity and amount of the loan. Competitive pressures, money
market rates, availability of funds and government regulations also influence
interest rates.
Allowance for Loan Losses
Management maintains an allowance for loan losses which it believes is
adequate to cover possible losses in the loan portfolio. However, management's
judgment is based upon a number of assumptions about future events which are
believed to be reasonable, but which may or may not prove valid. Thus, there can
be no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the allowance for loan losses
will not be required.
The allowance for loan losses is established through charges in the
form of a provision for loan losses. Loan losses and recoveries are charged or
credited directly to the allowance. The amount charged to the provision for loan
losses by the Company is based on management's judgment as to the amount
required to maintain an allowance adequate to provide for potential losses in
the Company's loan portfolio. The level of this allowance is dependent upon the
total amount of past due loans, general economic conditions and management's
assessment of potential losses.
The allowance for loan losses totaled $15.3 million, or 1.03% of loans
net of unearned income, at the end of March 1998, compared with $12.0 million,
or 1.01% of loans net of unearned income, at the end of March 1997. At December
31, 1997, the allowance for loan losses was $16.2 million, or 1.01% of loans net
of unearned income. The allowance for loan losses as a percentage of
nonperforming loans was 694% and 567% as of March 31, 1998 and 1997,
respectively. Table 1 presents changes in the allowance for loan losses.
13
<PAGE>
TABLE 1
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)
<TABLE>
<CAPTION>
At and for
At and for the three months the year ended
ended March 31, December 31,
--------------------------- ------------
1998 1997 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of period $ 16,211 $ 11,290 $ 11,290
Purchase accounting acquisitions 0 0 3,550
Valuation allowance for loans purchased 0 203 658
Provision for loan losses 2,136 2,952 11,646
Charge-offs:
Credit cards 1,109 1,854 5,325
Bank loans, leases & Blue Ridge 2,290 1,255 6,794
Recoveries 401 703 1,186
- --------------------------------------------------------------------------------------------------
Net charge-offs 2,998 2,406 10,933
- --------------------------------------------------------------------------------------------------
Allowance at end of period $ 15,349 $ 12,039 $ 16,211
- --------------------------------------------------------------------------------------------------
</TABLE>
At March 31, 1998, the recorded investment in loans that were
considered to be impaired under Statement of Financial Accounting Standards 114,
"Accounting by Creditors for Impairment of a Loan," was $930,000. The related
allowance for these impaired loans was $652,000. The average recorded investment
and foregone interest on impaired loans during the three months ended March 31,
1998 was approximately $968,000 and $27,000, respectively. For the three months
ended March 31, 1998, the Company recognized interest income on impaired loans
of $30,000.
Securities
At March 31, 1998, the Company's total investment portfolio had a book
value of $382.2 million and a market value of $390.5 million for an unrealized
net gain of $8.3 million. The investment portfolio has a weighted average
maturity of approximately 5.0 years. Securities (i.e., securities held for
investment, securities available for sale and trading securities) averaged
$316.0 million in the first three months of 1998, 38% above the first three
month 1997 average of $228.5 million. This increase was primarily attributable
to proceeds from the sale of First Southeast mortgage loans. The average
portfolio yield increased to 6.44% for the first three months of 1998 from 6.10%
for the first three months of 1997. The portfolio yield increased as a result of
changing the mix of securities. As securities matured, they were reinvested in
higher yielding agencies and mortgage-backed securities. At March 31, 1998,
securities totaled $390.0 million, up $128.6 million from the $261.4 million
invested as of the first quarter end 1997 and up $91.5 million from the December
31, 1997 balance of $298.5 million.
At March 31, 1998, the Company owned 2,528,366 shares of common stock
of Affinity and the Affinity Warrant entitling the Company to purchase an
additional 3,471,340 shares for approximately $0.0001 per share, or
approximately 17% of Affinity's outstanding common stock. The investment in
Affinity's common stock, included in securities available for sale, was recorded
at its market value of approximately $5.7 million. The Affinity Warrant was not
reported on the Company's balance sheet as of March 31, 1998.
14
<PAGE>
The Company currently owns 1,175,000 shares of Net.B@nk's common stock,
or approximately 18% of the outstanding shares. These shares are carried on the
Company's books (as securities available for sale) at a basis of approximately
$979,000. The Net.B@nk investment is not marked to market value since certain
regulators have precluded certain affiliates of Net.B@nk, including the Company,
from selling their shares until July 31, 2000.
Intangible Assets and Other Assets
The intangible assets balance at March 31, 1998 of $56.9 million was
attributable to goodwill of $48.0 million, core deposit balance premiums of $8.8
million and purchased credit card premiums of $121,000. The intangible assets
balance at March 31, 1997 of $16.2 million was attributable to goodwill of $7.5
million, core deposit balance premiums of $8.5 million and purchased credit card
premiums of $190,000. In connection with the acquisition of Lowcountry in 1997,
the Company recorded approximately $7.8 million in intangible assets ($7.2
million in goodwill and $0.6 million in core deposit intangibles). Approximately
$34.4 million in intangible assets ($33.7 million in goodwill and $0.7 million
in core deposit intangibles) were recorded in connection with the First
Southeast acquisition in 1997. This figure is net of the amount recorded
relative to the First Southeast mortgage loan sales. At March 31, 1998, other
assets included other real estate owned of $951,000 and mortgage servicing
rights of $22.7 million. At March 31, 1997, other assets included other real
estate owned of $3.0 million and mortgage servicing rights of $18.1 million.
Interest-bearing Liabilities
During the first three months of 1998, interest-bearing liabilities
averaged $1.7 billion, compared with $1.2 billion for the comparable period of
1997. This increase resulted principally from internal deposit growth related to
account promotions and sales efforts and acquisitions. The average interest
rates were 5.10% and 4.88% for the first three months of 1998 and 1997,
respectively. At March 31, 1998, interest-bearing deposits comprised
approximately 87% of total deposits and 91% of interest-bearing liabilities. For
the first three months of 1998, average borrowed funds, which include Federal
Home Loan Bank ("FHLB") advances and other short-term borrowings, totaled $140.1
million, compared with $123.5 million for the first three months of 1997. This
increase was primarily attributable to an increase in average repurchase
agreements which are provided to achieve a higher interest rate for our
customers. Advances from the FHLB declined to $10.0 million as of March 31, 1998
from $60.0 million as of March 31, 1997. The Company's FHLB advances were $10.0
million at December 31, 1997. FHLB advances are a source of funding which the
Company uses depending on the current level of deposits and management's
willingness to raise deposits through market promotions given the
competitiveness of the deposit market and the Company's cost of funds.
Carolina First Bank's primary source of funds for loans and investments
is its deposits which are gathered through Carolina First Bank's branch network.
Deposits grew 45% to $1.8 billion at March 31, 1998 from $1.3 billion at March
31, 1997. At December 31, 1997, deposits totaled $1.7 billion. The Company
acquired approximately $64 million in deposits from the Lowcountry acquisition
and approximately $285 million in deposits from the First Southeast acquisition.
Internal growth, particularly from account promotions, generated the remainder
of the new deposits. During the first three months of 1998, total
interest-bearing deposits averaged $1.6 billion with a rate of 4.97%, compared
with $1.1 billion with a rate of 4.72% in 1997. The increased rate paid on
deposits during the first quarter of 1998
15
<PAGE>
reflects the large number of CDs and IRAs acquired from First Southeast. The
Company focused on increasing deposit transaction accounts during the first
quarter of 1998 and will continue this effort going forward. During the first
three months of 1998, deposit pricing continued to be very competitive in
Carolina First Bank's market areas, resulting in upward pressure on deposit
interest rates. The Company expects this competitive deposit environment to
continue. The Company does not believe that it has any brokered deposits.
The Company has filed an application with the Federal Deposit Insurance
Corporation ("FDIC") to open a branch in the Cayman Islands. The branch is to be
a "shell" branch of Carolina First Bank, and accordingly, will involve minimal
start-up costs. The primary function of the branch will be to obtain deposits
from the Eurocurrency interbank market, which will be utilized in funding
Carolina First Bank's domestic loan portfolio. The bank views this branch
primarily as a vehicle for entrance into a funds market in which it is not
currently active.
Average noninterest-bearing deposits, which increased 6% during the
year, decreased to 11.5% of average total deposits in the first three months of
1997 from 15.0% in the first three months of 1997. This decrease reflects the
change in the mix of deposits related to the Lowcountry and First Southeast
acquisitions. It also reflects the fact that in the first quarter of 1997 the
deposits now associated with the Atlanta Internet Bank were carried on Carolina
First Bank's balance sheet.
The Company's core deposit base consists of consumer time deposits,
savings, NOW accounts, money market accounts and checking accounts. Although
such core deposits are becoming increasingly interest sensitive for both the
Company and the industry as a whole, such core deposits continue to provide the
Company with a large and stable source of funds. Core deposits as a percentage
of average total deposits averaged approximately 88% for the first three months
of 1998. The Company closely monitors its reliance on certificates of deposit
greater than $100,000, which are generally considered less stable and less
reliable than core deposits.
Capital Resources and Dividends
Total shareholders' equity amounted to $243.4 million, or 10.81% of
total assets, at March 31, 1998, compared with $105.3 million, or 6.53% of total
assets, at March 31, 1997. At December 31, 1997, shareholders' equity totaled
$201.7 million, or 9.35% of total assets. The $41.7 million increase in total
shareholders' equity since December 31, 1997 resulted principally from the
overseas offering of the Company's common stock and retention of earnings less
cash dividends paid.
The Company's capital needs have been met principally through public
offerings of common stock, preferred stock and subordinated notes and through
the retention of earnings. In addition, the Company issued capital stock in
connection with acquisitions. During the first quarter of 1998, the Company
raised approximately $39 million in new capital through the sale of 2.0 million
shares of its Common Stock to certain overseas investors in an offering meeting
the requirements of Regulation S of the Securities Act of 1933.
Book value per share at March 31, 1998 and 1997 was $13.74 and $9.28,
respectively. Tangible book value per share at March 31, 1998 and 1997 was
$10.53 and $7.85, respectively. At December 31, 1997, book value and tangible
book value were $12.88 and $9.17, respectively. Tangible book value was below
book value as a result of the purchase premiums associated with branch
acquisitions and the acquisitions of CF Mortgage, Lowcountry Savings Bank, Inc.
and First Southeast (all of which were accounted for as purchases).
16
<PAGE>
At March 31, 1998, the Company and Carolina First Bank were in
compliance with each of the applicable regulatory capital requirements. Table 2
sets forth various capital ratios for the Company and Carolina First Bank.
TABLE 2
CAPITAL RATIOS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
As of Well Capitalized Adequately Capitalized
3/31/98 Requirement Requirement
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Company:
Total Risk-based Capital 13.86% 10.0% 8.0%
Tier 1 Risk-based Capital 11.31 6.0 4.0
Leverage Ratio 8.27 5.0 4.0
Carolina First Bank:
Total Risk-based Capital 11.10 10.0 8.0
Tier 1 Risk-based Capital 10.20 6.0 4.0
Leverage Ratio 7.45 5.0 4.0
- -----------------------------------------------------------------------------------------------
</TABLE>
The Company and its subsidiaries are subject to certain regulatory
restrictions on the amount of dividends they are permitted to pay. The Company
has paid a cash dividend each quarter since the initiation of cash dividends on
February 1, 1994. At the December 17, 1997 meeting, the Board of Directors
approved an $0.08 per share cash dividend on the common stock, which represents
an effective annual increase of approximately 14%. The Company presently intends
to continue to pay a quarterly cash dividend on the Common Stock; however,
future dividends will depend upon the Company's financial performance and
capital requirements.
MARKET RISK
Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises principally from interest rate risk
inherent in its lending, deposit and borrowing activities. Management actively
monitors and manages its interest rate risk exposure. Although the Company
manages other risks, as in credit quality and liquidity risk, in the normal
course of business, management considers interest rate risk to be its most
significant market risk and could potentially have the largest material effect
on the Company's financial condition and results of operations. Other types of
market risks, such as foreign currency exchange risk and commodity price risk,
do not arise in the normal course of the Company's business activities.
Achieving consistent growth in net interest income is the primary goal
of the Company's asset/liability function. The Company attempts to control the
mix and maturities of assets and liabilities to achieve consistent growth in net
interest income despite changes in market interest rates. The Company seeks to
accomplish this goal while maintaining adequate liquidity and capital. The
Company's asset/liability mix is sufficiently balanced so that the effect of
interest rates moving in either direction is not expected to be significant over
time.
The Company's Asset/Liability Committee uses a simulation model to
assist in achieving consistent
17
<PAGE>
growth in net interest income while managing interest rate risk. The model takes
into account interest rate changes as well as changes in the mix and volume of
assets and liabilities. The model simulates the Company's balance sheet and
income statement under several different rate scenarios. The model's inputs
(such as interest rates and levels of loans and deposits) are updated on a
monthly basis in order to obtain the most accurate forecast possible. The
forecast presents information over a twelve month period. It reports a base case
in which interest rates remain flat and reports variations that occur when rates
increase and decrease 200 basis points. According to the model as of March 31,
1998, the Company is positioned so that net interest income will increase $11.1
million if interest rates rise in the near term and will decrease $7.8 million
if interest rates decline in the near term.
The static interest sensitivity gap position, while not a complete
measure of interest sensitivity, is also reviewed periodically to provide
insights related to the static repricing structure of assets and liabilities. At
March 31, 1998, on a cumulative basis through twelve months, rate-sensitive
liabilities exceeded rate-sensitive assets, resulting in a liability sensitive
position of $232.8 million.
Computation of prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of market
interest rates, loan prepayments and deposit decay rates, and should not be
relied upon as indicative of actual results. Further, the computations do not
contemplate any actions the Company could undertake in response to changes in
interest rates.
The table on the following page shows the Company's ending balance
sheet as of March 31, 1998 and the associated average yield/cost for the quarter
ended March 31, 1998 and reflects the impact that an increase and decrease of
200 basis points would have on net interest income within a one year time frame.
18
<PAGE>
TABLE 3
INTEREST RATE RISK
($ in thousands)
<TABLE>
<CAPTION>
PROJECTED FOR THE
YEAR ENDED 3/31/99
---------------------------
No Rate Changes
---------------------------
Average
Ending Yield/Rate
Balance For the Quarter Income/ Average
3/31/98 Ended 3/31/98 Expense Yield/Rate
------- ------------- ------- ----------
ASSETS
Earning assets
<S> <C> <C> <C> <C>
Loans (net of unearned income)(1)............$ 1,479,241 9.28% $ 165,837 9.53%
Investment securities (taxable).............. 357,427 6.36 20,727 6.44
Investment securities (nontaxable)........... 32,524 7.09(1) 2,386 7.18(1)
Federal funds sold and resale agreements..... 105,000 4.55 357 5.55
Interest bearing deposits with other banks... 47,229 5.63 1,396 5.52
----------- -----------
Total earning assets..................... 2,021,421 8.64 190,703 8.90
-----------
Non-earning assets........................... 229,326
===========
Total assets.............................$ 2,250,747
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking..........................$ 364,659 3.53% $ 13,899 3.73$
Savings..................................... 73,040 2.67 1,922 2.41
Money market................................ 182,170 4.13 8,014 4.13
Certificates of deposit..................... 977,294 5.80 56,800 5.61
----------- ------------
Total interest-bearing deposits........... 1,597,163 4.97 80,635 4.86
Short-term borrowings........................ 110,390 5.64 6,922 5.51
Long-term borrowings......................... 39,395 9.35 3,311 9.36
----------- ------------
Total interest-bearing liabilities.......... 1,746,948 5.10 90,868 4.98
------------
Non-interest bearing liabilities
Non-interest bearing deposits............... 228,866
Other non-interest liabilities.............. 31,550
----------
Total liabilities........................... 2,007,364
----------
Shareholders' equity............................ 243,383
Total liabilities and shareholders' equity...$ 2,250,747
===========
Net interest margin............................ 4.17% $ 99,835 4.69%
============= ============ ===========
PROJECTED FOR THE YEAR ENDED 3/31/99
-------------------------------------------------------
Increase Rates 200 BP Decrease Rates 200 BP
-------------------------- --------------------------
Income/ Average Income/ Average
Expense Yield/Rate Expense Yield/Rate
------- ---------- ------- ----------
ASSETS
Earning assets
Loans (net of unearned income)(1)............$ 188,185 10.81% $ 142,952 8.22%
Investment securities (taxable).............. 22,021 6.84 19,433 6.34
Investment securities (nontaxable)........... 2,467 7.43(1) 2,305 6.94(1)
Federal funds sold and resale agreements..... 398 7.50 315 3.50
Interest bearing deposits with other banks... 1,417 5.60 1,376 5.44
----------- -------------
Total earning assets..................... 214,488 10.01 166,381 7.76
----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking..........................$ 15,687 4.21% $ 12,611 3.38%
Savings.................................... 2,689 3.37 1,154 1.45
Money market............................... 10,255 5.28 5,773 2.97
Certificates of deposit.................... 62,265 6.15 47,208 4.66
----------- -------------
Total interest-bearing deposits.......... 90,896 5.48 66,746 4.02
Short-term borrowings....................... 9,090 7.43 4,598 3.76
Long-term borrowings........................ 3,554 9.88 3,067 8.84
----------- -------------
Total interest-bearing liabilities......... 103,540 5.68 74,411 4.07
----------- -------------
Net interest margin............................$ 110,948 5.22% $ 91,970 4.32%
============ ============= ============ ===========
</TABLE>
(1) Fully tax-equivalent basis at a 35% tax rate.
19
<PAGE>
LIQUIDITY
Liquidity management involves meeting the cash flow requirements of the
Company both at the holding company level as well as at the subsidiary level.
The holding company and non-banking subsidiaries of the Company require cash for
various operating needs including general operating expenses, payment of
dividends to shareholders, interest on borrowing, extensions of credit at Blue
Ridge, business combinations and capital infusions into subsidiaries. Sources of
liquidity for the Company's holding company and non-banking subsidiaries include
dividends from Carolina First Bank and non-banking subsidiaries to the holding
company, existing cash reserves and earnings.
Carolina First Bank's cash flow requirements involve withdrawals of
deposits, extensions of credit and payment of operating expenses. Carolina First
Bank's principal sources of funds for liquidity purposes are customers'
deposits, principal and interest payments on loans, loan sales or
securitizations, securities available for sale, maturities of securities,
temporary investments and earnings. Carolina First Bank's liquidity is also
enhanced by the ability to acquire new deposits through its branch network.
Carolina First Bank's liquidity needs are a factor in developing its deposit
pricing structure; deposit pricing may be altered to retain or grow deposits if
deemed necessary. Carolina First Bank has access to borrowing from FHLB and
maintains unused short-term lines of credit from unrelated banks.
The liquidity ratio is an indication of a company's ability to meet its
short-term funding obligations. At March 31, 1998, Carolina First Bank's
liquidity ratio was approximately 24%. At March 31, 1998, Carolina First Bank
had unused short-term lines of credit totaling approximately $48 million (which
are withdrawable at the lender's option). In addition, Carolina First Bank has
access to borrowing from the FHLB. At March 31, 1998, unused borrowing capacity
from the FHLB totaled approximately $171 million with an outstanding balance of
$10 million. Management believes that these sources are adequate to meet its
liquidity needs.
ASSET QUALITY
Prudent risk management involves assessing risk and managing it
effectively. Certain credit risks are inherent in making loans, particularly
commercial, real estate and consumer loans. The Company attempts to manage
credit risks by adhering to internal credit policies and procedures. These
policies and procedures include a multi-layered loan approval process, officer
and customer limits, periodic documentation examination and follow-up procedures
for any exceptions to credit policies. Loans are assigned a grade and those that
are determined to involve more than normal credit risk are placed in a special
review status. Loans that are placed in special review status are required to
have a plan under which they will be either repaid or restructured in a way that
reduces credit risk. Loans in this special review status are reviewed monthly by
the loan committee of the Board of Directors.
As demonstrated by the following analytical measures of asset quality,
management believes the Company has effectively managed its credit risk. Net
loan charge-offs, including credit card receivables, totaled $3.0 million and
$2.4 million in the first three months of 1998 and 1997, respectively, or 0.76%
and 0.83%, respectively, as an annualized percentage of average loans. Excluding
credit card receivables, annualized net loan charge-offs as a percentage of
average loans were 0.50% and 0.20% during the first quarter 1998 and 1997,
respectively. In the first quarter of 1998, net charge-offs for credit cards
totaled $1.1 million compared with $1.9 million in the first quarter of 1997.
The past due ratios for credit cards improved during the first quarter and the
Company hopes to achieve greater control over credit card
20
<PAGE>
collections through the acquisition of RPG. The majority of the increase in
accruing loans past due 90 days is attributable to one-to-four family
residential loans acquired from First Southeast.
TABLE 4
NONPERFORMING ASSETS AND PAST DUE LOANS
($ in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
---------------------- ------------
1998 1997 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $ 930 $ 840 $ 1,165
Restructured loans 1,283 1,283 1,283
- ------------------------------------------------------------------------------------
Total nonperforming loans 2,213 2,123 2,448
Other real estate 951 2,986 1,319
- ------------------------------------------------------------------------------------
Total nonperforming assets 3,164 5,109 3,767
====================================================================================
Nonperforming assets as a % of loans
and foreclosed property 0.21% 0.43% 0.23%
Accruing loans past due 90 days $ 4,608 $ 2,361 $ 4,125
====================================================================================
</TABLE>
INDUSTRY DEVELOPMENTS
Certain recently-enacted and proposed legislation could have an effect on
both the costs of doing business and the competitive factors facing the
financial institutions industry. The Company is unable at this time to assess
the impact of this legislation on its financial condition or operations.
FORWARD-LOOKING STATEMENTS
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward- looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include, but are not limited to, the
following: risks from changes in economic and industry conditions; changes in
interest rates; risks inherent in making loans including repayment risks and
value of collateral; dependence on senior management; and recently-enacted or
proposed legislation. Statements contained in this filing regarding expected
levels of past due credit cards may be forward-looking statements and are
subject to uncertainties and risks, including, but not limited to, the demand
for the Company's products and services, changing economic conditions, interest
rates, consumer spending and numerous other factors.
21
<PAGE>
PART II
ITEM 1 LEGAL PROCEEDINGS
The Company and its subsidiaries are from time to time parties to
various legal actions arising in the normal course of business. Such
items are not expected to have any material adverse effect on the
business or financial position of the Company or any of its
subsidiaries.
On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, the
majority of the Company's and Carolina First Bank's directors and
certain executive and other officers. The named plaintiffs are the
Company by and through certain minority shareholders. The Company filed
a motion to dismiss with respect to all claims in this complaint, which
was granted in December 1997. Plaintiffs have filed a motion for
reconsideration and have the right to appeal the grant of the motion to
dismiss. Plaintiffs allege as causes of action the following:
conversion of corporate opportunity; fraud and constructive fraud; and
negligent management. The factual basis upon which these claims are
made generally involves the payment to Company officers and other
individuals of a bonus in stock held by the Company in Affinity (as
reward for their efforts in connection with the Company's procurement
of stock in Affinity), statements to former shareholders in connection
with the Company's acquisition of Midlands National Bank ("MNB"),
alleged mismanagement by certain executive officers involving financial
matters and employee matters. The complaint seeks damages for the
benefit of the Company aggregating $41 million and recision of the
Affinity bonus.
In an action brought by the same attorneys who brought the
above-mentioned derivative action, on December 31, 1996, certain
individuals filed a class action lawsuit against the Company, Carolina
First Bank, and a number of officers and directors of the Company and
Carolina First Bank. In connection with the judge's granting the motion
to dismiss in the above-referenced derivative action, the plaintiffs'
attorneys withdrew this lawsuit, without prejudice.
ITEM 2 CHANGE IN SECURITIES
On February 12, 1998, the Company completed the sale of 2.0 million
shares of its Common Stock to certain overseas investors. The shares
were offered and sold only to non-U.S. persons under an exemption from
registration provided by Regulation S under the Securities Act of 1933.
In connection with this offering, the Company received net proceeds of
approximately $39 million which will be used to support internal
growth, acquisitions, the expansion of its finance subsidiary and for
general corporate purposes.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None.
22
<PAGE>
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On April 30, 1998, the Company held its 1998 Annual Meeting of
Shareholders. The results of the 1998 Annual Meeting of Shareholders
follow.
Proposal #1 - Election of Directors
The following persons were elected as Directors with the votes
indicated.
Voting Shares in Favor
---------------------- Withheld
# % Authority
---------- ----- ---------
Judd B. Farr 12,640,920 99.72% 34,876
C. Claymon Grimes, Jr. 12,637,794 99.73% 34,392
Elizabeth P. Stall 12,637,637 99.73% 34,489
David C. Wakefield III 12,644,963 99.79% 27,157
Mack I. Whittle, Jr. 12,639,816 99.74% 32,487
M. Dexter Hagy, William S. Hummers III, Vernon E. Merchant, Jr.,
William R. Phillips, H. Earle Russell, Jr., Charles B. Schooler, Eugene
E. Stone IV and William R. Timmons, Jr. continued in their present
terms as directors.
Proposal #2 - Amendments to the Company's Directors' Stock Option Plan
The shareholders approved an amendment to the Company's Directors'
Stock Option Plan (the "Directors' Plan" and, as amended, the "Amended
Directors' Plan") to increase the number of shares which may be subject
to options thereunder from 250,000 shares to 500,000 shares, and to
amend the compensation payable thereunder to Company directors
("Company Directors") to be consistent with the director compensation
program adopted by the Company for 1998. Under the Directors' Plan's
existing provisions, all non-employee directors of the Company and its
principal subsidiaries receive options to purchase 1,000 shares of
Common Stock on an annual basis. The Directors' Plan is being amended
to differentiate between Company Directors and directors of
subsidiaries who do not also serve as Company Directors ("Subsidiary
Directors"). Subsidiary Directors will continue to receive the annual
1,000 share grant. However, the Company has approved a program whereby
Company Directors will receive 60% of their total director compensation
(calculated assuming 100% attendance at all scheduled Board and
committee meetings) in the form of options to purchase Common Stock.
The options will be valued based on the Black-Scholes valuation method.
The Amended Directors' Plan also contains provisions for the immediate
vesting of options upon a Change of Control. These items were approved
with the votes indicated.
% of
Outstanding
# of Shares Shares
----------- ------
For 11,953,670 93.52%
Against 622,730 4.87
Abstain 205,477 1.61
Broker Non-Votes 1 ----
23
<PAGE>
ITEM 5 OTHER INFORMATION
Pending Acquisition
In February 1998, the Company signed a definitive merger agreement with
RPG, a privately-held credit card services company located in Columbia,
South Carolina. Under the terms of the agreement, the Company will
issue shares of the Company's common stock valued at approximately
$11.3 million. Substantially all of RPG's activities are related to the
origination and servicing of credit cards on behalf of third parties,
one of which is Carolina First Bank. At December 31, 1997, RPG had
approximately $10.3 million in assets and total equity of approximately
$10.6 million. RPG will become a wholly-owned subsidiary of the
Company. The transaction is expected to occur in the second quarter and
will be accounted for under the purchase method of accounting.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Lease Agreement by and between Poinsett Plaza, LLC and Carolina First
Bank
10.2 Amendment No. 1 to Carolina First Corporation Amended and Restated
Stock Option Plan
10.3 Carolina First Corporation Amended and Restated Directors' Stock Option
Plan
11.1 Computation of Basic and Diluted Earnings Per Share.
12.1 Computation of Earnings to Fixed Charges Ratio.
27.1 Financial Data Schedules.
(b) Reports on Form 8-K
None.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Carolina First Corporation
/s/ William S. Hummers, III
---------------------------
William S. Hummers, III
Executive Vice President
Lease Agreement
by and between
Poinsett Plaza, LLC
and
Carolina First Bank
April 20, 1998
Poinsett Plaza
Greenville, South Carolina
<PAGE>
TABLE OF CONTENTS
1. Certain Definitions................................................... 1
2. Lease Premises........................................................ 3
3. Term.................................................................. 4
4. Possession............................................................ 4
5. Rental Payments....................................................... 4
6. Base Rental........................................................... 5
7. [Intentionally Omitted.].............................................. 5
8. Additional Rental..................................................... 5
9. Operating Expenses.................................................... 7
10. Tenant Taxes...................................................... 9
11. Payments.......................................................... 9
12. Late Charges...................................................... 9
13. Use Rules..........................................................10
14. Alterations....................................................... 10
15. Repairs........................................................... 11
16. Landlord's Right of Entry......................................... 12
17. Insurance......................................................... 12
18. Waiver of Subrogation............................................. 13
19. Default........................................................... 13
20. Waiver of Breach...................................................16
21. Assignment and Subletting......................................... 16
22. Destruction....................................................... 18
23. [Intentionally Omitted.] ....................19
24. Services by Landlord.............................................. 19
25. Attorneys' Fees................................................... 19
26. Time.............................................................. 19
27. Subordination and Attornment...................................... 19
28. Estoppel Certificates............................................. 20
29. Leasehold Estate ............................... 21
30. Cumulative Rights................................................. 21
31. Holding Over...................................................... 21
32. Surrender of Premises............................................. 21
33. Notices........................................................... 22
34. Damage or Theft of Personal Property.............................. 22
35. Eminent Domain.................................................... 22
36. Parties........................................................... 24
37. Relocation of the Premises........................................ 24
38. Liability of Landlord............................................. 24
39. Force Majeure..................................................... 25
40. Indemnification................................................... 25
41. Landlord's Covenant of Quiet Enjoyment............................ 25
42. [Intentionally Omitted]........................................... 25
<PAGE>
43. Hazardous Substances.............................................. 25
44. Submission of Lease............................................... 26
45. Severability...................................................... 26
46. Entire Agreement.................................................. 26
47. Headings.......................................................... 27
48. Broker............................................................ 27
49. Governing Law..................................................... 27
50. Authority......................................................... 27
51. Joint and Several Liability....................................... 28
52. Special Stipulations.............................................. 28
Exhibit A - Legal Description
Exhibit A-1 - Legal Description of Existing Bank Property
Exhibit B - Demised Premises
Exhibit C - Supplemental Notice Exhibit D Construction
of the Building and the Demised Premises
Exhibit E - Building Standard Services
Exhibit F - Rules and Regulations
Exhibit G - Special Stipulations Exhibit H Guaranty
<PAGE>
Lease Agreement
THIS LEASE AGREEMENT ("Lease") is made and entered into this 20th day
of April, 1998, by and between Landlord and Tenant.
1. Certain Definitions: For purposes of this Lease, the following terms shall
have the meanings hereinafter ascribed thereto:
a) Landlord: Poinsett Plaza, LLC
b) Landlord's Address: P.O. Drawer 2567, Greenville, SC 29602
c) Tenant: Carolina First Bank
d) Tenant's Address: P.O. Box 1029, Greenville, SC 29602
e) Building Address: South Main St., Greenville, SC
f) Suite Number:
g) Rentable Floor Area of Demised Premises: Approximately 100,000
square feet in the Building, with exact Rentable Floor Area to
be determined by BOMA standards prior to Rental Commencement
Date. This does not include that portion of the Demised
Premises located in the Existing Bank Property.
h) Rentable Floor Area of Building: Approximately 202,000 square
feet, with exact Rentable Floor Area to be determined by BOMA
standards prior to Rental Commencement Date.
i) Lease Term: 240 months
j) Base Rental Rate:
1) For 75,000 Rentable Square Feet in the Building, including
any space leased by Tenant on the 1st, 2nd, 3rd and 10th
floors and such other portion of the Demised Premises as
Tenant may designate, subject to Landlord's approval (the
"Primary Space"), Base Rental per Rentable Square Foot per
year shall be:
Years 1 - 5 $18.00 per square foot
Year 6 $20.70 per square foot (15% increase)
Year 7 $21.22 per square foot (2.5% increase)
For each succeeding lease year, including any exercised option
years, the Base Rental Rate shall be 1.025 times the Base
Rental Rate for the preceding year, subject to the provisions
of Exhibit G.
2) For the balance of the Demised Premises in the Building
(the "Secondary Space"): For any portion of such space that is
(1) vacant and unoccupied and (2) sufficiently self-contained
that it can be closed off and left without HVAC and electrical
expense and without need for janitorial service, Base Rental
per Rentable Square Foot per year shall be:
Years 1 - 5 $13.90 per square foot
Year 6 $15.99 per square foot (15% increase)
Year 7 $16.38 per square foot (2.5% increase)
For each succeeding lease year, including any exercised option
years, the
1
<PAGE>
Base Rental Rate shall be 1.025 times the Base Rental Rate for
the preceding year, subject to the provisions of Exhibit G.
3) For any portion of the Secondary Space that is occupied, or
otherwise does not qualify for the Base Rental in (2) above,
Base Rental per Rentable Square Foot per year shall be:
Years 1 - 5 $15.70 per square foot
Year 6 $18.05 per square foot (15% increase)
Year 7 $18.50 per square foot (2.5% increase)
For each succeeding lease year, including any exercised option
years, the Base Rental Rate shall be 1.025 times the Base
Rental Rate for the preceding year, subject to the provisions
of Exhibit G.
4) For the Existing Bank Property at the corner of South Main
Street and West McBee Avenue previously owned and occupied by
Tenant: Beginning with the Rental Commencement Date, per year,
as follows:
Years 1 - 5 $230,000.00 total
Year 6 $264,500.00 total (15% increase)
Year 7 $271,112.50 total (2.5% increase)
For each succeeding lease year, including any exercised option
years, the Base Rental Rate shall be 1.025 times the Base
Rental Rate for the preceding year, subject to the provisions
of Exhibit G.
k) Rental Commencement Date: The latest of (i) June 15, 1999,
(ii) ninety (90) days after the date that the Demised Premises
are available for Tenant's Work, or (iii) the date the
Building lobby and common areas are substantially completed
and open for use.
Notwithstanding the foregoing, if Tenant uses Landlord's
contractor to perform Tenant's Work (as defined in Exhibit D),
and provided Tenant's Plans have been approved and are ready
for construction by December 15, 1998, then the Rental
Commencement Date shall be the later of (i) the date Tenant's
Work is substantially completed or (ii) the date the Building
lobby and common areas are substantially completed and open
for use. If there is any change in Tenant's Plans subsequent
to December 15, 1998, that in the opinion of Landlord's and
Tenant's contractor causes a delay in the completion of
Tenant's Work, then the Rental Commencement Date shall be the
date Tenant's Work would have been completed but for such
change or changes.
Landlord's architect will determine when the Demised Premises
are available for Tenant's Work. If Tenant's architect does
not agree that the Demised Premises are available for Tenant's
Work, Tenant will immediately notify Landlord of its
2
<PAGE>
disagreement. If Landlord and Tenant cannot agree on the date
the Demised Premises are available for Tenant's Work, then
Landlord's architect and Tenant's architect shall immediately
select another AIA architect to resolve the dispute, with each
party paying one-half of the fee and expense of the third
architect, and the decision of the third architect shall be
conclusive on both Landlord and Tenant.
l) Tenant Improvement Allowance: None
m) Security Deposits: None
n) Broker(s): None
2. Lease Premises: Landlord, in consideration of the covenants and agreements to
be performed by Tenant, and upon the terms and conditions hereinafter stated,
does hereby rent and lease unto Tenant, and Tenant does hereby rent and lease
from Landlord, certain premises (the "Demised Premises") containing
approximately 100,000 Rentable Square Feet including the 2nd, 3rd and 10th
floors in an office tower to be constructed by Landlord (the "Building"),
together with the Existing Bank Property (as defined below), located on that
certain tract of land (the "Land") more particularly described on Exhibit A
attached hereto and by this reference made a part hereof, which Demised Premises
are more fully described on Exhibit B attached hereto and by this reference made
a part hereof. That portion of the Demised Premises in the Existing Bank
Property is subject to the Special Stipulations in Exhibit G.
The "Project" is comprised of the Building, the building improvements at the
corner of South Main Street and West McBee Avenue owned and occupied by Carolina
First Bank prior to construction of the Building (the "Existing Bank Property"),
the Land, any walkways, covered walkways, or other means of access to the
Building and the Existing Bank Property, all common areas, including any lobbies
or plazas, and any other improvements or landscaping on the Land. Lobbies or
other areas within the Existing Bank Property are part of those premises and are
not common areas of the Project. Tenant and its employees, agents, and customers
shall have the right to non-exclusive use and access to all common areas of the
Project.
Landlord agrees that it will not cause or allow any construction on the Land
that would interfere with the view from and to the Demised Premises or would
interfere with the visibility of Tenant's signage.
Tenant shall have the right to locate one satellite dish or similar device on
the roof of the Building without charge, provided that the location and design
shall be subject to Landlord's prior written approval, which shall not be
unreasonably withheld or delayed, and provided further that the device and its
use shall not interfere with transmission or reception of other tenants or with
other typical office equipment or systems used in the Building.
Landlord will determine the exact Rentable Floor Area of the Demised Premises
and the Building in accordance with standards promulgated by the Building
Officers Management Association ("BOMA") as provided in Articles 1(g) and 1(h).
Within ninety (90) days after the Rental Commencement Date, Tenant may, at its
sole cost, measure the Rentable Floor Area of the
3
<PAGE>
Demised Premises and the Rentable Floor Area of the Building to determine if it
conforms to BOMA standards. If Tenant disputes Landlord's measurement of the
Demised Premises and/or the Building, and Landlord and Tenant cannot thereafter
agree to the measurement within ten (10) days, then either party shall have the
right to submit the question to arbitration in accordance with the rules of
American Arbitration Association, and the decision of the arbitrator(s) shall be
conclusive on both Landlord and Tenant. If it is determined that the Rentable
Floor Area of the Demised Premises and/or the Rentable Floor Area of the
Building varies from the square footage determined by Landlord as set forth in
Article 1(g) and Article 1(h) of this Lease, then the Base Rental and other
amounts determined based on the Rentable Floor Area of the Demised Premises
and/or the Rentable Floor Area of the Building shall be retroactively adjusted
at the applicable square foot rental figure.
3. Term: The term of this Lease (the "Lease Term") shall commence on the date
first hereinabove set forth (the "Term Commencement Date"), and, unless sooner
terminated as provided in this Lease, shall end on the expiration of the period
designated in Article 1(i) above, which period shall commence on the Rental
Commencement Date, unless the Rental Commencement Date shall be other than the
first day of a calendar month, in which event such period shall commence on the
first day of the calendar month following the month in which the Rental
Commencement Date occurs. Promptly after the Rental Commencement Date, Landlord
shall send to Tenant a Supplemental Notice in the form of Exhibit C attached
hereto and by this reference made a part hereof, specifying the Rental
Commencement Date, the date of expiration of the Lease Term in accordance with
Article 1(i) above and certain other matters as therein set forth.
4. Possession: The obligations of Landlord and Tenant with respect to the
initial leasehold improvements to the Demised Premises are set forth in Exhibit
D attached hereto and by this reference made a part hereof. Taking of possession
by Tenant shall be deemed conclusively to establish that Landlord's construction
obligations with respect to the Demised Premises have been completed, subject to
satisfactory completion by Landlord of all punch list items, in accordance with
the plans and specifications approved by Landlord and Tenant and that the
Demised Premises, to the extent of Landlord's construction obligations with
respect thereto, are in good and satisfactory condition, except for any latent
defects in the construction of the Building or the Demised Premises which could
not reasonably be discovered by Tenant in an examination of the Demised
Premises.
5. Rental Payments: Commencing on the Rental Commencement Date, and continuing
thereafter throughout the Lease Term, Tenant hereby agrees to pay all Rent due
and payable under this Lease. As used in this Lease, the term "Rent" shall mean
the Base Rental, Tenant's Forecast Additional Rental, Tenant's Additional Rental
and any other amounts that Tenant assumes or agrees to pay under the provisions
of this Lease that are owed to Landlord, including, without limitation, any and
all other sums that may become due by reason of any default of Tenant or failure
on Tenant's part to comply with the agreements, terms, covenants and conditions
of this Lease to be performed by Tenant. Base Rental, together with Tenant's
Forecast Additional Rental
4
<PAGE>
shall be due and payable in twelve (12) equal installments on the first day of
each calendar month, commencing on the Rental Commencement Date and continuing
thereafter throughout the Lease Term and any extensions or renewals thereof.
Tenant hereby agrees to pay such Rent to Landlord at Landlord's address as
provided herein (or such other address as may be designated by Landlord from
time to time) monthly in advance. Tenant shall pay all Rent and other sums of
money as shall become due from and payable by Tenant to Landlord under this
Lease at the times and in the manner provided in this Lease, without demand,
set-off or counterclaim, except as otherwise specifically provided herein.
If the Rental Commencement Date is other than the first day of a calendar month
or if this Lease terminates on a day other than the last day of a calendar
month, then the installments of Base Rental and Tenant's Forecast Additional
Rental for such month or months shall be prorated on a daily basis and the
installment or installments so prorated shall be paid in advance. Also, if the
Rental Commencement Date occurs on a day other than the first day of a calendar
year, or if this Lease expires or is terminated on a day other than the last day
of a calendar year, Tenant's Additional Rental shall be prorated for such
commencement or termination year, as the case may be, by multiplying such
Tenant's Additional Rental by a fraction, the numerator of which shall be the
number of days of the Lease Term (from and after the Rental Commencement Date)
during the commencement or expiration or termination year, as the case may be,
and the denominator of which shall be 365, and the calculation described in
Article 8 hereof shall be made as soon as possible after the expiration or
termination of this Lease, Landlord and Tenant hereby agreeing that the
provisions relating to said calculation shall survive the expiration or
termination of this Lease.
6. Base Rental: From and after the Rental Commencement Date, Tenant shall pay to
Landlord a base annual rental (herein called "Base Rental") calculated from the
Base Rental Rate as set forth in Article 1(j) above.
7. [Intentionally Omitted.]
8. Additional Rental: For purposes of this Lease, "Tenant's Forecast Additional
Rental" shall mean Landlord's reasonable estimate of Tenant's Additional Rental
for each calendar year or portion thereof during the Lease Term. If at any time
(but no more often than one time in any calendar year) it reasonably appears to
Landlord that Tenant's Additional Rental for the current calendar year then at
hand will vary from Landlord's estimate, Landlord shall have the right to
revise, upon sixty (60) days written notice to Tenant, its estimate for such
year, and subsequent payments by Tenant for such year shall be based upon such
revised estimate of Tenant's Additional Rental. Failure to make a revision
contemplated by the immediately preceding sentence shall not prejudice
Landlord's right to collect the full amount of Tenant's Additional Rental. Prior
to the first day of January immediately following the expiration of the Base
Year, and thereafter prior to the beginning of each calendar year during the
Lease Term, including any extensions or renewals thereof, Landlord shall present
to Tenant a statement of Tenant's Forecast Additional Rental for such calendar
year; provided, however, that if such statement is not given
5
<PAGE>
prior to the beginning of any calendar year as aforesaid, Tenant shall continue
to pay during the next ensuing calendar year on the basis of the amount of
Tenant's Forecast Additional Rental payable during the calendar year just ended
until the month after such statement is delivered to Tenant.
For purposes of this Lease, "Tenant's Additional Rental" shall mean for each
calendar year (or portion thereof) during the Lease Term the excess of (x) the
Operating Expense Amount (defined below) multiplied by the number of square feet
of Rentable Floor Area of the Demised Premises, over (y) the Base Operating
Expenses (defined below) multiplied by the number of square feet of Rentable
Floor Area of the Demised Premises. As used herein, "Operating Expense Amount"
shall mean the amount of Operating Expenses (as defined below) for such calendar
year divided by the greater of (i) ninety-five percent (95%) of the number of
square feet of Rentable Floor Area of the Building, or (ii) the total number of
square feet of Rentable Floor Area occupied in the Building for such calendar
year on an average annualized basis; provided, however, if the amount is
calculated under (i) above, the Operating Expenses actually incurred with
respect to such calendar year shall be adjusted to reflect the amount of
Operating Expenses which would have been incurred if the Building were
ninety-five percent (95%) occupied throughout such calendar year. As used
herein, the term "Base Operating Expenses" shall mean the Operating Expenses
paid or incurred by Landlord in the Base Year (as hereinafter defined) as if the
Building was ninety-five percent (95%) occupied throughout the Base Year,
divided by ninety-five percent (95%) of the number of square feet of Rentable
Floor Area of the Building. If the Building was not ninety-five percent (95%)
occupied throughout the Base Year, then the Base Operating Expenses shall be an
amount which fairly reflects what the Operating Expenses would have been in the
Base Year had the Building been ninety-five percent (95%) occupied throughout
the Base Year, as determined by Landlord in its reasonable opinion. Any
unfinished basement area not leased as office space will not be included in
calculating the Rentable Floor Area of the Building. As used herein, "Base Year"
shall mean the twelve-month period commencing with the Rental Commencement Date.
The period from the end of the Base Year through December 31 of that calendar
year shall be treated as a short year for the calculation of Tenant's Additional
Rental, with amounts prorated as provided for a partial year in Article 5, and
thereafter Tenant's Additional Rental shall be calculated on a calendar year
basis. In the event property taxes paid during the Base Year do not reflect the
value of the completed Building, an adjustment shall be made to Base Operating
Expenses so that the first year of property taxes on both the land and the
completed Building are fully reflected.
As soon as practicable after the end of the calendar year in which the Rental
Commencement Date occurs and of each calendar year thereafter during the Lease
Term, but in no event more than one hundred fifty (150) days thereafter,
Landlord shall provide Tenant a statement showing the Operating Expenses for
said calendar year, as prepared by an authorized representative of Landlord, and
a statement prepared by Landlord comparing Tenant's Forecast Additional Rental
with Tenant's Additional Rental. In the event Tenant's Forecast Additional
Rental exceeds Tenant's Additional Rental for said calendar year, Landlord shall
credit such amount against the Forecast Additional Rental next due hereunder or,
if the Lease Term has expired or is about to
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expire, refund such excess to Tenant if Tenant is not in default under this
Lease (in the instance of a default, such excess shall be held as additional
security for Tenant's performance, may be applied by Landlord to cure any such
default, and shall not be refunded until any such default is cured). In the
event that the Tenant's Additional Rental exceeds Tenant's Forecast Additional
Rental for said calendar year, Tenant shall pay Landlord, within thirty (30)
days of receipt of the statement, an amount equal to such difference. The
provisions of this Lease concerning the payment of Tenant's Additional Rental
shall survive the expiration or earlier termination of this Lease.
Landlord's books and records pertaining to the calculation of Operating Expenses
for any calendar year within the Lease Term may be audited by Tenant or its
representatives at Landlord's office where Operating Expense records are kept,
at Tenant's expense, at any time within three hundred sixty-five (365) days
after Landlord's annual statement is delivered to Tenant for such calendar year;
provided that Tenant shall give Landlord not less than thirty (30) days' prior
written notice of any such audit. If Landlord's calculations of Tenant's
Additional Rental for the audited calendar year was incorrect, then Tenant shall
be entitled to a prompt refund of any overpayment or Tenant shall promptly pay
to Landlord the amount of any underpayment, as the case may be. If Landlord's
calculations of Tenant's Additional Rental are determined to have been excessive
by three percent (3%) or more, then Tenant shall be entitled to reimbursement
for the costs and fees incurred in such audit.
9. Operating Expenses: For the purposes of this Lease, "Operating Expenses"
shall mean all expenses, costs and disbursements (but not specific costs billed
to specific tenants of the Building) of every kind and nature, determined
consistently with industry standards, computed on an accrual basis, relating to
or incurred or paid in connection with the ownership, management, operation,
repair and maintenance of the Project, including but not limited to, the
following: wages, salaries and other costs of all on-site and off-site employees
engaged either full or part time in the operation, reasonable and competitive
management, maintenance or access control of the Project, including taxes,
insurance and benefits relating to such employees, allocated based upon the time
such employees are engaged directly in providing such services; the cost of all
supplies, tools, equipment and materials used in the operation, management,
maintenance and access control of the Project; the cost of all utilities for the
Project, including but not limited to the cost of electricity, gas, water, sewer
services and power for heating, lighting, air conditioning and ventilating; the
cost of all maintenance and service agreements for the Project and the equipment
therein, including, but not limited to, security service, window cleaning,
elevator maintenance, HVAC maintenance, janitorial service, concierge service or
employees, landscaping maintenance and customary landscaping replacement; the
cost of inspections, repairs and general maintenance of the Project;
amortization (together with reasonable financing charges, whether or not
actually incurred) of the cost of acquisition and/or installation of capital
investment items (including security equipment), amortized over their respective
useful lives consistent with generally accepted accounting principles
consistently applied, which are installed only for the purpose of reducing, and
can reasonably be expected to reduce, operating expenses, promoting safety,
complying with governmental requirements, or maintaining the first-class nature
of the Project; the cost of
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casualty, rental loss, liability and other insurance applicable to the Project
and Landlord's personal property used in connection therewith; the cost of trash
and garbage removal, vermin extermination, and snow, ice and debris removal; the
cost of legal and accounting services incurred by Landlord in connection with a
protest or appeal of the real estate taxes or similar assessments or charges
which would otherwise be includable hereunder; all taxes, assessments and
governmental charges, paid by Landlord, whether federal, state, county or
municipal and whether they be by taxing districts or authorities presently
taxing the Project or by others subsequently created or otherwise, and any other
taxes and assessments attributable to the Project or its operation (and the
costs of monitoring and contesting any of the same), including business license
taxes and fees (all of the foregoing are herein sometimes collectively referred
to as "Taxes"), excluding, however, taxes and assessments imposed on the
personal property of the tenants of the Project, federal and state taxes on
income, death taxes, franchise taxes, and any taxes (other than business license
taxes and fees) imposed or measured on or by the income of Landlord from the
operation of the Project; provided, however, that if at any time during the
Lease Term, the present method of taxation or assessment shall be so changed
that the whole or any part of the taxes, assessments, levies, impositions or
charges now levied, assessed or imposed on real estate and the improvements
thereon shall be discontinued and as a substitute therefor, or in lieu of or in
addition thereto, taxes, assessments, levies, impositions or charges shall be
levied, assessed and/or imposed wholly or partially as a capital levy or
otherwise on the rents received from the Project or the rents reserved herein or
any part thereof, then such substitute or additional taxes, assessments, levies,
impositions or charges, to the extent so levied, assessed or imposed, shall be
deemed to be included within the Operating Expenses to the extent that such
substitute or additional tax would be payable if the Project were the only
property of the Landlord subject to such tax; and it is agreed that Tenant will
be responsible for ad valorem taxes on its personal property and on the value of
the leasehold improvements in the Demised Premises to the extent that the same
exceed building standard allowances, if said taxes are based upon an assessment
which includes the cost of such leasehold improvements in excess of building
standard allowances (and if the taxing authorities do not separately assess
Tenant's leasehold improvements, Landlord may make an appropriate allocation of
the ad valorem taxes allocated to the Project to give effect to this sentence);
the cost of operating the management office for the Project, including cost of
office supplies, telephone expenses and non-capital investment equipment and
amortization (together with reasonable financing charges) of the cost of capital
investment equipment; and reasonable management fees comparable to those paid in
the Greenville market.
For purposes of this Lease, and notwithstanding anything in any other provision
of this Lease to the contrary, "Operating Expenses" shall not include the
following: the cost of operating any parking garage or facilities; the cost of
any special work or service performed for any tenant (including Tenant) at such
tenant's cost; the cost of installing, operating and maintaining any specialty
service, such as an observatory, broadcasting facility, luncheon club,
restaurant, cafeteria, retail store, sundry shop, newsstand, or concession, but
only to the extent such costs exceed those which would normally be expected to
be incurred had such space been general office space; the cost of correcting
defects in construction; interest and penalties resulting from the late payment
of Taxes, so long as not resulting from any late payment by Tenant of Tenant's
Forecast
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Additional Rental or Tenant's Additional Rental; compensation paid to officers
and executives of Landlord (but it is understood that the on-site building
manager and other on-site employees below the grade of building manager may
carry a title such as vice president and the salaries and related benefits of
these officers/employees of Landlord would be allowable Operating Expenses under
this Article 9); the cost of any items for which Landlord is reimbursed by
insurance, condemnation or otherwise, except for costs reimbursed pursuant to
provisions similar to Articles 8 and 9 hereof; the cost of any additions,
changes, replacements and other items which are made in order to prepare for a
new or renewing tenant's occupancy; the cost of repairs incurred by reason of
fire or other casualty; insurance premiums to the extent Landlord may be
directly reimbursed therefor, except for premiums reimbursed pursuant to
provisions similar to Articles 8 and 9 hereof; interest on debt or amortization
payments on any mortgage or deed to secure debt (except to the extent
specifically permitted by the first paragraph of this Article 9) and rental
under any ground lease or other underlying lease; any real estate brokerage
commissions or other costs incurred in procuring or renewing tenants or any fee
in lieu of such commission; any advertising expenses incurred in connection with
the marketing of any rentable space; any expenses for repairs or maintenance
which are covered by warranties and service contracts, to the extent such
maintenance and repairs are made at no cost to Landlord; and legal expenses
arising out of the construction of the improvements on the Land or the
enforcement of the provisions of any lease affecting the Land or Building,
including without limitation this Lease.
10. Tenant Taxes: Tenant shall pay promptly when due all taxes directly or
indirectly imposed or assessed upon Tenant's gross sales, business operations,
machinery, equipment, trade fixtures and other personal property or assets,
whether such taxes are assessed against Tenant, Landlord or the Building. In the
event that such taxes are imposed or assessed against Landlord or the Building,
Landlord shall furnish Tenant with all applicable tax bills, public charges and
other assessments or impositions and Tenant shall forthwith pay the same either
directly to the taxing authority or, at Landlord's option, to Landlord.
11. Payments: All payments of Rent and other payments to be made to Landlord
shall be made on a timely basis and shall be payable to Landlord or as Landlord
may otherwise designate. All such payments shall be mailed or delivered to
Landlord's Address designated in Article 1(b) above or at such other place as
Landlord may designate from time to time in writing. If mailed, all payments
shall be mailed in sufficient time and with adequate postage thereon to be
received in Landlord's account by no later than the due date for such payment.
Tenant agrees to pay to Landlord Fifty Dollars ($50.00) for each check presented
to Landlord in payment of any obligation of Tenant which is not paid by the bank
on which it is drawn, together with interest from and after the due date for
such payment at the rate of the prime rate of Carolina First Bank or its
successor plus four percent (4%) per annum on the amount due.
12. Late Charges: Any Rent or other amounts payable to Landlord under this
Lease, if not paid by the fifth day of the month for which such Rent is due, or
by the due date specified on any invoices from Landlord for any other amounts
payable hereunder (which due date shall not be earlier than fifteen (15) days
from the date such invoice is received by Tenant), shall incur a late
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charge of Fifty Dollars ($50.00) for Landlord's administrative expense in
processing such delinquent payment and in addition thereto shall bear interest
at the rate of the prime rate of Carolina First Bank or its successor plus four
percent (4%) per annum from and after the due date for such payment.
Notwithstanding anything to the contrary contained in this Lease, in no event
shall the rate of interest payable on any amount due under this Lease exceed the
legal limits for such interest enforceable under applicable law.
13. Use Rules: The Demised Premises shall be used for executive, general
administrative and office space purposes and no other purposes and in accordance
with all applicable laws, ordinances, rules and regulations of governmental
authorities (the "Legal Requirements") and the Rules and Regulations attached
hereto as Exhibit F and made a part hereof. Tenant covenants and agrees that it
will, at its expense, comply with all laws, ordinances, orders, directions,
requirements, rules and regulations of all governmental authorities (including
Federal, State, county and municipal authorities), now in force or which may
hereafter be in force, which (i) shall impose any duty upon Landlord or Tenant
with respect to the use, occupancy or alteration of the Existing Bank Property,
or (ii) which pertain to the particular manner in which Tenant may use the
balance of the Demised Premises. Tenant covenants and agrees to abide by the
Rules and Regulations as now set forth and attached hereto or as hereafter
reasonably promulgated by Landlord. Landlord shall have the right at all times
during the Lease Term to publish and promulgate and thereafter enforce such
rules and regulations or changes in the existing Rules and Regulations as it may
reasonably deem necessary in its sole discretion to protect the tenantability,
safety, operation, and welfare of the Demised Premises and the Project. Landlord
shall impose on other occupants of the Project the same Rules and Regulations
which are imposed on Tenant.
Landlord represents and warrants that as of the date hereof and the Rental
Commencement Date, the Project, including the Demised Premises other than the
Existing Bank Property, shall be in compliance with all applicable Legal
Requirements and that all applicable covenants, restrictions, easements, zoning
and other Legal Requirements in effect as of the date hereof and as of the
Rental Commencement Date permit the use of the Premises for the operation of a
bank and for related general office purposes, storage, and other uses accessory
and incidental thereto. Landlord shall comply with Legal Requirements applicable
to the Project other than the Existing Bank Property, including cases where
Legal Requirements mandate repairs, alterations, changes or additions to the
Demised Premises (other than the Existing Bank Property) not caused by Tenant's
particular use thereof, provided that amortization of the cost of any such
mandated repairs, alterations, changes or additions (together with reasonable
financing charges, whether or not actually incurred) shall be included in
Operating Expenses as provided in Article 9.
14. Alterations: Except for any initial improvement of the Demised Premises
pursuant to Exhibit D, which shall be governed by the provisions of said Exhibit
D, Tenant shall not make, suffer or permit to be made any alterations, additions
or improvements to or of the Demised Premises or any part thereof, or attach any
fixtures or equipment thereto, without first obtaining Landlord's written
consent. No consent is required for work which constitutes only redecoration of
the Demised Premises. With respect to any alteration, addition or improvement
which does
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not affect the structure of the Building, does not affect any of the Building's
systems (e.g., mechanical, electrical or plumbing), does not diminish the
capacity of such Building systems available to other portions of the Building,
is not visible from the common areas or exterior of the Building, and is in full
compliance with all laws, orders, ordinances, directions, requirements, rules
and regulations of all governmental authorities, Landlord's consent shall not be
unreasonably withheld, conditioned or delayed. Any such alterations, additions
or improvements to the Demised Premises consented to by Landlord shall be made
by Landlord or under Landlord's supervision for Tenant's account and Tenant
shall reimburse Landlord for all costs thereof (including a reasonable charge
for Landlord's overhead), as Rent, within fifteen (15) days after receipt of a
statement. All such alterations, additions and improvements shall become
Landlord's property at the expiration or earlier termination of the Lease Term
and shall remain on the Demised Premises without compensation to Tenant unless
Landlord elects by notice to Tenant to have Tenant remove such alterations,
additions and improvements, in which event, notwithstanding any contrary
provisions respecting such alterations, additions and improvements contained in
Article 32 hereof, Tenant shall promptly restore, at its sole cost and expense,
the Demised Premises to its condition prior to the installation of such
alterations, additions and improvements, normal wear and tear and casualty
excepted. Upon Tenant's written request at the time of Landlord's approval of
alterations, additions or improvements or any time thereafter, Landlord will
notify Tenant whether or not it will require the removal of such alterations,
additions or improvements.
15. Repairs: Landlord shall maintain in good order and repair, subject to normal
wear and tear and subject to casualty and condemnation, the Building and all
building systems, including but not limited to plumbing, electrical, and
heating, ventilating and air conditioning (excluding the Demised Premises and
other portions of the Building leased to other tenants), the public areas and
the landscaped areas. Notwithstanding the foregoing obligation, and except as
limited by Article 18 below, the cost of any repairs or maintenance to the
foregoing necessitated by the intentional acts or negligence of Tenant or its
agents, contractors, employees, invitees, licensees, tenants or assigns, shall
be borne solely by Tenant and shall be deemed Rent hereunder and shall be
reimbursed by Tenant to Landlord upon demand. Landlord shall not be required to
make any repairs or improvements to the Demised Premises except (i) structural
repairs necessary for safety and tenantability, (ii) broken or damaged exterior
window glass, and (iii) except as limited by Article 18 below, any damage caused
by the negligent or intentional acts of Landlord or its agents, contractors,
employees or any other persons engaged by Landlord to perform Landlord's
obligations.
Except as provided in the preceding paragraph, Tenant covenants and agrees that
it will take good care of the Demised Premises and all alterations, additions
and improvements thereto and will keep and maintain the same in good condition
and repair, except for normal wear and tear and subject to casualty and
condemnation. Tenant shall at once report, in writing, to Landlord any defective
or dangerous condition known to Tenant. To the fullest extent permitted by law,
Tenant hereby waives all rights to make repairs at the expense of Landlord or in
lieu thereof to vacate the Demised Premises as may be provided by any law,
statute or ordinance now or hereafter in effect.
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Landlord has no obligation and has made no promise to alter, remodel, improve,
repair, decorate or paint the Demised Premises or any part thereof, except as
specifically and expressly herein set forth.
16. Landlord's Right of Entry: Landlord shall retain duplicate keys to all doors
of the Demised Premises and Landlord and its agents, employees and independent
contractors shall have the right to enter the Demised Premises at reasonable
hours to inspect and examine same, to make repairs, additions, alterations and
improvements, to exhibit the Demised Premises to mortgagees, prospective
mortgagees, purchasers or (during the last 180 days of the Lease Term, and then
only if the Lease Term has not been extended by Tenant) tenants, and to inspect
the Demised Premises to ascertain that Tenant is complying with all of its
covenants and obligations hereunder; provided, however, that Landlord shall,
except in case of emergency, afford Tenant reasonable prior notification of an
entry into the Demised Premises and shall afford Tenant the opportunity to have
a representative of the Tenant accompany the Landlord. Notwithstanding the
foregoing, Landlord shall have no right to have keys (or combinations) to, nor
have any right of access to, safes and other areas required to be secure by
banking laws or regulations or prudent banking policies, and Tenant may at any
time designate such areas by notice to Landlord. Landlord shall be allowed to
take into and through the Demised Premises any and all materials that may be
required to make such repairs, additions, alterations or improvements. During
such time as such work is being carried on, in or about the Demised Premises,
the Rent provided herein shall not abate, and Tenant waives any claim or cause
of action against Landlord for damages by reason of interruption of Tenant's
business or loss of profits therefrom because of the prosecution of any such
work or any part thereof, provided that such work is done in an expeditious
manner. Further, if such work is undertaken in the Demised Premises on behalf of
other tenants of the Building and not on behalf of Tenant, such work shall be
performed after normal business hours.
17. Insurance: Tenant shall procure at its expense and maintain throughout the
Lease Term a policy or policies of commercial property insurance, issued on an
"all risks" basis insuring the full replacement cost of its furniture,
equipment, supplies and other property owned, leased, held or possessed by it
and contained in the Demised Premises, including the improvements to the Demised
Premises constructed or installed as part of Tenant's Work as defined in Exhibit
D (with a replacement cost endorsement sufficient to prevent Tenant from
becoming a co-insurer), and workmen's compensation insurance as required by
applicable law. The Landlord and any mortgagee of the Project shall be insured
as their respective interests may appear under any such policies of commercial
property insurance. Tenant shall also procure at its expense and maintain
throughout the Lease Term a policy or policies of commercial general liability
insurance, written on an occurrence basis and insuring Tenant, Landlord, any
mortgagee of the Project, and any other person reasonably designated by Landlord
(such as the manager of the Project), against any and all liability for injury
to or death of a person or persons and for damage to property occasioned by or
arising out of any construction work being done on the Demised Premises, or
arising out of the condition, use or occupancy of the Demised Premises, or in
any way occasioned by or arising out of the activities of Tenant, its agents,
contractors, employees, guests or licensees in the Demised Premises, or other
portions of the Building or the Project, the limits of such policy
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or policies to be in combined single limits for both damage to property and
personal injury and in amounts not less than Three Million Dollars
($3,000,000.00) for each occurrence. Such insurance shall, in addition, extend
to any liability of Tenant arising out of the indemnities provided for in this
Lease. All insurance policies procured and maintained by Tenant pursuant to this
Article 17 shall be carried with companies licensed to do business in the State
of South Carolina reasonably satisfactory to Landlord and shall be
non-cancelable and not subject to material change except after twenty (20) days'
written notice to Landlord. Such policies or duly executed certificates of
insurance with respect thereto, accompanied by proof of payment of the premium
therefor, shall be delivered to Landlord prior to the Rental Commencement Date,
and renewals of such policies shall be delivered to Landlord at least thirty
(30) days prior to the expiration of each respective policy term. Tenant shall
have the right to self-insure some or all of the risks covered in this Article
17 upon evidence reasonably satisfactory to Landlord of a net worth of Tenant of
one hundred million dollars or more, so long as permitted by Landlord's
mortgagee.
Landlord shall procure and maintain throughout the Lease Term a policy or
policies of commercial property insurance, issued on an "all risks" basis,
covering the Building for the full replacement cost thereof, including all
improvements to the Demised Premises. Landlord shall also procure at its expense
and maintain throughout the Lease Term a policy or policies of commercial
general liability insurance insuring Landlord and Tenant against any and all
liability for injury to or death of a person or persons and for damage to
property occasioned by or arising out of the condition, use or occupancy of the
Project other than the Demised Premises, or in any way occasioned by or arising
out of the activities of Landlord, its agents, contractors, employees, guests or
licensees in the Demised Premises, or other portions of the Building or the
Project, the limits of such policy or policies to be in combined single limits
for both damage to property and personal injury and in amount not less than
Three Million Dollars ($3,000,000.00) for each occurrence. All insurance
policies procured and maintained by Landlord pursuant to this Article 17 shall
name Tenant as an additional insured, shall be carried with companies licensed
to do business in the State of South Carolina, and shall be non-cancelable and
not subject to material change except after twenty (20) days' written notice to
Tenant.
18. Waiver of Subrogation: Landlord and Tenant shall each have included in all
policies of commercial property insurance, commercial general liability
insurance, and business interruption and other insurance respectively obtained
by them covering the Demised Premises, the Building and contents therein, a
waiver by the insurer of all right of subrogation against the other in
connection with any loss or damage thereby insured against. Any additional
premium for such waiver shall be paid by the primary insured. To the full extent
permitted by law, Landlord and Tenant each waives all right of recovery against
the other for, and agrees to release the other from liability for, loss or
damage to the extent such loss or damage is covered by valid and collectible
insurance in effect at the time of such loss or damage or would be covered by
the insurance required to be maintained under this Lease by the party seeking
recovery.
19. Default: The following events shall be deemed to be Events of Default by
Tenant under
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this Lease: (i) Tenant shall fail to pay any installment of Rent or
any other charge or assessment against Tenant pursuant to the terms hereof
within five (5) days after written notice of non-payment; (ii) Tenant shall fail
to comply with any term, provision, covenant or warranty made under this Lease
by Tenant, other than the payment of the Rent or any other charge or assessment
payable by Tenant, and shall not cure such failure within fifteen (15) days
after written notice thereof to Tenant, unless such failure is of such a nature
that it cannot reasonably be cured within such 15-day period, in which case it
shall not be an event of default so long as Tenant shall commence the curing of
the default within such 15-day period and shall thereafter diligently prosecute
the curing of the default; (iii) Tenant shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
as they become due, or shall file a petition in bankruptcy, or shall be
adjudicated as bankrupt or insolvent, or shall file a petition in any proceeding
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file an answer admitting or fail timely to contest the
material allegations of a petition filed against it in any such proceeding; (iv)
a proceeding is commenced against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, and such
proceeding shall not have been dismissed within forty-five (45) days after the
commencement thereof; (v) a receiver or trustee shall be appointed for the
Demised Premises or for all or substantially all of the assets of Tenant; (vi)
Tenant shall abandon or vacate all or any portion of the Demised Premises or
fail to take possession thereof as provided in this Lease; (vii) Tenant shall do
or permit to be done anything which creates a lien upon the Demised Premises or
the Project and such lien is not removed or discharged within fifteen (15) days
after the filing thereof; (viii) Tenant shall fail to return a properly executed
instrument to Landlord in accordance with the provisions of Article 27 hereof
within the time period provided for such return following Landlord's request for
same as provided in Article 27; or (ix) Tenant shall fail to return a properly
executed estoppel certificate to Landlord in accordance with the provisions of
Article 28 hereof within the time period provided for such return following
Landlord's request for same as provided in Article 28.
Upon the occurrence of any of the aforesaid Events of Default, Landlord shall
have the option to pursue any one or more of the following remedies without any
notice or demand whatsoever: (i) terminate this Lease, in which event Tenant
shall immediately surrender the Demised Premises to Landlord and if Tenant fails
to do so, Landlord may without prejudice to any other remedy which it may have
for possession or arrearages in Rent, enter upon and take possession of the
Demised Premises and expel or remove Tenant and any other person who may be
occupying said Demised Premises or any part thereof, Tenant hereby agreeing to
pay to Landlord on demand the amount of all loss and damage which Landlord may
suffer by reason of such termination, whether through inability to relet the
Demised Premises on satisfactory terms or otherwise; (ii) terminate Tenant's
right of possession (but not this Lease) and enter upon and take possession of
the Demised Premises and expel or remove Tenant and any other person who may be
occupying said Demised Premises or any part thereof, by entry, dispossessory
suit or otherwise, without thereby releasing Tenant from any liability
hereunder, without terminating this Lease, and without being liable for
prosecution or any claim of damages therefor and, if Landlord so elects, make
such
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alterations, redecoration and repairs as, in Landlord's judgment, may be
necessary to relet the Demised Premises, and Landlord shall make reasonable
efforts to relet the Demised Premises or any portion thereof in Landlord's or
Tenant's name, but for the account of Tenant, for such term or terms (which may
be for a term extending beyond the Lease Term) and at such rental or rentals and
upon such other terms as may be commercially reasonable, and receive the rent
therefor, Tenant hereby agreeing to pay to Landlord the deficiency, if any,
between all Rent reserved hereunder and the total rental applicable to the Lease
Term hereof obtained by Landlord re-letting, and Tenant shall be liable for
Landlord's reasonable expenses in redecorating and restoring the Demised
Premises and all reasonable and customary costs incident to such re-letting,
including broker's commissions and lease assumptions, and in no event shall
Tenant be entitled to any rentals received by Landlord in excess of the amounts
due by Tenant hereunder; (iii) enter upon the Demised Premises (by force, if
necessary in the event of an emergency), without being liable for prosecution or
any claim of damages therefor, and do whatever Tenant is obligated to do under
the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for
any reasonable expenses including, without limitation, reasonable attorneys'
fees which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease and Tenant further agrees that Landlord shall not
be liable for any damages resulting to Tenant from such action, whether caused
by negligence of Landlord or otherwise, or (iv) suspend provision of any or all
Building Services without notice or liability to Tenant. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any other remedy herein
provided or any other remedy provided by law or at equity, nor shall pursuit of
any remedy herein provided constitute an election of remedies thereby excluding
the later election of an alternate remedy, or a forfeiture or waiver of any Rent
or other charges and assessments payable by Tenant and due to Landlord hereunder
or of any damages accruing to Landlord by reason of violation of any of the
terms, covenants, warranties and provisions herein contained. No reentry or
taking possession of the Demised Premises by Landlord or any other action taken
by or on behalf of Landlord shall be construed to be an acceptance of a
surrender of this Lease or an election by Landlord to terminate this Lease
unless written notice of such intention is given to Tenant. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an event of
default shall not be deemed or construed to constitute a waiver of such default.
In determining the amount of loss or damage which Landlord may suffer by reason
of termination of this Lease or the deficiency arising by reason of any
reletting of the Demised Premises by Landlord as above provided, allowance shall
be made for the reasonable expense of repossession. Tenant agrees to pay to
Landlord all reasonable costs and expenses incurred by Landlord in the
enforcement of this Lease, including without limitation, the reasonable fees of
Landlord's attorneys.
The occurrence of any one or more of the following matters constitutes an Event
of Default by Landlord under this Lease:
(i) failure by Landlord to pay, within five (5) days
after receipt of written notice from the Tenant, any
monies required to be paid by Landlord under this
Lease;
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(ii) failure by Landlord to observe any other covenant,
agreement, condition or provision of this Lease, if
such failure shall continue for fifteen (15) days
after receipt of written notice from Tenant to
Landlord, except that if such default cannot be cured
within such fifteen (15) day period, this period
shall be extended, provided that Landlord commences
to cure such default within such fifteen 15) day
period and proceeds diligently thereafter to effect
such cure.
If an Event of Default by Landlord occurs, Tenant shall have all rights and
remedies available at law or in equity.
20. Waiver of Breach: No waiver of any breach of the covenants, warranties,
agreements, provisions, or conditions contained in this Lease shall be construed
as a waiver of said covenant, warranty, provision, agreement or condition or of
any subsequent breach thereof, and if any breach shall occur and afterwards be
compromised, settled or adjusted, this Lease shall continue in full force and
effect as if no breach had occurred.
21. Assignment and Subletting: Tenant shall not, without the prior written
consent of Landlord, assign this Lease or any interest herein or in the Demised
Premises, or mortgage, pledge, encumber, hypothecate or otherwise transfer or
sublet the Demised Premises or any part thereof or permit the use of the Demised
Premises by any party other than Tenant. Consent to one or more such transfers
or subleases shall not destroy or waive this provision, and all subsequent
transfers and subleases shall likewise be made only upon obtaining the prior
written consent of Landlord. Without limiting the foregoing prohibition, in no
event shall Tenant assign this Lease or any interest herein, whether directly,
indirectly or by operation of law, or sublet the Demised Premises or any part
thereof or permit the use of the Demised Premises or any part thereof by any
party if such proposed assignment, subletting or use would contravene any
restrictive covenant (including any exclusive use) granted to any other tenant
of the Building or would contravene the provisions of Article 13 of this Lease.
Anything in this Lease to the contrary notwithstanding, the consent of the
Landlord need not be obtained if the assignment or sublease is to a parent,
subsidiary or affiliate of the Tenant or to an entity resulting from a merger or
consolidation with Tenant, or to any entity which acquires substantially all the
assets of Tenant as a going concern (collectively a "Tenant Affiliate").
Landlord acknowledges that the Demised Premises may be occupied by one or more
Tenant Affiliates and their employees and that such use of the Demised Premises
shall not be considered an assignment or sublease unless Tenant elects to treat
it as such. Any of Landlord's representations, warranties, covenants,
agreements, guarantees and indemnifies made for the benefit of Tenant or any
rights or privileges granted by Landlord to Tenant shall also inure to the
benefit of such Tenant Affiliate and their employees.
Sublessees or transferees of the Demised Premises for the balance of the Lease
Term shall become directly liable to Landlord for all obligations of Tenant
hereunder, without relieving Tenant (or
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any guarantor of Tenant's obligations hereunder) of any liability therefor, and
Tenant shall remain obligated for all liability to Landlord arising under this
Lease during the entire remaining Lease Term including any extensions thereof,
whether or not authorized herein. If Tenant is a partnership, a withdrawal or
change, whether voluntary, involuntary or by operation of law, of partners
owning a controlling interest in the Tenant shall be deemed a voluntary
assignment of this Lease and subject to the foregoing provisions Landlord may,
as a prior condition to considering any request for consent to an assignment or
sublease, require Tenant to obtain and submit current financial statements of
any proposed subtenant or assignee and such other financial documentation
relative to the proposed subtenant or assignee as Landlord may reasonably
require. Landlord may require, as a condition of considering any sublease, that
the rent under the sublease be no less than the rent due under this Lease.
In the event Landlord consents to an assignment or sublease, Tenant shall pay to
Landlord a fee to cover Landlord's accounting costs plus any legal fees incurred
by Landlord as a result of the assignment or sublease. The consent of Landlord
to any proposed assignment or sublease may be withheld by Landlord in its sole
and absolute discretion. Landlord may require an additional security deposit
from the assignee or subtenant as a condition of its consent. Any consideration,
in excess of the Rent and other charges and sums due and payable by Tenant under
this Lease, paid to Tenant by any assignee of this Lease for its assignment, or
by any sublessee under or in connection with its sublease, or otherwise paid to
Tenant by another party for use and occupancy of the Demised Premises or any
portion thereof, shall be promptly remitted by Tenant to Landlord as additional
rent hereunder and Tenant shall have no right or claim thereto as against
Landlord.
No assignment of this Lease consented to by Landlord shall be effective unless
and until Landlord shall receive an original assignment and assumption
agreement, in form and substance satisfactory to Landlord, signed by Tenant and
Tenant's proposed assignee, whereby the assignee assumes due performance of this
Lease to be done and performed for the balance of the then remaining Lease Term
of this Lease. No subletting of the Demised Premises, or any part thereof, shall
be effective unless and until there shall have been delivered to Landlord an
agreement, in form and substance satisfactory to Landlord, signed by Tenant and
the proposed sublessee, whereby the sublessee acknowledges the right of Landlord
to continue or terminate any sublease, in Landlord's sole discretion, upon
termination of this Lease, and such sublessee agrees to recognize and attorn to
Landlord in the event that Landlord elects under such circumstances to continue
such sublease.
Upon Landlord's receipt of a request by Tenant to assign this Lease or any
interest herein or in the Demised Premises or to transfer or sublet the Demised
Premises or any part thereof or permit the use of the Demised Premises by any
party other than Tenant, Landlord shall have the right, at Landlord's option, to
exercise in writing any of the following options: (a) To terminate this Lease as
to the portion of the Demised Premises proposed to be assigned or sublet; (b) to
consent to the proposed assignment or sublease, subject to the other terms and
conditions set forth in this Article 21; or (c) to refuse to consent to the
proposed assignment or sublease, which refusal shall
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be deemed to have been exercised unless Landlord gives Tenant written notice
providing otherwise.
22. Destruction: If the Demised Premises are damaged by fire or other casualty,
the same shall be repaired or rebuilt as speedily as practical under the
circumstances at the expense of Landlord, unless this Lease is terminated as
provided in this Article 22, and during the period required for restoration, a
just and proportionate part of Base Rental shall be abated until the Demised
Premises are repaired or rebuilt.
If the Demised Premises are (i) damaged to such an extent that repairs cannot,
in Landlord's reasonable judgment, be completed within one hundred eighty (180)
days after the date of the commencement of repair of the casualty, or (ii)
damaged or destroyed as a result of a risk which is not insured under the
insurance policies required hereunder, or (iii) damaged or destroyed during the
last eighteen (18) months of the Lease Term, or (iv) if the Building is damaged
in whole or in part (whether or not the Demised Premises are damaged) to such an
extent that the Building cannot, in Landlord's reasonable judgment, be operated
economically as an integral unit, then and in any such event Landlord may at its
option terminate this Lease by notice in writing to Tenant within sixty (60)
days after the day of such occurrence. If (x) the Demised Premises are damaged
to such an extent that repairs cannot, in Landlord's reasonable judgment, be
completed within one hundred eighty (180) days after the date of the
commencement of repair of the casualty, or (y) if the Demised Premises are
substantially damaged or destroyed during the last eighteen (18) months of the
Lease Term, or (z) if the Building is damaged in whole or in part (whether or
not the Demised Premises are damaged) to such an extent that the Building
cannot, in Tenant's reasonable judgment, be operated as a first class commercial
office building, then Tenant may elect to terminate this Lease by notice in
writing to Landlord within fifteen (15) days after the date of such occurrence.
Unless Landlord or Tenant elects to terminate this Lease as hereinabove
provided, this Lease will remain in full force and effect and Landlord shall
repair such damage at its expense to the extent required under the following
paragraph as expeditiously as possible under the circumstances.
If Landlord should elect or be obligated pursuant to the first paragraph of this
Article 22 to repair or rebuild because of any damage or destruction, Landlord's
obligation shall be limited to the original Building and any other work or
improvements which were originally performed or installed at Landlord's expense
as described in Exhibit D hereto. If the cost of performing such repairs exceeds
the actual proceeds of insurance paid or payable to Landlord on account of such
casualty, or if Landlord's mortgagee or the lessor under a ground or underlying
lease shall require that any insurance proceeds from a casualty loss be paid to
it, Landlord may terminate this Lease unless Tenant, within fifteen (15) days
after demand therefor, deposits with Landlord a sum of money sufficient to pay
the difference between the cost of repair and the proceeds of the insurance
available to Landlord for such purpose.
In no event shall Landlord be liable for any loss or damage sustained by Tenant
by reason of casualties mentioned hereinabove or any other accidental casualty.
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23. [Intentionally Omitted.]
24. Services by Landlord: Landlord shall provide the Building Standard Services
described on Exhibit E attached hereto and by this reference made a part hereof,
subject to the provisions of Article 19.
25. Attorneys' Fees: If either party uses the services of any attorney in order
to enforce any provision of this Lease, the prevailing party, as determined by a
final court judgment, shall be entitled to recover from the other party such
reasonable attorneys' fees and costs incurred in the action as the court may
award.
26. Time: Time is of the essence of this Lease and whenever a certain day is
stated for payment or performance of any obligation of Tenant or Landlord, the
same enters into and becomes a part of the consideration hereof. However, if a
certain day stated for payment or performance of any obligation of Landlord or
Tenant is a Saturday or Sunday or a State of South Carolina or federal holiday,
the certain day shall be extended until the end of the next day which is not a
Saturday, Sunday or state or federal holiday.
27. Subordination and Attornment: Tenant agrees that this Lease and all rights
of Tenant hereunder are and shall be subject and subordinate to any mortgage now
or hereafter encumbering the Demised Premises or the Project or any component
thereof, to all advances made or hereafter to be made upon the security of such
mortgage, to all amendments, modifications, renewals, consolidations, extensions
and restatements of such mortgage, and to any replacements and substitutions for
such mortgage, provided that this Lease shall be recognized by the mortgagee and
that the rights of Tenant shall remain in full force and effect during the term
of this Lease, so long as Tenant shall continue to perform all of the covenants
and conditions of this Lease. The terms of this provision shall be
self-operative and no further instrument of subordination shall be required.
Tenant, however, upon request of any party in interest, shall execute within
twenty (20) days after receipt such instrument or certificates as may be
reasonably required to carry out the intent hereof, whether said requirement is
that of Landlord or any other party in interest, including, without limitation,
any mortgagee. Landlord is hereby irrevocably vested with full power and
authority as attorney-in-fact for Tenant and in Tenant's name, place and stead,
to subordinate Tenant's interest under this Lease to the lien or security title
of any mortgage and to any future instrument amending, modifying, renewing,
consolidating, extending, restating, replacing or substituting any such
mortgage, providing such subordination shall be upon the express condition that
this Lease shall be recognized by the mortgagee, and that the rights of Tenant
shall remain in full force and effect during the term of this Lease so long as
Tenant shall continue to perform all of the covenants and conditions of this
Lease.
If any mortgagee elects to have this Lease superior to its mortgage and
signifies its election in the instrument creating its lien or by separate
recorded instrument, then this Lease shall be superior to such mortgage. The
term "mortgage", as used in this Lease, includes any deed to secure debt, deed
of trust or security deed and any other instrument creating a lien in connection
with any other
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method of financing or refinancing. The term "mortgagee", as used in this Lease,
refers to the holder(s) of the indebtedness secured by a mortgage.
In the event any proceedings are brought for the foreclosure of, or in the event
of exercise of the power of sale under, any mortgage covering the Demised
Premises or the Project, or in the event the interests of Landlord under this
Lease shall be transferred by reason of deed in lieu of foreclosure or other
legal proceedings, this Lease shall be recognized by the transferee or purchaser
at foreclosure or under power of sale, and the rights of Tenant shall remain in
full force and effect during the term of this Lease, so long as Tenant shall
continue to perform all of the covenants and conditions of this Lease, and at
the option of such transferee or purchaser, Tenant shall attorn to such
transferee or purchaser and shall recognize and be bound and obligated hereunder
to such person as the Landlord under this Lease; provided, however, that no such
transferee or purchaser shall be (i) bound by any payment of Rent for more than
one (1) month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease (and then only if such
prepayments have been deposited with and are under the control of such
transferee or purchaser); (ii) bound by any amendment or modification of this
Lease made without the express written consent of the mortgagee of the Landlord,
provided however, that for this subsection to be effective Tenant shall have
first received notice of such mortgagee and its insistence on this requirement;
(iii) (intentionally omitted); (iv) liable for any act or omission of any prior
landlord (including Landlord) except for the cure of ongoing defaults; (v)
subject to any offsets or defenses which Tenant might have against any prior
landlord (including Landlord); or (vi) bound by any verbal warranty or
representation of any prior landlord (including Landlord) relating to work
performed by any prior landlord (including Landlord) under this Lease. Tenant
agrees to execute any attornment agreement not in conflict herewith requested by
Landlord, the mortgagee or such transferee or purchaser. Tenant's obligation to
attorn to such transferee or purchaser shall survive the exercise of any such
power of sale, foreclosure or other proceeding. Tenant agrees that the
institution of any suit, action or other proceeding by any mortgagee to realize
on Landlord's interest in the Demised Premises or the Building pursuant to the
powers granted to a mortgagee under its mortgage, shall not, by operation of law
or otherwise, result in the cancellation or termination of the obligations of
Tenant hereunder. Landlord and Tenant agree that notwithstanding that this Lease
is expressly subject and subordinate to any mortgages, any mortgagee, its
successors and assigns, or other holder of a mortgage or of a note secured
thereby, may sell the Demised Premises or the Building, in the manner provided
in the mortgage and may, at the option of such mortgagee, its successors and
assigns, or other holder of the mortgage or note secured thereby, make such sale
of the Demised Premises or Building subject to this Lease.
28. Estoppel Certificates: Within twenty (20) days after request therefor by
Landlord or Tenant, the other party agrees to execute and deliver to the
requesting party in recordable form an estoppel certificate addressed to the
requesting party, any mortgagee or assignee of the requesting party's interest
in, or purchaser of, the Demised Premises or the Building or any part thereof,
certifying (if such be the case) that this Lease is unmodified and is in full
force and effect (and if there have been modifications, that the same is in full
force and effect as modified and
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stating said modifications); that there are no defenses or offsets against the
enforcement thereof or stating those claimed by the responding party; and
stating the date to which Rent and other charges have been paid. Such
certificate shall also include such other information as may reasonably be
required by such mortgagee, proposed mortgagee, assignee, purchaser or
requesting party. Any such certificate may be relied upon by the requesting
party, any mortgagee, proposed mortgagee, assignee, purchaser and any other
party to whom such certificate is addressed.
29. Leasehold Estate: This Lease shall create the relationship of landlord and
tenant only between Landlord and Tenant, and Tenant shall have a leasehold
estate in the Demised Premises.
30. Cumulative Rights: All rights, powers and privileges conferred hereunder
upon the parties hereto shall be cumulative to, but not restrictive of, or in
lieu of those conferred by law.
31. Holding Over: If Tenant remains in possession after expiration or
termination of the Lease Term with or without Landlord's written consent, Tenant
shall become a tenant-at- sufferance, and there shall be no renewal of this
Lease by operation of law. During the period of any such holding over, all
provisions of this Lease shall be and remain in effect except that the monthly
rental shall be the following multiples of the amount of Rent (including any
adjustments as provided herein) payable for the last full calendar month of the
Lease Term including renewals or extensions: 125% of such Rent for the first
holdover month; 150% of such Rent for the second holdover month; and 200% of
such Rent for each month thereafter. The inclusion of the preceding sentence in
this Lease shall not be construed as Landlord's consent for Tenant to hold over.
32. Surrender of Premises: Upon the expiration or other termination of this
Lease, Tenant shall quit and surrender to Landlord the Demised Premises and
every part thereof and all alterations, additions and improvements thereto,
broom clean and in good condition and state of repair, reasonable wear and tear
only excepted. Tenant shall remove all of Tenant's personalty, equipment and
other personal property from the Demised Premises, and Tenant shall restore the
Demised Premises to the condition immediately preceding the time of placement
thereof. If Tenant shall fail or refuse to remove all of Tenant's personalty,
equipment and other personal property from the Demised Premises within the
earlier of (x) sixty (60) days after the expiration or termination of this Lease
for any cause whatsoever or after Tenant is dispossessed by process of law or
otherwise, or (y) within fifteen (15) days after Landlord notifies Tenant that a
prospective tenant may lease all or a portion of the Demised Premises and such
removal is necessary in connection with the re-leasing of the space, such
personalty, equipment and other personal property shall be stored by Landlord,
and Tenant shall pay Landlord upon demand (i) the holdover Rent as set out in
Article 31 for the period of time such items remain in the Demised Premises and
(ii) 125% of the storage costs incurred by Landlord for storing such items. If
at any time Tenant defaults in the payment of such holdover Rent or storage
costs, such personalty, equipment and other property shall be deemed
conclusively to be abandoned and may be appropriated, sold, destroyed or
otherwise disposed of by Landlord without written notice to Tenant or any other
party and without obligation to account for them. Tenant shall also pay
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Landlord on demand any and all expenses incurred by Landlord in the removal of
such property, including, without limitation, the cost of repairing any damage
to the Building or Project caused by the removal of such property. The covenants
and conditions of this Article 32 shall survive any expiration or termination of
this Lease.
33. Notices: All notices required or permitted to be given hereunder shall be in
writing and shall be sent to the addresses set forth below. A party may change
its address for notice by giving notice hereunder to the other party. Notice may
be delivered by personal delivery, an overnight delivery service, or United
States Mail, return receipt requested. Notices are effective on the earliest of
the date received, the date of the delivery receipt, or the third (3rd) day
after postmark, as applicable. The following are the notice addresses for the
parties:
As to Landlord: Poinsett Plaza, LLC
304 N. Church Street (Zip 29601)
P.O. Drawer 2567
Greenville, South Carolina 29602
As to Tenant: Carolina First Bank
102 S. Main Street (Zip 29601)
P.O. Box 1029
Greenville, South Carolina 29602
34. Damage or Theft of Personal Property: All personal property brought into the
Demised Premises by Tenant, or Tenant's employees, agents, or business visitors,
shall be at the risk of Tenant only, and except for Landlord's gross negligence,
Landlord shall not be liable for theft thereof or any damage thereto occasioned
by any act of co-tenants, occupants, invitees or other users of the Building or
any other person. Except for Landlord's gross negligence, Landlord shall not at
any time be liable for damage to any property in or upon the Demised Premises,
which results from gas, smoke, water, rain, ice or snow which issues or leaks
from or forms upon any part of the Building or from the pipes or plumbing work
of the same, or from any other place whatsoever.
35. Eminent Domain: If all or part of the Demised Premises shall be taken for
any public or quasi-public use by virtue of the exercise of the power of eminent
domain or by private purchase in lieu thereof, this Lease shall terminate as to
the part so taken as of the date of taking, and, in the case of a partial
taking, either Landlord or Tenant shall have the right to terminate this Lease
as to the balance of the Demised Premises by written notice to the other within
thirty (30) days after such date. If title to so much of the Project is taken
that a reasonable amount of reconstruction thereof will not in Landlord's or
Tenant's reasonable discretion result in the Building being a practical
improvement and reasonably suitable for use for the purpose for which it is
designed, then either Landlord or Tenant shall have the right to terminate this
Lease by written notice to the other within thirty (30) days after the date that
the condemning authority
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actually takes possession of the part so condemned or purchased, and this Lease
shall be treated as terminated as of the date of taking or the date of such
notice, whichever is later.
If this Lease is terminated under the provisions of this Article 35, Rent shall
be apportioned and adjusted as of the date of termination. Tenant shall have no
claim against Landlord or against the condemning authority for the value of any
leasehold estate or for the value of the unexpired Lease Term provided that the
foregoing shall not preclude any claim that Tenant may have against the
condemning authority (i) for the unamortized cost of leasehold improvements, to
the extent the same were installed at Tenant's expense, (ii) for loss of
business, (iii) for moving expenses, or (iv) for other consequential damages.
If there is a partial taking of the Project and this Lease is not thereupon
terminated under the provisions of this Article 35, then this Lease shall remain
in full force and effect, and Landlord shall, within a reasonable time
thereafter, repair or reconstruct the remaining portion of the Building to the
extent necessary to make the same a complete architectural unit; provided, that
in complying with its obligations hereunder, Landlord shall not be required to
expend more than the net proceeds of the condemnation award which are paid to
Landlord. Upon any such partial taking, Landlord shall have the right to reduce
the figure described in item (y) of the definition of Tenant's Additional Rental
in Article 8 hereof by an amount equal to the product of (x) the amount of
operational savings resulting from such partial taking, as determined by
Landlord in its sole but reasonable discretion, divided by the number of square
feet of Rentable Floor Area of the Building, multiplied by (y) the number of
square feet of Rentable Floor Area of the Demised Premises.
All compensation awarded or paid to Landlord upon a total or partial taking of
the Demised Premises or the Project shall belong to and be the property of
Landlord without any participation by Tenant. Nothing herein shall be construed
to preclude Tenant from prosecuting any claim directly against the condemning
authority for loss of business, for damage to, and cost of removal of, trade
fixtures, furniture and other personal property belonging to Tenant, for the
unamortized cost of leasehold improvements to the extent the same were installed
at Tenant's expense, for moving expenses, and for any consequential damages;
provided, however, that no such claim shall diminish or adversely affect
Landlord's award.
Notwithstanding anything to the contrary contained in this Article 35, if,
during the Lease Term, the use or occupancy of any part of the Project or the
Demised Premises shall be taken or appropriated temporarily for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain, this Lease shall be and remain unaffected by such
taking or appropriation and Tenant shall continue to pay in full all Rent
payable hereunder by Tenant during the Lease Term. In the event of any such
temporary appropriation or taking, Tenant shall be entitled to receive that
portion of any award which represents compensation for the loss of use or
occupancy of the Demised Premises during the Lease Term, and Landlord shall be
entitled to receive that portion of any award which represents the cost of
restoration and compensation for the loss of use or occupancy of the Demised
Premises after the end of the Lease
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Term.
36. Parties: The term "Landlord", as used in this Lease, shall include Landlord
and its successors and assigns. It is hereby covenanted and agreed by Tenant
that should Landlord's interest in the Demised Premises cease to exist for any
reason during the Lease Term, then notwithstanding the happening of such event,
this Lease nevertheless shall remain in full force and effect, and Tenant hereby
agrees to attorn to the then owner of the Demised Premises. The term "Tenant"
shall include Tenant and its heirs, legal representatives and successors, and
shall also include Tenant's assignees and sublessees, if this Lease shall be
validly assigned or the Demised Premises sublet for the balance of the Lease
Term or any renewals or extensions thereof. In addition, Landlord and Tenant
covenant and agree that Landlord's right to transfer or assign Landlord's
interest in and to the Demised Premises, or any part or parts thereof, shall be
unrestricted, and that in the event of any such transfer or assignment by
Landlord which includes the Demised Premises, Landlord's obligations to Tenant
hereunder shall cease and terminate, and Tenant shall look only and solely to
Landlord's assignee or transferee for performance thereof.
37. Relocation of the Premises: In the event the Demised Premises leased to
Tenant contain less than one-half (1/2) of the total square feet of Rentable
Floor Area on the floor on which the Demised Premises are located, Landlord
reserves the right at any time or from time to time, at its option and upon
giving not less than thirty (30) days' prior written notice to Tenant, to
transfer and remove Tenant from the Demised Premises herein specified to any
other available rooms and offices of substantially equal size and area in the
Building and at an equivalent Base Rental; provided, however, that Landlord
shall have no such right with respect to the Existing Bank Property or any space
leased by Tenant on the first floor of the Building. Landlord shall bear the
expense of said removal together with the reasonable expense of replacement
business cards and stationery and the expense of any renovation or alterations
to said substituted space necessary to make the same substantially conform in
arrangement and layout to the original space described in this Lease. If
Landlord exercises such option, then the substituted space shall for all
purposes hereof be deemed to be and to constitute the Demised Premises under
this Lease and all terms, conditions, covenants, warranties, agreements and
provisions of this Lease including but not limited to the same Base Rental Rate
per square foot of Rentable Floor Area shall continue in full force and effect
and shall apply to the substituted space. Tenant agrees to vacate the Demised
Premises herein specified and relocate to said substituted space promptly after
the substituted space is ready for Tenant's occupancy as provided herein, and
Tenant's failure to do shall constitute an event of default by Tenant under this
Lease.
38. Liability of Landlord: Landlord shall have no personal liability with
respect to any of the provisions of this Lease. If Landlord is in default with
respect to its obligations under this Lease, Tenant shall look solely to the
equity of Landlord in and to the Building and the Land for satisfaction of
Tenant's remedies, if any. It is expressly understood and agreed that Landlord's
liability under the terms of this Lease shall in no event exceed the amount of
its interest in and to said Land and Building. In no event shall any partner of
Landlord nor any joint venturer in Landlord, nor any officer, director or
shareholder of Landlord or any such partner or joint
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venturer of Landlord be personally liable with respect to any of the provisions
of this Lease.
39. Force Majeure: In the event of strike, lockout, labor trouble, civil
commotion, Act of God, or any other cause beyond a party's control (collectively
"force majeure") resulting in Landlord's inability to supply the services or
perform the other obligations required of Landlord hereunder, this Lease shall
not terminate and Tenant's obligation to pay Rent and all other charges and sums
due and payable by Tenant shall not be affected or excused and Landlord shall
not be considered to be in default under this Lease. If, as a result of force
majeure, Tenant is delayed in performing any of its obligations under this
Lease, other than Tenant's obligation to take possession of the Demised Premises
on or before the Rental Commencement Date and to pay Rent and all other charges
and sums payable by Tenant hereunder, Tenant's performance shall be excused for
a period equal to such delay and Tenant shall not during such period be
considered to be in default under this Lease with respect to the obligation,
performance of which has thus been delayed.
40. Indemnification: Tenant shall protect, defend, indemnify and hold Landlord
and its members, officers, directors and employees harmless from and against any
and all claims, damages, losses, liens, judgments, penalties and expenses,
including reasonable attorneys' fees and consultants' fees, except for those
caused solely by the intentional misconduct or gross negligence of Landlord or
any of its employees, contractors, servants, agents, tenants, assignees,
representatives or invitees, arising out of or relating to injury to any person
or loss of or damage to property of any third party which occurs in the Demised
Premises.
Landlord shall protect, defend, indemnify and hold Tenant and its partners and
employees harmless from and against any and all claims, damages, losses, liens,
judgments, penalties and expenses, including reasonable attorneys' fees and
consultants' fees, except for those caused solely by the intentional misconduct
or gross negligence of Tenant or any of its employees, contractors, servants,
agents, tenants, assignees, representatives or invitees, arising out of or
relating to injury to any person or loss of or damage to property of any third
party which occurs on the Project, excluding the Demised Premises.
41. Landlord's Covenant of Quiet Enjoyment: Provided Tenant performs the terms,
conditions and covenants of this Lease, and subject to the terms and provisions
hereof, Landlord covenants and agrees to take all necessary steps to secure and
to maintain for the benefit of Tenant the quiet and peaceful possession of the
Demised Premises, for the Lease Term, without hindrance, claim or molestation by
Landlord or any other person lawfully claiming under Landlord.
42. [Intentionally Omitted]:
43. Hazardous Substances: Tenant and Landlord hereby covenant and agree that
each shall not cause or permit any "Hazardous Substances" (as hereinafter
defined) to be generated, placed, held, stored, used, located or disposed of at
the Project or any part thereof, except for Hazardous
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Substances as are commonly and legally used or stored as a consequence of using
the Demised Premises or the Project for general office and administrative
purposes, but only so long as the quantities thereof do not pose a threat to
public health or to the environment or would necessitate a "response action", as
that term is defined in CERCLA (as hereinafter defined), and so long as such
party strictly complies or causes compliance with all applicable governmental
rules and regulations concerning the use or production of such Hazardous
Substances. For purposes of this Article 43, "Hazardous Substances" shall mean
and include those elements or compounds which are contained in the list of
Hazardous Substances adopted by the United States Environmental Protection
Agency (EPA) or the list of toxic pollutants designated by Congress or the EPA
which are defined as hazardous, toxic, pollutant, infectious or radioactive by
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability
(including, without limitation, strict liability) or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereinafter in effect (collectively "Environmental Laws").
Each party hereby agrees to indemnify the other and to hold the other harmless
from and against any and all losses, liabilities, including strict liability,
damages, injuries, expenses, including reasonable attorneys' fees, costs of
settlement or judgment and claims of any and every kind whatsoever paid,
incurred or suffered by, or asserted against, the other by any person, entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the presence in, or the escape, leakage, spillage, discharge, emission or
release from, the Demised Premises (in the case of the Tenant) or the Project
(in the case of the Landlord) of any Hazardous Substances (including, without
limitation, any losses, liabilities, including strict liability, damages,
injuries, expenses, including reasonable attorneys' fees, costs of any
settlement or judgment or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liability Act ["CERCLA"], any so-called
federal, state or local "Superfund" or "Superlien" laws or any other
Environmental Law); provided, however, that the foregoing indemnity is limited
to matters arising solely from Landlord's or Tenant's violation of the covenant
contained in this Article. The obligations under this Article shall survive any
expiration or termination of this Lease.
44. Submission of Lease: The submission of this Lease for examination does not
constitute an offer to lease and this Lease shall be effective only upon
execution hereof by Landlord and Tenant and upon execution of any required
Guaranty Agreement annexed hereto and incorporated herein as Exhibit H.
45. Severability: If any clause or provision of the Lease is illegal, invalid or
unenforceable under present or future laws, the remainder of this Lease shall
not be affected thereby, and in lieu of each clause or provision of this Lease
which is illegal, invalid or unenforceable, there shall be added as a part of
this Lease a clause or provision as nearly identical to the said clause or
provision as may be legal, valid and enforceable.
46. Entire Agreement: This Lease contains the entire agreement of the parties
and no representations, inducements, promises or agreements, oral or otherwise,
between the parties not embodied herein shall be of any force or effect. No
failure of either party to exercise any power
26
<PAGE>
given such party hereunder, or to insist upon strict compliance by the other
party hereunder with any obligation of such party hereunder, and no custom or
practice of the parties at variance with the terms hereof, shall constitute a
waiver of either party's right to demand exact compliance with the terms hereof.
This Lease may not be altered, waived, amended or extended except by an
instrument in writing signed by Landlord and Tenant. This Lease is not in
recordable form, and Tenant agrees not to record or cause to be recorded this
Lease or any short form or memorandum thereof.
47. Headings: The use of headings herein is solely for the convenience of
indexing the various paragraphs hereof and shall in no event be considered in
construing or interpreting any provision of this Lease.
48. Broker: The parties agree that no Broker is entitled to a leasing commission
from Landlord by virtue of this Lease. Tenant hereby authorizes Landlord to
identify Tenant as a tenant of the Building and to state the amount of space
leased by Tenant in advertisements and promotional materials relating to the
Building. Tenant represents and warrants to Landlord that no broker, agent,
commission salesperson, or other person has represented Tenant in the
negotiations for and procurement of this Lease and that no commissions, fees or
compensation of any kind are due and payable in connection herewith to any
broker, agent, commission salesperson or other person as a result of any act or
agreement of Tenant. Tenant agrees to indemnify and hold Landlord harmless from
all loss, liability, damage, claim, judgment, cost or expense (including
reasonable attorneys' fees and court costs) suffered or incurred by Landlord as
a result of a breach by Tenant of the representation and warranty contained in
the immediately preceding sentence or as a result of any claim for any fee,
commission or similar compensation with respect to this Lease made by any
broker, agent or finder claiming to have dealt with Tenant, whether or not such
claim is meritorious. Landlord represents and warrants to Tenant that no broker,
agent, commission salesperson, or other person has represented Landlord in the
negotiations for and procurement of this Lease and that no commissions, fees or
compensation of any kind are due and payable in connection herewith to any
broker, agent, commission salesperson or other person as a result of any act or
agreement of Landlord. Landlord agrees to indemnify and hold Tenant harmless
from all loss, liability, damage, claim, judgment, cost or expense (including
reasonable attorneys' fees and court costs) suffered or incurred by Tenant as a
result of a breach by Landlord of the representation and warranty contained in
the immediately preceding sentence or as a result of any claim for any fee,
commission or similar compensation with respect to this Lease made by any
broker, agent or finder claiming to have dealt with Landlord, whether or not
such claim is meritorious.
49. Governing Law: The laws of the State of South Carolina shall govern the
validity, performance and enforcement of this Lease.
50. Authority: If Tenant executes this Lease as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby personally
represent and warrant that Tenant is a duly incorporated or a duly qualified (if
a foreign corporation) corporation and is fully authorized and
27
<PAGE>
qualified to do business in the State in which the Demised Premises are located,
that the corporation has full right and authority to enter into this Lease, and
that each person signing on behalf of the corporation is an officer of the
corporation and is authorized to sign on behalf of the corporation. If Tenant
signs as a partnership, joint venture or sole proprietorship or other business
entity (each being herein called "Entity"), each of the persons executing on
behalf of Tenant does hereby covenant and warrant that Tenant is a duly
authorized and existing Entity, that Tenant has full right and authority to
enter into this Lease, that all persons executing this Lease on behalf of the
Entity are authorized to do so on behalf of the Entity, and that such execution
is fully binding upon the Entity and its partners, joint venturers or principal,
as the case may be. Upon the request of Landlord, Tenant shall deliver to
Landlord documentation satisfactory to Landlord evidencing Tenant's compliance
with this Article, and Tenant agrees to promptly execute all necessary and
reasonable applications or documents as reasonably requested by Landlord,
required by the jurisdiction in which the Demised Premises is located, to permit
the issuance of necessary permits and certificates for Tenant's use and
occupancy of the Demised Premises.
51. Joint and Several Liability: If Tenant comprises more than one person,
corporation, partnership or other entity, the liability hereunder of all such
persons, corporations, partnerships or other entities shall be joint and
several.
52. Special Stipulations: The special stipulations attached hereto as Exhibit G
are hereby incorporated herein by this reference as though fully set forth (if
none, so state). To the extent the special stipulations conflict with or are
inconsistent with the foregoing provisions of this Lease, the Rules and
Regulations, or any exhibit to this Lease, the special stipulations shall
control.
[Signatures Follow on Next Page.]
28
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In Witness Whereof, the parties have hereunto set their hands and seals
as of the day, month and year first above written.
Landlord:
POINSETT PLAZA, LLC
By:__________________________
Title:_________________________
[Seal]
Tenant:
CAROLINA FIRST BANK
By:__________________________
Title:_________________________
[Seal]
<PAGE>
Exhibit A
Legal Description
All that piece, parcel or tract of land containing 0.95 acres, more or less,
located at the southwest corner of the intersection of South Main Street and
West McBee Avenue in the City of Greenville, County of Greenville, South
Carolina, being more fully shown and designated on a survey entitled "Survey for
Hughes Investments" prepared by Site Design, Inc., dated October 20, 1997, and
recorded in the RMC Office for Greenville County in Plat Book 37-E, Pages 66
A&B, and having according to that plat the following metes and bounds:
Beginning at an old nail at the intersection of the western right-of-way of
South Main Street and the southern right-of-way of West McBee Avenue, and
running thence with the western right-of-way of South Main Street S.20-39-47W.
75.63 feet to an old nail; thence continuing with the western right-of-way of
South Main Street S.21-08-34W. 75.62 feet to a point at the corner of property
now or formerly of G. Elton Todd; thence running with the property line of G.
Elton Todd the following courses and distance: N.68-46-30W. 102.75 feet to a
point; and thence S.21- 50-04W. 52.28 feet to a point in the property line of
land now or formally of Greenville Hospitality Associates, Inc.; thence with the
property line of Greenville Hospitality Associates, Inc. N.68-43-00W. 126.87
feet to a point; thence running with the property line of other property now or
formerly of Carolina First Bank N.20-52-06E. 202.31 feet to a point on the
southern right-of-way of West McBee Avenue; thence running with the southern
right-of-way of West McBee Avenue the following courses and distances:
S.69-07-64E. 6.20 feet to a point; thence S.69-17- 46E. 37.80 feet to a point;
thence S.68-58-35E. 186.59 feet to an old nail the point of beginning.
<PAGE>
Exhibit A-1
Legal Description of Existing Bank Property
All that piece, parcel or lot of land situate, lying and being at the southwest
corner of the intersection of South Main Street and West McBee Avenue in the
City of Greenville, in Greenville County, South Carolina, and having according
to a plat made by Dalton & Neves, Engineers, July 1958, recorded in Plat Book SS
at page 38, in the RMC Office for Greenville County, the follow ing metes and
bounds, to-wit:
Beginning at the point of intersection of the west side of South Main Street
with the south side of West McBee Avenue and running thence with the west side
of South Main Street, S. 20-41 W., 75.6 feet to a point in a 17" wall; thence
through said wall, N. 68-55 W., 120.3 feet to a point in wall; thence continuing
through another 17: wall, N. 21-11 E., 47.95 feet to a point in wall; thence
through a 20" wall, S. 69-00 E., 29.95 feet to a point in wall; thence through a
19-1/2" wall, N. 21-00 E., 27.4 feet to a point in the southern side of West
McBee Avenue; thence with the south side of West McBee Avenue, S. 69-00 E., 90.5
feet to the point of beginning.
The above described property was conveyed to Carolina First Bank by deed of
ApparelSoft, Inc. recorded April 16, 1991 in Deed Book 1432, page 826, in the
Office of the Register of Deeds for Greenville County.
<PAGE>
Exhibit B
Demised Premises
Approximately 100,000 Rentable Square Feet in the Building, including
the 2nd, 3rd and 10th floors and other space to be agreed upon by Landlord and
Tenant, together with the Existing Bank Property located at the corner of South
Main Street and West McBee Avenue.
<PAGE>
Exhibit C
Supplemental Notice
RE: Lease dated as of , 19 ___, by and between
_______________________ as Landlord, and ____________________, as Tenant.
Dear Sirs:
Pursuant to Article 3 of the captioned Lease, please be advised as
follows:
The Rental Commencement Date is the____ day of______ , 19____, and the
expiration date of the Lease Term is the _____ day of ______, 19___, subject
however to the terms and provisions of the Lease.
The Rentable Floor Area of the Demised Premises is square feet. Terms denoted
herein by initial capitalization shall have the meanings ascribed thereto in the
Lease.
Landlord:
By:__________________________
Title:_________________________
<PAGE>
Exhibit D
Construction of the Building and the Demised Premises
1. Landlord shall, at its sole cost and expense, cause the Building to be
constructed in accordance with Schedule 1 of this Exhibit D.
2. Landlord shall, at its sole cost and expense, provide the work in the Demised
Premises in accordance with Schedule 2 ("Landlord's Work"). All other work
within the Premises is the responsibility of Tenant ("Tenant's Work") and shall
include specifically, without limitation, the supply and installation (unless
otherwise indicated) of those items described on Schedule 3 of this Exhibit D
throughout the entire Demised Premises.
3. Tenant, at its sole cost and expense, will cause to be prepared by a licensed
architect and engineering firm the final working plans and specifications of
Tenant's Work suitable for construction containing, without limitation, at least
the information requested on Schedule 4 of this Exhibit D. Such final working
plans and specifications and all changes to them during construction shall be
subject to the reasonable approval of Landlord. As approved by Landlord, such
final working plans and specifications are referred to as "Tenant's Plans."
4. Workmanship and materials used in construction of Tenant's Work shall be of
the highest quality. Tenant shall submit the name of its proposed general
contractor and project manager for Landlord's prior approval, along with
information on at least three (3) comparable projects completed by the
contractor, if requested by Landlord and if the contractor has not previously
worked in the Building. Landlord hereby approves the general contractor and the
structural, mechanical and electrical contractors and subcontractors used by
Landlord for the Project for Tenant's Work in those disciplines. If Tenant
wishes to use different structural, mechanical or electrical contractors or
subcontractors, Tenant shall submit the name of the proposed contractors or
subcontractors and its project manager for Landlord's prior approval, along with
information on at least three (3) comparable projects completed by the proposed
contractors or subcontractors, if requested by Landlord and if the proposed
contractors or subcontractors have not previously worked in the Building. Any
contractors and/or subcontractors engaged by Tenant shall comply with all
reasonable, nondiscriminatory rules and regulations as are established by
Landlord and/or Landlord's general contractor to promote safety and quality of
construction in the Building, and such contractors shall coordinate their
efforts to ensure the timely completion of all Landlord's Work and Tenant's
Work. All design, construction and installation for Tenant's Work shall conform
to the requirements of the National Board of Fire Underwriters, all applicable
building, plumbing and electrical codes and the requirements of all Governmental
Authorities having jurisdiction over or with respect to Tenant's Work. Other
than the approved final inspection by the City of Greenville for the Building
shell and the common areas of the Building to be secured by Landlord no later
than the Rental Commencement Date, Tenant or its contractors shall secure all
necessary building and occupancy permits and/or approvals from all Governmental
Authorities to allow Tenant to use and occupy the Demised Premises and shall
provide Landlord with copies
<PAGE>
of such permits.
5. Tenant agrees to indemnify Landlord, its agents, employees and contractors
and to hold them harmless from and against any and all losses, costs, claims and
liabilities of every kind and description which may arise out of or be connected
in any way with the performance of Tenant's Work and not caused or contributed
to by the negligence or wrongdoing of Landlord, its employees, agents and
contractors.
Landlord agrees to indemnify Tenant, its agents, employees and contractors and
to hold them harmless from and against any and all losses, costs, claims and
liabilities of every kind and description which may arise out of or be connected
in any way with the performance of Landlord's Work and not caused or contributed
to by the negligence or wrongdoing of Tenant, its employees, agents and
contractors.
6. On and after the date the Demised Premises are available for Tenant's work as
provided in Article 1, Landlord shall permit Tenant and Tenant's duly authorized
agents and Tenant's approved contractors and subcontractors to enter the Demised
Premises and to use the elevators in the Building at the same time that
Landlord's contractors or any other contractors are working in the Building, in
order that Tenant may install Tenant's Work, and otherwise adapt the Demised
Premises for Tenant's use. The foregoing license is conditioned upon Tenant's
duly authorized agents and contractors working in harmony and not interfering
with the labor employed by Landlord, by Landlord's mechanics or contractors, or
by any other tenant or their agents or contractors, and complying with all rules
and regulations established by Landlord and/or Landlord's general contractor to
promote safety and quality of construction; failure of such compliance shall
entitle Landlord to compel Tenant to use its best efforts to discharge the
contractors or subcontractors who fail so to comply but shall not constitute
revocation of the license granted herein. Such agents, contractors and mechanics
shall coordinate their efforts to ensue timely completion of all work. This
license is further conditioned upon the employment by the contractors or
subcontractors engaged by Tenant of workers and means to ensure the progress of
the work without interruption on account of strikes, work stoppage or similar
causes for delay. Such license is further conditioned upon workers' compensation
and public liability insurance and property damage insurance, all in amounts and
with companies and on forms reasonably satisfactory to Landlord, being provided
and at all times maintained by Tenant's duly authorized agents and contractors
engaged in the performance of such work, and certificates of such insurance
being furnished to Landlord prior to proceeding with such work. The parking for
Tenant's general contractor and its subcontractors and their employees shall not
be the responsibility of Landlord.
7. Tenant shall not start any construction in the Demised Premises until all of
the following have been accomplished: (a) Landlord has approved Tenant's Plans,
(b) Landlord has approved Tenant's contractor and subcontractors, (c) Tenant has
secured and furnished Landlord with copies of all building permits from the
appropriate Governmental Authorities, (d) Tenant has furnished
<PAGE>
Landlord with certificates of insurance evidencing the policies of insurance
required under this Lease and in the foregoing paragraph (6), and (e) Tenant's
general contractor has acknowledged receipt of any rules and regulations
established by Landlord and/or Landlord's general contractor. Tenant shall
provide Landlord with copies of all building permits within ten (10) days of
Tenant's receipt thereof.
<PAGE>
8. Tenant's Work shall proceed strictly in accordance with Tenant's Plans and
the rules and regulations established by Landlord and/or Landlord's general
contractor to promote safety and quality of construction in the Building. Upon
completion of Tenant's work, Tenant shall deliver to Landlord one set of
as-built plans for the Demised Premises.
9. The actual cost of utilities consumed in the Demised Premises after the date
the Demised Premises are available for Tenant's Work, without any markup, shall
be paid for or reimbursed to Landlord by Tenant, provided such utilities are
separately metered and can be accurately determined.
10. So long as there is no unreasonable interference with the Landlord, Tenant
may store its construction material in the Demised Premises during the
construction period. If necessary, Landlord shall select other floors in the
Building that Tenant may use for the storage of materials, subject to Landlord's
reasonable requirements. Tenant at its election may also store Landlord-
supplied material, including HVAC or lighting material furnished as provided in
Schedule 2 of this Exhibit D, or other similar material in the Secondary Space,
provided such material is stored in a neat and orderly fashion; and such storage
alone shall not constitute occupancy of the space or otherwise cause the loss of
the lower Base Rental Rate provided in Section 1(j)(2).
11. If Tenant employs a general contractor other than Landlord's general
contractor, such contractor will be required, before commencement of Tenant's
Work, to waive any and all rights (if any) to file liens against Landlord or any
part of the Project other than Tenant's leasehold estate in connection with the
performance of Tenant's Work.
<PAGE>
Schedule 1 (Exhibit D)
Building Description
Landlord agrees to construct a Class A office building that is closely similar
if not identical to the building described in the Poinsett Plaza Project Manual
prepared September 26, 1996 by Smallwood, Reynolds, Stewart, Stewart &
Associates, Inc.; the Site Plan and Floor Plans, Poinsett Plaza, plotted 6/6/97
by Smallwood, Reynolds, Stewart, Stewart & Associates, Inc.; and the MEP Design
for Poinsett Plaza Office Building dated January 21, 1998. At a minimum the
building will include the following:
1. Building height will be not less than 10 office floors. (If
the Building should have more than 10 office floors, Tenant
shall have the top office floor rather than the tenth floor as
part of the Demised Premises, and all references in the Lease
to the tenth floor shall automatically be adjusted
accordingly.)
2. The minimum floor size will be not less than 17,500 rentable
square feet as measured by BOMA Standards. The maximum floor
size will be not greater than 20,000 rentable square feet.
3. The building will have one (1) separate dedicated freight
elevator with enclosed vestibules on each floor. The freight
elevator will have direct access to the building loading dock.
4. The building will have exterior panels of either stone or
colored architectural precast concrete with aggregate. The
floors in the building lobby will be either marble or smooth
stone (with possible carpet inserts) with wall panels of
either stone, wood, fabric, or a combination thereof.
5. The building will have a card-reader security system for
after-hours access.
6. Building will be connected to the decked parking facility with
a completely enclosed and climate-controlled access corridor.
7. Passenger elevator cabs will be finished with wood, stone,
metal and glass surfaces, or a combination thereof.
<PAGE>
Schedule 2 (Exhibit D)
Landlord's Work
At the sole cost and expense of Landlord:
1. Landlord shall provide the base Building sprinkler system loop
installed to meet City and State codes.
2. Landlord shall provide HVAC main duct work to the perimeter heating
and cooling fan powered induction boxes, branch ductwork (flex), slot diffusers
for exterior boxes only and thermostats served by a central control system.
Landlord shall provide HVAC main ductwork to interior zone VAV cooling only
boxes with branch ductwork and thermostats served by a central control system.
3. Landlord shall provide [2'x4'"FG"] fluorescent 18 cell parabolic
three lamp light fixtures on a ratio of one (1) fixture per one hundred (100)
square feet of Rentable Floor Area in the Demised Premises.
4. Landlord shall provide electrical power at the electrical rooms
sufficient to furnish the electrical capacity described in Exhibit E.
5. Landlord shall provide plumbing vent, waste, and domestic cold water
connection points.
6. Landlord shall provide 2'x 2' tegular lay-in ceiling tile and
related grid and the grid suspension. The ceiling tiles, grid and related
accessories shall be stacked on the floor by Landlord and installed by Tenant's
Contractor.
7. Landlord shall provide a concrete subfloor finished in accordance
with Project plans per ACI specifications 03300-3.07 (for flatness FF=4.57
maximum difference in elevation between successive 12" difference; for trowel
finish FF=20) suitable for application of Tenant's floor covering.
8. Gypsum wallboard shall be provided and installed by Landlord on all
core walls and on common area corridors of multi-tenant floors on corridor side
only, taped and bedded.
9. Finishes and fire extinguishers shall be provided by Landlord to
meet all applicable City and State codes in mechanical, electrical and telephone
equipment rooms and Tenant floor elevator lobbies.
<PAGE>
10. Landlord shall supply men's and women's rest rooms, including all
necessary plumbing, fixtures, water coolers, painting or wallpaper, and finishes
to Building standard finish.
11. Landlord shall supply and install Building standard window
treatments, which shall consist of mini-blinds.
12. Landlord shall provide fire escape stairways complete with doors,
finished to Building standard finish.
13. To the extent provided in base Building plans for the core of the
Building, Landlord shall provide such smoke detectors, life safety speakers and
public address equipment and exit signs as are required by any Governmental
Authority.
14. Landlord shall provide the Building's HVAC plant and equipment.
15. By the date the Demised Premises are available for Tenant's Work,
the common areas of the Building shall be completed so that Tenant is provided
with adequate access to and normal use of the Demised Premises. All such common
areas shall be in a safe, clean and orderly condition.
16. By the Rental Commencement Date, Landlord shall provide all of the
Building's systems and related fixtures, including sewer, electrical, HVAC and
other systems shall be completed to the extent they serve or run through the
Demised Premises. All such systems shall be in working order.
17. Landlord will provide a security card system for the Building keyed
to the elevators.
18. Landlord's Work shall comply with all federal, sate and local
governmental requirements applicable to such work.
In the event of any dispute as to whether any specific item of work in and about
the Premises constitutes Landlord's Work or work to be performed at Tenant's
cost and expense, Tenant agrees that the certificate of the Approved Architect,
who shall employ objective and professional standards, shall be conclusive.
<PAGE>
Schedule 3
(Exhibit D)
Tenant's Work
Tenant's Work shall include labor and materials, without limitation, to
provide the following:
1. Except for the base Building sprinkler system loop to be installed
by Landlord, Tenant shall provide base Building standard sprinkler system
installed to meet City and State codes. At its election, Tenant may use pop-out
sprinkler heads rather than base Building standard sprinkler heads.
2. Additional VAV boxes of fan powered induction boxes including
thermostats to match the building standards. All interior diffusers and
additional perimeter slot diffusers. Flex duct and spin-ins to supply interior
diffusers or additional perimeter slot diffuser. The installation of all
thermostats.
3. Installation of all light fixtures, conduit raceways and wiring from
base building lighting junction boxes. Any additional conduits, wiring panel
boards and transformers required in excess of base building systems to
accommodate Tenant lighting.
4. Installation of all electrical power outlet devices and conduit
raceways and wiring from base building power junction boxes. Any additional
conduits, wiring panel boards and transformers required in excess of base
building systems to accommodate Tenant's power requirements.
5. Plumbing requirements including fixtures, hot water heaters, trim,
piping except for Building standard rest rooms on each floor.
6. Installation of ceiling tiles, grid and related accessories.
7. Floor coverings and base materials.
8. Painting and other partition finishes.
9. Corridors (for a single tenant floor), gypsum wallboard on lease
side of multi-tenant floor corridor, all demising and interior partitions.
10. Corridor and interior doors, frames and hardware.
<PAGE>
11. Communication and data systems, distribution wiring, raceway
systems and termination points.
<PAGE>
12. Window treatments in addition to the Building standard window
treatments.
13. Installation of any security monitoring systems for Tenant's
individual premises.
14. To the extent not provided by Landlord, Tenant shall provide such
smoke detectors, life safety speakers and public address equipment and exit
signs as are required by Governmental Authority.
15. Hot water system for ordinary office purposes, private rest rooms
and kitchens within the Premises.
16. Tenant's Work shall comply with all federal, state and local
governmental requirements applicable to such work.
<PAGE>
Schedule 4
(Exhibit D)
Tenant's Plans
Tenant's Plans shall contain, without limitation, the following:
(a) Location and type of all partitions and doors (specify
hardware and provide keying schedule), glass partitions,
windows and glass doors (including framing sections if not
building standard).
(b) Indicate all critical dimensions necessary for construction.
(c) Location of telephone equipment room accompanied by an
approval of the telephone company.
(d) Location of all Building standard and above Building standard
electrical items including outlets, switches, telephone
outlets and lighting.
(e) Location and type of equipment having special electrical
requirements with manufacturer's specifications for use and
operations.
(f) Location, weight per square foot and description of any
equipment or filing system exceeding 70 pounds per square foot
live load, including 20 pounds per square foot for partitions.
Tenant shall provide this information by the time required by
Landlord's contractor so as not to delay Landlord's Work.
(g) Requirements for special air conditioning or ventilation,
including occupancy information of each room and space.
(h) Type and color of floor covering, wall covering and paint or
finishes.
(i) Requirements for special plumbing including all line sizes,
fixtures and specifications.
(j) Location and type of kitchen equipment including
specifications.
(k) Details showing:
(i) Construction of all partition types.
(ii) Head, jam and sill sections with elevations for all
door types.
<PAGE>
(iii) All shelving, cabinet work and architectural millwork
with dimensions and dimensions of all equipment to be
built in.
(iv) Any special corridor entrance with framing and
support requirements.
(v) Bracing or support of special walls, glass
partitions, drapery track, etc.
(vi) All mechanical and electrical information and detail
as required.
<PAGE>
Exhibit E
Building Standard Services
Landlord shall furnish the following services to Tenant during the Lease Term
(the "Building Standard Services"):
Hot and cold domestic water and common-use rest rooms and toilets at locations
provided for general use and as reasonably deemed by Landlord to be in keeping
with the first-class standards of the Building.
Subject to curtailment as required by governmental laws, rules or mandatory
regulations, central heat and air conditioning in season, at such temperatures
and in such amounts as are reasonably deemed by Landlord. Such heating and air
conditioning shall be furnished between 8:00 a.m. and 6:00 p.m. on weekdays
(from Monday through Friday, inclusive) and between 9:00 a.m. and 12:00 p.m. on
Saturdays, all exclusive of Holidays, as defined below (the "Building Operating
Hours").
Electric lighting service for all public areas and special service areas of the
Building in the manner and to the extent reasonably deemed by Landlord to be in
keeping with the first-class standards of the Building.
Janitor service shall be provided five (5) days per week, exclusive of Holidays
(as hereinbelow defined), in a manner that Landlord reasonably deems to be
consistent with the first-class standards of the Building.
Security services for the Building comparable as to coverage, control and
responsiveness (but not necessarily as to means for accomplishing same) to other
similarly situated Class "A" multi-tenant office buildings in Greenville, South
Carolina; provided, however, Landlord shall have no responsibility to prevent,
and shall not be liable to Tenant for, any liability or loss to Tenant, its
agents, employees and visitors arising out of losses due to theft, burglary, or
damage or injury to persons or property caused by persons gaining access to the
Demised Premises, and Tenant hereby releases Landlord from all liability for
such losses, damages or injury.
Sufficient electrical capacity to operate (i) incandescent lights, typewriters,
calculating machines, printers, scanners, personal computers (but not mainframe
computers), photocopying machines and other machines of the same low voltage
electrical consumption (120/208 volts). Should Tenant's total rated electrical
design load for the entire Premises or any portion thereof (including, but not
limited to, computer or telephone rooms) exceed the Building Standard Rated
Electrical Design Load for either low or high voltage electrical consumption, or
if Tenant's electrical design requires low voltage or high voltage circuits in
excess of Tenant's share of the building standard
<PAGE>
circuits, Landlord will (at Tenant's expense) install such additional circuits
and associated high voltage panels and/or additional low voltage panels with
associated transformers (which additional circuits, panels and transformers
shall be hereinafter referred to as the "Additional Electrical Equipment"). If
the Additional Electrical Equipment is installed because Tenant's low voltage or
high voltage rated electrical design load exceeds the applicable Building
Standard Rated Electrical Design Load, then a meter shall also be added (at
Tenant's expense) to measure the electricity used through the Additional
Electrical Equipment. The design and installation of any Additional Electrical
Equipment (or any related meter) required by Tenant shall be subject to the
prior approval of Landlord (which approval shall not be unreasonably withheld).
All expenses incurred by Landlord in connection with the review and approval of
any Additional Electrical Equipment shall also be reimbursed to Landlord by
Tenant. Tenant shall also pay on demand the actual metered cost of electricity
consumed through the Additional Electrical Equipment (if applicable), plus any
actual accounting expenses incurred by Landlord in connection with the metering
thereof. If any of Tenant's electrical equipment requires conditioned air in
excess of building standard air conditioning, the same shall be installed by
Landlord (on Tenant's behalf), and Tenant shall pay all design, installation,
metering, operating and maintenance costs relating thereto. If Tenant requires
that certain areas within Tenant's Demised Premises must operate in excess of
the normal Building Operating Hours (as hereinabove defined), the electrical
service to such areas shall be separately circuited and metered (at Tenant's
expense) such that Tenant shall be billed the costs associated with electricity
consumed during hours other than Building Operating Hours.
All building standard fluorescent bulb replacement in all areas and all
incandescent bulb replacement in public areas, toilet and rest room areas, and
stairwells. Non-exclusive multiple cab passenger service to the Demised Premises
during Building Operating Hours (as hereinabove defined) and at least one (1)
cab passenger service to the floor(s) on which the Demised Premises are located
twenty-four (24) hours per day and non-exclusive freight elevator service during
Building Operating Hours (all subject to temporary cessation for ordinary repair
and maintenance and during times when life safety systems override normal
Building operating systems) with such freight elevator service available at
other times upon reasonable prior notice and the payment by Tenant to Landlord
of any additional expense actually incurred by Landlord in connection therewith.
To the extent the services described above require electricity and water
supplied by public utilities, Landlord's covenants thereunder shall only impose
on Landlord the obligation to use its reasonable efforts to cause the applicable
public utilities to furnish same. Except for deliberate and willful acts or
gross negligence of Landlord, failure by Landlord to furnish the services
described herein, or any cessation thereof, shall not render Landlord liable for
damages to either person or property, nor be construed as an eviction of Tenant,
nor work an abatement of rent, nor relieve Tenant from fulfillment of any
covenant or agreement hereof. In addition to the foregoing, should any of the
equipment or machinery, for any cause, fail to operate or function properly,
Tenant shall have no claim for rebate of rent or damages on account of an
interruption in service occasioned thereby or resulting therefrom; provided,
however, Landlord agrees to use reasonable efforts to promptly repair said
equipment or machinery and to restore said services during normal business
hours.
<PAGE>
The following dates shall constitute "Holidays," as that term is used in this
Lease: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, Christmas, and any other holiday generally recognized as such by landlords
of office space in the metropolitan Greenville office market, as determined by
Landlord in good faith. If, in the case of any specific holiday mentioned in the
preceding sentence, a different day shall be observed than the respective day
mentioned, then that day which constitutes the day observed by national banks in
Greenville, South Carolina on account of said holiday shall constitute the
Holiday under this Lease. Notwithstanding the foregoing, any day when a bank is
required by federal or state law to be open shall not be considered a "Holiday"
under this Lease.
<PAGE>
Exhibit F
Rules and Regulations
No sign, picture, advertisement or notice visible from the exterior of the
Demised Premises shall be installed, affixed, inscribed, painted or otherwise
displayed by Tenant on any part of the Demised Premises or the Building unless
the same is first approved by Landlord. Any such sign, picture, advertisement or
notice approved by Landlord shall be painted or installed for Tenant at Tenant's
cost by Landlord or by a party approved by Landlord. No awnings, curtains,
blinds, shades or screens shall be attached to or hung in, or used in connection
with any window or door of the Demised Premises without the prior consent of
Landlord, including approval by Landlord of the quality, type, design, color and
manner of attachment.
Tenant agrees that its use of electrical current shall never exceed the capacity
of existing feeders, risers or wiring installation.
The Demised Premises shall not be used for storage of merchandise held for sale
to the general public. Tenant shall not do or permit to be done in or about the
Demised Premises or Building anything which shall increase the rate of insurance
on said Building or obstruct or interfere with the rights of other lessees of
Landlord or annoy them in any way, including, but not limited to, using any
musical instrument, making loud or unseemly noises, or singing, etc. The Demised
Premises shall not be used for sleeping or lodging. No cooking or related
activities shall be done or permitted by Tenant in the Demised Premises except
with permission of Landlord. Tenant will be permitted to use for its own
employees within the Demised Premises a small microwave oven and Underwriters'
Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar
beverages, provided that such use is in accordance with all applicable federal,
state, county and city laws, codes, ordinances, rules and regulations. No
vending machines of any kind will be installed, permitted or used on any part of
the Demised Premises without the prior consent of Landlord. No part of said
Building or Demised Premises shall be used for gambling, immoral or other
unlawful purposes. No intoxicating beverage shall be sold in said Building or
Demised Premises without the prior written consent of Landlord. No area outside
of the Demised Premises shall be used for storage purposes at any time.
No birds or animals of any kind shall be brought into the Building (other than
trained seeing-eye dogs required to be used by the visually impaired). No
bicycles, motorcycles or other motorized vehicles shall be brought into the
Building.
The sidewalks, entrances, passages, corridors, halls, elevators and stairways in
the Building shall not be obstructed by Tenant or used for any purposes other
than those for which same were intended as ingress and egress. No windows,
floors or skylights that reflect or admit light into the Building shall be
covered or obstructed by Tenant. Toilets, wash basins and sinks shall not be
used for any purpose other than those for which they were constructed, and no
sweeping,
<PAGE>
rubbish or other obstructing or improper substances shall be thrown therein. Any
damage resulting to them, or to heating apparatus, from misuse by Tenant or its
employees, shall be borne by Tenant.
Twenty-five (25) keys or access cards for the Demised Premises will be furnished
to Tenant without charge. Landlord may make a reasonable charge for any
additional keys or access cards. Twenty-five (25) keys or access cards for the
Building will be furnished to Tenant without charge. Landlord may make a
reasonable charge for any additional access cards. No additional lock, latch or
bolt of any kind shall be placed upon any door nor shall any changes be made in
existing locks without written consent of Landlord and Tenant shall in each such
case furnish Landlord with a key for any such lock. At the termination of the
Lease, Tenant shall return to Landlord all keys and access cards furnished to
Tenant by Landlord, or otherwise procured by Tenant, and in the event of loss of
any keys or access cards so furnished, Tenant shall pay to Landlord the cost
thereof.
Landlord shall have the right to prescribe the weight, position and manner of
installation of heavy articles such as safes, machines and other equipment
brought into the Building. No safes, furniture, boxes, large parcels or other
kind of freight shall be taken to or from the Demised Premises or allowed in any
elevator, hall or corridor except at times allowed by Landlord. No deliveries
shall be made in passenger elevators. The persons employed to move the same must
be approved by Landlord. No hand trucks, except those equipped with rubber tires
and side guards, shall be permitted in the Building. No hand trucks shall be
permitted in any passenger elevator. In no event shall any weight be placed upon
any floor by Tenant so as to exceed the design conditions of the floors at the
applicable locations.
Tenant shall not cause or permit any gases, liquids or odors to be produced upon
or permeate from the Demised Premises, and no flammable, combustible or
explosive fluid, chemical, substance or item (including, without limitation,
natural Christmas trees) shall be brought into the Building.
Every person, including Tenant, its employees and visitors, entering and leaving
the Building may be questioned by a watchman as to that person's business
therein and may be required to sign such person's name on a form provided by
Landlord for registering such person; provided that, except for emergencies or
other extraordinary circumstances, such procedures shall not be required between
the hours of 7:00 a.m. and 6:00 p.m., on all days except Saturdays, Sundays and
Holidays. Landlord may also implement a card access security system to control
access during such other times. Landlord shall not be liable for excluding any
person from the Building during such other times, or for admission of any person
to the Building at any time, or for damages or loss for theft resulting
therefrom to any person, including Tenant.
Unless agreed to in writing by Landlord, Tenant shall not employ any person
other than Landlord's contractors for the purpose of cleaning and taking care of
the Demised Premises. Cleaning service will not be furnished on nights when
rooms are occupied after 6:30 p.m., unless,
<PAGE>
by agreement in writing, service is extended to a later hour for specifically
designated rooms. Landlord shall not be responsible for any loss, theft,
mysterious disappearance of or damage to, any property, however occurring. Only
persons authorized by Landlord may furnish ice, drinking water, towels, and
other similar services within the Building and only at hours and under
regulations fixed by Landlord.
No connection shall be made to the electric wires or gas or electric fixtures,
without the consent in writing on each occasion of Landlord. All glass, locks
and trimmings in or upon the doors and windows of the Demised Premises shall be
kept whole and in good repair. Tenant shall not permit upon the Demised Premises
any noisome, noxious, noisy or offensive business.
If Tenant requires wiring for a bell or buzzer system, such wiring shall be done
by the electrician of Landlord only, and no outside wiring persons shall be
allowed to do work of this kind unless by the written permission of Landlord or
its representatives. If telephonic or other communications service is desired,
the wiring or cabling for same shall be approved by Landlord, and no boring or
cutting for wiring or cabling shall be done unless approved by Landlord or its
representatives, as stated. The electric current shall not be used for power or
heating unless written permission to do so shall first have been obtained from
Landlord or its representatives in writing, and at an agreed cost to Tenant.
Tenant and its employees and invitees shall observe and obey all parking and
traffic regulations as imposed by Landlord. All vehicles shall be parked only in
areas designated therefor by Landlord.
Canvassing, peddling, soliciting and distribution of handbills or any other
written materials in the Building are prohibited, and Tenant shall cooperate to
prevent the same.
Landlord shall have the right to change the name of the Building and to change
the street address of the Building, provided that in the case of a change in the
street address, Landlord shall give Tenant not less than 180 days' prior notice
of the change, unless the change is required by governmental authority.
The directory of the Building will be provided for the display of the name and
location of the tenants. Any additional name which Tenant shall desire to place
upon said directory must first be approved by Landlord, and if so approved, a
reasonable charge will be made therefor.
Tenant, in order to obtain maximum effectiveness of the cooling system, shall
lower and close the blinds (at not less than a 45(degree) angle) or drapes when
the sun's rays are directly in windows of the Demised Premises. Tenant shall not
remove any standard blinds installed in the Demised Premises. Tenant shall not
place items on window sills in the Demised Premises.
Smoking is prohibited within the Building.
<PAGE>
Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular lessee, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of any other
lessee, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the other lessees of the Building.
These Rules and Regulations are supplemental to, and shall not be construed to
in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of any premises in the Building.
Landlord reserves the right to make such other and reasonable Rules and
Regulations as in its judgment may from time to time be needed for the safety,
care and cleanliness of the Building and the Land, and for the preservation of
good order therein.
<PAGE>
Exhibit G
Special Stipulations
1. Upon Landlord's written request on or before the Rental Commencement Date,
Tenant will sell and Landlord will buy the Existing Bank Property described in
Article 2 and more fully described on Exhibit A-1 for the agreed price of Two
Million Dollars ($2,000,000.00). Tenant shall convey marketable and insurable
fee simple title to the property by general warranty deed, free and clear of
liens and encumbrances except those approved by Landlord. No party other than
Tenant shall have any right of occupancy of all or any portion of the Existing
Bank Property at the time of conveyance.
2. Upon acquisition of the Existing Bank Property by Landlord, it shall become
part of the Demised Premises and shall be subject to the provisions of the Lease
except as provided in this Exhibit G. Base Rental for the Existing Bank Property
shall become due and payable on the date of its acquisition by Landlord at the
rate prescribed in Article 1(j), but this shall not affect the Rental
Commencement Date as that term is defined and otherwise used in the Lease.
3. Notwithstanding the provisions of the Lease, however, Tenant shall manage and
operate the Existing Bank Property and shall be fully responsible for the repair
and maintenance thereof and the payment of all Operating Expenses for the
Existing Bank Property. Tenant agrees to maintain and repair the Existing Bank
Property in the same manner as Landlord is required to maintain and repair the
Building under the terms of the Lease. It is the intent of the parties that this
Lease will operate in all respects as a net lease with respect to the Existing
Bank Property. The Existing Bank Property shall not be treated as part of the
Demised Premises for purposes of calculating Tenant's Additional Rental or for
related purposes. To the extent that any operating expense cannot be separately
metered or priced for the Existing Bank Property, Landlord shall pay the expense
and shall reasonably allocate that portion attributable to the Existing Bank
Property, which shall be paid by Tenant upon demand. Nothing contained herein
shall prohibit Landlord and Tenant from entering a separate agreement under
which Landlord for a management fee would perform or manage some or all of
Tenant's duties under this paragraph.
4. Tenant at its expense shall be responsible for restoring the appearance of
the south (courtyard) wall of the Existing Bank Property after demolition of the
adjoining building; and Tenant shall be responsible for any necessary structural
work on the Existing Bank Property that results from or is discovered in
connection with the demolition of the adjoining building, so long as not caused
by negligence in the performance of that demolition. Tenant shall have the
discretion to add windows or other architectural features, so long as the
restoration is of a quality and appearance consistent with the balance of the
Project. Tenant shall also be responsible for the work on the Existing Bank
Property that is required in order to create an opening to connect the Existing
Bank Property with the lobby of the Project.
<PAGE>
5. Provided Tenant is not in default under the Lease, Tenant shall have the
option to extend the Lease for two consecutive periods of five (5) years each.
The extension shall be under the same terms and conditions as stated in the
Lease. Base Rental shall be determined as set forth in Article 1(j) of the
Lease; provided, however, that Base Rental Rate for each category of space
addressed in Article 1(j) for the first year of the first option period shall be
the greater of (a) 1.025 times the Base Rental Rate for the last year of the
initial Lease Term, or (b) an amount equal to (i) the Base Rental Rate for the
first year of the initial Lease Term, plus (ii) the Base Rental Rate for the
first year of the initial Lease Term multiplied by 75% of the percentage
increase (not less than zero) in the Index (as defined below) between the Rental
Commencement Date and the commencement of the first option period.
The term "Index" shall mean the Consumer Price Index for All Urban Consumers,
U.S. City Average, All Items (1982-84=100), published by the Bureau of Labor
Statistics of the United States Department of Labor. If the Bureau of Labor
Statistics should discontinue the publication of the Index, or publish the same
less frequently, or alter the same in some manner, then Landlord shall adopt a
substitute Index or substitute procedure which reasonably reflects and monitors
consumer prices.
Base Rental Rate for all subsequent years of any exercised option period shall
be determined as provided in Article 1(j) of the Lease.
6. Tenant shall have the option of treating up to 25,000 Rentable Square Feet of
the Demised Premises in the Building as "Master Leased" space. This option may
be exercised by Tenant at any time during the Term of the Lease by giving
written notice of its exercise to Landlord. Only Secondary Space as defined in
1(j) may be designated by Tenant as Master Leased space. With respect to any
such space for which Tenant exercises this option, the space shall be considered
available for leasing to a third party by Landlord. Any space designated as
Master Leased space under this provision must be a commercially reasonable size
and configuration of space and is subject to Landlord's approval in that
respect.
If any space is designated as "Master Leased" space by Tenant when Landlord
receives a proposal to lease space in the Building that would result in the
total leased space in the Building (including all space in the Building leased
to Tenant) exceeding 150,000 Rentable Square Feet, Landlord shall notify Tenant
of the proposed size of the space, the term of the lease, the proposed rental,
and other material business terms. Tenant shall have the option to notify
Landlord that it elects to have the proposed lease (if consummated by Landlord)
treated as an "Offsetting Lease" with respect to some portion or all of the
space to be leased (the "Offsetting Space"). The Offsetting Space shall be
designated by Tenant but must be (i) space in excess of 150,000 Rentable Square
Feet leased in the Building, and (ii) not more than the amount of Master Leased
space then leased by Tenant.
During the coincident terms of this Lease and any Offsetting Lease, Tenant shall
be credited with
<PAGE>
all amounts paid by the Offsetting Lease tenant as Rent, Forecast Additional
Rental, and Additional Rental for the Offsetting Space, less, however, any
portion of Rent that represents Landlord's recovery of any tenant improvement
allowance paid by Landlord for the Offsetting Space, amortized over the life of
the Offsetting Lease at an interest rate of 12%. In no event shall the credit to
Tenant exceed the amounts otherwise due from Tenant for the Offsetting Space.
Tenant shall remain responsible for any balance due as Rental, Forecast
Additional Rental, and Additional Rental for the Offsetting Space, including any
amounts due but unpaid by the Offsetting Lease tenant. It is the intent of this
provision, in order to secure financing for the Project, that Tenant shall
guarantee payment of Rent, Forecast Additional Rental, and Additional Rental for
all Master Leased space throughout the Lease Term (but not including any
extensions under this Exhibit G if Tenant elects not to extend for the Master
Leased space). Landlord shall be entitled to any and all amounts by which the
Rental, Forecast Additional Rental, and Additional Rental received from any
Offsetting Space tenant may exceed the amounts otherwise due from Tenant for the
Offsetting Space.
Any amount of space designated by Tenant as Offsetting Space shall reduce the
space available for occupancy by Tenant during the term of the Offsetting
Lease(s). The physical space actually leased under an Offsetting Lease need not
be a part of the space Master Leased by Tenant in order for the provisions of
this Section to apply; and in such event, Tenant shall designate space within
the Master Leased space of equal size to be exchanged for the space actually
leased under the Offsetting Lease. Thereafter, the exchanged Offsetting Lease
space shall be substituted as Master Leased space under this Lease. Both the
exchanged space being deleted from and added to the Master Leased space must be
a commercially reasonable size and configuration of space, and both spaces are
subject to Landlord's approval in that respect.
Upon expiration or other termination of any Offsetting Lease during the Lease
Term, the Offsetting Space shall again be available for occupancy by Tenant at
its election. Tenant's Base Rental Rate for the Offsetting Space shall be at the
applicable Secondary Space rate, depending upon whether the space is vacant and
otherwise qualifies for the lower Secondary Space rate. However, if Landlord has
not fully recovered any tenant improvement allowance paid to or on behalf of the
Offsetting Lease tenant for the Offsetting Space, then Tenant shall either
reimburse Landlord for such unpaid amount, or Tenant's Rent for the balance of
the Term shall be increased by an amount that allows Landlord to recover such
unpaid amount plus interest at a rate of 12%.
Landlord and Tenant acknowledge that the nature of lease negotiations for any
potential Offsetting Lease makes it difficult to establish specific notice dates
or time periods for action to be taken. Landlord agrees to keep Tenant informed
of prospective tenants and the status of negotiations, and Tenant agrees to
advise Landlord promptly of its likely interest or lack of interest in treating
the potential lease as an Offsetting Lease. In any event, however, Tenant shall
have at least twenty (20) days from the date of written notice from Landlord in
which to elect whether to treat a proposed lease as an "Offsetting Lease."
<PAGE>
7. Landlord agrees that 150 parking spaces will be available for lease by Tenant
as of the Rental Commencement Date at an initial monthly cost equal to the
generally applicable rates charged by the City of Greenville for parking in the
parking facility. Landlord, at its option, may either arrange for direct lease
of these spaces to Tenant by the City of Greenville or may lease the spaces
itself and sublease them to Tenant at the same rate. Reserved parking may be
made available if and to the extent provided by the City and may be at a premium
rate determined by the City. Tenant may elect to take only a portion of these
spaces, and Tenant may allow a portion to be used by an Offsetting Lease tenant.
8. Notwithstanding any provision of the Lease, Tenant shall have the right to
designate the name of the Building and the Existing Bank Property so long as
this Lease remains in full force and effect. Tenant at its expense may construct
two signs at the top of the Building reflecting Tenant's name, subject to
Landlord's prior approval of the design, which approval shall not be
unreasonably withheld. Tenant's signs on the Existing Bank Property as of the
date of this Lease are approved by Landlord.
9. Notwithstanding the provisions of the Lease, including Article 13, Tenant
agrees to use the Demised Premises for banking purposes and related executive,
administrative and office purposes. If Tenant should vacate all or any portion
of the Demised Premises or should cease to operate all or any portion of the
Demised Premises as a bank or in connection with its banking operations, that
portion of the premises may be subleased by Tenant only with Landlord's prior
written approval. It is understood and agreed that Landlord, as a condition of
granting approval, may consider whether the proposed subtenant and its proposed
use are consistent with the first class character of the Building, and Landlord
may require a designation of the use of the premises by the subtenant. Landlord
shall have broad discretion to approve or disapprove any proposed use, and
without limiting the foregoing, may limit or prohibit retail use or any other
use which would involve a large volume of customers or clientele or a clientele
that would not be consistent with other uses of the Demised Premises. Nothing
contained herein shall limit or restrict Landlord's rights under Article 21 of
the Lease.
10. Notwithstanding the provisions of Article 8, "Base Operating Expenses" for
purposes of calculating Tenant's Additional Rental under this Lease shall in no
event be less than $5.00 per square foot of Rentable Floor Area.
11. Tenant agrees to use its best efforts to assist Landlord in negotiating to
secure direct ground floor access between the lobby area of the Building and the
adjoining Poinsett Hotel property.
12. Tenant shall have the exclusive right to install and operate in the lobby of
the Building, at Tenant's sole expense, an automatic teller machine or similar
device, including without limitation terminals for use in connection with
Internet banking; provided, however, that the location and design of such
machine or device shall be subject to Landlord's approval, which shall not be
unreasonably withheld or delayed.
<PAGE>
13. Landlord may add an additional floor or floors designed for residential use
and located above the top office floor in the Building. If such space is
constructed and residential leases are entered, Landlord will reasonably and
equitably allocate any Operating Expenses that cannot reasonably be separately
measured and billed directly to the residential tenants, in order to reflect the
differing uses of residential and office tenants, and the residential space
shall not be considered part of the Rentable Floor Area of the Building in
calculating Tenant's Additional Rental. If Landlord, after exercising good faith
efforts to market the residential space, is unable to lease the space on terms
reasonably acceptable to Landlord, then Landlord may convert such space to
office space; and in that event, Tenant shall have the first right to lease such
space on the terms offered by Landlord.
14. If construction of the Building has not commenced by June 30, 1998, Tenant
shall have the right to cancel the Lease by notice to Landlord at any time prior
to the commencement of construction. Commencement of construction for this
purpose shall be defined as the pouring of footings with rebar and normal
continuation of work thereafter. If the Demised Premises are not available for
Tenant's Work within two years from the date of this Lease, Tenant shall have
the right to cancel the Lease by notice to Landlord at any time prior to the
Demised Premises being available for Tenant's Work.
15. The terms and conditions of this Lease shall be confidential between
Landlord and Tenant. Neither party shall disclose the terms and conditions
hereof except (i) as it may be necessary to disclose them to legal counsel,
accountants or financial advisors, lenders or prospective lenders, prospective
purchasers or assignees of the interests of Landlord or Tenant, or similar
parties having a legitimate business interest, and (ii) as may be required by
law or governmental regulation. Any such party to whom the terms and conditions
of the Lease are disclosed shall likewise preserve their confidentiality.
<PAGE>
Exhibit H
Lease Guaranty Agreement
FOR VALUE RECEIVED, and in consideration for and as an inducement to
Poinsett Plaza, LLC as Landlord for entering into the Lease dated the ____ day
of ________, 1998, with Carolina First Bank as Tenant, Carolina First
Corporation ("Guarantor") hereby guarantees to Landlord, its successors and
assigns, the full and prompt payment when due of all the rents and other sums
required to be paid by Tenant to Landlord and the full performance and
observance of all the covenants, conditions, and agreements required to be
performed and observed by Tenant under the Lease. Guarantor agrees that the
validity of this Guaranty and the obligations of Guarantor hereunder shall in no
way be terminated, affected, or impaired by the bankruptcy, insolvency,
reorganization or dissolution of Tenant; by the assertion by Landlord against
Tenant of any of the rights or remedies reserved to Landlord under the Lease; by
any amendment, modification, renewal or extension of the Lease or any
compromise, settlement, release, extension, or modification of any of the
obligations and liabilities of Tenant under the Lease; by any failure, neglect,
or omission on the part of Landlord to realize upon any obligations or
liabilities of Tenant; or by the failure of Landlord to give notice to Guarantor
of any of the foregoing or of any default under the Lease.
No assignment or transfer of the Lease by Landlord shall operate to
extinguish or diminish the liability of the undersigned under this Guaranty.
This Guaranty shall be binding upon the undersigned and its successors and
assigns.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed this ___ day of _______, 1998.
CAROLINA FIRST CORPORATION (SEAL)
WITNESSES:
___________________ By:_____________________________________
Name (printed):_________________________
___________________
Title:__________________________________
EXHIBIT 10.2
AMENDMENT NO. 1
TO
CAROLINA FIRST CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
In accordance with a Resolution of the Carolina First Corporation Board
of Directors dated July 28, 1997 and subsequent approval of the shareholders of
Carolina First Corporation on November 18, 1997, the Amended and Restated Stock
Option Plan (the "Plan") is hereby amended to increase the shares authorized for
issuance thereunder pursuant to options to 1,500,000.
Section 4(c) of the Plan is also hereby amended to provide that the
exercise price of options granted under the Plan may be in excess of the Fair
Market Value per share of the Company's Common Stock on the date the option is
granted.
This Amendment No. 1 shall be effective November 19, 1997.
EXHIBIT 10.3
CAROLINA FIRST CORPORATION
AMENDED AND RESTATED DIRECTORS' STOCK OPTION PLAN
(Amended and Restated as of May 1, 1998)
1. PURPOSE. The purpose of the Carolina First Corporation Directors'
Stock Option Plan (the "Plan") is to promote the growth and profitability of
Carolina First Corporation (the "Company") and its subsidiaries from time to
time by increasing the personal participation of directors in the financial
performance of the Company, by enabling the Company to attract and retain
directors of outstanding competence and by providing such directors with an
equity opportunity in the Company. This purpose will be achieved through the
grant of stock options ("Options") to purchase shares of common stock of the
Company, $1.00 par value per share ("Common Stock").
2. ADMINISTRATION. The Plan shall be administered by the Company's
Board of Directors (the "Board"); provided, however, that if applicable law
precludes or restricts the Board from acting in such capacity, then the Board
shall have the authority to appoint a committee of individuals (the "Committee")
to administer the Plan, all in accordance with applicable law. Subject to
applicable law, the Board or Committee shall have complete authority to: (i)
interpret all terms and provisions of the Plan; (ii) prescribe the form of
instrument(s) evidencing Options granted under this Plan; (iii) adopt, amend and
rescind general and special rules and regulations for the Plan's administration;
and (iv) make all other determinations necessary or advisable for the
administration of this Plan. Any action which the Board or Committee is
authorized to take may be taken without a meeting if all the members of the
Board or Committee sign a written document authorizing such action to be taken,
unless different provision is made by the By-Laws of the Company or by
resolution of the Board or Committee.
The Board or Committee may designate selected Board or Committee
members or certain employees of the Company to assist the Board or Committee in
the administration of the Plan and may grant authority to such persons to
execute documents, including Options, on behalf of the Board or Committee,
subject in each such case to applicable law. No member of the Board or Committee
or employee of the Company assisting the Board or Committee pursuant to the
preceding paragraph shall be liable for any action taken or determination made
in good faith.
3. STOCK SUBJECT TO PLAN. The stock to be offered under this Plan shall
be authorized but unissued shares of Common Stock. An aggregate of 500,000
shares are reserved for the grant under this Plan of Options (which shall
include Options outstanding under the Directors Stock Option Plan outstanding
immediately prior to May 1, 1998). The numbers of shares of Common Stock which
may be granted under this Plan may be adjusted to reflect any change in the
capitalization of the Company as contemplated by Section 9 of the Plan and
occurring after the adoption of this Plan. The Board or Committee will maintain
records showing the cumulative total of all shares subject to Options
outstanding under this Plan.
4. OPTIONS FOR DIRECTORS WHO ARE NEITHER OFFICERS NOR EMPLOYEES. The
grant of Options under this Plan shall be limited to those directors of the
Company and/or a Company subsidiary who:
(1) on the date of grant, are neither officers nor employees of
the Company or any Company subsidiary and
<PAGE>
(2) who are directors of either the Company or a Company
subsidiary designated from time to time by the Board of
Directors as a "Principal Subsidiary."
Each of such persons is hereinafter referred to as an "Eligible Director".
Initially, Carolina First Bank, Carolina First Mortgage Company, and Blue Ridge
Finance Company, Inc. are designated as "Principal Subsidiaries," subject to
change by the Board of Directors.
(a) On May 1 of each calendar year (or, if May 1 is not a
business day, the immediately preceding business day) (the "Grant Date"), each
Eligible Director who is not a Company Director (a "Non- corporate Director")
shall automatically receive from the Company an option to acquire 1,000 shares
of Common Stock at an exercise price equal to the average of the high and low
sales prices of the Common Stock (the "Fair Market Value") on the Grant Date.
Each such Option shall be exercisable after ten months from the Grant Date and
at any time and from time to time thereafter (subject to Section 6 hereof) until
and including the date which is the business day immediately preceding the tenth
anniversary of the Grant Date. Notice of each such Option granted on a Grant
Date shall be given to each Non-corporate Director within a reasonable time
after the Grant Date.
(b) On May 1 of each calendar year (or, if May 1 is not a
business day, the immediately preceding business day) (the "Grant Date"), each
Eligible Director who is a Company Director (a "Corporate Director") shall
automatically receive from the Company an option to acquire shares of Common
Stock, valued based on the Black-Scholes valuation method, equal to 60% of the
Corporate Director's total compensation as a Company director for that
particular twelve month period (assuming 100% attendance at all schedule Board
and committee meetings). Each such Option shall have an exercise price equal to
the Fair Market Value of the Common Stock on the Grant Date. Each such Option
shall be exercisable after ten months from the Grant Date and at any time and
from time to time thereafter (subject to Section 6 hereof) until and including
the date which is the business day immediately preceding the tenth anniversary
of the Grant Date. Notice of each such Option granted on a Grant Date shall be
given to each Corporate Director within a reasonable time after the Grant Date.
(c) Corporate Directors will not be eligible to receive Options
under Section 4(a) above, irrespective of whether they serve as directors of any
Principal Subsidiary. Non-corporate Directors who serve as directors of more
than one Principal Subsidiary shall receive only the Options to acquire 1,000
shares of Common Stock as provided in the preceding paragraph (and shall not
receive additional Options based on the multiple directorships).
(d) This Section 4 may not be amended more frequently than once
every six months, other than to comport with changes in the Internal Revenue
Code of 1986, as amended (the "Code"), the Employee Retirement Income Security
Act of 1972, as amended, ("ERISA") or the rules thereunder.
(e) It is intended that Options granted hereunder shall not
qualify as incentive stock options under Section 422 of the Code.
5. NON-TRANSFERABILITY. An Option granted to a participant under this
Plan shall not be transferable by him except: (i) by will; (ii) by the laws of
descent and distribution; or (iii) pursuant to a qualified domestic relations
order as defined by the Code or in Title I of ERISA, or the rules thereunder.
6. EXERCISABILITY OF OPTIONS. Options granted hereunder shall be
exercisable in accordance with the provisions hereof.
<PAGE>
Any Option granted under this Plan shall terminate in full (whether or
not previously exercisable and prior to the expiration of its term) one year
following the date on which the Optionee ceases to be an Eligible Director;
provided that in the one year period following the date on which the Optionee
ceased to be an Eligible Director, such Optionee may exercise the Option only to
the extent that he could have exercised the Option at the time he ceased being
an Eligible director, unless the Optionee shall (a) die while a director of the
Company, in which case the Optionee's legatee(s) under his last will or the
Optionee's personal representative or representatives may exercise all or part
of the previously unexercised portion of such Option at any time within two
years after the Optionee's death to the extent the Optionee could have exercised
the Option immediately prior to his death, or (b) become permanently or totally
disabled within the meaning of Section 22(e)(3) of the Code (or any successor
provision) while a director of the Company, in which case the Optionee or his
personal representative may exercise the previously unexercised portion of such
Option at any time within two years after termination of his directorship to the
extent the Optionee could have exercised the Option immediately prior to such
termination.
In no event may an Option be exercised after the expiration of its
fixed term.
All vesting of Options shall cease when a person ceases (for whatever
reason) to serve as an Eligible Director. Immediately prior to the consummation
of a "Change of Control," all outstanding Options shall become immediately
vested.
A "Change of Control" shall mean:
(i) the acquisition, directly or indirectly, by any Person within
any twelve month period of securities of the Company representing an
aggregate of 20% or more of the combined voting power of the Company's
then outstanding securities; or
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, cease for any
reason to constitute at least a majority thereof, unless the election
of each new director was approved in advance by a vote of at least a
majority of the directors then still in office who were directors at
the beginning of the period; or
(iii) consummation of (A) a merger, consolidation or other
business combination of the Company with any other Person or affiliate
thereof, other than a merger, consolidation or business combination
which would result in the outstanding Common Stock of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into common stock of the surviving
entity or a parent or affiliate thereof) at least 51% of the
outstanding Common Stock (on a fully diluted basis) of the Company or
such surviving entity or parent or affiliate thereof outstanding
immediately after such merger, consolidation or business combination,
or (B) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all
of its assets; or
(iv) the occurrence of any other event or circumstance which is
not covered by (i) through (iii) above which the Board reasonably
determines effects a change of control of the Company for the purposes
of this provision.
A "Person" shall mean any individual, corporation, limited liability
Company, bank, partnership, joint venture, association, joint-stock Company,
trust, unincorporated organization or other entity. When determining a Person's
Common Stock ownership, such Person's Common Stock ownership shall be aggregated
with any other Person with whom he/it is acting in concert or as a group for the
purpose of acquiring, holding or disposing of the Common Stock.
<PAGE>
7. METHOD OF EXERCISE. Each Option granted under the Plan shall be
deemed exercised when the holder (a) shall indicate the decision to do so in
writing delivered to the Company, (b) shall at the same time tender to the
Company payment in full of the exercise price for the shares for which the
Option is exercised, (c) shall tender to the Company payment in full in cash of
the amount of all federal and state withholding or other employment taxes
applicable to the taxable income, if any, of the holder resulting from such
exercise, and (d) shall comply with such other reasonable requirements as the
Board or Committee may establish. The exercise price may be paid either in cash
or by surrender to the Company of Common Stock having a Fair Market Value on the
date of exercise equal to the exercise price.
No person, estate or other entity shall have any of the rights of a
shareholder with reference to shares subject to an Option until a certificate
for the shares has been delivered.
An Option granted under this Plan may be exercised for any lesser
number of shares than the full amount for which it could be exercised. Such a
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan for the remaining shares subject
to the Option.
8. TERMINATION OF OPTIONS. An Option granted under this Plan shall be
considered terminated in whole or part, to the extent that, in accordance with
the provisions of this Plan and such Option, it can no longer be exercised for
any shares originally subject to the Option. The shares subject to any Option or
portion thereof, which terminates, shall no longer be charged against the
applicable limitation or limitations provided in Section 3 of this Plan and may
again become shares available for the purposes, and subject to the same
applicable limitations, of this Plan.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the outstanding Common Stock of the Company by reason of a stock
dividend, stock split, stock consolidation, recapitalization, reorganization,
merger, split up or the like, the shares available for purposes of this Plan,
the shares to be covered by subsequent grants under Section 4 hereof and the
number and kind of shares under option in outstanding option agreements pursuant
to this Plan and the option price under such agreements shall be appropriately
adjusted so as to preserve, but not increase, the benefits of this Plan to the
Company and the benefits to the holders of such Options. Adjustments under this
Section shall be made by the Board or Committee, whose determination as to what
adjustments shall be made and the extent thereof shall be final, binding and
conclusive.
10. COMPLIANCE WITH SECURITIES LAWS AND OTHER REQUIREMENTS. No
certificate(s) for shares shall be executed and delivered upon exercise of an
Option until the Company shall have taken such action, if any, as is then
required to comply with the provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the South Carolina
Uniform Securities Act, as amended, any other applicable state securities law(s)
and the requirements of any exchange on which the Common Stock may, at the time,
be listed.
In the case of the exercise of an Option by a person or estate
acquiring the right to exercise the Option by bequest or inheritance, the Board
or Committee may require reasonable evidence as to the ownership of the Option
and may require such consents and releases of taxing authorities as it may deem
advisable.
11. NO RIGHT TO DIRECTORSHIP. Neither the adoption of the Plan nor its
operation, nor any document describing or referring to the Plan, or any part
thereof, shall confer upon any director participant under the Plan any right to
continue as a director of the Company, or shall in any way affect the right and
power of the
<PAGE>
Company to terminate the position with the Company of any participant under this
Plan at any time with or without assigning a reason therefor, to the same extent
as the Company might have done if this Plan had not been adopted.
12. AMENDMENT AND TERMINATION. Except as provided otherwise herein and
subject to applicable law, the Board or Committee may at any time suspend, amend
or terminate this Plan. Notwithstanding the foregoing, no amendment, suspension
or termination shall, without the consent of the holder of an Option, alter or
impair any rights or obligations under any Option theretofore granted under the
Plan.
In addition to Board or Committee approval of an amendment, if the
amendment would: (i) materially increase the benefits accruing to participants;
(ii) increase the number of securities issuable under this Plan (other than an
increase pursuant to Section 9 hereof); (iii) change the class or classes of
individuals eligible to receive Options; or (iv) otherwise materially modify the
requirements for eligibility, then such amendment must be approved by the
holders of a majority of the Company's outstanding capital stock present or
represented by proxy and entitled to vote at a meeting duly held of the
stockholders of the Company.
13. USE OF PROCEEDS. The proceeds received by the Company from the sale
of shares pursuant to Options granted under the Plan shall be used for general
corporate purposes as determined by the Board.
14. INDEMNIFICATION OF BOARD OR COMMITTEE. In addition to such other
rights of indemnification as they may have as members of the Board, the members
of the Board or Committee shall, to the fullest extent permitted by law, be
indemnified by the Company against the reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided the settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Board member or Committee member is liable for
gross negligence or willful misconduct in the performance of his duties;
provided that within 30 days after institution of any such action, suit or
proceeding the Board member or Committee member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.
15. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective as of
May 1, 1998, assuming the requisite shareholder approval is received at the
Company's 1998 annual meeting of shareholders.
16. DURATION OF THE PLAN. Unless previously terminated by the Board or
Committee, this Plan shall terminate at the close of business on May 1, 2008,
and no Option shall be granted under it thereafter, but such termination shall
not affect any Option theretofore granted under this Plan.
Computation of Earnings Per Share EXHIBIT 11.1
Carolina First Corporation and Subsidiaries
Three Months Ended
March 31, 1998
------------------
BASIC
Net income..................................................$4,694,000
Less dividends on preferred stock........................... 0
-----------
Net income applicable to common
shareholders (numerator).................................$4,694,000
===========
Average common shares outstanding
(denominator)............................................16,588,163
Per share amount.................................................$0.28
===========
DILUTED
Net income (numerator)......................................$4,694,000
Average common shares outstanding...........................16,588,163
Dilutive average shares outstanding under options........... 802,304
Exercise prices........................................$4.81.to.$21.56
Assumed proceeds on exercise................................10,929,294
Average market value per share......................... $23.34
Less: Treasury stock purchased with the assumed
proceeds from exercise of options........................ 468,265
-----------
Adjusted average shares.....................................16,922,202
-----------
Convertible preferred stock assumed
converted.........................................................0
Average diluted shares outstanding
-----------
(denominator)............................................16,922,202
-----------
Per share amount.................................................$0.28
===========
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Carolina First Corporation and Subsidiaries
($ in thousands)
Three Months Ended
March 31, 1998
------------------
EARNINGS:
Income from continuing operations
before income taxes....................................$ 7,445
ADD:
(a) Fixed charges.......................................... 22,167
DEDUCT:
(a) Interest capitalized during year...................... ------
------------
Earnings, for computation purposes..........................$ 29,612
============
FIXED CHARGES:
Interest on indebtedness, expensed or capitalized.........$ 21,900
Portion of rents representative of the
interest factor......................................... 235
Amortization of debt expense.............................. 32
------------
Fixed charges, for computation purposes.....................$ 22,167
============
Ratio of earnings to fixed charges.......................... 1.34x
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