Registration No. 333-
Filed June 16, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HFNC FINANCIAL CORP.
(Exact Name of Registrant as specified in its Articles of Incorporation)
NORTH CAROLINA 56-1937349
(State of incorporation) (IRS Employer Identification No.)
139 South Tryon Street
CHARLOTTE, NORTH CAROLINA 28202
(Address of principal executive offices, including zip code)
HFNC Financial Corp.
STOCK OPTION PLAN
(Full Title of the Plan)
Copies to:
H. Joe King, Jr. Kevin M. Houlihan, Esq.
President and Chief Executive Officer Elias, Matz, Tiernan & Herrick L.L.P.
HFNC Financial Corp. 734 15th Street, N.W..
139 South Tryon Street Washington, D.C. 20005
CHARLOTTE, NORTH CAROLINA 28202 (202) 347-0300
(Name and Address of Agent For Service)
(704) 373-0400
(Telephone Number, Including Area Code,
of Agent for Service)
Page 1 of 25 pages
Index to Exhibits is located on page 5.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 1,548,471 $13.92 (3) $21,554,716(3) $6,531.08
Common Stock,
par value $.01 170,779 $17.438(4) $ 2,978,044(4) $ 902.35
Total 1,719,250(2) $ 24,532,760 $7,433.43
</TABLE>
(1) Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance pursuant
to the HFNC Financial Corp. ("Company" or "Registrant") Stock Option Plan
("Option Plan") as a result of a stock split, stock dividend or similar
adjustment of the outstanding common stock, $.01 par value per share ("Common
Stock"), of the Company.
(2) Represents shares currently reserved for issuance pursuant to the Option
Plan.
(3) Estimated solely for the purpose of calculating the registration fee,
which has been calculated pursuant to Rule 457(h) promulgated under the
Securities Act of 1933, as amended ("Securities Act"). The Proposed Maximum
Offering Price Per Share is equal to the weighted average exercise price for
options to purchase 1,548,471 shares of Common Stock which have been granted
under the Option Plan as of the date hereof but not yet exercised.
(4) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(c) promulgated under the Securities Act. The
Proposed Maximum Offering Price Per Share for 170,779 shares for which stock
options have not been granted under the Option Plan is equal to the average of
the high and low prices of the Common Stock of the Company on June 13, 1997 on
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market.
__________________________
This Registration Statement shall become effective automatically upon
the date of filing in accordance with Section 8(a) of the Securities Act
and 17 C.F.R. <section> 230.462.
2
<PAGE>
PART I*
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended ("Securities Act"),
and the Note to Part I on Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in
this Registration Statement:
(a) The Annual Report on Form 10-K of the Company for the year
ended June 30, 1996;
(b) All reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since the end of the fiscal year covered by the Company's Annual Report on
Form 10-K referred to in clause (a) above;
(c) The description of the Common Stock of the Company contained in
the Company's Registration Statement on Form 8-A (Commission File No. 0-27388)
filed with the Commission on December 13, 1995;
(d) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold.
Any statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained herein, or in any other subsequently
filed document which also is or is
3
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable since the Company's Common Stock is registered under
Section 12 of the Exchange Act.
ITEM. 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the North Carolina Business Corporation Act, Article
VI of the Registrant's Bylaws provides as follows:
6.1 INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director, officer or employee of the Corporation or any predecessor of
the Corporation, or is or was serving at the request of the Corporation or any
predecessor of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines, excise taxes
and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding to the fullest
extent authorized by the North Carolina Business Corporation Act, provided
that the Corporation shall not be liable for any amounts which may be due to
any person in connection with a settlement of any action, suit or proceeding
effected without its prior written consent or any action, suit or proceeding
initiated by any person seeking indemnification hereunder without its prior
written consent.
6.2 ADVANCEMENT OF EXPENSES. Reasonable expenses (including attorneys'
fees) incurred by a director, officer or employee of the Corporation in
defending any civil, criminal, administrative or investigative action, suit
or proceeding described in Section 6.1 shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors only upon receipt of an undertaking by or
on behalf of such person to repay such amount if it shall ultimately be
determined that the person is not entitled to be indemnified by the
Corporation.
6.3 OTHER RIGHTS AND REMEDIES. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may
4
be entitled under the Corporation's Articles of Incorporation, any agreement,
vote of stockholders or disinterested directors or otherwise, both as to
actions in their official capacity and as to actions in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such person.
6.4 INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer of employee of the Corporation, or is or was
serving at the request of the corporation as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of its Articles of Incorporation or this Article VI.
6.5 MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to a director, officer or employee provided in this Article
VI shall be in the nature of a contract between the Corporation and each such
person, and no amendment or repeal of any provision of this Article VI shall
alter, to the detriment of such person, the right of such person to the
advance of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment or repeal.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable since no restricted securities will be reoffered or resold
pursuant to this Registration Statement.
ITEM 8. EXHIBITS
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit
Table in Item 601 of Regulation S-K):
NO. EXHIBIT PAGE
4.0 Specimen Common Stock Certificate of HFNC
Financial Corp.* --
5.0 Opinion of Elias, Matz, Tiernan & Herrick E-1
L.L.P. as to the legality of the securities
10.1 HFNC Financial Corp. Stock Option Plan E-3
23.1 Consent of Elias, Matz, Tiernan & Herrick --
5
L.L.P. (contained in the opinion included
as Exhibit 5)
23.2 Consent of Deloitte & Touche, LLP E-13
24.0 Power of attorney for any subsequent --
amendments is located in the signature pages
* Incorporated by reference from the Company's Registration Statement on
Form S-1 (Commission File No. 33-97492) filed with the Commission on
September 28, 1995, as amended.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act, (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement, and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; PROVIDED, HOWEVER, that clauses (i)
and (ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
4. That, for the purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act and each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
6
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the questions whether such
indemnification by it is against public policy expressed in the Securities Act
and will be governed by the final adjudication of such issue.
<PAGE>
7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the State of North Carolina on June 10, 1997.
By: /S/ H. JOE KING, JR.
H. Joe King, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, his
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints H. Joe King, Jr. his or her
true and lawful attorney, with full power to sign for such person and in
such person's name and capacity indicated below, and with full power of
substitution any and all amendments to this Registration Statement, hereby
ratifying and confirming such person's signature as it may be signed by
said attorney to any and all amendments
NAME TITLE DATE
/S/ H. JOE KING, JR. President, Chief Executive Officer June 10, 1997
H. Joe King, Jr. and Chairman of the Board
/S/ J. HAROLD BARNES, JR.Executive Vice President and June 10, 1997
J. Harold Barnes, Jr. Director
/S/ RAY W. BRADLEY, JR. Director June 10, 1997
Ray W. Bradley, Jr.
/S/ JOE M. LOGAN Director June 10, 1997
Joe M. Logan
8
/S/ JOHN M. MCCASKILL Director June 10, 1997
John M. McCaskill
/S/ LEWIS H. PARHAM, JR. Director June 10, 1997
Lewis H. Parham, Jr.
/S/ WILLIE E. ROYAL Director June 10, 1997
Willie E. Royal
/S/ A. BURTON MACKEY Vice President and Treasurer June 10, 1997
A. Burton Mackey (principal financial officer)
9
<PAGE>
EXHIBIT 5.0
OPINION OF ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
<PAGE>
EXHIBIT 23.2
CONSENT OF DELOITTE & TOUCHE, LLP
<PAGE>
EXHIBIT 10.1
STOCK OPTION PLAN
<PAGE>
[ELIAS, MATZ, TIERNAN & HERRICK, L.L.P LETTERHEAD]
June 16, 1997
Board of Directors
HFNC Financial Corp.
139 South Tryon Street
Charlotte, North Carolina 28202
Re: Registration Statement on Form S-8
1,719,250 Shares of Common Stock
Gentlemen:
We are special counsel to HFNC Financial Corp., a North Carolina
corporation (the "Corporation"), in connection with the preparation and
filing with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, of a Registration Statement on Form S-8
(the "Registration Statement"), relating to the registration of up to
1,719,250 shares of common stock, par value $1.00 per share ("Common Stock"),
to be issued pursuant to the Corporation's Stock Option Plan (the "Plan")
upon the exercise of stock options and/or appreciation rights (referred to as
"Option Rights"). The Registration Statement also registers an indeterminate
number of additional shares which may be necessary under the Plan to adjust
the number of shares reserved thereby for issuance as the result of a stock
split, stock dividend or similar adjustment of the outstanding Common Stock of
the Corporation. We have been requested by the Corporation to furnish an
opinion to be included as an exhibit to the Registration Statement.
For this purpose, we have reviewed the Registration Statement and related
Prospectus, the Articles of Incorporation and Bylaws of the Corporation, the
Plan, a specimen stock certificate evidencing the Common Stock of the
Corporation and such other corporate records and documents as we have deemed
appropriate. We are relying upon the originals, or copies certified or
otherwise identified to our satisfaction, of the corporate records of the
Corporation and such other instruments, certificates and representations of
public officials, officers and representatives of the Corporation as we have
deemed relevant as a basis for this opinion. In addition, we have assumed,
without independent verification, the genuineness of all signatures and the
authenticity of all documents furnished to us and the
Board of Directors
June 16, 1997
Page 2
conformance in all respects of copies to originals. Furthermore, we have made
such factual inquiries and reviewed such laws as we determined to be relevant
for this opinion.
For purposes of this opinion, we have also assumed that (i) the shares of
Common Stock issuable pursuant to Option Rights granted under the terms of the
Plan will continue to be validly authorized on the dates the Common Stock is
issued pursuant to the Option Rights; (ii) on the dates the Option Rights are
exercised, the Option Rights granted under the terms of the Plan will
constitute valid, legal and binding obligations of the Corporation and will
(subject to applicable bankruptcy, moratorium, insolvency, reorganization and
other laws and legal principles affecting the enforceability of creditors'
rights generally) be enforceable as to the Corporation in accordance with
their terms; (iii) no change occurs in applicable law or the pertinent facts;
and (iv) the provisions of "blue sky" and other securities laws as may be
applicable will have been complied with to the extent required.
Based on the foregoing, and subject to the assumptions set forth herein,
we are of the opinion as of the date hereof that the shares of Common Stock to
be issued pursuant to the Plan, when issued and sold pursuant to the
Prospectus and the Plan and upon receipt of the consideration required
thereby, will be legally issued, fully paid and non-assessable shares of
Common Stock of the Corporation.
We hereby consent to the reference to this firm under the caption "Legal
Opinion" in the Prospectus of the Plan and to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Kevin M. Houlihan
Kevin M. Houlihan, a Partner
HFNC FINANCIAL CORP.
STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
HFNC Financial Corp. (the "Corporation") hereby establishes this Stock
Option Plan (the "Plan") upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation and its Subsidiary Companies by providing Employees and
Non-Employee Directors with a proprietary interest in the Corporation as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding those Employees for outstanding performance. All
Incentive Stock Options issued under this Plan are intended to comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and
all provisions hereunder shall be read, interpreted and applied with that
purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Association" means Home Federal Savings and Loan Association, the
wholly-owned subsidiary of the Corporation.
3.02 "Award" means an Option or Stock Appreciation Right granted
pursuant to the terms of this Plan.
3.03 "Board" means the Board of Directors of the Corporation or of the
Association.
3.04 "Change in Control of the Corporation" shall be deemed to have
occurred if: (i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Corporation and any trustee or other
fiduciary holding securities under any employee benefit plan of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; (ii) during any period of two
consecutive years (not including any period prior to the adoption of the
Plan), individuals who at the beginning of such period constitute the Board
of Directors, and any new director whose election by the Board of Directors
or nomination for election by the Corporation's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors; (iii) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
that would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Corporation outstanding immediately after such merger or consolidation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets. If
any of the events enumerated in clauses (i) through (iv) occur, the Board
shall determine the effective date of the Change in Control resulting
therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act.
3.07 "Common Stock" means shares of the common stock, $.01 par value per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary Company, or, if
no such plan applies, which would qualify such Employee for disability
benefits under the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation or a
Subsidiary Company, or is an Officer of the Corporation or a Subsidiary
Company, but not including directors who are not also Officers of or otherwise
employed by the Corporation or a Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the
composite of the markets, if more than one) or national quotation system in
which such shares are then traded, or if no such closing prices are reported,
the mean between the high bid and low asked prices that day on the principal
market or national quotation system then in use, or if no such quotations are
available, the price furnished by a professional securities dealer making a
market in such shares selected by the Committee.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board who is not an
Officer or Employee of the Corporation or any Subsidiary Company and shall
include any individual who, at the date of adoption of the Plan or any time
thereafter, serves the Board in an advisory or emeritus capacity.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
3.16 "Offering" means the offering of Common Stock to the public
pursuant to the Plan of Conversion adopted by the Association.
3.17 "Officer" means an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.18 "Option" means a right granted under this Plan to purchase Common
Stock.
3.19 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.20 "Retirement" means a termination of employment upon or after
attainment of age sixty-five (65) or such earlier age as may be specified in
any applicable plans or policies maintained by the Corporation or a Subsidiary
Company.
3.21 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.11.
3.22 "Subsidiary Companies" means those subsidiaries of the Corporation,
including the Association, which meet the definition of "subsidiary
corporations" set forth in Section 425(f) of the Code, at the time of granting
of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to adopt,
amend and rescind such rules, regulations and procedures as, in its opinion,
may be advisable in the administration of the Plan, including, without
limitation, rules, regulations and procedures which (i) deal with satisfaction
of an Optionee's tax withholding obligation pursuant to Section 12.02 hereof,
(ii) include arrangements to facilitate the Optionee's ability to borrow funds
for payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, and (iii) include arrangements which provide
for the payment of some or all of such exercise or purchase price by delivery
of previously-owned shares of Common Stock or other property and/or by
withholding some of the shares of Common Stock which are being acquired. The
interpretation and construction by the Committee of any provisions of the
Plan, any rule, regulation or procedure adopted by it pursuant thereto or of
any Award shall be final and binding in the absence of action by the Board of
Directors.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a non-employee director as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within
the meaning of Section 162(m) of the Code and regulations thereunder at such
times as is required under such regulations. The Committee shall act by vote
or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. It may appoint one of its members to be chairman and any person,
whether or not a member, to be its secretary or agent. The Committee shall
report its actions and decisions to the Board at appropriate times but in no
event less than one time per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Board of Directors or the Committee
may by resolution immediately revoke, rescind and terminate any Option, or
portion thereof, to the extent not yet vested, or any Stock Appreciation
Right, to the extent not yet exercised, previously granted or awarded under
this Plan to an Employee who is discharged from the employ of the Corporation
or a Subsidiary Company for cause, which, for purposes hereof, shall mean
termination because of the Employee'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
final cease-and-desist order. Options granted to a Non-Employee Director
who is removed for cause pursuant to the Corporation's Articles of
Incorporation shall terminate as of the effective date of such removal.
4.04 LIMITATION ON LIABILITY. Neither the members of the Board of
Directors nor any member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan, any rule,
regulation or procedure adopted pursuant thereto or for any Awards granted
hereunder. If any members of the Board of Directors or a member of the
Committee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him
in such capacity under or with respect to the Plan, the Corporation shall,
subject to the requirements of applicable laws and regulations, indemnify such
member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in the best
interests of the Corporation and its Subsidiary Companies and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as
may be required. The Corporation shall not be required to issue or deliver
any certificates for shares of Common Stock prior to the completion of any
registration or qualification of or obtaining of consents or approvals with
respect to such shares under any federal or state law or any rule or
regulation of any government body, which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option or
Stock Appreciation Right may be exercised if such exercise would be contrary
to applicable laws and regulations.
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees or Non-Employee Directors of the
Corporation and its Subsidiary Companies as may be designated from time to
time by the Board of Directors or the Committee. Awards may not be granted to
individuals who are not Employees or Non-Employee Directors of either the
Corporation or its Subsidiary Companies. Non-Employee Directors shall be
eligible to receive only Non-Qualified Options.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided
in Article IX, shall be 1,719,250 shares, which is equal to 10.0% of the
shares of Common Stock issued in the Offering. None of such shares shall be
the subject of more than one Award at any time, but if an Option as to any
shares is surrendered before exercise, or expires or terminates for any reason
without having been exercised in full, or for any other reason ceases to be
exercisable, the number of shares covered thereby shall again become available
for grant under the Plan as if no Awards had been previously granted with
respect to such shares. Notwithstanding the foregoing, if an Option is
surrendered in connection with the exercise of a Stock Appreciation Right, the
number of shares covered thereby shall not be available for grant under the
Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares, shares purchased by
the Corporation on the open market or from private sources for use under the
Plan, or, if applicable, shares held in a grantor trust created by the
Corporation.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
7.01 DETERMINATION OF AWARDS. The Board of Directors or the Committee
shall, in its discretion, determine from time to time which Employees and Non-
Employee Directors will be granted Awards under the Plan, the number of shares
of Common Stock subject to each Award, whether each Option will be an
Incentive Stock Option or a Non-Qualified Stock Option and the exercise price
of an Option. In making determinations with respect to Employees there shall
be taken into account the duties, responsibilities and performance of each
respective Employee, his present and potential contributions to the growth and
success of the Corporation, his salary and such other factors as the Board of
Directors or the Committee shall deem relevant to accomplishing the purposes
of the Plan.
7.02 MAXIMUM AWARDS TO EMPLOYEES. Notwithstanding anything contained in
this Plan to the contrary, the maximum number of shares of Common Stock to
which Awards may be granted to any Employee in any calendar year shall be
429,812.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which
shall set forth the total number of shares of Common Stock to which it
pertains, the exercise price, whether it is a Non-Qualified Option or an
Incentive Stock Option, and such other terms, conditions, restrictions and
privileges as the Board of Directors or the Committee in each instance shall
deem appropriate, provided they are not inconsistent with the terms,
conditions and provisions of this Plan. Each Optionee shall receive a copy of
his executed Stock Option Agreement.
8.02 AWARDS TO EMPLOYEES AND NON-EMPLOYEE DIRECTORS. Specific Awards to
Employees and Non-Employee Directors shall be made to such persons and in such
amounts as are determined by the Board of Directors or the Committee.
8.03 OPTION EXERCISE PRICE.
(A) INCENTIVE STOCK OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock
Option shall be no less than one hundred percent (100%) of the Fair Market
Value of a share of Common Stock at the time such Incentive Stock Option is
granted, except as provided in Section 8.10(b), and subject to any applicable
adjustment pursuant to Article IX hereof.
(B) NON-QUALIFIED OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of a Non-Qualified Option shall be
no less than one hundred percent (100%) of the Fair Market Value of a share of
Common Stock at the time such Non-Qualified Option is granted, and subject to
any applicable adjustment pursuant to Article IX hereof.
8.04 VESTING AND EXERCISE OF OPTIONS.
(A) GENERAL RULES. Incentive Stock Options and Non-Qualified
Options granted hereunder shall become vested and exercisable at the rate, to
the extent and subject to such limitation as may be specified by the Board or
the Committee. Notwithstanding the foregoing, no vesting shall occur on or
after an Employee's employment with the Corporation and all Subsidiary
Companies is terminated for any reason other than his death, Disability or
Retirement. In determining the number of shares of Common Stock with respect
to which Options are vested and/or exercisable, fractional shares will be
rounded up to the nearest whole number if the fraction is 0.5 or higher, and
down if it is less.
(B) ACCELERATED VESTING. Unless the Committee shall specifically
state otherwise at the time an Option is granted, all Options granted
hereunder shall become vested and exercisable in full on the date an Optionee
terminates his employment with or service to the Corporation or a Subsidiary
Company because of his death or Disability. In addition, all options
hereunder shall become immediately vested and exercisable in full on the date
an Optionee terminates his employment or service to the Corporation or a
Subsidiary Company due to Retirement. Further, all outstanding options shall
become immediately vested and exercisable in the event that there is a Change
in Control of the Corporation.
8.05 DURATION OF OPTIONS.
(A) GENERAL RULE. Except as provided in Sections 8.05(b) and 8.10,
each Option or portion thereof granted to Employees and Non-Employee Directors
shall be exercisable at any time on or after it vests and becomes exercisable
until the earlier of (i) ten (10) years after its date of grant or (ii) three
(3) months after the date on which the Optionee ceases to be employed (or in
the service of the Board of Directors in the case of Non-Employee Directors)
by the Corporation and all Subsidiary Companies, unless the Board of Directors
or the Committee in its discretion decides at the time of grant or thereafter
to extend such period of exercise upon termination of employment or service
from three (3) months to a period not exceeding five (5) years.
(B) EXCEPTIONS. If an Employee dies while in the employ of the
Corporation or a Subsidiary Company or terminates employment with the
Corporation or a Subsidiary Company as a result of Disability or Retirement
without having fully exercised his Options, the Optionee or the executors,
administrators, legatees or distributees of his estate shall have the right,
during the twelve-month period following the earlier of his death or
termination due to Disability or Retirement, to exercise such Options. If a
Non-Employee Director dies while serving as a Non-Employee Director or
terminates his service to the Corporation or a Subsidiary Company as a result
of Disability or Retirement without having fully exercised his Options, the
Non-Employee Director or the executors, administrators, legatees or
distributees of his estate shall have the right, during the twelve-month
period following the earlier of his death or termination due to Disability or
Retirement, to exercise such Options. In no event, however, shall any
Option be exercisable more than ten (10) years from the date it was granted.
8.06 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an
Optionee's lifetime shall be exercisable only by such Optionee or the
Optionee's guardian or legal representative. Notwithstanding the foregoing,
or any other provision of this Plan, an Optionee who holds Non-Qualified
Options may transfer such Options to his or her spouse, lineal ascendants,
lineal descendants, or to a duly established trust for the benefit of one or
more of these individuals. Options so transferred may thereafter be
transferred only to the Optionee who originally received the grant or to an
individual or trust to whom the Optionee could have initially transferred the
Option pursuant to this Section 8.06. Options which are transferred pursuant
to this Section 8.06 shall be exercisable by the transferee according to the
same terms and conditions as applied to the Optionee.
8.07 MANNER OF EXERCISE. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be
set forth in the written Stock Option Agreement provided pursuant to Section
8.01.
8.08 PAYMENT FOR SHARES. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall
be made to the Corporation upon exercise of such Option. All shares sold
under the Plan shall be fully paid and nonassessable. Payment for shares may
be made by the Optionee in cash or, at the discretion of the Board of
Directors or the Committee in the case of Awards to Employees, by delivering
shares of Common Stock (including shares acquired pursuant to the exercise of
an Option) or other property equal in Fair Market Value to the purchase price
of the shares to be acquired pursuant to the Option, by withholding some of
the shares of Common Stock which are being purchased upon exercise of an
Option, or any combination of the foregoing. Notwithstanding the foregoing,
payment may also be made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the exercise price.
8.09 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded
on the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of such Option.
8.10 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.09 above, to those
contained in this Section 8.10.
(A) Notwithstanding any contrary provisions contained elsewhere in
this Plan and as long as required by Section 422 of the Code, the aggregate
Fair Market Value, determined as of the time an Incentive Stock Option is
granted, of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year, under
this Plan and stock options that satisfy the requirements of Section 422 of
the Code under any other stock option plan or plans maintained by the
Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.
(B) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option
is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders of
the Corporation or any Subsidiary Company, shall be no less than one hundred
and ten percent (110%) of the Fair Market Value of a share of the Common Stock
of the Corporation at the time of grant, and such Incentive Stock Option shall
by its terms not be exercisable after the earlier of the date determined under
Section 8.04 or the expiration of five (5) years from the date such Incentive
Stock Option is granted.
(C) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option within two
(2) years after the grant of such Incentive Stock Option or within one (1)
year after the acquisition of such shares, setting forth the date and manner
of disposition, the number of shares disposed of and the price at which such
shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee
may, in its discretion, require shares of Common Stock acquired by an Optionee
upon exercise of an Incentive Stock Option to be held in an escrow arrangement
for the purpose of enabling compliance with the provisions of this Section
8.10(c).
8.11 STOCK APPRECIATION RIGHTS.
(A) GENERAL TERMS AND CONDITIONS. The Board of Directors or the
Committee may, but shall not be obligated to, authorize the Corporation, on
such terms and conditions as it deems appropriate in each case, to grant
rights to Optionees to surrender an exercisable Option, or any portion
thereof, in consideration for the payment by the Corporation of an amount
equal to the excess of the Fair Market Value of the shares of Common Stock
subject to the Option, or portion thereof, surrendered over the exercise
price of the Option with respect to such shares (any such authorized
surrender and payment being hereinafter referred to as a "Stock Appreciation
Right"). Such payment, at the discretion of the Board of Directors or the
Committee, may be made in shares of Common Stock valued at the then Fair
Market Value thereof, or in cash, or partly in cash and partly in shares of
Common Stock.
The terms and conditions set with respect to a Stock Appreciation Right
may include (without limitation), subject to other provisions of this Section
8.11 and the Plan, the period during which, date by which or event upon which
the Stock Appreciation Right may be exercised (which shall be on the same
terms as the Option to which it relates pursuant to Section 8.04 hereunder);
the method for valuing shares of Common Stock for purposes of this Section
8.11; a ceiling on the amount of consideration which the Corporation may pay
in connection with exercise and cancellation of the Stock Appreciation Right;
and arrangements for income tax withholding. The Board of Directors or the
Committee shall have complete discretion to determine whether, when and to
whom Stock Appreciation Rights may be granted.
(B) TIME LIMITATIONS. If a holder of a Stock Appreciation Right
terminates service with the Corporation, the Stock Appreciation Right may be
exercised only within the period, if any, within which the Option to which it
relates may be exercised. Notwithstanding the foregoing, any election by an
Optionee to exercise the Stock Appreciation Rights provided in this Plan shall
be made during the period beginning on the third business day following the
release for publication of quarterly or annual financial information required
to be prepared and disseminated by the Corporation pursuant to the
requirements of the Exchange Act and ending on the twelfth business day
following such date. The required release of information shall be deemed to
have been satisfied when the specified financial data appears on or in a wire
service, financial news service or newspaper of general circulation or is
otherwise first made publicly available.
(C) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR OPTIONS.
Upon the exercise of a Stock Appreciation Right, the number of shares of
Common Stock available under the Option to which it relates shall decrease by
a number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock Appreciation
Right shall terminate as to any number of shares of Common Stock subject to
the Stock Appreciation Right that exceeds the total number of shares for which
the Option remains unexercised.
(D) TIME OF GRANT. A Stock Appreciation Right granted in connection
with an Incentive Stock Option must be granted concurrently with the Option to
which it relates, while a Stock Appreciation Right granted in connection with
a Non-Qualified Option may be granted concurrently with the Option to which it
relates or at any time thereafter prior to the exercise or expiration of such
Option.
(E) NON-TRANSFERABLE. The holder of a Stock Appreciation Right may
not transfer or assign the Stock Appreciation Right otherwise than by will or
in accordance with the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by the holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any outstanding Award relates,
the maximum number of shares that can be covered by Awards to each Employee
and each Non-Employee Director and the exercise price per share of Common
Stock under any outstanding Option shall be proportionately adjusted for any
increase or decrease in the total number of outstanding shares of Common Stock
issued subsequent to the effective date of this Plan resulting from a split,
subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Corporation. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation's Common Stock
shall be exchanged for other securities of the Corporation or of another
corporation, each recipient of an Award shall be entitled, subject to the
conditions herein stated, to purchase or acquire such number of shares of
Common Stock or amount of other securities of the Corporation or such other
corporation as were exchangeable for the number of shares of Common Stock of
the Corporation which such optionees would have been entitled to purchase or
acquire except for such action, and appropriate adjustments shall be made to
the per share exercise price of outstanding Options. In the event the
Corporation declares a special cash dividend or return of capital in an amount
per share which exceeds 10% of the fair market value of a share of Common
Stock as of the date of declaration, the per share exercise price of all
previously granted Awards which remain unexercised as of the date of such
declaration shall be proportionately adjusted to give effect to such special
cash dividend or return of capital as of the date of payment of such special
cash dividend or return of capital; provided that the adjustments to the per
shares exercise price shall satisfy the criteria set forth in Emerging Issues
Task Force 90-9 (or any successor thereto) so that the adjustments do not
result in compensation expense, and provided further that if such adjustment
with respect to incentive stock options would be treated as a modification of
the outstanding incentive stock options with the effect that, for purposes of
Section 422 and 425(h) of the Code, and the rules and regulations thereunder,
new incentive stock options would be deemed to be granted, then no adjustment
to the per share exercise price of outstanding incentive stock options shall
be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been
granted, subject to any applicable regulatory requirements and any required
stockholder approval or any stockholder approval which the Board may deem to
be advisable for any reason, such as for the purpose of obtaining or
retaining any statutory or regulatory benefits under tax, securities or other
laws or satisfying any applicable stock exchange listing requirements. The
Board may not, without the consent of the holder of an Award, alter or impair
any Award previously granted or awarded under this Plan as specifically
authorized herein.
ARTICLE XI
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create
any right on the part of any Employee or Non-Employee Director of the
Corporation or a Subsidiary Company to continue in such capacity.
ARTICLE XII
WITHHOLDING
12.01 TAX WITHHOLDING. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the
Corporation the amount required to be withheld as a condition to delivering
the shares acquired pursuant to an Award. The Corporation also may withhold or
collect amounts with respect to a disqualifying disposition of shares of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option,
as provided in Section 8.10(c).
12.02 METHODS OF TAX WITHHOLDING. The Board of Directors or the
Committee is authorized to adopt rules, regulations or procedures which
provide for the satisfaction of an Optionee's tax withholding obligation by
the retention of shares of Common Stock to which the Employee would otherwise
be entitled pursuant to an Award and/or by the Optionee's delivery of
previously-owned shares of Common Stock or other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder as of or after the
Effective Date and prior to the termination of the Plan, provided that no
Incentive Stock Option issued pursuant to this Plan shall qualify as such
unless this Plan is approved by the requisite vote of the holders of the
outstanding voting shares of the Corporation at a meeting of stockholders of
the Corporation held within twelve (12) months of the Effective Date.
13.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been fully exercised or earned, are surrendered or by their terms expire
or are forfeited.
ARTICLE XIV
MISCELLANEOUS
14.01 GOVERNING LAW. To the extent not governed by federal law, this
Plan shall be construed under the laws of the State of North Carolina.
14.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
EXHIBIT 23.2
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of HFNC Financial Corp. of our report dated August 2,
1996 (September 10, 1996 as to litigation in Note 11), appearing in and
incorporated by reference in the Annual Report on Form 10-K of HFNC Financial
Corp. for the year ended June 30, 1996.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
June 16, 1997
