SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date Filed:
N/A
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Notes:
SouthBanc Shares, Inc.
December 18, 1998
Dear Stockholder:
You are cordially invited to attend the First Annual Meeting of
Stockholders of SouthBanc Shares, Inc. ("Company"), the holding company for
Perpetual Bank, A Federal Savings Bank ("Savings Bank"). The meeting will be
held at the main office of the Savings Bank, located at 907 N. Main Street,
Anderson, South Carolina, on Wednesday, January 27, 1999, at 2:00 p.m., Eastern
Time.
The Notice of First Annual Meeting of Stockholders 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 Elliott, 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 ENSURE THAT YOUR SHARES ARE REPRESENTED, WE URGE YOU TO COMPLETE
AND MAIL THE ENCLOSED PROXY CARD. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN
PERSON EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY CARD.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert W. Orr
Robert W. Orr
President
SOUTHBANC SHARES, INC.
907 N. MAIN STREET
ANDERSON, SOUTH CAROLINA 29621
(864) 225-0241
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NOTICE OF FIRST ANNUAL MEETING OF STOCKHOLDERS
To Be Held On January 27, 1999
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NOTICE IS HEREBY GIVEN that the First Annual Meeting of Stockholders of
SouthBanc Shares, Inc. ("Company") will be held at the main office of Perpetual
Bank, A Federal Savings Bank, located at 907 N. Main Street, Anderson, South
Carolina, on Wednesday, January 27, 1999, at 2:00 p.m., Eastern Time, for the
following purposes:
1. To elect two directors to serve for a term of three years;
2. To vote upon a proposal to adopt the SouthBanc Shares, Inc. 1998 Stock
Option Plan;
3. To vote upon a proposal to adopt the SouthBanc Shares, Inc. Management
Recognition and Development Plan;
4. To act upon such other matters as may properly come before the meeting
or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date(s) to which, by original or later
adjournment, the meeting may be adjourned. Stockholders of record at the close
of business on December 1, 1998 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
SYLVIA B. REED
SECRETARY
Anderson, South Carolina
December 18, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY 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
OF
SOUTHBANC SHARES, INC.
907 N. MAIN STREET
ANDERSON, SOUTH CAROLINA 29621
FIRST ANNUAL MEETING OF STOCKHOLDERS
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JANUARY 27, 1999
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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. ("Company"), the
holding company for Perpetual Bank, A Federal Savings Bank ("Savings Bank"), to
be used at the First Annual Meeting of Stockholders ("Meeting") of the Company.
The Meeting will be held at the main office of the Savings Bank, located at 907
N. Main Street, Anderson, South Carolina, on Wednesday, January 27, 1999, at
2:00 p.m., Eastern Time. This Proxy Statement and the enclosed proxy card are
being first mailed to stockholders on or about December 18, 1998.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote at Meeting. Stockholders of record at the
close of business on December 1, 1998 ("Voting Record Date") are entitled to one
vote for each share of common stock ("Common Stock") of the Company then held.
As of the close of business on the Voting Record Date, the Company had 4,076,066
shares of Common Stock issued and outstanding.
Quorum Requirement. The presence, in person or by proxy, of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Meeting. Abstentions will be
counted as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum. Broker non-votes will not be considered
shares present and will not be included in determining whether a quorum is
present.
Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each stockholder has the opportunity to vote on the proposals to
be considered at the Meeting. When a proxy card is returned properly signed and
dated, the shares represented thereby will be voted in accordance with the
instructions on the proxy card. Where a proxy card is properly signed but no
instructions are indicated, proxies will be voted FOR the nominees for directors
set forth below, FOR adoption of the SouthBanc Shares, Inc. 1998 Stock Option
Plan, FOR adoption of the SouthBanc Shares, Inc. Management Recognition and
Development Plan and FOR ratification of Elliott, Davis & Company LLP as
independent auditors. If a stockholder attends the Meeting, he or she may vote
by ballot.
Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed to
the Secretary of the Company or by filing a later dated proxy before a vote
being taken on a particular proposal at the Meeting. Attendance at the Meeting
will not automatically revoke a proxy, but a stockholder in attendance may
request a ballot and vote in person, thereby revoking a prior granted proxy.
Vote Required. The two directors to be elected at the Meeting will be
elected by a plurality of the votes cast by stockholders present in person or by
proxy and entitled to vote. Stockholders are not permitted to cumulate their
votes for the election of directors. Votes may be cast for or withheld from
each nominee for election as directors. Votes that are withheld and broker non-
votes will have no effect on the outcome of the election because directors will
be elected by a plurality of votes cast.
With respect to the other proposals to be voted upon at the Meeting,
stockholders may vote for or against a proposal or may abstain from voting.
Adoption of the 1998 Stock Option Plan and the Management Recognition and
Development Plan and ratification of Elliott, Davis & Company LLP as independent
auditors for the fiscal year ending September 30, 1999 will each require the
affirmative vote of a majority of the outstanding shares of Common Stock present
in person or by proxy at the Meeting and entitled to vote. Broker non-votes,
therefore, will have no effect on the outcome of each of these proposals.
Abstentions, however, will have the same effect as a vote against each of these
proposals.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing such
ownership pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Based on such reports, the following table sets forth, as of the close
of business on the Voting Record Date, certain information as to those persons
who were beneficial owners of more than 5% of the outstanding shares of Common
Stock. Management knows of no persons who beneficially owned more than 5% of the
outstanding shares of Common Stock at the close of business on the Voting Record
Date. The table also sets forth, as of the close of business on the Voting
Record Date, certain information as to shares of Common Stock beneficially owned
by the Company's directors and "named executive officers" and all directors and
executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned(1) Outstanding
- ----------------------------- --------------------- -----------------
DIRECTORS
Harold A. Pickens, Jr. 49,041 1.20
Martha S. Clamp 28,085 *
Jack F. McIntosh 22,456 *
Charles W. Fant, Jr. 9,305 *
Cordes G. Seabrook, Jr. 32,064 *
Jim Gray Watson 10,364 *
Richard C. Ballenger 9,715 *
F. Stevon Kay 51,251 1.26
NAMED EXECUTIVE OFFICERS(2)
Robert W. Orr (3) 61,786 1.52
Thomas C. Hall 60,519 1.48
Barry C. Visioli 54,848 1.35
All Executive Officers and
Directors as a
Group (21 persons) 629,710 15.45
(footnotes on following page)
2
______________
* Less than 1% of shares outstanding.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting or investment power with respect to
such security. Includes shares owned by spouses, other immediate family
members in trust, shares held in retirement accounts or funds for the
benefit of the named individuals, and other forms of ownership, over which
shares the persons named in the table may possess voting and/or investment
power. Also includes shares subject to outstanding stock options
exercisable within 60 days if the Voting Record Date (Robert W. Orr, 5,846
shares; Thomas C. Hall, 12,405 shares; Barry C. Visioli, 12,405 shares) and
shares allocated to participants accounts under the Savings Bank's Employee
Stock Ownership Plan (Robert W. Orr, 3,040 shares; Thomas C. Hall, 2,604
shares; Barry Visioli, 2,429 shares).
(2) SEC regulations define the term "named executive officers" to include the
chief executive officer, regardless of compensation level, and the four
most highly compensated executive officers, other than the chief executive
officer, whose total annual salary and bonus for the last completed fiscal
year exceeded $100,000. Messrs. Orr, Hall and Visioli were the Company's
only "named executive officers" for the fiscal year ended September 30,
1998.
(3) Mr. Orr is also a director of the Company.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of eight members as required by
the Company's Bylaws. In accordance with the Company's Certificate of
Incorporation, the Board of Directors is divided into three classes with three-
year staggered terms, with approximately one third of the directors elected each
year. Two directors will be elected at the 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 Harold A. Pickens and Martha S. Clamp, each
of whom is a current member of the Board of Directors of the Company and of the
Savings Bank.
It is intended that the proxies solicited by the Company's Board of
Directors will be voted for the election of the above named nominees. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute nominee as the Board of Directors may
recommend, or the Board of Directors may adopt a resolution to amend the Bylaws
and reduce the size of the Board. At this time the Board of Directors knows of
no reason why either nominee might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MR. PICKENS
AND MRS. CLAMP.
The following table sets forth certain information regarding the nominees
for election at the Meeting, as well as information regarding those directors
continuing in office after the Meeting.
Year First
Elected Term to
Name Age (1) Director (2) Expire
---- ------- ------------ -------
BOARD NOMINEES
Harold A. Pickens, Jr. 65 1977 2001(3)
Martha S. Clamp 56 1988 2001(3)
(continued on following page)
3
Year First
Elected Term to
Name Age (1) Director (2) Expire
---- ------- ------------ -------
DIRECTORS CONTINUING IN OFFICE
Richard C. Ballenger 50 1996 1999
Jim Gray Watson 70 1976 1999
Cordes G. Seabrook, Jr. 71 1976 1999
Robert W. "Lujack" Orr 51 1989 2000
Jack F. McIntosh 71 1988 2000
F. Stevon Kay 47 1996 2000
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(1) As of September 30, 1998.
(2) Includes prior service on the Board of Directors of the Savings Bank.
(3) Assuming the individual is re-elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Harold A. "Drew" Pickens, Jr. is the owner of Harold A. Pickens and Sons,
Inc., a commercial construction contractor. He serves as Chairman of the Boards
of Directors of the Company and the Savings Bank.
Martha C. Clamp is a certified public accountant.
Charles W. Fant, Jr. is a partner in the architectural firm of Fant & Fant
Architects, Anderson, South Carolina.
Richard C. Ballenger is the President of City Glass Company and D&B Glass
Company, Inc., both located in Anderson, South Carolina.
Jim Gray Watson, retired, is a former President and Chief Executive Officer
of the Savings Bank. He is a brother of Wade A. Watson, Jr., Director Emeritus
of the Savings Bank.
Cordes G. Seabrook, Jr. is a mentor.
Robert W. "Lujack" Orr has been affiliated with the Savings Bank since
1974. He became President of the Savings Bank 1991.
Jack F. McIntosh is an attorney.
F. Stevon Kay is the President of Hill Electric Company, Inc., Anderson,
South Carolina.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Savings Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended September 30, 1998, the Board of Directors of the Company
held one meeting in connection with its initial organization and eight
subsequent meetings, and the Board of Directors of the Savings Bank held 15
meetings. No director of the Company or the Savings Bank attended fewer than
75% of the total meetings of the Boards and committees on which such person
served during this period.
4
Committees of the Company's Board. The Company's Board of Directors
established Executive (consisting of Directors Seabrook, McIntosh and Pickens),
Audit (consisting of Directors Clamp, Kay and Seabrook), Compensation
(consisting of Directors Seabrook, Fant and Pickens) and Nominating (consisting
of the full Board of Directors) Committees, among others. During 1998, the
Executive Committee met once, the Audit Committee met three times, and both the
Compensation Committee and the Nominating Committee met once.
Committees of the Savings Bank's Board. The Savings Bank's Board of
Directors has established Executive and Audit Committees, among others. These
committees were in existence and met during the fiscal year ended September 30,
1998.
The Executive Committee of the Board of Directors, which consists of
Directors Pickens (Chairman), Seabrook, Watson and Clamp, meets as necessary in
between meetings of the full Board of Directors. All actions of the Executive
Committee must be ratified by the full Board of Directors. The Executive
Committee reviews directors' and officers' compensation and makes
recommendations to the full Board of Directors in this regard. The Executive
Committee also recommends prospective new members to the full Board of Directors
and insures that all directors, directors emeritus and officers are acting in
compliance with the Savings Bank's Charter and Bylaws. The Executive Committee
met once during the fiscal year ended September 30, 1998.
The Audit Committee of the Savings Bank consists of Directors Clamp
(Chairwoman), Fant, Pickens and Orr, Thomas C. Hall, Senior Vice President, and
Doris Hoover, a Savings Bank staff member. This committee is responsible for
developing and monitoring the Savings Bank's audit program. The committee
selects the Savings Bank's outside auditor and meets with them to discuss the
results of the annual audit and any related matters. The members of the
committee also receive and review all the reports and findings and other
information presented to them by the Savings Bank's officers regarding financial
reporting policies and practices. In addition, the Savings Bank's Internal
Auditor and Compliance Coordinator operate under the direction of the Audit
Committee and report quarterly to the committee. The committee meets quarterly.
The Audit Committee met four times during the fiscal year ended September 30,
1998.
The Savings Bank's full Board of Directors serves as a Nominating
Committee. The Board of Directors met once in its capacity as the nominating
committee during the 1998 fiscal year.
The Savings Bank also has standing Loan, Pension Plan, Strategic Planning
and Asset/Liability Management Committees.
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DIRECTORS' COMPENSATION
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Directors (including Directors Emeriti, but excluding directors who are
full-time employees) receive annual compensation of $10,800, payable $900
monthly, and $100 for each committee meeting attended. No fees are paid for
attending special meetings of the Board. The Savings Bank's Chairman of the
Board receives compensation of $18,000 per year. The Savings Bank paid a total
of $119,500 in directors' and committee fees for the fiscal year ended September
30, 1998. Director compensation is deducted by $100 for each meeting absence.
Directors also participate in the Company's stock option plans.
5
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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE
The following information is presented for Messrs. Orr, Hall and Visioli.
Long-Term Compensation
Awards
Annual Compensation ----------------------------
------------------------------------------- Restricted Securities
Name and Other Annual Stock Underlying All Other
Position Year Salary($)(1) Bonus($)(1) Compensation($) Award($)(2) Options(#) Compensation($)(3)
- --------- ---------- ------------ ----------- --------------- ------------ ---------- ------------------
Robert W. Orr, 1998 $98,800 $ -- $16,290 -- -- $30,745
President and 1997 95,000 64,813 -- 330,525 16,685 21,636
Managing Officer 1996 71,350 59,299 -- -- -- 12,488
Thomas C. Hall, 1998 83,200 -- 7,386 -- -- 26,891
Senior Vice 1997 80,000 54,580 -- 330,525 16,685 18,166
President 1996 60,902 50,616 -- -- -- 10,661
Barry C. Visioli 1998 72,800 -- 6,042 -- -- 23,699
Senior Vice 1997 70,000 47,757 -- 330,525 16,685 16,360
President 1996 58,418 48,552 -- -- -- 10,226
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(1) Includes salary and directors' fees.
(2) Represents the value of shares awarded under the 1996 MRP that vested in
equal installment over a five-year period beginning on April 7, 1998.
Dividends are paid on such awards if and when dividends are declared and
paid by the Savings Bank. At September 30, 1998, the value of the
unvested awards was $228,585 for each of Mr. Orr, Mr. Hall and Mr.
Visioli (13,348 shares at $17.125 per share).
(3) Represents employer 401(k) Plan contributions and ESOP contributions.
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OPTION EXERCISE/VALUE TABLE
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The following information is presented for Messrs. Orr, Mr. Hall and Mr.
for the fiscal year ended September 30, 1998.
Value of Unexercised
Number of Securities In-the-Money Options
Shares Underlying Unexercised Options at Fiscal Year End($)(1)
Acquired on Value ------------------------------ --------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- --------------- ------------ ----------- ------------- --------------- ----------- -------------
Robert W. Orr -- -- 5,846 23,383 $ 48,348 $193,390
Thomas C. Hall -- -- 12,405 23,383 137,671 193,390
Barry C. Visioli -- -- 12,405 23,383 137,671 193,390
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(1) Value of unexercised in-the-money options equals the market value of shares
covered by in-the-money options on September 30, 1998 less the option
exercise price. Options are in-the-money if the market value of the shares
covered by the options is greater than the option exercise price.
6
EMPLOYMENT AGREEMENTS
The Company and the Savings Bank (collectively, the "Employers") have
entered into three-year employment agreements ("Employment Agreements" or
"Agreements") with Messrs. Orr, Hall and Visioli. Under the Employment
Agreements, the current base salaries for Messrs. Orr, Hall and Visioli are
$98,800, $83,200 and $72,800, respectively, which will be paid by the Savings
Bank and may be increased at the discretion of the Board of Directors or an
authorized committee of the Board of Directors of the Savings Bank. Messrs.
Orr's, Hall's and Visioli's salaries may not be decreased during the term of the
Employment 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 Board of Directors for an additional year unless a termination
notice is given by Messrs. Orr, Hall and Visioli. The Agreements are terminable
by the Employers for just cause at any time or in certain events specified by
federal regulations.
The Agreements provide for severance payments if employment is terminated
following a change in control. These payments, which will be made promptly after
any change in control, will be equal to 2.99 times the average annual
compensation paid to Messrs. Orr, Hall and Visioli during the five years
immediately preceding the change in control. Under the Agreements, a "change in
control" is deemed to occur if, at anytime during the term of the Agreement, a
person other than the Company purchases shares of common stock pursuant to a
tender or exchange offer for such shares, 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,
the membership of the Board of Directors changes as the result of a contested
election, or 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 has occurred. Assuming that a change in control
had occurred at September 30, 1998 and that Messrs. Orr, Hall and Visioli
elected to receive a lump sum cash payment, they would be entitled to payments
of approximately $386,000, $328,000 and $304,000, respectively.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee of the
Company, Report of the Compensation Committee of the Savings Bank, and
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE OF THE COMPANY. The Compensation
Committee of the Company ("Committee") administer all policies that govern
executive compensation for the Company and the Savings Bank. The Committee
evaluates the performance and determines the compensation of each named
executive officer and two other senior officers of the Company and the Savings
Bank. The Company's executive compensation policies are intended to retain and
attract key executives who are vital to the success of the Company and the
Savings Bank by providing a compensation package that is competitive in the
financial industry and motivational to each individual executive.
The compensation for named executive officers consists of a base salary and
bonus. The Committee determines the base salary. The inflation rate is a guide
for the annual raise of executive officers. Annual base salaries are generally
effective September 30 of each year. Factors considered in setting base
salaries include the executive's performance, the Company's and the Savings
Bank's overall performance and compensation levels in the financial services
industry, among other factors.
A bonus pool has been established for the named executive officers 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 their approval. The annual review and bonuses are generally
made on September 30 of each year. For 1998 the named executive officers
received no bonus because of the loss reserve established for the a limited
partnership investment in mortgage servicing rights held by the Savings Bank,
which reduced pre-tax earnings to $1.8 million. The threshold for the bonus
plan is $2.5 million pre-tax earnings.
7
During the fiscal year ended September 30, 1998, the base salary of Robert
W. Orr, President of the Company and the Savings Bank, was $98,800. In
addition, he received other compensation of $47,035 as set forth in the Summary
Compensation Table presented earlier herein. This resulted in total
compensation of $145,835, which represents a 19.6% decrease from the previous
year. The Board of Directors believes that Mr. Orr's compensation is
appropriate based on the Savings Bank's compensation policy, consideration of
salaries for similar positions in the financial industry and the Savings Bank's
performance during the fiscal year.
Mr. Orr does not serve on the Committee and did not participate in the
Board of Director's review and adoption of the Personnel Committee's
recommendation concerning his compensation.
Compensation Committee of the Company consisting of:
/s/ Cordes G. Seabrook, Jr., Chairman
/s/ Charles W. Fant, Jr.
/s/ Harold A. Pickens, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. No executive
officer of the Company or the Savings Bank 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 or the Personnel Committee
of the Savings Bank. No executive officer of the Company or the Savings Bank
has served as a director of another entity, one of whose executive officers
served on either the Compensation Committee of the Company or the Personnel
Committee of the Savings Bank. No executive officer of the Company or the
Savings Bank has served as a member of the compensation committee of another
entity, one of whose executive officers served as a director of the Company or
the Savings Bank.
8
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. Total return assumes the reinvestment of all dividends.
Before the Company's Common Stock began trading on the Nasdaq National Market on
April 16, 1998, the Savings Bank's common stock traded on the Nasdaq SmallCap
Market. The Savings Bank's common stock began trading on the Nasdaq SmallCap
Market on October 1, 1996. The base amount for the Company's Common Stock
presented in the following graph is $21.25 per share, which was the closing
price for the Savings Bank's common stock on its initial day of trading.
Period Ending
-----------------------------------------------------
10/01/96 03/31/97 09/30/97 03/21/98 09/30/98
--------- --------- --------- --------- ---------
SouthBanc Shares, Inc. $ 100.00 $ 129.39 $ 305.61 $ 363.36 $ 278.97
The Nasdaq Index (U.S. Companies) 100.00 99.70 137.92 151.30 140.98
SNL $250-$500 Million Asset Thrift Index 100.00 120.52 162.80 195.58 155.10
9
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act 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 SEC. Executive officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received and
written representations provided to the Company by the above referenced persons,
the Company believes that, during the fiscal year ended September 30, 1998, all
filing requirements applicable to its reporting officers, directors and greater
than 10% stockholders were properly and timely complied with.
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TRANSACTIONS WITH MANAGEMENT
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Federal regulations require that all loans or extensions of credit by the
Savings Bank to executive officers and directors must generally be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons (unless
the loan or extension of credit is made under a benefit program generally
available to all other employees and does not give preference to any insider
over any other employee) and must not involve more than the normal risk of
repayment or present other unfavorable features. The Savings Bank's policy is
not to make any new loans or extensions of credit to the Savings Bank's
executive officers and directors at different rates or terms than those offered
to the general public. The aggregate amount of loans by the Savings Bank to its
executive officers and directors and their associates was approximately $917,000
at September 30, 1998.
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PROPOSAL II -- RATIFICATION OF 1998 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
GENERAL
On December 4, 1998, the Board of Directors of the Company adopted, subject
to stockholder approval, the SouthBanc Shares, Inc. 1998 Stock Option Plan
("Plan").
The objective of the Plan is to reward performance and build the
participant's equity interest in the Company by providing long-term incentives
and rewards to officers, key employees and other persons who provide services to
the Company and its subsidiaries and who contribute to the success of the
Company by their innovation, ability, industry, loyalty and exceptional service.
The following summary is a brief description of the materials features of
the Plan. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, A
COPY OF WHICH IS ATTACHED AS EXHIBIT A.
SUMMARY OF THE PLAN
Type of Stock Option Grants. The 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 ("Code"), and Non-Qualified Stock Options
("NQSOs"), which do not satisfy the requirements for ISO treatment.
10
Administration. The Plan is administered by the Company's Board of
Directors. Subject to the terms of the Plan and resolutions of the Board, the
Board interprets the Plan and is authorized to make all determination and
decisions thereunder. The Board 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 officers and employees of the Company and its
subsidiaries, as well as other persons who render services to the Company, are
eligible to participate in the Plan. In addition, non-employee directors of the
Company are eligible to participate in the Plan.
Number of Shares of Common Stock Available. The Company has reserved
228,131 shares of Common Stock for issuance under the Plan in connection with
the exercise of options. Shares of Common Stock to be issued under the 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 Plan.
Stock Option Grants. The exercise price of each ISO or NQSO will not be
less than the fair market value of a Common Stock on the date the ISO or NQSO is
granted. The aggregate fair market value of the shares for which ISOs granted
to any employee may be exercisable for the first time by such employee during
any calendar year (under all stock option plans of the Company and its
subsidiaries) may not exceed $100,000.
The exercise price of an option may be paid in cash, Common Stock or other
property, by the surrender of all or part of the option being exercised, by the
immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Board.
Under the 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 during the holder's lifetime, only by the holder or the
holder's guardian or legal representative, 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 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 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.
Effect of a Change in Control. In the event of a change in control (as
defined in the 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 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 Plan. The Plan will be effective on April 16, 1999, but only
if, before that date, the Plan is approved by the stockholders of the Company.
By postponing the effective date of the Plan, options granted under the Plan
will not be subject to certain restrictions under Office of Thrift Supervision
("OTS") regulations (including a limitation on the acceleration of vesting in
the event of a change in control) otherwise applicable to stock compensation
plans implemented prior to the first anniversary of the Savings Bank's mutual-
to-stock conversion. The Plan will expire on the tenth anniversary of the
effective date, unless terminated sooner by the Board.
Amendment of the Plan. The Plan allows the Board to amend the Plan 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 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.
11
There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or and NQSO. 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 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 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 NQSO, 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 NQSO 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 Plan will be made when the
Plan becomes effective, the Board has made no specific determinations regarding
the size or terms of awards.
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PLAN
ATTACHED AS EXHIBIT A.
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PROPOSAL III -- RATIFICATION OF THE
MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN
- --------------------------------------------------------------------------------
GENERAL
On December 4, 1998, the Board of Directors of the Company adopted, subject
to stockholder approval, the SouthBanc Shares, Inc. Management Recognition and
Development Plan ("MRDP").
The objective of the MRDP is to reward performance and build the
participant's equity interest in the Company by providing long-term incentives
and rewards to officers, key employees and other persons who provide services to
the Company and its subsidiaries and who contribute to the success of the
Company by their innovation, ability, industry, loyalty and exceptional service.
In addition, the company believes that the MRDP will provide an important
retention incentive for key personnel.
The following summary is a brief description of the materials features of
the MRDP. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MRDP, A
COPY OF WHICH IS ATTACHED AS EXHIBIT B.
SUMMARY OF THE MRDP
Type of Stock Awards. The MRDP provides for the award of Common Stock in
the form of restricted stock awards which are subject to the restrictions
specified in the MRDP or as determined by the Company's Board of Directors.
12
Administration. The MRDP is administered by the Board. Subject to the
terms of the MRDP and resolutions of the Board, the Board interprets the MRDP
and is authorized to make all determination and decisions thereunder. The Board
also determines the participants to whom restricted stock awards will be made,
the number of shares of Common Stock covered by each award and the terms and
conditions applicable to such award.
Participants. All officers and employees of the Company and its
subsidiaries are eligible to participate in the MRDP.
Number of Shares of Common Stock Available. The Company has reserved
91,252 shares of Common Stock for issuance under the MRDP in the form of
restricted stock. Shares of Common Stock to be issued under the MRDP may be
either authorized but unissued shares, or reacquired shares held by the Company
in its treasury. Any shares subject to an award which is forfeited or is
terminated will again be available for issuance under the MRDP.
Restricted Stock Awards. Awards under the MRDP will be made in the form of
restricted shares of Common Stock that are subject to restrictions on transfer
of ownership. Compensation expense in the amount of the fair market value of
the Common Stock at the date of the grant to the officer or director will be
recognized during the period over which the shares vest. If a recipient
terminates employment or service with the Company or its subsidiaries for
reasons other than death or disability, the recipient forfeits all rights to
shares under restriction. If such termination is caused by death or disability,
all restrictions expire and all shares allocated become unrestricted. A
recipient will be entitled to voting and other stockholder rights with respect
to the shares while restricted. Dividends paid during the period of
restriction will, at the Board's discretion, be distributed to the recipient
when paid or held in escrow for the benefit of the recipient until the shares to
which the dividends relate are vested.
Effect of a Change in Control. In the event of a change in control (as
defined in the MRDP) of the Company, each outstanding award under the MRDP will
become fully vested.
Term of the MRDP. The MRDP will be effective on April 16, 1999, but only
if, before that date, the MRDP is approved by the stockholders of the Company.
By postponing the effective date of the MRDP, awards under the MRDP will not be
subject to certain restrictions under OTS regulations (including a limitation on
the acceleration of vesting in the event of a change in control) otherwise
applicable to stock compensation plans implemented prior to the first
anniversary of the Savings Bank's mutual-to-stock conversion. The MRDP will
expire on the tenth anniversary of the effective date, unless sooner terminated
by the Board.
Amendment of the MRDP. The MRDP allows the Board to amend the MRDP 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 awards of restricted stock under the MRDP 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.
A participant who has been awarded restricted stock under the MRDP and does
not make an election under Section 83(b) of the Code will not recognize taxable
income at the time of the award. At the time any transfer or forfeiture
restrictions applicable to the restricted stock award lapse, the recipient will
recognize ordinary income and the Company will be entitled to a corresponding
deduction equal to the excess of the fair market value of such stock at such
time over the amount paid therefor. Any dividend paid to the recipient on the
restricted stock at or prior to such time will be ordinary compensation income
to the recipient and deductible as such by the Company.
A recipient of a restricted stock award who makes an election under Section
83(b) of the Code will recognize ordinary income at the time of the award and
the Company will be entitled to a corresponding deduction equal to the fair
market value of such stock at such time over the amount paid therefor. Any
dividends subsequently paid to the recipient on the restricted stock will be
dividend income to the recipient and not deductible by the Company. If the
13
recipient makes a Section 83(b) election, there are no federal income tax
consequences either to the recipient or the Company at the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse.
NEW PLAN BENEFITS
While its is anticipated that awards under the MRDP will be made when the
MRDP becomes effective, the Board has made no specific determination regarding
the size or terms of awards.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE MRDP
ATTACHED AS EXHIBIT B.
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in mailing proxy
solicitation materials to beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and regular employees of the Company
may solicit proxies personally or by telecopier or telephone without additional
compensation. The Company also has retained ChaseMellon Shareholder Services,
L.L.C. to assist in soliciting proxies for a fee of $4,500 plus reimbursement of
expenses.
The Company's 1998 Annual Report to Stockholders, including consolidated
financial statements, has been mailed to all stockholders of record at the close
of business on the Voting Record Date. Any stockholder who has not received a
copy of such annual report may obtain a copy by writing to the Company. The
Annual Report is not to be treated as part of the proxy solicitation material or
having been incorporated herein by reference.
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1998, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS OF
RECORD AS OF THE CLOSE OF BUSINESS ON THE VOTING RECORD DATE UPON WRITTEN
REQUEST TO SYLVIA B. REED, CORPORATE SECRETARY, SOUTHBANC SHARES, INC., 907 N.
MAIN STREET, ANDERSON, SOUTH CAROLINA 29621.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
Proposals of stockholders intended to be presented at the Company's annual
meeting next year, tentatively scheduled for January 19, 2000, must be received
by the Company no later than August 20, 1999 to be considered for inclusion in
the proxy materials and form of proxy relating to such meeting. Any such
proposals shall be subject to the requirements of the proxy solicitation rules
adopted under the Exchange Act.
14
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 prior to 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. As specified in
the Certificate of Incorporation, the written notice with respect to nominations
for election of directors must set forth certain information regarding each
nominee for election as a director, including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director, if
elected, and certain information regarding the stockholder giving such notice.
The notice with respect to business proposals to be brought before the Meeting
must state the stockholder's name, address and number of shares of Common Stock
held, and briefly discuss the business to be brought before the Meeting, the
reasons for conducting such business at the Meeting and any interest of the
stockholder in the proposal.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
SYLVIA B. REED
SECRETARY
Anderson, South Carolina
December 18, 1998
15
Exhibit A
SOUTHBANC SHARES, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The SouthBanc Shares, Inc. 1998 Stock Option Plan (the "Plan") is
hereby established to foster and promote the long-term success of SouthBanc
Shares, Inc. and its shareholders by providing directors, officers and employees
of the Corporation and its subsidiaries with an equity interest in the
Corporation. The Plan will assist the Corporation in attracting and retaining
the highest quality of experienced persons as directors, officers and employees
and in aligning the interests of such persons more closely with the interests of
the Corporation's shareholders by encouraging such parties to maintain an equity
interest in the Corporation.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a)
an offeror other than the Corporation purchases shares of the stock of the
Corporation pursuant to 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
Corporation representing twenty-five percent (25%) or more of the combined
voting power of the Corporation's then outstanding securities, (c) the
membership of the board of directors of the Corporation changes as the result of
a contested election, such that individuals who were directors at the beginning
of any twenty-four (24) month period (whether commencing before or after the
date of adoption of this Plan) do not constitute a majority of the Board at the
end of such period, or (d) shareholders of the Corporation approve a merger,
consolidation, sale or disposition of all or substantially all of the
Corporation's assets, or a plan of partial or complete liquidation. If any of
the events enumerated in clauses (a) - (d) occur, the Board shall determine the
effective date of the change in control resulting therefrom, for purposes of the
Plan.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
CORPORATION means SouthBanc Shares, Inc., a Delaware corporation.
DIRECTOR shall mean a director of the Corporation who is not also an
employee of the Corporation or its subsidiaries.
DISABILITY means any physical or mental injury or disease of a
permanent nature which renders a Participant incapable of meeting the
requirements of the employment or service performed by such Participant
immediately prior to the commencement of such disability. The determination of
whether a Participant is disabled shall be made by the Board in its sole and
absolute discretion.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE shall be determined as follows:
(a) If the Stock is traded or quoted on the Nasdaq Stock Market or
other national securities exchange on any date, then the Fair Market Value shall
be the average of the highest and lowest selling price on such exchange on such
date or, if there were no sales on such date, then on the next prior business
day on which there was a sale.
A-1
(b) If the Stock is not traded or quoted on the Nasdaq Stock Market
or other national securities exchange, then the Fair Market Value shall be a
value determined by the Board in good faith on such basis as it deems
appropriate.
INCENTIVE STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
NON-QUALIFIED STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is not intended to be an Incentive
Stock Option.
OPTION means an Incentive Stock Option or a Non-Qualified Stock
Option.
PARTICIPANT means a Director or employee of the Corporation or its
subsidiaries selected by the Board to receive an Option under the Plan.
PLAN means this SouthBanc Shares, Inc. 1998 Stock Option Plan.
STOCK means the common stock, $0.01 par value, of the Corporation.
TERMINATION FOR CAUSE shall mean termination because of a
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board. Among other
things, the Board shall have authority, subject to the terms of the Plan, to
grant Options, to determine the individuals to whom and the time or times at
which Options may be granted, to determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options (subject to the
requirements of the Code), to determine the terms and conditions of any Option
granted hereunder, and the exercise price thereof.
(b) Subject to the other provisions of the Plan, the Board shall
have authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and any
Option and to decide all disputes arising in connection with the Plan. The Board
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any option agreement in the manner and to the extent it shall
deem appropriate to carry the Plan into effect, in its sole and absolute
discretion. The Board's decision and interpretations shall be final and binding.
Any action of the Board with respect to the administration of the Plan shall be
taken pursuant to a majority vote or by the unanimous written consent of its
members.
SECTION 4. ELIGIBILITY AND PARTICIPATION.
Officers and employees of the Corporation and its subsidiaries and
Directors shall be eligible to participate in the Plan. The Participants under
the Plan shall be selected from time to time by the Board, in its sole
discretion, from among those eligible, and the Board shall determine, in its
sole discretion, the numbers of shares to be covered by the Option or Options
granted to each Participant. Options intended to qualify as Incentive Stock
Options shall be granted only to persons who are eligible to receive such
options under Section 422 of the Code.
A-2
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Stock which may be issued and
purchased pursuant to Options granted under the Plan is 228,131, subject to the
adjustments as provided in Section 5 and Section 9, to the extent applicable. If
an Option granted under this Plan expires or terminates before exercise or is
forfeited for any reason, the shares of Stock subject to such Option, to the
extent of such expiration, termination or forfeiture, shall again be available
for subsequent Option grants under Plan. Shares of Stock issued under the Plan
may consist in whole or in part of authorized but unissued shares or treasury
shares.
(b) In the event that the Board determines, in its sole discretion,
that any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation,split-
up, spin-off, combination, exchange of shares, or other similar transaction
affects the Stock such that an adjustment is required in order to preserve the
benefits or potential benefits intended to be granted or made available under
the Plan to Participants, the Board shall have the right to proportionately and
appropriately adjust equitably any or all of (i) the maximum number and kind of
shares of Stock in respect of which Options may be granted under the Plan to
Participants, (ii) the number and kind of shares of Stock subject to outstanding
Options held by Participants, and (iii) the exercise price with respect to any
Options held by Participants, without changing the aggregate purchase price as
to which such Options remain exercisable, provided that no adjustment shall be
made pursuant to this Section if such adjustment would cause the Plan to fail to
comply with Section 422 of the Code with regard to any Incentive Stock Options
granted hereunder. No fractional Shares shall be issued on account of any such
adjustment.
(c) Any adjustments under this Section will be made by the Board,
whose determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
The Board may, from time to time, grant Non-Qualified Stock Options to
Participants upon such terms and conditions as the Board may determine. Non-
Qualified Stock Options granted under this Plan are subject to the following
terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon
the exercise of each Non-Qualified Stock Option shall be determined by the Board
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Fair Market Value of the Stock on the date of
grant. Shares may be purchased only upon full payment of the purchase price.
Payment of the purchase price may be made, in whole or in part, through the
surrender of shares of the Stock at the Fair Market Value of such shares on the
date of surrender or through a "cashless exercise" involving a stock brokerage
firm.
(b) Terms of Options. The term during which each Non-Qualified
Stock Option may be exercised shall be determined by the Board, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more than
ten (10) years from the date of grant. Except as provided herein, no Non-
Qualified Stock Option granted under this Plan is transferable except by will or
the laws of descent and distribution. The Board shall have discretionary
authority to permit the transfer of any Non-Qualified Stock Option to members of
a Participant's immediate family, including trusts for the benefit of such
family members and partnerships in which such family members are the only
partners; provided, however, that a transferred Non-Qualified Stock Option may
be exercised by the transferee on any date only to the extent that the
Participant would have been entitled to exercise the Non-Qualified Stock Option
on such date had the Non-Qualified Stock Option not been transferred. Any
transferred Non-Qualified Stock Option shall remain subject to the terms and
conditions of the Participant's stock option agreement.
(c) Termination of Service. Unless otherwise determined by the
Board, upon the termination of a Participant's employment (or, in the case of a
Director, service as a member of the Board) for any reason other than
Disability, death or Termination for Cause, the Participant's Non-Qualified
Stock Options shall be exercisable only as
A-3
to those shares which were immediately exercisable by the Participant at the
date of termination and only for a period of one (1) year following termination.
Notwithstanding any provision set forth herein nor contained in any Agreement
relating to the award of an Option, in the event of Termination for Cause, all
rights under the Participant's Non-Qualified Stock Options shall expire upon
termination. In the event of death or termination as a result of Disability of
any Participant, all Non-Qualified Stock Options held by the Participant,
whether or not exercisable at such time, shall be exercisable by the Participant
or his legal representatives or beneficiaries of the Participant for two (2)
years or such longer period as determined by the Board following the date of the
Participant's death or termination of service due to Disability, provided that
in no event shall the period extend beyond the expiration of the Non-Qualified
Stock Option term.
SECTION 7. INCENTIVE STOCK OPTIONS
The Board may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon
the exercise of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant.
However, if a Participant owns (or, under Section 422(d) of the Code, is deemed
to own) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of Stock, the purchase price per share of Stock
deliverable upon the exercise of each Incentive Stock Option shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the Stock on the
date of grant. Shares may be purchased only upon payment of the full purchase
price. Payment of the purchase price may be made, in whole or in part, through
the surrender of shares of the Stock at the Fair Market Value of such shares on
the date of surrender or through a "cashless exercise" involving a stock
brokerage firm.
(b) Amounts of Options. Subject to Sections 4(b) and (c), Incentive
Stock Options may be granted to any eligible employee in such amounts as
determined by the Board. In the case of an option intended to qualify as an
Incentive Stock Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during any
calendar year shall not exceed $100,000. The provisions of this Section 7(b)
shall be construed and applied in accordance with Section 422(d) of the Code and
the regulations, if any, promulgated thereunder. To the extent an award is in
excess of such limit, it shall be deemed a Non-Qualified Stock Option. The Board
shall have discretion to redesignate options granted as Incentive Stock Options
as Non-Qualified Stock Options.
(c) Terms of Options. The term during which each Incentive Stock
Option may be exercised shall be determined by the Board, but in no event shall
an Incentive Stock Option be exercisable in whole or in part more than ten (10)
years from the date of grant. If at the time an Incentive Stock Option is
granted to an employee, the employee owns Stock representing more than ten
percent (10%) of the total combined voting power of the Corporation (or, under
Section 422(d) of the Code, is deemed to own Stock representing more than ten
percent (10%) of the total combined voting power of all such classes of Stock,
by reason of the ownership of such classes of Stock, directly or indirectly, by
or for any brother, sister, spouse, ancestor or lineal descendent of such
employee, or by or for any corporation, partnership, estate or trust of which
such employee is a shareholder, partner or beneficiary), the Incentive Stock
Option granted to such employee shall not be exercisable after the expiration of
five (5) years from the date of grant. No Incentive Stock Option granted under
this Plan is transferable except by will or the laws of descent and
distribution.
(d) Termination of Employment. Upon the termination of a
Participant's service for any reason other than Disability, death or Termination
for Cause, the Participant's Incentive Stock Options which are then exercisable
at the date of termination may only be exercised by the Participant for a period
of three (3) months following termination, after which time they shall be void.
Notwithstanding any provisions set forth herein nor contained in any Agreement
relating to an award of an Option, in the event of Termination for Cause, all
rights under the Participant's Incentive Stock Options shall expire immediately
upon termination.
A-4
Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable at
such time, shall be exercisable by the Participant or the Participant's legal
representatives or the beneficiaries of the Participant for one (1) year
following the date of the Participant's death or termination of employment as a
result of Disability. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.
(f) Compliance with Code. The options granted under this Section 7
of the Plan are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code, but the Corporation makes no warranty as to
the qualification of any option as an incentive stock option within the meaning
of Section 422 of the Code. A Participant shall notify the Board in writing in
the event that he disposes of Stock acquired upon exercise of an Incentive Stock
Option within the two-year period following the date the Incentive Stock Option
was granted or within the one-year period following the date he received Stock
upon the exercise of an Incentive Stock Option and shall comply with any other
requirements imposed by the Corporation in order to enable the Corporation to
secure the related income tax deduction to which it will be entitled in such
event under the Code.
SECTION 8. EXTENSION
The Board may, in its sole discretion, extend the dates during which
all or any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted without the
Participant's consent if it would cause Incentive Stock Options issued under the
Plan to fail to comply with Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Board considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.
(b) Each Option may be granted alone, in addition to or in relation
to any other Option. The terms of each Option need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided by the
Plan or a particular Option, any determination with respect to an Option may be
made by the Board at the time of grant or at any time thereafter.
(c) Notwithstanding anything in this Plan to the contrary, in the
event of a Change in Control, all then outstanding Options shall become one
hundred percent vested and exercisable as of the effective date of the Change in
Control. If, in connection with or as a consequence of a Change in Control, the
Corporation is merged into or consolidated with another corporation, if the
Corporation becomes a subsidiary of another corporation or if the Corporation
sells or otherwise disposes of substantially all of its assets to another
corporation, then unless provisions are made in connection with such
transactions for the continuance of the Plan and/or the assumption or
substitution of then outstanding Options with new options covering the stock of
the successor corporation, or parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, such Options shall
be canceled as of the effective date of the merger, consolidation, or sale and
the Participant 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 such corporate event and the exercise price of the Options. Notwithstanding
anything in this Section 9(c) or any Option agreement to the contrary, in the
event that the consummation of a Change in Control is contingent on using
pooling of interests accounting methodology, the Board may, in its discretion,
take any action necessary to preserve the use of pooling of interests
accounting.
(d) The Corporation shall be entitled to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Corporation with respect
to any Options exercised under this Plan, and the Corporation may defer issuance
of Stock hereunder until and
A-5
unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the Board
or its delegate and shall be payable by the Participant at such time as the
Board determines. To the extent authorized by the Board, such withholding
obligation may also be satisfied by the payment of cash by the Participant to
the Corporation, the tendering of previously acquired shares of Stock of the
Participant or the withholding, at the appropriate time, of shares of Stock
otherwise issuable to the Participant, in a number sufficient, based upon the
Fair Market Value of such Stock, to satisfy such tax withholding requirements.
The Board shall be authorized, in its sole discretion, to establish such rules
and procedures relating to any such withholding methods as it deems necessary or
appropriate, including, without limitation, rules and procedures relating to
elections by Participants who are subject to the provisions of Section 16 of the
Exchange Act.
(e) Subject to the terms of the Plan, the Board may at any time,
and from time to time, amend, modify or terminate the Plan or any outstanding
Option held by a Participant, including substituting therefor another Option of
the same or a different type or changing the date of exercise or realization,
provided that the Participant's consent to each action shall be required unless
the Board determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option,
and the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Board. The Corporation expressly
reserves the right at any time to dismiss a Participant free from any liability
or claim under the Plan, except as expressly provided in the Plan or the
applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no
Participant shall have any rights as a shareholder (including, without
limitation, any rights to receive dividends, or non cash distributions with
respect to such shares) with respect to any shares of Stock to be distributed
under the Plan until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan,
any provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor shall
any member of the Board be liable for any agreement issued pursuant to this Plan
or any grants under it. Each member of the Board shall be indemnified by the
Corporation against any losses incurred in such administration of the Plan,
unless his action constitutes serious and willful misconduct.
(f) The Plan shall be effective on April 16, 1999 but only if, prior
to such date, the Plan is approved by the Corporation's shareholders. The Plan
will be so approved if at an annual or special meeting of shareholders held
prior to such date a quorum is present and the votes of the holders of a
majority of the securities of the Corporation present or represented by proxy
and entitled to vote on such matter shall be cast in favor of its approval.
(g) The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply with any applicable
tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after the tenth
anniversary of the effective date of the Plan, but then outstanding Options may
extend beyond such date.
A-6
(i) To the extent that State laws shall not have been preempted by
any laws of the United States, the Plan shall be construed, regulated,
interpreted and administered according to the other laws of the State of
Delaware.
* * *
Adopted by the Board of Directors on December 4, 1998.
A-7
Exhibit B
SOUTHBANC SHARES, INC.
MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN
SECTION 1. PURPOSE AND ADOPTION OF THE PLAN
(a) PURPOSE. The purpose of the SouthBanc Shares, Inc. Management
Recognition and Development Plan is to assist the Corporation and its
subsidiaries in attracting, retaining and motivating key management employees
and non-employee directors who will contribute to the Corporation's success.
The Plan is intended to recognize the contributions of key management personnel
to the success of the Corporation and its subsidiaries, to link the benefits
paid to eligible employees and directors who have substantial responsibility for
the successful operation, administration and management of the Corporation with
the enhancement of shareholder value and to provide eligible employees and
directors with an opportunity to acquire a greater proprietary interest in the
Corporation through the grant of restricted shares of Stock which, in accordance
with the terms and conditions set forth below, will vest only if the employees
meet the vesting criteria established by the Board and this Plan.
(b) ADOPTION AND EFFECTIVE DATE. The Plan shall be effective on April
16, 1999 but only if, prior to such date, the Plan is approved by the
Corporation's shareholders. The Plan will be so approved if at an annual or
special meeting of shareholders held prior to such date a quorum is present and
the votes of the holders of a majority of the securities of the Corporation
present or represented by proxy and entitled to vote on such a matter shall be
cast in favor of its approval.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
AWARD AGREEMENT means a written agreement between the Corporation and
a Participant specifically setting forth the terms and conditions of an award of
Restricted Stock granted to a Participant pursuant to Section 5 of the Plan.
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a)
an offeror other than the Corporation purchases shares of the common stock of
the Corporation pursuant to 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
Corporation representing twenty-five percent (25%) or more of the combined
voting power of the Corporation's then outstanding securities, (c) the
membership of the board of directors of the Corporation changes as the result of
a contested election, such that individuals who were directors at the beginning
of any twenty-four (24) month period (whether commencing before or after the
date of adoption of this Plan) do not constitute a majority of the Board at the
end of such period, or (d) shareholders of the Corporation approve a merger,
consolidation, sale or disposition of all or substantially all of the
Corporation's assets or a plan of partial or complete liquidation. If any of
the events enumerated in clauses (a) - (d) occur, the Board shall determine the
effective date of the change in control resulting therefrom.
CORPORATION means SouthBanc Shares, Inc., a Delaware corporation, and
its successors.
DATE OF GRANT means the date as of which an award of Restricted Stock
is granted in accordance with Section 5.
DISABILITY means any physical or mental injury or disease of a
permanent nature which renders a Participant incapable of meeting the
requirements of the employment or service performed by such Participant
immediately prior
B-1
to the commencement of such disability. The determination of whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EFFECTIVE DATE means the date as of which the Plan shall become
effective, as determined in accordance with Section 1(b).
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
FAIR MARKET VALUE shall be determined as follows:
(a) If the stock is traded or quoted on the Nasdaq Stock Market or
other national securities exchange on any date, then the Fair Market Value shall
be the average of the highest and lowest selling price on such exchange on such
date or, if there were no sales on such date, then on the next prior business
day on which there was a sale.
(b) If the stock is not traded or quoted on the Nasdaq Stock Market or
other national securities exchange, then the Fair Market Value shall be a value
determined by the Board in good faith on such basis as it deems appropriate.
PARTICIPANT means any person selected by the Board, pursuant to
Section 3(b), to participate under the Plan.
PLAN means this SouthBanc Shares, Inc. Management Recognition and
Development Plan, as the same may be amended from time to time.
RESTRICTED STOCK means shares of Stock awarded to a Participant
subject to restrictions as described in Section 5.
STOCK means the common stock, par value $0.01 per share, of the
Corporation.
SECTION 3. ADMINISTRATION AND PARTICIPATION
(a) ADMINISTRATION. The Plan shall be administered by the Board which
shall have exclusive and final authority and discretion in each determination,
interpretation or other action affecting the Plan and its Participants. The
Board shall have the sole and absolute authority and discretion to interpret the
Plan, to establish and modify administrative rules for the Plan, to select, in
accordance with Section 3(b), the persons who will be Participants hereunder, to
impose, in accordance with Section 5(a), such conditions and restrictions as it
determines appropriate and to take such other actions and make such other
determinations in connection with the Plan as it may deem necessary or
advisable.
(b) DESIGNATION OF PARTICIPANTS. Participants in the Plan shall be
such employees of the Corporation and its subsidiaries, in its sole discretion,
may designate. The Board shall consider such factors as it deems pertinent in
selecting Participants.
SECTION 4. STOCK ISSUABLE UNDER THE PLAN
(a) NUMBER OF SHARES OF STOCK ISSUABLE. Subject to adjustments as
provided in Section 6(c), the maximum number of shares of Stock available for
issuance under the Plan shall be 91,252. The Stock to be offered under the Plan
shall be authorized and unissued Stock, Stock which shall have been reacquired
by the Corporation and held in its treasury, or Stock held in a trust
established by the Corporation for the purpose of funding awards under the Plan
with shares acquired on the open market with funds contributed by the
Corporation or any subsidiary.
B-2
(b) SHARES SUBJECT TO TERMINATED AWARDS. Shares of Stock forfeited as
provided in Section 5(b) may again be issued under the Plan.
SECTION 5. RESTRICTED STOCK
Subject to the terms of this Plan, the Board may grant to any
Participant an award of Restricted Stock in respect of such number of shares of
Stock, and subject to such terms and conditions relating to forfeitability and
restrictions on delivery and transfer (whether based on performance standards,
periods of service or otherwise), as the Board shall determine in its sole
discretion. The terms of all such Restricted Stock awards shall be set forth in
an Award Agreement between the Corporation and the Participant which shall
contain such provisions, not inconsistent with this Plan, as shall be determined
by the Board.
(a) ISSUANCE OF RESTRICTED STOCK. As soon as practicable after the
Date of Grant of Restricted Stock, the Corporation shall cause to be transferred
on the books of the Corporation shares of Stock, registered on behalf of the
Participant, evidencing such Restricted Stock, but subject to forfeiture to the
Corporation retroactive to the Date of Grant if an Award Agreement delivered to
the Participant by the Corporation with respect to the Restricted Stock is not
duly executed by the Participant and timely returned to the Corporation. Unless
the Board determines otherwise, until the lapse or release of all restrictions
applicable to an award of Restricted Stock, the stock certificates representing
such Restricted Stock shall be held in custody by the Corporation or its
designee. Notwithstanding the foregoing, the Corporation may, in its sole
discretion, establish a trust for the purpose of holding Restricted Stock
awarded pursuant to this Plan. In the event that a trust is established, the
Corporation may elect to hold any or all shares of Stock subject to awards in
the name of the trust for the benefit of the Participant and subject to the
forfeiture conditions applicable to the award.
(b) SHAREHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Stock and subject to execution of the Award Agreement as provided in
Section 5(a), the Participant shall become a shareholder of the Corporation with
respect to all Stock subject to the Award Agreement and shall have all of the
rights of a shareholder, including, but not limited to, the right to vote such
Stock and the right to receive dividends and other distributions paid with
respect to such Stock; provided, however, that any Stock distributed as a
dividend or otherwise with respect to any Restricted Stock as to which the
restrictions have not yet lapsed shall be subject to the same restrictions as
such Restricted Stock and shall be held as prescribed in Section 5(a). Cash
dividends paid with respect to Restricted Stock may, at the Board's discretion,
be held by the Corporation in escrow until such time as the Participant vests in
such shares or distributed to the Participant during the forfeiture period. The
Corporation may credit a reasonable rate of interest to such cash dividends
prior to distribution.
(c) RESTRICTION ON TRANSFERABILITY. None of the Restricted Stock may
be assigned, transferred (other than by will or the laws of descent and
distribution), pledged, sold or otherwise disposed of prior to lapse or release
of the restrictions applicable thereto.
(d) DELIVERY OF STOCK UPON RELEASE OF RESTRICTIONS. Upon expiration
or earlier termination of the forfeiture period without a forfeiture, and the
satisfaction of or release from any other conditions prescribed by the Board,
the restrictions applicable to the Restricted Stock shall lapse. As promptly as
administratively feasible thereafter, subject to the requirements of Section
6(b), the Corporation shall deliver to the Participant or, in case of the
Participant's death, to the Participant's legal representatives, one or more
stock certificates for the appropriate number of shares of Stock, free of all
such restrictions, except for any restrictions that may be imposed by law.
(e) TERMS OF RESTRICTED STOCK; FORFEITURE OF RESTRICTED STOCK. All
Restricted Stock shall be forfeited and returned to the Corporation and all
rights of the Participant with respect to such Restricted Stock shall cease and
terminate in their entirety if during the forfeiture restrictions the employment
(or, in the case of a Director, service) of the Participant with the Corporation
and/or its subsidiaries terminates for any reason. Subject to the terms of the
Plan, the Board, in its sole discretion, shall establish any forfeiture period
for each grant of Restricted
B-3
Stock, and may provide for the forfeiture period to lapse in installments.
Notwithstanding the foregoing, upon the termination of a Participant's
employment by reason of death or Disability, all forfeiture restrictions imposed
on Restricted Stock shall immediately and fully lapse. In addition, upon the
effective date of a Change in Control, all forfeiture restrictions imposed on
outstanding Restricted Stock awards shall immediately and fully lapse.
SECTION 6. MISCELLANEOUS
(a) LIMITATIONS ON TRANSFER. The rights and interest of a Participant
under the Plan may not be assigned or transferred other than by will or the laws
of descent and distribution. During the lifetime of a Participant, only the
Participant personally may exercise rights under the Plan.
(b) TAXES. The Corporation shall be entitled to withhold (or secure
payment from the Participant in lieu of withholding) the amount of any
withholding or other tax required by law to be withheld or paid by the
Corporation with respect to any Stock issuable under this Plan, or with respect
to any income recognized upon the lapse of restrictions applicable to Restricted
Stock and the Corporation may defer issuance of Stock hereunder until and unless
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Board or
its delegate and shall be payable by the Participant at such time as the Board
determines. To the extent authorized by the Board, such withholding obligation
may be satisfied by the payment of cash by the Participant to the Corporation,
the tendering of previously acquired shares of Stock of the Participant or the
withholding, at the appropriate time, of shares of Stock otherwise issuable to
the Participant, in a number sufficient, based upon the Fair Market Value of
such Stock, to satisfy such tax withholding requirements. The Board shall be
authorized, in its sole discretion, to establish such rules and procedures
relating to any such withholding methods as it deems necessary or appropriate,
including, without limitation, rules and procedures relating to elections by
Participants who are subject to the provisions of Section 16 of the Exchange
Act.
(c) ADJUSTMENTS TO REFLECT CAPITAL CHANGES. The amount and kind of
Stock available for issuance under the Plan and the limit on the number of
shares of Stock in respect of which awards may be made to any Participant in any
calendar year shall be appropriately adjusted to reflect any stock dividend,
stock split, combination or exchange of shares, merger, consolidation or other
change in capitalization with a similar substantive effect upon the Plan. The
Board shall have the power and sole discretion to determine the nature and
amount of the adjustment, if any, to be made pursuant to this Section 6(c).
(d) NO RIGHT TO AWARD; NO RIGHT TO EMPLOYMENT. No employee or other
person shall have any claim of right to be permitted to participate or be
granted an award under this Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation.
(e) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant to the Plan shall be governed by the laws of the State of
Delaware other than the conflict of laws provisions of such laws, and shall be
construed in accordance therewith.
(f) CAPTIONS. The captions (i.e., all Section and subsection
headings) used in the Plan are for convenience only, do not constitute a part of
the Plan, and shall not be deemed to limit, characterize or affect in any way
any provisions of the Plan, and all provisions of the Plan shall be construed as
if no captions had been used in the Plan.
(g) SEVERABILITY. Whenever possible, each provision in the Plan and
every Award Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of the Plan or any Award
Agreement shall be held to be prohibited by or invalid under applicable law,
then (x) such provision shall be deemed amended to accomplish the objectives of
the provision as originally written to the fullest extent permitted by law and
(y) all other provisions of the Plan and every Award Agreement shall remain in
full force and effect.
B-4
(h) LEGENDS. All certificates for Stock delivered under the Plan
shall be subject to such transfer restrictions set forth in the Plan and such
other restrictions as the Board may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed and any applicable federal or state
securities law, and the Board may cause a legend or legends to be endorsed on
any such certificates making appropriate references to such restrictions.
(i) AMENDMENT AND TERMINATION.
(A) AMENDMENT. Subject to applicable law and regulations, the Board
shall have complete power and authority to amend the Plan at any time it is
deemed necessary or appropriate; provided, however, that no amendment shall be
made without shareholder approval if such approval is necessary for the
Corporation to comply with an applicable tax law or regulatory requirement. No
termination or amendment of the Plan may, without the consent of the Participant
to whom any award shall theretofore have been granted under the Plan, adversely
affect the right of such individual under such award.
(B) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time. Unless sooner terminated by action of the
Board, the Plan shall automatically terminate, without further action of the
Board or the Corporation's shareholders, on the tenth anniversary of the
Effective Date. No award shall be granted under the Plan after the termination
of the Plan, but the termination of the Plan shall not have any other effect and
any award outstanding at the time of the termination of the Plan shall continue
in effect in accordance with its terms as if the Plan has not terminated.
* * *
Adopted by the Board of Directors on December 4, 1998.
B-5
REVOCABLE PROXY
SOUTHBANC SHARES, INC.
FIRST ANNUAL MEETING OF STOCKHOLDERS, JANUARY 27, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of SouthBanc Shares, Inc. ("Company"), consisting of Charles W.
Fant, Jr., J.R. Martin and Wade A. Watson, 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 First
Annual Meeting of Stockholders, to be held at main office of Perpetual Bank, A
Federal Savings Bank, located at 907 N. Main Street, Anderson, South Carolina,
on Wednesday, January 27, 1999, at 2:00 p.m., Eastern Time, and at any and all
adjournments thereof.
Should the undersigned be present and elect to vote at the Meeting or at any
adjournment thereof and after notification to the Secretary of the Company at
the 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.
THIS PROXY, PROPERLY SIGNED AND DATED, WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH 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. (Continued on reverse side)
Please mark
your votes as
indicated in
this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITIONS.
VOTE VOTE
FOR WITHHELD
--- --------
1. The election as directors of the nominees
listed below (except as marked to the
contrary below). [ ] [ ]
NOMINEES:
Harold A. Pickens, Jr.
Martha S. Clamp
INSTRUCTIONS: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NOMINEE'S NAME ON THE LINE BELOW.
--------------------------------------
FOR AGAINST ABSTAIN
----- ------- -------
2. The adoption of the SouthBanc Shares, Inc.
1998 Stock Option Plan. [ ] [ ] [ ]
3. The adoption of the SouthBanc Shares, Inc.
Management Recognition and Development Plan. [ ] [ ] [ ]
4. In their discretion, upon such other matters
as may properly come before the meeting.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy of the Notice of the First Annual Meeting of
Stockholders, a Proxy Statement for the First Annual Meeting of Stockholders,
and the 1998 Annual Report to Stockholders.
Date: ____________________, 199___
___________________________________ ___________________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
___________________________________ ___________________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. 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.