UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 14, 2000
SOUTHBANC SHARES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23751 58-2361245
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(State or other Jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
907 N. Main Street, Anderson, South Carolina 29621
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(Address of principal executive offices)
(864) 225-0241
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. Other Events.
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On February 14, 2000, SouthBanc Shares, Inc. ("SouthBanc") and Heritage
Bancorp, Inc. ("Heritage"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Heritage will merge with and into
SouthBanc. As a result of the merger, Heritage Federal Bank will become a
wholly owned subsidiary of SouthBanc. The Merger Agreement is filed as Exhibit
2.1 hereto and is incorporated herein by reference.
Pursuant to the terms of the Merger Agreement, each share of Heritage
common stock, $0.01 par value per share, issued and outstanding at the effective
time of the merger, will become and be converted into the right to receive, at
the election of the holder, either shares of SouthBanc common stock, par value
$.01 per share, or $17.65 in cash. The elections of Heritage shareholders will
be subject to the requirement that 50% of Heritage shares be exchanged for cash
and 50% be exchanged for SouthBanc common stock. The number of shares of
SouthBanc common stock into which each Heritage share will be exchanged will be
based on the price of SouthBanc common stock over a measurement period prior to
the closing, as follows: if the average closing price of SouthBanc common stock
during the measurement period is $15.92 or less, the exchange ratio will be
1.109; if the average price of SouthBanc common stock is between $15.92 and
$20.60, the exchange ratio will be $17.65 divided by average closing price; if
the average price of SouthBanc common stock is $20.60 or more and less than
$23.41, the exchange ratio will be 0.857; and if the average price of SouthBanc
common stock is more than $23.41, the exchange ratio will be $20.06 divided by
average closing price.
If the average closing price of SouthBanc common stock during the
measurement period is less than $14.05, Heritage may elect to terminate the
agreement unless SouthBanc elects to increase the exchange ratio. In that case,
the exchange ratio will equal $15.57 divided by the average closing price of
SouthBanc common stock.
The merger will be structured as a tax-free reorganization and will be
accounted under the purchase method of accounting. Consummation of the merger
is subject to various conditions, including the approval of the shareholders of
SouthBanc and Heritage and the receipt of all requisite regulatory approvals.
In connection with the Merger Agreement, SouthBanc granted to Heritage a
stock option pursuant to a Stock Option Agreement, dated as of February 14,
1999, which, under certain defined circumstances, would enable Heritage to
purchase up to 19.9% of SouthBanc's issued and outstanding shares of common
stock at a price of $17.50 per share. The Stock Option Agreement provides that
the total profit receivable thereunder may not exceed $2.0 million plus
reasonable out-of-pocket expenses. A copy of the Stock Option Agreement is
attached hereto as Exhibit 4.1. In addition, Heritage granted to SouthBanc an
identical option to acquire up to 19.9% of Heritage's common stock at a price of
$13.25 per share. A copy of the Stock Option Agreement is attached hereto as
Exhibit 10.1.
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Following consummation of the merger, the Board of Directors of SouthBanc
will have eight members and will be composed of five members of SouthBanc's
current Board of Directors and three members of Heritage's current Board of
Directors.
The summary of the Merger Agreement is not complete and is qualified in its
entirety by reference to the complete text of such documents filed as an exhibit
herewith and incorporated herein by reference.
ITEM 7. Financial Statements and Other Exhibits.
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Exhibit 2.1 Agreement and Plan of Merger, dated as of February 14, 2000, by
and between SouthBanc Shares, Inc. and Heritage Bancorp, Inc.
Exhibit 4.1 Stock Option Agreement dated as of February 14, 2000 by and
between SouthBanc Shares, Inc. and Heritage Bancorp, Inc.
Exhibit 10.1 Stock Option Agreement dated February 14, 2000 by and between
Heritage Bancorp, Inc. and SouthBanc Shares, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SouthBanc Shares, Inc.
Dated: February 18, 2000 By: /s/ Robert W. Orr
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Robert W. Orr
President and Chief Executive Officer
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