SCHEDULE 14A INFORMATION
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:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SouthBanc Shares, Inc.
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(Name of Registrant as Specified in Its Charter)
SouthBanc Shares, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] $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.
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[_] 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
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December 14, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of SouthBanc Shares, Inc. We will hold the meeting at the main office of
Heritage Federal Bank at 201 West Main Street, Laurens, South Carolina on
Wednesday, January 17, 2001 at 10:00 a.m., local time. This will be our first
annual meeting since the completion of our merger with Heritage Bancorp, Inc. in
July 2000.
The notice of annual meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the Company.
Directors and officers of the Company, as well as a representative of Elliot,
Davis & Company LLP, the Company's independent auditors, will be present to
respond to appropriate questions of stockholders.
It is important that your shares are represented at this meeting,
whether or not you attend the meeting in person and regardless of the number of
shares you own. To make sure your shares are represented, we urge you to
complete and mail the enclosed proxy card or vote by telephone. If you attend
the meeting, you may vote in person even if you have previously mailed a proxy
card or voted by telephone.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert W. "Lujack" Orr /s/ J. Edward Wells
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Robert W. "Lujack" Orr J. Edward Wells
President and Chief Executive Officer Chairman of the Board
SOUTHBANC SHARES, INC.
907 N. MAIN STREET
ANDERSON, SOUTH CAROLINA 29621
(864) 225-0241
Notice of Annual Meeting of Stockholders
On Wednesday, January 17, 2001, SouthBanc Shares, Inc will hold its annual
meeting of stockholders at the main office of Heritage Federal Bank at 201 West
Main Street, Laurens, South Carolina. The meeting will begin at 10:00 a.m.,
local time. At the meeting, stockholders will consider and act on the following:
1. The election of three directors to serve for a term of three years;
2. To ratify the SouthBanc Shares, Inc. 2001 Stock Option Plan;
3. The ratification of the appointment of Elliot, Davis & Company LLP as
independent auditors for the Company for the fiscal year ending
September 30, 2001; and
4. Any other business that may properly come before the meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Only stockholders of record at the close of business on December 1, 2000
are entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person. Instead of
returning a proxy card, registered stockholders may vote their shares by
telephone.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
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Sylvia B. Reed
Corporate Secretary
Anderson, South Carolina
December 14, 2000
IMPORTANT: The prompt return of proxies will save the expense of further
requests for proxies in order to ensure a quorum. A self-addressed envelope is
enclosed for your convenience. No postage is required if mailed in the United
States.
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SouthBanc Shares, Inc. ("SouthBanc Shares"
or the "Company") to be used at the annual meeting of stockholders of the
Company. The Company is the holding company for Perpetual Bank, A Federal
Savings Bank ("Perpetual Bank") and Heritage Federal Bank ("Heritage Federal").
The annual meeting will be held at Heritage Federal's main office at 201 West
Main Street, Laurens, South Carolina on Wednesday, January 17, 2001, at 10:00
a.m., local time. This proxy statement and the enclosed proxy card are being
first mailed to stockholders of record on or about December 14, 2000.
Voting and Proxy Procedure
Who Can Vote at the Meeting
You are entitled to vote your SouthBanc Shares common stock if the records
of the Company show that you held your shares as of the close of business on
December 1, 2000. As of the close of business on that date, a total of 4,499,103
shares of SouthBanc Shares common stock were outstanding. Each share of common
stock has one vote. The Company's Certificate of Incorporation provides that
record holders of the Company's common stock who beneficially own, either
directly or indirectly, in excess of 10% of the Company's outstanding shares are
not entitled to any vote in respect of the shares held in excess of the 10%
limit.
Attending the Meeting
If you are a beneficial owner of SouthBanc Shares common stock held by a
broker, bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of SouthBanc Shares common stock held in street name in person at
the meeting, you will have to get a written proxy in your name from the broker,
bank or other nominee who holds your shares.
Vote Required
The annual meeting will be held if a majority of the outstanding shares of
common stock entitled to vote is represented at the meeting, constituting a
quorum. If you return valid proxy instructions or attend the meeting in person,
your shares will be counted for purposes of determining whether there is a
quorum, even if you abstain from voting. Broker non-votes also will be counted
for purposes for determining the existence of a quorum. A broker non-vote occurs
when a broker, bank or other nominee holding shares for a beneficial owner does
not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received voting
instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to any
nominee. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the ratification of the SouthBanc Shares, Inc.
2001 Stock Option Plan and the ratification of the appointment of Elliot, Davis
& Company LLP
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as independent auditors, you may vote in favor of the proposal, vote against the
proposal or abstain from voting. These matters will be decided by the
affirmative vote of a majority of the votes cast at the annual meeting.
Abstentions and broker non-votes will have no effect on the outcome of the vote.
Voting by Proxy
The Board of Directors of SouthBanc Shares is sending you this proxy
statement for the purpose of requesting that you allow your shares of SouthBanc
Shares common stock to be represented at the annual meeting by the persons named
in the enclosed proxy card. All shares of SouthBanc Shares common stock
represented at the meeting by properly executed, dated proxies will be voted
according to the instructions indicated on the proxy card. If you sign, date and
return a proxy card without giving voting instructions, your shares will be
voted as recommended by the Company's Board of Directors. The Board of Directors
recommends a vote "FOR" each of the nominees for director, "FOR" ratification of
the SouthBanc Shares, Inc. 2001 Stock Option Plan and "FOR" ratification of
Elliot, Davis & Company LLP as independent auditors.
Instead of returning a proxy card, stockholders of record may vote their
shares by telephone by calling a special toll-free telephone number. Telephone
voting instructions and the toll-free telephone number are set forth on the
enclosed proxy card.
If any matters not described in this proxy statement are properly presented
at the annual meeting, the persons named in the proxy card will use their own
judgment to determine how to vote your shares. This includes a motion to adjourn
or postpone the annual meeting in order to solicit additional proxies. If the
annual meeting is postponed or adjourned, your SouthBanc Shares common stock may
also be voted by the persons named in the proxy card on the new meeting date,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the annual meeting.
You may revoke your proxy at any time before the vote is taken at the
annual meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your SouthBanc Shares common stock has been voted at
the annual meeting, deliver a later dated proxy, or attend the annual meeting
and vote your shares in person. Attendance at the annual meeting will not in
itself constitute revocation of your proxy.
If your SouthBanc Shares common stock is held in street name, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form provided by your broker, bank or other nominee that
accompanies this proxy statement.
Participants in Perpetual Bank's ESOP or 401(k) Plan
If you participate in the Perpetual Bank Employee Stock Ownership Plan
("ESOP") or if you hold shares through Perpetual Bank's 401(k) Plan, you will
have received with this proxy statement a voting instruction form for each plan
that reflects all shares you may vote under the plans. Under the terms of the
ESOP, all shares held by the ESOP are voted by the ESOP trustee, but each
participant in the ESOP may direct the trustee how to vote the shares of Company
common stock allocated to his or her account. Unallocated shares of common stock
held by the ESOP and allocated shares for which no timely voting instructions
are received will be voted by the ESOP trustees in the same proportion as shares
for which the trustees have received voting instructions, subject to the
exercise of their fiduciary duties. Under the terms of the 401(k) Plan, a
participant is entitled to direct the trustee as to the shares in the SouthBanc
Shares, Inc.
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Stock Fund credited to his or her account. The trustee will vote all shares for
which no directions are given or for which timely instructions were not received
in the same proportion as shares for which the trustee received voting
instructions. The deadline for returning your voting instructions to each plan's
trustee is January 10, 2001.
Stock Ownership
The following table provides information as of December 1, 2000 about the
shares of common stock of SouthBanc Shares that may be considered to be
beneficially owned by each director or nominee for director of the Company, by
those officers of the Company named in the Summary Compensation Table, and by
all directors and executive officers of the Company as a group. Unless otherwise
indicated, each of the named individuals has sole voting power and sole
investment power with respect to the number of shares shown. Management knows of
no persons who were the beneficial owners of more than 5% of the Company's
outstanding common stock as of December 1, 2000.
Number of
Shares That May
be Acquired
Number of Within 60 Days Percent of
Shares Owned by Exercising Common Stock
Name (excluding options) Options Outstanding(1)
- ----------------------------------- ---------------------- ----------------- ----------------
J. Riley Bailes 51,966/(2)/ - 1.16
Richard C. Ballenger 9,945/(3)/ 14,781 *
Martha S. Clamp 26,891/(4)/ 16,032 *
F. Stevon Kay 64,793 14,781 1.76
Robert W. Orr 73,544/(5)/ 69,152 3.12
John C. Owings, II 48,311/(6)/ - 1.07
Harold A. Pickens, Jr. 50,292/(7)/ 13,527 1.41
J. Edward Wells 63,951/(8)/ - 1.42
Thomas C. Hall 71,768/(9)/ 69,152 3.08
Barry C. Visioli 67,042 69,152 2.98
All Directors and
Executive Officers
as a group (11 persons) 533,741 266,577 16.79
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*Less than 1% of the shares outstanding
(1) Based on 4,499,103 shares of Company common stock outstanding and entitled
to vote as of December 1, 2000, plus the number of shares that may be
acquired within 60 days by each individual (or group of individuals) by
exercising options.
(2) Includes 20,170 shares owned by Mr. Bailes' spouse and 1,238 shares held by
Mr. Bailes as custodian for his grandchildren's trust.
(3) Includes 1,020 shares owned by Mr. Ballenger's children and 4,147 owned by
the City Glass Company.
(4) Includes 4,057 shares owned by Mrs. Clamp's spouse.
(5) Includes 813 shares owned by Mr. Orr's spouse and 1,202 shares owned by Mr.
Orr's child.
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(6) Includes 953 shares owned by Mr. Owings' spouse and 13,233 shares held by
Mr. Owings in his capacity as co-trustee of a family trust.
(7) Includes 5,405 shares owned by Mr. Pickens' spouse.
(8) Includes 14,550 shares owned by Mr. Wells' spouse.
(9) Includes 2,851 shares owned by Mr. Hall's spouse.
Interests of Certain Persons in Matters
To Be Acted Upon
After obtaining shareholder approval, SouthBanc Shares will consider
granting stock options to directors, officers and employees of SouthBanc Shares,
Perpetual Bank and Heritage Federal under the SouthBanc Shares, Inc. 2001 Stock
Option Plan.
Proposal 1 -- Election of Directors
The Company's Board of Directors currently consists of eight members. Six
directors are independent and two are members of management. The Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. Three directors will be elected at
the annual meeting to serve for a three-year term, or until their respective
successors have been elected and qualified. The nominees for election this year
are F. Stevon Kay, Robert W. "Lujack" Orr and John C. Owings, II, each of whom
is currently a member of the Board of Directors of the Company.
SouthBanc Shares and Heritage Bancorp, Inc. completed their merger on July
31, 2000. Under the terms of the merger agreement, three directors of Heritage
Bancorp, John C. Owings, II, J. Riley Bailes and J. Edward Wells, were appointed
to the Company's Board of Directors.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the nominees named above. If any nominee is unable to
serve, the persons named in the proxy card would vote your shares to approve the
election of any substitute proposed by the Board of Directors. Alternatively,
the Board of Directors may adopt a resolution to reduce the size of the Board.
At this time, the Board of Directors knows of no reason why any nominee might be
unable to serve.
The Board of Directors recommends a vote "FOR" the election of all nominees.
Information regarding the nominees and the directors continuing in office
is provided below. Unless otherwise stated, each individual has held his or her
current occupation for the last five years. The age indicated in each nominee's
biography is as of September 30, 2000. There are no family relationships among
the directors or executive officers except as otherwise stated. The indicated
period for service as a director includes service as a director of Perpetual
Bank if applicable.
Nominees for Election of Directors
The nominees standing for election are:
F. Stevon Kay is the President of Hill Electric Company, Inc., Anderson,
South Carolina. Mr. Kay is also a Director of Perpetual Bank. Age 49. Director
since 1996.
Robert W. "Lujack" Orr has been affiliated with Perpetual Bank since 1974.
He became President of Perpetual Bank in 1991 and has served as President and
Chief Executive Officer of the Company (and its
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predecessor, SouthBanc Shares, MHC) since 1991. Mr. Orr is also a Director of
Perpetual Bank and Heritage Federal. Age 53. Director since 1989.
John C. Owings, II is the owner of Laurens Lumber Company in Laurens, South
Carolina. Until the Company's merger with Heritage Bancorp in July 2000, Mr.
Owings had served as a Director of Heritage Bancorp. Mr. Owings is also a
Director of Heritage Federal. Age 48. Director since 2000.
Directors Continuing in Office
The following directors have terms ending in 2002:
Harold A. "Drew" Pickens, Jr., Vice Chairman of the Board, is the retired
owner of Harold A. Pickens and Sons, Inc., a commercial construction contractor.
Mr. Pickens has served as Vice Chairman of the Company's Board of Directors
since 2000. He also serves as Chairman of the Board of Perpetual Bank and a
Director of Heritage Federal. Age 67. Director since 1977.
J. Riley Bailes is the retired owner of a retail clothing store in Laurens,
South Carolina. Until the Company's merger with Heritage Bancorp in July 2000,
Mr. Bailes had served as a Director of Heritage Bancorp. Mr. Bailes is also a
Director of Heritage Federal. Age 61. Director since 2000.
Martha C. Clamp is a certified public accountant. Age 58. Director since
1988.
The following directors have terms ending in 2003:
J. Edward Wells has served as Chairman of the Board of the Company since
2000 and is the President and Chief Executive Officer of Heritage Federal,
positions he has held since 1972. Until the Company's merger with Heritage
Bancorp in July 2000, Mr. Wells served as Director, President and Chief
Executive Officer of Heritage Bancorp. Mr. Wells also serves as a Director of
Perpetual Bank and Heritage Federal. Age 62. Director since 2000.
Richard C. Ballenger is the President of City Glass Company and D&B Glass
Company, Inc., both located in Anderson, South Carolina. Mr. Ballenger also
serves as a Director of Perpetual Bank. Age 52. Director since 1996.
Named Executive Officers who are not also Directors
Thomas C. Hall has been employed by Perpetual Bank since 1975 and currently
serves as Senior Vice President, Treasurer and Chief Financial Officer of the
Company and Perpetual Bank, responsible for areas of accounting, investments,
date processing and deposits.
Barry C. Visioli has been affiliated with Perpetual Bank since 1973. Mr.
Visioli serves as Senior Vice President of the Company and Perpetual Bank, and
is responsible for Lending Operations.
Meetings and Committees of the Board of Directors
The Company conducts business through meetings and activities of its Board
of Directors and its committees. During the fiscal year ended September 30,
2000, the Board of Directors of the Company held 12 regular meetings and 4
special meetings. No director attended fewer than 75% of the total meetings of
the Boards of Directors and committees on which such director served.
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The Company's Board of Directors has established Audit (consisting of
Directors Clamp, Kay and Ballenger), Compensation (consisting of Directors Wells
and Pickens) and Nominating (consisting of the entire Board) Committees, among
others.
The Audit Committee receives and reviews all reports prepared by the
Company's independent auditors. This committee met 5 times during the fiscal
year ended September 30, 2000.
The Compensation Committee of the Company is responsible for all matters
regarding the Company's, Perpetual Bank's and Heritage Federal's employee
compensation and benefit programs. This Committee met once during the fiscal
year ended September 30, 2000.
The Nominating Committee selects annually the nominees for election as
directors. The Committee met once to select management's nominees for election
as directors at this annual meeting. The Company's bylaws provide for
shareholder nominations of directors. See "Stockholders Proposals and
Nominations."
Directors' Compensation
Directors' Fees. Non-officer directors of Perpetual Bank receive annual
compensation of $10,800, payable $900 monthly, and $100 for each committee
meeting attended. Director compensation is deducted by $100 for each meeting
absence. No fees are paid for attending special meetings of the Board. The
Chairman of the Board receives compensation of $18,000 per year. Perpetual Bank
paid a total of approximately $117,025 in directors' and committee fees for the
fiscal year ended September 30, 2000.
Non-officer directors of Heritage Federal receive monthly compensation of
$1,250 and do not receive compensation for committee meetings attended. No fees
are paid for attending special meetings of the Board. Since the completion of
the merger, Heritage Federal paid a total of approximately $5,000 in directors'
and committee fees for the fiscal year ended September 30, 2000.
No separate fees are paid for service on the Company's Board of Directors.
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Executive Compensation
Summary Compensation Table
The following information is furnished for Messrs. Orr, Hall and Visioli.
No other executive officer of SouthBanc Shares, Perpetual Bank or Heritage
Federal received salary and bonus of $100,000 or more during the fiscal year
ended September 30, 2000.
Long-Term Compensation
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Annual Compensation Awards
----------------------------- -----------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Principal Compensation Awards Options/ Compensation
Positions Year Salary($) Bonus($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------------ ------ --------- -------- ------------ ----------- ---------- -------------
Robert W. Orr 2000 $ 104,105 $ 69,659 -- $ -- -- $ 16,650
President and 1999 101,764 115,799 -- 463,332 39,923 11,323
Chief Executive Officer 1998 98,800 -- -- -- -- 15,337
Thomas C. Hall 2000 87,667 58,660 -- -- -- 14,649
Senior Vice 1999 85,696 97,515 -- 463,332 39,923 10,120
President 1998 83,200 -- -- -- -- 13,855
Barry C. Visioli 2000 76,709 51,328 -- -- -- 13,152
Senior Vice 1999 74,984 85,325 -- 463,332 39,923 9,224
President 1998 72,800 -- -- -- -- 12,736
__________________
(1) Does not include certain additional benefits, the aggregate amounts of
which do not exceed the lesser of $50,000 or 10% of salary and bonus for
the named executive officers.
(2) For fiscal year 1999, represents the value of shares awarded under the
SouthBanc Shares, Inc. 1998 Management Development and Recognition Plan.
All restricted stock awards vested upon completion of the Company's merger
with Heritage Bancorp.
(3) For fiscal year 1999, represents stock options granted pursuant to the
SouthBanc Shares, Inc. 1998 Stock Option Plan.
(4) For fiscal year 2000, represents 401(k) Plan employer contributions of
$9,919, $8,377 and $7,313 for Messrs. Orr, Hall, Visioli, respectively, and
ESOP contributions of $6,731, $6,272 and $5,839 for Messrs. Orr, Hall and
Visioli, respectively.
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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following information is presented for Messrs. Orr, Hall and Visioli
for the fiscal year ended September 30, 2000.
Number of Value of Unexercised In-the-
Securities Underlying Money Options at Fiscal
Unexercised Options Year End ($)(1)
---------------------------- --------------------------------
Shares Value
Acquired on Realized
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------- ------------- ------------- ------------- --------------- ------------- ---------------
Robert W. Orr -- -- 69,152 -- $ 252,831 --
Thomas C. Hall -- -- 69,152 -- 252,831 --
Barry C. Visioli -- -- 69,152 -- 252,831 --
__________
(1) Value of unexercised in-the-money options equals the market value of shares
covered by in-the-money options on September 29, 2000 ($17.50 per share)
less the exercise prices of the options. Options are in-the-money if the
market value of the shares covered by the options is greater than the
option exercise price.
Employment Agreements
The Company and Perpetual Bank have entered into three-year employment
agreements with Messrs. Orr, Hall and Visioli. Under the agreements, the current
base salaries for Messrs. Orr, Hall and Visioli (collectively, the "Executives")
are $104,105, $87,667 and $76,709, respectively, for which the Executives will
be paid by Perpetual Bank. Each Executive's salary may be increased at the
discretion of the respective Board of Directors or an authorized committee of
the respective Board of Directors. The Executives' salaries may not be decreased
during the term of the agreements without their prior written consent. On the
anniversary of the commencement date of the agreements, the term of the
agreements may be extended by the respective Board of Directors for an
additional year unless a termination notice is given by the Executives. The
Company or Perpetual Bank may terminate the agreements with the Executives with
or without cause. The Executives may also voluntarily terminate employment under
specific circumstances set forth in the agreements which constitute constructive
termination or in certain circumstances specified by federal regulations. If the
Executives' employment is terminated without cause or upon a constructive
termination, the Company or Perpetual Bank would be required to honor the terms
of the agreements through the expiration of the then current term, including
payment of current cash compensation and continuation of employee benefits.
The agreements also provide for severance payments to the Executives if
employment is terminated following a change in control of the Company or
Perpetual Bank. In the event of a change in control each Executive is entitled
to a severance benefit equal to three times his average annual compensation for
the five preceding taxable years. In addition, each executive is entitled to
continuation of other employee benefits for a 36-month period following a change
in control. The term "change in control" is defined in the agreements as having
occurred when, among other things: (a) a person other than the Company purchases
shares of the Company's common stock in a tender or exchange offer for such
shares; (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities; (c) the membership of the Board of
Directors changes as the result of a contested election; or (d) stockholders of
the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
9
Cash and benefits paid to the Executives under the agreements, together
with payments under other benefit plans, following a change in control of the
Company or Perpetual Bank may constitute an "excess parachute payment" under
Section 280G of the Internal Revenue Code, resulting in the imposition of a 20%
excise tax on the recipient and the denial of the deduction for such excess
amounts to the Company or Perpetual Bank. The Company agreements with the
Executives include a provision whereby the Company indemnifies the Executives on
an after-tax basis for any "excess parachute payment" excise taxes.
The employment agreements restrict each executive's right to compete
against the employers for a period of one year from the date of termination of
the agreement if his employment is terminated without cause, except if
termination occurs after a change in control.
Supplemental Executive Retirement Agreements
Perpetual Bank entered into supplemental executive retirement agreements in
April 1998 with Messrs. Orr, Hall and Visioli. Upon retirement on or after
reaching age 65, Messrs. Orr, Hall and Visioli would receive monthly benefits of
$7,575, $3,433 and $2,808, respectively, paid monthly for 239 months following
retirement. Upon termination of employment following a change in control of
Perpetual Bank or the Company, Messrs. Orr, Hall and Visioli would receive
monthly benefits of $7,575, $3,433 and $2,808, respectively, paid monthly for
239 months commencing with the month after he reaches age 65. Upon termination
of service for disability or retirement before age 65, Messrs. Orr, Hall and
Visioli would receive a reduced amount pursuant to a schedule set forth in the
agreements paid monthly for 239 months following termination. The reduced
payments would reflect Perpetual Bank's accrued liability under the agreements
as of the date of termination. The agreements provide a death benefit if Messrs.
Orr, Hall and Visioli die while in active service of Perpetual Bank equal to the
amount that would be paid to Messrs. Orr, Hall and Visioli upon serving until
age 65. If Messrs. Orr, Hall and Visioli die after benefit payments commence but
before receiving all payments, Perpetual Bank will pay the remaining benefits at
the same time and in the same amounts they would have been paid had Messrs. Orr,
Hall and Visioli survived. Perpetual Bank purchased life insurance on Messrs.
Orr, Hall and Visioli whereby Perpetual Bank is the beneficiary in order to
offset the expected payments to Messrs. Orr, Hall and Visioli. Perpetual Bank
accrued aggregate expense related to these agreements of approximately $78,000.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the following Report of the Compensation Committee of the
Company and Performance Graph shall not be incorporated by reference into any
such filings.
Report of the Compensation Committee of the Company
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information about the
compensation and benefits provided to the Company's Chief Executive Officer and
its other executive officers. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and consideration that led to the fundamental
executive compensation decisions affecting those individuals.
The Compensation Committee of the Company ("Committee") administer all
policies that govern executive compensation for the Company, Perpetual Bank and
Heritage Federal. The Committee evaluates the performance and determines the
compensation of each named executive officer and other senior officers of the
Company, Perpetual Bank and Heritage Federal.
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The Committee believes that compensation policy should reflect both
executives' management skills as well as Company performance and shareholder
returns. To this end, the following goals underlie the Committee's policies:
1. To attract and retain key executives who possess the management skills
and experience vital to the long-term success of the Company, Perpetual
Bank and Heritage Federal.
2. To provide compensation that is competitive and consistent with
executive compensation levels found in the financial and banking
industries.
3. To motivate executives to enhance long-term shareholder value by
building their ownership in the Company.
4. To make the compensation program an integral part of the Company's
long-term planning and management process.
The Committee's uses whatever means it considers necessary to obtain
adequate and current information upon which to base its recommendations to the
Board of Directors. For fiscal 2000, the Committee reviewed the results of
various compensation surveys and assessed the performance of the Chief Executive
Officer and other executive officers of Perpetual Bank and Heritage Federal.
In preparing its analysis with respect to comparative compensation data,
the Committee considers characteristics of peer institutions such as asset size,
off-balance sheet assets, earnings, type of business operations, corporate
structure and geographic location. When analyzing comparative data for
individual executive officers at peer institutions, the Committee considers the
scope and similarity of officer positions, experience and the complexity of
individual officer responsibilities.
In making its compensation recommendations, the Committee also considers
the performance of executive officers. The Chief Executive Officer evaluates the
performance of all other executive officers and reports to the Committee. The
Committee evaluates the performance of the Chief Executive Officer. The
Committee then reports to the Board of Directors regarding the performance of
the Chief Executive Officer and other executive officers. The Committee also
recommends to the Board of Directors the compensation of each of the executive
officers, including the Chief Executive Officer. Upon review of the Committee's
recommendations, the Board of Directors sets all executive compensation. The
Chief Executive Officer, a member of the Board of Directors, abstains from
voting on matters related to his compensation.
Compensation Committee Considerations for Fiscal 2000. Compensation for
executive officers is generally composed of salary, bonus, participation in
various employee benefit plans, such as the ESOP and the 401(k) plan, certain
fringe benefits provided to employees and directors fees, if applicable. The
benefits provided under the ESOP and the 401(k) plan are determined based on the
executive's compensation and/or years of service with Perpetual Bank or Heritage
Federal.
A bonus pool has been established for Messrs. Orr, Hall and Visioli based
on the earnings of the Company. The bonus is also measured by the Company's loan
delinquency ratios and growth in deposits and loans, earnings per share and
other financial measurements. The Committee recommends the proposed bonuses to
the full Board for its approval. The annual review and bonuses are generally
made on September 30 of each year. For 2000 Messrs. Orr, Hall and Visioli
received bonuses of $69,659, $58,660 and $51,328,
11
respectively. The threshold for the bonus plan is $2.5 million pre-tax earnings
excluding merger related ESOP expenses and loss on sale of investments.
Compensation of the Chief Executive Officer. For the fiscal year ended
September 30, 2000, Mr. Orr received a base salary of $104,105 and a cash bonus
of $69,659. In addition, he received other compensation of $16,650 as set forth
in the Summary Compensation Table presented earlier. The Board of Directors
believes that Mr. Orr's compensation is appropriate based on Perpetual Bank's
compensation policy, consideration of salaries for similar positions in the
financial industry and Perpetual Bank's performance during the fiscal year.
Mr. Orr does not serve on the Compensation Committee and did not
participate in the Board of Director's review and adoption of the Compensation
Committee's recommendation concerning his compensation.
Compensation Committee of the Company consisting of:
Harold A. "Drew" Pickens, Jr.
J. Edward Wells
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company, Perpetual Bank or Heritage Federal has
served as a member of the compensation committee of another entity, one of whose
executive officers served on either the Compensation Committee of the Company,
Perpetual Bank or Heritage Federal. No executive officer of the Company,
Perpetual Bank or Heritage Federal has served as a director of another entity,
one of whose executive officers served on either the Compensation Committee of
the Company, Perpetual Bank or Heritage Federal. No executive officer of the
Company, Perpetual Bank or Heritage Federal has served as a member of the
compensation committee of another entity, one of whose executive officers served
as a director of the Company, Perpetual Bank or Heritage Federal.
12
Performance Graph
The following graph compares the cumulative total shareholder return on the
Company's common stock with the cumulative total return on the Nasdaq Index
(U.S. Companies) and with the SNL $250 - $500 Million Asset Thrift Index and the
SNL $500 Million to $1 Billion Asset Thrift Index. The graph SNL $500 Million to
$1 Billion Asset Thrift Index has been included as a peer group index because of
the increase in the Company's asset size due to the completion of its merger
with Heritage Bancorp. The Company will not use the SNL $250 - $500 Million
Asset Thrift Index as a peer group index in future proxy statements. Before the
Company's common stock began trading on The Nasdaq National Market on April 16,
1998, Perpetual Bank's common stock traded on the Nasdaq SmallCap Market. The
base amount for the graph is $21.25 per share, which was the closing price of
Perpetual Bank's common stock on October 1, 1996, the first day of trading for
Perpetual Bank's common stock. The graph assumes that the value of an investment
in Perpetual Bank's common stock and in each index was $100 at October 1, 1996,
and that all dividends were reinvested. Stock price performance shown is not
necessarily indicative of future price performance.
[GRAPH APPEARS HERE]
------------------------------------------------------
10/01/96 9/30/97 9/30/98 9/30/99 9/30/00
---------- --------- --------- --------- ----------
SouthBanc Shares, Inc............................... $100 $306 $279 $371 $305
Nasdaq - Total U.S.................................. 100 138 140 229 304
SNL $250-$500 Million Asset Thrift Index............ 100 163 155 193 205
SNL $500 Million-$1 Billion Asset Thrift Index...... 100 167 155 145 155
13
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of any
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of the reports it has received and
written representations provided to the Company from the individuals required to
file the reports, the Company believes that each of its executive officers and
directors has complied with applicable reporting requirements for transactions
in SouthBanc Shares common stock during the fiscal year ended September 30,
2000.
Transactions with Management
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made under programs generally available to all employees, and
must not involve more than the normal risk of repayment or present other
unfavorable features. Perpetual Bank and Heritage Bank, therefore, are
prohibited from making any new loans or extensions of credit to executive
officers and directors at different rates or terms than those offered to the
general public, except for loans made pursuant to programs generally available
to all employees, and has adopted a policy to this effect. In addition, loans
made to a director or executive officer in an amount that, when aggregated with
the amount of all other loans to such person and his or her related interests,
are in excess of the greater of $25,000 or 5% of the institution's capital and
surplus (up to a maximum of $500,000) must be approved in advance by a majority
of the disinterested members of the Board of Directors. The aggregate amount of
loans by Perpetual Bank and Heritage Bank to its executive officers and
directors and their associates was approximately $1.3 million and $31,000,
respectively at September 30, 2000.
Proposal 2 -- Ratification of SouthBanc Shares, Inc.
2001 Stock Option Plan
General
On November 20, 2000, the Board of Directors of the Company adopted,
subject to stockholder approval, the SouthBanc Shares, Inc. 2001 Stock Option
Plan.
The Company's stockholders previously adopted the Perpetual Bank, A Federal
Savings Bank 1997 Stock Option Plan (assumed by SouthBanc Shares, Inc.) and the
SouthBanc Shares, Inc. 1998 Stock Option Plan which provided for the grant of
options to directors, officers and employees of the Company and its affiliates.
The granting of stock options has been an effective way for the Company to
reward its current directors, officers and employees and attract and retain key
personnel who provide services to the Company and its affiliates. The Company
wishes to continue its stock option program, however, no options remain under
either the 1997 Stock Option Plan or 1998 Stock Option Plan. Therefore, the
Board of Directors has adopted the 2001 Stock Option Plan, subject to
stockholder approval, to continue the Company's program of rewarding and
motivating directors, officers and employees of the Company with stock options.
14
The following summary is a brief description of the material features of
the 2001 Stock Option Plan. This summary is qualified in its entirety by
reference to the 2001 Stock Option Plan, a copy of which is attached as Appendix
A.
Summary of the Plan
Type of Stock Option Grants. The 2001 Stock Option Plan provides for the
grant of incentive stock options ("ISOs"), within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended and non-qualified options
("NQOs").
Administration. The 2001 Stock Option Plan is administered by a committee
appointed by the Company's Board of Directors. If a committee is not appointed,
the 2001 Stock Option Plan is administered by the Board of Directors. Subject to
the terms of the 2001 Stock Option Plan and resolutions of the Board, the
committee (or the Board) interprets the 2001 Stock Option Plan and is authorized
to make all determinations and decisions thereunder. The committee also
determines the participants to whom stock options will be granted, the type and
amount of stock options that will be granted and the terms and conditions
applicable to such grants.
Participants. All directors, officers, employees and associates of the
Company and its subsidiaries are eligible to participate in the 2001 Stock
Option Plan.
Number of Shares of Common Stock Available. On the date the Board of
Directors adopted the 2001 Stock Option Plan, the Company reserved 225,000
shares of common stock (subject to adjustment as provided for in the 2001 Stock
Option Plan) for issuance under the 2001 Stock Option Plan in connection with
the exercise of options. Shares of common stock to be issued under the 2001
Stock Option Plan may be either authorized but unissued shares, or reacquired
shares held by the Company in its treasury. Any shares subject to an award which
expires or is terminated unexercised will again be available for issuance under
the 2001 Stock Option Plan.
Stock Option Grants. The exercise price of each ISO or NQO will not be less
than the fair market value of the common stock of the Company on the date the
ISO or NQO is granted. The aggregate fair market value of the shares for which
ISOs granted to any employee under the 2001 Stock Option Plan or any other stock
option plans of the Company may be exercisable for the first time by such
employee during any calendar year (under all plans of the Company and its
subsidiaries) may not exceed $100,000.
Options may be exercised in whole or in part. The exercise price of an
option may be paid in common stock, by the surrender of all or part of the
option being exercised, or in cash or a cash equivalent acceptable to the
Company.
Under the 2001 Stock Option Plan, the Board may permit participants to
transfer options to eligible transferees (as such eligibility is determined by
the Board). Each option may be exercised by the holder during the holder's
lifetime, and after death only by the holder's beneficiary or, absent a
beneficiary, by the estate or by a person who acquired the right to exercise the
option by will or the laws of descent and distribution. Options may become
exercisable in full at the time of grant or at such other times and in such
installments as the Board determines or as may be specified in the 2001 Stock
Option Plan. Options may be exercised during periods before and after the
participant terminates employment, as the case may be, to the extent authorized
by the Board or specified in the 2001 Stock Option Plan. However, no option may
be exercised after the tenth anniversary of the date the option was granted. The
Board may, at any time and without additional consideration, accelerate the date
on which an option becomes exercisable.
15
Effect of a Change in Control. In the event of a change in control (as
defined in the 2001 Stock Option Plan) of the Company, each outstanding stock
option grant will become fully vested and immediately exercisable. In addition,
in the event of a change in control, the 2001 Stock Option Plan provides for the
cash settlement of any outstanding stock option if provision is not made for the
assumption of the options in connection with the change in control.
Term of the 2001 Stock Option Plan. The 2001 Stock Option Plan was
effective on November 20, 2000, subject to approval by the stockholders of the
Company. The 2001 Stock Option Plan will expire on the tenth anniversary of the
effective date, unless terminated sooner by the Board.
Amendment of the 2001 Stock Option Plan. The 2001 Stock Option Plan allows
the Board to amend, suspend or terminate it without stockholder approval unless
such approval is required to comply with a tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief description of
the tax consequences of stock option grants under the 2001 Stock Option Plan is
based on federal income tax laws currently in effect and does not purport to be
a complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or an NQO. On the exercise of an ISO during
employment or within three months thereafter, the optionee will not recognize
any income and the Company will not be entitled to a deduction, although the
excess of the fair market value of the shares on the date of exercise over the
option price is included in the optionee's alternative minimum taxable income,
which may give rise to alternative minimum tax liability for the optionee.
Generally, if the optionee disposes of shares acquired upon exercise of an ISO
within two years of the date of grant or one year of the date of exercise, the
optionee will recognize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the shares on the
date of exercise over the option price (limited generally to the gain on the
sale). The balance of any gain or loss will be treated as a capital gain or loss
to the optionee. If the shares are disposed of after the two year and one year
holding periods mentioned above, the Company will not be entitled to any
deduction, and the entire gain or loss for the optionee will be treated as a
capital gain or loss.
On exercise of an NQO, the excess of the date-of-exercise fair market value
of the shares acquired over the option price will generally be taxable to the
optionee as ordinary income and deductible by the Company, provided the Company
properly withholds taxes in respect of the exercise. This disposition of shares
acquired upon the exercise of a NQO will generally result in a capital gain or
loss for the optionee, but will have no tax consequences for the Company.
New Plan Benefits
While it is anticipated that awards under the 2001 Stock Option Plan will
be made following the annual meeting, the Board has made no specific
determination regarding the size or terms of awards.
The Board of Directors recommends a vote "FOR" the adoption of the 2001
Stock Option Plan attached as Appendix A.
Proposal 3 -- Ratification of Independent Auditors
16
The Board of Directors has appointed Elliot, Davis & Company LLP to be its
independent auditors for the 2001 fiscal year, subject to the ratification by
stockholders. A representative of Elliot, Davis & Company LLP is expected to be
present at the annual meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement should he desire
to do so.
If the ratification of the appointment of the independent auditors is not
approved by a majority of the votes cast by stockholders at the annual meeting,
other independent auditors will be considered by the Board of Directors. The
Board of Directors recommends that stockholders vote "FOR" the ratification of
the appointment of independent auditors.
Report of the Audit Committee
The Audit Committee of the Board of Directors is responsible for exercising
independent, objective oversight of SouthBanc Shares' independent auditors,
accounting functions and internal controls. The Audit Committee is composed of
three directors, each of whom is independent under The Nasdaq Stock Market
Inc.'s listing standards. The Audit Committee acts under a written charter
adopted by the Board of Directors, a copy of which is attached to this proxy
statement as Appendix B.
The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The Audit
Committee also received and reviewed written disclosures and a letter from the
accountants concerning their independence as required under applicable standards
for auditors of public companies. The Audit Committee discussed with the
accountants the contents of such materials, the accountant's independence and
the additional matters required under Statement on Auditing Standards No. 61.
Based on such review and discussion, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial statements in
SouthBanc Shares' Annual Report on Form 10-K for the year ended September 30,
2000 for filing with the Securities and Exchange Commission.
Members of the Audit Committee:
Martha C. Clamp
F. Stevon Kay
Richard C. Ballenger
Miscellaneous
The Company will pay the cost of this proxy solicitation. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of SouthBanc Shares common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone without receiving additional
compensation. In addition to the solicitation of proxies by mail, Regan &
Associates, Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for a fee of $7,000.
The Company's Annual Report to Stockholders has been mailed to stockholders
as of the close of business on December 1, 2000. Any stockholder who has not
received a copy of the Annual Report may
17
obtain a copy by writing to the Secretary of the Company. The Annual Report is
not to be treated as part of the proxy solicitation material or as having been
incorporated in this proxy statement by reference.
A copy of the Company's Form 10-K (without exhibits) for the fiscal year
ended September 30, 2000, as filed with the Securities and Exchange Commission,
will be furnished without charge to individuals who are stockholders as of the
close of business on December 1, 2000 upon written request to Sylvia B. Reed,
Corporate Secretary, SouthBanc Shares, Inc., 907 N. Main Street, Anderson, South
Carolina 29621.
Stockholder Proposals and Nominations
The Company must receive proposals that stockholders seek to have included
in the proxy statement for the Company's next annual meeting no later than
August 16, 2001. If next year's annual meeting is held on a date more than 30
calendar days from January 17, 2002, a stockholder proposal must be received by
a reasonable time before the Company begins to print and mail its proxy
solicitation materials for such annual meeting. Any stockholder proposals will
be subject to the requirements of the proxy rules adopted by the Securities and
Exchange Commission.
The Company's Certificate of Incorporation provides that in order for a
stockholder to make nominations for the election of directors or proposals for
business to be brought before a meeting of stockholders, a stockholder must
deliver written notice of such nominations and/or proposals to the Secretary not
less than 30 nor more than 60 days before the date of the meeting; provided that
if less than 31 days' notice of the meeting is given to stockholders, such
notice must be delivered not later than the close of the tenth day following the
day on which notice of the meeting was mailed to stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
---------------------
Sylvia B. Reed
Corporate Secretary
Anderson, South Carolina
December 14, 2000
18
APPENDIX A
SOUTHBANC SHARES, INC.
2001 STOCK OPTION PLAN
1. Purpose of the Plan and Types of Awards
a. SouthBanc Shares, Inc. (the "Company"), a Delaware corporation,
intends for the SouthBanc Shares, Inc. 2001 Stock Option Plan (the
"Plan") to provide additional incentive to certain valued and trusted
officers, employees, and others who perform services for SouthBanc
Shares, Inc. and its subsidiaries, Perpetual Bank, A Federal Savings
Bank and Heritage Federal Bank (each referred to herein as the
"Bank"), by encouraging these individuals to acquire shares of common
stock of the Company (the "Stock"). The Plan offers them options to
purchase Stock granted pursuant to the Plan ("Options"), thereby
increasing their proprietary interest in the business of the Company
and their personal interest in the continued success and progress of
the Company and each Bank, to the benefit of the Company and its
shareholders.
b. The Committee (as described below) will grant Options under the Plan
that are intended either to qualify as incentive stock options
("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or non-qualified options
("NQOs"). Each individual granted an option (an "Optionee") under the
Plan shall enter into an agreement with the Company (an "Option
Agreement") that sets forth the terms and conditions of the Option,
as determined in accordance with the Plan.
2. Administration of the Plan
A committee (the "Committee"), composed of two (2) or more members of the Board
of Directors of the Company (the "Board of Directors") who shall be appointed
from time to time by the Board of Directors, shall administer the Plan. If a
Committee is not appointed, the entire Board of Directors shall serve as the
Committee. The Committee shall have sole and absolute power, subject to the
Provisions of the Plan, to take the following actions:
(i) determine the terms and conditions of all options, and construe and
interpret the Plan and any Option Agreement under the Plan;
(ii) determine the time or times an Option may be exercised, the number of
shares that may be exercised at any one time, and when an Option may
terminate;
(iii) establish, amend, and revoke rules and regulations related to the
Plan and its administration, and correct any defect, supply any
omission, or reconcile any inconsistencies in the Plan, or in any
option agreement, in a manner and to the extent necessary;
(iv) determine all questions of policy and expediency that may arise in
the administration of the Plan and exercise such powers and perform
such acts as are deemed necessary and in the best interests of the
Company; and
(v) to the extent permissible by law, allocate or delegate all or any
portion of its powers and responsibilities to one or more of its
members or to any person(s) it selects, subject to further revocation
or modification by the Committee.
A-1
All of the determinations and interpretations made by the Committee shall be
conclusive and binding on all Optionees, their legal representatives and
beneficiaries.
3. Shares Subject to the Plan
Subject to the provisions of Paragraph 13 of the Plan, the Stock issued pursuant
to Options granted under the Plan shall not exceed in the aggregate 225,000
shares. If any Options granted under the Plan terminate, expire or are
surrendered without full exercise, the unpurchased number of shares of Stock
shall once again become available for purposes of the Plan.
4. Persons Eligible for Options
a. All officers, employees, directors and independent contractors of the
Company and each Bank (and any affiliates of the Company and the
Bank) shall be eligible to receive Options under the Plan. The
Committee, or the Board of Directors, shall determine the individuals
to be granted options, the times Options shall be granted, the types
of Options to be granted, the number of shares subject to each
Option, the times when Options may be exercised, and any other terms
and conditions associated with the Options. The Committee may grant
ISOs or NQOs, or both, under the Plan.
b. With regard to the granting of ISOs, no ISO will be granted, and any
attempted grant shall be void, if the aggregate Fair Market Value Per
Share (as defined below), as determined by the Committee at the time
of grant, of the current and all previously granted ISOs exercisable
for the first time by the Optionee during any calendar year (under
all plans of the Company), exceeds $100,000.00 or such other amount
as may be specified in Section 422(d) of the Code.
5. Purchase Price
The purchase price of each share of Stock covered by each ISO will equal at
least one hundred percent (100%) of the Fair Market Value Per Share (as defined
below) of the Stock on the date the ISO is granted. However, if at the time an
ISO is granted, the Optionee owns, or will be considered to own by reason of
Section 424(d) of the Code, more than 10% of the total voting power of all
classes of stock of the Company, the purchase price of the Stock will equal at
least one hundred and ten percent (110%) of the Fair Market Value Per Share of
the Stock on the date the ISO is granted. The purchase price of each share of
Stock covered by each NQO shall be set periodically by the Committee; provided,
however, that the Committee shall set the purchase price for each share of Stock
covered by an Option at the time it grants the Option.
Definition of Fair Market Value Per Share. For purposes of this Plan, "Fair
Market Value Per Share" shall mean:
(i) if the Stock is not publicly traded, the amount determined by the
Committee in good faith on the date of grant;
(ii) if the Stock is traded, but not on a securities exchange and it is
not reported on The Nasdaq Stock Market ("Nasdaq"), the closing
quoted selling price of the Stock on the date of grant as quoted in
the "pink sheets" published by the National Daily Quotation Bureau;
(iii) if the Stock is traded, but not on a securities exchange, but is
reported on Nasdaq, the closing Nasdaq reported sales price of the
Stock on the date of grant, as reported in the Wall Street Journal;
or
A-2
(iv) if the Stock is admitted to trading on a securities exchange, the
closing quoted selling price of the Stock on the date of the Option
grant, as reported in the Wall Street Journal.
6. Duration of Options
a. Non-Qualified Options
---------------------
Unless the Committee, in its discretion, determines otherwise, the duration
of Non-Qualified Options shall be as follows:
Termination of Employment or Service (General). Upon termination of
employment or service for reasons other than retirement, disability,
death, or Termination for Cause, the Optionee may exercise only those
NQOs that were immediately exercisable by the Optionee at the date of
termination and only for a period of three (3) months following the
date of termination, or until expiration of the NQOs, if they expire
less than three months from the date of termination.
Termination of Employment or Service (Retirement). Upon retirement
(as defined in the Option Agreement) an Optionee may exercise only
those NQOs that were immediately exercisable at the date of
retirement, and only for a period of one (1) year following the date
of retirement, or until expiration of the NQOs, if they expire less
than one year from the date of termination.
Termination of Employment or Service (Disability or Death). Upon
termination of employment or service due to disability (as defined in
the Option Agreement) or death, all NQOs held by an Optionee shall
immediately become exercisable and shall remain exercisable for a
period of two (2) years following the date of termination, or until
expiration of the NQOs, if they expire less than two years from the
date of termination.
Termination for Cause. Upon Termination for Cause (as defined below),
all NQOs held by an Optionee shall expire immediately upon the
effective date of termination.
Definition of Termination for Cause. For purposes of this Plan,
"Termination for Cause" shall include termination because of:
personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to
perform stated duties, or willful violation of any law, rule, or
regulation (other than traffic violations or similar infractions).
A-3
b. Incentive Stock Options
-----------------------
Unless the Committee, in its discretion, determines otherwise, the duration
of Incentive Stock Options shall be as follows:
Termination of Employment or Service (General). Upon termination of
employment or service for any reason other than retirement, disability
or death, or Termination for Cause, the Optionee may exercise only
those ISOs that were immediately exercisable at the date of
termination and only for a period of three (3) months following the
date of termination, or until expiration of the ISOs, if they expire
in less than three months.
Termination of Employment (Retirement). Upon retirement (as defined in
the Option Agreement), the Optionee may exercise only those ISOS
immediately exercisable at the date of retirement, and only for a
period of one (1) year following the date of retirement, or until
expiration of the ISOs, if they expire in less than one year.
Termination of Employment (Disability or Death). Upon termination of
employment or service due to disability (as defined in the Option
Agreement) or death, all ISOs held by the Optionee shall immediately
become exercisable, and shall remain exercisable, for a period of one
(1) year from the date of disability or death, or a shorter period of
time, if they expire in less than one year.
Termination for Cause. Upon Termination for Cause (defined in the same
manner as above, for NQOs), all rights under the ISOs shall expire
immediately upon the effective date of termination.
c. Duration of Options Upon a Change in Control
--------------------------------------------
Unless the Committee, in its discretion, determines otherwise, and
notwithstanding any contrary provisions in this Plan, upon a Change in
Control, all outstanding options shall be vested and immediately
exercisable as of the effective date of the Change in Control. If the
Company is merged into or consolidated with another corporation, becomes a
subsidiary of another corporation, or sells or otherwise disposes of
substantially all of its assets to another corporation, such Options shall
be canceled as of the effective date of the merger, consolidation, or sale,
and the Optionee shall be paid in cash an amount equal to the difference
between the Fair Market Value of the Stock subject to the Options on the
effective date of the change in control, and the exercise price of the
Options. The foregoing shall apply unless provisions are made in connection
with such transactions for the continuance of the Plan and/or the
assumption or substitution of outstanding Options with new Options covering
the stock of the successor corporation, with appropriate adjustments as to
the number and kinds of shares and prices. However, if the consummation of
a Change in Control is contingent upon the use of pooling of interests
accounting methodology, the Board may, in its discretion, take any action
necessary to preserve the use of pooling of interests accounting.
Definition of a Change in Control. For purposes of this Plan, a Change in
Control means, with respect to the Bank or the Company, an event of a
nature that:
(i) would be required to be reported in response to Item 1(a) of the
current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); or
A-4
(ii) results in a Change in Control of the Bank or the Company within
the meaning of the Home Owners' Loan Act of 1933, as amended,
the Federal Deposit Insurance Act, and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS"), as in
effect on the date thereof; provided that, in applying the
definition of change in control as set forth in the Rules and
Regulations of the OTS, the Board shall substitute its judgment
for that of the OTS.
In addition, and without limitation, a Change in Control shall be deemed to
have occurred at such time as:
(iii) any "person" (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Bank or the Company
representing 20% or more of the Bank's or the Company's
outstanding voting securities or right to acquire such
securities, except for any voting securities of the Bank
purchased by the Company and any voting securities purchased by
any employee benefit plan of the Company or its Subsidiaries; or
(iv) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a
vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members,
shall be considered as though he were a member of the Incumbent
Board, or
(v) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Company or
similar transaction occurs or is effectuated and the Bank or
Company is not the resulting entity, or
(vi) a proxy statement has been distributed by someone other than the
current management of the Company soliciting proxies from
stockholders of the Company and seeking stockholder approval of
a plan of reorganization, merger or consolidation of the Company
or Bank with one or more corporations, and as a result the
outstanding shares of the class of securities subject to such
plan or transaction are exchanged for or converted into cash,
property or securities not issued by the Bank or the Company, or
(vii) a tender offer is made for 20% or more of the then outstanding
voting securities of the Bank or Company.
A-5
7. Exercise of Options
An Option may be exercised in installments or upon such other terms as the
Committee shall determine when the Option is granted. As a condition of the
exercise of any option, the Committee may require the Optionee to pay, in
addition to the purchase price of the Stock covered by the Option, any Federal,
state, local and foreign taxes to be withheld in connection with the exercise of
the Option. The Committee may also authorize the Company's officers to establish
procedures whereby an Optionee can satisfy withholding tax liability incurred
upon exercise of the Option by authorizing the Company to retain upon exercise
the number of shares (based on the Fair Market Value Per Share as determined by
the Committee) necessary to satisfy the withholding tax due.
8. Method of Exercise
a. When the right to purchase shares accrues or vests, the Optionee may
exercise Options by giving written notice to the Company stating the
number of shares for which the Option shall be exercised. The written
notice must be accompanied by payment in full, in cash or an
equivalent form acceptable to the Company, of the entire price for the
shares to be purchased, and, if applicable, any required Federal,
state, local and foreign withholding taxes, in accordance with the
provisions of Paragraph 7 of this Plan. The Committee may, from time
to time, establish or direct additional or different procedures or
requirements for the exercise of Options.
b. The Committee, in its discretion, may allow payment of the purchase
price for the shares to be made in whole or in part with other shares
of Stock of the Company that are free and clear of all liens and
encumbrances. The value of the shares of Stock tendered in payment
shall be the Fair Market Value Per Share on the date the Optionee
provides written notice of intent to exercise the Options.
c. Notwithstanding paragraph 8(b), the Company reserves the right to
postpone the time of delivery of the shares for as long as necessary
for the Company, with reasonable diligence, to comply with any
applicable listing requirements of any national securities exchange,
Nasdaq or Federal, state, local or foreign laws. If the Optionee, or
another person entitled to exercise the Option, fails to timely accept
delivery of and pay for the shares specified in the written notice of
intent to exercise an Option or Option(s), the Committee shall have
the right to terminate the Option(s) with respect to those shares.
d. Each Option Agreement pertaining to an ISO shall require the Optionee
to notify the Committee within ten (10) days of any disqualifying
disposition of Stock issued pursuant to the exercise of such Option,
under the circumstances described in Section 421(b) of the Code.
9. Transferability of Options
Unless the Committee determines otherwise, the Optionee may not transfer or
assign any Option granted under the Plan, either voluntarily or by operation of
law, other than by will or the laws of descent and distribution. During the
lifetime of the Optionee, only the Optionee may exercise Options granted under
this Plan.
A-6
10. Continuance of Employment or Service
No provision of this Plan or any Option Agreement shall confer upon an Optionee
any rights to continue employment or service with the Company, or to interfere
in any way with the Company's right (subject to any contrary terms of a separate
employment agreement) to terminate employment or service, or to increase or
reduce the compensation of the Optionee, at any time.
11. Restrictions on Shares
If counsel advises the Company that certain requirements of Federal, state or
foreign securities laws must be met before Stock may be issued under this Plan,
the Company shall notify all persons who were issued Options. The Company shall
not be liable for failure to issue Stock under any Option exercise because of a
delay in compliance, or an inability to comply, with these legal requirements.
12. Privileges of Stock Ownership
No person entitled to exercise any Option to purchase shares of Stock granted
under the Plan shall have the rights or privileges of a shareholder of the
Company until such person has become the record holder of the shares. No
adjustment shall be made for dividends or other rights if the record date is
prior to the date on which that person became the holder of record, except as
provided in Paragraph 13 of this Plan.
13. Adjustment
a. If the number of outstanding shares of Stock of the Company increases
or decreases, or outstanding shares are exchanged for a different
number or kind of shares of securities of the Company through
reorganization, merger, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, combination of shares, or
similar transaction, the Committee shall appropriately and
proportionately adjust the aggregate number of shares of Stock subject
to the Plan as provided in Paragraph 3, the maximum number of shares
under Options that may be granted during any calendar year as
specified in paragraph 4(a), and the shares subject to issued and
outstanding Options under the Plan. The Committee shall make
adjustments without changing the aggregate purchase price applicable
to the unexercised portion of the Option, but instead shall change the
price for each share or other unit of any security covered by the
Option. If the Committee determines that any dividend or distribution
(whether in the form of cash, shares of Stock, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, exchange of shares of Stock or other
securities of the Company, issuance of warrants, issuance of other
rights to purchase shares of Stock or other securities of the Company,
or similar transaction or event affects the shares of Stock, other
securities or property then covered by an Option, such that an
adjustment other than as provided for in this subparagraph (a) is
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits under the Plan and Options granted
thereunder, the Committee shall, in a manner it deems equitable,
adjust any or all of:
(i) the number and kind of shares of stock (or other securities or
property) which thereafter may be made the subject of Options;
(ii) the number and kind of shares of stock (or other securities or
property) subject to outstanding Options;
A-7
(iii) the purchase price with respect to any outstanding Options, or,
if deemed appropriate, the Committee shall make a cash payment
to the holders of outstanding Options; and
(iv) the aggregate number of shares of Stock or number and kind of
other securities or property subject to the Plan and the maximum
number of shares or other securities or property under Options
that may be granted to an Optionee during any calendar year as
specified in Paragraph 4(a) of the Plan.
b. The Committee shall make any necessary adjustments under this
Paragraph 13. The Committee's determination as to adjustments to be
made, and their extent, shall be final, binding and conclusive. No
fractional shares of Stock shall be issued, however, under the Plan or
in connection with any adjustment.
14. Amendment and Termination of the Plan
a. The Board of Directors may, from time to time, suspend or terminate
the Plan, or amend or revise the terms of the Plan or any Option
Agreements. However, to the extent it is required to do so by
applicable law or rule, the Board of Directors will submit an
amendment for approval by a majority of votes cast at a meeting of
shareholders, at which a quorum representing a majority of the Stock
is present in person or by proxy, or to such other vote as required by
the applicable law or rule.
b. Subject to the provisions of Paragraph 13, no amendment, suspension,
or termination of this Plan or any Option Agreement shall, without the
consent of the Optionee, adversely affect the rights of such Optionee
under any Option previously granted under the Plan.
15. Effective Date of the Plan
The Plan shall become effective upon adoption by the Board of Directors, subject
to approval by a majority of shareholders of the Company present or represented
by proxy at a meeting of the shareholders occurring within twelve (12) months of
the date of Board adoption. Options may be granted under the Plan prior to the
date of shareholder approval; provided, however, that they will be null and void
if shareholder approval is not obtained.
16. Term of the Plan
No Options shall be granted more than ten (10) years after the effective date of
the Plan.
17. Governing Law
The Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware, except to the extent that Federal law is deemed to apply.
A-8
APPENDIX B
SOUTHBANC SHARES, INC.
AUDIT COMMITTEE CHARTER
Mission Statement
The committee's role is to assist the board of directors in overseeing all
material aspects of SouthBanc Shares, Inc.'s (the "Company") financial
reporting, internal control, and audit functions, including a particular focus
on the qualitative aspects of financial reporting to stockholders, on compliance
with significant applicable legal, ethical, and regulatory requirements and to
ensure the objectivity of the financial statements. The role also includes
maintenance of strong, positive working relationships with management, external
and internal auditors, counsel, and other committee advisors.
Organization
Committee Composition. The committee shall consist of at least three board
members, all of whom shall be independent of management and the Company.
Committee members shall have: (1) knowledge of the primary industries in which
the Company operates; and (2) the ability to read and understand financial
statements, including the balance sheet, income statement, statement of cash
flows, and key performance indicators. At least one member of the committee,
preferably the chairperson, must have past employment experience in finance or
accounting, requisite professional certification in accounting or other
comparable experience or background that results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Committee appointments, including selection of the committee
chairperson, shall be approved annually by the full board.
Meetings. The committee shall meet at least quarterly. Additional meetings
shall be scheduled as considered necessary by the committee or chairperson. A
quorum of the committee shall be declared when a majority of the appointed
members of the committee are in attendance.
External Resources. The committee shall be authorized to access internal
and external resources, as the committee requires, to carry out its
responsibilities.
Roles and Responsibilities
Communication with the Board of Directors and Management
. The chairperson and others on the committee shall, to the extent
appropriate, have contact throughout the year with senior management,
the board of directors, external and internal auditors and legal
counsel, as applicable, to strengthen the committee's knowledge of
relevant current and prospective business issues, risks and exposures.
This will include requests by the committee that members of
management, counsel, the internal and external auditors, as
applicable, participate in committee meetings, as necessary, to carry
out the committee's responsibilities.
. The committee, with input from management and other key committee
advisors, shall develop an annual plan, which shall include an agenda
and procedures for the review of the Company's quarterly financial
data, its year end audit, the procedures and results of the internal
audit and the review of the independence of its accountants.
B-1
. The committee, through the committee chairperson, shall report
periodically, as deemed necessary, but at least semi-annually, to the
full board.
. The committee shall make recommendations to the full board regarding
the compensation to be paid to the external auditors and its views
regarding the retention of the auditors for the upcoming fiscal year.
Review of the Internal Audit
. The internal audit function shall be responsible to the board of
directors through the committee.
. The committee shall review and assess the annual internal audit plan,
including the activities and organizational structure of the internal
audit function.
. The committee shall meet with the internal auditors, at least
annually, to review the status of the internal audit activities, any
significant findings and recommendations by the internal auditors and
management's response.
. If either the internal auditors identify significant issues relative
to the overall board responsibility that have been communicated to
management but, in their judgment, have not been adequately addressed,
they should communicate these issues to the committee.
Review of the External Audit
. The committee shall meet with the external auditors, at least
annually, who shall report all relevant issues to the committee.
. The external auditors, in their capacity as independent public
accountants, shall be responsible to the board of directors and the
audit committee as representatives of the stockholders.
. The committee shall review the annual financial statements, including
the overall scope and focus of the annual audit. This review should
include a determination of whether the annual financial statements are
consistent with the information known to committee members. This
review shall also include a review of key financial statement issues
and risks, their impact or potential effect on reported financial
information, the processes used by management to address such matters,
related auditor views, and the basis for audit conclusions. Any
important conclusions concerning the year-end audit work should be
discussed well in advance of the public release of the annual
financial statements.
. The committee shall annually review the performance (effectiveness,
objectivity, and independence) of the external auditors. The committee
shall ensure receipt of a formal written statement from the external
auditors consistent with standards set by the Independence Standards
Board. Additionally, the committee shall discuss with the auditor any
relationships or services that may affect auditor objectivity or
independence. If the committee is not satisfied with the auditors'
assurances of independence, it shall take or recommend to the full
board appropriate action to ensure the independence of the external
auditor.
B-2
. The committee shall review any important recommendations on financial
reporting, controls, other matters, and management's response.
. If the external auditors identify significant issues relative to the
overall board responsibility that have been communicated to management
but, in their judgment, have not been adequately addressed, they
should communicate these issues to the committee.
Reporting to Stockholders
. The committee should be briefed on the processes used by management in
producing its interim financial statements and review and discuss with
management any questions or issues concerning the statements. Any
important issues on interim financial statements should be discussed
well in advance of the public release of the interim financial
statements.
. The committee will ensure that management requires that the external
auditors review the financial information included in the Company's
interim financial statements before the Company files its quarterly
reports with the Securities and Exchange Commission.
. The committee shall review all major financial reports in advance of
filings or distribution, including the annual report.
. The committee shall annually provide a written report of its
activities and findings, a copy of which shall be included within the
proxy statement for the annual meeting. The report shall appear over
the names of the audit committee. Such report shall be furnished to
and approved by the full board of directors before its inclusion in
the proxy statement. The report will state whether the committee: (i)
has reviewed and discussed the audited financial statements with
management; (ii) has discussed with the independent auditors the
matters to be discussed by Statement of Auditing Standards No. 61;
(iii) has received the written disclosures and the letter from the
independent auditors regarding the independence required by
Independence Standards Board Standard No. 1; (iv) has discussed with
the auditors their independence; and (iv) based on the review and
discussion of the audited financial statements with management and the
independent auditors, has recommended to the board of directors that
the audited financial statements be included in the Company's annual
report on Form 10-K.
. The Company shall disclose that the committee is governed by a written
charter, a copy of which has been approved by the full board of
directors. The committee shall review the charter annually, assess its
adequacy and propose appropriate amendments to the full board of
directors. A copy of the charter shall be filed as an appendix to the
proxy statement at least every three years.
. The Company shall also disclose in its proxy statement the
independence of the committee. To the extent that the board appoints a
non-independent director to the committee, the Company will disclose
the nature of the relationship of the non-independent director and the
reasons for appointing the non-independent director to the committee
in the next proxy statement.
Regulatory Examinations
. The committee shall review the results of examinations by regulatory
authorities and management's response to such examinations.
B-3
Committee Self Assessment and Education
. The committee shall review, discuss, and assess its own performance as
well as the committee role and responsibilities, seeking input from
senior management, the full board, and others.
. The committee shall review significant accounting and reporting
issues, including recent professional and regulatory pronouncements
and understand their impact on the Company's business, results of
operation and financial statements.
While the committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations.
B-4
REVOCABLE PROXY
SOUTHBANC SHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 17, 2001
The undersigned hereby appoints the official Proxy Committee of the
Board of Directors of SouthBanc Shares, Inc. (the "Company"), consisting of the
entire Board of Directors, with full powers of substitution to act as attorneys
and proxies for the undersigned, to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the annual meeting of
stockholders to be held at the main office of Heritage Federal Bank, 201 West
Main Street, Laurens, South Carolina, on Wednesday, January 17, 2001, at 10:00
a.m., local time, and at any and all adjournments thereof, as indicated on the
opposite side of this revocable proxy.
VOTE VOTE
FOR WITHHELD
--- --------
1. The election as director of the nominees [_] [_]
listed below (except as marked to the
contrary below).
F. Stevon Kay
Robert W. "Lujack" Orr
John C. Owings, II
INSTRUCTIONS: To withhold your vote
for any individual nominee, write the
nominee's name on the line below.
_____________________________
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the SouthBanc Shares, Inc. [_] [_] [_]
2001 Stock Option Plan
FOR AGAINST ABSTAIN
--- ------- -------
3. The ratification of Elliot, Davis & Company LLP [_] [_] [_]
as independent auditors for the fiscal
year ending September 30, 2001.
4. In their discretion, upon such other matters as may properly come before
the meeting.
The Board of Directors recommends a vote "FOR" the listed proposals.
THIS PROXY, PROPERLY SIGNED AND DATED, WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF
ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE
BOARD OF DIRECTORS IN ITS BEST JUDGMENT. PRESENTLY, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote in person at the
annual meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the annual meeting of the stockholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company before the
execution of this proxy of the Notice of Annual Meeting of Stockholders, a Proxy
Statement for the Annual Meeting of Stockholders and the 2000 Annual Report to
Stockholders.
Dated: ___________________________
_________________________ _________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_________________________ _________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, indicate your full title. If
shares are held jointly, only one registered holder need sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
VOTE BY TELEPHONE
QUICK***EASY***IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you completed, signed, dated and returned your proxy card.
CALL TOLL-FREE 1-800-840-1208 ON A TOUCH-TONE TELEPHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the Control Number located in the lower right corner
of this form.
- -------------------------------------------------------------------------------
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OPTION B: If you choose to vote on each item separately, press 0. You will
hear these instructions.
- -------------------------------------------------------------------------------
Item 1: To vote FOR ALL nominees, press 1. To WITHHOLD FOR ALL nominees,
press 9. To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to
the instructions.
Item 2: To vote FOR, press 1. To vote AGAINST, press 9. To ABSTAIN,
press 0.
When asked, you must confirm your vote by pressing 1.
THANK YOU FOR VOTING
Call **Toll-Free**On a Touch-Tone
Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.