PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(x) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (sect.mark)240.14a-11(c) or
(sect.mark)240.14a-12
CCB FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
CCB FINANCIAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fees (Check the appropriate box):
(x) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
( ) Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY COPY
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 5, 1994
NOTICE is hereby given that the Annual Meeting of Shareholders of CCB
Financial Corporation (the Corporation) will be held as follows:
PLACE: George Watts Hill Alumni Center, Stadium Drive at Ridge
Road on the campus of the University of North Carolina at
Chapel Hill, Chapel Hill, North Carolina
DATE: Tuesday, April 5, 1994
TIME: 11:00 A.M.
For your convenience, a map with directions to the George Watts Hill Alumni
Center appears on the back inside cover of the accompanying Proxy Statement.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To consider a proposal to increase the number of directors of the
Corporation to 18.
2. To elect 18 members of the Board of Directors.
3. To consider a proposal to approve the Corporation's Long-Term
Incentive Plan.
4. To consider a proposal to increase the number of authorized shares
of the Corporation's common and preferred stock from 25,000,000 to
35,000,000.
5. To consider a proposal to ratify the appointment of KPMG Peat
Marwick as the Corporation's independent accountants for 1994.
6. To consider and act on any other matters that may properly come
before the Annual Meeting.
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting has been set as the close of business on
February 16, 1994.
EVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO MARK, DATE, AND SIGN THE ENCLOSED APPOINTMENT OF PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR APPOINTMENT OF PROXY AND VOTE YOUR SHARES IN PERSON.
Sincerely,
ERNEST C. ROESSLER,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
March , 1994
PRELIMINARY COPY
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
PROXY STATEMENT
MAILING DATE: MARCH , 1994
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 5, 1994
GENERAL
This Proxy Statement is being distributed in connection with the
solicitation by the Board of Directors of CCB Financial Corporation (the
Corporation) of appointments of proxy in the form enclosed herewith for the 1994
Annual Meeting of Shareholders of the Corporation and any adjournments thereof
(the Annual Meeting). The Annual Meeting will be held on Tuesday, April 5, 1994,
beginning at 11:00 A.M., at the George Watts Hill Alumni Center, Stadium Drive
at Ridge Road on the campus of the University of North Carolina at Chapel Hill,
Chapel Hill, North Carolina. For your convenience, a map with directions to the
George Watts Hill Alumni Center appears on the back inside cover of this Proxy
Statement.
As used in this Proxy Statement, the term the Bank refers to the
Corporation's North Carolina-chartered commercial bank subsidiary, Central
Carolina Bank and Trust Company.
VOTING OF APPOINTMENTS OF PROXIES; REVOCATION
Persons named in the enclosed appointment of proxy as proxies for
shareholders at the Annual Meeting are Richard W. Every, Secretary of the
Corporation and the Bank, W. Harold Parker, Jr., Controller of the Corporation
and the Bank, and Manuel L. Rojas, General Auditor of the Bank. Shares
represented by each appointment of proxy which is properly executed, returned,
and not revoked, will be voted in accordance with the directions contained
therein. If no directions are given, those shares will be voted FOR the election
of each of the 18 nominees for director named in Proposal 2 and FOR each of the
other proposals described herein. If, at or before the time of the Annual
Meeting, any nominee named in Proposal 2 becomes unavailable for any reason, the
proxies will be authorized to vote for a substitute nominee. On such other
matters as may properly come before the meeting, the proxies will be authorized
to vote shares represented by appointments of proxy in accordance with their
best judgment.
A shareholder may revoke an appointment of proxy at any time before the
shares represented by it have been voted by filing with Mr. Every an instrument
revoking it or a properly executed appointment of proxy bearing a later date, or
by attending the Annual Meeting and announcing his or her intention to vote in
person.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of preparing, assembling, and mailing
this Proxy Statement and other proxy solicitation expenses. In addition to the
use of the mail, appointments of proxy may be solicited in person or by
telephone by officers, directors, or employees of the Corporation and its
subsidiaries without additional compensation.
RECORD DATE
The Board of Directors has set February 16, 1994, as the record date (the
Record Date) for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. Only shareholders of record on that date will be
entitled to vote at the Annual Meeting.
VOTING SECURITIES
The voting securities of the Corporation are the shares of its $5.00 par
value common stock (Common Stock), of which 20,000,000 shares were authorized
and 9,516,379 shares were outstanding on January 31, 1994. During 1993, the
Corporation' convertible subordinated debentures were called for redemption and
substantially all were converted into shares of Common Stock.
VOTING PROCEDURES; VOTES REQUIRED FOR APPROVAL
At the Annual Meeting, each shareholder will be entitled to cast one vote
for each share of Common Stock held of record on the Record Date for each matter
submitted for voting and, in the election of directors, for each director to be
elected.
For Proposal 1 to be approved, a majority of the outstanding shares of
Common Stock must be voted in favor of approval. If Proposal 1 is approved, then
in the voting for directors the 18 nominees receiving the highest numbers of
votes will be elected. If Proposal 1 is not approved, then the 17 nominees
receiving the highest numbers of votes will be elected. In the case of Proposals
3, 4, and 5, for each of such proposals to be approved the number of votes cast
for approval must exceed the number of votes cast against the proposal. Except
in the voting on Proposal 1, abstentions and broker nonvotes will have no
effect. Because the affirmative vote of a majority of all outstanding shares is
required to approve Proposal 1, abstentions and broker nonvotes will have the
same effect as votes against that proposal.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
Set forth below is information regarding the only person known to
management of the Corporation to beneficially own more than 5% of the issued and
outstanding shares of Common Stock as of January 31, 1994.
PERCENTAGE
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS(1)
Central Carolina Bank and 718,399(2) 7.55%
Trust Company
Durham, North Carolina
(1) The calculation of the percentage of class beneficially owned is based on
the 9,516,379 shares of the Corporation's Common Stock issued and
outstanding on January 31, 1994.
(2) Shares beneficially owned by the Bank are held through its Trust Department
in various fiduciary capacities. In addition to the shares reflected above,
the Bank holds certain other shares in various fiduciary capacities as to
which the Bank disclaims beneficial ownership. The aggregate number of
shares held by the Bank includes 552,828 shares over which the Bank
exercises sole voting power, 165,721 shares over which the Bank has shared
voting power, 239,418 shares over which the Bank has sole investment power,
and 389,404 shares over which the Bank has shared investment power.
2
Set forth below is information as of January 31, 1994 regarding the
beneficial ownership of Common Stock by its current directors, nominees for
election as directors, certain of its executive officers individually, and by
all current directors and executive officers of the Corporation as a group.
PERCENTAGE
AMOUNT AND NATURE OF OF
NAME BENEFICIAL OWNERSHIP(1) CLASS(2)
J. Harper Beall, III 14,815(3) .16%
James B. Brame, Jr. 300 *
Timothy B. Burnett 500 *
W. L. Burns, Jr. 136,379(4) 1.43%
Arthur W. Clark 26,621 .28%
Kinsley van R. Dey, Jr. 9,067(5) .10%
Mrs. Frances Hill Fox 222,702 2.34%
T. E. Haigler, Jr. 2,125 .02%
George R. Herbert 2,195(6) .02%
Edward S. Holmes 4,320(7) .05%
Owen G. Kenan 3,730(8) .04%
Eugene J. McDonald 1,321(9) .01%
Hamilton W. McKay, Jr., M.D. 3,426(10) .04%
Eric B. Munson 275 *
Ernest C. Roessler 11,031(11) .12%
John B. Stedman 42,815(12) .45%
H. Allen Tate, Jr. 15,461(13) .16%
Dr. Phail Wynn, Jr. 367 *
J. Scott Edwards 17,022(14) .18%
Richard L. Furr 12,000(15) .13%
All current directors and 522,289(16) 5.49%
executive officers as a
group (18 persons)
(1) Except as otherwise noted, each individual exercises sole voting and
investment power with respect to all shares shown as beneficially owned.
(2) An asterisk (*) indicates less than .01%. Except as otherwise noted, the
calculation of the percentage of class beneficially owned is based on the
9,516,379 shares of Common Stock issued and outstanding at January 31,
1994.
(3) Includes 4,734 shares with respect to which Mr. Beall exercises sole voting
and investment power and 5,760 shares with respect to which Mr. Beall
exercises sole voting power only. The calculation of the percentage of
shares is based on 9,520,700 shares, which is composed of the 9,516,379
shares issued and outstanding at January 31, 1994 plus 4,321 shares subject
to an immediately exercisable option held by Mr. Beall.
(4) Includes 34,884 shares with respect to which Mr. Burns exercises shared
voting and investment power and 13,071 shares with respect to which he
exercises sole voting power only.
(5) Includes 1,012 shares with respect to which Mr. Dey exercises shared voting
and investment power.
(6) Includes 2,039 shares with respect to which Mr. Herbert exercises shared
voting and investment power.
(7) Does not include 21,648 shares held by Mr. Holmes' spouse and with respect
to which he disclaims any beneficial ownership.
(8) Includes 3,530 shares with respect to which Mr. Kenan exercises shared
voting and investment power.
(9) Includes 1,221 shares with respect to which Mr. McDonald exercises shared
voting and investment power.
(10) Does not include 1,057 shares held by Dr. McKay's spouse and son and with
respect to which he disclaims any beneficial ownership.
(11) Includes 6,762 shares with respect to which Mr. Roessler exercises sole
voting power only, and 1,500 shares with respect to which he is considered
to have shared voting and investment power.
(12) Includes 2,366 shares with respect to which Mr. Stedman exercises shared
voting and investment power.
3
(13) Includes 6,418 shares with respect to which Mr. Tate exercises shared
voting and investment power. Does not include a total of 2,787 shares held
by or for Mr. Tate's spouse and children and with respect to which he
disclaims any beneficial ownership.
(14) Includes 6,724 shares with respect to which Mr. Edwards exercises sole
voting power only and 262 shares with respect to which Mr. Edwards
exercises shared voting and investment power.
(15) Includes 6,724 shares with respect to which Mr. Furr exercises sole voting
power only and 702 shares with respect to which Mr. Furr exercises shared
voting and investment power.
(16) Includes an aggregate of 428,427 shares with respect to which current
directors and officers exercise sole voting and investment power, 56,683
shares with respect to which they have shared voting and investment power,
and 36,979 shares with respect to which they have sole voting power only.
PROPOSAL 1. SETTING THE NUMBER OF DIRECTORS
The Corporation's bylaws provide that the Board of Directors shall consist
of such number of members, not less than five nor more than 30, as from time to
time shall be determined by a majority of the votes which all of the
shareholders are entitled to cast. The number of directors of the Corporation
currently is set at 17. The Board of Directors recommends that the number of
directors be increased by shareholders to 18 and will introduce a proposal to
that effect at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 1.
PROPOSAL 2. ELECTION OF BOARD OF DIRECTORS
Action will be taken at the Annual Meeting to elect a full Board of
Directors. The Board of Directors has nominated the 18 persons named below for
election as directors for terms of one year or until their respective successors
are duly elected and qualified.
4
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOREACH OF THE 18
NOMINEES NAMED BELOW.
PRINCIPAL OCCUPATION
NAME AND AGE AND OTHER DIRECTORSHIPS
J. Harper Beall, III President, Fairfield Chair Company (furniture manufacturer)
(52)
James B. Brame, Jr.(2) President, Brame Specialty Co., Inc. (office supplies and equipment)
(48)
Timothy B. Burnett President, Bessemer Improvement Company (industrial and commercial real
(53) estate development)
W. L. Burns, Jr.(3) President and Chief Executive Officer of the Corporation and the Bank
(66) until April 6, 1993; presently serving as Chairman of the Board of the
Corporation and the Bank
Arthur W. Clark Retired since 1987; previously served as Chairman, President, and Chief
(71) Executive Officer, Peoples Security Life Insurance Company
Kinsley van R. Dey, Jr. Retired since 1990; previously served as President and Chief Executive
(69) Officer, Liggett Group, Inc. (cigarette manufacturer); Director, GTE
South (telecommunications company)
Mrs. Frances Hill Fox Secretary-Treasurer, Croasdaile, Inc. (real estate developer)
(85)
T. E. Haigler, Jr. Retired since 1989; previously served as President and Chief Executive
(69) Officer, Burroughs Wellcome Co. (pharmaceutical manufacturer)
George R. Herbert Retired since 1989; previously served as President, and currently is
(71) Vice Chairman and President Emeritus, Research Triangle Institute
(research contractor); also serves as Director, Duke Power Company,
and Trustee, Duke University
Edward S. Holmes Partner, Holmes & McLaurin (attorneys)
(64)
Owen G. Kenan President, Kenan Enterprises, Inc. (commercial real estate holding
(50) company), Kenan Oil Co., Inc. (petroleum products), Kenan
Developments, Inc. (commercial real estate developer); also serves as
Director, Kenan Transport Co., Inc. (bulk products hauler), and Vice
Chairman, Flagler Systems, Inc. (hotel and property management)
Eugene J. McDonald President, Duke Management Company (asset management company affiliated
(61) with Duke University); Executive Vice President, Duke University; also
serves as Director, SBSF Funds, Inc., Sphinx Pharmaceuticals, and
Flagg Group of Mutual Funds
Hamilton W. McKay, Jr., M.D. Physician, Carolina Allergy Clinic, P.A.
(64)
Eric B. Munson Executive Director, University of North Carolina Hospitals
(51)
Ernest C. Roessler(3) Executive Vice President and Chief Financial Officer of the Corporation
(52) and the Bank until April 6, 1993; presently serving as President and
Chief Executive Officer of the Corporation and the Bank
John B. Stedman(4) Retired since 1989; previously served as Chairman of the Board of
(69) Republic Bank & Trust Co.
H. Allen Tate, Jr.(5) President, Allen Tate Company, Inc. (residential real estate broker)
(62)
Dr. Phail Wynn, Jr. President, Durham Technical Community College
(46)
NAME AND AGE DIRECTOR SINCE(1)
J. Harper Beall, III New nominee
(52)
James B. Brame, Jr.(2) 1993
(48)
Timothy B. Burnett New nominee
(53)
W. L. Burns, Jr.(3) 1972
(66)
Arthur W. Clark 1977
(71)
Kinsley van R. Dey, Jr. 1984
(69)
Mrs. Frances Hill Fox 1946
(85)
T. E. Haigler, Jr. 1974
(69)
George R. Herbert 1973
(71)
Edward S. Holmes 1973
(64)
Owen G. Kenan 1981
(50)
Eugene J. McDonald 1985
(61)
Hamilton W. McKay, Jr., M.D. 1990
(64)
Eric B. Munson 1985
(51)
Ernest C. Roessler(3) 1993
(52)
John B. Stedman(4) 1987
(69)
H. Allen Tate, Jr.(5) 1989
(62)
Dr. Phail Wynn, Jr. 1992
(46)
(1) Refers to the year in which a person first was elected a director of the
Corporation or, if prior to its organization in 1983, the year in which such
person first was elected a director of the Bank.
(2) During 1993, the Bank purchased office supplies and other products from
Brame Specialty Co., Inc. in an aggregate amount of $609,700.
(3) Mr. Burns retired from his positions as President and Chief Executive
Officer of the Corporation and the Bank effective April 6, 1993. The Board
of Directors elected Mr. Roessler to succeed Mr. Burns in those positions
effective upon Mr. Burns' retirement.
5
(4) Mr. Stedman has been nominated for reelection as a director pursuant to an
employment agreement between the Corporation, Republic Bank & Trust Co.
(Republic), and him that became effective during 1986 upon the Corporation's
acquisition of Republic as a wholly-owned subsidiary. Provided that Mr.
Stedman continues to beneficially own at least 37,500 shares of the
Corporation's common stock (as appropriately adjusted to reflect any
recapitalization of the Corporation), the employment agreement provides that
the Corporation will nominate Mr. Stedman for reelection at each Annual
Meeting through 1994.
(5) Mr. Tate is involved, either individually or through his company, as a
principal shareholder, officer, director, or partner in numerous other firms
engaged in the development or sale of real estate, residential construction,
and real estate investments.
DIRECTORS' COMPENSATION
During 1993 each director of the Corporation, other than directors who were
also officers or members of the Executive Committee, received a retainer of
$5,000. If the director was a non-officer member of the Executive Committee, he
received a retainer of $7,000. Directors who also were officers of the
Corporation or the Bank did not receive retainers. Directors received a fee of
$550 for each meeting of the Board of Directors attended and a fee of $450 for
attendance at each meeting of a committee of the Board of Directors. If the
director also was chairman of the committee, he received an additional fee of
$100 for attendance at each committee meeting.
For 1994, the standard director's retainer will be increased to $6,000,
meeting attendance fees will be increased to $600 for each meeting of the Board
of Directors and $600 for each committee meeting. All other retainers and fees
will remain unchanged.
Directors have the option to defer their fees each year under an
arrangement whereby the Corporation pays interest on deferred amounts at
prevailing money market rates. Total directors' fees payable for 1993 were
$250,350, of which $190,200 was paid to directors and $60,150 was deferred.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held five regular meetings and one special meeting
during 1993. All incumbent directors attended more than 75% of the total number
of meetings of the Board of Directors and its committees on which they served
during 1993.
The Board of Directors has several standing committees, including an Audit
Committee, a Nominating Committee, and a Compensation Committee. The voting
members of these committees are appointed by the Board of Directors annually
from among its members. Additionally, certain officers of the Corporation and
the Bank are appointed to serve as non-voting, advisory members of each
committee.
The current members of the Audit Committee are Mr. Munson, who serves as
Chairman, and Messrs. Dey, Brame, Burns, and Dr. Wynn. Officers currently
serving as advisory, non-voting members are Messrs. Rojas, Parker, J. Scott
Edwards, Executive Vice President of the Corporation and the Bank, and B. W.
Harris, Jr., retired Comptroller of the Bank. The primary functions of the Audit
Committee are to provide additional assurance regarding the integrity of
financial information used by the Board of Directors and distributed to the
public by the Corporation and to oversee and monitor the activities of the
Corporation's internal and external audit processes. The committee met four
times during 1993.
The current members of the Nominating Committee are Mr. Burns, who serves a
Chairman, and Messrs. Dey, Herbert, Holmes, McDonald, and Mrs. Fox. Messrs.
Every and Roessler currently serve as non-voting, advisory members. The primary
function of the Nominating Committee is to recommend candidates to the Board of
Directors for selection as nominees for election as directors. In making its
recommendations for the 1995 Annual Meeting, the Nominating Committee will
consider nominee candidates recommended by shareholders if their names are
submitted in writing to Mr. Every by November 15, 1994. The committee has met
one time since the 1993 Annual Meeting.
The Compensation Committee administers the Corporation's compensation
program and has responsibility for matters involving the compensation of
executive officers of the Corporation and the Bank. With respect to salaries,
however, the Compensation Committee only establishes salary ranges for executive
officers while the Executive Committee sets actual salaries within those ranges.
All actions of the Compensation Committee are subject to review by the full
Board of Directors. The membership of the Compensation Committee, which met six
times during 1993, is described below.
6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until the death of George Watts Hill in January 1993, the Compensation
Committee consisted of Mr. Clark, who served as Chairman, and Messrs. Dey,
Haigler, Munson, and Hill, with Messrs. Burns and J. Kent Fawcett, Senior Vice
President and Personnel Director of the Corporation and the Bank, serving as
non-voting, advisory members of the Compensation Committee. Upon Mr. Burns'
retirement as President and Chief Executive Officer of the Corporation and the
Bank effective April 6, 1993, Mr. Burns became a voting member of the
Compensation Committee and his successor, Mr. Roessler, became a non-voting,
advisory member of the Compensation Committee.
Prior to April 6, 1993, the Executive Committee, consisted of Mr. Burns,
who served as Chairman, and Messrs. Clark, Haigler, Herbert, Holmes, Roessler,
McDonald, and until his death, Mr. Hill, with Messrs. Edwards and Richard L.
Furr, Executive Vice President of the Corporation and the Bank, serving as
non-voting, advisory members. On April 6, 1993, Mr. Burns stepped down as
Chairman of the Executive Committee and was replaced by Mr. Roessler. During
1993, Messrs. Hill, Burns, Roessler, Fawcett, Edwards, and Furr each served as
an officer of the Corporation and the Bank.
In addition to other law firms, the firm of Holmes & McLaurin was engaged
to provide certain legal services to the Bank during 1993 and is expected to
continue to be so engaged in the future. Mr. Holmes, a partner in that firm,
served as a director and member of the Executive Committee during 1993 and has
been nominated for reelection as a director at the Annual Meeting.
COMPENSATION COMMITTEE REPORT
GENERAL. It is the policy of the Compensation Committee to provide a fully
competitive, performance-based compensation program such as will enable the
Corporation to attract, motivate, and retain qualified executive officers.
During 1993, the Corporation's executive compensation program provided for (a)
annual compensation consisting of base salaries combined with cash incentive
bonuses based on the Corporation's financial performance and (b) long-term
compensation consisting of periodic restricted stock awards combined with cash
incentive compensation based on the Corporation's financial performance. The
Corporation also provided certain other compensation plans customary for
companies of comparable size. The annual and long-term compensation programs
were intended to be competitive with median levels of incentive compensation
provided by the Corporation's competitors and were developed based on
recommendations of an independent compensation consulting firm selected by the
Compensation Committee.
The Omnibus Reconciliation Act of 1993 amended Section 162(m) of the
Internal Revenue Code of 1986, as amended (the Code), to limit the deductibility
of annual compensation paid by public corporations to certain executive officers
in excess of $1,000,000. As the Corporation presently does not compensate any
officer in an amount approaching $1,000,000 per year, the Compensation Committee
has not adopted a policy with respect to Section 162(m).
The following is a discussion of each of the elements of the compensation
program for 1993 with respect to the Corporation's executive officers named in
the Summary Compensation Table set forth below (the Named Executive Officers),
including Messrs. Burns and Roessler.
ANNUAL COMPENSATION PROGRAM. The 1993 salaries of the Named Executive
Officers were set during February 1993, within ranges established by the
Compensation Committee, by the Executive Committee based on its evaluation of
the contribution, performance, and levels of responsibility of each officer and
on the Corporation's financial performance, measured in terms of its return on
assets and return on equity, for the prior fiscal year. The Corporation's
financial performance was considered only generally in the setting of salaries,
and there was no specific formula or other mechanism by which salary increases
were tied directly to corporate performance. The salary ranges for the Named
Executive Officers, including the Corporation's Chief Executive Officer, were
set by the Compensation Committee based on its evaluation of the level of
demands and responsibility required by each executive position and by the levels
of compensation paid by financial institutions of comparable size for similar
positions.
The amount of cash incentive bonus paid for 1993 to Messrs. Burns and
Roessler and to each of the other Named Executive Officers was determined under
the terms of the Management Performance Incentive Plan (the Incentive Plan)
following the end of fiscal 1993 based on a comparison of the Corporation's 1993
financial performance, measured in terms of the Corporation's return on assets
and return on equity, to the financial performance of a group of the
Corporation's peer financial institutions. Based on that comparison, the amounts
of cash bonuses paid to individual Named Executive Officers, including Messrs.
Burns and Roessler, were approximately 105% of the amounts that would have been
paid for targeted levels of performance under the Incentive Plan.
7
Other forms of annual compensation listed in the Summary Compensation Table
below for 1993 include the Corporation's matching contributions (the Matching
Contributions) to the account of each Named Executive Officer under the
Corporation's Section 401(k) Retirement Savings Plan (the 401(k) Plan) and the
portion of the Corporation's special discretionary contribution to the 401(k)
Plan (the Discretionary Contribution) allocated to the account of each Named
Executive Officer. The Matching Contributions for Messrs. Burns and Roessler and
the other Named Executive Officers were based on a formula contained in the
terms of the 401(k) Plan and were not related to the Corporation's or the
individual officer's performance for the year. The total amount of the
Discretionary Contribution was based upon the Corporation's financial
performance for 1993, measured in terms of earnings per share, net income,
return on equity, and return on assets. The portion of the Discretionary
Contribution allocated to the accounts of Messrs. Burns and Roessler and the
other Named Executive Officers was based upon a formula contained in the terms
of the 401(k) Plan.
LONG-TERM INCENTIVE PROGRAM. During 1993, the Corporation's long-term
incentive program consisted of the Restricted Stock Plan (the Stock Plan) and
the Performance Unit Plan (the Unit Plan) which were approved by the
Corporation's shareholders. The Stock Plan and the Unit Plan expired on December
31, 1993 except to the extent such plans continue to govern awards which have
not yet vested. These plans were designed to operate in conjunction with each
other to enhance and reinforce the Corporation's long-term goals by (i)
providing an inducement to the continued employment of key officers, (ii)
providing key officers with the incentive of additional compensation based on
the Corporation's financial performance over an extended period, (iii) insuring
that key officers had the perspective of shareholders, and (iv) structuring a
portion of key officers' incentive compensation such that they were rewarded
only in circumstances beneficial to all shareholders.
Under the Stock Plan, awards of restricted shares of Common Stock were
granted by the Compensation Committee from time to time to key officers of the
Corporation and its subsidiaries based on the Committee's evaluation of the
individual level of responsibility and contribution of each officer. Shares
included in each award are held in trust and cannot be sold or transferred by
the officer for a period of from three to five years from the date of grant, as
determined by the Compensation Committee. Shares awarded under the Stock Plan
are distributed to the officer if he remains employed by the Corporation until
the end of the restriction period, without any consideration of the
Corporation's financial performance. Such shares are forfeited if the officer's
employment terminates before the end of that period.
At the time awards were made under the Stock Plan, awards under the Unit
Plan consisting of performance units having a Target Value of $100 each also may
have been granted by the Compensation Committee. At the end of the restriction
period applicable to an officer's Stock Plan award, a percentage (from 0% to
200%) of the Target Value of each performance unit awarded to that officer may
be paid in cash based on a comparison of the Corporation's financial performance
over that period, measured in terms of return on assets and return on equity, to
the financial performance of a group of the Corporation's peer financial
institutions.
During the fourth quarter of 1992, the Executive Committee engaged an
independent consulting firm to conduct a comprehensive search for an individual
to replace Mr. Burns as Chief Executive Officer upon his retirement in April
1993. The search encompassed both internal and external candidates for the
position. The internal candidates were limited to Messrs. Roessler, Edwards, and
Furr. Based in part upon the recommendations of the aforementioned consulting
firm, the Executive Committee elected Mr. Roessler to succeed Mr. Burns. In
order to promote stability and continuity in the executive management of the
Corporation, and to emphasize the value of Messrs. Edwards and Furr as well as
Mr. Roessler to the Corporation and its prospects for future growth, the
Compensation Committee determined that grants of restricted stock in equal
amounts to each individual would be appropriate and in the best interest of the
Corporation and its shareholders. These grants were effected in 1993 under the
Stock Plan and are subject to a three-year vesting period. See Restricted Stock
Awards on the Summary Compensation Table set forth below.
During 1993, no awards or payments under the Unit Plan were made to Messrs.
Burns or Roessler or to any other Named Executive Officer.
8
Subject to approval by the shareholders, the Board of Directors has adopted
a new long-term incentive plan which is intended to replace the Stock Plan and
the Unit Plan. See Proposal 3. Approval of the Long-Term Incentive Plan.
COMPENSATION COMMITTEE AT DECEMBER 31, 1993:
ARTHUR W. CLARK, CHAIRMAN
W. L. BURNS, JR.
ERIC B. MUNSON
KINSLEY VAN R. DEY, JR.
T. E. HAIGLER, JR.
EUGENE J. MCDONALD
ERNEST C. ROESSLER*
J. KENT FAWCETT*
EXECUTIVE COMMITTEE AT
DECEMBER 31, 1993:
ERNEST C. ROESSLER, CHAIRMAN
W. L. BURNS, JR.
ARTHUR W. CLARK
T. E. HAIGLER, JR.
GEORGE R. HERBERT
EDWARD S. HOLMES
EUGENE J. MCDONALD
J. SCOTT EDWARDS*
RICHARD L. FURR*
* Denotes a non-voting, advisory member of the committee.
EXECUTIVE COMPENSATION
The following table shows, for 1993, 1992, and 1991, the cash and certain
other compensation paid to or received or deferred by the Named Executive
Officers, which include the four current executive officers of the Corporation,
including the Chief Executive Officer, in all capacities in which they served.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER RESTRICTED SECURITIES PAYOUTS
NAME AND ANNUAL STOCK UNDERLYING LTIP
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS
POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (POUND) ($)(4)
W. L. Burns, Jr., 1993 $109,187 $24,259 -- --164,045 -- --
President and Chief Executive Officer 1992 309,000 61,134 -- -- -- --
of the Corporation and the Bank until 1991 289,667 83,954 -- $ -- --
April 6, 1993 and presently Chairman of
the Board of the Corporation and the
Bank
Ernest C. Roessler, 1993 241,323 62,986 -- 53,438 -- --
Executive Vice President of the 1992 161,178 22,654 -- -- -- --
Corporation and the Bank until April 6, 1991 149,350 31,166 -- 65,800 -- --
1993 and presently Chief Executive
Officer of the Corporation and the Bank
J. Scott Edwards, 1993 184,608 38,841 -- 53,438 -- --
Executive Vice President of the 1992 156,491 22,361 -- -- -- --
Corporation and the Bank 1991 147,393 30,758 -- 64,925 -- --
Richard L. Furr, 1993 184,608 38,841 -- 53,438 -- --
Executive Vice President of the 1992 156,972 22,361 -- -- -- --
Corporation and the Bank 1991 147,393 30,758 -- 64,925 -- --
ALL
NAME AND OTHER
PRINCIPAL COMPENSATION
POSITION ($)(5)
W. L. Burns, Jr., $132,654
President and Chief Executive Officer 16,929
of the Corporation and the Bank until 16,179
April 6, 1993 and presently Chairman of
the Board of the Corporation and the
Bank
Ernest C. Roessler, 11,692
Executive Vice President of the 8,223
Corporation and the Bank until April 6, 7,831
1993 and presently Chief Executive
Officer of the Corporation and the Bank
J. Scott Edwards, 9,173
Executive Vice President of the 8,087
Corporation and the Bank 7,746
Richard L. Furr, 9,173
Executive Vice President of the 8,095
Corporation and the Bank 7,746
(1) Consists of salary payable to each Named Executive Officer, including
portions of salary deferred at the election of each officer.
(2) Consists entirely of cash bonuses paid to the Named Executive Officers under
the Incentive Plan. See Compensation Committee Report.
(3) Reflects the market value, on the date of award, of shares of Common Stock
awarded under the Stock Plan. During 1993, Messrs. Roessler, Edwards, and
Furr were each awarded 1,500 shares of restricted stock under the Stock Plan
which are subject to a three-year vesting period. At December 31, 1993, the
Named Executive Officers held outstanding awards which remained subject to
restrictions under the Stock Plan and which included the following aggregate
numbers and market values of shares: Mr. Burns -- 13,071 shares valued at
$434,611; Mr. Edwards -- 6,724 shares valued at $223,573; Mr. Furr -- 6,724
shares valued at $223,573; Mr. Roessler -- 6,762 shares valued at $224,837.
9
Shares included in awards under the Stock Plan are eligible to receive
dividends paid by the Corporation on its Common Stock generally.
(4) During 1991 the restriction period expired on certain performance units
previously awarded to the Named Executive Officers under the Unit Plan;
however, the comparison under the Unit Plan of the Corporation's performance
to the performance of its peers resulted in no payment being made on account
of those performance units.
(5) The amount listed for each Named Executive Officer for 1993 includes (i) the
Bank's matching contributions on behalf of that executive officer to the
401(k) Plan and (ii) the portion of the Corporation's 1993 special
discretionary contribution to the 401(k) Plan which was allocated to the
account of that executive officer. Those separate amounts for each Named
Executive Officer are, respectively: Mr. Burns -- $5,960 and $2,963; Mr.
Edwards -- $6,048 and $3,126; Mr. Furr -- $6,048 and $3,126; Mr.
Roessler -- $7,708 and $3,984. In addition, the 1993 amount for Mr. Burns
includes amounts paid in connection with his retirement consisting of
$74,684 for accrued sick leave, $23,292 for accrued vacation, $19,709 under
a supplemental retirement plan, and $837 in Common Stock and $209 in cash as
retirement gifts.
PENSION PLAN
The Corporation maintains a qualified, defined benefit pension plan (the
Pension Plan) in which substantially all full-time employees of the Corporation
and its subsidiaries who have been continuously employed for a period of 12
months participate. The following table shows the estimated annual benefit
payable under the Pension Plan to participants following retirement at age 65,
which is the normal retirement age under the Pension Plan, based on various
specified numbers of years of service with the Corporation and its subsidiaries
and various levels of compensation covered under the Pension Plan.
FINAL YEARS OF SERVICE
AVERAGE COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
$100,000........................................ $ 21,825 $ 29,100 $ 36,375 $ 43,650 $ 50,925 $ 58,200
125,000......................................... 27,450 36,600 45,750 54,900 64,050 73,200
150,000......................................... 33,075 44,100 55,125 66,150 77,175 88,200
175,000......................................... 38,700 51,600 64,500 77,400 90,300 103,200
200,000......................................... 44,325 59,100 73,875 88,650 103,425 115,641
225,000......................................... 49,950 66,600 83,250 99,900 115,641 115,641
250,000......................................... 55,575 74,100 92,625 111,150 115,641 115,641
275,000......................................... 61,200 81,600 102,000 115,641 115,641 115,641
300,000......................................... 66,825 89,100 111,375 115,641 115,641 115,641
325,000......................................... 72,450 96,600 115,641 115,641 115,641 115,641
350,000......................................... 78,075 104,100 115,641 115,641 115,641 115,641
Benefits shown in the table are computed as straight life annuities
beginning at age 65 and are not subject to a deduction for Social Security
benefits or any other offset amount. Compensation covered by the Pension Plan
each year is a participant's base salary. See Salary on the Summary Compensation
Table set forth above. At his or her retirement, a participant's annual benefit
under the Pension Plan is based on his or her average base salary for any five
consecutive plan years during the last ten years preceding normal retirement age
(Final Average Compensation). However, under tax laws in effect at December 31,
1993, the amount of a participant's annual compensation taken into account for
benefit calculation purposes under the Pension Plan may not exceed $235,840, and
maximum annual benefits payable under the Pension Plan are $115,641. As of
December 31, 1993, the Final Average Compensation and years of service of each
of the Named Executive Officers would have been: Mr. Edwards -- $147,753 and 25
years; Mr. Furr -- $147,846 and 21 years; Mr. Roessler -- $160,056 and 6 years.
Mr. Burns retired effective April 6, 1993 after 33 years of service. His annual
benefit under the Pension Plan, calculated as a straight life annuity, is
$100,347.
As described above, tax laws place limits on the amount of compensation
that may be taken into account for benefit calculation purposes under the
Pension Plan and in the maximum amount of benefits payable under the Pension
Plan. The Corporation has adopted a supplemental retirement plan which operates
in conjunction with the Pension Plan and under which a retiree will receive
annual benefits in an amount equal to the difference, if any, between his actual
annual benefit under the Pension Plan and the amount he would receive under the
Pension Plan in the absence of the above limitations. Mr. Burns' annual benefit
under the supplemental plan is $25,267. At December 31, 1993, the other Named
Executive Officers would not have qualified for any benefit at retirement under
the supplemental plan.
10
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Corporation's Stock Plan and Unit Plan generally provide that
outstanding awards of restricted stock and performance units will become vested
on the date of any merger to which the Corporation is a party but is not the
surviving corporation, or on the date of certain other changes in control of the
Corporation. Also, the Unit Plan provides that, upon the termination of a plan
participant's employment following his death, disability, or retirement, or in
the event his employment is involuntarily terminated under circumstances
determined by the Corporation to have been without his fault, the participant
shall be entitled to payment of a portion of the value, if any, of his
outstanding award of performance units based on the time elapsed since the date
of such award. Under the Stock Plan, upon any such termination of a
participant's employment, the Compensation Committee has the discretion to waive
remaining restrictions on all or any part of the participant's outstanding award
of restricted stock.
11
PERFORMANCE GRAPHS
The following line graphs illustrate the cumulative total shareholder
return on the Corporation's Common Stock over the five-year period ending
December 31, 1993 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1988 and that all dividends were reinvested in additional shares.
CCB FINANCIAL CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
YEARS ENDED DECEMBER 31 (2)
(Five Year Comparison of Cumulative Total Return Graph appears here)
1988 1989 1990 1991 1992 1993
CCBF 100.0 113.8 80.3 135.8 175.3 169.4
NASDAQ(US) 100.0 121.2 103.0 165.2 192.1 219.2
NASDAQ(BANK) 100.0 111.2 81.4 133.6 194.2 221.3
Dow Jones Industrials 100.0 131.6 131.0 162.8 174.8 204.6
S&P 500 100.0 131.6 127.5 166.2 178.9 196.9
(1) Assumes $100 invested on December 31, 1988 with all subsequent
dividends invested.
(2) Closing price of CCB Financial Corporation Common Stock adjusted where
applicable for the 3/2 stock split effected in the form of a 50% stock
dividend paid October 1, 1992:
December 31, 1988-23.83
December 31, 1989-26.17
December 31, 1990-17.67
December 31, 1991-28.67
December 31, 1992-35.63
December 31, 1993-33.25
12
The following line graphs illustrate the cumulative total shareholder
return on the Corporation's Common Stock over the ten-year period ending
December 31, 1993 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1983 and that all dividends were reinvested in additional shares.
CCB FINANCIAL CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
YEARS ENDED DECEMBER 31 (2)
(Ten Year Comparison of Cumulative Total Return Graph appears here)
1983 1984 1985 1986 1987 1988
CCBF 100.0 137.3 190.7 235.2 253.9 240.1
Dow Jones 100.0 101.0 134.9 171.6 180.9 209.7
S&P 500 100.0 106.2 139.9 165.9 174.5 203.3
1989 1990 1991 1992 1993
CCBF 282.2 190.5 338.3 430.4 421.0
Dow Jones 275.9 274.7 341.3 366.4 428.9
S&P 500 267.5 259.1 337.9 363.6 400.2
(1) Assumes $100 invested on December 31, 1983 with all subsequent
dividends invested.
(2) Closing price of CCB Financial Corporation Common Stock adjusted where
applicable for the 3/2 stock split effected in the form of a 50% stock
dividend paid October 1, 1992 and for the 2 for 1 stock split effected
in the form of a 100% stock dividend paid July 25, 1984:
December 31, 1983-11.29 December 31, 1989-26.17
December 31, 1984-14.96 December 31, 1990-17.67
December 31, 1985-20.17 December 31, 1991-28.67
December 31, 1986-24.19 December 31, 1992-35.63
December 31, 1987-22.67 December 31, 1993-33.25
December 31, 1988-23.83
13
TRANSACTIONS WITH MANAGEMENT
The Bank and the Corporation's other financial institution subsidiaries
have had, and expect to have in the future, lending transactions in the ordinary
course of business with many of their officers and directors and with associates
of such persons. All loans included in such transactions during 1993 were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and
did not involve more than the normal risk of collectibility or present other
unfavorable features.
PROPOSAL 3. APPROVAL OF THE LONG-TERM INCENTIVE PLAN
To enable the Corporation to attract, retain, and motivate key employees
and directors, the Board of Directors has adopted the CCB Financial Corporation
Long-Term Incentive Plan (the LTIP) and will introduce a proposal for
shareholders to approve the LTIP at the Annual Meeting. The LTIP would have a
ten-year term and is intended to replace the Stock Plan and the Unit Plan, both
of which expired by their terms on December 31, 1993. See Compensation Committee
Report. The LTIP's objectives are to reward achievement of long-term goals,
provide balance to short-term incentive awards, and reinforce a one company
perspective. Under the provisions of the LTIP, restricted stock, unrestricted
stock, stock options, cash incentives, and other equity-based incentive awards
may be granted from time to time to key employees and directors of the
Corporation or any of its subsidiary corporations (the Participants). It
currently is the intention of the Board of Directors to utilize the LTIP only
for awards to key employees of the Corporation or its subsidiary corporations.
Although the LTIP will permit the Board of Directors to choose from an expanded
list of cash and equity-based incentives in designing the Corporation's
long-term compensation program, individual awards under the LTIP need not
include all such incentives and it is the present intention of the Board of
Directors to limit individual awards to no more than two.
ADMINISTRATION OF THE LTIP
The LTIP will be administered by the Compensation Committee. The
Compensation Committee will be authorized to construe and interpret the LTIP and
to promulgate, amend, and rescind rules and regulations relating to the
implementation, administration, and maintenance of the LTIP. Each Participant
receiving an award under the LTIP will enter into an agreement with the
Corporation that sets forth the restrictions, terms, and conditions of the award
(the Award Agreement). The Compensation Committee will make all determinations
necessary or advisable for the LTIP including (a) selecting the LTIP's
Participants, (b) making awards thereunder in such amounts and form as the
Compensation Committee may determine, (c) imposing such restrictions, terms, and
conditions upon such awards as the Compensation Committee may deem appropriate,
and (d) correcting any defect or omission, or reconciling any inconsistency, in
the LTIP or any Award Agreement.
SECURITIES OF THE CORPORATION SUBJECT TO THE LTIP
The Board of Directors will reserve for awards under the LTIP 500,000
shares of the authorized and unissued shares of Common Stock. The number of
shares authorized for issuance under the LTIP may be replenished one time during
the life of the LTIP, up to an additional 500,000 shares, for a total
authorization of up to 1,000,000 shares. If any awards expire unexercised or are
forfeited, terminated, or settled in cash in lieu of Common Stock, the shares of
Common Stock theretofore subject to such awards will generally again be
available for awards under the LTIP. The maximum number of shares of Common
Stock for any Participant for which awards may be granted under the LTIP in any
year is 50,000 shares.
ELIGIBILITY
Employees eligible to participate in the LTIP consist of key employees who
are senior officers of the Corporation or any of its subsidiary corporations. As
of January 31, 1994, there were such employees. Directors who are not
employees of the Corporation or any of its subsidiary corporations will be
eligible to participate in the LTIP only with respect to awards of Non-qualified
Options (as hereinafter defined) and Restricted Stock (as hereinafter defined).
As of January 31, 1994, there were 16 such directors.
STOCK OPTIONS
An option to purchase shares of Common Stock granted under the LTIP will
either (a) qualify under Section 422 of the Code for treatment as an incentive
stock option (Incentive Option) or (b) not qualify for treatment as an incentive
stock option under Section 422 of the Code (Non-qualified Option). Hereinafter,
the term Option refers to either an
14
Incentive Option or a Non-Qualified Option. An Option may be granted alone or in
addition to any other award under the LTIP and will be subject to a periodic
vesting schedule. The exercise price of an Option will be determined by the
Compensation Committee at the time of grant subject to the following
limitations: (a) the exercise price of an Incentive Option may not be less than
100% of the fair market value per share of the Common Stock on the date of the
grant and (b) the exercise price of an Incentive Option granted to an employee
who owns ten percent or more of the combined total voting power of the
Corporation may not be less than 110% of the fair market value per share of the
Common Stock on the date of grant. On January 31, 1994 the last sale price of a
share of Common Stock on the Nasdaq National Market was $37.50. The term of an
Option will be such period of time as is fixed by the Compensation Committee at
the time of grant subject to the following limitations: (a) the term of an
Incentive Option may not exceed ten years after the date of grant and (b) the
term of an Incentive Option granted to an employee who owns ten percent or more
of the combined total voting power of the Corporation may not exceed five years.
An Option may be exercised by giving written notice of exercise to the
Corporation specifying the number of shares to be purchased. Such notice must be
accompanied by payment in full of the exercise price in cash or if permitted by
the terms of the governing Award Agreement by delivery of (a) a fully-secured,
recourse promissory note or (b) shares of Common Stock already owned by the
Participant. The Compensation Committee also may permit Participants to
simultaneously exercise an Option, sell the shares of Common Stock thereby
acquired, and use the proceeds from such sale for payment of the exercise price.
If a Participant purchases Common Stock upon the exercise of an Incentive
Option and either (a) holds it for a period of at least two years following the
date of grant and at least one year from the date the option is exercised (the
Holding Periods) or (b) dies while owning such Common Stock, the Participant
will be subject to federal income tax on the gain realized upon disposition of
such Common Stock at the time of disposition and the amount of gain will be
equal to the amount realized on disposition less the amount paid upon exercise
of the Incentive Option. The Corporation will not be permitted to claim a tax
deduction from federal taxable income at any time in connection an Incentive
Option held for the Holding Periods specified above.
A Participant who receives a Non-qualified Option will not be subject to
federal income tax upon the grant thereof. On the date a Participant exercises a
Non-qualified Option he or she will recognize federal taxable ordinary income
equal to the difference between the exercise price and the fair market value of
the Common Stock purchased. The Corporation will be allowed to deduct from its
federal taxable income an amount equal to the ordinary income recognized by such
Participant upon exercise of the Non-qualified Option. The federal income tax
consequences of the issuance and exercise of a Non-qualified Option may vary
from those described above in circumstances where the exercise price is
significantly less than the fair market value of the underlying Common Stock on
the date of grant or where the Participant is permitted to pay the exercise
price with previously acquired shares of Common Stock.
If a Participant's employment is terminated for any reason other than
disability, retirement, or death before an Option has vested, such Participant's
right to exercise such Option will immediately terminate. If a Participant's
employment is terminated by disability, retirement, or death before an Option
has vested, such Option will vest to the extent determined by the Compensation
Committee.
If a Participant's employment is terminated for any reason other than
disability, retirement, or death, a vested Option will remain exercisable for a
period of up to 30 days following such termination, as determined by the
Compensation Committee. If a Participant's employment is terminated by
retirement or disability, such Participant will have the right to exercise a
vested Option at any time within the one-year period following such termination.
If a Participant dies while entitled to exercise an Option such Participant's
estate, designated beneficiary, or other legal representative will have the
right to exercise such Option at any time within the one-year period from the
date of such Participant's death.
If a non-employee director leaves the Board of Directors for any reason
other than disability, retirement, or death before an Option becomes vested,
such Option will be forfeited. If a non-employee director leaves the Board of
Directors due to disability, retirement, or death before an Option becomes
vested, such Option will vest to the extent determined by the Compensation
Committee.
If a non-employee director leaves the Board of Directors for any reason
other than disability, retirement, or death, a vested Option will remain
exercisable for a period of up to 30 days following such termination, as
determined by the Compensation Committee. If a non-employee director leaves the
Board of Directors due to disability or retirement, such director will have the
right to exercise a vested Option at any time within the one-year period
following such event. If a non-employee director leaves the Board of Directors
due to death, such non-employee director's estate, designated beneficiary, or
other legal representative, as the case may be, will have the right to exercise
a vested Option at any time within the one-year period following such director's
death.
15
RESTRICTED STOCK
Awards under the LTIP may be in the form of shares of Common Stock subject
to certain restrictions imposed by the Compensation Committee (Restricted
Stock). The Compensation Committee may restrict the transferability of
Restricted Stock and require that it be forfeited upon termination of a
Participant's employment or service as a director, as the case may be.
Restricted Stock may be granted alone or in addition to any other award under
the LTIP. The Compensation Committee will determine the number of shares of
Restricted Stock to be granted and may impose different terms and conditions on
any particular grant of Restricted Stock. Shares of Restricted Stock will be
issued in uncertificated form and registered in the name of such Participant and
will be so held until the restrictions thereon have lapsed and all of the terms
and conditions applicable to such award have been satisfied. Awards of
Restricted Stock will only become unrestricted and vest in the Participant in
accordance with the vesting schedule set forth in the underlying Award Agreement
(the Restriction Period). In no event will the Restriction Period be less than
one year after the date on which such award is granted. During the Restriction
Period, Restricted Stock may not be transferred or otherwise disposed of by the
Participant. After satisfaction of the restrictions set by the Compensation
Committee, a certificate for the number of shares of Common Stock which are no
longer subject to such restrictions will be delivered to the Participant. The
remaining shares, if any, issued in respect of such Restricted Stock will either
be forfeited or will continue to be subject to the restrictions set by the
Compensation Committee, as the case may be. A Participant will have, with
respect to shares of Restricted Stock, all of the rights of a shareholder of the
Corporation, including the right to vote such shares and to receive any cash
dividends declared and paid thereon. Stock dividends issued with respect to
Restricted Stock will be treated as additional grants of Restricted Stock and
will be subject to the same restrictions that apply to the shares of Restricted
Stock with respect to which such stock dividends are issued.
If a Participant's employment with or service to the Corporation or any of
its subsidiaries is terminated for any reason other than disability, retirement,
or death prior to satisfaction of the restrictions applicable to a grant of
shares of Restricted Stock, such shares will be forfeited unless the
Compensation Committee in its discretion determines otherwise. In the event of
disability, retirement, or death during the Restricted Period, shares of
Restricted Stock will become free of restrictions to the extent determined by
the Compensation Committee.
PERFORMANCE UNITS
Awards under the LTIP may be in the form of performance-based units, with
each unit representing such monetary amount as is designated by the Compensation
Committee subject to such terms and conditions as the Compensation Committee
deems appropriate (Performance Units), including a requirement that the
Participant forfeit such units in the event certain performance criteria are not
met within a designated period of time. Performance Units may be granted alone
or in addition to any other award under the LTIP. The Compensation Committee
will determine the number of Performance Units to be granted to a Participant.
The Compensation Committee may impose different terms and conditions on any
particular Performance Units granted to any Participant. Participants receiving
grants of Performance Units will only earn into and be entitled to payment in
respect of such awards if the Corporation and the Participant achieve certain
performance goals (the Performance Goals) during and in respect of a designated
performance period (the Performance Period). The Performance Goals and the
Performance Period will be established by the Compensation Committee. The
Compensation Committee will establish Performance Goals for each Performance
Period prior to, or as soon as practicable after, the commencement of such
Performance Period. The Compensation Committee will also establish a schedule
for such Performance Units setting forth the portion of the award which will be
earned or forfeited based on the degree of achievement, or lack thereof, of the
Performance Goals at the end of the relevant Performance Period. In setting the
Performance Goals, the Compensation Committee may use such measures as total
shareholder return, return on equity, return on assets, net earnings per share
growth, comparisons to peer companies, divisional goals, individual or aggregate
Participant performance, or such other measure or measures of performance as the
Compensation Committee may deem appropriate. Such performance measures will be
defined as to their respective components and meaning by the Compensation
Committee. During any Performance Period, the Compensation Committee will have
the authority to adjust the Performance Goals in such manner as the Compensation
Committee deems appropriate with respect to such Performance Period. In addition
to the Performance Goals, the Compensation Committee also may require a minimum
shareholder return threshold be attained before consideration is given to any
results achieved on the Performance Goals. Should the Corporation and the
Participant achieve the applicable Performance Goals, but the minimum
shareholder return threshold falls below the minimum expectations, then the
Performance Unit may be deferred by the Compensation Committee for up to two
years until the threshold is exceeded. If the minimum shareholder return
threshold is not achieved within the additional time frame, then no Performance
Unit will be paid. With respect to each Performance Unit,
16
the Participant will, if the applicable Performance Goals and minimum
shareholder return threshold have been achieved during the relevant Performance
Period, be entitled to receive payment in an amount equal to the designated
value of each Performance Unit times the number of such units so earned. Payment
in settlement of earned Performance Units will be made as soon as practical
following the conclusion of the respective Performance Period in cash, shares of
unrestricted Common Stock, or shares of Restricted Stock, as the Compensation
Committee will determine and provide in the underlying Award Agreement.
If a Participant's employment with the Corporation or any of its subsidiary
corporations is terminated for any reason other than disability, retirement, or
death prior to the completion of any Performance Period, such termination will
result in the forfeiture of the Performance Unit. If termination is due to
disability, retirement, or death, the disposition of non-vested awards will be
determined by the Compensation Committee.
DEFERRAL OF AWARDS UNDER THE LTIP
The Compensation Committee may permit a Participant to elect to defer
receipt of any payment of cash or any delivery of shares of Common Stock that
would otherwise be due to such Participant by virtue of the exercise, earn out,
or settlement of any award made under the LTIP. If any such election is
permitted, the Compensation Committee will establish rules and procedures for
such deferrals, including the payment of reasonable interest or dividend
equivalents.
CHANGES IN CONTROL OF THE CORPORATION
Under the provisions of the LTIP, if a change in control of the Corporation
occurs (a) all stock options then unexercised and outstanding will become fully
exercisable, (b) all restrictions applicable to all Restricted Stock then
outstanding will be deemed lapsed and satisfied, and (c) all Performance Units
will be deemed to have been fully earned as of the date thereof subject to the
limitation that such stock options, shares of Restricted Stock, and Performance
Units have been granted and outstanding for more than six months as of the date
of such change in control.
If (a) a Participant's employment is terminated by the Corporation or any
of its subsidiary corporations prior to a change in control without cause at the
request of a person who has entered into an agreement with the Corporation the
consummation of which will constitute a change in control or (b) the Participant
terminates his or her employment with the Corporation or any of its subsidiary
corporations prior to a change in control of the Corporation and the
circumstance or event which causes such termination occurs at the request of
such person, then a change in control will be deemed to have occurred
immediately prior to such Participant's termination of employment.
If the making of any payment or payments under the LTIP would (a) subject
the Participant to an excise tax under Section 4999 of the Code, or any like or
successor section thereto or (b) result in the Corporation's loss of a federal
income tax deduction for such payments under Section 280G of the Code, or any
like or successor section thereto (either or both, an Adverse Tax Consequence),
then, unless otherwise expressly provided in the underlying Award Agreement, the
payments attributable to the LTIP that are parachute payments within the meaning
of Section 280G of the Code will be reduced, as determined by the Compensation
Committee in its sole discretion, but after consultation with the Participant
affected, to the extent necessary to avoid any Adverse Tax Consequence.
SUSPENSION, TERMINATION, AND AMENDMENT OF THE LTIP
The Board of Directors may suspend, terminate, or amend the LTIP at any
time and from time to time in such respects as the Board of Directors may deem
advisable subject to the limitation that no such amendment will, without
majority stockholder approval, (a) materially increase the number of shares of
Common Stock which may be issued under the LTIP, (b) materially modify the
requirements as to eligibility for participation in the LTIP, (c) materially
increase the benefits accruing to Participants under the LTIP, or (d) extend the
termination date of the LTIP.
A copy of the LTIP is on file and may be inspected by any shareholder at
the offices of the Corporation, and a copy will be available for inspection by
any shareholder at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FORPROPOSAL 3.
17
PROPOSAL 4. INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Corporation has voted to recommend to the
shareholders an amendment to Paragraph 4 of the Corporation's Restated Charter
to increase by 10,000,000 the number of authorized shares of the Corporation's
capital stock (the Amendment). The Corporation presently has 25,000,000 shares
authorized, with 20,000,000 of such shares classified as Common Stock and the
remaining 5,000,000 shares classified as serial preferred stock (Preferred
Stock). At January 31, 1994, there were 9,516,379 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. If the Amendment is approved
by the shareholders, all additional shares authorized by the Amendment would be
classified as Common Stock. The relative rights and limitations of the Common
Stock would remain unchanged under the Amendment. Holders of Common Stock do not
have any preemptive rights.
The Amendment has been recommended by the Board of Directors to assure that
an adequate supply of authorized, unissued shares is available for future
acquisitions and general corporate needs, such as future stock dividends, stock
splits, or issuance under stock-based benefit plans. There are currently no
plans or arrangements relating to the issuance of any of the additional shares
of the Common Stock proposed to be authorized. If the Amendment is approved by
the shareholders, such shares would be available for issuance without further
action by the shareholders, unless required by the Corporation's Restated
Charter or bylaws or by applicable law.
The issuance of additional shares of Common Stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock. The issuance of additional shares of Common
Stock by the Corporation also may potentially have an anti-takeover effect by
making it more difficult to obtain shareholder approval of various actions, such
as a merger or removal of management.
The text of Paragraph 4 of the Restated Charter, as proposed to be amended,
is as follows:
The total number of shares of capital stock which the Corporation has
authority to issue is 35,000,000, of which 30,000,000 shall be common
stock, $5.00 par value, and 5,000,000 shall be serial preferred stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FORPROPOSAL 4.
PROPOSAL 5. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of KPMG Peat Marwick, Certified Public Accountants, has been
appointed by the Board of Directors to serve as the Corporation's independent
accountants for 1994, and a proposal to ratify that appointment will be
introduced at the Annual Meeting. KPMG Peat Marwick has served as independent
accountants for the Corporation since its organization as the parent holding
company of the Bank during 1983, and previously had served as independent
accountants for the Bank since 1975. If shareholders do not approve this
proposal, the Board of Directors will reconsider the appointment.
Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
an opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FORPROPOSAL 5.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 1995 Annual Meeting will be held during
April 1995. Any proposal of a shareholder which is intended to be presented at
the 1995 Annual Meeting must be received by the Corporation at its principal
executive office in Durham, North Carolina, not later than November 15, 1994 in
order to be included in the Corporation's proxy statement and form of
appointment of proxy to be issued in connection with that meeting.
March , 1994
18
[MAP OF GEORGE WATTS HILL ALUMNI CENTER]
APPENDIX
[THE FOLLOWING DOCUMENT IS APPENDED HERETO PURSUANT TO SECTION 14A,
ITEM 10, INSTRUCTION 3 AND WILL NOT BE DISTRIBUTED TO SHAREHOLDERS]
A-1
CCB FINANCIAL CORPORATION
LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the Long-Term Incentive Plan (the Plan) is to
further and promote the interests of CCB Financial Corporation (the Company) and
its shareholders by enabling the Company to attract, retain and motivate key
employees, and to align the interests of such key employees and the Company's
shareholders. Additionally, the Plan's objectives are to provide a competitive
reward for achieving longer-term goals, provide balance to short-term incentive
awards, and reinforce a one company perspective. To do this, the Plan offers
performance-based stock and cash incentives and other equity-based incentive
awards and opportunities to provide such key employees with a proprietary
interest in maximizing the growth, profitability and overall success of the
Company.
2. DEFINITIONS. For purposes of the Plan, the following terms shall have
the meaning set forth below:
2.1 AWARD means an award or grant made to a Participant under Sections 6,
7, and/or 8 of the Plan. Award Agreementmeans the agreement executed by a
Participant pursuant to Sections 3.2 and 15.7 of the Plan in connection with the
granting of an Award.
2.2 BOARD means the Board of Directors of the Company, as constituted from
time to time.
2.3 CODE means the Internal Revenue Code of 1986, as in effect and as
amended from time to time, or any successor statute thereto, together with any
rules, regulations and interpretations promulgated thereunder or with respect
thereto.
2.4 COMMITTEE means the Compensation Committee of the Board, as constituted
in accordance with Section 3 of the Plan.
2.5 COMMON STOCK means the Common Stock, $5.00 par value, of the Company.
2.6 COMPANY means CCB Financial Corporation, a North Carolina corporation,
or any successor corporation to CCB Financial Corporation.
2.7 DISABILITY means disability as determined by the Committee in
accordance with standards and procedures similar to those under the Company's
long-term disability plan, if any. If the Company does not then maintain a
long-term disability plan, Disability shall mean the inability of a Participant,
as determined by the Committee, substantially to perform such Participant's
regular duties and responsibilities due to a medically determinable physical or
mental illness which has lasted (or can reasonably be expected to last) for a
period of six (6) consecutive months.
2.8 EXCHANGE ACT means the Securities Exchange Act of 1934, as in effect
and as amended from time to time, or any successor statute thereto, together
with any rules, regulations and interpretations promulgated thereunder or with
respect thereto.
2.9 FAIR MARKET VALUE means on, or with respect to, any given date, (i) the
closing price of the Common Stock, as reported on the over-the-counter-market by
the Nasdaq system for such date, or if the Common Stock was not traded on such
date, on the latest previous day on which the Common Stock was traded, or (ii)
the last sale price should the Common Stock be traded on any national securities
exchange on such date.
2.10 INCENTIVE STOCK OPTION means any stock option granted pursuant to the
provisions of Section 6 of the Plan that is intended to be (and is specifically
designated as) an incentive stock optionwithin the meaning of Section 422 of the
Code.
2.11 NON-EMPLOYEE DIRECTOR means a member of the Board of Directors of the
Company who is not an employee of the Company.
2.12 NON-QUALIFIED STOCK OPTION means any stock granted pursuant to the
provisions of Section 6 of the Plan that is not an Incentive Stock Option.
2.13 PARTICIPANT means a key employee or Non-Employee Director of the
Company or any Subsidiary who is selected under Section 5 to receive an Award by
the Committee under the Plan.
2.14 PERFORMANCE UNITS means the monetary units granted under Section 8 of
the Plan.
A-2
2.15 PLAN means the CCB Financial Corporation Long-Term Incentive Plan, as
set forth herein and as in effect and as amended from time to time (together
with any rules and regulations promulgated by the Committee with respect
thereto).
2.16 RESTRICTED AWARD means an Award of Restricted Stock pursuant to the
provisions of Section 7 of the Plan.
2.17 RESTRICTED STOCK means the restricted shares of Common Stock granted
pursuant to the provisions of Section 7 of the Plan with the restriction that
the holder may not sell, transfer, pledge, or assign such Restricted Stock and
such other restrictions (which other restrictions may expire separately or in
combination, at one time, from time to time or in installments), as determined
by the Committee in accordance with and as set forth in the Plan and/or the
relevant Award Agreement.
2.18 RETIREMENT means (i) as to officers and employees, retirement from
active employment with the Company and its Subsidiaries and is receiving
benefits under the Company's qualified retirement plan and (ii) as to
Non-Employee Directors, the same as Retirementunder the Retirement policy in
effect for the Board on which the Participant was serving upon receipt of an
Award.
2.19 SUBSIDIARY(IES) means any corporation (other than the Company) in an
unbroken chain of corporations, beginning with the Company, if each of such
corporations, other than the last corporation in the unbroken chain, owns fifty
percent (50%) or more of the voting stock in one of the other corporations in
such chain.
3. ADMINISTRATION.
3.1 THE COMMITTEE. The Plan shall be administered by the Committee. The
Committee shall be appointed from time to time by the Board and shall be
comprised of not less than three (3) of the then members of the Board who
qualify to administer the Plan as disinterested persons within the meaning of
Rule 16b-3 of the Exchange Act. Members of the Committee shall serve at the
pleasure of the Board and the Board may at any time and from time to time remove
members from the Committee, or, subject to the immediately preceding sentence,
add members to the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Any act or acts approved in
writing by all of the members of the Committee then serving shall be the act or
acts of the Committee (as if taken by unanimous vote at a meeting of the
Committee duly called and held).
3.2 PLAN ADMINISTRATION AND PLAN RULES. The Committee is authorized to
construe and interpret the Plan and to promulgate, amend and rescind rules and
regulations relating to the implementation, administration and maintenance of
the Plan. Subject to the terms and conditions of the Plan, the Committee shall
make all determinations necessary or advisable for the implementation,
administration and maintenance of the Plan including, without limitation, (a)
selecting the Plan's Participants, (b) making Awards in such amounts and form as
the Committee shall determine, (c) imposing such restrictions, terms and
conditions upon such Awards as the Committee shall deem appropriate, and (d)
correcting any defect or omission, or reconciling any inconsistency, in the Plan
and/or any Award Agreement. The Committee may designate persons other than
members of the Committee to carry out the day-to-day administration of the Plan
under such conditions and limitations as it may prescribe, except that the
Committee shall not delegate its authority with regard to selection for
participation in the Plan and/or the granting of any Awards to Participants. The
Committee's determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated. Any determination, decision or action of the Committee in connection
with the construction, interpretation, administration, implementation or
maintenance of the Plan shall be final, conclusive and binding upon all
Participants and any person(s) claiming under or through any Participants. The
Company shall effect the granting of Awards under the Plan, in accordance with
the determinations made by the Committee, by execution of written agreements
and/or other instruments in such form as is approved by the Committee.
3.3 LIABILITY LIMITATION. Neither the Board nor the Committee, nor any
member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan (or
any Award Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys' fees)
arising or resulting therefrom to the fullest extent permitted by law/or under
any directors and officers liability insurance coverage which may be in effect
from time to time.
4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.
4.1 TERM. The Plan shall terminate on December 31, 2003, except with
respect to Awards then outstanding. After such date no further Awards shall be
granted under the Plan.
A-3
4.2 COMMON STOCK SUBJECT TO PLAN.
4.2.1 COMMON STOCK. The Board shall reserve for Awards under the Plan
500,000 shares of the authorized and unissued shares. In the event of a
change in the Common Stock of the Company that is limited to a change in
the designation thereof to Capital Stock or other similar designation, or
to a change in the par value thereof, or from par value to no par value,
without increase or decrease in the number of issued shares, the shares
resulting from any such change shall be deemed to be the Common Stock for
purposes of the Plan. Common Stock which may be issued under the Plan shall
be authorized and unissued shares. No fractional shares of Common Stock
shall be issued under the Plan.
4.2.2 MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common
Stock for any Participant for which Awards may be granted under the Plan in
any year is 50,000 shares.
4.2.3 COMMON STOCK REPLENISHED. The maximum number of shares
authorized for issuance under the Plan shall be replenished one time (up to
an additional 500,000 shares for a total authorization of up to 1,000,000
shares of the authorized and unissued shares) during the life of the Plan.
4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of computing the total
number of shares of Common Stock available for Awards under the Plan, there
shall be counted against the limitations set forth in Section 4.2 of the Plan
the maximum number of shares of Common Stock potentially subject to issuance
upon exercise or settlement of Awards granted under Sections 6 and 7 of the
Plan, the number of shares of Common Stock issued or subject to potential
issuance under grants of Restricted Stock pursuant to Section 7 of the Plan, and
the maximum number of shares of Common Stock potentially issuable under grants
of Performance Units pursuant to Section 8 of the Plan, in each case determined
as of the date on which such Awards are granted. If any Awards expire
unexercised or are forfeited, surrendered, canceled, terminated or settled in
cash in lieu of Common Stock, the shares of Common Stock which were theretofore
subject (or potentially subject) to such Awards shall again be available for
Awards under the Plan to the extent of such expiration, forfeiture, surrender,
cancellation, termination or settlement of such Awards; PROVIDED, HOWEVER, that
forfeited Awards shall not again be available for Awards under the Plan if the
Participant received, directly or indirectly, any of the benefits of ownership
of the securities of the Company underlying such Award, including, without
limitation, the benefit described in Section 7.6 of the Plan.
5. ELIGIBILITY. Employees eligible for Awards under the Plan shall consist
of key employees who are officers or managers of the Company and/or its
Subsidiaries who are responsible for the management, growth and protection of
the business of the Company and/or its Subsidiaries and whose performance or
contribution, in the sole discretion of the Committee, benefits or will benefit
the Company in a significant manner. Non-Employees (e.g., those with third party
relationships such as Directors) shall be eligible Participants for
Non-Qualified Stock Options and/or Restricted Stock at the discretion of the
Compensation Committee.
6. STOCK OPTIONS.
6.1 TERMS AND CONDITIONS. Stock options granted under the Plan may be in
the form of Incentive Stock Options or Non-Qualified Stock Options (sometimes
referred to collectively herein as the Stock Option(s). Such Stock Options shall
be subject to the terms and conditions set forth in this Section 6 and any
additional terms and conditions, not inconsistent with the express terms and
provisions of the Plan, as the Committee shall set forth in the relevant Award
Agreement.
6.2 GRANT. Stock Options may be granted under the Plan in such form as the
Committee may from time to time approve. Subject to Section 5 of the Plan, Stock
Options may be granted alone or in addition to other Awards under the Plan.
Notwithstanding the above, no Incentive Stock Options shall be granted to any
employee who owns more than 10% of the combined total voting power of the
Company or any Subsidiary, unless the requirements of Section 422(c)(6) of the
Code are satisfied.
6.3 EXERCISE PRICE. The exercise price per share of Common Stock subject to
a Stock Option shall be determined by the Committee at the time of grant;
PROVIDED, HOWEVER, that the exercise price of an Incentive Stock Option shall
not be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock on the date of the grant of such Incentive Stock Option. For any
employee who owns ten percent (10%) or more of the combined total voting power
of the Company or any Subsidiary, the exercise price of an Incentive Stock
Option shall not be less than one hundred ten percent (110%).
6.4 TERM. The term of each Stock Option shall be such period of time as is
fixed by the Committee at the time of grant; PROVIDED, HOWEVER, that the term of
any Incentive Stock Option shall not exceed ten (10) years after the date the
A-4
Incentive Stock Option is granted. For any employee who owns ten percent (10%)
or more of the combined total voting power of the Company or any Subsidiary, the
term of each Stock Option shall not exceed five (5) years.
6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Director of Personnel of the
Company specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the exercise price in cash, by certified
check, bank draft or money order payable to the order of the Company or, if
permitted by the terms of the relevant Award Agreement and applicable law, by
delivery of, alone or in conjunction with a partial cash or instrument payment,
(a) a fully-secured, recourse promissory note, or (b) shares of Common Stock
already owned by the Participant or to be received upon exercise of the Stock
Option in a cashless exerciseas described below. The Committee may, in the
relevant Award Agreement, also permit Participants (either on a selective or
group basis) to simultaneously exercise Stock Options and sell the shares of
Common Stock thereby acquired, pursuant to a brokerage cashless
exercisearrangement, selected by and approved of in all respects in advance by
the Committee, and use the proceeds from such sale as payment of the exercise
price of such Stock Options. Payment instruments shall be received by the
Company subject to collection. The proceeds received by the Company upon
exercise of any Stock Option may be used by the Company for general corporate
purposes.
6.6 DATE OF EXERCISE. Vesting dates will be specified in the Award
Agreement at the discretion of the Committee. Stock Options that meet the
vesting requirements may be exercised in whole or in part at any time and from
time to time during its specified term.
7. RESTRICTED AWARDS.
7.1 TERMS AND CONDITIONS. Restricted Awards under the Plan may be in the
form of grants of Restricted Stock. Restricted Awards shall be subject to the
terms and conditions set forth in this Section 7 and any additional terms and
conditions, not inconsistent with the express terms and provisions of the Plan,
as the Committee shall set forth in the relevant Award Agreement.
7.2 RESTRICTED STOCK GRANTS. A grant of Restricted Stock is an Award of
shares of Common Stock, in uncertificated form, issued to and registered with
the Company's designated Stock Transfer Agent, in the name of a Participant,
subject to such restrictions, terms and conditions as the Committee deems
appropriate, including, without limitation, restrictions on the sale,
assignment, transfer, hypothecation or other disposition of such shares and the
requirement that the Participant deposit such shares with the Company while such
shares are subject to such restrictions and that such shares be forfeited upon
termination of employment for specified reasons within a specified period of
time.
7.3 GRANTS OF AWARDS.
7.3.1 Subject to Section 5 of the Plan, Restricted Awards may be
granted alone or in addition to any other Awards under the Plan. Subject to
the terms of the Plan, the Committee shall determine the number of
Restricted Awards to be granted to a Participant and the Committee may
impose different terms and conditions on any particular Restricted Award
made to any Participant.
7.3.2 With respect to each Participant receiving an Award of
Restricted Stock, this Award shall be issued in an uncertificated form and
registered in the name of such Participant. The stock transfer books of the
Company's designated Stock Transfer Agent shall be noted with the following
legend with reference to the shares made subject to this Award.
These shares are subject to the terms and restrictions of the CCB
Financial Corporation Long Term Incentive Plan; such shares are
subject to forfeiture or cancellation under the terms of said
Plan; and such shares shall not be sold, transferred, assigned,
pledged, encumbered, or otherwise alienated or hypothecated
except pursuant to the provisions of said Plan, a copy of which
Plan is available from CCB Financial Corporation upon request.
Such Award shall be held in uncertificated form until the restrictions
thereon shall have lapsed and all of the terms and conditions applicable to
such grant shall have been satisfied.
7.4 RESTRICTION PERIOD. In accordance with Sections 7.1 and/or 7.2 of the
Plan, Restricted Awards shall only become unrestricted and vest in the
Participant in accordance with the vesting schedule relating to the service
performance restriction applicable to such Restricted Award, as the Committee
may establish at the time of the Award in the relevant Award Agreement (the
Restriction Period). Notwithstanding the immediately preceding sentence, in no
event shall the Restriction Period be less than one (1) year and one day after
the date on which such Restricted Award is granted. During the Restriction
Period applicable to a Restricted Award, such Award shall be unvested and a
Participant may not sell,
A-5
assign, transfer, pledge, encumber or otherwise dispose of or hypothecate such
Award. Upon satisfaction of the vesting schedule and any other applicable
restrictions, terms and conditions, the Participant shall be entitled to receive
payment of the Restricted Award or a portion thereof, as the case may be, as
provided in Section 7.5 of the Plan.
7.5 PAYMENT OF AWARDS.
7.5.1 RESTRICTED STOCK GRANTS. After the satisfaction and/or lapse of
the restrictions, terms and conditions set by the Committee in respect of a
grant of Restricted Stock, a certificate for the number of shares of Common
Stock which are no longer subject to such restrictions, terms and
conditions shall, as soon as practicable thereafter, be delivered to the
Participant. The remaining shares, if any, issued in respect of such
Restricted Stock shall either be forfeited and canceled, or shall continue
to be subject to the restrictions, terms and conditions set by the
Committee, as the case may be.
7.6 SHAREHOLDER RIGHTS. A Participant shall have, with respect to the
shares of Common Stock received under a grant of Restricted Stock, all of the
rights of a shareholder of the Company, including, without limitation, the right
to vote the shares and to receive any cash dividends. Stock dividends issued
with respect to such Restricted Stock shall be treated as additional Restricted
Stock grants and shall be subject to the same restrictions and other terms and
conditions that apply to the shares of Restricted Stock with respect to which
such stock dividends are issued.
8. PERFORMANCE UNITS.
8.1 TERMS AND CONDITIONS. Performance Units shall be subject to the terms
and conditions set forth in this Section 8 and any additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement.
8.2 PERFORMANCE UNIT GRANTS. A Performance Unit is an Award of units (with
each unit representing such monetary amount as is designated by the Committee in
the Award Agreement) granted to a Participant, subject to such terms and
conditions as the Committee deems appropriate, including, without limitation,
the requirement that the Participant forfeit such units (or a portion thereof)
in the event certain performance criteria are not met within a designated period
of time.
8.3 GRANTS. Subject to Section 5 of the Plan, Performance Units may be
granted alone or in addition to any other Awards under the Plan. Subject to the
terms of the Plan, the Committee shall determine the number of Performance Units
to be granted to a Participant and the Committee may impose different terms and
conditions on any particular Performance Units granted to any Participant.
8.4 PERFORMANCE GOALS AND PERFORMANCE PERIODS. Participants receiving
grants of Performance Units shall only earn into and be entitled to payment in
respect of such Awards if the Company and/or a Division of the Company and/or
the Participant achieves certain performance goals (the Performance Goals)
during and in respect of a designated performance period as determined by the
Committee (the Performance Period). The Performance Goals and the Performance
Period shall be established by the Committee, in its sole discretion. The
Performance Periods may overlap each other from time to time. The Committee
shall establish Performance Goals for each Performance Period prior to, or as
soon as practicable after, the commencement of such Performance Period. The
Committee shall also establish a schedule or schedules for such Performance
Units setting forth the portion of the Award which will be earned or forfeited
based on the degree of achievement, or lack thereof, of the Performance Goals at
the end of the relevant Performance Period. In setting Performance Goals, the
Committee may use, but shall not be limited to, such measures as total
shareholder return, return on equity, return on assets, net earnings per share
growth, comparisons to peer companies, divisional goals, individual or aggregate
Participant performance or such other measure or measures of performance as the
Committee, in its sole discretion, may deem appropriate. Such performance
measures shall be defined as to their respective components and meaning by the
Committee (in its sole discretion). During any Performance Period, the Committee
shall have the authority to adjust the Performance Goals in such manner as the
Committee, in its sole discretion, deems appropriate with respect to such
Performance Period. In addition to the Performance Goals, the Committee may also
require a minimum shareholder return (threshold) be attained before
consideration is given to any results achieved on the Performance Goals. Should
the Company, Division and/or Participant achieve the applicable Performance
Goals, but the minimum shareholder return (threshold) falls below the minimum
expectations, then the Award opportunity may be deferred by the Committee for up
to one (1) or two (2) year(s) until the threshold is exceeded. If the minimum
shareholder return (threshold) is not achieved within the additional one (1) or
two (2) year timeframe, then no Award shall be paid.
A-6
8.5 PAYMENT OF UNITS. With respect to each Performance Unit, the
Participant shall, if the applicable Performance Goals and minimum shareholder
return (threshold) have been achieved by the Company and/or a Division of the
Company during the relevant Performance Period, be entitled to receive payment
in an amount equal to the designated value of each Performance Unit times the
number of such units so earned. Payment in settlement of earned Performance
Units shall be made as soon as practical following the conclusion of the
respective Performance Period in cash, in shares of unrestricted Common Stock or
in Restricted Stock, as the Committee in its sole discretion, shall determine
and provide in the relevant Award Agreement. Should the Company, Division and/or
Participant achieve the applicable Performance Goals, but the minimum
shareholder return (threshold) falls below the minimum expectations, then the
Award opportunity may be deferred by the Committee for up to one (1) or two (2)
year(s) until the threshold is exceeded. If the minimum shareholder return
(threshold) is not achieved within the additional one (1) or two (2) year
timeframe, then no Award shall be paid.
9. DEFERRAL ELECTIONS. The Committee may permit a Participant to elect to
defer receipt of any payment of cash or any delivery of shares of Common Stock
that would otherwise be due to such Participant by virtue of the exercise, earn
out or settlement of any Award made under the Plan. If any such election is
permitted, the Committee shall establish rules and procedures for such
deferrals, including, without limitation, the payment or crediting of reasonable
interest on such deferred amounts credited in cash or crediting of dividend
equivalents in respect of deferral credited in units of Common Stock.
10. TERMINATION OF EMPLOYMENT.
10.1 GENERAL. Subject to the terms and conditions of Section 13 of the
Plan, if, and to the extent, the terms and conditions under which an Award may
be exercised, earned out or settled after a Participant's termination of
employment, or a Non-Employee Director officially leaves the Board, for any
particular reason shall not have been set forth in the relevant Award Agreement,
by and as determined by the Committee in its sole discretion, the following
terms and conditions shall apply as appropriate and as not inconsistent with the
terms and conditions, if any, of such Award Agreement:
10.1.1 Except as otherwise provided in this Section 10.1.1, if:
(a) a Participant's employment by the Company or any of its
Subsidiaries is terminated for any reason, (other than Disability,
Retirement or death) while the shares are non-vested, such Participant's
rights, if any, to exercise any non-vested Stock Options, if any, shall
immediately terminate and the Participant (and such Participant's estate,
designated beneficiary or other legal representative) shall forfeit any
rights or interest in or with respect to any such Stock Options. In the
event of Disability, Retirement or death while the Stock Options are
non-vested, non-vested Stock Options shall become vested to the extent
determined by the Committee. The Committee, in its sole discretion, may
determine that such Participant's Stock Options, if any, to the extent
exercisable immediately prior to any termination of employment (other than
a termination due to death, Retirement or Disability), may remain
exercisable for a specified time period not to exceed thirty (30) days
after such termination (subject to the applicable terms and provisions of
the Plan [and any rules or procedures thereunder] and the relevant Award
Agreement). If any termination of employment is due to Retirement or
Disability, a Participant shall have the right, subject to the applicable
terms and provisions of the Plan (and any rules or procedures thereunder)
and the relevant Award Agreement, to exercise such Stock Options, if any,
at any time within one (1) year period following such termination due to
Retirement or Disability (to the extent such Participant was entitled to
exercise any such Awards immediately prior to such termination). If any
Participant dies while entitled to exercise a Stock Option, if any, such
Participant's estate, designated beneficiary or other legal representative,
as the case may be, shall have the right, subject to the applicable
provisions of the Plan (and any rules or procedures thereunder) and the
relevant Award Agreement, to exercise such Stock Options, if any, at any
time within one (1) year from the date of such Participant's death (but in
no event more than one (1) year from the date of such Participant's
termination due to Retirement or Disability); or
(b) a Non-Employee Director who resigns from the Board, or is not
reelected, or leaves the Board for any reason, (other than Disability,
Retirement or death) while the shares are non-vested, such Non-Employee
Director's rights, if any, to exercise any non-vested Stock Options, if
any, shall immediately terminate and the Non-Employee Director (and such
Non-Employee Director's estate, designated beneficiary or other legal
representative) shall forfeit any rights or interest in or with respect to
any such Stock Options. In the event of Disability, Retirement or death
while the Stock Options are non-vested, non-vested Stock Options shall
become vested to the extent determined by the Committee. The Committee, in
its sole discretion, may determine that such Non-Employee Director's Stock
Options, if any, to the extent exercisable immediately prior to leaving the
Board (other than due to death, Retirement or Disability), may remain
exercisable for a specified time period not to exceed thirty (30) days
after such leaving the
A-7
Board (subject to the applicable terms and provisions of the Plan [and any
rules or procedures thereunder] and the relevant Award Agreement). If
leaving the Board is due to Retirement or Disability, a Non-Employee
Director shall have the right, subject to the applicable terms and
provisions of the Plan (and any rules or procedures thereunder) and the
relevant Award Agreement, to exercise such Stock Options, if any, at any
time within one (1) year period following such leaving the Board due to
Retirement or Disability (to the extent such Non-Employee Director was
entitled to exercise any such Awards immediately prior to such leaving). If
any Non-Employee Director dies while entitled to exercise a Stock Option,
if any, such Non-Employee Director's estate, designated beneficiary or
other legal representative, as the case may be, shall have the right,
subject to the applicable provisions of the Plan (and any rules or
procedures thereunder) and the relevant Award Agreement, to exercise such
Stock Options, if any, at any time within one (1) year from the date of
such Non-Employee Director's death (but in no event more than one (1) year
from the date of such Non-Employee Director's leaving the Board due to
Retirement or Disability).
10.1.2 If a Participant's employment with the Company or any of its
Subsidiaries is terminated for any reason (other than Disability,
Retirement or death) prior to the satisfaction and/or lapse of the
restrictions, terms and conditions applicable to a grant of Restricted
Stock, such Restricted Award or Awards shall be forfeited, unless the
Committee in its discretion determines otherwise. In the event of
Disability, Retirement or death during the Restricted Period, shares of
Restricted Stock shall become free of restrictions to the extent determined
by the Committee.
10.1.3 If a Participant's employment with the Company or any of its
Subsidiaries is terminated for any reason (other than Disability,
Retirement or death) prior to the completion of any Performance Period,
such termination results in the forfeiture of the Performance Unit. If
termination is due to Disability, Retirement or death, the disposition of
the non-vested awards will be determined by the Committee.
11. NON-TRANSFERABILITY OF AWARDS. No Award under the Plan or any Award
Agreement, and no rights or interests herein or therein, shall or may be
assigned, transferred, sold, exchanged, pledged, disposed of or otherwise
hypothecated or encumbered by a Participant or any beneficiary thereof, except
by testamentary disposition or the laws of descent and distribution. No such
interest shall be subject to seizure for the payment of the Participant's (or
any beneficiary's) debts, judgements, alimony, or separation maintenance or be
transferrable by operation of law in the event of the Participant's (or any
beneficiary's) bankruptcy or insolvency. During the lifetime of a Participant,
Stock Options are exercisable only by the Participant.
12. CHANGES IN CAPITALIZATION AND OTHER MATTERS.
12.1 NO CORPORATE ACTION RESTRICTION. The existence of the Plan, any Award
Agreement and/or the Awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the shareholders of the
Company to make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company's or any Subsidiary's capital
structure or its business, (b) any merger, consolidation or change in the
ownership of the Company or any Subsidiary, (c) any issue of bonds, debentures,
capital, preferred or prior preference stocks ahead of or affecting the
Company's or any Subsidiary's capital stock or the rights thereof, (d) any
dissolution or liquidation of the Company or any Subsidiary, (e) any sale or
transfer of all or any part of the Company's or any Subsidiary's assets or
business, or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person shall have any claim
against any member of the Board or the Committee, the Company or any Subsidiary
as a result of any such action.
12.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change in
capitalization affecting the Common Stock of the Company, including, without
limitation, a stock dividend or other distribution, stock split, reverse stock
split, recapitalization, merger, acquisition, consolidation, subdivision,
split-up, spin-off, split-off, combination or exchange of shares or other form
of reorganization, or any other change affecting the Common Stock, the Board, in
its sole discretion, may authorize and make such proportionate adjustments, if
any, as the Board may deem appropriate to reflect such change, including,
without limitation, with respect to the aggregate number of shares of the Common
Stock for which Awards in respect thereof may be granted under the Plan, the
maximum number of shares of the Common Stock which may be sold or awarded to any
Participant, any number of shares of the Common Stock covered by each
outstanding Award, and the exercise price or other price per share of Common
Stock in respect of outstanding Awards.
13. CHANGE IN CONTROL.
13.1 ACCELERATION OF AWARDS VESTING. Except as otherwise provided in
Section 13.2 of the Plan, if a Change in Control of the Company occurs (a) all
Stock Options then unexercised and outstanding shall become fully exercisable as
of the date of the Change in Control, (b) all restrictions, terms and conditions
applicable to all Restricted Stock then outstanding
A-8
shall be deemed lapsed and satisfied as of the date of the Change in Control,
and (c) all Performance Units shall be deemed to have been fully earned as of
the date of the Change in Control.
13.2 SIX-MONTH RULE. The provisions of Section 13.1 of the Plan shall not
apply to any Award that has been granted and outstanding for less than six (6)
months as of the date of the Change in Control.
13.3 PAYMENT AFTER CHANGE IN CONTROL. Within thirty (30) days after a
Change in Control occurs, (a) the holder of an Award of Restricted Stock shall
receive a new certificate for such shares without the legend set forth in
Section 7.3.2 of the Plan, and (b) the holder of an Award of Performance Units
shall receive payment of the value of such grants in cash.
13.4 TERMINATION AS A RESULT OF A POTENTIAL CHANGE IN CONTROL. In
determining the applicability of Section 13.1 of the Plan, if (a) a
Participant's employment is terminated by the Company or any Subsidiary prior to
a Change in Control without Cause at the request of a Person who has entered
into an agreement with the Company the consummation of which will constitute a
Change in Control, or (b) the Participant terminates his employment with the
Company or any Subsidiary for Good Reason prior to a Change in Control and the
circumstance or event which constitutes Good Reason occurs at the request of the
Person described in Section 13.4(a) of the Plan, then for purposes of this
Section 13, a Change in Control shall be deemed to have occurred immediately
prior to such Participant's termination of employment.
13.5 DEFINITIONS. For purposes of this Section 13, the following words and
phrases shall have the meaning specified:
13.5.1 Beneficial Owner shall have the meaning defined in Rule 13d-3
of the Exchange Act.
13.5.2 Cause shall mean, unless otherwise defined in an employee's
individual employment agreement with the Company or any Subsidiary (in
which case such employment agreement definition shall govern), (a) the
indictment of the Participant for any serious crime, (b) the willful and
continued failure by the Participant to substantially perform the
Participant's duties, as they may be defined from time to time, with the
Participant's primary employer or to abide by the written policies of the
Company or the Participant's primary employer (other than any such failure
resulting from the Participant's incapacity due to physical or mental
illness), or (c) the willful engaging by the Participant in conduct which
is demonstrably and materially injurious to the Company or any Subsidiary,
monetarily or otherwise. For purposes of the preceding sentence, no act
shall be considered willful unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that such act,
or failure to act, was in the best interests of the Company and its
Subsidiaries.
13.5.3 A Change in Control shall be deemed to have occurred if any one
of the following conditions shall have been satisfied:
(a) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by any such Person any securities acquired
directly from the Company) representing twenty-five percent (25%) or
more of the combined voting power of the Company's then outstanding
securities; or
(b) during any period of twenty-four (24) consecutive months (not
including any period prior to January 1, 1994), individuals who at the
beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into an
agreement with the Company to effect a transaction described in Sections
13.5.3(a), 13.5.3(c) or 13.5.3(d)) whose election or nomination for
election to the Board was or is approved of by a vote of at least
two-thirds of the directors at the beginning of such twenty-four (24)
month period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of the Board;
or
(c) the shareholders of the Company approve and the action is
implemented to merge or consolidate the Company with any other
corporation or a plan of complete liquidation of the Company, other than
a merger, consolidation or liquidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the Surviving Entity), in
combination with the ownership of any trustee or other fiduciary holding
securities under any benefit plan of the Company or any Subsidiary, more
than seventy-five percent (75%) of the combined voting power of the
voting securities of the Company or such Surviving Entity outstanding
immediately after such merger, consolidation or liquidation; or
(d) the shareholders of the Company approve an agreement for the
sale or disposition by the Company (other than to a Subsidiary) of all
or substantially all of the Company's assets.
A-9
Notwithstanding the foregoing, with respect to a particular Participant a Change
in Control shall not include any event, circumstance or transaction which
results from the action of any entity or group which includes, is affiliated
with, or is wholly or partly controlled by one or more executive officers of the
Company or any Subsidiary and in which entity or group the Participant
participates.
13.5.4 Good Reason for termination by a Participant of the
Participant's employment shall mean, for purposes of this Section 13,
unless otherwise defined in the Participant's individual employment
agreement with the Company or any Subsidiary (in which case such employment
agreement definition shall govern), the occurrence (without the
Participant's consent) of any one of the following:
(a) the assignment to the Participant of any duties and/or
responsibilities substantially and significantly inconsistent with the
nature and status of the Participant's duties and/or responsibilities
immediately prior to any Potential Change in Control, or a substantial
and significant adverse alteration in the nature or status of the
employee's duties and/or responsibilities from those in effect
immediately prior to any such Potential Change in Control; PROVIDED,
HOWEVER, that a redesignation of the Participant's title shall not under
any circumstances constitute Good Reason if the Participant's overall
status among the Company and its Subsidiaries is not substantially and
significantly adversely affected; or
(b) a reduction in the Participant's rate of annual base salary is
in effect on January 1, 1994, as the same may be increased from time to
time, where annual base salary is the Participant's regular basic annual
compensation prior to any reduction therein under a salary reduction
agreement pursuant to Section 401(k) or Section 125 of the Code, and,
without limitation, shall not include, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
13.5.5 Person shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
PROVIDED, HOWEVER, a Person shall not include (a) the Company or any
Subsidiary, (b) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a Subsidiary qualified under
Section 401(a) of the Code, (c) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (d) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company.
13.5.6 Potential Change in Control shall be deemed to have occurred if
any one of the following conditions shall have been satisfied:
(a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control; or
(b) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control; or
(c) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent (10%)
or more of the combined voting power of the Company's then outstanding
securities, or any Person increases such Person's beneficial ownership
of such securities by five (5) percentage points or more over the
percentage so owned by such Person on January 1, 1994; or
(d) the Board adopts a resolution to the effect that, for purposes
of the Plan, a Potential Change in Control has occurred.
13.5.7 Surviving Entity shall mean only an entity in which
substantially all of the Company's shareholders immediately before any
merger, consolidation or liquidation become shareholders by the terms of
such merger, consolidation or liquidation.
13.6 ADVERSE TAX CONSEQUENCES. If the making of any payment or payments
pursuant to this Section 13 or otherwise would (a) subject the Participant to an
excise tax under Section 4999 of the Code, or any like or successor section
thereto, or (b) result in the Company's loss of a federal income tax deduction
for such payments under Section 280G of the Code, or any like or successor
section thereto (either or both, an Adverse Tax Consequence), then, unless
otherwise expressly provided in a relevant Award Agreement, the payments
attributable to the Plan that are parachute payments within the meaning of such
Section 280G of the Code shall be reduced, as determined by the Committee in its
sole discretion, but after consultation with the Participant affected, to the
extent necessary to avoid any Adverse Tax Consequence. Any disputes regarding
whether any payments to a Participant would result in an Adverse Tax Consequence
shall be resolved by
A-10
an opinion of nationally-recognized legal counsel selected by the Committee in
good faith (which legal counsel may be Ward and Smith P.A., Attorneys).
14. AMENDMENT, SUSPENSION AND TERMINATION.
14.1 IN GENERAL. The Board may suspend or terminate the Plan (or any
portion thereof) at any time and may amend the Plan at any time and from time to
time in such respects as the Board may deem advisable to insure that any and all
Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to benefit from any
change in applicable laws or regulations, or in any other respect the Board may
deem to be in the best interests of the Company or any Subsidiary; PROVIDED,
HOWEVER, that no such amendment shall, without majority (or such greater
percentage if required by law, charter, by-law or other regulation or rule)
stockholder approval to the extent required by law or the rules of any exchange
upon which the Common Stock is listed, (a) except as provided in Section 12 of
the Plan, materially increase the number of shares of Common Stock which may be
issued under the Plan, (b) materially modify the requirements as to eligibility
for participation in the Plan, (c) materially increase the benefits accruing to
Participants under the Plan, or (d) extend the termination date of the Plan. No
such amendment, suspension or termination shall (i) materially adversely affect
the rights of any Participant under any outstanding Stock Options, Performance
Units, or Restricted Stock grants, without the consent of such Participant, or
(ii) make any change that would disqualify the Plan, or any other plan of the
Company or any Subsidiary intended to be so qualified, from (A) the exemption
provided by Rule 16b-3, promulgated under the Exchange Act, or any successor
rule or regulation to such Rule 16b-3, as such rule is applicable from time to
time, or (B) the benefits provided under Section 422 of the Code, or any
successor thereto.
14.2 AWARD AGREEMENTS. The Committee may amend or modify at any time and
from time to time any outstanding Stock Options, Performance Units, or
Restricted Stock grants, in any manner to the extent that the Committee would
have had the authority under the Plan to initially determine the restrictions,
terms and provisions of such Stock Options, Performance Units, and/or Restricted
Stock grants, including, without limitation, to change the date or dates as of
which such Options may be exercised. No such amendment or modification shall,
however, materially adversely affect the rights of any Participant under any
such Award without the consent of such Participant.
15. MISCELLANEOUS.
15.1 TAX WITHHOLDING. The Company shall have the right to deduct from any
payment or settlement under the Plan, including, without limitation, the
exercise of any Stock Option, or the delivery or vesting of any shares of Common
Stock, Restricted Stock, any federal, state, local or other taxes of any kind
which the Committee, in its sole discretion, deems necessary to be withheld to
comply with the Code and/or any other applicable law, rule or regulation. If the
Committee, in its sole discretion, permits shares of Common Stock to be used to
satisfy any such tax withholding, such Common Stock shall be valued based on the
Fair Market Value of such stock as of the date the tax withholding is required
to be made, such date to be determined by the Committee. The Committee may
establish rules limiting the use of Common Stock to meet withholding
requirements by Participants who are subject to Section 16 of the Exchange Act.
15.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan, the granting
of any Award, nor the execution of any Award Agreement, shall confer upon any
employee of the Company or any Subsidiary any right to continued employment with
the Company or any Subsidiary, as the case may be, nor shall it interfere in any
way with the right, if any, of the Company or any Subsidiary to terminate the
employment of any employee at any time for any reason.
15.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not be
required to segregate any assets in connection with any Awards under the Plan.
Any liability of the Company to any person with respect to any Award under the
Plan or any Award Agreement shall be based solely upon the contractual
obligations that may be created as a result of the Plan or any such Award or
agreement. No such obligation of the Company shall be deemed to be secured by
any pledge of, encumbrance on, or other interest in, any property or asset of
the Company or any Subsidiary. Nothing contained in the Plan or any Award
Agreement shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between the Company, any Subsidiary
and/or any such Participant, any beneficiary or any other person.
15.4 PAYMENTS TO A TRUST. The Committee is authorized to cause to be
established a trust agreement or several trust agreements or similar
arrangements from which the Committee may make payments of amounts due or to
become due to any Participants under the Plan.
A-11
15.5 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's compensation for purposes of the
determination of benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Company or any Subsidiary unless expressly
provided in such other plans or arrangements, or except where the Board
expressly determines in writing that inclusion of an Award or portion of an
Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.
15.6 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No shares of the
Common Stock shall be issued under the Plan unless legal counsel for the Company
shall be satisfied that such issuance will be in compliance with all applicable
federal and state securities laws and regulations and any other applicable laws
or regulations. The Committee may require, as a condition of any payment or
share issuance, that certain agreements, undertakings, representations,
certificates, and/or information, as the Committee may deem necessary or
advisable, be executed or provided to the Company to assure compliance with all
such applicable laws or regulations. Certificates for shares of the Restricted
Stock and/or Common Stock delivered under the Plan may be subject to such
stock-transfer orders and such other restrictions as the Committee may deem
advisable under the rules, regulations, or other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such share certificates to make
appropriate reference to such restrictions. In addition, if, at any time
specified herein (or in any Award Agreement) for (a) the making of any
determination, (b) the issuance or other distribution of Restricted Stock and/or
Common Stock, or (c) the payment of amounts to or through a Participant with
respect to any Award, any law, rule, regulation or other requirement of any
governmental authority or agency shall require either the Company, any
Subsidiary or any Participant (or any designated beneficiary or other legal
representative) to take any action in connection with any such determination,
any such shares to be issued or distributed, any such payment, or the making of
any such determination, as the case may be, shall be deferred until such
required action is taken. If at any time and from time to time the Committee
determines, in its sole discretion, that the listing, registration or
qualification of any Award, or any Common Stock or property covered by or
subject to such Award, upon any securities exchange or under any foreign,
federal, state or local securities or other law, rule or regulation is necessary
or desirable as a condition to or in connection with the granting of such Award
or the issuance or delivery of Restricted Stock and/or Common Stock or other
property under such Award or otherwise, no such Award may be exercised or
settled, or paid in Restricted Stock, Common Stock or other property, unless
such listing, registration or qualification shall have been effected free of any
conditions that are not acceptable to the Committee.
15.7 AWARD AGREEMENTS. Each Participant receiving an Award under the Plan
shall enter into an Award Agreement with the Company in a form specified by the
Committee. Each such Participant shall agree to the restrictions, terms and
conditions of the Award set forth therein.
15.8 DESIGNATION OF BENEFICIARY. Each Participant to whom an Award has been
made under the Plan may designate a beneficiary or beneficiaries to receive any
payment which under the terms of the Plan and the relevant Award Agreement may
become payable on or after the Participant's death. At any time, and from time
to time, any such designation may be changed or canceled by the Participant
without the consent of any such beneficiary. Any such designation, change or
cancellation must be on a form provided for that purpose by the Committee and
shall not be effective until received by the Committee. If no beneficiary has
been named by a deceased Participant, or if the designated beneficiaries have
predeceased the Participant, the beneficiary shall be the Participant's estate.
If the Participant designates more than one beneficiary, any payments under the
Plan to such beneficiaries shall be made in equal shares unless the Participant
has expressly designated otherwise, in which case the payments shall be made in
the shares designated by the Participant.
15.9 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the power to
promulgate rules and regulations and to make determinations, as it deems
appropriate, under the Plan in respect of any leave of absence from the Company
or any Subsidiary granted to a Participant. Without limiting the generality of
the foregoing, the Committee may determine whether any such leave of absence
shall be treated as if the Participant has terminated employment with the
Company or any such Subsidiary. If a Participant transfers within the Company,
or to or from any Subsidiary, such Participant shall not be deemed to have
terminated employment as a result of such transfers.
A-12
15.10 GOVERNING LAW. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of North
Carolina, without regard to principles of conflict of laws. Any titles and
headings herein are for reference purposes only, and shall in no way limit,
define or otherwise affect the meaning, construction or interpretation of any
provisions of the Plan.
15.11 EFFECTIVE DATE. The Plan shall be effective as of January 1, 1994,
subject to approval by a majority of the Company's shareholders at the 1994
annual meeting of shareholders or any proper adjournment thereof.
A-13
APPOINTMENT OF PROXY
CCB
FINANCIAL
CORPORATION
111 Corcoran Street, Post Office Box 931
Durham, North Carolina 27702
PRELIMINARY COPY
THIS APPOINTMENT OF PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS The under-
signed hereby appoints Richard W. Every, W. Harold
Parker, Jr., and Manuel L. Rojas, and
each of them, as attorneys and proxies, each with
full power to appoint his substitute, and hereby
authorizes them to represent and to vote as
directed below all the shares of common
stock of CCB Financial Corporation (the
Corporation) held of record by the undersigned on
February 16, 1994 at the Annual Meeting of
Shareholders of the Corporation to be held on April
5, 1994 and any adjournments thereof. The
undersigned hereby directs that such
shares be voted as follows:
1. SETTING THE NUMBER OF DIRECTORS AT 18: ( ) FOR ( ) AGAINST ( ) ABSTAIN
2. ELECTION OF DIRECTORS: ( ) FOR All Nominees Listed ( ) WITHHOLD Authority To Vote
Below For All Nominees Listed
Below
2. ELECTION OF DIRECTORS: ( ) WITHHOLD Authority To Vote For Those
Below; and FOR All Other
Nominees Written In The Space Provided
NOMINEES: J. Harper Beall, III, James B. Brame, Jr., Timothy B. Burnett, W. L.
Burns, Jr., Arthur W. Clark, Kinsley van R. Dey, Jr., Mrs. Frances Hill Fox, T.
E. Haigler, Jr., George R. Herbert, Edward S. Holmes, Owen G. Kenan, Eugene J.
McDonald, Dr. Hamilton W. McKay, Jr., Eric B. Munson, Ernest C. Roessler, John
B. Stedman, H. Allen Tate, Jr., and Dr. Phail Wynn, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
3. APPROVAL OF THE LONG-TERM INCENTIVE PLAN:
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. APPROVAL OF PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES FROM 25,000,000 TO 35,000,000:
( ) FOR ( ) AGAINST ( ) ABSTAIN
5. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK
AS THE CORPORATION'S INDEPENDENT ACCOUNTANTS FOR 1994:
( ) FOR ( ) AGAINST ( ) ABSTAIN
6. OTHER BUSINESS: On such other matters as may properly come before the Annual
Meeting, the proxies are authorized to vote the shares represented by this
appointment of proxy in accordance with their best judgment.
The shares represented by this appointment of proxy will be voted as directed
above. In the absence of any direction, such shares will be voted by the proxies
FOR Proposals 1, 3, 4 and 5 above, and FOR the election of each of the nominees
for director as listed in Proposal 2 by casting an equal number of votes for
each such nominee. If, at or before the time of the meeting, any nominee listed
in Proposal 2 becomes unavailable for any reason, the proxies are authorized to
vote for a substitute nominee.
Please sign exactly as your name(s) appears below. If shares are held by joint
tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
Date: , 1994
Signature
Signature if held jointly
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS APPOINTMENT OF PROXY USING THE
ENCLOSED ENVELOPE.
***************************************************************************
APPENDIX
On Page 12 under the heading of Performance Graphs the Five-Year
Comparison of Cumulative Total Return graph appears where indicated.
The plot points are listed in the table below that point.
On Page 13 the Ten-Year Comparison of Cumulative Total Return
graph appears where indicated. The plot points are listed in the
table below that point.
A full-page map of George Watts Hill Alumni Center, Stadium Drive at
Ridge Road, Chapel Hill, NC appears between pages 18 and A-1 where noted.