<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
SCOTLAND BANCORP, INC.
(Exact name of Registrant as specified in its charter)
North Carolina 56-1955133
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
505 South Main Street
Laurinburg, North Carolina 28352
(Address of Principal Executive Offices)
SCOTLAND BANCORP, INC. STOCK OPTION PLAN
(Full title of the Plans)
--------------------
WILLIAM C. FITZGERALD, III, President
Scotland Bancorp, Inc.
505 South Main Street
Laurinburg, North Carolina 28352
(910) 276-2703
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
EDWARD C. WINSLOW III
JEAN C. BROOKS
Brooks, Pierce, McLendon,
Humphrey & Leonard, L.L.P.
2000 Renaissance Plaza
Post Office Box 26000
Greensboro, North Carolina 27420
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered/1/ Offering Price Aggregate Offering Registration
Per Unit Price/4/ Fee
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<S> <C> <C> <C> <C>
Common Stock, no par value 184,000/2/ $15.625/3/ $2,875,000 $871.21
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</TABLE>
(Footnotes on Next Page)
This Registration Statement shall become effective upon filing in
accordance with Section 8(a) of the Securities Act of 1933, as amended, and 17
C.F.R. (S)230.462.
/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 Scotland Bancorp, Inc. Stock Option Plan ("Stock Option Plan") as a result
of a reclassification, reorganization, recapitalization, stock split, stock
dividend or similar occurrence which makes an adjustment of shares just and
appropriate.
/2/Represents the total number of shares which may be issued pursuant to
options granted under the Stock Option Plan.
/3/Assumes a value per share underlying options granted under the Stock
Option Plan equal to $15.625, which was the price per share paid on May, 12,
1997, which was the closing market price of Scotland Bancorp, Inc. common stock
on the American Stock Exchange on May 12, 1997.
/4/Estimated total for the purposes of calculating the registration fee
in accordance with Rule 457(c) and (h).
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<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item I. Plan Information.
This Registration Statement on Form S-8 relates to the registration of up
to 184,000 shares of common stock, no par value, of Scotland Bancorp, Inc.
(the "Registrant") which are reserved for issuance pursuant to options which
have been granted under the Scotland Bancorp, Inc. Stock Option Plan ("Stock
Option Plan"). This Registration Statement also relates to an indeterminent
number of additional shares which may be necessary to adjust the number of
shares reserved for issuance pursuant to the Stock Option Plan as a result of
a reclassification, reorganization, recapitalization, stock split, stock
dividend or similar occurrence which makes an adjustment of shares just and
appropriate. Documents containing the information specified in Part I of Form
S-8 will be sent or given to the participants in the Stock Option Plan as
specified by Rule 428(b)(1). Such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424 in
reliance on Rule 428.
Item 2. Registration Information and Employee Plan Annual Information.
The required statement is contained in the prospectus to be delivered
pursuant to Part I of this Registration Statement as specified by Rule
428(b)(1).
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission are incorporated herein
by reference:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1996.
(b) The Registrant's Quarterly Report on Form 10-QSB for the quarters
ended December 31, 1996 and March 31,1997.
(c) The description of the Registrant's Common Stock contained in the
Registrant's S-1 Registration Statement, Registration No. 33-99916,
incorporated by reference in the Registration Statement on Form 8-A
filed with the Commission under Section 12(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on
February 20, 1996 (File No. 1-14266), including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant and the Stock Option
Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities registered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed incorporated by reference
herein and to be a part hereof from the date of the filing of such documents.
Any statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be
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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 is also incorporated or 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.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation provide that to the fullest
extent permitted by the North Carolina Business Corporation Act (the "NCBCA"),
no person who serves as a director shall be personally liable to the
Registrant or any of its stockholders or otherwise for monetary damages for
breach of any duty as director. The Registrant's Bylaws state that any person
who at any time serves or has served as a director or officer of the
Registrant, or who, while serving as a director or officer of the Registrant,
serves or has served at the request of the Registrant as a director, officer,
partner, trustee, employer or agent of another corporation, partnership, joint
venture, trust or other enterprise, or as a trustee or administrator under an
employee benefit plan, shall have a right to be indemnified by the Registrant
to the fullest extent permitted by law against liability and litigation
expense arising out of such status or activities in such capacity. "Liability
and litigation expense" is defined in the Bylaws as including costs and
expenses of litigation (including reasonable attorneys' fees), judgments,
fines and amounts paid in settlement which are actually and reasonably
incurred in connection with or as a consequence of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, including appeals.
Litigation expense, as described above, may be paid by the Registrant in
advance of the final disposition or termination of the litigation matter, if
the Registrant receives an undertaking, dated, in writing and signed by the
person to be indemnified, to repay all such sums unless such person is
ultimately determined to be entitled to be indemnified by the Registrant as
provided in the Registrant's Bylaws.
Sections 55-8-50 through 55-8-58 of the NCBCA contain provisions
prescribing the extent to which directors and officers shall or may be
indemnified. Section 55-8-51 of the NCBCA permits a corporation, with certain
exceptions, to indemnify a present or former director against liability if (i)
the director conducted himself in good faith, (ii) the director reasonably
believed (x) that the director's conduct in the director's official capacity
with the corporation was in its best interests and (y) in all other cases the
director's conduct was at least not opposed to the corporation's best
interests, and (iii) in the case of any criminal proceeding, the director had
no reasonable cause to believe the director's conduct was unlawful. A
corporation may not indemnify a director in connection with a proceeding by or
in the right of the corporation in which the director was adjudged liable to
the corporation or in connection
2
<PAGE>
with a proceeding charging improper personal benefit to the director. The
above standard of conduct is determined by the board of directors, or a
committee or special legal counsel or the shareholders as prescribed in
Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation to
indemnify a director or officer in the defense of any proceeding to which the
director or officer was a party against reasonable expenses when the director
or officer is wholly successful in the director's or officer's defense, unless
the articles of incorporation provide otherwise. Upon application, the court
may order indemnification of the director or officer if the director or
officer is adjudged fairly and reasonably so entitled under Section 55-8-54.
In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles
of incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf
of these individuals.
The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does
not purport to be complete. It is qualified in its entirety by reference to
the relevant statutes, which contain detailed specific provisions regarding
the circumstances under which and the person for whose benefit
indemnifications shall or may be made.
Item 7. Exemption from Registration Claimed.
Not applicable.
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-B):
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<CAPTION>
Exhibit No. Description of Document
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<S> <C>
(3)(i) The Registrant's Articles of Incorporation
(incorporated by reference to Exhibit (3)(i) of the
Registrant's S-1 Registration Statement,
Registration No. 33-99916)
(3)(ii) The Registrant's Bylaws (incorporated by reference
to Exhibit (3)(ii) of the Registrant's S-1
Registration Statement, Registration No. 33-99916)
(4) Specimen Stock Certificate for the Registrant
(incorporated by reference to Exhibit 4 of the
Registrant's S-1 Registration Statement,
Registration No. 33-99916)
</TABLE>
3
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<TABLE>
<S> <C>
(5) Opinion of Brooks, Pierce, McLendon, Humphrey
& Leonard, L.L.P. as to legality of securities being
registered
(10) Scotland Bancorp, Inc. Stock Option Plan
(23)(i) Consent of Brooks, Pierce, McLendon, Humphrey
& Leonard, L.L.P. (included in Exhibit 5)
(23)(ii) Consent of McGladrey & Pullen, LLP
</TABLE>
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 the Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) Reflect in the prospectus any facts or events arising which,
individually or together, represent a fundamental change in
the information in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
Registration Statement;
(iii) Include any additional or changed material information on the
plan of distribution.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply
-------- -------
if the Registration Statement is on Form S-3 or Form S-8 and the information
required in a post-effective amendment is incorporated by reference from
periodic reports filed by the Registrant under the Exchange Act.
(2) For determining liability under the 1933 Act, to treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of such securities at that time to be the initial bona fide
offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
4
<PAGE>
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers, and controlling persons of the Registrant
pursuant to the provisions discussed in Item 6 hereof, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such 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 question whether such indemnification by
it is against public policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
5
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SIGNATURES
The Registrant. 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 City of Laurinburg, State of North Carolina,
on the 12th day of May, 1997.
SCOTLAND BANCORP, INC.
Registrant
By: /s/ William C. Fitzgerald, III
--------------------------------------
William C. Fitzgerald, III, President
Each person whose individual signature appears below hereby makes,
constitutes and appoints William C. Fitzgerald, III to sign for such person
and in such person's name and capacity indicated below, any and all amendments
to this Registration Statement, including any and all post-effective
amendments.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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<S> <C>
Date: May 12 , 1997 By: /s/ William C. Fitzgerald, III
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William C. Fitzgerald, III, President and
Director (Principal Executive Officer)
Date: May 12 , 1997 By: /s/ Debora B. Steagall
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Debora B. Steagall, Assistant Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Date: May 12 , 1997 By: /s/ James W. Mason
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James W. Mason, Director
Date: May 12 , 1997 By: /s/ S.T. Snowdon, Jr.
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S.T. Snowdon, Jr., Director
Date: May 12 , 1997 By: /s/ John B. Clark
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John B. Clark, Director
Date: May 12 , 1997 By: /s/ James E. Milligan
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James E. Milligan, Director
Date: May 12 , 1997 By: /s/ James S. Mitchener, Jr.
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James S. Mitchener, Jr., Director
Date: May 12 , 1997 By: /s/ Clifton P. Buie
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Clifton P. Buie, Director
Date: May 12 , 1997 By: /s/ E.S. Hill, Jr.
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E. S. Hill, Jr., Director
Date: May 12 , 1997 By: /s/ John W. Hudson
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John W. Hudson, Director
Date: May 12 , 1997 By: /s/ James T. Willis
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James T. Willis, Director
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Method of
Exhibit No. Description Filing
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<S> <C> <C>
(3)(i) The Registrant's Articles of Incorporation Incorporated by
Reference
(3)(ii) The Registrant's Bylaws Incorporated by
Reference
(4) Specimen Stock Certificate for the Registrant Incorporated by
Reference
(5) Opinion of Brooks, Pierce, McLendon, Filed Herewith
Humphrey & Leonard, L.L.P. as to legality of
securities being registered
(10)(i) Scotland Bancorp, Inc. Stock Option Plan Filed Herewith
(23)(i) Consent of Brooks, Pierce, McLendon, Filed Herewith
Humphrey & Leonard, L.L.P. (included in
Exhibit 5)
(23)(ii) Consent of McGladrey & Pullen, LLP Filed Herewith
</TABLE>
8
<PAGE>
Exhibit (5)
[LETTERHEAD OF BPMH&L APPEARS HERE]
May 12, 1997
(910) 271-3171
Board of Directors
Scotland Bancorp, Inc.
505 South Main Street
Laurinburg, North Carolina 28352
Re: Scotland Bancorp, Inc. Stock Option Plan -- Registration Statement
on Form S-8 with Respect to the Offering of up to 184,000 Shares of
Common Stock
Gentlemen:
We have acted as special counsel to Scotland Bancorp, Inc. (the "Holding
Company"), in connection with the Holding Company's registration under the
Securities Act of 1933 on Form S-8 (the "Registration Statement") of its
offering of up to 184,000 shares of Common Stock, no par value (the "Shares"),
under the Scotland Bancorp, Inc. Stock Option Plan (the "Stock Option Plan") in
connection with the exercise of stock options (the "Option Rights"). As such
counsel, we have made such legal and factual examinations and inquiries as we
deemed advisable for the purpose of rendering our opinions.
For purposes of rendering our opinion, we have assumed that (i) the Shares
issuable pursuant to the exercise of Option Rights granted under the terms of
the Stock Option Plan will continue to be duly and validly authorized on the
dates the Shares are issued pursuant to the Option Rights; (ii) on the dates the
Option Rights are exercised, the Option Rights granted under the terms of the
Stock Option Plan will constitute valid, legal and binding obligations of the
Holding Company and will (subject to applicable bankruptcy, moratorium,
insolvency, reorganization and other laws and legal principles affecting the
enforceability of creditors' rights generally) be enforceable against the
Holding Company in accordance with their terms; (iii) no change occurs after the
date hereof in applicable law or the pertinent facts; and (iv) the provisions of
applicable "blue sky" and other state securities laws have been complied with to
the extent required.
<PAGE>
Board of Directors
Scotland Bancorp, Inc.
May 12, 1997
Page 2
Based on the foregoing, and subject to the assumptions set forth herein, it
is our opinion as of the date hereof that the Shares which have been or are to
be issued pursuant to the Stock Option Plan have been duly and validly
authorized and, upon the issuance or sale of the Shares in accordance with the
Stock Option Plan, and upon receipt of any consideration required thereby, will
be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement.
Sincerely yours,
BROOKS, PIERCE, MCLENDON, HUMPHREY &
LEONARD, L.L.P.
By: /s/ Edward C. Winslow III
-----------------------------------
<PAGE>
Exhibit 10(i)
SCOTLAND BANCORP, INC.
STOCK OPTION PLAN
THIS IS THE STOCK OPTION PLAN ("Plan") of Scotland Bancorp, Inc. (the
"Corporation"), a North Carolina corporation, with its principal office in
Laurinburg, Scotland County, North Carolina, adopted by the Board of Directors
of the Corporation and effective upon the approval of the Plan by the
shareholders of the Corporation, under which options may be granted from time to
time to eligible directors and employees of the Corporation, Scotland Savings
Bank, Inc., SSB (the "Bank") and of any corporation or other entity of which
either the Corporation or the Bank owns, directly or indirectly, not less than
50% of any class of equity securities (a "Subsidiary"), to purchase shares of
common stock of the Corporation ("Common Stock"), subject to the provisions set
forth below:
1. PURPOSE OF THE PLAN. The purpose of the Plan is to aid the
-------------------
Corporation, the Bank and any Subsidiary in attracting and retaining capable
directors and employees and to provide a long range incentive for directors and
employees to remain in the management of the Corporation, the Bank or any
Subsidiary, to perform at increasing levels of effectiveness and to acquire a
permanent stake in the Corporation with the interest and outlook of an owner.
These objectives will be promoted through the granting of options to acquire
shares of Common Stock pursuant to the terms of this Plan.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
--------------
"Committee"), which shall consist of not less than two members of the Board of
Directors of the Corporation (the "Board") who are "Non-Employee Directors" as
defined in Rule 16b-3(b)(3) of the Rules and Regulations under the Securities
Act of 1934 (the "Exchange Act"). Members of the Committee shall serve at the
pleasure of the Board. In the absence at any time of a duly appointed
Committee, this Plan shall be administered by the Board. The Committee may
designate any officers or employees of the Corporation, the Bank or any
Subsidiary to assist in the administration of the Plan and to execute documents
on behalf of the Committee and perform such other ministerial duties as may be
delegated to them by the Committee.
Subject to the provisions of the Plan, the determinations or the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive upon all persons affected thereby. By way of
illustration and not of limitation, the Committee shall have the discretion (a)
to construe and interpret the Plan and all options granted hereunder and to
determine the terms and provisions (and amendments thereof) of the options
granted under the Plan (which need not be identical); (b) to define the terms
used in the Plan and in the options granted hereunder; (c) to prescribe, amend
and rescind the rules and regulations relating to the Plan; (d) to determine the
individuals to whom and the time or times at which such options shall be
granted, the number of shares to be subject to each option, the option price,
and the determination of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan; and (e) to make all other determinations necessary or advisable for the
administration of the Plan.
<PAGE>
It shall be in the discretion of the Committee to grant options which
qualify as "incentive stock options," as that term is defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options") or which do not qualify as Incentive Stock Options ("Nonqualified
Stock Options") (herein referred to collectively as "Options;" however, whenever
reference is specifically made only to "Incentive Stock Options" or
"Nonqualified Stock Options," such reference shall be deemed to be made to the
exclusion of the other). Any options granted which fail to satisfy the
requirements for Incentive Stock Options shall become Nonqualified Stock
Options.
3. STOCK AVAILABLE FOR OPTIONS. In the discretion of the Committee,
---------------------------
the stock to be subject to Options under the Plan shall be authorized but
unissued shares of Common Stock which are issued directly to optionees upon
exercise of options and/or shares of Common Stock which are acquired by the Plan
or the Corporation in the open market. The total number of shares of Common
Stock for which Options may be granted under the Plan is 184,000 shares, which
is 10% of the total number of shares of Common Stock issued by the Corporation
in connection with the conversion of the Bank from a North Carolina mutual
savings bank to a North Carolina stock savings bank on March 29, 1996 (the
"Conversion"). Such number of shares is subject to any capital adjustments as
provided in Section 16. In the event that an Option granted under the Plan is
forfeited, released, expires or is terminated unexercised as to any shares
covered thereby, such shares thereafter shall be available for the granting of
Options under the Plan; however, if the forfeiture, expiration, release or
termination date of an Option is beyond the term of existence of the Plan as
described in Section 21, then any shares covered by forfeited, unexercised,
released or terminated options shall not reactivate the existence of the Plan
and therefore may not be available for additional grants under the Plan. The
Corporation, during the term of the Plan, will reserve and keep available a
number of shares of Common Stock sufficient to satisfy the requirements of the
Plan. In the discretion of the Committee, the shares of Common Stock necessary
to be delivered to satisfy exercised options may be from authorized and unissued
shares of Common Stock or may be purchased in the open market.
4. ELIGIBILITY. Options shall be granted only to individuals who meet
-----------
all of the following eligibility requirements:
(a) Such individual must be an employee or a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary. For this purpose,
an individual shall be considered to be an "employee" only if there exists
between the Corporation, the Bank or a Subsidiary and the individual the
legal and bona fide relationship of employer and employee. In determining
whether such relationship exists, the regulations of the United States
Treasury Department relating to the determination of such relationship for
the purpose of collection of income tax at the source on wages shall be
applied.
(b) Such individual must have such knowledge and experience in
financial and business matters that he or she is capable of evaluating the
merits and risks of the investment involved in the exercise of the Options.
2
<PAGE>
(c) Such individual, being otherwise eligible under this Section 4,
shall have been selected by the Committee as a person to whom an Option
shall be granted under the Plan.
In determining the directors and employees to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee shall take
into account the nature of the services rendered by respective directors and
employees, their present and potential contributions to the success of the
Corporation, the Bank and any Subsidiary and such other factors as the Committee
shall deem relevant. A director or employee who has been granted an Option
under the Plan may be granted an additional Option or Options under the Plan if
the Committee shall so determine.
If, pursuant to the terms of the Plan, it is necessary that the percentage
of stock ownership of any individual be determined, stock ownership in the
Corporation or of a related corporation which is owned (directly or indirectly)
by or for such individual's brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants or by or for any corporation,
partnership, estate or trust of which such employee is a shareholder, partner or
beneficiary shall be considered as owned by such director or employee.
5. OPTION GRANTS. Subject to the provisions of this Plan, Options
-------------
shall be awarded to the directors and employees in such amounts as are
determined by the Committee. The proper officers on behalf of the Corporation
and each Optionee shall execute a Stock Option Grant and Agreement (the "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 Nonqualified Stock Option
or an Incentive Stock Option, and such other terms, conditions, restrictions and
privileges as 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 Option Agreement. Any
Option granted with the intention that it will be an Incentive Stock Option but
which fails to satisfy a requirement for Incentive Stock Options shall continue
to be valid and shall be treated as a Nonqualified Stock Option.
6. OPTION PRICE.
------------
(a) The option price of each Option granted under the Plan shall be
not less than 100% of the market value of the stock on the date of grant of
the Option. In the case of incentive stock options granted to a shareholder
who owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation, the Bank or a Subsidiary (a
"ten percent shareholder"), the option price of each Option granted under
the Plan shall not be less than 110% of the market value of the stock on
the date of grant of the Option. If the Common Stock is listed on a
national securities exchange (including for this purpose the Nasdaq Stock
Market, Inc. National Market) on the date in question, then the market
value per share shall be not less than 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 the market price per share shall be equal to the
average between the bid and asked price on such date. If the Common Stock
is traded otherwise than on a national securities exchange (including for
this purpose the Nasdaq Stock Market, Inc. National Market) on the date in
question, then the market price per share shall be equal to the average
between the bid and asked price on
3
<PAGE>
such date, or, if there is no bid and asked price on such date, then on the
next prior business day on which there was a bid and asked price. If no
such bid and asked price is available, then the market value per share
shall be its fair market value as determined by the Committee, in its sole
and absolute discretion. The Committee shall maintain a written record of
its method of determining such value.
(b) The option price shall be payable to the Corporation either (i)
in cash or by check, bank draft or money order payable to the order of the
Corporation, or (ii) at the discretion of the Committee, through the
delivery of shares of the common stock of the Corporation owned by the
optionee with a market value (determined in a manner consistent with (i)
above) equal to the option price, or (iii) at the discretion of the
Committee by a combination of (i) and (ii) above. No shares shall be
delivered until full payment has been made.
7. EXPIRATION OF OPTIONS. The Committee shall determine the
---------------------
expiration date or dates of each Option, but such expiration date shall be not
later than 10 years after the date such Option is granted. In the event an
Incentive Stock Option is granted to a ten percent shareholder, the expiration
date or dates of each Option shall be not later than 5 years after the date such
Option is granted. The Committee, in its discretion, may extend the expiration
date or dates of an Option after such date was originally set; however, such
expiration date may not exceed the maximum expiration date described in this
Section 7.
8. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
(a) All Options must be granted within 10 years of the Effective Date
of this Plan as defined in Section 20.
(b) The Committee may grant Options which are intended to be
Incentive Stock Options and Nonqualified Stock Options, either separately
or jointly, to an eligible employee.
(c) The grant of Options shall be evidenced by a written instrument
(an Option Agreement) containing terms and conditions established by the
Committee consistent with the provisions of this Plan.
(d) Not less than 100 shares may be purchased at any one time unless
the number purchased is the total number at that time purchasable under the
Plan.
(e) The recipient of an Option shall have no rights as a shareholder
with respect to any shares covered by his Option until payment in full by
him for the shares being purchased. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is
prior to the date such stock is fully paid for, except as provided in
Section 16.
4
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(f) The aggregate fair market value of the stock (determined as of
the time the Option is granted) with respect to which Incentive Stock
Options are exercisable for the first time by any participant during any
calendar year (under all benefit plans of the Corporation, the Bank or any
Subsidiary, if applicable) shall not exceed $100,000; provided, however,
that such $100,000 limit of this subsection (f) shall not apply to the
grant of Nonqualified Stock Options. The Committee may grant Options which
are exercisable in excess of the foregoing limitations, in which case
Options granted which are exercisable in excess of such limitation shall be
Nonqualified Stock Options.
(g) All stock obtained pursuant to an option which qualifies as an
Incentive Stock Option shall be held in escrow for a period which ends on
the later of (i) two (2) years from the date of the granting of the Option
or (ii) one (1) year after the transfer of the stock pursuant to the
exercise of the Option. The stock shall be held by the Corporation or its
designee. The employee who has exercised the Option shall during such
holding period have all rights of a shareholder, including but not limited
to the rights to vote, receive dividends and sell the stock. The sole
purpose of the escrow is to inform the Corporation of a disqualifying
disposition of the stock within the meaning of Section 422 of the Code, as
amended, and it shall be administered solely for that purpose.
9. EXERCISE OF OPTIONS.
-------------------
(a) Options granted to an optionee by virtue of his position as a
nonemployee director of the Corporation or the Bank (as stated in the
Option Agreement) or to an employee by virtue of his position as an
employee (as stated in the Option Agreement) shall become vested and
exercisable at the times, at the rate and subject to such limitations as
may be set forth in the Option Agreement executed in connection therewith;
provided, however, that all outstanding and nonforfeited options shall be
exercisable, if not sooner, on the day prior to the expiration date
thereof.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted hereunder shall become
vested and exercisable upon the optionee's death, retirement or disability
within the meaning of Section 22(e)(3) of the Code, and in the event of a
change in control as set forth in Section 13 of this Plan.
(c) The exercise of any Option must be evidenced by written notice to
the Corporation that the optionee intends to exercise his Option. In no
event shall an Option be deemed granted by the Corporation or exercisable
by a recipient prior to the mutual execution by the Corporation and the
recipient of an Option Agreement which comports with the requirements of
Section 5 and Section 8(c).
(d) Any right to exercise Options in annual installments shall be
cumulative and any vested installments may be exercised, in whole or in
part, at the election of the optionee.
5
<PAGE>
(e) The inability of the Corporation or Bank to obtain approval from
any regulatory body or authority deemed by counsel to be necessary to the
lawful issuance and sale of any shares of Common Stock hereunder shall
relieve the Corporation and the Bank of any liability in respect of the
non-issuance or sale of such shares. As a condition to the exercise of an
option, the Corporation may require the person exercising the Option to
make such representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of federal
or state securities laws.
(f) The Committee shall have the discretionary authority to impose in
the Option Agreements such restrictions on shares of Common Stock as it may
deem appropriate or desirable, including but not limited to the authority
to impose a right of first refusal or to establish repurchase rights or
both of these restrictions.
(g) Notwithstanding anything to the contrary herein, an optionee
receiving the grant of an Option by virtue of his or her position as a
director or as an employee of the Corporation, the Bank or a Subsidiary (as
stated in the Option Agreement), shall be required to exercise his or her
Options within the periods set forth in Sections 10, 11 and 12 below.
10. TERMINATION OF EMPLOYMENT - EXCEPT BY DISABILITY, RETIREMENT OR
---------------------------------------------------------------
DEATH. If any optionee receiving the grant of an Option by virtue of his
- -----
position as a director (as stated in the Option Agreement) ceases to be a
director of the Corporation, the Bank or any Subsidiary for any reason other
than death, retirement (as defined in Section 11) or disability (as defined in
Section 11) or if any optionee receiving the grant of an Option by virtue of his
position as an employee (as stated in the Option Agreement) ceases to be an
employee of the Corporation, the Bank or any Subsidiary for any reason other
than death, retirement (as defined in Section 11) or disability (as defined in
Section 11), he may, (i) at any time within three (3) months after his date of
termination, but not later than the date of expiration of the Option, exercise
any Option designated in the Option Agreement as an Incentive Stock Option and
(ii) at any time prior to the date of expiration of the Option, exercise any
option designated in the Option Agreement as a Nonqualified Stock Option.
However, in either such event the optionee may exercise any Option only to the
extent it was vested and he or she was entitled to exercise the Option on the
date of termination. Any Options or portions of Options of terminated optionees
not so exercised shall terminate and be forfeited.
11. TERMINATION OF EMPLOYMENT - DISABILITY OR RETIREMENT. If any
----------------------------------------------------
optionee receiving the grant of an Option by virtue of his position as a
director (as stated in the Option Agreement) ceases to be a director of the
Corporation, the Bank or any Subsidiary due to his becoming disabled within the
meaning of Section 22(e)(3) of the Code, or if any employee receiving the grant
of an Option by virtue of his position as an employee (as stated in the Option
Agreement) ceases to be employed by the Corporation, the Bank or any Subsidiary
due to his becoming disabled within the meaning of Section 22(e)(3) of the Code,
all unvested and forfeitable Options of such optionee shall immediately become
vested and nonforfeitable and he may, (i) at any time within 12 months after his
date of termination, but not later than the date of expiration of the Option,
exercise any option designated in the Option Agreement as an Incentive Stock
Option with respect to all shares subject thereto and (ii) at any time prior to
the date of expiration of the
6
<PAGE>
Option, exercise any Option designated in the Option Agreement as a Nonqualified
Stock Option with respect to all shares subject thereto. Any portions of
Options of optionees who are terminated because they become disabled which are
not so exercised shall terminate.
If any optionee receiving the grant of an Option by virtue of his position
as a director (as stated in the Option Agreement) ceases to be a director of the
Corporation, the Bank or any Subsidiary due to his retirement, or if any
employee receiving the grant of an Option by virtue of his position as an
employee (as stated in the Option Agreement) ceases to be employed by the
Corporation, the Bank or any Subsidiary due to his retirement, all unvested and
forfeitable Options of such optionee shall immediately become vested and
nonforfeitable and he may, at any time prior to the date of expiration of the
Option, excercise such Option; provided, however, that if the Option is
exercised more than three (3) months after such retirement, the Option may be
treated as a Nonqualified Stock Option. Any portions of Options of retired
directors or employees not so exercised shall terminate. For purposes of this
Plan, the term "retirement," as it relates to any optionee receiving a grant of
an Option as a result of his or her position as an employee of the Corporation,
the Bank or any Subsidiary, shall mean (i) the termination of the optionee's
employment under conditions which would constitute retirement under any tax
qualified retirement plan maintained by the Corporation, the Bank or a
Subsidiary, or (ii) termination of employment after attaining age 65. The term
"retirement," as it relates to any optionee receiving a grant of an Option as a
result of his or her position as a director, shall mean the cessation of
membership on such board of directors (i) with the approval of such board of
directors, at any time after such optionee reaches age 65, or (ii) at the
election of the optionee at any time after not less than 25 years of service as
a member of the such board of directors, as applicable.
12. TERMINATION OF EMPLOYMENT - DEATH. If an optionee receiving the
---------------------------------
grant of an option by virtue of his position as a director (as stated in the
Option Agreement) dies while a director of the Corporation, the Bank or any
Subsidiary or if any employee receiving the grant of an option by virtue of his
position as an employee (as stated in the Option Agreement) dies while in the
employment of the Corporation, the Bank or a Subsidiary, all unvested and
forfeitable Options of such optionee shall immediately become vested and
nonforfeitable and the person or persons to whom the Option is transferred by
will or by the laws of descent and distribution may exercise the Option at any
time until the term of the Option has expired, with respect to all shares
subject thereto, to the same extent and upon the same terms and conditions the
optionee would have been entitled to do so had he lived. Any Options or
portions of options of deceased directors or employees not so exercised shall
terminate.
13. CHANGE IN CONTROL. In the event that an optionee ceases to be an
-----------------
employee or a director of the Corporation, the Bank or a Subsidiary (which
position resulted in his or her receipt of an option pursuant to this Plan) for
any reason after the occurrence of a "change in control" and prior to the time
that all shares allocated to him or her would be 100% vested, nonforfeitable and
exercisable in accordance with Sections 9 and 10 above, then, notwithstanding
Sections 9 and 10 above, all Options granted to such optionee shall immediately
become fully vested and nonforfeitable. For purposes of this Plan, a "change in
control" shall mean (i) a change in control
7
<PAGE>
of a nature that would be required to be reported by the Corporation in response
to Item 1 of the Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; (ii) such time as any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation or Bank
representing 25% or more of the combined voting power of the outstanding Common
Stock of the Corporation or outstanding common stock of the Bank, as applicable;
or (iii) individuals who constitute the Board or the board of directors of the
Bank on the date hereof (the "Incumbent Board" and "Incumbent Bank Board,"
respectively) cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board or Incumbent Bank Board, as applicable, or whose
nomination for election by the Corporation's or Bank's shareholders was approved
by the Corporation's or Bank's Board of Directors or Nominating Committee, shall
be considered as though he or she were a member of the Incumbent Board or
Incumbent Bank Board, as applicable; or (iv) either the Corporation or the Bank
consolidates or merges with or into another corporation, association or entity
or is otherwise reorganized, where neither the Corporation nor the Bank,
respectively, is the surviving corporation in such transaction; or (v) all or
substantially all of the assets of either the Corporation or the Bank are sold
or otherwise transferred to or are acquired by any other entity or group.
As set forth in Section 10, in the event of such a termination after a
change in control, the Optionee must exercise any Incentive Stock Options within
three (3) months after his date of termination, but in no event later than the
date of expiration of the Option and may exercise any Nonqualified Stock Options
at any time prior to the date of expiration of the Option.
14. OPTIONAL CASH PAYMENT. Upon the exercise of an Option, at the
---------------------
written request of the optionee, the Committee, in its sole and absolute
discretion, may make a cash payment to the optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
market value per share (determined as set forth in Section 6 above) of Common
Stock on the date of the Option exercise and the exercise price per share of the
Option. Such cash payment shall be in exchange for the cancellation of such
Option. Notwithstanding the above, such cash payment shall not be made in the
event that such transaction would result in liability to the optionee and the
Company under Section 16(b) of the Exchange Act, and the regulations promulgated
thereunder.
15. RESTRICTIONS ON TRANSFER. An Option granted under this Plan may
------------------------
not be transferred except by will or the laws of descent and distribution and,
during the lifetime of the optionee to whom it was granted, may be exercised
only by such optionee.
16. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK.
------------------------------------------
(a) If the outstanding shares of Common Stock of the Corporation are
increased, decreased, changed into or exchanged for a different number or
kind of shares or other securities of the Corporation or another entity as
a result of a recapitalization, reclassification, stock dividend, stock
split, amendment to the Corporation's Certificate of
8
<PAGE>
Incorporation, reverse stock split, merger or consolidation, an appropriate
adjustment shall be made in the number and/or kind of securities allocated
to the Options previously and subsequently granted under the Plan, without
change in the aggregate purchase price applicable to the unexercised
portion of the outstanding Options but with a corresponding adjustment in
the price for each share or other unit of any security covered by the
Options.
(b) In the event that the Corporation shall declare and pay any
dividend with respect to the Common Stock (other than a dividend payable in
shares of the Corporation's Common Stock or a regular quarterly cash
dividend), including a dividend which results in a nontaxable return of
capital to the holders of shares of Common Stock for federal income tax
purposes, or otherwise than by dividend makes distribution of property to
the holders of its shares of Common Stock, the Committee, in its discretion
applied uniformly to all outstanding Options, may adjust the exercise price
per share of outstanding Options in such a manner as the Committee may
determine to be necessary to reflect the effect of the dividend or other
distribution on the fair market value of a share of Common Stock.
(c) To the extent that the foregoing adjustments described in
Sections 16(a) and (b) above relate to particular Options or to particular
stock or securities of the Corporation subject to Option under this Plan,
such adjustments shall be made by the Committee, whose determination in
that respect shall be final and conclusive.
(d) The grant of an Option pursuant to this Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
(e) No fractional shares of stock shall be issued under the Plan for
any such adjustment.
(f) Any adjustment made pursuant to this Section 16, shall be made,
to the extent practicable, in such manner as not to constitute a
modification of any outstanding Incentive Stock Options within the meaning
of Section 424(h) of the Code.
17. INVESTMENT PURPOSE. At the discretion of the Committee, any
------------------
Option Agreement may provide that the optionee shall, by accepting the Option,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the Option will be acquired for investment and not for resale or
distribution, and that upon each exercise of any portion of an Option, the
person entitled to exercise the same shall furnish evidence of such facts which
is satisfactory to the Corporation. Certificates for shares of stock acquired
under the Plan may be issued bearing such restrictive legends as the Corporation
and its counsel may deem necessary to ensure that the optionee is not an
"underwriter" within the meaning of the regulations of the Securities Exchange
Commission.
18. APPLICATION OF FUNDS. The proceeds received by the Corporation
--------------------
from the sale of Common Stock pursuant to Options will be used for general
corporate purposes.
9
<PAGE>
19. NO OBLIGATION TO EXERCISE. The granting of an Option shall impose
-------------------------
no obligation upon the optionee to exercise such Option.
20. EFFECTIVE DATE OF PLAN. The Plan will become effective upon the
----------------------
approval of the Plan by the shareholders of the Corporation and receipt of any
necessary regulatory approvals.
21. TERM OF PLAN. Options and may be granted pursuant to this Plan
------------
from time to time within ten (10) years from the effective date of the Plan.
22. TIME OF GRANTING OF OPTIONS. Nothing contained in the Plan or in
---------------------------
any resolution adopted or to be adopted by the Committee or the shareholders of
the Corporation and no action taken by the Committee shall constitute the
granting of any Option hereunder. The granting of an Option pursuant to the
Plan shall take place only when an Option Agreement shall have been duly
executed and delivered by and on behalf of the Corporation at the direction of
the Committee.
23. WITHHOLDING TAXES. Whenever the Corporation proposes or is
-----------------
required to cause to be issued or transferred shares of stock, cash or other
assets pursuant to this Plan, the Corporation shall have the right to require
the optionee to remit to the Corporation an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the issuance
of any certificate or certificates for such shares or delivery of such cash or
other assets. Alternatively, the Corporation may issue or transfer such shares
of stock or make other distributions of cash or other assets net of the number
of shares or other amounts sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of stock, cash and other
assets to be distributed shall be valued on the date the withholding obligation
is incurred.
24. TERMINATION AND AMENDMENT. The Board may at any time alter,
-------------------------
suspend, terminate or discontinue the Plan, subject to any applicable regulatory
requirements and any required stockholder approval or any stockholder approval
which the Board may deem 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 applicable stock exchange or quotation
system listing requirements. The Board may not, without the consent of the
holder of an Option previously granted, make any alteration which would deprive
the optionee of his rights with respect thereto.
25. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
----------------------------------------
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part, and shall not serve as a basis
for interpretation or construction of, this Plan. As used herein, the masculine
gender shall include the feminine and neuter, and the singular number shall
include the plural, and vice versa, whenever such meanings are appropriate.
10
<PAGE>
26. COST OF PLAN; EXCULPATION AND INDEMNIFICATION. All costs and
---------------------------------------------
expenses incurred in the operation and administration of the Plan shall be borne
by the Corporation, the Bank and the Subsidiaries. In connection with this
Plan, no member of the Board, no member of the Board of Directors of the Bank,
and no member of the Board of Directors of any Subsidiary, and no member of the
Committee shall be personally liable for any act or omission to act, nor for any
mistake in judgment made in good faith, unless arising out of, or resulting
from, such person's own bad faith, willful misconduct or criminal acts. To the
extent permitted by applicable law and regulation, the Corporation shall
indemnify, defend and hold harmless the members of the Board, the members of the
Board of Directors of the Bank and the members of the Board of Directors of any
Subsidiary, and members of the Committee, and each other officer or employee of
the Bank, the Corporation or of any Subsidiary to whom any power or duty
relating to the administration or interpretation of this Plan may be assigned or
delegated, from and against any and all liabilities (including any amount paid
in settlement of a claim with the approval of the Board), and any costs or
expenses (including counsel fees) incurred by such persons arising out of or as
a result of, any act or omission to act, in connection with the performance of
such person's duties, responsibilities and obligations under this Plan, other
than such liabilities, costs, and expenses as may arise out of, or result from
the bad faith, willful misconduct or criminal acts of such persons.
27. GOVERNING LAW. Without regard to the principles of conflicts of
-------------
laws, the laws of the State of North Carolina shall govern and control the
validity, interpretation, performance, and enforcement of this Plan.
28. INSPECTION OF PLAN. A copy of this Plan, and any amendments
------------------
thereto, shall be maintained by the Secretary of the Corporation and shall be
shown to any proper person making inquiry about it.
29. OTHER PROVISIONS. The Option Agreements authorized under this
----------------
Plan shall contain such other provisions not inconsistent with the foregoing,
including, without limitation, increased restrictions upon the exercise of
options, as the Committee may deem advisable.
11
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Exhibit (23)(ii)
Consent of Independent Public Accountants
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Scotland Bancorp, Inc. of our report dated October 22, 1996 relating to
the consolidated statements of financial condition of Scotland Bancorp, Inc. as
of September 30, 1996 and 1995, and the related consolidated statements of
income, stockholders' equity and cash flows for the years then ended, which
report was incorporated by reference in the September 30, 1996 Form 10-KSB of
Scotland Bancorp, Inc.
McGLADREY & PULLEN, LLP
May 7, 1997
Raleigh, North Carolina
