UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---------
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 0-17939
CAROLINA FIRST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-165582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
236 East Main Street
Lincolnton, North Carolina 28092
(Address of principal executive office) (Zip Code)
704-732-2222
(Registrant's telephone number, including area code)
N/A
(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
5,984,239 SHARES OF COMMON STOCK, PAR VALUE $2.50
PER SHARE, OUTSTANDING AS OF NOVEMBER 15, 1999
<PAGE>
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
INDEX PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1999
and December 31, 1998 3
Consolidated Statements of Operations -
Three and nine months ended September 30, 1999
and 1998 4
Consolidated Statements of Changes in
Shareholders' Equity and Comprehensive Income -
Nine months ended September 30, 1999 and 1998 5
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9 - 15
Item 3. Quantitative and Qualitative Disclosures about 16
Market Risk
PART II. OTHER INFORMATION 17
Item 1. Legal Proceedings
Item 2. Changes in the Rights of the Company's Security Holders
Item 3. Defaults by the Company on its Senior Securities
Item 4. Results of Votes of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 18
</TABLE>
<PAGE>
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
- ----------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
-------------------- -----------------
(unaudited)
<S> <C> <C>
Assets:
Cash and due from banks $28,501,335 $28,611,146
Federal funds sold -- 13,220,957
------------- ------------
Total cash and cash equivalents 28,501,335 41,832,103
Interest bearing deposits in other banks 426,787 777,346
Investment securities held to maturity (market value of
$36,599,967 in 1999 and $33,609,910 in 1998) 37,461,817 33,306,113
Securities available for sale (cost of $170,902,457 in
1999 and $153,255,268 in 1998) 169,083,695 154,384,075
Loans, net of unearned income ( $719,094 in 1999 and
$565,714 in 1998) 514,319,026 476,109,833
Allowance for loan losses (7,337,543) (6,723,516)
------------- -------------
Loans, net 506,981,483 469,386,317
Premises and equipment, net 12,977,698 13,662,738
Other real estate owned 205,949 326,206
Other assets 17,967,022 17,951,346
------------- -------------
Total Assets $773,605,786 $731,626,244
============= =============
Liabilities and Shareholders' Equity
Deposits:
Demand $96,439,247 $89,666,447
Interest bearing transaction accounts 177,102,789 167,131,413
Savings 67,899,816 63,833,667
Time, $100,000 and over 88,606,305 87,947,784
Other time 231,269,639 244,023,259
------------- -------------
Total deposits 661,317,796 652,602,570
Repurchase agreements 15,061,059 10,399,634
Other liabilities 31,522,795 6,646,309
------------- -------------
Total Liabilities 707,901,650 669,648,513
Shareholders' Equity:
Preferred stock, $1.00 par value; authorized ---
5,000,000 shares; none issued and outstanding;
Common stock, $2.50 par value; authorized ---
20,000,000 shares; issued and outstanding -
5,984,144 shares in 1999, and 5,396,736 shares in 1998 14,960,360 13,491,840
Additional paid-in capital 33,871,128 22,758,001
Retained earnings 17,983,008 25,031,771
Accumulated other comprehensive income (1,110,360) 696,119
------------- -------------
Total Shareholders' Equity 65,704,136 61,977,731
Commitments and Contingent Liabilities ------------- -------------
Total Liabilities and Shareholders' Equity $773,605,786 $731,626,244
============= =============
</TABLE>
3
<PAGE>
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------- ---------------------------------------
1999 1998 1999 1998
----------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $11,601,125 $10,481,894 $33,487,920 $30,082,056
Interest and dividends on securities:
Taxable income 2,950,651 2,449,091 8,338,499 7,220,559
Non-taxable income 106,129 78,105 304,598 239,750
Other interest income 34,969 371,482 344,647 876,842
------------------ ------------------ ------------------ -----------------
Total interest income 14,692,874 13,380,572 42,475,664 38,419,207
Interest Expense:
Interest on deposits 5,280,949 5,427,844 16,369,987 15,883,750
Interest on borrowed funds 370,611 139,987 707,562 372,211
------------------ ------------------ ------------------ -----------------
Total interest expense 5,651,560 5,567,831 17,077,549 16,255,961
Net Interest Income 9,041,314 7,812,741 25,398,115 22,163,246
Provision for Loan Losses 440,000 370,000 1,170,200 880,000
------------------ ------------------ ------------------ -----------------
Net Interest Income after Provision
for Loan Losses 8,601,314 7,442,741 24,227,915 21,283,246
Other Income:
Charges on deposit accounts 1,049,610 965,602 3,008,459 2,853,782
Insurance commissions 175,399 145,289 436,278 500,130
Other service fees and commissions 352,114 383,401 1,095,503 1,063,124
Mortgage banking income 128,403 170,577 463,942 473,884
Securities gains, net (1,954) 11,342 38,208 54,050
Other income 416,189 331,228 1,084,672 940,351
------------------ ------------------ ------------------ -----------------
Total other income 2,119,761 2,007,439 6,127,062 5,885,321
Operating Expenses:
Salaries and benefits 3,405,192 2,954,805 9,668,024 9,191,642
Occupancy and equipment 918,302 815,688 2,741,413 2,404,727
Federal and other insurance premiums 56,146 51,499 141,857 156,878
Office supplies 205,658 211,687 677,274 700,065
Data processing 350,119 180,703 894,182 494,251
Other expenses 1,992,416 2,072,556 5,952,469 5,166,903
------------------ ------------------ ------------------ -----------------
Total operating expenses 6,927,833 6,286,938 20,075,219 18,114,466
Income Before Income Taxes 3,793,242 3,163,242 10,279,758 9,054,101
Income Taxes 1,243,839 1,077,855 3,240,429 3,090,030
------------------ ------------------ ------------------ -----------------
Net Income $2,549,403 $2,085,387 $7,039,329 $5,964,071
================== ================== ================== =================
Net Income Per Common Share - Basic $0.43 $0.35 $1.18 $1.01
================== ================== ================== =================
Net Income Per Common Share - Diluted $0.42 $0.34 $1.16 $0.98
================== ================== ================== =================
Cash Dividend Per Common Share $0.10 $0.08 $0.30 $0.24
================== ================== ================== =================
4
</TABLE>
<PAGE>
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND
COMPREHENSIVE INCOME
- -----------------------------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
ACCULULATED
COMMON STOCK ADDITIONAL OTHER
----------------------- PAID-IN RETAINED COMPREHENSIVE SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) EQUITY
---------- ----------- ----------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 5,325,769 $13,314,423 $22,335,466 $19,980,565 $580,346 56,210,800
Exercise of stock options 64,351 160,878 194,439 355,317
Cash dividend ($.16 per share) (1,215,968) (1,215,968)
Retirement of stock (3,694) (9,235) (112,707) (121,942)
Dividend Reinvestment Plan 4,432 11,080 110,049 121,129
Net income 5,964,071 5,964,071
Other comprehensive income:
Unrealized gain on securities
available for sale 579,584 579,584
---------------
Total comprehensive income 6,543,655
---------- ----------- ----------- ------------ --------------- ---------------
Balance, September 30, 1998 5,390,858 13,477,146 22,527,247 24,728,668 1,159,930 61,892,991
Balance, December 31, 1998 5,396,736 13,491,840 22,758,001 25,031,771 696,119 61,977,731
Exercise of stock options 46,767 116,918 169,827 286,745
10% stock dividend 544,000 1,360,000 11,016,001 (12,401,896) (25,895)
Cash dividend ($..30 per share) (1,686,196) (1,686,196)
Retirement of stock (4,200) (10,501) (94,988) (105,489)
Dividend reinvestment plan 841 2,103 22,287 24,390
Net income 7,039,329 7,039,329
Other comprehensive income:
Unrealized loss on securities
available for sale (1,806,479) (1,806,479)
---------------
Total comprehensive income 5,232,850
========== ========== =========== ============ ============= ===============
Balance, September 30, 1999 5,984,144 $14,960,360 $33,871,128 $17,983,008 ($1,110,360) $65,704,136
========== ========== =========== ============ ============= ===============
</TABLE>
5
<PAGE>
Carolina First BancShares, Inc. and Subsidiary Companies
- -------------------------------------------------------------
Consolidated Statements of Cash Flows
- -------------------------------------------------------------
For the Nine Months Ended September 30, 1999 and 1998
- -------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---------------- --------------
<S> <C> <C>
Operating Activities:
Net Income 7,039,329 5,964,071
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,894,933 1,413,445
Accretion and amortization of securities discounts and premiums, net (685,695) (210,526)
Provision for loan losses 1,170,200 880,000
Losses on sales of equipment, net 4,625 309
Gains (losses) on sales of real estate, net (45,075) 500
Decrease (increase) in other assets 1,201,076 (1,324,554)
Decrease in other liabilities 25,800,254 159,603
---------------- --------------
Net cash provided by operating activities 36,379,647 6,882,848
---------------- --------------
Investing Activities:
Proceeds from maturities of securities available for sale 61,625,858 46,443,595
Proceeds from sales of securities available for sale 16,013,602 385,635
Purchases of securities available for sale (95,134,237) (54,905,648)
Proceeds from calls and maturities of securities held to maturity 9,794,107 6,884,246
Purchases of securities held to maturity (13,985,742) (3,361,966)
Purchases and maturities of certificates of deposit, net 350,559 (78,706)
Originations of loans, net (38,820,122) (38,400,255)
Proceeds from sale of real estate 213,644 247,865
Proceeds from sale of premises and equipment (42,194) 20
Capital expenditures (672,328) (1,129,844)
---------------- --------------
Net cash used in investing activities (60,656,853) (43,915,058)
---------------- --------------
Financing Activities:
Increase (decrease) in time deposits (12,095,099) 40,272,144
Net increase in other deposits 20,810,325 25,054,248
Net increase in borrowed funds 4,661,425 1,718,639
Repayment of notes payable (923,768) (15,498)
Repurchase of stock (105,489) (121,942)
Payment of cash dividends and fractional shares (1,712,091) (1,215,968)
Issuance of stock 311,135 476,446
---------------- --------------
Net cash provided by financing activities 10,946,438 66,168,069
---------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents (13,330,768) 29,135,859
Cash and Cash Equivalents, Beginning of Year 41,832,103 29,946,377
================ ==============
Cash and Cash Equivalents, End of Year 28,501,335 59,082,236
================ ==============
Supplemental disclosures of cash flow information:
Interest paid 16,743,325 16,089,764
Income taxes paid 2,619,300 3,310,564
================ ==============
Supplemental disclosure of noncash investing and financing activities:
Increase (decrease) in net unrealized loss (1,806,479) 98,430
Assets transferred to other real estate 55,313 319,859
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of Management, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of Carolina First
BancShares, Inc. and Subsidiary Companies as of September 30, 1999 and December
31, 1998 the results of operations for the three and nine-month periods ended
September 30, 1999 and 1998, and cash flows for the nine-month periods ended
September 30, 1999 and 1998.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's audited consolidated financial statements for the year ended December
31, 1998 included in the Company's Annual Report on Form 10-K for the period
ended December 31, 1998.
2. The consolidated financial statements include the accounts and results of
operations of the holding company, and its wholly-owned subsidiaries, Cabarrus
Bank of North Carolina, ("Cabarrus Bank"), Lincoln Bank of North Carolina,
("Lincoln Bank") and Community Bank & Trust Co., ("Community Bank")
(collectively, the "Banks"). Together, Lincoln Bank, Cabarrus Bank and Community
Bank own a mortgage company, Carolina First Mortgage Corporation. Lincoln Bank
and Cabarrus Bank jointly own a financial services company, Carolina First
Financial Services Corporation. The consolidated financial statements also
include the accounts and results of operations of Lincoln Bank's wholly-owned
Delaware subsidiary, CFBI Corp., and wholly-owned subsidiary, CFBI Mortgage,
Inc. All significant intercompany items and transactions have been eliminated in
consolidation. The Company operates one business segment.
3. The results of operations for the three and nine-month periods ended
September 30, 1999 and 1998 are not necessarily indicative of the results that
might be expected for the full year-ending December 31, 1999 and 1998.
4. The Company adopted the provisions of SFAS No. 128, "Earnings Per Share",
during 1997. SFAS No. 128 establishes standards for computing and presenting
earnings per share (EPS). Basic EPS is computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects potential dilution that could occur if the Company's dilutive stock
options were exercised. The numerator of the basic EPS computation is the same
as the numerator of the diluted EPS computation for all periods presented. A
reconciliation of the denominator of the basic EPS computation is as follows.
<TABLE>
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic EPS denominator: weighted average number of
common shares outstanding 5,982,252 5,927,135 5,979,902 5,900,457
Dilutive effect arising from assumed exercise of
stock options 84,071 147,114 76,593 155,248
- ------------- ---------- ---------- ---------- ----------
Diluted EPS denominator 6,066,323 6,074,249 6,056,495 6,055,699
========== ========== ========== ==========
</TABLE>
5. On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No.
130 establishes standards for reporting and displaying comprehensive income and
its components (revenues, expense, gains and losses) in a full set of
general-purpose financial statements. SFAS No. 130 requires that an enterprise
(a) classify items of other comprehensive income by their nature in the
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of a statement of financial position. In
accordance with the provisions of SFAS No. 130, comparative financial statements
presented for earlier periods have been reclassified to reflect the provisions
of SFAS No. 130.
7
<PAGE>
Comprehensive income is the change in equity of a corporation during the period
from transactions and other events and circumstances from non-owner sources.
Comprehensive income is divided into net income and other comprehensive income.
The Company's other comprehensive income for the three and nine-months ended
September 30, 1999 and 1998 consists of unrealized gains and losses on
securities available for sale. Comprehensive income for the three and
nine-months ended September 30, 1999 is $2,869,919 and $5,232,850, respectively,
and for the three and nine-months ended September 30, 1998 is $2,566,541 and
$6,543,655, respectively.
Information concerning the Company's other comprehensive income for the three
and nine - months ended September 30, 1999 and 1998 is as follows:
<TABLE>
Three months ended September Nine months ended September
30, 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Unrealized holdings gains (losses)
arising during the period $346,305 $487,916 $(1,782,790) $613,095
Less: reclassification adjustment for
realized gains (losses), net of taxes (1,211) 7,032 23,689 33,511
============== ============== ============== ===========
Unrealized gains (losses) on securities
available for sale, net of applicable
income taxes $347,516 $480,884 $(1,806,479) $579,584
============== ============== ============== ===========
</TABLE>
6. On December 23, 1998, the Company acquired Community Bank, a $110 million
community bank headquartered in Rutherfordton, North Carolina by merging
Community Bank into a wholly-owned subsidiary and Community Bank was the
surviving institution. The merger was effected through a tax-free exchange of
stock whereby each outstanding share of Community Bank was exchanged for .72716
of a share of the Company's common stock. Consequently, the Company issued
approximately 1,021,202 shares of common stock and cash in-lieu of fractional
shares for all of the outstanding shares of Community Bank. Community Bank is
continuing to operate as a wholly-owned subsidiary of the Company. The merger
with Community Bank has been accounted for as a pooling-of-interests.
In connection with the Community Bank merger, the Company incurred restructuring
and merger related expenses. At December 31, 1998, accruals related to such
restructuring charges totaled approximately $563,000, consisting mainly of
severance payments and payments under employment contracts. During the nine
months ended September 30, 1999, the Company paid $476,000 in connection with
severance payments and payments under employment contracts which has been
charged to the restructuring accrual. The remaining restructuring accrual of
approximately $124,000 relates to amounts due to former Community Bank executive
officers under existing employment contracts and will be paid out over the next
year pursuant to the terms of the contracts.
7. On June 23, 1999, the Company declared a 10% stock dividend to be paid on
July 23, 1999, to shareholders of record as of July 9, 1999. All per share
amounts, shown herein, have been restated to reflect the stock dividend for all
periods presented.
8. Subsequent event - On November 7, 1999, First Charter Corporation ("FCC") and
Carolina First Bancshares, Inc. ("Carolina First") entered into an Agreement and
Plan of Merger ("Merger Agreement"), pursuant to which Carolina First will be
merged (the "Merger") into FCC. The Board of Directors of FCC and the Board of
Directors of Carolina First approved the Merger Agreement and the transactions
related thereto at separate meetings held on November 7, 1999. The transaction
will be accounted for as a pooling -of-interests. The merger is expected to be
completed in the beginning of the second quarter of 2000 subject to a number of
conditions, including approval of regulatory authorities and the stockholders of
Carolina First and FCC.
8
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report on Form 10-Q contains "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. When used
in this report, the words "believes", "expects, "anticipates", and similar words
and expressions are generally intended to identify forward-looking statements.
Statements that describe the Company's future strategic plans, goals or
objectives are also forward-looking statements, including those regarding the
intent, belief or current expectations of the Company or management, are not
guarantees of future performance, results or events and involve risks and
uncertainties, and that actual results and events may differ materially from
those in the forward-looking statements as a result of various factors
including, but not limited to (i) interest rates and general economic conditions
in the markets in which the Company operates, (ii) competitive pressures in the
markets in which the Company operates, (iii) the effect of future legislation or
regulatory changes on the Company's operations and (iv) other factors described
from time to time in the Company's filings with the Securities and Exchange
Commission. The forward-looking statements included in this report are made only
as of the date hereof. The Company undertakes no obligation to update such
forward-looking statements to reflect subsequent events or circumstances.
The following discussion and analysis sets forth the major factors which
affected the Company's results of operations and financial condition reflected
in the unaudited financial statements for the three and nine-month periods ended
September 30, 1999 and 1998. On June 23 1999, the Company declared a 10% stock
dividend to be paid on July 23, 1999. All per share data has been restated to
reflect the stock dividend.
On November 7, 1999, First Charter Corporation ("FCC") and Carolina First
Bancshares, Inc. ("Carolina First") entered into an Agreement and Plan of Merger
("Merger Agreement"), pursuant to which Carolina First will be merged (the
"Merger") into FCC. The Board of Directors of FCC and the Board of Directors of
Carolina First approved the Merger Agreement and the transactions related
thereto at separate meetings held on November 7, 1999. The merger is expected to
be finalized in the beginning of the second quarter of 2000 subject to a number
of conditions, including approval of regulatory authorities and the stockholders
of Carolina First.
Year 2000 Readiness Disclosure
The "Year 2000 Issue" is a general term used to describe problems that may
arise as a result of improper processing of dates and date-sensitive
calculations as the Year 2000 approaches. The issue is due to the fact that many
of the world's computer programs were developed using only two digits to
identify the year in a date field, without consideration on the impact of the
upcoming century date change. These programs could experience malfunctions when
the last two digits of the year change to "00" and are interpreted as 1900
rather than 2000. This misinterpretation could result in disruption to normal
business operations. Due to these possible ramifications, the Company is taking
the Year 2000 Issue very seriously.
The Company's Year 2000 Preparedness Team is comprised of a representative from
all of the principal areas of the Company. The Company's Board of Directors has
approved a plan submitted by the Year 2000 Preparedness Team. The plan was
developed in accordance with the guidelines set by the Federal Financial
Institutions Examination Council.
The first phase of the plan required the Company to assess or inventory all
known processes that could be impacted by the Year 2000 Issue and their vendors,
if applicable. The inventory included not only typical computer processes, but
also all systems and equipment that could be impacted by embedded micro-chip
malfunctions. These include, but are not limited to, the Company's alarm
systems, telephone systems, elevators, and ATM machines. This assessment phase
is complete, and updated as needed.
In the second phase of the plan, the Company contacted all third party vendors
and service providers to obtain documentation regarding their Year 2000 efforts.
This is significant for the Company due to its dependence on external sources.
This is an ongoing phase to track the vendors and service providers continuous
efforts.
Additionally, the Company's plan deals with the assessment of its significant
borrowers and depositors and their Year 2000 readiness. Through letters,
questionnaires, and personal contacts, the Company has assessed the Year 2000
risk associated with these customers. The Year 2000 Issue has been addressed as
an addendum to the Company's loan policy. New and renewed loans are subject to
Year 2000 assessment as part of the approval process.
9
<PAGE>
The Company's Board of Directors approved a Year 2000 three-year budget of
$58,100 in 1998, $58,100 in 1999, and $25,000 in 2000. This budget was set to
cover costs associated with the Year 2000 Issue. Some areas include, but are not
limited to, software and hardware upgrades, customer awareness materials,
necessary testing, and employee training and education.
As of September 30, 1999,approximately $46,000 has been expensed of the 1999
budget on Year 2000 Issues. It is anticipated that approximately $17,500 will be
expensed in the fourth quarter. Other resources such as personnel time for
testing and training ahas been redirected in the company and has not been
quantified in these costs.
The third and fourth required phases deal with renovation and validation. To
cover these phases, the testing of hardware and all mission-critical
applications has been completed. All upgrades to software and test scripts have
been received from the vendors and service providers and have been tested. The
Company has completed testing of lower priority systems.
The fifth phase is implementation, whereby the subsidiary banks introduce the
successfully tested systems into use within the banks (a.k.a. "put into
production environment"). This has been an ongoing process, as the Company has
made efforts to replace and upgrade older systems with newer technology. All
required modifications and conversions have been completed.
Even after tests have been completed and results are satisfactory, the Company
must consider the fact that systems could still fail when the actual date
arrives. Therefore, the Company has completed a Board approved Business
Resumption Contingency Plan that addresses all areas of operations, such as
systems power, telecommunications, etc. and how the Company will resume business
if any or all areas experience difficulties, until the Year 2000 problems are
fixed. All areas of the Business Resumption Contingency Plan have been tested
and employees have been trained on how business will resume should the Company
encounter any problems.
The costs associated with the Year 2000 project and the date the Company plans
to complete Year 2000 compliance are based on management's best estimates.
However, there can be no guarantee that these estimates will be achieved at the
cost disclosed or within the time frame indicated. The Company will make every
effort to do whatever is necessary to correct all relevant problems in an
attempt to eliminate any possibility of business disruptions.
General
Net income for the quarter ended September 30, 1999 was $2,549,403, or $.43 per
basic share, up 22.25% compared to net income of $2,085,387 or $.35 per basic
share, for the same period in 1998. Net income for the nine-months ended
September 30, 1999 was $7,039,329, or $1.18 per basic share, up 18.03%from net
income of $5,964,071, or $1.01 per basic share, for the same period in 1998.
Net Interest Income/Margins
Net interest income of $24,227,915 during the first nine months of 1999 resulted
from a net interest margin of 4.90% on average earning assets of $695.4 million.
This compares with a net interest margin of 4.93% on average earning assets of
$602.2 million generating net interest income of $21,283,246 for the same period
in 1998. The interest rate earned on taxable securities has been reduced as the
Company continues to invest in relatively short-term government securities. The
Company has, however, been able to sustain the strong net interest margin as
average interest bearing liabilities have decreased slightly as a percentage of
total liabilities and capital. This is the result of both increased capital and
increases in noninterest bearing deposits. Interest rates have remained
relatively stable and thus the change in the net interest margin is more a
function of competition and investment options than changes in interest rates.
The increase in loan demand experienced by the Company positively affects the
net interest margin, as noted by the large volume related increase, and is an
indicator of the continued strong local economy. The increase in net interest
income for the last nine months consists of a decrease of $686,000 relative to
rate and an increase of $3,954,000 relative to volume.
Management reviews asset/liability volumes and rates on a regular basis. As
Carolina First's loans have continued to grow, the funds have been obtained
primarily through customer deposits and the maturing of investment securities.
Deposit and loan rates are adjusted as market conditions and Company needs
allow.
Analysis of average balances and interest rates for the nine-months ended
September 30, 1999 and 1998 is presented on pages 14 and 15 of this report. Such
analysis is presented on a fully-taxable equivalent basis at the federal
statutory rate of 34 %.
10
<PAGE>
Return on Equity and Assets
<TABLE>
September 30, 1999 December 31, 1998
------------------ -----------------
(annualized)
<S> <C> <C>
Return on average assets 1.25% 1.27%*
Return on average equity 14.61% 14.63%*
Dividend payout 25.42% 21.52%*
Average equity to average assets 8.56% 8.67%
Return on Equity and Assets
</TABLE>
*Computed using operating earnings. Operating earnings in 1998 reflects earnings
prior to merger related and restructuring charges associated with the December
23, 1998 acquisition of Community Bank and Trust Co.
Loan Loss Allowance/Provision
The allowance for loan losses represents management's determination as to an
adequate amount in relation to the risk of likely losses in the loan portfolio.
In evaluating the allowance and its adequacy, management considers the bank's
loan loss experience, the amount of past due and non-performing loans, current
economic conditions and other appropriate information. Because these risks are
continually changing in response to facts beyond the control of the Company,
such as the state of the economy, management's judgment as to the adequacy of
the provision is approximate only. It is also subject to regulatory examinations
and determinations as to adequacy, which may take into account such factors as
the methodology used to calculate the allowance for loan losses and the size of
the loan loss allowance in comparison to a group of peer banks identified by the
regulatory agencies.
In assessing the adequacy of the allowance, management reviews the loan
portfolio, to both ascertain whether there are probable losses and to assess the
risk characteristics of the portfolio in the aggregate. This review considers
the judgments of management, and also those of bank regulatory agencies that
review the loan portfolio as part of their regular bank examination process.
There are no loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that the Company reasonably expects will
materially impact future operating results, liquidity, or capital resources. The
Company has no concentrations or credit risks by type of credit or industry
group within its loan or investment portfolio.
On a monthly basis, the Company reviews the adequacy of its allowance for loan
losses. The Company has both an allocated and unallocated allowance for loan
losses. The allocated portion of the allowance for loan losses represents
specific allowances related to loans identified by management. These loans are
rated as to the presumed collectibility, and a statistical loss factor is
assigned to each category of loans that directly relates to the associated risk.
The allocated portion of the allowance also includes a component that is
computed by applying a factor based on historical loss experience to all other
loans by type. The unallocated portion of the allowance for loan losses is
determined by assigning a factor to the entire portfolio to cover probable
losses inherent in the loan portfolio. This final component reflects the
economic conditions of the market areas served. These factors are multiplied by
the balances in each category and totaled to determine the required allowance
for loan losses. The actual allowance for loan losses (after charge-offs) is
compared with the required level to determine if an additional provision should
be made in the current period. The allowance for loan losses was $7,337,543 or
1.43% of outstanding loans at September 30, 1999, and $6,723,516 or 1.41% of
outstanding loans at December 31, 1998.
The provision for loan losses charged to operations during the first nine months
was $1,170,200 in 1999 and $880,000 in 1998. This increase in the provision is
due to the increase in non-performing assets and loan growth. Charge-offs, net
of recoveries, were approximately $556,173 or 0.15% (annualized) of average
loans outstanding, during the nine months ended September 30, 1999, as compared
to approximately $367,845 or .12% (annualized) of average loans outstanding,
during the same period in 1998. Non-accrual loans and loans greater than 90 days
past due and still accruing were $2,474,623 and $169,585, respectively, at
September 30, 1999, $1,432,086 and $111,272, respectively, at December 31, 1998
and $1,006,473 and $362,915, respectively at September 30, 1998. The ratio of
non-accrual loans to total loans was 0.48% at September 30, 1999, 0.31% at
December 31, 1998, and 0.23% at September 30, 1998. The ratio of loans greater
than 90 days past due and still accruing to total loans was 0.03% at September
30, 1999, 0.02% at December 31, 1998, and 0.08% at September 30, 1998. The ratio
of non-performing assets to total assets was 0.37% at September 30, 1999, 0.26%
at December 31, 1998, and 0.28% at September 30, 1998. The increase in
nonperforming assets is primarily due to two commercial loans for which the
Company has significant collateral. Management believes that reserves and asset
values are adequate with respect to these two loans.
11
<PAGE>
The following table depicts the change in the allowance for loan losses for the
periods ended September 30, 1999 and 1998.
<TABLE>
1999 1998
--------- ----------
<S> <C> <C>
Balance at beginning of year $6,723,516 $5,837,328
Charge-offs:
Commercial, financial and agricultural (360,152) (47,926)
Real estate - construction (12,549) ---
Real estate - mortgage (43,029) (71,169)
Installment loans to individuals (259,522) (385,584)
--------- ---------
(675,252) (504,679)
Recoveries:
Commercial, financial and agricultural 27,565 15,190
Real estate - construction --- 160
Real estate - mortgage 33,404 12,994
Installment loans to individuals 58,110 108,490
--------- -------
119,079 136,834
========= =======
Provision for loan losses 1,170,200 880,000
--------- -------
Balance at September 30, $7,337,543 $6,349,483
========== ==========
</TABLE>
Non-Interest Income
Non-interest income increased $241,741 or 4.1% for the nine-month period ended
September 30, 1999, as compared to the same period a year earlier. Non-interest
income from core operations continues to increase as the Company expands fee
income areas such as trust services and credit cards. The Company also
recognized a gain of $33,444 on the sale of other real estate. Also, the
deposits acquired from the 1998 branch acquisitions and branch openings have
positively impacted deposit-related charges and fees.
Non-interest expense increased $1,960,753 or 10.82% for the nine-month period
ended September 30, 1999, as compared to the same period a year earlier.
Non-interest expense increased as a result of the 1998 branch acquisitions and
branch openings and the completed acquisition of Community Bank in late December
1998. Specifically, occupancy and data processing were directly affected as well
as other expenses which included the amortization of the premium paid to acquire
the deposits. Additionally, the expenses related to our technology expenditures
are apparent in the increase in occupancy and equipment expense of $336,686.
The effective income tax rate was 31.5% for the nine months ended September 30,
1999 compared to 34.1% for the same period in 1998. The decrease in effective
rate was due to an increase in holdings of tax exempt municipal securities and
the establishment of a real estate investment trust (REIT) subsidiary to hold
various mortgage loans, in the second quarter of 1999.
Financial Condition
The Company's total assets at September 30, 1999 and 1998, were $773,605,786 and
$690,948,073 respectively, and $731,626,244 at December 31, 1998. Average
earning assets for the first nine months of 1999 were $695,424,000 versus
$602,188,000 for the same period a year earlier, an increase of 15.48%. The
greatest dollar increases were average securities which grew approximately
$32,191,000 and average loans which increased approximately $72,175,000. This
growth is the result of the strong local economy and the Company's continued
expansion of its customer base. In 1998, the Company opened three new full
service branches during the second and third quarters of the year and acquired
the deposits of a former Central Carolina Bank branch in the fourth quarter.
Average loans of $484,740,000 represented 69.70% of average earning assets
during the first nine months of 1999. During the same period in 1998, average
loans totaled $412,565,000, or 68.51% of average earning assets. Gross loans
increased to $514,319,026 at September 30, 1999, a 16.38% increase over gross
loans at September 30, 1998 and an 8.03% increase over December 31, 1998. It is
anticipated that general loan growth will continue to mirror the economy,
however, competition for quality loans may adversely effect the net interest
margins.
12
<PAGE>
Securities averaged $200,483,000 during the nine months ended September 30, 1999
versus $168,292,000 for the same period a year ago. The securities portfolio
represented 28.83% of earning assets during the nine months ended September 30,
1999 and 27.95% at September 30, 1998. At September 30, 1999, the securities
portfolio had an unrealized loss of approximately $1,818,762 for securities
available for sale. A gain of $38,208 was realized during the first nine months
of 1999. Securities held to maturity with a carrying value of approximately $8.1
million were scheduled to mature within the next five years. Of this amount,
$2.5 million were scheduled to mature within one year. Securities available for
sale with a carrying value of $118.6 million were scheduled to mature within the
next five years. Of this amount, $45.0 million were scheduled to mature within
one year. The Company currently has the ability and intent to hold its
investment securities held to maturity to their contractual maturity. Certain
securities are designated by management as available for sale and are carried at
the fair value with the unrealized gain (loss), net of taxes, included in other
comprehensive income. The Company's securities portfolio has shifted toward the
available for sale category due to the added flexibility such securities provide
over the securities held to maturity.
Average interest bearing liabilities rose 15.08%, to $589,880,000 in the first
nine months of 1999, from an average of $512,588,000 in the first nine months of
1998. Total deposits increased 8.35% from September 30, 1998 to September 30,
1999, and 1.34% from December 31, 1998 to September 30, 1999. Although the
increase from December 31, 1998 to September 30, 1999 was slight, the average
deposits for the nine months of 1999 increased 13.31% from the same period in
1998. Average certificates of deposit and other time deposits grew 10.26%.
Average savings increased 10.87% and average interest bearing demand deposit
accounts increased 20.81%. The acquisitions of 1998 resulted in large growth
rates. As the Company capitalizes on acquisitions and gains market share,
deposits will continue to increase.
Liquidity
The liquidity position of the Company's subsidiaries, Lincoln Bank of North
Carolina ("Lincoln Bank"), Cabarrus Bank of North Carolina ("Cabarrus Bank"),
and Community Bank & Trust Co., ("Community Bank"), (collectively, the "Banks")
is primarily dependent upon their need to respond to withdrawals from deposit
accounts and upon the liquidity of their assets. Primary liquidity sources
include cash and due from banks, federal funds sold, short-term investment
securities and loan repayments. At September 30, 1999, the Company had a
liquidity ratio of 28.99%. In light of Year 2000, additional liquidity sources
have been made available and tested. These resources include the use of
repurchase agreements and the Federal Reserve discount window as well as
additional portfolio management. Management believes the liquidity sources are
adequate to meet operating needs even if increased liquidity needs arise from
the century date change. Except as discussed above, there are no known trends,
events or uncertainties that will have or that are reasonably likely to have a
material effect on the Company's liquidity, capital resources or operations.
Capital Resources
Banks and bank holding companies, as regulated institutions, must meet required
levels of capital. The primary Federal regulators for the Banks and the Company
have adopted minimum capital requirements or guidelines that categorize
components and the level of risk associated with various types of assets.
Financial institutions are expected to maintain a level of capital commensurate
with the risk profile assigned to its assets in accordance with the guidelines.
The current capital standards call for a minimum total capital of 8% of
risk-adjusted assets, including 4% Tier I capital, and minimum leverage ratio of
Tier I capital to total tangible assets of at least 4-5%. The Company, and each
of the Banks all maintain capital levels exceeding the minimum levels for well
capitalized banks and bank holding companies as follows.
<TABLE>
<CAPTION>
Well Adequately Carolina Lincoln Cabarrus Community
Capitalized Capitalized First Bank Bank Bank
<S> <C> <C> <C> <C> <C> <C>
Tier I capital to risk adjusted assets 6.00% 4.00% 12.95% 11.20% 10.58% 12.89%
Total capital to risk adjusted assets 10.00% 8.00% 14.19% 12.45% 11.78% 14.15%
Leverage ratio 5.00% 4.00% 8.75% 8.18% 7.72% 6.61%
</TABLE>
13
<PAGE>
The following table summarizes net interest income and average yields and rates
paid for the years indicated. For purposes of this analysis, the interest on
non-taxable investment securities has been adjusted to a taxable-equivalent
amount to facilitate comparison with other asset yields. The adjustment gives
effect to the exemption from federal income taxes for earnings on obligations of
state and political subdivisions and assumes a marginal tax rate of 34%.
Non-accrual loans are excluded from the interest-earning loan balances shown.
CAROLINA FIRST BANCSHARES, INC.
- --------------------------------------------------------
AVERAGE BALANCE SHEET AS OF SEPTEMBER 30,
- --------------------------------------------------------
<TABLE>
<CAPTION>
As of September 30,
-------------------------------------------------------------------------------------------
(Thousands)
1999 1998
--------------------------------------------- -------------------------------------------
Interest Interest
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
--------------- ----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest bearing deposits in other banks $756 $35 6.17% 699 $36 6.87%
Taxable securities 192,408 8,338 5.78% 163,128 7,221 5.90%
Non-taxable securities 8,075 462 7.63% 5,164 364 9.40%
Federal funds sold and securities
purchased with agreements to
resell 9,445 309 4.36% 20,632 841 5.43%
Loans 484,740 33,488 9.21% 412,565 30,082 9.72%
--------------- ----------- ------------- ------------- ------------ -----------
Interest earning assets 695,424 42,632 8.17% 602,188 38,544 8.53%
--------------- ----------- ------------- ------------- ------------ -----------
Cash and due from banks 26,755 23,935
Other assets 29,918 28,243
--------------- -------------
Total assets $752,097 $654,366
=============== =============
Liabilities and Shareholders' Equity
Interest bearing deposits
Demand $171,488 $2,618 2.04% $141,948 $2,506 2.35%
Savings 67,455 1,043 2.06% 60,844 1,079 2.36%
Time 330,321 12,709 5.13% 299,582 12,299 5.47%
Other borrowings 20,616 708 4.58% 10,214 372 4.86%
--------------- ----------- ------------- ------------- ------------ -----------
Interest bearing liabilities 589,880 17,078 3.86% 512,588 16,256 4.23%
--------------- ----------- ------------- ------------- ------------ -----------
Other liabilities 97,795 85,056
Shareholders' equity 64,422 56,722
--------------- -------------
Total liabilities and shareholders'
equity $752,097 $654,366
=============== =============
Interest rate spread 4.31% 4.30%
============= ===========
Net interest earned and net
yield on earning assets $25,554 4.90% $22,288 4.93%
=========== ============= ============ ===========
</TABLE>
14
<PAGE>
The following table presents the dollar amount of changes in interest income and
interest expense on a taxable-equivalent basis. The table distinguishes between
the changes related to average outstanding (volume) interest-earning assets and
interest-bearing liabilities, as well as the changes related to average interest
rates (rate) on such assets and liabilities. Changes attributable to both volume
and rate have been allocated proportionately.
CAROLINA FIRST BANCSHARES, INC.
- ----------------------------------------------------------------
RATE / VOLUME ANALYSIS
- ------------------------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND 1998
- ------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
As of September 30,
-------------------------------------------------------------------
(Thousands)
1999 1998
Income/ Income/
Expense Volume Rate Expense
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Interest Income:
Loans 33,488 4,986 (1,580) 30,082
Securities - tax - exempt 462 167 (69) 364
Securities - taxable 8,338 1,269 (151) 7,221
Federal funds sold & interest bearing
balances in other banks 344 (375) (158) 877
---------------- -------------- --------------- ---------------
Total Interest Income 42,632 6,047 (1,958) 38,544
Interest Expense:
Interest Bearing Demand 2,618 451 (340) 2,506
Savings 1,043 102 (138) 1,079
Time 12,709 1,183 (773) 12,299
Other Borrowings 708 357 (21) 372
---------------- -------------- --------------- ---------------
Total Interest Expense 17,078 2,093 (1,272) 16,256
---------------- -------------- --------------- ---------------
Net Interest Income 25,554 3,954 (686) 22,288
================ ============== =============== ===============
</TABLE>
15
<PAGE>
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk is inherent to all industries, but in the banking industry, the Company
believes credit risks to be the most significant, however, interest rate risk is
a close second. There are eight risks that are considered in managing the
Company. These and other risks are listed in order of the perceived level of
risk imposed upon the Company.
Credit Risk. Credit risk is the risk to the bank's earnings or capital from the
potential of an obligor or related group of obligators failing to fulfill its or
their contractual commitments to the bank. Credit risk is most closely
associated with a bank's lending. It encompasses the potential of loss on a
particular loan as well as the potential for loss from a group of related loans,
i.e., a credit concentration. Credit risk extends also to less traditional bank
activities. It includes the credit risk inherent in the bank's investment
portfolio, the counterparties to interest rate contracts, and the securities
dealers and brokers holding the bank's investment portfolio in street name.
Interest Rate Risk. Interest rate risk is the risk to earnings or capital from
the potential of movement in interest rates. It is the sensitivity of bank's
future earnings to interest rate changes. Interest rate risk is generally
measured on the basis of duration analysis or gap analysis. Duration analysis
measures the degree of risk in a particular instrument or portfolio and gap
analysis defines the timing when loss may occur. The Company is willing to
accept a modified duration of 5% and a one-year cumulative gap of +/- 5% and a
one to five-year cumulative gap of +/- 8%. As of September 30, 1999, the Company
had a modified duration of less than 2.84% and one year and five-year cumulative
gap of negative 10.38% and negative 8.29%, respectively.
Price Risk. Price risk is the risk to earnings or capital from changes in the
value of portfolios of financial instruments. Frequently this is referred to as
market risk. Price risk is generally reflected as the risk of a decline in
market value of its securities portfolio and the Company is willing to accept a
7.5% change in value after experiencing a 300 basis point rate shock, either
positive or negative. At September 30, 1999, the price change was 5.90% for such
a negative rate shock and (7.76%) for such a positive rate shock.
Liquidity Risk. Liquidity risk is the risk to earnings or capital from a bank's
inability to meet its obligations when they come due without incurring
unacceptable losses or costs. Depositors withdraw their deposits and the bank
does not have the liquid assets to fund the withdrawals and to meet its loan
funding obligations. The risk is particularly great with brokered deposits, of
which the Company currently has none.
Transaction Risk. Transaction risk is the risk to earnings or capital arising
from problems with service or product delivery. Transaction risk is the risk of
a failure in a bank's operating processes such as automation, employee
integrity, or internal controls.
Compliance Risk. Compliance risk is the risk to earnings or capita from
noncompliance with laws, rules or regulations.
Strategic Risk. Strategic risk is the risk to earnings or capital arising from
adverse business decisions or failure to implement those decisions.
Reputation Risk. Reputation risk is the risk to earnings or capital from
negative public opinion.
Various of these risks are interrelated and thus all must be considered by
management regardless of the implied risk. Management reviews performance
against these ranges on a quarterly basis. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 4 through 15
of the Company's Annual Report to Shareholders. There have been no significant
changes in these risks since December 31, 1998.
16
<PAGE>
PART II - OTHER INFORMATION
Item
1 - Legal Proceedings
The Company understands that former Chairman and Chief Executive
Officer, D. Mark Boyd, III, entered a negotiated plea of guilty upon the advice
of counsel pursuant to the principles of North Carolina vs. Alford, 400 U.S. 25,
to two Misdemeanor Statements of Charges regarding his solicitation of the
Company and one of his sons to violate the antifraud provisions of the North
Carolina Securities Act, ending the pending criminal indictments against him.
The SEC informal inquiry into trading in Community Bank stock prior to the
public announcement of Community Bank's merger with a Company subsidiary
continues. See the Company's Annual Report on Form 10-K for the period ended
December 31, 1998 for additional information.
2 - Changes in Securities and Use of Proceeds
Not applicable
3 - Defaults upon Senior Securities
Not applicable
4 - Results of Votes of Security Holders
No matters were submitted to a vote of Security Holders during the
three months ended September 30, 1999.
5 - Other Information
On November 7, 1999, First Charter Corporation ("FCC") and Carolina
First Bancshares, Inc. ("Carolina First") entered into an Agreement and Plan of
Merger ("Merger Agreement"), pursuant to which Carolina First will be merged
(the "Merger") into FCC.
6 - Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 - Amended and Restated Bylaws of Carolina First
BancShares, Inc.
10.1 - Employment Agreement dated as of February 18, 1999,
between Carolina First BancShares, Inc and Jan H. Hollar, as
amended.
10.2 - Employment Agreement dated as of September 12, 1999
between Carolina First BancShares, Inc and James E. Burt, III.
10.3 - Amendment No. 1 to the Carolina First BancShares, Inc.
1990 Stock Option Plan.
10.4 - Carolina First BancShares, Inc. Second Amended and
Restated Directors Deferred Compensation Plan dated as of May
20, 1999
27 - Financial Data Schedule
(b) Reports on Form 8-K
The following reports on Form 8-K were filed by the Company
during the fourth quarter of 1999.
On November 7, 1999, First Charter Corporation ("FCC") and
Carolina First Bancshares, Inc. ("Carolina First") entered
into an Agreement and Plan of Merger ("Merger Agreement"),
pursuant to which Carolina First will be merged (the "Merger")
into FCC. The Board of Directors of FCC and the Board of
Directors of Carolina First approved the Merger Agreement and
the transactions related thereto at separate meetings held on
November 7, 1999.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAROLINA FIRST BANCSHARES, INC.
(Registrant)
Date: November 15, 1999 By: /s/ James E. Burt, III
------------------- ----------------------------------------
James E. Burt, III
Chief Executive Officer
Date: November 15, 1999 By: /s/ Jan H.Hollar
------------------- ---------------------------------------
Jan H. Hollar
Chief Financial Officer
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
<S> <C>
3.2 Amended and Restated Bylaws of Carolina First BancShares, Inc.
10.1 Employment Agreement dated as of February 17, 1999, between Carolina First BancShares, Inc and Jan H. Hollar, as amended.
10.2 Employment Agreement dated as of September 12, 1999 between Carolina First BancShares, Inc and James E. Burt, III, as
amended.
10.3 Amendment No. 1 to the Carolina First BancShares, Inc. 1990 Stock Option Plan.
10.4 Carolina First BancShares, Inc. Second Amended and Restated Directors Deferred Compensation Plan dated as of May 20, 1999
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
CAROLINA FIRST BANCSHARES, INC.
Adopted September 23, 1999
<PAGE>
- ii -
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I OFFICE.................................................................................... 1
ARTICLE II SHAREHOLDERS............................................................................. 1
Section 1. Annual Meeting.................................................................. 1
Section 2. Special Meetings................................................................ 1
Section 3. Place of Meeting................................................................ 1
Section 4. Notice of Meeting............................................................... 2
Section 5. Closing of Transfer Books or Fixing of Record Date.............................. 2
Section 6. Voting Lists.................................................................... 2
Section 7. Quorum.......................................................................... 3
Section 8. Proxies......................................................................... 3
Section 9. Voting of Shares................................................................ 3
Section 10. [Reserved]..................................................................... 3
Section 11. Informal Action by Shareholders................................................ 3
Section 12. Order of Business.............................................................. 3
ARTICLE III BOARD OF DIRECTORS...................................................................... 4
Section 1. General Powers.................................................................. 4
Section 2. Number and Tenure............................................................... 4
Section 3. Qualification of Directors...................................................... 4
Section 4. Regular Meetings................................................................ 5
Section 5. Special Meetings................................................................ 5
Section 6. Notice.......................................................................... 5
Section 7. Quorum.......................................................................... 5
Section 8. Manner of Acting................................................................ 5
Section 9. Vacancies....................................................................... 6
Section 10. Presumption of Assent.......................................................... 6
Section 11. Informal Action by Directors................................................... 6
Section 12. Order of Business.............................................................. 6
Section 13. Executive Committee............................................................ 6
Section 14. Audit Committee................................................................ 7
Section 15. Compensation Committee......................................................... 7
Section 16. Community Reinvestment Act (CRA) Committee..................................... 8
Section 17. Other Committees............................................................... 8
ARTICLE IV OFFICERS................................................................................. 8
Section 1. Number.......................................................................... 8
Section 2. Election of Officers............................................................ 8
Section 3. Removal......................................................................... 8
Section 4. Vacancies....................................................................... 8
Section 5. Chairman of the Board........................................................... 8
Section 6. Vice Chairman of the Board...................................................... 9
Section 7. President....................................................................... 9
Section 8. Executive Vice President........................................................ 9
Section 9. Vice Presidents................................................................. 9
Section 10. Secretary...................................................................... 9
Section 11. Treasurer...................................................................... 9
Section 12. Assistant Secretaries and Assistant Treasurers................................. 10
Section 13. Salaries....................................................................... 10
Section 14. Bonds.......................................................................... 10
ARTICLE V CONTRACTS, LOANS, CHECKS AND DEPOSITS..................................................... 10
Section 1. Contracts....................................................................... 10
Section 2. Loans........................................................................... 10
Section 3. Checks and Drafts............................................................... 10
Section 4. Deposits........................................................................ 10
ARTICLE VI CERTIFICATES FOR SHARES AND THEIR TRANSFER............................................... 11
Section 1. Certificate for Shares.......................................................... 11
Section 2. Transfer of Shares.............................................................. 11
ARTICLE VII FISCAL YEAR............................................................................. 11
ARTICLE VIII DIVIDENDS.............................................................................. 11
ARTICLE IX SEAL..................................................................................... 11
ARTICLE X WAIVER OF NOTICE.......................................................................... 12
ARTICLE XI AMENDMENTS............................................................................... 12
ARTICLE XII INDEMNIFICATION......................................................................... 12
Section 1. Indemnification Provisions in Articles of Incorporation......................... 12
Section 2. Indemnification of Others....................................................... 12
Section 3. Undertakings for Advances of Expenses........................................... 12
Section 4. Claims for Indemnification...................................................... 12
Section 5. Insurance....................................................................... 13
Section 6. Severability.................................................................... 13
ARTICLE XIII......................................................................................... 13
</TABLE>
<PAGE>
- 16 -
AMENDED AND RESTATED
BYLAWS
OF
CAROLINA FIRST BANCSHARES, INC.
ARTICLE I
OFFICE
.........The principal office of the Corporation shall be located in the City of
Lincolnton, county of Lincoln, State of North Carolina. The Corporation may have
such other offices, either within or without the State of North Carolina, as the
Board of Directors may designate or as the business of the Corporation may
require from time to time.
.........The registered office of the Corporation required by the North Carolina
Business Corporation Act (the "NCBCA") to be maintained in the State of North
Carolina may be, but need not be, identical with the principal office of any of
the Corporation's places of business, and the address of the registered office
may be changed from time to time by the Board of Directors, by advising the
Secretary of State of the current address and county in which the new registered
office will be located.
ARTICLE II
SHAREHOLDERS
.........Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the third Tuesday of April of each year, or on such other date as may
be determined by the Board of Directors, at a time and place to be determined by
the Board of Directors for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the State of North
Carolina, such meeting shall be held on the next succeeding business day.
.........Section 2. Special Meetings. Special meetings of the shareholders, for
a specific purpose or purposes, unless otherwise prescribed by statute, may be
called by the Board of Directors. The notice delivered to the Corporation's
shareholders shall set forth the purpose for which a special meeting has been
called.
.........Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of North Carolina, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of North
Carolina, as the place for holding such meeting. If no designation is made, or
if a special meeting is otherwise called, the place of meeting shall be the
principal office of the Corporation in the State of North Carolina.
.........Section 4. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting shall be delivered not less than ten nor more
sixty days before the date of the meeting, either personally or by mail to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
correctly addressed to the shareholder at his address as it appears in the
Corporation's records, with sufficient postage thereon prepaid. In the case of
an annual meeting, the notice of meeting need not specifically state the
business to be transacted thereat unless it is a matter, other than election of
Directors, on which the vote of shareholders is expressly required by the
provisions of the NCBCA. In the case of a special meeting, the notice of meeting
shall state the purpose or purposes for which the meeting is called.
.........When a meeting is adjourned for thirty days or more, notice of the
adjourned meeting shall be given as in the case of an original meeting. When a
meeting is adjourned for less than thirty days in any one adjournment, it is not
necessary to give any notice of the adjourned meeting other than by announcement
at the meeting at which the adjournment is taken.
.........Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days. If the stock transfer
books shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing the
stock transfer books the Board of Directors may fix in advance a date for any
such determination of shareholders, such date in any case to be not more than
sixty days and, in case of a meeting of shareholders, not less than ten days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
.........Section 6. Voting Lists. The Corporation shall make, within two
business days after notice of a shareholders meeting is given, a complete list
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list shall be kept on file at the principal office of
the Corporation and shall be subject to inspection by any shareholder, his agent
or attorney, at any time during usual business hours, and such list shall also
be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder, his agent or attorney, during the
whole time of the meeting; provided, however, that it shall not be necessary to
prepare or produce such list in any case where the record of shareholders
actually presented readily shows in alphabetical order or by alphabetical index,
and by classes or series if such there be, the names of the shareholders
entitled to vote, with their address and the amount of their holdings. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
.........Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
.........Section 8. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
.........Section 9. Voting of Shares. Except as otherwise provided in accordance
with Article IV of the Articles of Incorporation, each outstanding share of the
Corporation shall be entitled to one vote upon each matter submitted to a vote
at a meeting of shareholders. The vote of a majority of the shares voted on any
matter at a meeting of shareholders at which a quorum is present shall be the
act of the shareholders on that matter unless the vote of a greater number is
required by law or by the Charter or Bylaws of the Corporation.
.........Voting on all matters shall be by voice vote or by a show of hands
unless the holders of more than ten percent of the shares represented at the
meeting shall, prior to the voting on any matter, demand a ballot vote on that
matter.
.........Section 10. [Reserved]
.........Section 11. Informal Action by Shareholders. Any action which is
required or permitted to be taken at a meeting of the shareholders may be taken
without a meeting if consent in writing, setting forth the action so taken,
shall be signed by all of the persons who would be entitled to vote upon such
action at a meeting, and filed with the Secretary of the Corporation in the
minute book of the Corporation, whether done before or after the action so
taken.
.........Section 12. Order of Business. The order of business at the annual
meeting and, so far as practicable at all other meetings of the shareholders,
may, but need not, be as follows:
1. Call of roll or other method of ascertaining the amount of
stock entitled to voting rights which is represented in person
or by proxy.
2. Proof of due notice of meeting. 3. Reading and disposal of any
unapproved minutes.
4. Reports of officers.
5. Election of Directors.
6. Unfinished business.
7. New business.
8. Adjournment.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
.........Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
.........Section 2. Number and Tenure. The number of Directors of the
Corporation shall be not less than three and not more than twenty-five, the
exact number within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full Board of Directors or
by resolution of the shareholders at any meeting thereof. Any directorships not
filled by the shareholders shall be treated as vacancies to be filled by and in
the discretion of the Board of Directors. Each Director shall hold office until
the next annual meeting of shareholders and until his successor shall have been
elected and qualified. Nominations for directors to be voted upon at each annual
meeting of shareholders shall be made by action of the Board of Directors, in
addition to any nominations made by one or more shareholders in accordance with
the Corporations Articles of Incorporation.
.........Section 3. Qualification of Directors. Each Director of the Corporation
shall be the owner and holder of at least $1,000 aggregate market value of stock
in the Corporation at the time he or she becomes a director, and shall hold such
stock in his own name unpledged and unencumbered in any way.
.........Directors need not be residents of the State of North Carolina.
.........There may be up to three designations of Directors, as follows:
(1) Active Director shall be a qualified shareholder who has not
reached the age of seventy (70) years. The Board of Directors shall
consist of Active Directors.
(2) Advisory Director shall be a qualified shareholder who has reached
the age of seventy (70) years but has not reached the age of
seventy-five (75) years and has served as an Active Director within
twelve (12) months immediately preceding reaching the age of seventy
(70) years. An Advisory Director shall be elected annually or more
often by the shareholders or by the Board of Directors and may attend
any meeting of the Board of Directors and may take part in discussion
but shall not have the power to vote.
(3) Director Emeritus shall be a qualified shareholder who has reached
the age of seventy-five (75) years and has served as an Advisory
Director within twelve (12) months immediately preceding reaching the
age of seventy-five (75). A Director Emeritus shall be elected annually
or more often by the shareholders or by the Board of Directors and
shall not be required to attend or take part in any meeting of the
Board of Directors and shall not have the power to vote.
.........Notwithstanding the language used herein above, an Active Director may
serve the remainder of the calendar month in which he reaches the age of seventy
(70) years but shall automatically be terminated as such at the beginning of
business on the first day of the month immediately following; and, an Advisory
Director may serve the remainder of the calendar month in which he reaches the
age of seventy-five (75) years but shall automatically be terminated as such at
the beginning of business on the first day of the month immediately following.
.........Notwithstanding the orderly termination date and age requirements
herein above enumerated, nothing in this Section shall prevent the election of
an Advisory Director or a Director Emeritus prior to reaching the age herein
above specified when such action appears to be desirable and in the interest of
the Corporation. A resolution by the Board of Directors setting forth the reason
for such election at an early age shall be sufficient and conclusive for such
election.
.........The Board of Directors, herein sometimes referred to as the "Board", as
used in the Articles of Incorporation and these Bylaws, including any reference
to Director or Directors, shall mean "Active Director" or "Active Directors"
unless specifically otherwise designated by use of either the descriptive word
"Advisory" or "Emeritus" or "Emeriti".
.........Section 4. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately after,
and at the same place as, the annual meeting of the shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of North Carolina, for the holding of additional regular
meetings.
.........Section 5. Special Meetings. Special meetings of the Board of Directors
may be held at any time and place upon the call of the Chairman of the Board,
the President, or of the Secretary acting under instruction from the Chairman of
the Board or the President, or upon the call of any three Directors. Special
meetings may be held at any time and place and without special notice by
unanimous consent of the Directors.
.........Section 6. Notice. Notice of any special meeting shall be given at
least two days previously thereto by written notice delivered personally or
mailed to each Director at his business address, by telegram, or by telecopier.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the telegram
is delivered to the telegraph company. If notice be given by telecopier, such
notice shall be deemed to be delivered when confirmation is received that the
transmission has arrived at the telecopier machine whose number is listed as the
telecopier number of the Director to whom notice is sent. The attendance of a
Director at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Notice of an adjourned meeting need not be given if the time and place
are fixed at the meeting adjourning and if the period of adjournment does not
exceed ten days in any one adjournment.
.........Section 7. Quorum. A majority of the number of Directors fixed as
provided in Section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the Directors present
may adjourn the meeting from time to time without further notice.
.........Section 8. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise provided in this Section. The vote of a
majority of the number of Directors fixed as provided in Section 2 of this
Article III shall be required for the adoption of a resolution designating the
Directors to constitute the Executive Committee. The vote of a majority of the
Directors then holding office shall be required for the adoption, amendment or
repeal of a bylaw which is a proper subject for such action by the Board of
Directors, or for the adoption of a resolution dissolving the Corporation
without action by the shareholders.
.........Section 9. Vacancies. Except as otherwise expressly required by the
provisions of the NCBCA, any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors though
less than a quorum of the Board of Directors. A Director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
.........Section 10. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his contrary vote is recorded or his dissent shall be entered in the minutes of
the meeting or unless he shall file his written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Director who voted in favor of such action.
.........Section 11. Informal Action by Directors. Action taken by a majority of
the Directors without a meeting is nevertheless action of the Board of Directors
if written consent to the action in question is signed by all the Directors and
filed with the minutes of the proceedings of the Board of Directors, whether
done before or after the action so taken.
.........Section 12. Order of Business. The regular order of business at the
meeting of the Board of Directors shall be as follows:
1. Reading and disposal of any unapproved minutes.
2. Reports of Officers.
3. Unfinished business.
4. New business.
5. Adjournment.
.........Section 13. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the Directors then in office, may designate two or more
Directors to constitute an Executive Committee. The Executive Committee, between
meetings of the Board of Directors and subject to such limitations as may be
required by law or imposed by resolution of the Board of Directors, shall have
and may exercise all of the authority of the Board of Directors in the
management of the Corporation. The designation of the Executive Committee and
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or him by law.
.........Meetings of the Executive Committee may be held at any time on call of
the Chairman of the Board, the President, the Chairman of this Committee or any
two members of the Committee. A majority of the members shall constitute a
quorum of all meetings. The Executive Committee shall keep minutes of its
proceedings and submit them to the next succeeding meeting of the Board of
Directors for approval.
.........Section 14. Audit Committee. There shall be a standing committee of the
Board of Directors to be known as the Audit Committee, consisting of not fewer
than three nor more than five Directors. This Committee shall examine, or
superintend the examination of the assets and liabilities of the Corporation,
and shall report to the Board of Directors the results of such examination.
.........Meetings of the Audit Committee may be held at any time on call of the
Chairman of the Board, the President, the Chairman of this Committee or any two
members of the Committee. A majority of the members shall constitute a quorum of
all meetings. The Audit Committee shall keep minutes of its proceedings and
submit them to the next succeeding meeting of the Board of Directors for
approval.
.........Section 15. Compensation Committee. There shall be a standing committee
of the Board of Directors to be known as the Compensation Committee, consisting
of not fewer than three nor more than five Directors, all of whom must be
non-employee directors as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended.
.........The Compensation Committee shall annually review and recommend to the
Board of Directors salary ranges and the salary administration guidelines
(matrix). This Committee shall also recommend to the Board of Directors the
salaries of all officers of Carolina First BancShares, Inc. and each of its
subsidiaries and shall annually recommend eligible participants and potential
bonus for each officer under the Corporation's Incentive Compensation Plan. The
Committee shall periodically review the Corporation's Stock Option Plans to
ensure their proper administration and to assure compliance with all laws and
governmental regulations. The Compensation Committee shall have the authority to
grant awards under the Plans, and will make recommendations to the Board of
Directors as it deems appropriate concerning the Corporation's Stock Option
Plans. The Compensation Committee shall serve as the Benefit Plan Committee of
Carolina First BancShares, Inc. Employee Benefit Plan. The Committee shall
review recommendations from management regarding employee benefit plans and
bring such recommendations to the Board of Directors as appropriate. The Chief
Executive Officers (CEOs) of the Corporation and its subsidiaries shall present
recommendations to the Compensation Committee for the annual salaries and
bonuses of the officers.
.........The Compensation Committee shall have the power to make, or cause to be
made, studies of compensation paid by competitors and/or other employers in the
immediate area or region; and for the purpose of keeping itself informed, such
other studies and/or activities as may appear desirable. The Compensation
Committee shall recommend to the Board of Directors a schedule of holidays to be
observed by Carolina First BancShares, Inc. and each of its Subsidiaries. The
Committee shall be responsible for reviewing and recommending to the Board of
Directors for adoption and/or revision employee handbook and policies regarding
employment practices.
.........The Compensation Committee shall, at least once annually, review by
name and amount the compensation of each officer and employee of Carolina First
BancShares, Inc. and each of its subsidiaries. Meetings of the Compensation
Committee may be held at any time on call of the Chairman of the Board, the
President, the Chairman of this Committee or any two members of the Committee. A
majority of the members shall constitute a quorum of all meetings. The
Compensation Committee shall keep minutes of its proceedings and submit them to
the next succeeding meeting of the Board of Directors for approval.
.........Section 16. Community Reinvestment Act (CRA) Committee. The Board of
Directors of Carolina First BancShares, Inc. may appoint a CRA Committee, the
membership should be comprised of representation from Carolina First BancShares,
Inc. and each subsidiary bank, both at the board and officer levels. Also a CRA
coordinator should be designated and be responsible for compilation and
reporting of information as required by the regulation for each subsidiary bank.
This Committee has as its main purpose the coordination and reporting of CRA
activities for subsidiary banks of the holding company as they go about helping
to meet community credit needs, including low-and-moderate income neighborhoods,
consistent with safe and sound operations.
.........Section 17. Other Committees. The Board of Directors may appoint, from
time to time, such other standing or temporary committees for such purposes and
with such powers as the Board may determine.
ARTICLE IV
OFFICERS
.........Section 1. Number. The officers of the Corporation shall be a Chairman
of the Board of Directors, a President, one or more Vice Presidents (one of whom
may be designated Executive Vice President), a Treasurer, one or more Assistant
Treasurers, a Secretary, and one or more Assistant Secretaries, and such other
officers and assistant officers as the Board of Directors shall deem necessary
or desirable. Any two or more offices may be held by the same person, but no
officer may act in more than one capacity where action of two or more officers
is required.
.........Section 2. Election of Officers. The officers of the Corporation shall
be elected annually by the Board of Directors at the first meeting of the Board
of Directors held after each annual meeting of the shareholders or at such time
or times as the Board of Directors shall determine.
.........Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
.........Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
.........Section 5. Chairman of the Board. The Chairman of the Board shall in
general supervise and control all of the business and affairs of the
Corporation. He shall, when present, preside at all meetings of the shareholders
and at meetings of the Board of Directors. He may sign, with the Secretary or
any other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of the Chairman of the Board and such other duties
as may be prescribed by the Board of Directors from time to time.
.........Section 6. Vice Chairman of the Board. The Vice Chairman of the Board,
if and when elected, shall have such powers and perform such duties as may be
prescribed from time to time by the Board of Directors. At the request of the
Chairman of the Board, the Vice Chairman of the Board may act temporarily in the
place of the Chairman of the Board.
.........Section 7. President. The President, subject to the control of the
Board of Directors, shall in general supervise and control all of the business
and affairs of the Corporation. In the absence of the Chairman of the Board, he
shall preside at meetings of the Shareholders and Board of Directors. He may
sign, with the Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
.........Section 8. Executive Vice President. The Executive Vice President, if
and when elected, shall familiarize himself with the affairs of the Corporation,
and, in the absence or disability of the President, shall possess all the powers
of and perform all the duties of that officer, and shall have such other powers
and duties as may be prescribed from time to time by the Board of Directors.
.........Section 9. Vice Presidents. Each Vice President shall have such powers
and perform such duties as may be prescribed from time to time by the Board of
Directors. At the request of the Chairman of the Board or the President (or, if
and when elected, the Executive Vice President), any Vice President may act
temporarily in the place of the President.
.........Section 10. Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the Chairman of the Board or the
President, or a Vice President so authorized, certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the Corporation, unless the Corporation shall employ an independent stock
transfer agent; and (g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Chairman of the Board or the President or by the Board of Directors.
.........Section 11. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of its Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these Bylaws; and (b) in general perform all
of the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Chairman of the Board or the
President or by the Board of Directors.
.........Section 12. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Board of Directors, or senior
officers.
.........Section 13. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
.........Section 14. Bonds. Any or all officers and agents shall, respectively,
if required by the Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board of Directors shall
determine.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
.........Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instruments in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
.........Section 2. Loans. Except for loans which are incurred in the ordinary
course of business and which mature in less than twelve months, no loans shall
be contracted on behalf of the Corporation and no evidences of indebtedness
shall be issued in its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific instances.
.........Section 3. Checks and Drafts. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
.........Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
<PAGE>
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
.........Section 1. Certificate for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by, or bear the facsimile signature
of, the Chairman of the Board or the President or a Vice President and the
Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
.........Section 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only (a) on the stock transfer books of the Corporation by the
holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and (b) on surrender for cancellation of the certificate for
such shares. The person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
ARTICLE VII
FISCAL YEAR
.........The fiscal year of the Corporation shall be the calendar year unless
otherwise determined by the Board of Directors.
ARTICLE VIII
DIVIDENDS
.........The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
SEAL
.........The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the word "Seal".
<PAGE>
ARTICLE X
WAIVER OF NOTICE
.........Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of the NCBCA or under the
provisions of the Charter or Bylaws of the Corporation, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be equivalent to the giving of such
notice.
ARTICLE XI
AMENDMENTS
.........As provided in the Articles of Incorporation, these Bylaws may be
amended or repealed and new Bylaws may be adopted by the affirmative vote of a
majority of the Directors then holding office at any regular or special meeting
of the Board of Directors.
ARTICLE XII
INDEMNIFICATION
.........Section 1. Indemnification Provisions in Articles of Incorporation. The
provisions of this Article XII are intended to supplement Article NINTH of the
Articles of Incorporation pursuant to Sections 9.2 and 9.3 thereof. To the
extent that this Article XII contains any provisions inconsistent with said
Article NINTH, the provisions of the Articles of Incorporation shall govern.
Terms defined in such Article NINTH shall have the same meaning in this Article
XII.
.........Section 2. Indemnification of Others. The Corporation may indemnify and
advance expenses to its other officers, employees and agents to the same or any
lesser extent as to its directors and Board-elected officers, as set forth in
the Articles of Incorporation and in this Article XII of the Bylaws of the
Corporation, and, if so indemnified, such persons shall be included in the term"
indemnitee" or "indemnitees" as used in this Article XII of the Bylaws.
.........Section 3. Undertakings for Advances of Expenses. If and to the extent
the NCBCA requires, an advancement by the Corporation of expenses incurred by an
indemnitee pursuant to clause (iii) of the last sentence of Section 9.1 of the
Articles of Incorporation (hereinafter an "advancement of expenses") shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
Article NINTH of the Articles of Incorporation or otherwise.
.........Section 4. Claims for Indemnification. If a claim for indemnification
under Section 9.1 of the Articles of Incorporation is not paid in full by the
Corporation within 60 days after it has been received in writing by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If the indemnitee is successful in whole or in part in any such
suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses only upon
a final adjudication that, the indemnitee is not entitled to indemnification by
reason of Section 55-8-57 of the NCBCA (or any successor provision or
provisions). Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee is not entitled
to indemnification by reason of Section 55-8-57 of the NCBCA (or any successor
provision or provisions), nor an actual determination by the Corporation
(including the Board of Directors, special legal counsel, or its shareholders)
that the indemnitee is not entitled to indemnification by reason of such
statutory limit, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to have or retain such advancement of expenses,
under Article NINTH of the Articles of Incorporation or this Article XII or
otherwise, shall be on the Corporation.
.........Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, trustee, officer, employee or agent
of the Corporation or another entity against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the NCBCA.
.........Section 6. Severability. In the event that any of the provisions of
this Article XII (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
ARTICLE XIII
.........The Corporation elected prior to September 30, 1990, to not be governed
by the provisions of Article 9 and Article 9A of Chapter 55 of the General
Statutes of North Carolina and shall not be bound or subject to either of the
North Carolina Shareholder Protection Act or the North Carolina Control Share
Acquisition Act.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (sometimes referred to below as the
"Agreement"), made and entered into as of this the 17th_day of _February, 1999,
by and between JANET H. HOLLAR, a resident of Mecklenburg County, North Carolina
(herein referred to as "Employee"); and CAROLINA FIRST BANCSHARES, INC, a
corporation with its principal office in Lincolnton, North Carolina (hereinafter
referred to as "Employer").
WHEREAS, the Employer desires to secure the future services of the
Employee and to that end desires to enter into this Employment Agreement with
Employee, upon the terms and conditions herein set forth, which replaces and
supersedes all prior employment contracts, agreements or understandings, if any,
between the Employee and the Employer; and,
WHEREAS, the Employee wishes to continue employment and enter into this
Employment Agreement with Employer effective as of January 1, 1999;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and of other good and valuable consideration, the receipt
and sufficiency of which are mutually acknowledged, the parties hereto,
intending legally to be bound, agree as follows:
Section 1. Agreement of Employment. Employer hereby agrees to continue
to employ the Employee and Employee hereby agrees to remain employed by Employer
for the term, and upon and subject to the terms and conditions hereafter set
forth.
Section 2. Term. Employer and Employee hereby agree that Employee shall
become employed by Employer under the terms of this Agreement as of January 1,
1999 (the "Commencement Date"), and shall remain employed by Employer for a
period of five (5) years (through December 31, 2003), unless sooner terminated
pursuant to the terms hereof (the "Employment Period").
Section 3. Employee Representations. Employee represents to Employer
that Employee is not subject to an employment agreement with any other employer,
nor to any other agreements under the terms of which she may be prohibited from
accepting employment with Employer, and that Employee may accept employment;
with Employer effective as of the Commencement Date.
Section 4. Duties of Employee.
(a). Subject to the supervision and pursuant to the orders,
advice and directions of the Board of Directors and President of the Employer,
Employee shall perform her assigned duties as Senior Vice President, Chief
Financial Officer, Secretary and Treasurer of Employer and shall perform such
other duties as are customarily performed by one holding such positions in
other, the same or similar business or enterprises as that engaged in by
Employer.
(b). Employee agrees that she will at all times faithfully,
industriously, and to the best of her ability, experience and talents, perform
all of the duties that may be reasonably required of and from her pursuant to
the express and implied terms hereof, to the reasonable satisfaction of the
President and Board of Directors of Employer.
(c). Employee hereby agrees to refrain from engaging in any
ventures or enterprises which might interfere with the performance of her
express and implied duties hereunder. Employee shall at all times conduct
herself in a manner that will not prejudice or injure the reputation of
Employer, its other employees or any of its affiliates.
Section 5. Employer's Right to Benefits of Work Performed. Employer
shall be entitled to all of the benefits, emoluments, and profits arising from
or incident to any and all work, services, and advice of the Employee performed
or rendered in the course of Employee's employment hereunder.
Section 6. Compensation, Expenses and Benefits.
(a). Employer shall pay to Employee, and Employee shall accept
from Employer, during the Employment Period, and in consideration for the
services to be performed by Employee, a salary at the rate of $90,000.00 per
annum (the "Annual Salary"), less deductions required by law and Employee
authorized deductions, payable in such equal periodic installments as Employer
may determine, but not less frequently than monthly. Provided, however, that
each year the salary of the Employee shall be reviewed and a salary amount set
for the following year by mutual agreement with the Board of Directors. In the
event an agreement cannot be reached as to the salary amount, the salary shall
be that set for the previous year.
(b). In addition to the Annual Salary described in Section
6(a) above, employer agrees to reimburse Employee promptly (in accordance with
policies and procedures adopted by the Board of Directors of Employer) for all
reasonable and necessary expenses incurred by Employee in connection with the
Employer's business, including, without limitation, all reasonable and necessary
expenses of travel, lodging, entertainment, and meals away from home incurred by
Employee in the course of her employment hereunder. Employee agrees to keep and
maintain such records of the aforesaid expenses as Employer may require and to
account to Employer therefore prior to any such reimbursement. Employee shall
comply with all reasonable and lawful policies and procedures applied by
Employer from time to time to its employees generally and relating to or
regulating the nature and extent of reimbursement expenses, and the manner of
accounting and reimbursement therefor.
(c). Employer hereby agrees to make available to Employee,
during the Employment Period, all benefits which are generally available to
similarly situated employees of the Employer, subject to and on a basis
consistent with the terms and conditions of such benefits. In addition, Employer
agrees to provide Employee with the following benefits.
(1) A noncontributory qualified employee profit -
sharing plan and participation in the Employer's 401(K) Plan.
(2) A noncontributory employee's group life insurance
plan which will provide life insurance for Employee in the amount equal to two
(2) times Employee's annual salary (or a maximum of $250,000,00)during all times
that Employee remains an employee of Employer.
(3) A noncontributory accident and health insurance
plan for the payment of medical care expenses for employee.
(4) Three (3) weeks of vacation time each year.
(5 A noncontributory disability income plan.
As to (1), (2), (3) and (5) above, all such benefits shall be
subject to the plans adopted by the Employer from time to time, it being
understood by the parties that said benefits also apply to the Employer's work
force generally.
The Employer, in its sole discretion, may apply for additional
insurance in its own name and for its own benefit covering the Employee for
life, medical, or disability insurance, in any amount deemed advisable and the
Employee shall have no right, title or interest therein. The Employee shall
submit to any required examination and shall execute and assign and/or deliver
such application and policies necessary to effectuate such insurance coverage.
The Employer may require the Employee to have a thorough
annual physical examination and will reimburse the Employee for the expense.
Except as otherwise specifically set forth herein, nothing
herein shall be construed to impose upon Employer any legal obligation to
establish or maintain any particular benefit or benefits for any of its
employees.
(d). Employee shall also be eligible to receive an annual bonus based
upon performance criteria to be determined by the Board of Directors of the
Employer. The Board of Directors of the Employer shall determine the performance
criteria to be met by Employee for each fiscal year of Employer or other twelve
(12) month period designated by the Board of Directors of the Employer during
the term of this Agreement prior to the commencement of each fiscal year or such
other period and shall cause such criteria to be communicated in writing to
Employee. The amount of Employee's bonus shall be determined based upon the
level of achievement of Employee as compared with the established performance
criteria. The final determination concerning the levels of achievement attained
by Employee and the amount of each such annual bonus shall be made by the Board
of Directors of the Employer in its sole judgment. Any bonus earned by the
Employee pursuant to this Section 6(d) shall be payable to Employee, less
deductions required by law and Employee authorized deductions, no later than
March 31 following the year to which such bonus relates. The bonus provided for
hereunder shall be payable with respect to the fiscal year or such other period
immediately preceding the year in which the bonus is paid and shall not be
payable if the Employee is terminated for cause prior to the end of the fiscal
year or such other period for which the bonus is to be paid. In the event that
the employee dies, is terminated because of illness or disability as provided in
Section 10 of this Agreement, is terminated by the Employer without cause prior
to the end of the fiscal year or such other period for which such bonus is to be
paid, or is terminated by Employee pursuant to Section 10(d), a pro rata portion
of such bonus, if otherwise earned, shall nevertheless be paid to the Employee
or her estate, as the case may be. The pro rata portion shall be based upon the
number of days the Employee was employed by the Employer during such fiscal year
as compared to 365.
Section 7. Non-Solicitation.
(a). While Employee is employed by the Employer under this Agreement
Employee will not, directly or indirectly, employ, solicit for employment, or
advise or recommend to any other person that such person employ or solicit for
employment, any person employed by the Employer or its affiliates.
(b). While Employee is employed by the Employer under this Agreement
Employee shall not, directly or indirectly, solicit or advise or recommend to
any other person that such person solicit, any customer of the Employer or its
affiliates for the purpose of obtaining banking services of such customer.
(c). For a period of two (2) years after the termination of the
employment of Employee hereunder, for any reason whatever other than (1) by
termination of the employment of Employee by Employer without cause pursuant to
Section 10(e), or (2) by termination of the employment of Employee upon material
breach of this Agreement by Employer pursuant to Section 10(d), Employee will
not, directly or indirectly, employ, solicit for employment, or advise or
recommend to any other person that such person employ or solicit for employment,
any person employed by the Employer or its affiliates.
(d). For a period of two (2) years after the termination of the
employment of Employee hereunder, for any reason whatever other than (1) by
termination of the employment of Employee by Employer without cause pursuant to
Section 10(e), or (2) by termination of the employment of Employee upon material
breach of this Agreement by Employer pursuant to Section 10(d), Employee shall
not, directly or indirectly, solicit or advise or recommend to any other person
that such person solicit, any customer of the Employer or its affiliates for the
purpose of obtaining banking services of such customer.
(e). For purposes of this Section 7, "Employer" shall also include the
Employer's subsidiaries and other affiliates.
Section 8. Confidentiality. The Employee acknowledges that she has had
and, will have access to certain information related to the business,
operations, future plans and customers of the Employer, the disclosure or use of
which could cause the Employer substantial losses and damages. Accordingly, the
Employee covenants that during the term of her employment with the Employer and
thereafter she will keep confidential all business and technical information and
documents which constitute trade secrets furnished to her by or on behalf of the
Employer and not use the same to her advantage, except to the extent such
information or documents are or thereafter become lawfully obtainable from other
sources, are in the public domain through no fault on her part, or is consented
to in writing by the Employer. Upon termination of her employment, the Employee
shall return to the Employer all records, lists, files and documents which are
in her possession and which relate to the Employer. This restriction shall
expire two (2) years from the date of Employee's termination.
For the purposes of this Section 8, "Employer" shall also include the
Employer's subsidiaries and other affiliates.
Section 9. Limitations on Section 7. Upon a breach of this Employment
Agreement by Employer failing to make payments required of it upon a termination
of Employee's employment, the provisions of Section 7 shall terminate in the
event Employer, after thirty (30) days notice from Employee, fails to cure the
breach. Upon the failure of Employer to cure the breach within the required
time, Employee may immediately declare any remaining sums to be immediately due
and payable and may institute such legal actions as may be necessary to collect
said sums.
Section 10. Termination. If the term of this Agreement has not
sooner expired by lapse of time, the term of Employee's
employment shall terminate upon the occurrence of any of the following:
(a). Death. Upon the death of the Employee;
(b). Disability. Upon the total and permanent disability of
the Employee. If it is determined that Employee is disabled and that such
disability is likely to be permanent (herein referred to as a "Determination of
Permanent Disability"), Employer may terminate this Agreement. Said termination
shall not be effective until such time as Employer has given written notice to
Employee, at the address specified in Section 14, of its intent to terminate
this Agreement. For the purposes of this Section 10(b), the term "Disability"
shall mean the Employee's inability to perform functions normally performed for
Employer by the Employee. A "Determination of Permanent Disability" may be made
at the request of either the Employer or Employee; provided, however, that in
the event Employee is unable, due to her disability, to make such a request, her
spouse or other designee may make a request in her stead. In the event of a
request by either Employee or Employer for a "Determination of Permanent
Disability", each of Employee and Employer shall designate one doctor to
participate in the determination; provided, however, that it Employee is unable,
due to her disability, to make such a designation, her spouse or other designee
shall make the designation in her stead. If the two doctors so designated agree
on a determination required by this Section 10(b), such determination shall be
final. If the two doctors fail to agree, they shall designate a third doctor to
make the determination required by this Section 10(b), which determination shall
be final.
(c). By the Employer for Cause. Employee's employment may be
terminated effective immediately by the Employer for "cause" by notice of
termination to the Employee. "Cause" for such termination shall mean the
following:
(i) Dishonesty of the Employee with respect to her
employment with Employer
(ii) Misfeasance or nonfeasance with respect to her
employment with Employer;
(iii) Conviction of the Employee upon a felony charge
or upon a charge of any crime involving moral
turpitude;
(iv) Willful or prolonged absence from work by
the Employee (other than by reason of disability due tophysical or mental
illness) or failure, neglect or refusal by the Employee to perform her duties;
(v) Material breach by the Employee of any of the
covenants contained in this Agreement; or
(vi) Ineligibility of the Employee to serve as an
officer of a depository institution as a result of final regulatory action.
(d). By Employee. By Employee upon a material breach of this
Agreement by Employer when after thirty (30) days notice of the breach Employer
fails to cure the breach. Any such termination must be elected by Employee
within thirty (30) days of Employer's failure to cure such breach or the breach
will be deemed to have been waived for all purposes.
(e). By Employer. For any reason other than cause upon ninety
(90) days notice to Employee. Cause shall have the definition n stated above.
Except as otherwise provided in this Agreement, Employee's right to
further compensation and benefits under this Agreement shall cease upon the
termination of her employment. Except as otherwise provided in this Agreement,
Employee shall remain entitled to any unpaid compensation and benefits accrued
prior to termination. Likewise, Employee shall be entitled to receive all
insurance and disability benefits if termination is due to death or disability.
In the event that the employment of the Employee is terminated by the Employer
without cause pursuant to Section 10(e) during the term of this Agreement, or
should Employee terminate her employment pursuant to Section 10(d), the Employer
shall continue to pay the Annual Salary and provide the benefits set forth in
Section 6 of this Agreement {except for the annual bonus, the payment of which
is controlled by Section 6(d)} for a period of twelve (12) months after the
termination of Employee's employment, as severance pay.
Section 11. Change of Control. If, at any time within thirty-six (36)
months following a "Change in Control" as defined hereafter, Employee is
terminated by Employer (or its successor) without cause pursuant to Section
10(e), Employer shall continue to pay the Annual Salary and provide the benefits
set forth in Section 6 of this Agreement for a period of twenty-four (24) months
after the termination of Employee as severance pay (this compensation to be in
lieu of that severance compensation set forth in Section 10 for termination
without cause). Said Annual Salary shall be paid periodically and on the same
schedule as that prior to Employee's termination. The Employer (or its
successor) may not, following a Change in Control, permanently assign the
Employee to work more than forty (40) miles from the intersection of N.C.
Highway 16 and Huntersville/Mt. Holly Highway without Employee's consent.
Notwithstanding the foregoing, the Employer (or its successor) may, following a
Change in Control, require the Employee to work more than fifty (50) miles from
the above intersection from time to time but no more often than ninety (90) days
per year.
A "Change in Control" shall be deemed to have occurred if and when any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
and Exchange Act of 1934) is or becomes a beneficial owner, directly or
indirectly, of securities of the Employer or its parent company representing
greater than twenty-five percent (25%) of the combined voting power of the
Employer's or its parent company's then outstanding securities. Notwithstanding
the foregoing, no "change in control" shall be deemed to have occurred by virtue
of any transaction which results in the Employee and/or a member or members of
the Employer's present Board of Directors (i. e. existing on January 1, 1999),
or a group of persons including the Employee and/or a member or members of the
Employer's present Board of Directors, acquiring, directly or indirectly, more
than twenty-five percent (25%) of the combined voting power of the Employer's or
its parent company's outstanding securities. In limitation of the provisions in
the preceding sentence, a "change in control" shall be deemed to have occurred
if the member or members of the Employer's present Board of Directors do not
own, control or constitute a material portion of the acquiring "person".
Any dispute or controversy arising under or in connection with this
Section 11 shall be settled exclusively by arbitration in the State of North
Carolina in accordance with the rules of the American Arbitration Association
then in effect.
Section 12. Enforcement of Employee Restrictions. Employee acknowledges
that she has carefully read and considered the provisions of this Agreement and,
having done so, agrees that the restrictions set forth in this Agreement in
Sections 7 and 8 (including, but not limited to, the period of restriction set
forth therein) are fair and reasonable and are necessarily required for the
protection of the interests of the Employer and its affiliates. Employee further
acknowledges that due to the nature of Employer's business, more limited
restriction than those found herein would not be reasonable or appropriate. The
Employee covenants and agrees with Employer that the Employer shall be entitled
to an accounting and repayment of all profits, compensation, commissions,
remunerations or benefits which the Employee directly or indirectly has realized
and/or may realize as a result, growing out of or in connection with any such
violations; such remedy to be in addition to and not in limitation to any
injunctive relief or other rights or remedies to which Employer or its
affiliates is or may be entitled to at law or in equity. In the event that,
notwithstanding the foregoing, any part of the covenants set forth in this
Agreement shall be held to be invalid or unenforceable, the remaining parts
hereof shall nevertheless continue to be valid and enforceable as though the
invalid and unenforceable part had not been included herein. In the event that
any provisions of this Agreement relating to the time period or geographical
restriction shall be declared by a court of competent jurisdiction to exceed the
maximum time periods or geographical areas which such court deems reasonable or
enforceable, such time periods or geographical areas of restriction shall be
deemed to become and thereafter be the maximum time period or geographical areas
which such court deems reasonable and enforceable.
Section 13. Stock Options. Any and all stock options previously issued
in favor of Employee shall remain in full force and effect according to their
terms, provided, however, all stock options held by Employee shall be fully
vested and exercisable upon a Change in Control of the Employer or any successor
or assign.
Section 14. Notices. All notices required or permitted hereunder shall
be deemed to be duly given if in writing and delivered personally or sent by
United States registered or certified mail, postage pre-paid, addressed to
Employer at:
President, Carolina First BancShares, Inc.
402 East Main Street
Lincolnton, NC 28092
and addressed to Employee at:
Janet H. Hollar
11917 Overlook Mountain Drive
Charlotte, North Carolina 28216
or at such changed addresses as the parties may designate in writing.
Section 15. Miscellaneous.
(a). Headings. Headings, titles and captions contained in
this Employment Agreement are inserted only as a matter of convenience and
reference and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provisions hereof.
(b). Gender. The use in this Agreement of gender-specific
words or phrases shall be deemed to include the masculine, feminine or neuter
genders, as the context may require.
(c). Entire Agreement. This writing constitutes the entire
agreement between the parties hereto and supersedes any prior understanding or
agreements among them respecting the subject matter. There are no extraneous
representations, arrangements, understandings, or agreements, oral or written,
in respect of the subject matter of this Agreement, among the parties hereto,
except those fully expressed herein.
(d). Amendments. No amendments, changes, alterations,
modifications, additions and qualifications of the terms of this Agreement shall
be made or binding unless made in writing and signed by all the parties hereto.
(e). Waiver. The failure of either party to enforce at any
time any of the provisions of this Agreement shall not be construed as a waiver
of such provisions or of the right of such party thereafter to enforce any such
provisions.
(f). Invalidity and Severability. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the enforceability of other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.
(g). Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of North Carolina, Employer
hereby consents to the jurisdiction of any local, state or federal court located
in the State of North Carolina, and hereby waives personal service of process
and consents to service of process by certified or registered mail directed to
Employee at Employee's address stated in Section 11 of this Agreement. Employee
further specifically consents to venue in Lincoln County.
(h). Burden and Benefit, This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, successors and,
as allowed herein, assigns.
(i). Assignment. The terms of this Employment Agreement are
personal to Employee. As such Employer may not assign its interest in this
Employment Agreement other than to Employer's subsidiaries, parent company,
sister companies and such affiliates as may exist from time to time (the
"Carolina First family of businesses"). Employer may also assign this Employment
Agreement pursuant to any Merger or Change of control as set forth in Section 11
herein (subject to Employee's rights specified in Section 11). Employee may not
assign her interest in this Employment Agreement.
[Signatures on next page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
Employer:
CAROLINA FIRST BANCSHARES, INC.
BY:
Title:
ATTEST:
Secretary
(Corporate Seal)
Employee:
(SEAL)
Janet H. Hollar
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of September 23,
1999, by and between JAMES E. BURT, III, a resident of Lincolnton, North
Carolina (hereinafter referred to as "Executive") and CAROLINA FIRST BANCSHARES,
INC., a North Carolina corporation, with its principal office in Lincolnton,
North Carolina (hereinafter referred to as the "Company"), and supersedes in its
entirety the Employment Agreement between the parties dated as of December 31,
1996, except for Exhibit A thereto, which shall continue in full force and
effect as Exhibit A hereto.
WHEREAS, the Company and the Executive desire to continue the services
of the Executive pursuant to this Employment Agreement with Executive, upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are mutually acknowledged, the parties hereto,
intending legally to be bound, agree as follows:
Section 1. Agreement of Employment. Company hereby agrees to continue
to employ Executive, and Executive hereby agrees to remain employed by Company
for the term, and upon and subject to the terms and conditions hereafter set
forth.
Section 2. Term. Company and Executive hereby agree that Executive
shall become subject to the terms of this Agreement as of the date hereof, and
shall remain employed by Company through January 31, 2001, unless sooner
terminated pursuant to the terms hereof (the "Employment Period").
Section 3. Duties of Executive.
(a) Subject to the supervision and pursuant to the direction
of the Board of Directors of the Company, Executive shall perform his
assigned duties as President and Chief Executive Officer of Company and
shall perform such other duties as are customarily performed by one
holding such positions in similar businesses or enterprises as that
engaged in by Company including such specific duties, powers and
responsibilities as may be assigned to him by the Board of Directors.
Among his other duties, Executive shall be responsible for implementing
an effective transition plan and recruiting a successor to serve as
President and Chief Executive Officer of the Company upon Executive's
planned retirement on January 31, 2001. Executive shall, at the
direction of the Board of Directors of the Company, serve in such other
executive capacities with various subsidiaries of the Company as the
Board of Directors may determine.
(b) The Executive shall faithfully and diligently discharge
his duties and responsibilities under this Agreement and devote his
full and exclusive business time, energy and skill to the promotion of
the Company and its subsidiaries.
Section 4. Compensation, Expenses and Benefits.
(a) Company shall pay to Executive, and Executive shall accept
from Company, during the Employment Period, and in consideration for
the services to be performed by Executive, a salary at the rate of not
less than $156,963 per annum (the "Annual Salary"), less deductions
required by law and deductions authorized by the Executive, payable in
such equal periodic installments as Company may determine, but not less
frequently than monthly. Each year the salary of the Executive shall be
reviewed and a salary amount set for the following year by the Board of
Directors based upon recommendations of its Compensation & Benefits
Committee, in accordance with the Company's established salary
administration plan. In the event that a mutual agreement cannot be
reached then the salary shall remain at the same level as that of the
previous year.
(b) In addition to the Annual Salary described in Section 4(a)
above, Company agrees to reimburse Executive promptly (in accordance
with the policies and procedures adopted by the Board of Directors of
Company) for all reasonable expenses actually incurred by Executive in
connection with the Company's business, including, without limitation,
all reasonable expenses of travel, lodging, entertainment, and meals
away from home incurred by Executive in the course of his employment
hereunder. Executive agrees to keep and maintain such records of the
aforesaid expenses as Company may require and to account to Company
therefor prior to any such reimbursement.
(c) Company hereby agrees to make available to Executive,
during the Employment Period, all benefits which are generally
available to executives of the Company, subject to and on a basis
consistent with the terms and conditions of such benefits. In addition,
Company agrees to provide Executive, during the Employment Period, with
the following benefits:
(1) An automobile for his use in carrying out his
duties to the Company and its affiliates. If necessary, the
Executive will be allowed to use such automobile for personal
use provided an account is kept concerning the dates and
mileage for personal use. Such account shall be made to the
Compensation & Benefits Committee on a quarterly basis. The
Executive shall, on a quarterly basis, reimburse the Company
for his personal use at the then current Federal rate. Upon
retirement, the Company shall transfer title of such
automobile to the Executive.
(2) A non-contributory qualified employee
profit-sharing plan; including participation in the Company's
401(k) Plan that provides for the Company to match the
Executive's contributions in accordance with the Company's
match of senior officers' contributions to such plan
generally.
(3) A non-contributory employee group life insurance
plan which will provide life insurance for Executive in the
amount equal to two times Executive's annual salary (or a
maximum of $250,000.00) during all times that Executive
remains an active executive officer of the Company and/or its
affiliates.
(4) A non-contributory accident and health insurance
plan for the payment of medical care expenses for Executive
and Executive's family.
(5) Executive and Executive's family shall be
eligible for participation in, and shall receive all benefits
under the welfare benefit plans, practices, policies and
programs provided by the Company and its affiliates
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and
travel accident insurance, plans and programs) (collectively,
"Welfare Plans") to the extent applicable generally to
executives of the Company and its subsidiaries.
(6) Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies of
the Company and its affiliates made available to executives of
the Company and its subsidiaries.
(7) A non-contributory deferred compensation plan
pursuant to the terms of Exhibit A attached hereto, which
notwithstanding anything to the contrary contained herein,
shall continue in full force and effect.
(8) A non-contributory disability income plan wherein
the Company will provide the Executive with the following
disability income payable to age 65 and after a 90-day waiting
period: disability income equal to sixty percent (60%) of the
Executive's annual salary as it exists from time to time up to
a maximum benefit of $5,000.00 per month. The Company, in its
sole discretion, may apply for additional insurance in its own
name and for its own benefit covering the Executive for life,
medical, or disability insurance, in any amount deemed
advisable, and the Executive shall have no right, title or
interest therein. The Executive shall submit to any required
examination and shall execute and assign and/or deliver such
application and policies necessary to effect such insurance
coverage.
The Company shall require the Executive to have a
thorough annual physical examination and will reimburse the
Executive for the expense. The first such examination shall be
made no later than December 31, 1999.
(9) Club dues to a civic club and a country club
which may include any required initiation fees. The payment of
all dues are subject to approval by the Board of Directors.
(d) Executive shall, in addition to his Annual Salary, be
eligible to receive an annual bonus determined as follows: for each and
every calendar year of this Agreement, beginning with 1999, the
Executive shall be eligible to earn a bonus based on performance goals,
in an amount not less than $62,785 per year.
Each year the Compensation & Benefits Committee shall make
recommendations to the Board of Directors concerning the setting of the
performance goals for that year, after consulting with the Executive.
The goals shall be specific and a fixed dollar amount and the
attainment of each goal shall be stated. Each year as a bonus the
Executive may be paid nothing, or the amount of the maximum possible
bonus, or any amount in between, depending on how many of the goals are
reached.
Nothing herein is intended to or shall prevent the Company
from providing, in its discretion, additional bonus and/or additional
compensation to the Executive, and further the Executive,
notwithstanding anything to the contrary contained herein, shall
participate in all stock option and benefit and Welfare Plans of the
Company and its affiliates on the same basis as all other senior
officers of the Company and its affiliates.
The bonus provided for hereunder shall be payable with respect
to the fiscal year immediately preceding the year in which the bonus is
paid and shall not be payable if the Executive voluntarily terminates
his employment prior to the end of the fiscal year or if the Executive
is terminated for Cause (as defined in Section 6(c) below) prior to the
end of the fiscal year. In the event that the Executive dies, is
terminated because of illness or disability or is terminated by the
Company without Cause, prior to the end of the fiscal year, a pro rata
portion of such bonus, if otherwise earned, shall nevertheless be paid
to the Executive or his estate, as the case may be. The pro rata
portion shall be based upon the number of days the Executive was
employed by the Company during such fiscal year as compared to 365.
(e) Following the Executive's termination and prior to him
reaching age 65, or such longer period as may be provided by the terms
of the appropriate plan, program, practice or policy, the Company shall
continue, at Executive's expense, health insurance and other benefits
to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the Company's
and its affiliates' plans, programs, practices and policies generally,
and as otherwise described in this Agreement if the Executive's
employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect
to other senior officers of the Company and its affiliates and their
families, provided, however, that if the Executive becomes re-employed
with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time
or commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after
the date of termination and to have retired on the last day of such
period.
Section 5. Nondisclosure of Confidential Information and
Nonsolicitation.
(a) Executive covenants and agrees to treat as confidential
and not to disclose and to use only for the advancement of the
interests of Company all information, plans, records, trade secrets,
business secrets, and confidential or other data of Company, or its
subsidiaries, submitted to Executive or compiled, received, or
otherwise discovered by Executive from time to time in the course of
his employment by Company for use in Company's business, which
Executive knows to have been acquired by him in confidence or which he
knows would not otherwise be available to competitors of Company or to
members of the public and which would not otherwise become known to
said competitors or members of the public.
(b) Executive agrees that upon termination of his employment
with Company, for any reason, voluntary or involuntary, with or without
Cause, he will immediately return to the Company any property, customer
lists, shareholder lists (of the Company or its affiliates),
information, forms, formulae, plans, documents or other written or
computer material or data, software or firmware, or copies of the same,
belonging to Company or its affiliates, or any of their customers,
within his possession, and will not at any time thereafter copy,
reproduce or otherwise facilitate the future disclosure of the same.
Executive further agrees that he will not retain or use for his account
at any time any trade name, trademark, service mark, or other
proprietary business designation used or owned in connection with the
business of the Company or its affiliates.
(c) Following termination of employment, and for two (2) years
thereafter, Executive shall not (i) use any information obtained as a
result of his employment with Company to solicit any business of any
customers, (ii) solicit the employment of any executive officers of the
Company or its affiliates, or (iii) become an executive officer,
director or 10% or greater shareholder of any depository institution or
its affiliates that is located in any county where the Company or its
affiliates has an office on the date of termination.
(d) For purposes of this Section 5, the term "Company" shall
also include the Company's subsidiaries and other affiliates.
Section 6. Termination. If the term of this Agreement has not sooner
automatically expired by lapse of time on January 31, 2001, the term of
Executive's employment hereunder shall terminate upon the occurrence of any of
the following:
(a) Upon the death of the Executive.
(b) As a result of the permanent disability of Executive. If
it is determined that Executive is disabled and that such disability is
likely to be permanent (herein referred to as a "Determination of
Permanent Disability"), Company may terminate this Agreement. Said
termination shall not be effective until such time as Company has given
written notice to Executive, at the address specified in Section 9, of
its intent to terminate this Agreement. For the purposes of this
Section 6(b), the term "Disability" shall mean the Executive's
inability to perform functions normally performed for Company by the
Executive. "Permanent Disability" shall mean the present disability of
the Executive coupled with the probability that such disability will
continue for an indefinite period but not less than six (6) months. A
Determination of Permanent Disability may be made at the request of
either the Company or Executive; provided, however, that in the event
Executive is unable, due to his disability, to make such a request, his
spouse or other designee may make a request in his stead. In the event
of a request by either Executive or Company for a Determination of
Permanent Disability, each of Executive and Company shall designate one
doctor to participate in the determination; provided, however, that if
Executive is unable, due to his disability, to make such designation,
his spouse or other designee shall make the designation in his stead.
If the two doctors so designated agree on the determination required by
this Section 6(b), such determination shall be final. If the two
doctors fail to agree, they shall by agreement designate a third doctor
to make the determination required by this Section 6(b), which
determination shall be final.
(c) At the election of Company, for Cause. "Cause" shall mean
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than as a
result of incapacity due to physical or mental illness, and
specifically excluding any failure by Executive, after reasonable
efforts, to meet performance expectations), after a written demand for
substantial performance is delivered to Executive by the Board of
Directors which specifically identifies the manner in which such Board
believes the Executive has not substantially performed his duties; (ii)
the willful engaging by Executive in illegal conduct or grossly
negligent or willful misconduct which is materially and demonstrably
injurious to the Company, or (iii) Executive becomes ineligible to
serve as an officer or director of a depository institution or a
depository institution holding company as a result of any action by a
regulatory or governmental agency.
For purposes of this provision, no act or failure to act on
the part of Executive shall be considered "willful" unless it is done
or admitted to be done by Executive in bad faith or without reasonable
belief that Executive's act or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board of Directors or
based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good
faith and in the best interests of the Company.
The termination of employment of Executive shall not be deemed
for Cause pursuant to subparagraphs (i) and (ii) of this paragraph (c)
unless and until the Executive has received a resolution of the Board
of Directors adopted by affirmative vote of not less than two-thirds of
the entire Board of Directors at a meeting duly called and held for
such purpose upon reasonable notice to Executive and where the
Executive is given an opportunity, together with counsel, to be heard
before such Board of Directors, finding that in the good faith opinion
of such Board, Executive has engaged in the conduct described in
subparagraphs (i) or (ii) of this paragraph (c) and specifying in
particular the details thereof.
Upon termination under this Section 6, Executive's right to further
compensation and benefits under this Agreement shall cease; provided, however,
that Executive shall remain entitled to any unpaid compensation and benefits
accrued prior to the date of such termination (including, without limitation,
any deferred compensation, all of which shall be deemed vested as provided in
Exhibit A hereto) and to any reimbursements of expenses to which he was entitled
at the date of such termination and if Executive's employment is terminated by
Company without Cause or due to his death or disability, such termination shall
not affect Executive's or Executive's personal representative's right to receive
additional payments pursuant to and according to the terms contained in Section
4(d) of this Agreement. Notwithstanding anything herein to the contrary, in the
event that the employment of the Executive is terminated by the Company, without
Cause under Section 6 prior to January 31, 2001, the Company shall (i) continue
to pay the Executive the Annual Salary and provide the benefits set forth in
Section 4 of this Agreement except for the annual bonus, the payment of which is
controlled by Section 4(d) until January 31, 2001, or (ii) pay the Executive
twelve (12) months pay, whichever is greater, as severance pay. Notwithstanding
anything contained herein to the contrary, the obligations of Executive under
Section 5 (except as limited in Section 8 below) shall survive the termination
(for any reason) of this Agreement.
If Executive desires to sell any shares of Company capital stock within
six (6) months after termination for cause hereunder, the Executive shall notify
the Company in writing and provide the Company a right of first refusal for
three business days with respect to any sale of any or all such shares at the
same price and terms of any bona fide offer by a third-party to purchase such
shares. Upon termination for Cause, Executive shall submit all certificates
representing shares of Company capital stock to the Company and a legend shall
be placed prominently upon such certificates reflecting the Company's right of
first refusal.
Section 7. Change of Control. In the event that the Company experiences
a "Change in Control" as defined herein, the Company shall immediately pay to
the Executive a lump-sum of money equal to his Annual Salary and maximum bonus
potential for the year in which the Change in Control occurs; said lump sum
payment shall be in addition to and not in lieu of the Executive's regular
compensation should he remain in the employ of the Company or its successor
after a Change in Control. If, following a Change in Control, Executive is
terminated by Company or any successor, the Company or such successors shall
continue to pay to Executive, for the balance of the term hereof and in addition
to any other required payments, the Annual Salary in effect for Executive on the
date of Executive's termination, which shall be payable on the same schedule as
that prior to Executive's termination. Furthermore, all deferred compensation
shall be immediately vested 100%, and shall be paid by the Company or its
successor when due.
A "Change in Control" shall be deemed to have occurred if and when any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
and Exchange Act of 1934 and including a "group" thereunder) is or becomes a
beneficial owner, directly or indirectly, of securities of the Company or its
parent company representing greater than fifteen percent (15%) of the combined
voting power of the Company's or its parent company's then outstanding
securities. A "Change in Control" shall not be deemed to have occurred solely as
a result of merger, consolidation or other business combination, where the
Company is the surviving entity, even though the former shareholders of the
other party to such transaction hold, in total, more than 15% of the combined
voting power of the Company's or its parent company's then outstanding
securities, provided such persons are not acting collectively and would not be
deemed to be a single "person" or part of a "group" hereunder solely as a result
of their status as former shareholders of such other entity.
Any dispute or controversy arising under or in connection with this
Section 7 shall be settled exclusively by arbitration in the State of North
Carolina in accordance with the rules of the American Arbitration Association
then in effect.
Section 8. Enforcement of Executive Restrictions. Executive
acknowledges that he has carefully read and considered the provisions of this
Agreement and, having done so, agrees that the restrictions set forth in this
Agreement in Section 5 (including, but not limited to, the period of restriction
set forth therein) are fair and reasonable and are necessarily required for the
protection of the interests of the Company and its affiliates. Executive further
acknowledges that due to the nature of Company's business, more limited
restrictions than those found herein would not be reasonable or appropriate. The
Executive covenants and agrees with Company that if he shall violate any of the
covenants or agreements contained in this Agreement, then Company shall be
entitled to damages in addition to, and not in limitation of, any injunctive
relief or other rights or remedies to which Company and/or its affiliates is or
may be entitled at law or in equity. In the event that any provisions of this
Agreement relating to the time period of any restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time periods or
geographical areas which such court deems reasonable and enforceable, such time
periods of restriction shall be deemed to become and thereafter be the maximum
time period which such court deems reasonable and enforceable. Section 9.
Notices. All notices required or permitted hereunder shall be deemed to be duly
given if in writing and delivered personally or sent by United States registered
or certified mail, postage pre-paid, addressed to Company at:
Chairman
Carolina First BancShares, Inc.
236 East Main Street
Post Office Box 657
Lincolnton, North Carolina 28092
and addressed to Executive at:
James E . Burt, III
208 Mockingbird Lane
Lincolnton, North Carolina 28092
or at such changed addresses as the parties may designate in writing.
Section 10. Miscellaneous.
(a) Headings. Headings, titles and captions contained in this
Agreement are inserted only as a matter of convenience and reference
and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provisions hereof.
(b) Gender. The use in this Agreement of gender-specific words
or phrases shall be deemed to include the masculine, feminine or neuter
genders, as the context may require.
(c) Entire Agreement. This Agreement including the
attachments, exhibits and appendices hereto constitutes the entire
agreement between the parties hereto and supersedes any prior
understanding or agreements among them respecting the subject matter,
except for Exhibit A which shall continue in full force and effect
unmodified hereby. There are no extraneous representations,
arrangements, understandings, or agreements, oral or written, in
respect of the subject matter of this Agreement among the parties
hereto, except those fully expressed herein.
(d) Amendments. No amendments, changes, alterations,
modifications, additions, extensions and qualifications to the terms of
this Agreement shall be made or binding, unless made in writing and
signed by all the parties hereto.
(e) Waiver. The failure of either party to enforce at any time
any of the provisions of this Agreement shall not be construed as a
waiver of such provisions or of the right of such party thereafter to
enforce any such provisions.
(f) Invalidity and Severability. The invalidity or
unenforceability of any particular provision of this Agreement shall
not affect the enforceability of other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted. Executive agrees and
acknowledges that nothing contained in this Agreement, nor the
enforcement of any provision herein including Section 5, shall alter
Executive's ability to obtain a livelihood. Executive agrees and
acknowledges that all of the provisions of this Agreement, including
Section 5, are reasonable. Executive acknowledges that he has carefully
read and considered all the provisions of this Agreement.
(g) Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of North Carolina.
Executive hereby consents to the jurisdiction of any local, state or
federal court located in the State of North Carolina.
(h) Burden and Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COMPANY:
ATTEST: CAROLINA FIRST BANCSHARES, INC.
By:_______________________ By:
Secretary Chairman
EXECUTIVE:
James E. Burt, III
<PAGE>
Exhibit "A" to Employment Agreement
CAROLINA FIRST BANCSHARES, INC.
DEFERRED COMPENSATION AGREEMENT WITH
JAMES E. BURT, III
THIS PLAN AND AGREEMENT, dated as of the 31st day of December 1996, by
and between Carolina First BancShares, Inc., a North Carolina corporation
(hereinafter referred to as the "Company"), and JAMES E. BURT, III (hereinafter
referred to as the "Executive"):
W I T N E S S E T H :
WHEREAS, the Company believes it is in the best interest of the Company
and the Executive to establish a plan for the purpose of providing certain
benefits for the Executive pursuant to his Employment Agreement:
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I
EMPLOYMENT
The Company has employed the Executive as provided in the Employment
Agreement with the Executive, to which this is an exhibit.
ARTICLE II
BENEFITS
The Company is obligated to provide benefits to the Executive as
follows:
A. Except as expressly provided herein, no benefit shall be paid
hereunder, except to the extent then vested, upon the discharge of the Executive
by the Company for cause. The definition of "cause" shall be the same as "Cause"
in the Executive's Employment Agreement.
B. Upon retirement from the Company, the Executive shall receive the
monthly amount then vested for 120 consecutive months beginning on the first
business day of the calendar month next succeeding the Executive's retirement
date. In the event the Executive dies after such monthly payments begin but
prior to receiving all 120 monthly payments, then his beneficiary(s) shall be
entitled to receive all remaining payments.
C. If the Executive shall die before his retirement while in the employ
of the Company, the Company will make monthly payments of $4,166.67 for 120
months to the beneficiary(s) of the Executive beginning in the month of the
Executive's death.
D. Upon permanent disability before retirement at age 65, the Executive
shall receive no benefits under this Deferred Compensation Plan until the
earlier of (i) age 65 or (ii) such time as his disability benefits cease, at
which time the Company shall pay the Executive, and after death, his
beneficiaries, monthly payments of $4,166.67 per month for 120 months beginning
in the month of the Executive's death. If the Executive shall die after becoming
permanently disabled but before the age of 65, then the monthly payments shall
begin at death and shall be made to his beneficiary(s) in the amount of
$4,166.67 per month for 120 months. "Permanent disability" shall have the
meaning given it in the Executive's Employment Agreement and shall be determined
accordingly.
E. Should the Executive leave the employ of the Company for any reason
within twelve (12) months after a "Change of Control" (as defined in his
Employment Agreement) then the Company or its successor shall, upon Executive's
request within 30 days of such separation of employment, transfer to the
Executive the ownership of the Insurance policy, if any, that funds this
Deferred Compensation Agreement in lieu of all future monthly payments, but if
such transfer is not requested by the Executive prior to the payment of benefits
hereunder, then the Company shall pay such benefits when due.
F. Should the Executive leave the employment of the Company for any
other reason prior to retirement, then no benefits shall be paid under this
plan, except and to the extent such benefits are vested.
G. Notwithstanding anything to the contrary contained herein or in the
Employment Agreement, as of the date hereof, Executive shall be fully vested in
monthly payments of $2,500.00 through May 30, 1997, at which point his vested
benefits shall be $2,916.67 per month through May 30, 1998, at which time his
vested benefit becomes $3,333.33 through May 30, 1999 when the benefit becomes
$3,750.00 per month through January 31, 2000, at which time his vested benefit
becomes $4,166.67, regardless of any other provisions hereof and regardless of
any reasons for any termination or cessation of the Executive's employment. All
such amounts shall be vested, and shall be paid to the Executive or to the
Executive's named beneficiaries.
ARTICLE III
SOURCE OF PAYMENTS
Notwithstanding any references to life insurance contracts contained
herein, nothing herein shall require the Company to purchase such contract or
any other properties to secure its obligation under this Agreement, or if the
Company should purchase such contract or other property, to exercise any option,
election or right under such contract or other property, or if the Company
wishes to exercise any option, election or right under such contract or other
property, to exercise such option, election or right in any particular manner.
The Executive, beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this Agreement
shall rely solely on the unsecured promise of the Company set forth herein, and
nothing in this Agreement (other than the provisions of Article II, B. and F.)
shall be construed to give the Executive, beneficiary or any other person or
persons any rights, title, interest or claim in or to any specific asset, fund,
reserve, account or property of any kind whatsoever owned by the Company or in
which it might have any right, title or interest now or in the future, but
Executive shall have the right to enforce his claim against the Company in the
same manner as any unsecured creditor.
ARTICLE IV
BENEFICIARIES
The death beneficiary of the Executive shall be the person, persons,
trust or charitable entity, living or in existence at the time for any
distribution hereunder, which the Executive shall have most recently designated
as highest in priority on a form, provided for that purpose by the Company,
signed by the Executive, filed with the Company, and attached to the Company's
original copy of this document as "Annex A". The death or non-existence of any
such beneficiary either before or after receipt of any distribution hereunder,
shall terminate the entire interest of such beneficiary in any to the then
undistributed portion of such Executive's account and such undistributed portion
shall thereafter be distributed to or for the benefit of the beneficiary or
beneficiaries designated as next highest in priority by such Executive. If no
such beneficiary be thus designated, or if all of the thus designated
beneficiaries do not survive or are no longer in existence at any time prior to
the complete distribution of such account, such account, or the then
undistributed balance thereof, shall be distributed by the corporation directly
to the person or persons who are heirs as named in the Executive's last will and
testament, except to the extent to which the specific bequests of such document
are paid by the Executive's other resources; or if there is no such document
then in existence under the laws of descent and distribution, to those persons
who would be entitled to the Executive's personal property, and in the
proportions to which they would be so entitled, had such Executive died, at the
time for such distribution, intestate and a resident of the State of North
Carolina.
ARTICLE V
MISCELLANEOUS
This Agreement supersedes all deferred compensation agreements
previously entered into by the parties hereto, none of which shall have any
further force and effect upon an after the execution and delivery hereof. This
Agreement shall be subject to, and governed by, the laws of the State of North
Carolina irrespective of the fact that one or more of the parties is or may
become a resident of a different state.
In the event any parts of this Agreement are found to be void, the
remaining provisions of this Agreement shall nevertheless be binding with the
same effect as though the void parts were deleted.
Whenever in this Agreement, words, including pronouns, are used in the
masculine, they shall be read and construed in the feminine or neuter whenever
they will so apply, and whenever in this Agreement, words, including pronouns,
are used in the singular or plural, they shall be read and construed in the
plural or singular, respectively, wherever they would so apply.
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees that it
will not be a party to any merger, consolidation, reorganization or transaction
which results in a "Change in Control" (as defined in the Employment Agreement),
unless and until its obligations hereunder shall be expressly assumed by its
successor or successors.
This Agreement may be amended or revoked at any time or times, in whole
or in part, solely by the mutual written consent of the Executive and the
Company.
ARTICLE VI
FIDUCIARY
The Company is hereby designated as the named fiduciary hereunder, and
shall be responsible for the management and control of the operation and
administration of this plan including any and all decisions pertaining to the
granting or denial of benefit claims and any and all decisions pertaining to the
review of denials of benefit claims.
ARTICLE VII
FUNDING POLICY
The Company shall establish a funding policy and method for this Plan,
and shall annually review such funding policy and method to make any necessary
adjustments thereto in order to ensure that such funding policy and method at
all times shall remain consistent with the objectives of this Plan, and to the
extent applicable, the requirements of Title I of the Executive Retirement
Income Security Act of 1974, as amended.
ARTICLE VIII
ADMINISTRATION
The Secretary of the Company shall maintain a copy of this Agreement
and any amendments thereto continuously as official records of the Company.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
the day and year first above written.
COMPANY:
CAROLINA FIRST BANCSHARES, INC.
By:
Chairman
ATTEST:
____________________, Secretary
(CORPORATE SEAL)
EXECUTIVE
(SEAL)
James E. Burt, III
<PAGE>
31
EXHIBIT A
Beneficiaries Designated by Executive:
Name % Interest in Payment
EXHIBIT 10.3
Amendment No. 1
to the
Carolina First BancShares, Inc. 1990 Stock Option Plan
This Amendment No. 1 ("Amendment") to the Carolina First BancShares,
Inc. 1990 Stock Option Plan is made and executed this 20th day of May, 1999, to
be effective as of May 1, 1999.
WHEREAS, the Board of Directors of Carolina First BancShares, Inc. (the
"Corporation"), deems it to be in the best interests of the Corporation and its
shareholders to effect certain amendments to the Carolina First BancShares, Inc.
1990 Stock Option Plan (the "Plan") pursuant to Section 5.3 of the Plan, which
amendments do not require approval of the stockholders of the Corporation;
NOW, THEREFORE, in accordance with Section 5.3 of the Plan, the Plan is
hereby amended as follows:
1. Definition of Acceleration Event. Section 1.2 of the Plan is
hereby amended by removing subsection (a) thereto andrenumbering subsections
(b) and (c) accordingly.
2. Definition of Change in Control. Section 1.2 of the Plan is hereby
amended by adding the following definition as new subsection (c):
(c) "Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of
25% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition by a Person who is on May 1, 1999 (the "Amendment Date")
the beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (ii) any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (v) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Amendment Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Amendment Date whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(3) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Voting Securities, and
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
3. Committee Requirements. The first two sentences of Section 1.3 shall
be deleted in their entirety, and the following sentences are substituted in
lieu thereof:
The Plan shall be administered by the Compensation and Benefits
Committee of the Board (the "Committee") or, at the discretion of the
Board from time to time, by the Board. The Committee shall consist of
two or more members of the Board. It is intended that the directors
appointed to serve on the Committee shall be "non-employee directors"
(within the meaning of Rule 16b-3 promulgated under the 1934 Act) and
"outside directors" (within the meaning of Code Section 162(m) and the
regulations thereunder) to the extent that Rule 16b-3 and, if necessary
for relief from the limitation under Code Section 162(m) and such
relief is sought by the Company, Code Section 162(m), respectively, are
applicable. However, the mere fact that a Committee member shall fail
to qualify under either of the foregoing requirements shall not
invalidate any Award made by the Committee which Award is otherwise
validly made under the Plan. The members of the Committee shall be
appointed by, and may be changed at any time and from time to time in
the discretion of, the Board. During any time that the Board is acting
as administrator of the Plan, it shall have all the powers of the
Committee hereunder, and any reference herein to the Committee (other
than in this Section 1.3) shall include the Board.
4. Payment with Common Stock. Section 1.5(e) of the Plan is hereby
amended by adding the following clause to the end of the first sentence:
; provided that if shares of Stock surrendered in payment of the
exercise price were themselves acquired otherwise than on the open
market, such shares shall have been held by the Optionee for at least
six months.
5. Acceleration Upon a Change in Control. Section 1.6 of the Plan is
hereby deleted in its entirety and the following is substituted in lieu thereof:
1.6 Acceleration Upon a Change in Control.
Except as otherwise provided in the Option Agreement, upon the
occurrence of a Change in Control, all outstanding Options,
SARs, and STARs shall become fully exercisable and all
restrictions on outstanding Options, SARs, and STARs shall
lapse; provided, however that such acceleration will not occur
if, in the opinion of the Company's accountants, such
acceleration would preclude the use of "pooling of interest"
accounting treatment for a Change in Control transaction that
(a) would otherwise qualify for such accounting treatment, and
(b) is contingent upon qualifying for such accounting
treatment. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in
Section 2.2, the excess Options shall be deemed to be
Nonqualified Stock Options.
6. Acceleration Upon Certain Events Not Constituting a Change in
Control. Section 1.7 of the Plan is hereby deleted in its entirety and the
following is substituted in lieu thereof:
1.7 Acceleration Upon Certain Events Not Constituting a Change in
Control.
In the event of the occurrence of any circumstance,
transaction or event not constituting a Change in Control (as
defined in Section 1.2(c)) but which the Board of Directors
deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of the 1934 Act, the Committee may in its sole
discretion declare all outstanding Options, SARs, and STARs to
be fully exercisable, and/or all restrictions on all
outstanding Options, SARs, and STARs to have lapsed, in each
case, as of such date as the Committee may, in its sole
discretion, declare, which may be on or before the
consummation of such transaction or event. To the extent that
this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Section 2.2, the excess Options
shall be deemed to be Nonqualified Stock Options.
7. Acceleration for Any Other Reason; Changes in Capital Structure. The
Plan is hereby amended by adding the following as Sections 1.8 and 1.9 of the
Plan and by renumbering the present Section 1.8 to Section 1.10:
1.8 Acceleration for Any Other Reason.
Regardless of whether an event has occurred as described in
Section 1.6 or 1.7 above, the Committee may in its sole
discretion at any time determine that all or a portion of an
Optionee's Options, SARs, and STARs shall become fully or
partially exercisable, and/or that all or a part of the
restrictions on all or a portion of the outstanding Options,
SARs, and STARs shall lapse, in each case, as of such date as
the Committee may, in its sole discretion, declare. The
Committee may discriminate among Participants and among Awards
granted to a Participant in exercising its discretion pursuant
to this Section 1.8.
1.9 Changes in Capital Structure.
In the event a stock dividend or stock split is declared, the
authorization limits under Section 5.1 and 5.4 shall be
changed proportionately, and the shares of Stock then subject
to each Award shall be increased or decreased proportionately
and appropriately without any change in the aggregate purchase
price therefor. In the event the Stock shall be changed into
or exchanged for a different number or class of shares of
stock or securities of the Company or of another corporation,
whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination
of shares, merger or consolidation, the authorization limits
under Section 5.1 and 5.4 shall be adjusted proportionately,
and there shall be substituted for each such share of Stock
then subject to each Award the number and class of shares into
which each outstanding share of Stock shall be so exchanged,
all without any change in the aggregate purchase price for the
shares then subject to each Award, or, subject to Section
11.2, there shall be made such other equitable adjustment as
the Committee shall approve.
8. Continued Employment. Section 2.3 of the Plan is hereby amended
by adding the following clause to the end of the first sentence:
; provided that with respect to Incentive Stock Options, if a period of
leave exceeds 90 days and the individual's right to reemployment is not
guaranteed whether by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such
leave.
9. Termination of Employment. Section 3.1(b) of the Plan is hereby
changing the term "Stock Option Committee" to "Committee" and by deleting the
words "an Incentive or" from the first sentence.
10. Section 83(b) Election. Section 3.2 of the Plan shall be deleted
in its entirety.
11. Certain Tax Code References. All references in the Plan to Section
422A of the Code shall be changed to refer to "Section 422 of the Code," except
the references to Section 422A(c)(7) contained in Sections 1.5(c) and 1.5(d) of
the Plan, which shall be changed to refer to "Section 22(e)(3) of the Code," and
all references in the Plan to Section 425 of the Code, or any subsection
thereof, shall be changed to refer to "Section 424 of the Code," or the
corresponding subsection thereof.
12. Effect of Amendment. As modified hereby, the provisions of the Plan
shall remain in full force and effect.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
duly executed as of the date first above written.
Carolina First BancShares, Inc.
----------------------------
By:
Title:
EXHIBIT 10.4
Draft dated May 19, 1999
CAROLINA FIRST BANCSHARES, INC.
SECOND AMENDED AND RESTATED
DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE 1
ESTABLISHMENT OF PLAN
1.01 Background of Plan. Carolina First BancShares, Inc. hereby amends and
restates the Carolina First BancShares, Inc. Amended and Restated
Directors' Deferred Compensation Plan, effective as of January 1, 2000,
and renames the plan the Carolina First BancShares, Inc. Second Amended
and Restated Directors' Deferred Compensation Plan.
1.02 Status of Plan. The Plan is intended to be a nonqualified, unfunded
plan of deferred compensation under the Internal Revenue Code of 1986,
as amended. Although the plan is unfunded for tax purposes, the Company
has established a trust under Revenue Procedure 92-64 to provide
benefits under the Plan. (See Section 1.03).
1.03 Establishment of Trust. As noted in Section 1.02, the Company has
established a trust to fund benefits provided under the terms of the
Plan ("Trust"). It is intended that a transfer of assets into the Trust
will not generate taxable income (for federal income tax purposes) to
the Participants until such assets are actually distributed or
otherwise made available to the Participants.
1.04 Purpose. The purpose of the Plan is to permit Directors to defer
Compensation they receive from the Company and, through the Stock
Account, give Directors the opportunity to further align their
interests with the interests of the Company's shareholders.
ARTICLE 2
DEFINITIONS
2.01 Definitions. Certain terms of the Plan have defined meanings set forth
in this Article and which shall govern unless the context in which they
are used clearly indicates that some other meaning is intended.
Accounts. The Certificate of Deposit Account, the Balanced Mutual
Fund Account, the Growth Mutual Fund Account and the Stock Account, as defined
below.
Advisory Director. A Director becomes an Advisory Director in the month
following his or her 70th birthday. Advisory Directors may continue to
attend meetings of the Board and shall receive the same Compensation as
Directors, but may not vote.
Balanced Mutual Fund Account. The account established by the
Company for each Participant for Compensation deferred pursuant to the
Plan, the performance and value of which shall be measured by reference
to the performance of one or more balanced mutual funds (investing in
equities and fixed income instruments) designated from time to time by
the Plan Administrator as being benchmark investments for the Balanced
Mutual Fund Accounts. The maintenance of individual Balanced Mutual
Fund Accounts is for bookkeeping purposes only.
Beneficiary. Any person or persons designated by a Participant,
in accordance with procedures established by the Committee or Plan
Administrator, to receive benefits hereunder in the event of the
Participant's death. If any Participant shall fail to designate a
Beneficiary or shall designate a Beneficiary who shall fail to survive
the Participant, the Beneficiary shall be the Participant's surviving
spouse, or, if none, the Participant's surviving descendants (who shall
take per stirpes) and if there are no surviving descendants, the
Beneficiary shall be the Participant's estate.
Board. The Board of Directors of the Company.
Certificate of Deposit Account. The account established by the
Company for each Participant for Compensation deferred pursuant to the
Plan and which shall be credited with interest on the last day of each
month (or such other day as determined by the Plan Administrator) based
on the annual yield of six-month certificates of deposit of Lincoln
Bank as of, and adjusted on, April 1 and October 1 of each calendar
year. The maintenance of individual Certificate of Deposit Accounts is
for bookkeeping purposes only.
Committee. The Compensation Committee of the Board or its
designee that will administer and interpret the terms of the Plan.
Common Stock. The $2.50 par value common stock of the Company.
Common Stock Units. Phantom stock units having value based on shares of
Common Stock, which may be credited to Participants' Stock Accounts
pursuant to the Plan.
Company. Carolina First BancShares, Inc. and its corporate
successors.
Compensation. The compensation that the Company pays a Director to
serve as a Director, including without limitation, annual retainer and
amounts paid for attendance meetings of Directors.
Director. A member of the Board, a member of a Subsidiary's board of
directors, an Advisory Director to the Company or a Subsidiary, or a
member of an advisory board of directors to the Company or a
Subsidiary.
Election Form. A form, substantially in the form attached hereto as
Exhibit A, pursuant to which a Director elects to defer Compensation
under the Plan.
Election Date. The date established by the Plan as the date by which a
Participant must submit a valid Election Form to the Plan Administrator
in order to participate in the Plan for a calendar year. For each
calendar year, the Election Date is December 31 of the preceding
calendar year; provided, however, that the Election Date for a newly
eligible Participant shall be the 30th day following the date on which
such individual becomes a Director.
Fair Market Value. The average of the bid and asked price of a share of
Common Stock on the over-the-counter market on a given date, or if the
Common Stock was not traded on such day, then on the next preceding
trading date on which the Common Stock was traded.
Growth Mutual Fund Account. The account established by the
Company for each Participant for Compensation deferred pursuant to the
Plan, the performance and value of which shall be measured by reference
to the performance of one or more growth mutual funds (investing in
growth equities) designated from time to time by the Plan Administrator
as being benchmark investments for the Growth Mutual Fund Accounts. The
maintenance of individual Growth Mutual Fund Accounts is for
bookkeeping purposes only.
Independent Agent. An "agent independent of the issuer" as
defined in Rule 100 of Regulation M under the Securities Exchange Act
of 1934, as amended. The Independent Agent shall be First Citizens
Bank, Raleigh, North Carolina, or such other agent independent of the
issuer as shall be designated from time to time by the Board.
Participant. Any Director who is participating in the Plan.
Plan. The Carolina First BancShares, Inc. Amended and Restated
Directors' Deferred Compensation Plan as set forth in this document,
together with any subsequent amendments hereto.
Plan Administrator. The Treasurer of the Company or such other
individual(s) appointed by the Committee.
<PAGE>
Stock Account. The account established by the Company for each
Participant for Compensation deferred pursuant to the Plan and which
shall be credited with a money-market rate of return unless and until
invested in Common Stock Units. Once invested in Common Stock Units,
the performance and value of the Stock Account shall be measured by
reference to the Fair Market Value of the Common Stock from time to
time. The maintenance of individual Stock Accounts is for bookkeeping
purposes only.
Subsidiary. A wholly owned subsidiary of the Company and any
wholly owned subsidiary of a subsidiary of the Company.
Termination of Service. A Termination of Service occurs when a
Participant ceases to serve as a Director for any reason.
Transfer Date. The date upon which a transfer between or among
Accounts is effected pursuant to a valid Transfer Form.
Transfer Form. A form, substantially in the form attached hereto
as Exhibit B, pursuant to which a Participant elects to transfer
amounts between his or her Accounts.
Trust. The trust referred to in Sections 1.02 and 1.03 of the
Plan.
ARTICLE 3
PARTICIPATION
3.01 Election to Participate. Each Director is automatically eligible to
participate in the Plan. A Director may participate in the Plan by
delivering a properly completed and signed Election Form to the Plan
Administrator on or before the Election Date. The Director's
participation in the Plan will be effective as of the first day of the
calendar year beginning after the Plan Administrator receives the
Director's Election Form, or, in the case of a newly eligible
Participant, on the first day of the calendar month beginning after the
Plan Administrator receives such Director's Election Form. A
Participant shall not be entitled to any benefit hereunder unless such
Participant has properly completed an Election Form and deferred the
receipt of his or her Compensation pursuant to the Plan.
3.02 Voluntary Termination of Election Form. A Participant may terminate his
or her Election Form with respect to future Compensation at any time.
Such termination will be effective on the first day of the calendar
quarter after the Participant notifies the Plan Administrator of the
Participant's termination of the Election Form. If a Participant
terminates his or her Election Form, however, the Participant may not
activate a new Election Form to defer his or her Compensation for the
remainder of the calendar year in which the Participant's former
Election Form was terminated. However, effective as of the first day of
the following calendar year or the first day of any subsequent calendar
year, the Participant (other than a Director who has begun receiving
payment of his or her Account) may deliver a new Election Form and
thereby defer the receipt of any future Compensation attributable to
service on the Board. Such new Election Form shall be effective only
for Compensation applicable to the Participant's service on the Board
after the first day of the calendar year following the Plan
Administrator's receipt of the Participant's new Election Form. Any
Compensation deferred prior to the termination of the Election Form
shall remain subject to the original Election Form and the Plan.
3.03 Continuation of Election Form. Prior to the commencement of each
calendar year, a Participant shall have the right, by executing and
delivering to the Plan Administrator a new Election Form, to modify the
dollar amount or percentage of his or her Compensation which are
deferred under the Plan, and, if such Election Form is filed at least
two years prior to the payment commencement date, to change the form of
payment (i.e., lump sum or installments) as provided in Section 4.05(b)
below. If the Participant fails to deliver a new Election Form prior to
the commencement of the new calendar year, the Participant's Election
Form in effect during the previous calendar year shall continue in
effect during the new calendar year.
3.04 Automatic Termination of Election Form. A Participant's Election Form
will automatically terminate at the earlier of (i) the Participant's
Termination of Service, or (ii) the termination of the Plan.
3.05 No Right to Continue as a Director. Nothing contained in the Plan
shall be deemed to give any Director the
right to be retained as a Director of the Company.
ARTICLE 4
PLAN BENEFITS
4.01 Deferred Compensation. A Director may elect to defer all or part of the
Compensation to which he or she is entitled in a calendar year. The
amount deferred, if any, shall be in increments of $10, beginning with
$100, up to 100% of the Director's Compensation. For bookkeeping
purposes, the amount of the Compensation which the Director elects to
defer pursuant to the Plan shall be transferred to and held in
individual Accounts.
4.02 Time of Election of Deferral. A Director who wishes to defer
Compensation for a calendar year must irrevocably elect to do so on or
prior to the Election Date for such calendar year, by delivering a
valid Election Form to the Plan Administrator. The Election Form shall
indicate, among other required information: (1) the Compensation to be
deferred; and (2) the portion of the deferral to be credited to the
Participant's Certificate of Deposit Account, Balanced Mutual Fund
Account, Growth Mutual Fund Account and Stock Account, respectively.
Amounts to be deferred shall be credited to the Participant's
Certificate of Deposit Account, Balanced Mutual Fund Account, Growth
Mutual Fund Account and/or Stock Account, as applicable, as of the date
such Compensation is otherwise payable.
4.03 Accounts.
(a) Certificate of Deposit Account. Amounts in a Participant's
Certificate of Deposit Account will be credited with interest on
the last day of each month (or such other day as determined by
the Plan Administrator) based on the annual yield of six-month
certificates of deposit of Lincoln Bank as of, and adjusted on,
April 1 and October 1 of each calendar year.
(b) Balanced Mutual Fund Account. Amounts in a Participant's Balanced
Mutual Fund Account will be credited or debited, as the case may
be, by reference to the performance of one or more balanced
mutual funds (investing in equities and fixed income instruments)
designated from time to time by the Plan Administrator as being
benchmark investments for the Balanced Mutual Fund Accounts.
(c) Growth Mutual Fund Account. Amounts in a Participant's Growth
Mutual Fund Account will be credited or debited, as the case may
be, by reference to the performance of one or more growth mutual
funds (investing in growth equities) designated from time to time
by the Plan Administrator as being benchmark investments for the
Growth Mutual Fund Accounts.
(d) Stock Account. Amounts in a Participant's Stock Account initially
will be credited with interest on the last day of each month (or
such other day as determined by the Plan Administrator) based on
the rate earned in a money-market account at Lincoln Bank. If,
when, and to the extent that, the trustee of the Trust is able to
purchase shares of Common Stock for the Trust (which purchases
shall be made through an Independent Agent in accordance with
Regulation M, Section 102(c), under the Securities Exchange Act
of 1934, as amended, or any successor provision), the amounts in
Participants' Stock Accounts shall be converted, on a prorata
basis, to Common Stock Units. Such Common Stock Units are
recorded as units of Common Stock, and fractions thereof, with
one Common Stock Unit equating to a single share of Common Stock.
Thus, the value of one Common Stock Unit shall be the Fair Market
Value of a single share of Common Stock on the date such Common
Stock Units are credited to the Stock Account. The use of Common
Stock Units is merely a bookkeeping convenience; the Common Stock
Units are not actual shares of Common Stock. The actual shares of
Common Stock purchased by the trustee of the Trust are owned by
the Company, under grantor trust rules, and are subject to the
claims of creditors of the Company. There can be no assurance
that the trustee of the Trust will be able to purchase shares of
Common Stock or that amounts deferred into a Participant's Stock
Account will ever be credited with Common Stock Units. As
described below in Section 4.05, a Participant may elect to have
some or all of the value of his or her Stock Account (to the
extent credited with Common Stock Units) distributed in actual
shares of Common Stock. The maximum number of Common Stock Units
that may be allocated by deferral of Compensation to Stock
Accounts under the Plan is 100,000.
(e) Sub-Accounts. To the extent required for bookkeeping purposes, a
Participant's Accounts will be subdivided to reflect deferred
Compensation on a year-by-year basis. For example, a 1997 Growth
Mutual Fund Sub-Account, a 1998 Growth Mutual Fund Sub-Account, a
1997 Stock Sub-Account, a 1998 Stock Sub-Account, and so on.
4.04 Investment in the Stock Account and Transfers Among Accounts.
(a) Election Into the Stock Account. If a Participant elects to defer
Compensation into his or her Stock Account, his or her Stock
Account shall be credited, as of the date described in Section
4.02, with a money-market rate of return unless and until
converted to Common Stock Units, as described above in Section
4.03(d). If and when appropriate, a Participant's Stock Account
will be credited with that number of Common Stock Units, and
fractions thereof, obtained by dividing the dollar amount to be
converted to Common Stock Units by the Fair Market Value of the
Common Stock as of such date.
(b) Transfers Among Accounts. Except as provided in the remainder of
this paragraph (b), a Participant may, by delivering a valid
Transfer Form to the Plan Administrator, direct that all or any
portion, designated as a whole dollar amount or as a number of
whole Common Stock Units, of the existing balance of one of his
or her Accounts be transferred to one or more of his or her other
Accounts. However, a Participant may not effect "opposite way"
transfers between his or her Accounts more often than once in any
six-month period.
(c) Transfer Into the Stock Account. If a Participant elects pursuant
to Section 4.04(b) to transfer an amount from one or more of his
or her other Accounts to his or her Stock Account, then effective
as of the election's Transfer Date, (i) his or her Account or
Accounts from which funds are being transferred shall be reduced
by the amount elected to be transferred, and (ii) his or her
Stock Account shall be credited with a money-market rate of
return unless and until credited with Common Stock Units, as
described above in Section 4.03(d). If and when appropriate, a
Participant's Stock Account will be credited with that number of
Common Stock Units, and fractions thereof, obtained by dividing
the dollar amount to be converted to Common Stock Units by the
Fair Market Value of the Common Stock as of such date.
(d) Transfer Out of the Stock Account. If a Participant elects
pursuant to Section 4.04(b) to transfer an amount from his or her
Stock Account to one or more of his or her other Accounts, then
effective as of the election's Transfer Date, (i) his or her
Account or Accounts to which funds are being transferred shall be
credited with a dollar amount equal to the cash balance, if any,
in the Stock Account plus the amount obtained by multiplying the
number of Common Stock Units to be transferred into such Account
by the Fair Market Value of the Common Stock on the election's
Transfer Date; and (ii) his or her Stock Account shall be reduced
by the cash and number of Common Stock Units elected to be
transferred.
(e) Dividend Equivalents. Effective as of the payment date for each
cash dividend on the Common Stock, the Stock Account of each
Participant whose Stock Account was credited with Common Stock
Units on the record date for such dividend shall be credited with
an amount equal to the cash dividend that would have been paid on
such shares of Common Stock if issued in his or her name. Such
amount shall be credited with a money-market rate of interest
unless and until converted to Common Stock Units as provided in
Section 4.03(d).
(f) Stock Dividends. Effective as of the payment date for each stock
dividend on the Common Stock, additional Common Stock Units shall
be credited to the Stock Account of each Participant whose Stock
Account was credited with Common Stock Units on the record date
for such dividend. The number of Common Stock Units that shall be
credited to the Stock Account of such a Participant shall equal
the number of shares of Common Stock, and fractions thereof,
which the Participant would have received as stock dividends had
he or she been the owner on the record date for such stock
dividend of the number of shares of Common Stock equal to the
number of Common Stock Units credited to his or her Stock Account
on such record date.
(g) Allocation of Dividends. To the extent required for bookkeeping
purposes, the allocation of additional Common Stock Units
attributable to cash dividends or stock dividends will be made to
the Stock Sub-Account holding existing Common Stock Units to
which the cash dividend or stock dividend relates. For example, a
Participant's 1997 Stock Sub-Account will be credited with
dividends attributable to Common Stock Units held in the 1997
Stock Sub-Account. A Participant's 1998 Stock Sub-Account will be
credited with dividends attributable to Common Stock Units held
in the 1998 Stock Sub-Account, and so on.
(h) Recapitalization. If, as a result of a recapitalization of the
Company, the outstanding shares of Common Stock shall be changed
into a greater number or smaller number of shares, the number of
Common Stock Units credited to a Participant's Stock Account
shall be appropriately adjusted on the same basis.
(i) Distributions. Amounts credited to the Stock Account (in cash or
Common Stock Units) may only be distributed out of the Stock
Account by transfer to one or more other Accounts or withdrawal
from the Stock Account. Withdrawals from the Stock Account shall
be made either in cash or shares of Common Stock, as indicated by
the Participant; provided, however, that shares of Common Stock
may be elected only to the extent that the Stock Account is
credited with Common Stock Units. Any such withdrawal will be
delayed, if necessary, until the expiration of six months after
the last transfer of funds into the Stock Account from another
Account or the last day amounts credited to the Stock Account are
converted to Common Stock Units. Any fractional Common Stock
Units shall be paid in cash. For purposes of transfers to the
other Accounts or distributions from the Stock Fund payable in
cash, the number of Common Stock Units to be transferred or
distributed from a Participant's Stock Account shall be valued by
multiplying the number of such Common Stock Units by the Fair
Market Value of the Common Stock as of the date such distribution
is to occur.
(j) Responsibility for Investment Choices. Each Participant is solely
responsible for any decision to defer Compensation into his or
her Accounts and accepts all investment risks entailed by such
decision, including the risk of loss and a decrease in the value
of the amounts he or she elects to defer into his or her
Accounts.
4.05 Form of Payment.
(a) Payment of Benefits. Payment of Plan benefits shall commence on
the first regular business day of the first month following the
earliest to occur of (i) the Participant's Termination of
Service, or (ii) the Participant's reaching age 70 or becoming
an Advisory Director. Any Director who has begun receiving a
payment of Plan benefits may not participate further in the
Plan.
(b) Optional Forms of Payment. Distributions from Participant
Accounts (either in cash or in Common Stock) may be paid to the
Participant either in a lump sum or in a number of approximately
equal monthly, quarterly or annual installments designated by the
Participant. Such installments may be for up to ten years. The
method of payment (e.g., in lump sum or installments) elected on
the Participant's initial Election Form will apply to all amounts
(including future deferrals) held in the Participant's Accounts;
unless the Participant elects a different method of payment
(e.g., lump sum or installments) for all amounts (including prior
and future deferrals) held in the Participant's Accounts by
filing a subsequent Election Form with the Plan Administrator at
least two years prior to the payment commencement date. If a
Participant elects to receive a distribution of his or her
Accounts in cash installments, the Plan Administrator may
purchase an annuity from an insurance company which annuity will
pay the Participant the desired periodic installments. If the
Plan Administrator purchases an annuity contract, the Director
will have no further rights to receive payments from the Company
or the Plan with respect to the amounts subject to the annuity.
If the Plan Administrator does not purchase an annuity contract,
the value of the Accounts remaining unpaid shall continue to
receive allocations of return as provided in Section 4.03 and
Section 4.04. If the Participant fails to designate a payment
method in the Participant's initial Election Form or any
subsequent Election Form filed with the Plan Administrator at
least two years prior to the payment commencement date, the
Participant's Account shall be distributed in a lump sum.
(c) Stock Payment. If a Participant so designates as provided in
Section 4.04(i), distributions from the Stock Account may be
distributed to the Participant in the form of Common Stock
rather than cash. The shares of Common Stock distributable to
Participants under the Plan must be previously issued and
repurchased shares and may not be original issue shares.
(d) Uniform Elections. A Participant's election of payment form
shall apply uniformly to each year's Compensation deferred under
the Plan.
(e) Payment to Beneficiary. Upon the Participant's death, all unpaid
amounts held in the Participant's Account shall be paid to the
Participant's Beneficiary in a lump sum no later than sixty (60)
days following the Participant's death or, if the Beneficiary
shall so elect in writing to the Plan Administrator prior to
payment, unpaid amounts held in the Participant's Account shall
be paid to the Participant's Beneficiary over the same period
that the Participant had elected to receive such amounts.
4.06 Financial Hardship. The Plan Administrator may, in its sole discretion,
accelerate the making of payment to a Participant of an amount
reasonably necessary to handle a severe financial hardship of a sudden
and unexpected nature due to causes not within the control of the
Participant. Such payment may be made even if the Participant has not
incurred a Termination of Service. All financial hardship distributions
shall be made in cash in a lump sum. Such payments will be made on a
first-in, first-out basis so that the oldest Compensation deferred
under the Plan shall be deemed distributed first in a financial
hardship. Any such financial hardship distribution from a Participant's
Stock Account will be delayed, if necessary, until the expiration of
six months after the last transfer of funds into the Stock Account from
another Account.
4.07 Payment to Minors and Incapacitated Persons. In the event that any
amount is payable to a minor or to any person who, in the judgment of
the Plan Administrator, is incapable of making proper disposition
thereof, such payment shall be made for the benefit of such minor or
such person in any of the following ways as the Plan Administrator, in
its sole discretion, shall determine:
(a) By payment to the legal representative of such minor or such
person;
(b) By payment directly to such minor or such person;
(c) By payment in discharge of bills incurred by or for the benefit
of such minor or such person. The Plan Administrator shall make
such payments without the necessary intervention of any guardian
or like fiduciary, and without any obligation to require bond or
to see to the further application of such payment. Any payment
so made shall be in complete discharge of the Plan's obligation
to the Participant and his or her Beneficiaries.
4.08 Application for Benefits. The Plan Administrator may require a
Participant or Beneficiary to complete and file certain forms as a
condition precedent to receiving the payment of benefits. The Plan
Administrator may rely upon all such information given to it, including
the Participant's current mailing address. It is the responsibility of
all persons interested in receiving a distribution pursuant to the Plan
to keep the Plan Administrator informed of their current mailing
addresses.
4.09 Designation of Beneficiary. Each Participant from time to time may
designate any person or persons (who may be designated contingently or
successively and who may be an entity other than a natural person) as
his or her Beneficiary or Beneficiaries to whom the Participant's
Account is to be paid if the Participant dies before receipt of all
such benefits. Each Beneficiary designation shall be on the form
prescribed by the Plan Administrator and will be effective only when
filed with the Plan Administrator during the Participant's lifetime.
Each Beneficiary designation filed with the Plan Administrator will
cancel all Beneficiary designations previously filed with the Plan
Administrator. The revocation of a Beneficiary designation, no matter
how effected, shall not require the consent of any designated
Beneficiary.
<PAGE>
ARTICLE 5
FUNDING OF PLAN
5.01 Funding. Plan benefits shall be paid from the general assets of the
Company or as otherwise directed by the Company. To the extent that any
Participant acquires the right to receive payments under the Plan (from
whatever source), such right shall be no greater than that of an
unsecured general creditor of the Company. Participants and their
Beneficiaries shall not have any preference or security interest in the
assets of the Company other than as a general unsecured creditor.
ARTICLE 6
ADMINISTRATION OF THE PLAN
6.01 Administration of the Plan. The Committee and the Plan Administrator
shall have complete control of the administration of the Plan with all
powers necessary to enable it to properly carry out the provisions of
the Plan. In addition to all implied powers and responsibilities
necessary to carry out the objectives of the Plan, the Committee and
the Plan Administrator shall have the following specific powers and
responsibilities:
(a) To construe the Plan and to determine all questions arising
in the administration, interpretation and operation of the Plan;
(b) To determine the benefits of the Plan to which any Participant,
Beneficiary or other person may be entitled;
(c) To keep records of all acts and determinations of the
Committee and Plan Administrator, and to keep all such
records, books of accounts, data and other documents as may be
necessary for the proper administration of the Plan;
(d) To prepare and distribute to all Participants and
Beneficiaries information concerning the Plan and their rights
under the Plan;
(e) To do all things necessary to operate and administer the Plan in
accordance with its provisions.
Subject to Section 6.02, the Committee's interpretation and
construction of any provision of the Plan shall be final, conclusive
and binding on all Participants and the Company.
6.02 Claims Resolution. If for any reason a benefit due under the Plan is
not paid when due, the Participant or other person alleging entitlement
to such benefit may file a written claim with the Committee. If the
claim is denied or no response is received within forty-five (45) days
(in which case, the claim will be deemed to have been denied), the such
person may appeal the denial to the Board within thirty (30) days of
the denial. In pursuing an appeal, the person may require that a
responsible officer of the Company review the denial, may review
pertinent documents, and may submit issues and comments in writing. Any
decision on appeal shall be made within thirty (30) days after the
appeal is made, unless special circumstances require the Board to
extend the period for an additional thirty (30) days.
ARTICLE 7
AMENDMENT AND TERMINATION
7.01 Amendment and Termination. The Committee reserves the right to modify,
alter, amend, or terminate the Plan, at any time and from time to time,
without notice, to any extent deemed advisable; provided, however, that
no such amendment or termination shall (without the written consent of
the Participant, if living, and if not, the Participant's Beneficiary)
adversely affect any benefit under the Plan which has accrued with
respect to the Participant or Beneficiary as of the date of such
amendment or termination regardless of whether such benefit is in pay
status.
ARTICLE 8
MISCELLANEOUS
8.01 Headings. The headings and sub-headings in the Plan have been
inserted for convenience of reference only and are to be ignored in
any construction of the provisions hereof.
8.02 Spendthrift Clause. None of the benefits, payments, proceeds or
distribution under the Plan shall be subject to the claim of any
creditor of any Participant or Beneficiary, or to any legal process by
any creditor of such Participant or Beneficiary, and none of them shall
have any right to alienate, commute, anticipate or assign any of the
benefits, payments, proceeds or distributions under the Plan except to
the extent expressly provided herein to the contrary.
8.03 Merger. The Plan shall not be automatically terminated by the Company's
acquisition by, merger into, or sale of substantially all of its assets
to any other organization, but the Plan shall be continued thereafter
by such successor organization. All rights to amend, modify, suspend or
terminate the Plan shall be transferred to the successor organization,
effective as of the date of the combination or sale.
8.04 Release. Any payment to Participant or Beneficiary, or to their legal
representatives, in accordance with the provisions of the Plan, shall
to the extent thereof be in full satisfaction of all claims hereunder
against the Committee, the Plan Administrator and the Company, any of
whom may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a
receipt and release therefor in such form as shall be determined by the
Plan Administrator, the Committee, or the Company, as the case may be.
8.05 Governing Law. The Plan shall be governed by the laws of the State of
North Carolina.
8.06 Costs of Collection; Interest. In the event the Participant collects
any part or all of the payments due under the Plan by or through a
lawyer or lawyers, the Company will pay all costs of collection,
including reasonable legal fees incurred by the Participant. In
addition, the Company shall pay to the Participant interest on all or
any part of the payments that are not paid when due at a rate equal to
the Prime Rate as announced by SunTrust Bank or its successors from
time to time.
8.07 Successors and Assigns. The Plan shall be binding upon the successors
and assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Second Amended and
Restated Plan to be duly executed and its seal to be hereunto affixed on the
date indicated below.
CAROLINA FIRST BANCSHARES, INC.
By:
Title:
Date:
[CORPORATE SEAL]
Attest:
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