SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definative Proxy Statement
[ ] Confidential, for Use of the Commission Only
[ ] Definative Additional Meterials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Great Pee Dee Bancorp, Inc.
(Name of Registrant as Specified in Its Charter)
John J. Gorman
Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, NW
Washington, DC 20015
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
<PAGE>
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule dand the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(803) 537-7656
November 24, 1998
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of Great Pee Dee Bancorp, Inc. (the "Company"), which
will be held at the Matheson Library, 227 Huger Street, Cheraw,
South Carolina at 2:00 p.m. (South Carolina time) on Thursday,
January 7, 1999.
The enclosed Notice of Annual Meeting and Proxy Statement describe
the formal business to be transacted. During the meeting we will
also report on the operations of the Company and First Federal
Savings and Loan Association of Cheraw (the "Association"), the
wholly-owned subsidiary of the Company. Directors and officers of
the Company and Association will be present to respond to any
questions that stockholders may have. Also enclosed for your
review is our Annual Report to Stockholders, which contains
detailed information concerning the activities and operating
performance of the Association.
The business to be conducted at the Annual Meeting consists of the
election of two directors, the approval of the Company's 1998 Stock
Option Plan and 1998 Recognition and Retention Plan, and the
ratification of the appointment of independent auditors for the
Company for the fiscal year ending June 30, 1999. The Board of
Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the
Company and its stockholders, and the Board of Directors
unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and
return the enclosed proxy card as soon as possible even if you
currently plan to attend the Annual Meeting. This will not prevent
you from voting in person, but will assure that your vote is
counted if you are unable to attend the meeting.
Sincerely,
/S/ Herbert W. Watts
Herbert W. Watts
President and Chief Executive Officer
<PAGE>
Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(803) 537-7656
NOTICE OF
1998 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On January 7, 1999
Notice is hereby given that the Annual Meeting of Stockholders
of Great Pee Dee Bancorp, Inc. (the "Company") will be held at the
Matheson Library, 227 Huger Street, Cheraw, South Carolina, on
Thursday, January 7, 1999 at 2:00 p.m., South Carolina time.
A Proxy Card and a Proxy Statement for the Annual Meeting are
enclosed. The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors;
2. The approval of Great Pee Dee Bancorp, Inc. 1998 Stock
Option Plan;
3. The approval of Great Pee Dee Bancorp, Inc. 1998
Recognition and Retention Plan;
4. The ratification of Dixon, Odom & Co., L.L.P. as
independent auditors of the Company for the fiscal year ending June
30, 1999; and
such other matters as may properly come before the
Annual Meeting, or any adjournments thereof. The Board of
Directors is not aware of any other business to come before the
Annual Meeting.
Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or dates
to which the Annual Meeting may be adjourned. Stockholders of
record at the close of business on November 20, 1998, are the
stockholders entitled to vote at the Annual Meeting, and any
adjournments thereof. A list of stockholders entitled to vote at
the Annual Meeting will be available at First Federal Savings and
Loan Association of Cheraw, 515 Market Street, Cheraw, South
Carolina for a period of ten days prior to the Annual Meeting and
will also be available for inspection at the meeting itself.
By Order of the Board of Directors
/S/ Johnnie L. Craft
Johnnie L. Craft
Secretary
Cheraw, South Carolina
November 24, 1998
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE
ANNUAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.
_________________________________________________________________
<PAGE>
Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(803) 537-7656
_____________________________________
PROXY STATEMENT
_____________________________________
ANNUAL MEETING OF STOCKHOLDERS
January 7, 1999
_____________________________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of
Great Pee Dee Bancorp, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders of the Company (the "Annual
Meeting"), which will be held at the Matheson Library, 227 Huger
Street, Cheraw, South Carolina, on Thursday, January 7, 1999, at
2:00 p.m., South Carolina time, and at all adjournments of the
Annual Meeting. The accompanying Notice of Annual Meeting of
Stockholders and this Proxy Statement are first being mailed to
stockholders on or about December 1, 1998.
Regardless of the number of shares of Common Stock owned, it
is important that stockholders be represented by proxy or be
present in person at the Annual Meeting. Stockholders are requested
to vote by completing the enclosed Proxy Card and returning it,
signed and dated, in the enclosed postage-paid envelope.
Stockholders are urged to indicate the way they wish to vote in the
spaces provided on the proxy card. Proxies solicited by the Board
of Directors of the Company will be voted in accordance with the
directions given therein. Where no instructions are indicated,
signed proxies will be voted FOR the election of the nominees for
director named in this Proxy Statement, FOR the approval of the
1998 Stock Option Plan ("Stock Option Plan"), FOR the approval of
the 1998 Recognition and Retention Plan ("RRP"), and FOR the
ratification of Dixon, Odom & Co., L.L.P. as independent auditors
of the Company for the fiscal year ending June 30, 1999.
The Board of Directors knows of no additional matters that
will be presented for consideration at the Annual Meeting.
Execution of a proxy, however, confers on the designated
proxyholders discretionary authority to vote the shares in
accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any
adjournments thereof.
Stockholders who execute proxies in the form solicited hereby
retain the right to revoke them in the manner described below.
Unless so revoked, the shares represented by such proxies will be
voted at the Annual Meeting and all adjournments thereof. Proxies
solicited on behalf of the Board
<PAGE>
of Directors of the Company will be voted in accordance with the directions
given thereon. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED "FOR"
THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR CONSIDERATION AT THE ANNUAL
MEETING.
Proxies may be revoked at any time prior to exercise by
sending written notice of revocation to the Secretary of the
Company, Johnnie L. Craft, at the address of the Company shown
above, or by delivering to the Company a duly executed proxy
bearing a later date. The presence at the Annual Meeting of any
stockholder who had given a proxy shall not revoke such proxy
unless the stockholder delivers his or her ballot in person at the
Annual Meeting or delivers a written revocation to the Secretary of
the Company prior to the voting of such proxy.
The cost of solicitation of proxies in the form enclosed
herewith will be borne by the Company. Proxies may also be
solicited personally or by mail, telephone or telegraph by the
Company's Directors, officers and regular employees, without
additional compensation therefor. The Company will also request
persons, firms and corporations holding shares in their names, or
in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such
beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so. The Company has retained Regan &
Associates, Inc., a proxy soliciting firm, to assist the Company in
the solicitation of proxies for the Annual Meeting, for a fee of
$3,250, plus out-of-pocket expenses.
VOTING SECURITIES
Holders of record of the Company's common stock, par value
$.01 per share (the "Common Stock") as of the close of business on
November 20, 1998 (the "Record Date") are entitled to one vote for
each share then held, except as described below. As of the Record
Date, the Company had 2,173,425 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of at least a
majority of the total number of shares of Common Stock outstanding
and entitled to vote is necessary to constitute a quorum at this
Annual Meeting. In the event there are not sufficient votes for a
quorum, or to approve or ratify any matter being presented, at the
time of this Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies.
In accordance with the provisions of the Company's Certificate
of Incorporation, record holders of Common Stock who beneficially
own in excess of 10% of the outstanding shares of Common Stock (the
"Limit") are not entitled to any vote with respect to the shares
held in excess of the Limit. The Company's Certificate of
Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit,
including determining whether persons or entities are acting in
concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit supply
information to the Company to enable the Board to implement and
apply the Limit.
VOTING PROCEDURES AND METHOD OF COUNTING VOTES
As to the election of Directors, the proxy card being provided
by the Board of Directors enables a stockholder to vote FOR the
election of the two nominees proposed by the Board, or to
<PAGE>
WITHHOLD AUTHORITY to vote for the nominees being proposed. Under Delaware
law and the Company's Certificate of Incorporation and Bylaws,
Directors are elected by a plurality of votes cast, without regard
to either broker non-votes, or proxies as to which authority to
vote for the nominees being proposed is withheld.
As to the approval of the Stock Option Plan and the RRP, by
checking the appropriate box, a shareholder may: (i) vote FOR the
item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting on
such item. Under the Company's Certificate of Incorporation, the
approval of either matter shall be determined by a majority of
votes cast, without regard to broker non-votes or proxies marked
"ABSTAIN."
As to the ratification of the appointment of independent
auditors, the proxy card being provided by the Board of Directors
enables a stockholder to check the appropriate box on the proxy
card to (i) vote "FOR", (ii) vote "AGAINST", or (iii) vote to
"ABSTAIN" from voting on, such matter. An affirmative vote of the
holders of a majority of the Common Stock present at the Annual
Meeting, in person or by proxy, and entitled to vote is required to
constitute ratification by the stockholders. Shares as to which
the "ABSTAIN" box has been selected on the proxy card will be
counted as shares present and entitled to vote and will have the
effect of a vote against the matter for which the "ABSTAIN" box has
been selected. In contrast, broker non-votes will not be counted
as shares present and entitled to vote and will have no effect on
the vote on the matter presented.
Proxies solicited hereby will be returned to the Company, and
will be tabulated by inspectors of election designated by the
Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of the
Common Stock are required to file certain reports with the Company
and with the Securities and Exchange Commission (the "SEC")
regarding such ownership pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"). The following table sets forth
information regarding each person known to be beneficial owners of
more than 5% of the Company's outstanding shares of Common Stock on
the Record Date.
<TABLE>
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
_______________________________ ________________ __________________
<S> <C> <C> <C>
The Great Pee Dee Bancorp, Inc. 174,570(1) 8.0%
Employee Stock Ownership Plan and Trust
515 Market Street
Cheraw, South Carolina 29520
First Citizens Bancorporation
of South Carolina, Inc. 109,000(2) 5.02%
1230 Main Street
Columbia, South Carolina 29201
</TABLE>
________________________________
(1) Under The Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan and
Trust (the "ESOP"), shares allocated to participants' accounts are voted in
accordance with the participants' directions. Unallocated shares held by the
ESOP are voted by the Trustees in the manner calculated to most accurately
reflect the instructions it has received from the participants regarding
<PAGE>
the allocated shares. As of the Record Date, 2,119 shares of Common Stock have
been allocated to the accounts of employees under the ESOP. The Trustees of the
ESOP are the Outside Directors of the Company.
(2) Based on a Schedule 13D filed November 12, 1998.
PROPOSAL 1 ELECTION OF DIRECTORS
Directors of the Company are generally elected to serve for a
three-year period or until their respective successors shall have
been elected and shall qualify. Each of the Directors of the
Company also serves on the board of directors of First Federal
Savings and Loan Association of Cheraw (the "Association"). Two
directors will be elected at the Annual Meeting to serve for a
three-year period or until a successor has been elected and
qualified. The Board of Directors has nominated Henry P. Duvall, IV
and John S. Long to serve as director. Mr. Duvall currently serves
as a member of the Board of Directors and Mr. Long currently serves
as an executive officer of the Company.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including the
terms of office of Board members. It is intended that the proxies
solicited on behalf of the Board of Directors will be voted at the
Annual Meeting for the election of the nominee identified below
(unless otherwise directed on the proxy card). If a nominee is
unable to serve, the shares represented by all such proxies will be
voted for the election of such substitute as the Board of Directors
may recommend. At this time, the Board of Directors knows of no
reason why the nominees might be unable to serve, if elected.
<TABLE>
Term to Shares of
Expire following Common Stock
Positions Fiscal Year Beneficially
Held in the Director Ending Owned on Percent
Name Age(1) Company Since(2) June 30 Record Date(3) Of Class
____________________ _____ ___________ ________ ________________ _______________ _________
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
Henry P. Duvall, IV 67 Director 1964 2001 16,757(4) *
John S. Long 44 Vice President 2001 86 *
Chief Operating Officer
DIRECTORS CONTINUING IN OFFICE
Herbert W. Watts 54 President, Chief 1977 1999 20,998 *
Executive Officer
and Director
James C. Crawford, III 41 Director 1992 1999 51,800(4)(5) 2.38%
Cornelius B. Young 65 Director 1985 1999 39,600(4)(5) 1.82%
Robert M. Bennett 66 Director 1973 2000 29,600(4) 1.36%
William R. Butler 49 Director 1992 2000 29,600(4) 1.36%
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Johnnie L. Craft 55 Secretary n/a n/a 7,430 *
and Treasurer
All Directors and Executive Officers 157,471(6) 7.25%
as a Group (8 persons)
______________________
* Less than 1%. (Footnotes continued on following page)
</TABLE>
<PAGE>
(1) As of June 30, 1998.
(2) Reflects initial appointment to the Board of Directors of the
Association, the Company's subsidiary.
(3) Includes shares owned directly and indirectly as well as shares owned
by the individual's spouse and minor children.
(4) Includes 4,600 shares held by a deferred compensation plan as to which
all outside directors serve as trustee.
(5) Includes 20,000 shares owned by the First Federal Savings and Loan
Association of Cheraw Foundation, as to which Messrs. Crawford and Young
serve as directors. (6) Excludes 173,512 shares of Common Stock, or 8.0% of the
shares of Common Stock outstanding, owned by the Company's ESOP for the benefit
of the employees of the Association. The ESOP Administrative Committee
administers the ESOP. Under the terms of the ESOP, shares of Common Stock
allocated to the account of employees are voted in accordance with the
instructions of the respective employees. Unallocated shares are voted by the
ESOP Trustee in the manner calculated to most accurately reflect the
instructions it has received from the participants regarding the allocated
shares, unless their fiduciary duties require otherwise. As of the Record Date,
2,119 shares of Common Stock have been allocated under the ESOP, including 1,058
shares allocated to the executive officers and included in the above table. The
Trustees of the ESOP are Directors of the Company.
DIRECTORS
The principal occupation during the past five years of each
director and executive officer of the Company is set forth below.
All directors have held their present positions for five years
unless otherwise stated.
Herbert W. Watts is the President and Chief Executive Officer of
the Association. Mr. Watts has been employed by the Association in
various capacities since 1973.
Robert M. Bennett is President of Bennett Motor Company, a
General Motors dealership located in Cheraw, South Carolina.
William R. Butler is the owner of P&H Pharmacy which is a retail
pharmacy located in Cheraw, South Carolina. Mr. Butler is a
licensed pharmacist.
James C. Crawford III is the Chief Operating Officer of B.C.
Moore & Sons, Inc., a department store chain.
Henry P. Duvall IV is retired. Prior to his retirement, Mr.
Duvall was the President and Chief Executive Officer of Cheraw
Hardware and Supply Company.
Cornelius B. Young is retired. Prior to his retirement, Mr.
Young was a Senior Manager of Delta Mills, a division of Delta-
Woodside, Inc., a textile manufacturing company.
John S. Long became Vice President of the Association in November
1997. Prior to joining Association, Mr. Long was Senior Vice
President of The County Bank.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Johnnie L. Craft has been the Secretary and Treasurer of the
Association since 1988.
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company and the Association is conducted
through regular and special meetings of the Board of Directors and
its committees. The Board of Directors of the Company met three
times during fiscal 1998. During the fiscal year ended June 30,
1998, the Board of Directors of the Association held thirty
meetings. No director attended fewer than 75% of the total
meetings held by the Board of Directors and the committees on which
such director served, with respect to each of the Company and the
Association. The following is a discussion of certain committees
of the Association. The Association's Audit Committee functions as
the audit committee of the Company, and the Association's Personnel
Committee functions as the personnel committee of the Company.
The Audit Committee consists of Directors Butler, Crawford and
Young. The Audit Committee meets as needed to review the audit
reports prepared by the Company's independent auditor, and meets
periodically with the Company's management in order to set asset
classifications. In addition, the committee annually reviews the
Company's audit policies and recommends any necessary changes to
the Board of Directors. During fiscal 1998, the Audit Committee
held one meeting.
The Budget and Finance Investments Committee meets periodically
to review the Company's investment policies, and it is authorized
to make security investments on behalf of the Company. The Budget
and Finance Investments Committee is composed of Directors Bennett,
Crawford, Watts, Young and Long, and in the absence of either
member, any one of the other members of the Board of Directors may
be substituted for the absent member of the committee. During
fiscal 1998, this committee met four times.
The Personnel Committee consists of all outside Directors. The
Personnel Committee reviews compensation, officer promotions,
benefits and other matters of personnel policy and practice.
During fiscal 1998, this committee met two times.
While the Board will consider nominees recommended by the
stockholders, it has not actively solicited recommendations from
stockholders. Nominations by stockholders must comply with certain
procedural and informational requirements set forth in the
Company's Bylaws. See "Advance Notice of Business to be Conducted
at an Annual Meeting." The Board of Directors met once in its
capacity as the nominating committee during fiscal 1998.
DIRECTOR COMPENSATION
The Association pays a $700 monthly retainer to each of its
directors, plus $150 for each meeting attended. The Company does
not pay fees to its directors.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information as to annual, long
term and other compensation for services in all capacities to the
President and Chief Executive Officer for the fiscal years ended
June 30, 1998 and 1997. No executive officers earned over $100,000
in salary and bonuses during fiscal 1998. Set forth below is
information regarding the compensation of Herbert W. Watts,
President and Chief Executive Officer of the Company and the Association.
<TABLE>
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation
Awards
Other Restricted
Annual Stock Options/ All Other
Name and Principal Fiscal Compensation Award SARs Compensation
Position Year(1) Salary($) Bonus($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert W. Watts 1998 $73,000 $6,500 $16,200(2) $10,166(3)
President and Chief 1997 70,375 8,981 8,000 --
Executive Officer
</TABLE>
__________________________
(1) In accordance with the rules on executive officer and director compensation
disclosure adopted by the SEC, Summary Compensation information is excluded
for the fiscal year ended June 30, 1996, since the Association was not a
public company during such period.
(2) Includes directors fees and deferred compensation.
(3) Represents the market value of shares allocated to the executive's ESOP
account at June 30, 1998.
Employment Agreement. The Association has entered into employment
agreements with Mr. Watts and Mr. Long that provide for a term of thirty-six
months. On each anniversary date, the agreements may be extended for an
additional twelve months, so that the remaining term shall be thirty- six
months. If the agreements are not renewed, the agreements will expire thirty-six
months following the anniversary date. The current Base Salary for Mr. Watts is
$78,000 and for Mr. Long is $72,100. The Base Salary may be increased but not
decreased. In addition to the Base Salary, the agreement provides for, among
other things, participation in stock benefit plans and other employee and fringe
benefits applicable to executive personnel. The agreements provide for
termination by the Association for cause at any time. In the event the
Association terminates the executive's employment for reasons other than for
cause, or in the event of the executive's resignation from the Association upon
(i) failure to re-elect the executive to his current offices, (ii) a material
change in the executive's functions, duties or responsibilities, or relocation
of his principal place of employment by more than thirty (30) miles, (iii)
liquidation or dissolution of the Association, or (iv) a breach of the agreement
by the Association, the executive, or in the event of death, his beneficiary
would be entitled to severance pay in an amount equal to three times the annual
rate of Base Salary (which includes any salary deferred at the election of Mr.
Watts) at the time of termination, plus the highest annual cash bonus paid to
him during the prior three years. The Association would also continue the
executive's life, health, dental and disability coverage for the remaining
unexpired term of the agreement. In the event the payments to the Executive
would <PAGE>
include an "excess parachute payment" as defined by the Internal Revenue
Code of 1986, as amended, (the "Code") Section 280G (relating to payments made
in connection with a change in control), the payments would be reduced in order
to avoid having an excess parachute payment.
The executives employment may be terminated upon his attainment of normal
retirement age (i.e., age 65) or in accordance with any retirement policy
established by the Association (with executive's consent). Upon retirement, the
executive will be entitled to all benefits available to him under any retirement
or other benefit plan maintained by the Association. In the event of the
executive's disability for a period of six months, the Association may terminate
the agreement provided that the Association will be obligated to pay the
executive his Base Salary for the remaining term of the agreement or one year,
whichever is longer, reduced by any benefits paid to the executive pursuant to
any disability insurance policy or similar arrangement maintained by the
Association. In the event of the executive's death, the Association will pay his
Base Salary to his named beneficiaries for one year following his death, and
will also continue medical, dental, and other benefits to his family for one
year. The employment agreements provide that, following termination of
employment, the executive will not compete with the Association for a period of
one year, provided, however, that in the event of a termination in connection
with a change in control, the non-compete provisions will not apply.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Association has followed a policy of offering to the directors and
officers real estate mortgage loans secured by their principal residence as well
as other loans. All of the loans to the directors and officers are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public, and
do not involve more than minimal risk of collectibility. Loans to directors,
executive officers and their associates totaled $376,190 at June 30, 1998.
PROPOSAL 2 -APPROVAL OF THE GREAT PEE DEE BANCORP, INC.
1998 STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company intends to adopt the 1998 Stock
Option Plan (the "Stock Option Plan"). Under the Stock Option Plan, 220,213
shares of the Company's Common Stock will be reserved for issuance pursuant to
the exercise of options to be granted thereunder. Since stockholders do not have
preemptive rights, to the extent the Company issues all shares reserved for
issuance under the Stock Option Plan from authorized but unissued shares, the
interests of current stockholders will be diluted 11.0%.
The Board of Directors believes that it is appropriate for the Company to
adopt a flexible and comprehensive stock option plan which permits the granting
of a variety of long-term incentive awards to directors, officers and employees
as a means of enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Company most depends. Attached
<PAGE>
as Appendix A to this Proxy Statement is the complete text of the Stock Option
Plan. The principal features of the Stock Option Plan are summarized below.
PRINCIPAL FEATURES OF THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options,
reload options, limited stock appreciation rights ("Limited Rights") and
dividend equivalent rights. Each award shall be on such terms and conditions,
consistent with the Stock Option Plan, as the committee administering the Stock
Option Plan may determine.
The Committee has full and exclusive power within the limitations set forth
in the Stock Option Plan to make all decisions and determinations regarding the
selection of participants and the granting of awards; establishing the terms and
conditions relating to each award; adopting rules, regulations and guidelines
for carrying out the Plan's purposes; and interpreting and otherwise construing
the Stock Option Plan.
The term of a stock option will not exceed ten years from the date of
grant. Stock options granted under the Stock Option Plan may be either
"Incentive Stock Options" as defined under Section 422 of the Code or stock
options not intended to qualify as such ("non-qualified stock options").
Shares issued upon the exercise of a stock option may be either authorized
but unissued shares or reacquired shares held by the Company in its treasury.
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the Stock Option Plan. Generally, in the
discretion of the Board, all or any non-qualified stock options granted under
the Stock Option Plan may be transferable by the Participant but only to the
persons or classes of persons determined by the Board. No other award or any
right or interest therein is assignable or transferable except under certain
limited exceptions set forth in the Stock Option Plan.
The Stock Option Plan is administered by a committee of the Board (the
"Committee") consisting of either two or more "non-employee directors" (as
defined in the Stock Option Plan), or the entire Board. The members of the
Committee shall be appointed by the Board. Currently, the Committee is comprised
of all outside directors. Pursuant to the terms of the Stock Option Plan, any
director, officer or employee of the Company or its affiliates is eligible to
participate. The Stock Option Committee will determine to whom the awards will
be granted, in what amounts, and the period over which such awards will vest and
become exercisable. In granting awards under the Stock Option Plan, the
Committee considers, among other things, position and years of service, value of
the individual's services to the Company and the Association and the added
responsibilities of such individuals as employees, directors and officers of a
public company. The committee may extend or accelerate the time period for the
exercise of an option.
STOCK OPTIONS
All stock options will be exercisable in such installments as the committee
shall determine. If an individual to whom an option or right was granted ceases
to maintain continuous service for any reason (excluding death or disability,
and termination of employment by the Company or any affiliate
<PAGE>
following a change in control or for cause), such individual may, but only
for a three month period immediately following cessation of continuous service
and in no event after the expiration date of such option or right, exercise such
option or right to the extent that such individual was entitled to exercise such
option or right at the date of cessation. If an individual to whom an option or
right was granted ceases to maintain continuous service by reason of death or
disability, or following a change in control, then, unless the Committee
provides otherwise in the instrument evidencing the grant, all options and
rights granted and not fully exercisable shall become exercisable in full upon
the happening of such event and shall remain exercisable for a one year period.
Following the disability or death of any individual who has received an
option, the Committee may, upon request by the option holder, elect to pay to
the holder an amount of cash equal to the amount by which the market value of
the shares covered by the option on the date of termination of employment or
service exceeds the exercise price, multiplied by the number of shares with
respect to which such option is properly exercised. If the continuous service of
an individual to whom an option or right was granted by the Company is
terminated for cause, all rights under such option or right shall expire
immediately upon the effective date of such termination.
The exercise price for the purchase of shares subject to a stock option may
not be less than 100% of the market value of the shares on the date of grant.
The exercise price must be paid in full in cash or shares of Common Stock, or a
combination of both.
LIMITED STOCK APPRECIATION RIGHTS
The Committee may grant Limited Rights simultaneous with the grant of any
option. A Limited Right gives the option holder the right, upon a change in
control of the Company or the Association, to receive the excess of the market
value of the shares represented by the Limited Rights on the date exercised over
the exercise price. Limited Rights generally will be subject to the same terms
and conditions and exercisable to the same extent as stock options, as described
above. Payment upon exercise of a Limited Rights will be in cash, or in the
event of a change in control in which pooling accounting treatment is a
condition to the transaction, for shares of stock of the Company, or in the
event of a merger transaction, for shares of the acquiring corporation or its
parent, as applicable.
Limited Rights may be granted at the time of, and must be related to, the
grant of a stock option. The exercise of one will reduce to that extent the
number of shares represented by the other. If a Limited Rights is granted with
and related to an Incentive Stock Option, the Limited Rights must satisfy all
the restrictions and limitations to which the related Incentive Stock Option is
subject.
DIVIDEND EQUIVALENT RIGHTS
Dividend equivalent rights may also be granted at the time of the grant of
a stock option. Dividend equivalent rights entitle the option holder to receive
an amount of cash at the time that certain extraordinary dividends are declared
equal to the amount of the extraordinary dividend multiplied by the number of
options that the person holds. For these purposes, an extraordinary dividend is
defined under the Stock Option Plan as any dividend paid on shares of Common
Stock where the rate of
<PAGE>
dividend exceeds the Bank's weighted average cost of funds on interest-bearing
liabilities for the current and preceding three quarters.
RELOAD OPTIONS
Reload options may also be granted at the time of the grant of a stock
option. Reload options entitle the option holder, who has delivered shares that
he or she owns as payment of the exercise price for option stock, to a new
option to acquire additional shares equal in amount to the number of shares he
or she has traded in. Reload options may also be granted to replace option
shares retained by the employer for payment of the option holder's withholding
tax. The option price at which the additional shares of stock can be purchased
by the option holder through the exercise of a reload option is equal to the
market value of the stock at the time of the new option grant. The option period
during which the reload option may be exercised expires at the same time as that
of the original option that the holder has exercised.
EFFECT OF ADJUSTMENTS
Shares as to which awards may be granted under the Stock Option Plan, and
shares then subject to awards, will be adjusted by the Stock Option Committee in
the event of any merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination or exchange of shares or other change in the
corporate structure of the Company.
In the case of any merger, consolidation or combination of the Company with
or into another holding company or other entity, whereby either the Company is
not the continuing holding company or its outstanding shares are converted into
or exchanged for securities, cash or other property, or any combination thereof,
any individual to whom a stock option or Limited Rights has been granted at
least six months prior to such event will have the right (subject to the
provisions of the Stock Option Plan and any applicable vesting period) upon
exercise of the option or Limited Rights to an amount equal to the excess of
fair market value on the date of exercise of the consideration receivable in the
merger, consolidation or combination with respect to the shares covered or
represented by the stock option or Limited Rights over the exercise price of the
option multiplied by the number of shares with respect to which the option or
Limited Rights has been exercised.
AMENDMENT AND TERMINATION
The Board may at any time amend, suspend or terminate the Stock Option Plan
or any portion thereof, provided however, that no such amendment, suspension or
termination shall impair the rights of any individual, without his consent, in
any award made pursuant to the Plan. Unless previously terminated, the Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will generally not be deemed to have recognized taxable income
upon grant or exercise of any Incentive Stock Option, provided that shares
transferred in connection with the exercise
<PAGE>
are not disposed of by the optionee for at least one year after the date the
shares are transferred in connection with the exercise of the option and two
years after the date of grant of the option. If these holding periods are
satisfied, upon disposal of the shares, the aggregate difference between the per
share option exercise price and the fair market value of the Common Stock is
recognized as income taxable at capital gains rates. No compensation deduction
may be taken by the Company as a result of the grant or exercise of Incentive
Stock Options, assuming these holding periods are met.
In the case of the exercise of a Non-Statutory Stock Option, an optionee
will be deemed to have received ordinary income upon exercise of the option in
an amount equal to the aggregate amount by which the fair market value of the
Common Stock exceeds the exercise price of the option. In the event shares
received through the exercise of an Incentive Stock Option are disposed of prior
to the satisfaction of the holding periods (a "disqualifying disposition"), the
exercise of the option will essentially be treated as the exercise of a
Non-Statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount of
any ordinary income recognized by an optionee upon the exercise of a
Non-Statutory Stock Option or due to a disqualifying disposition will be a
deductible expense of the Company for federal income tax purposes, subject to
the limitations imposed by Code Section 162(m).
AWARDS UNDER THE STOCK OPTION
Plan The following table presents information with respect to the number of
awards of options which are intended to be granted under the Stock Option Plan,
to the Company's chief executive officer, to all executive officers as a group,
to directors who are not executive officers of the Company and the Association
as a group, and to non-executive employees as a group. All options will be
granted at the fair market value on the date of grant.
<TABLE>
STOCK OPTION PLAN
Name and Position Dollar Number of
Value(1) Option Shares
<S> <C> <C> <C>
Herbert W. Watts, Chief Executive Officer $-- 55,053
Executive Officers as a Group (3 persons) -- 113,409
Non-Executive Director Group (5 persons) -- 66,065(2)
Non-Executive Employee Group (1 person) -- 11,011
</TABLE>
__________________________
(1) Any value realized will be the difference between the exercise price
and the market value upon exercise. Since the options have not been granted,
there is no current value.
(2) The Committee intends to grant a non-qualified stock option to purchase
13,213 shares of Common Stock to each director of the Company who is not an
employee.
Subject to the conditions of the Stock Option Plan described herein, the
proposed awards to be made in 1999 described herein will vest and become
exercisable in three equal annual installments with the first installment
generally vesting one year from the date of stockholder approval of the Stock
Option Plan. <PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE APPROVAL OF THE 1998 STOCK OPTION PLAN.
PROPOSAL 3 - APPROVAL OF THE
1998 RECOGNITION AND RETENTION PLAN
GENERAL
The Board of Directors intends to adopt a Recognition and Retention Plan
(the "RRP") as a method of providing key officers and directors with a
proprietary interest in the Company in a manner designed to encourage such
individuals to remain with the Company. Pursuant to the RRP, restricted stock
awards covering 88,085 shares will be reserved for issuance under the RRP.
Attached as Appendix B to this Proxy Statement is the complete text of the
RRP. The principal features of the RRP are summarized below.
PRINCIPAL FEATURES OF THE RRP
The RRP provides for the award of shares of Common Stock ("RRP Shares"),
subject to the restrictions described below. Each award under the RRP will be
made on terms and conditions, consistent with the RRP, as determined by the RRP
Committee.
The RRP is administered by a committee of the Board consisting of either
(i) at least two "non- employee directors" or (ii) the entire Board (the "RRP
Committee"). The members of the RRP Committee shall be appointed by the Board.
Currently, the RRP Committee is comprised of all five outside directors. The RRP
Committee will select the recipients and terms of awards pursuant to the RRP,
and may determine to accelerate the vesting period of an award. Pursuant to
the terms of the RRP, any director, officer or employee of the Company or its
affiliates may be selected by the RRP Committee to participate in the RRP. In
determining to whom and in what amount to grant awards, the RRP Committee
considers the position and responsibilities of eligible employees, the value of
their services to the Company and the Association and other factors it deems
relevant. As of June 30, 1998, there were five non-employee directors eligible
to participate in the RRP.
The RRP provides that RRP Shares used to fund awards under such plan may be
either authorized but unissued shares or issued shares heretofore or hereafter
reacquired by the Company in the open market and held as treasury shares. To the
extent the Company utilizes authorized but unissued shares to fund the RRP, the
interests of the current stockholders will be diluted by approximately 4.0%.
RRP Shares to be awarded in 1999 to directors, officers and employees will
vest in such installments as the RRP Committee shall determine. RRP Shares are
subject to forfeiture if the recipient fails to remain in the continuous service
(as defined in the RRP) as an employee, officer, or director of the Company or
the Association for the stipulated period (the "restricted period").
<PAGE>
In the event a recipient ceases to maintain continuous service with the
Company or the Association by reason of death or disability, or following a
change in control, RRP Shares still subject to restrictions will vest and be
free of these restrictions. In the event of termination for any other reason,
all nonvested shares will be forfeited and returned to the Company. Prior to
vesting of the nonvested RRP shares, a recipient will have the right to vote the
nonvested RRP Shares which have been awarded to the recipient and will receive
any dividends declared on such RRP Shares.
EFFECT OF ADJUSTMENTS
Restricted stock awarded under the RRP will be adjusted by the RRP
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure.
FEDERAL INCOME TAX CONSEQUENCES
Holders of restricted stock will recognize ordinary income on the date that
the shares of restricted stock are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of the shares on that
date. In certain circumstances, a holder may elect to recognize ordinary income
and determine such fair market value on the date of the grant of the restricted
stock. Holders of restricted stock will also recognize ordinary income equal to
their dividend or dividend equivalent payments when such payments are received.
Generally, the amount of income recognized by individuals will be a deductible
expense for tax purposes by the Association.
AMENDMENT TO THE RRP
The Board of Directors may at any time amend, suspend or terminate the RRP
or any portion thereof, provided however, that no such amendment, suspension or
termination shall impair the rights of any award recipient, without his consent,
in any award therefore made pursuant to the RRP.
AWARDS UNDER THE RRP
The following table presents information with respect to the number of
awards of restricted stock which are intended to be granted under the RRP to the
Company's chief executive officer, to all executive officers as a group, to
directors as a group who are not executive officers, and to all non- executive
employees as a group.
<PAGE>
<TABLE>
RECOGNITION AND RETENTION PLAN
Name and Position Dollar Shares of Restricted
Value(1) Stock
<S> <C> <C> <C>
Herbert W. Watts, Chief Executive Officer $ 280,768 22,021
Executive Group (3 persons) 578,378 45,363
Non-Executive Director Group (5 persons) 336,919 26,425 (2)
Non-Executive Employee Group (1 person) 56,151 4,404
</TABLE>
___________________
(1) Assumes an aggregate market value of the shares of restricted stock
based on the closing sales price of the Company's Common Stock of $12.75 per
share on November 16, 1998.
(2) The Committee intends to award 5,285 shares of restricted stock to
each director of the Company who is not also an employee.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE 1998 RECOGNITION AND RETENTION PLAN.
PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1998
were Dixon, Odom & Co., L.L.P. The Company's Board of Directors has reappointed
Dixon, Odom & Co., L.L.P. to continue as independent auditors for the Company
for the fiscal year ending June 30, 1999, subject to ratification of such
appointment by the stockholders. It is expected that a representative of Dixon,
Odom & Co., L.L.P. will attend the Annual Meeting and will be given the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from shareholders present at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DIXON, ODOM & CO., L.L.P. AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the date fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by
<PAGE>
the stockholder, describe briefly the proposed business, the reasons for
bringing the business before the annual meeting, and any material interest of
the stockholder in the proposed business. In the case of nominations to the
Board, certain information regarding the nominee must be provided. Nothing in
this paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to an annual meeting any stockholder proposal which
does not meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
The date on which the 1999 Annual Meeting of Stockholders is expected to be
held is November 1, 1999. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 1999 Annual
Meeting of Stockholders must be given to the Company no later than August 3,
1999.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy material for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office, 515 Market
Street, Cheraw, South Carolina 29520, no later than May 28, 1999. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Johnnie L. Craft
Johnnie L. Craft
Secretary
Cheraw, South Carolina
November 24, 1998
<PAGE>
APPENDIX A
GREAT PEE DEE BANCORP, INC.
1998 STOCK OPTION PLAN
1. Purpose
The purpose of the Great Pee Dee Bancorp, Inc. 1998 Stock Option Plan (the
"Plan") is to advance the interests of the Company and its stockholders by
providing Key Employees and Outside Directors of the Company and its Affiliates,
including First Federal Savings & Loan Association of Cheraw, upon whose
judgment, initiative and efforts the successful conduct of the business of the
Company and its Affiliates largely depends, with an additional incentive to
perform in a superior manner as well as to attract people of experience and
ability.
2. Definitions
"Affiliate" means any "parent corporation" or "subsidiary corporation" of
the Company or the Bank, as such terms are defined in Section 424(e) or 424(f),
respectively, of the Code, or a successor to a parent corporation or subsidiary
corporation.
"Award" means an Award of Non-Statutory Stock Options, Incentive Stock
Options, Limited Rights, Reload Options and/or Dividend Equivalent Rights
granted under the provisions of the Plan.
"Bank" means First Federal Savings & Loan Association of Cheraw, or a
successor corporation.
"Beneficiary" means the person or persons designated by a Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Board" or "Board of Directors" means the board of directors of the Company
or its Affiliate, as applicable.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Bank or the Company means a change in control of
a nature that: (i) would be required to be reported in response to Item 1(a) of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change in Control of the Bank or the Company within the
meaning of the Home Owners' Loan Act, as amended ("HOLA"), and applicable rules
and regulations promulgated thereunder, as in effect at the time of the Change
in Control; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (a) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board")
A-1
<PAGE>
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Company's stockholders
was approved by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as though he were a member
of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation,
sale of all or substantially all the assets of the Bank or the Company or
similar transaction in which the Bank or Company is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the Plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) at
least two Non-Employee Directors of the Company, or (ii) the entire Board
of the Company. "Common Stock" means shares of the common stock of the
Company, par value $.01 per share.
"Company" means Great Pee Dee Bancorp, Inc. or a successor corporation.
"Continuous Service" means employment as a Key Employee and/or service as
an Outside Director without any interruption or termination of such employment
and/or service. Continuous Service shall also mean a continuation as a member of
the Board of Directors following a cessation of employment as a Key Employee. In
the case of a Key Employee, employment shall not be considered interrupted in
the case of sick leave, military leave or any other leave of absence approved by
the Bank or in the case of transfers between payroll locations of the Bank or
between the Bank, its parent, its subsidiaries or its successor.
"Date of Grant" means the actual date on which an Award is granted by the
Committee.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of mental or
physical infirmity, or both, of an employee to perform the work customarily
assigned to him, or of a Director to serve as such. Additionally, in the case
of an employee, a medical doctor selected or approved by the Board must advise
the Committee that it is either not possible to determine when such Disability
will terminate or that it appears probable that such Disability will be
permanent during the remainder of said employee's lifetime.
"Dividend Equivalent Rights" means the right to receive an amount of cash
based upon the terms set forth in Section 10 hereof.
"Effective Date" means the date of, or a date determined by the Board of
Directors following, approval of the Plan by the Company's stockholders.
"Fair Market Value" means, when used in connection with the Common Stock on
a certain date, the reported closing price of the Common Stock as reported by
the Nasdaq stock market (as published by The Wall Street Journal,
A-2
<PAGE>
if published) on such date, or if the Common Stock was not traded on the
day prior to such date, on the next preceding day on which the Common Stock was
traded; provided, however, that if the Common Stock is not reported on the
Nasdaq stock market, Fair Market Value shall mean the average sale price of all
shares of Common Stock sold during the 30-day period immediately preceding the
date on which such stock option was granted, and if no shares of stock have been
sold within such 30-day period, the average sale price of the last three sales
of Common Stock sold during the 90-day period immediately preceding the date on
which such stock option was granted. In the event Fair Market Value cannot be
determined in the manner described above, then Fair Market Value shall be
determined by the Committee. The Committee is authorized, but is not required,
to obtain an independent appraisal to determine the Fair Market Value of the
Common Stock.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated as an Incentive Stock Option pursuant to
Section 8.
"Key Employee" means any person who is currently employed by the Company or
an Affiliate who is chosen by the Committee to participate in the Plan.
"Limited Right" means the right to receive an amount of cash based upon the
terms set forth in Section 9.
"Non-Statutory Stock Option" means an Option granted by the Committee to
(i) an Outside Director or (ii) to any other Participant and such Option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.
"Non-Employee Director" means, for purposes of the Plan, a Director who (a)
is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal or
early retirement date set forth in the Bank's Employee Stock Ownership Plan, or
any successor plan. Normal Retirement for an Outside Director means a cessation
of service on the Board of Directors for any reason other than removal for
Cause, after reaching 60 years of age and maintaining at least 10 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate who is
not an employee of the Company or an Affiliate.
"Option" means an Award granted under Section 7 or Section 8.
"Participant" means a Key Employee or Outside Director of the Company or
its Affiliates who receives or has received an award under the Plan.
"Reload Option" means an option to acquire shares of Common Stock
equivalent to the shares (i) used by a Participant to pay for an Option, or (ii)
deducted from any distribution in order to satisfy income tax required to be
withheld, based upon the terms set forth in Section 19.
"Right" means a Limited Right or a Dividend Equivalent Right.
A-3
<PAGE>
"Termination for Cause" means the termination of employment or termination
of service on the Board caused by the individual's personal dishonesty, willful
misconduct, any breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or the willful violation of any law, rule or
regulation (other than traffic violations or similar offenses), or a final
cease-and-desist order, any of which results in material loss to the Company or
one of its Affiliates.
3. Plan Administration Restrictions
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.
All transactions involving a grant, award or other acquisition from the
Company shall:
(a) be approved by the Company's full Board or by the Committee;
(b) be approved, or ratified, in compliance with Section 14 of the Exchange
Act, by either: the affirmative vote of the holders of a majority of the
securities present, or represented and entitled to vote at a meeting duly held
in accordance with the laws of the state in which the Company is incorporated;
or the written consent of the holders of a majority of the securities of the
issuer entitled to vote provided that such ratification occurs no later than the
date of the next annual meeting of shareholders; or
(c) result in the acquisition of an Option or Limited Right that is held by
the Participant for a period of six months following the date of such
acquisition.
4. Types of Awards
Awards under the Plan may be granted in any one or a combination of:
(a)Incentive Stock Options; (b)Non-Statutory Stock Options; (c)Limited
Rights; (d) Dividend Equivalent Rights; and (e) Reload Options.
5. Stock Subject to the Plan
Subject to adjustment as provided in Section 17, the maximum number of
shares reserved for issuance under the Plan is 220,213 shares. To the extent
that Options or Rights granted under the Plan are exercised, the shares covered
will be unavailable for future grants under the Plan; to the extent that Options
together with any related Rights granted under the Plan terminate, expire or are
canceled without having been exercised or, in the case of Limited Rights
exercised for cash, new Awards may be made with respect to these shares.
6. Eligibility
Key Employees of the Company and its Affiliates shall be eligible to
receive Incentive Stock Options, Non-Statutory Stock Options, Limited Rights,
Dividend Equivalent Rights, and/or Reload Options under the Plan. Outside
Directors shall be eligible to receive Non-Statutory Stock Options, Dividend
Equivalent Rights and Reload Options under the Plan.
A-4
<PAGE>
7. Non-Statutory Stock Options
7.1 Grant of Non-Statutory Stock Options
(a) Grants to Outside Directors and Key Employees. The Committee may, from
time to time, grant Non-Statutory Stock Options to eligible Key Employees and
Outside Directors, and, upon such terms and conditions as the Committee may
determine, grant Non-Statutory Stock Options in exchange for and upon surrender
of previously granted Awards under the Plan. Non-Statutory Stock Options granted
under the Plan, including Non-Statutory Stock Options granted in exchange for
and upon surrender of previously granted Awards, are subject to the terms and
conditions set forth in this Section 7. The maximum number of shares subject to
a Non-Statutory Option that may be awarded under the Plan to any Key Employee
shall be 75,000.
(b) Option Agreement. Each Option shall be evidenced by a written option
agreement between the Company and the Participant specifying the number of
shares of Common Stock that may be acquired through its exercise and containing
such other terms and conditions that are not inconsistent with the terms of the
Plan.
(c) Price. The purchase price per share of Common Stock deliverable upon
the exercise of each Non-Statutory Stock Option shall be the Fair Market Value
of the Common Stock of the Company on the date the Option is granted. Shares may
be purchased only upon full payment of the purchase price. Payment of the
purchase price may be made, in whole or in part, through the surrender of shares
of the Common Stock of the Company at the Fair Market Value of such shares
determined in the manner described in Section 2.
(d) Manner of Exercise and Vesting. The Committee may, in its sole
discretion, designate the period over which the Non-Statutory Stock Options
shall vest or accelerate the time at which any Non-Statutory Stock Option may be
exercised in whole or in part. A vested Option may be exercised from time to
time, in whole or in part, by delivering a written notice of exercise to the
President or Chief Executive Officer of the Company, or his designee. Such
notice shall be irrevocable and must be accompanied by full payment of the
purchase price in cash or shares of Common Stock at the Fair Market Value of
such shares, determined on the exercise date in the manner described in Section
2 hereof. If previously acquired shares of Common Stock are tendered in payment
of all or part of the exercise price, the value of such shares shall be
determined as of the date of such exercise.
(e) Terms of Options. The term during which each Non-Statutory Stock Option
may be exercised shall be determined by the Committee, but in no event shall a
Non-Statutory Stock Option be exercisable in whole or in part more than 10 years
and one day from the Date of Grant. No Options shall be earned by a Participant
unless the Participant maintains Continuous Service until the vesting date of
such Option, except as set forth herein. The shares comprising each installment
may be purchased in whole or in part at any time after such installment becomes
purchasable. The Committee may, in its sole discretion, accelerate or extend the
time at which any Non-Statutory Stock Option may be exercised in whole or in
part by Key Employees and/or Outside Directors. Notwithstanding any other
provision of this Plan, in the event of a Change in Control of the Company or
the Bank, all Non-Statutory Stock Options that have been awarded shall become
immediately exercisable for one year following such Change in Control.
(f) Termination of Employment or Service. Upon the termination of a Key
Employee's employment or upon termination of an Outside Director's service for
any reason other than Normal Retirement, death, Disability, Change in Control or
Termination for Cause, the Participant's Non-Statutory Stock Options shall be
exercisable only as to those shares that were immediately purchasable on the
date of termination and only for three months following termination. In the
event of Termination for Cause, all rights under a Participant's Non-Statutory
Stock Options shall expire upon termination. In the event of the Participant's
termination of service or employment due to Normal Retirement, death or
Disability, or following a Change in Control, all Non-Statutory Stock Options
held by the Participant, whether or not exercisable at such time, shall be
exercisable by the Participant or his legal representative
A-5
<PAGE>
or beneficiaries for one year following the Participant's cessation of
employment or service, as applicable, provided that in no event shall the period
extend beyond the expiration of the Non-Statutory Stock Option term.in no event
shall the period extend beyond the expiration of the Non-Statutory Stock Option
term.
(g) Transferability. In the discretion of the Board, all or any
Non-Statutory Stock Option granted hereunder may be transferable by the
Participant once the Option has vested in the Participant, provided, however,
that the Board may limit the transferability of such Option or Options to a
designated class or classes of persons.
8. Incentive Stock Options
8.1 Grant of Incentive Stock Options
The Committee may, from time to time, grant Incentive Stock Options to Key
Employees. Incentive Stock Options granted pursuant to the Plan shall be subject
to the following terms and conditions:
(a) Option Agreement. Each Option shall be evidenced by a written option
agreement between the Company and the Key Employee specifying the number of
shares of Common Stock that may be acquired through its exercise and containing
such other terms and conditions that are not inconsistent with the terms of the
Plan.
(b) Price. Subject to Section 17 of the Plan and Section 422 of the Code,
the purchase price per share of Common Stock deliverable upon the exercise of
each Incentive Stock Option shall be not less than 100% of the Fair Market Value
of the Company's Common Stock on the date the Incentive Stock Option is granted.
However, if a Key Employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its Affiliates
(or under Section 424(d) of the Code is deemed to own stock representing more
than 10% of the total combined voting power of all classes of stock of the
Company or its Affiliates by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such Key Employee, or by or for any corporation,
partnership, estate or trust of which such Key Employee is a shareholder,
partner or Beneficiary), the purchase price per share of Common Stock
deliverable upon the exercise of each Incentive Stock Option shall not be less
than 110% of the Fair Market Value of the Company's Common Stock on the date the
Incentive Stock Option is granted. Shares may be purchased only upon payment of
the full purchase price. Payment of the purchase price may be made, in whole or
in part, through the surrender of shares of the Common Stock of the Company at
the Fair Market Value of such shares, determined on the exercise date, in the
manner described in Section 2.
(c) Manner of Exercise and Vesting. The Committee may, in its sole
discretion, designate the period over which the Incentive Stock Options shall
vest or accelerate the time at which any Incentive Stock Option may be exercised
in whole or in part, provided that it is consistent with the terms of Section
422 of the Code and in the event of a Change in Control of the Company, all
Incentive Stock Options that have been awarded shall become immediately
exercisable, unless the Fair Market Value of the amount exercisable as a result
of a Change in Control shall exceed $100,000 (determined as of the Date of
Grant). In such event, the first $100,000 of Incentive Stock Options (determined
as of the Date of Grant) shall be exercisable as Incentive Stock Options and any
excess shall be exercisable as Non- Statutory Stock Options. A vested Option may
be exercised from time to time, in whole or in part, by delivering a written
notice of exercise to the President or Chief Executive Officer of the Company,
or his designee. Such notice shall be irrevocable and must be accompanied by
full payment of the purchase price in cash or shares of Common Stock at the Fair
Market Value of such shares, determined on the exercise date in the manner
described in Section 2 hereof. If previously acquired shares of Common Stock are
tendered in payment of all or part of the exercise price, the value of such
shares shall be determined as of the date of such exercise.
A-6
<PAGE>
(d) Amounts of Options. Incentive Stock Options may be granted to any
eligible Key Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
Notwithstanding the above, the maximum number of shares that may be subject to
an Incentive Stock Option awarded under the Plan to any Key Employee shall be
75,000. In granting Incentive Stock Options, the Committee shall consider such
factors as it deems relevant, which factors may include, among others, the
position and responsibilities of the Key Employee, the length and value of his
or her service to the Bank, the Company, or the Affiliate, the compensation paid
to the Key Employee and the Committee's evaluation of the performance of the
Bank, the Company, or the Affiliate, according to measurements that may include,
among others, key financial ratios, levels of classified assets, and independent
audit findings. In the case of an Option intended to qualify as an Incentive
Stock Option, the aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and its Affiliates) shall not
exceed $100,000. The provisions of this Section 8.1(d) shall be construed and
applied in accordance with Section 422(d) of the Code and the regulations, if
any, promulgated thereunder.
(e) Terms of Options. The term during which each Incentive Stock Option may
be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If any Key Employee, at the time an Incentive Stock
Option is granted to him, owns stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or its Affiliate
(or, under Section 424(d) of the Code, is deemed to own stock representing more
than 10% of the total combined voting power of all classes of stock, by reason
of the ownership of such classes of stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor or lineal descendent of such Key Employee, or
by or for any corporation, partnership, estate or trust of which such Key
Employee is a shareholder, partner or Beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five years from
the Date of Grant. The Committee may, in its sole discretion with the consent of
any option holder, accelerate or extend the time at which any Incentive
Statutory Stock Option may be exercised in whole or in part by Key Employees
and/or Outside Directors (which acceleration or extension could impact the
incentive nature of the option under the Code).
(f) Termination of Employment. Upon the termination of a Key Employee's
service for any reason other than Disability, Normal Retirement, Change in
Control, death or Termination for Cause, the Key Employee's Incentive Stock
Options shall be exercisable only as to those shares that were immediately
purchasable by such Key Employee at the date of termination and only for a
period of three months following termination; provided, however, that such
Options shall not be eligible for treatment as an Incentive Stock Option in the
event such Option is exercised more than three months following termination of
employment. In the event of Termination for Cause all rights under the Incentive
Stock Options shall expire upon termination.
Upon termination of a Key Employee's employment due to Normal Retirement,
death, Disability, or following a Change in Control, all Incentive Stock Options
held by such Key Employee, whether or not exercisable at such time, shall be
exercisable for a period of one year following the date of his cessation of
employment, provided however, that any such Option shall not be eligible for
treatment as an Incentive Stock Option in the event such Option is exercised
more than three months following the date of his Normal Retirement or
termination of employment following a Change in Control; and provided further,
that no Option shall be eligible for treatment as an Incentive Stock Option in
the event such Option is exercised more than one year following termination of
employment due to Disability and provided further, in order to obtain Incentive
Stock Option treatment for Options exercised by heirs or devisees of an
Optionee, the Optionee's death must have occurred while employed or within three
(3) months of termination of employment. In no event shall the exercise period
extend beyond the expiration of the Incentive Stock Option term.
A-7
<PAGE>
(g) Transferability. No Incentive Stock Option granted under the Plan is
transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Key Employee to which it is granted.
(h) Compliance with Code. The options granted under this Section 8 are
intended to qualify as Incentive Stock Options within the meaning of Section 422
of the Code, but the Company makes no warranty as to the qualification of any
Option as an Incentive Stock Option within the meaning of Section 422 of the
Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not or cannot be
cured, such Option shall be a Non-Statutory Stock Option.
9. Limited Rights
9.1 Grant of Limited Rights
The Committee may grant a Limited Right simultaneously with the grant of
any Option to any Key Employee of the Bank, with respect to all or some of the
shares covered by such Option. Limited Rights granted under the Plan are subject
to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
whole or in part before the expiration of six months from the date of grant of
the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control of the Company.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.
Upon exercise of a Limited Right, the related Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
receive from the Company an amount of cash equal to the difference between the
Fair Market Value on the Date of Grant of the related Option and the Fair Market
Value of the underlying shares on the date the Limited Right is exercised,
multiplied by the number of shares with respect to which such Limited Right is
being exercised. In the event of a Change in Control in which pooling accounting
treatment is a condition to the transaction, the Limited Right shall be
exercisable solely for shares of stock of the Company, or in the event of a
merger transaction, for shares of the acquiring corporation or its parent, as
applicable. The number of shares to be received on the exercise of such Limited
Right shall be determined by dividing the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.
10. Dividend Equivalent Rights
Simultaneously with the grant of any Option to a Participant, the Committee
may grant a Dividend Equivalent Right with respect to all or some of the shares
covered by such Option. Dividend Equivalent Rights granted under this Plan are
subject to the following terms and conditions:
A-8
<PAGE>
(a) Terms of Rights. The Dividend Equivalent Right provides the Participant
with a cash benefit per share for each share underlying the unexercised portion
of the related Option equal to the amount of any extraordinary dividend (as
defined in Section 10(c)) per share of Common Stock declared by the Company. The
terms and conditions of any Dividend Equivalent Right shall be evidenced in the
Option agreement entered into with the Participant and shall be subject to the
terms and conditions of the Plan. The Dividend Equivalent Right is transferable
only when the related Option is transferable and under the same conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the Participant
holding a Dividend Equivalent Right with respect to Options or portions thereof
which have vested shall promptly receive from the Company or the Bank the amount
of cash equal to the amount of the extraordinary dividend per share of Common
Stock, multiplied by the number of shares of Common Stock underlying the
unexercised portion of the related Option. With respect to options or portions
thereof which have not vested, the amount that would have been received pursuant
to the Dividend Equivalent Right with respect to the shares underlying such
unvested Option or portion thereof shall be paid to the Participant holding such
Dividend Equivalent Right together with earnings thereon, on such date as the
Option or portion thereof becomes vested. Payments shall be decreased by the
amount of any applicable tax withholding prior to distribution to the
Participant as set forth in Section 19.
(c) Extraordinary Dividend. For purposes of this Section 10, an
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend exceeds the Bank's weighted average cost of funds on
interest-bearing liabilities for the current and preceding three quarters.
11. Reload Option
Simultaneously with the grant of any Option to a Participant, the Committee
may grant a Reload Option with respect to all or some of the shares covered by
such Option. A Reload Option may be granted to a Participant who satisfies all
or part of the exercise price of the Option with shares of Common Stock (as
described in Section 13(c) below). The Reload Option represents an additional
option to acquire the same number of shares of Common Stock as is used by the
Participant to pay for the original Option. Reload Options may also be granted
to replace Common Stock withheld by the Company for payment of a Participant's
withholding tax under Section 19. A Reload Option is subject to all of the same
terms and conditions as the original Option except that (i) the exercise price
of the shares of Common Stock subject to the Reload Option will be determined at
the time the original Option is exercised and (ii) such Reload Option will
conform to all provisions of the Plan at the time the original Option is
exercised.
12. Surrender of Option
In the event of a Participant's termination of employment or termination of
service as a result of death, Disability, Normal Retirement or following a
Change in Control, the Participant (or his or her personal representative(s),
heir(s), or devisee(s)) may, in a form acceptable to the Committee make
application to surrender all or part of the vested Options held by such
Participant in exchange for a cash payment from the Company of an amount equal
to the difference between the Fair Market Value of the Common Stock on the date
of termination of employment or the date of termination of service on the Board
and the exercise price per share of the Option. Whether the Company accepts such
application or determines to make payment, in whole or part, is within its
absolute and sole discretion, it being expressly understood that the Company is
under no obligation to any Participant whatsoever to make such payments. In the
event that the Company accepts such application and determines to make payment,
such payment shall be in lieu of the exercise of the underlying Option and such
Option shall cease to be exercisable.
A-9
<PAGE>
13. Alternate Option Payment Mechanism
The Committee has sole discretion to determine what form of payment it will
accept for the exercise of an Option. The Committee may indicate acceptable
forms in the agreement with the Participant covering such Options or may reserve
its decision to the time of exercise. No Option is to be considered exercised
until payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by certified
check. To the extent permitted by law, the Committee may permit all or a portion
of the exercise price of an Option to be paid through borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if applicable, a
Participant may engage in a "cashless exercise" of the Option. Upon a cashless
exercise, the Participant shall give the Bank written notice of the exercise of
the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Common Stock subject to the Option and
to deliver enough of the proceeds to the Bank to pay the Option exercise price
and any applicable withholding taxes. If the Participant does not sell the
Common Stock subject to the Option through a registered broker-dealer or
equivalent third party, the Optionee can give the Bank written notice of the
exercise of the Option and the third party purchaser of the Common Stock subject
to the Option shall pay the Option exercise price plus applicable withholding
taxes to the Bank.
(c) Exchange of Common Stock. The Committee may permit payment of the
Option exercise price by the tendering of previously acquired shares of Common
Stock. All shares of Common Stock tendered in payment of the exercise price of
an Option shall be valued at the Fair Market Value of the Common Stock on the
date prior to the date of exercise. No tendered shares of Common Stock which
were acquired by the Participant upon the previous exercise of an Option or as
awards under a stock award plan (such as the Company's Recognition and Retention
Plan) shall be accepted for exchange unless the Participant has held such shares
(without restrictions imposed by said plan or award) for at least six months
prior to the exchange.
14. Rights of a Stockholder
A Participant shall have no rights as a stockholder with respect to any
shares covered by a Non-Statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in the Plan or in
any Award granted confers on any person any right to continue in the employ of
the Company or its Affiliates or to continue to perform services for the Company
or its Affiliates or interferes in any way with the right of the Company or its
Affiliates to terminate his services as an officer, director or employee at any
time.
15. Agreement with Participants
Each Award of Options, Limited Rights, Reload Options and/or Dividend
Equivalent Rights will be evidenced by a written agreement, executed by the
Participant and the Company or its Affiliates that describes the conditions for
receiving the Awards including the date of Award, the purchase price, applicable
periods, and any other terms and conditions as may be required by the Board or
applicable securities law.
16. Designation of Beneficiary
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any stock Option, Reload Options,
Dividend Equivalent Rights or Limited Rights Award to which he would then be
entitled. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked in writing. If a Participant fails effectively to
designate a Beneficiary, then his estate will be deemed to be the Beneficiary.
A-10
<PAGE>
17. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, pro rata return of capital to
all shareholders, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other similar corporate
change, or other increase or decrease in such shares without receipt or payment
of consideration by the Company, the Committee shall make such adjustments to
previously granted Awards, to prevent dilution or enlargement of the rights of
the Participant, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
that may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
covered by Awards already made under the Plan; or
(c) adjustments in the purchase price of outstanding Incentive and/or
Non-Statutory Stock Options, or any Limited Rights attached to such Options. No
such adjustments may, however, materially change the value of benefits available
to a Participant under a previously granted Award. With respect to Incentive
Stock Options, no such adjustment shall be made if it would be deemed a
"modification" of the Award under Section 424 of the Code.
18. Effect of a Change in Control on Option Awards
In the event of a Change in Control, the Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of such Change in Control:
(a) provide that such Options shall be assumed, or equivalent options shall
be substituted ("Substitute Options") by the acquiring or succeeding corporation
(or an affiliate thereof), provided that: (A) any such Substitute Options
exchanged for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, and (B) the shares of stock issuable upon the exercise of
such Substitute Options shall constitute securities registered in accordance
with the Securities Act of 1933, as amended ("1933 Act") or such securities
shall be exempt from such registration in accordance with Sections 3(a)(2) or
3(a)(5) of the 1933 Act, (collectively, "Registered Securities"), or in the
alternative, if the securities issuable upon the exercise of such Substitute
Options shall not constitute Registered Securities, then the Participant will
receive upon consummation of the Change in Control a cash payment for each
Option surrendered equal to the difference between the (1) Fair Market Value of
the consideration to be received for each share of Common Stock in the Change in
Control times the number of shares of Common Stock subject to such surrendered
Options, and (2) the aggregate exercise price of all such surrendered Options,
or
(b) in the event of a transaction under the terms of which the holders of
Common Stock will receive upon consummation thereof a cash payment (the "Merger
Price") for each share of Common Stock exchanged in the Change in Control
transaction, make or provide for a cash payment to the Participants equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such Options held by each Optionee (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of all such surrendered Options in exchange for such surrendered
Options.
A-11
<PAGE>
19. Withholding
There may be deducted from each distribution of cash and/or Common Stock
under the Plan the amount of tax required by any governmental authority to be
withheld. Shares of Common Stock will be withheld where required from any
distribution of Common Stock.
20. Amendment of the Plan
The Board may at any time, and from time to time, modify or amend the Plan
in any respect, or modify or amend an Award received by Key Employees and/or
Outside Directors; provided, however, that no such termination, modification or
amendment may affect the rights of a Participant, without his consent, under an
outstanding Award. Any amendment or modification of the Plan or an outstanding
Award under the Plan, including but not limited to the acceleration of vesting
of an outstanding Award for reasons other than the death, Disability, Normal
Retirement, or a Change in Control, shall be approved by the Committee or the
full Board of the Company.
21. Effective Date of Plan
The Plan shall become effective upon the date of, or a date determined by
the Board of Directors following, approval of the Plan by the Company's
stockholders.
22. Termination of the Plan
The right to grant Awards under the Plan will terminate upon the earlier of
(i) 10 years after the Effective Date, or (ii) the date on which the exercise of
Options or related Rights equaling the maximum number of shares reserved under
the Plan occurs, as set forth in Section 5. The Board may suspend or terminate
the Plan at any time, provided that no such action will, without the consent of
a Participant, adversely affect his rights under a previously granted Award.
23. Applicable Law
The Plan will be administered in accordance with the laws of the State of
Delaware.
A-12
<PAGE>
APPENDIX B
GREAT PEE DEE BANCORP, INC.
1998 RECOGNITION AND RETENTION PLAN
1. Establishment of the Plan
Great Pee Dee Bancorp, Inc. (the "Company") hereby establishes the Great
Pee Dee Bancorp, Inc. Recognition and Retention Plan (the "Plan") upon the terms
and conditions hereinafter stated in the Plan.
2. Purpose of the Plan
The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing Key Employees and Outside Directors of the Company and
its Affiliates, including First Federal Savings and Loan Association of Cheraw
(the "Bank"), upon whose judgment, initiative and efforts the successful conduct
of the business of the Company and its Affiliates largely depends, with
compensation for their contributions to the Company and its Affiliates and an
additional incentive to perform in a superior manner, as well as to attract
people of experience and ability.
3. Definitions
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary corporation" of
the Company or the Bank, as such terms are defined in Section 424(e) and (f),
respectively, of the Code, or a successor to a parent corporation or subsidiary
corporation.
"Award" means the grant by the Committee of Restricted Stock, as provided
in the Plan.
"Bank" means First Federal Savings and Loan Association of Cheraw, or a
successor corporation.
"Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
"Board" or "Board of Directors" means the Board of Directors of the Company
or an Affiliate, as applicable. For purposes of Section 4 of the Plan, "Board"
shall refer solely to the Board of the Company.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Bank or the Company means a change in control of
a nature that: (i) would be required to be reported in response to Item 1(a) of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change
B-1
<PAGE>
in Control of the Bank or the Company within the meaning of the Home
Owners' Loan Act, as amended ("HOLA"), and applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change in Control; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (a) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of Company's
outstanding securities except for any securities purchased by the Bank's
employee stock ownership plan or trust; or (b) individuals who constitute the
Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by the
same Nominating Committee serving under an Incumbent Board, shall be, for
purposes of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or the Company or similar
transaction in which the Bank or Company is not the surviving institution
occurs; or (d) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Company or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the Plan
are to be exchanged for or converted into cash or property or securities not
issued by the Company; or (e) a tender offer is made for 25% or more of the
voting securities of the Company and the shareholders owning beneficially or of
record 25% or more of the outstanding securities of the Company have tendered or
offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) at
least two Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.
"Common Stock" means shares of the common stock of the Company, par value
$.01 per share.
"Company" means Great Pee Dee Bancorp, Inc., the stock holding company of
the Bank, or a successor corporation.
"Continuous Service" means employment as a Key Employee and/or service as
an Outside Director without any interruption or termination of such employment
and/or service. Continuous Service shall also mean a continuation as a member of
the Board of Directors following a cessation of employment as a Key Employee. In
the case of a Key Employee, employment shall not be considered interrupted in
the case of sick leave, military leave or any other leave of absence approved by
the Bank or in the case of transfers between payroll locations of the Bank or
between the Bank, its parent, its subsidiaries or its successor.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of mental or
physical infirmity, or both, of an employee to perform the work customarily
assigned to him, or of a Director to serve as such. Additionally, in the case of
an employee, a medical doctor selected or approved by the Board must advise the
Committee that it is either not possible to determine when such Disability will
terminate or that it appears probable that such Disability will be permanent
during the remainder of such employee's lifetime.
"Effective Date" means the date the Plan is implemented by the Board of
Directors coincident with or following approval of the Plan by the Company's
stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
B-2
<PAGE>
"Key Employee" means any person who is currently employed by the Company or
an Affiliate who is chosen by the Committee to participate in the Plan.
"Non-Employee Director" means, for purposes of the Plan, a Director who (a)
is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal or
early retirement date set forth in the Bank's Employee Stock Ownership Plan, or
any successor plan. Normal Retirement for an Outside Director means a cessation
of service on the Board of Directors for any reason other than removal for
Cause, after reaching 60 years of age and maintaining at least 10 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate who is
not an employee of the Company or an Affiliate.
"Recipient" means a Key Employee or Outside Director of the Company or its
Affiliates who receives or has received an Award under the Plan.
"Restricted Period" means the period of time selected by the Committee for
the purpose of determining when restrictions are in effect under Section 6 with
respect to Restricted Stock awarded under the Plan.
"Restricted Stock" means shares of Common Stock that have been contingently
awarded to a Recipient by the Committee subject to the restrictions referred to
in Section 6, so long as such restrictions are in effect.
4. Administration of the Plan.
4.01 Role of the Committee. The Plan shall be administered and interpreted
by the Committee, which shall have all of the powers allocated to it in the
Plan. The interpretation and construction by the Committee of any provisions of
the Plan or of any Award granted hereunder shall be final and binding. 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 and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year.
4.02 Role of the Board. The members of the Committee shall be appointed or
approved by, and will serve at the pleasure of, the Board. The Board may in its
discretion from time to time remove members from, or add members to, the
Committee. The Board shall have all of the powers allocated to it in the Plan,
may take any action under or with respect to the Plan that the Committee is
authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
except as provided in Section 6.02, the Board may not revoke any Award except in
the event of revocation for Cause.
4.03 Plan Administration Restrictions. All transactions involving a grant,
award or other acquisitions from the Company shall:
(a) be approved by the Company's full Board or by the Committee;
(b) be approved, or ratified, in compliance with Section 14 of the Exchange
Act, by either: the affirmative vote of the holders of a majority of the shares
present, or represented and entitled to vote at a meeting duly held in
accordance with the laws under which the Company is incorporated; or the written
consent of the holders of
B-3
<PAGE>
a majority of the securities of the issuer entitled to vote provided that
such ratification occurs no later than the date of the next annual meeting of
shareholders; or
(c) result in the acquisition of Common Stock that is held by the Recipient
for a period of six months following the date of such acquisition.
4.04 Limitation on Liability. No member of the Board or the Committee shall
be liable for any determination made in good faith with respect to the Plan or
any Awards granted under it. If a member of the Board or 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 Bank or the Company shall indemnify such
member against expense (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 Bank and the Company and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
5. Eligibility; Awards
5.01 Eligibility. Key Employees and Outside Directors are eligible to
receive Awards.
5.02 Awards to Key Employees and Outside Directors. The Committee may
determine which of the Key Employees and Outside Directors referenced in Section
5.01 will be granted Awards and the number of shares covered by each Award;
provided, however, that in no event shall any Awards be made that will violate
the Bank's Charter and Bylaws, the Company's Certificate of Incorporation and
Bylaws, or any applicable federal or state law or regulation. Shares of
Restricted Stock that are awarded by the Committee shall, on the date of the
Award, be registered in the name of the Recipient and transferred to the
Recipient, in accordance with the terms and conditions established under the
Plan. The aggregate number of shares that shall be issued under the Plan is
88,085. The shares with respect to which Awards may be made under the Plan may
be either authorized and unissued shares or issued shares reacquired and held as
treasury shares.
In the event Restricted Stock is forfeited for any reason, the Committee,
from time to time, may determine which of the Key Employees and Outside
Directors will be granted additional Awards to be awarded from forfeited
Restricted Stock. An Award will not be considered to have been made under the
Plan with respect to Restricted Stock which is forfeited.
In selecting those Key Employees and Outside Directors to whom Awards will
be granted and the amount of Restricted Stock covered by such Awards, the
Committee shall consider such factors as it deems relevant, which factors may
include, among others, the position and responsibilities of the Key Employees
and Outside Directors, the length and value of their services to the Bank and
its Affiliates, the compensation paid to the Key Employees or fees paid to the
Outside Directors, and the Committee may request the written recommendation of
the Chief Executive Officer and other senior executive officers of the Bank, the
Company and its Affiliates or the recommendation of the full Board.
No Restricted Stock shall be earned unless the Recipient maintains
Continuous Service with the Bank or an Affiliate until the restrictions lapse.
5.03 Manner of Award. As promptly as practicable after a determination is
made pursuant to Section 5.02 to grant an Award, the Committee shall notify the
Recipient in writing of the grant of the Award, the number of shares of
Restricted Stock covered by the Award, and the terms upon which the Restricted
Stock subject to the Award may be earned. Upon notification of an Award of
Restricted Stock, the Recipient shall execute and return to the Company a
restricted stock agreement (the "Restricted Stock Agreement") setting forth the
terms and conditions under which the Recipient shall earn the Restricted Stock,
together with a stock power or stock powers endorsed in blank. Thereafter,
B-4
<PAGE>
the Recipient's Restricted Stock and stock power shall be deposited with an
escrow agent specified by the Company ("Escrow Agent") who shall hold such
Restricted Stock under the terms and conditions set forth in the Restricted
Stock Agreement. Each certificate in respect of shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Recipient.
5.04 Treatment of Forfeited Shares. In the event shares of Restricted Stock
are forfeited by a Recipient, such shares shall be returned to the Company and
shall be held and accounted for pursuant to the terms of the Plan until such
time as the Restricted Stock is re-awarded to another Recipient, in accordance
with the terms of the Plan and the applicable state and federal laws, rules and
regulations.
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant awards of Restricted Stock to Key Employees
and Outside Directors and, in addition to the terms and conditions contained in
Sections 6.01 through 6.08, to provide such other terms and conditions (which
need not be identical among Recipients) in respect of such Awards, and the
vesting thereof, as the Committee shall determine.
6.01 General Rules. At the time of an Award of Restricted Stock, the
Committee shall establish for each Participant a Restricted Period during which
or at the expiration of which, as the Committee shall determine and provide in
the agreement referred to in Section 5.03, the Shares awarded as Restricted
Stock shall vest. The Committee shall have the authority, in its discretion, to
accelerate the time at which any or all of the restrictions shall lapse with
respect to a Restricted Stock Award, or to remove any or all of such
restriction.
Subject to any such other terms and conditions as the Committee shall
provide with respect to Awards, shares of Restricted Stock may not be sold,
assigned, transferred (within the meaning of Code Section 83), pledged or
otherwise encumbered by the Recipient, except as hereinafter provided, during
the Restricted Period.
6.02 Continuous Service; Forfeiture. If a Recipient ceases to maintain
Continuous Service for any reason (other than death, Disability, Normal
Retirement or Change in Control), unless the Committee shall otherwise
determine, all shares of Restricted Stock theretofore awarded to such Recipient
and which at the time of such termination of Continuous Service are subject to
the restrictions imposed by Section 6.01 shall upon such termination of
Continuous Service be forfeited. Any stock dividends or declared but unpaid cash
dividends attributable to such shares of Restricted Stock shall also be
forfeited. Notwithstanding the foregoing, Restricted Stock awarded to a
Recipient whose employment with, or service on the Board of, the Company or an
Affiliate terminates due to death, Disability, Normal Retirement or following a
Change in Control shall be deemed earned as of the Recipient's last day of
employment with the Company or an Affiliate, or last day of service on the Board
of the Company or an Affiliate; provided that Restricted Stock awarded to a Key
Employee who at any time also serves as a Director, shall not be deemed earned
until both employment and service as a Director have been terminated.
6.03 Revocation for Cause. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof, previously awarded under the Plan, to the extent
Restricted Stock has not been redelivered by the Escrow Agent to the Recipient,
whether or not yet earned, in the case of a Key Employee whose employment is
terminated by the Company or an Affiliate or an Outside Director whose service
is terminated by the Company or an Affiliate for Cause or who is discovered
after termination of employment or service on the Board to have engaged in
conduct that would have justified termination for Cause.
6.04 Restricted Stock Legend. Each certificate in respect of shares of
Restricted Stock awarded under the Plan shall be registered in the name of the
Recipient and deposited by the Recipient, together with a stock power endorsed
in blank, with the Escrow Agent and shall bear the following (or a similar)
legend:
"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture)
contained in B-5
<PAGE>
the Great Pee Dee Bancorp, Inc. 1998 Recognition and
Retention Plan. Copies of such Plan are on file in the offices of the
Secretary of Great Pee Dee Bancorp, Inc. 515 Market Street, Cheraw, South
Carolina 29520."Great Pee Dee
Bancorp, Inc. 515 Market Street, Cheraw, South Carolina 29520."
6.05 Payment of Dividends and Return of Capital. After an Award has been
granted but before such Award has been earned, the Recipient shall receive any
cash dividends paid with respect to such shares, or shall share in any pro-rata
return of capital to all shareholders with respect to the Common Stock. Stock
dividends declared by the Company and paid on Awards that have not yet been
earned shall be subject to the same restrictions as the Restricted Stock and the
certificate(s) or other instruments representing or evidencing such shares shall
be legended in the manner provided in Section 6.04 and shall be delivered to the
Escrow Agent for distribution to the Recipient when the Restricted Stock upon
which such dividends were paid are earned. Unless the Recipient has made an
election under Section 83(b) of the Code, cash dividends or other amounts so
paid on shares that have not yet been earned by the Recipient shall be treated
as compensation income to the Recipient when paid. If dividends are paid with
respect to shares of Restricted Stock under the Plan that have been forfeited
and returned to the Company or to a trust established to hold issued and
unawarded or forfeited shares, the Committee can determine to award such
dividends to any Recipient or Recipients under the Plan, to any other employee
or director of the Company or the Bank, or can return such dividends to the
Company.
6.06 Voting of Restricted Shares. After an Award has been granted, the
Recipient as conditional owner of the Restricted Stock shall have the right to
vote such shares.
6.07 Delivery of Earned Shares. At the expiration of the restrictions
imposed by Section 6.01, the Escrow Agent shall redeliver to the Recipient (or
in the case of a deceased Recipient, to his Beneficiary) the certificate(s) and
any remaining stock power deposited with it pursuant to Section 5.03 and the
shares represented by such certificate(s) shall be free of the restrictions
referred to Section 6.01.
7. Adjustments upon Changes in Capitalization
In the event of any change in the outstanding shares subsequent to the
Effective Date by reason of any reorganization, recapitalization, stock split,
stock dividend, combination or exchange of shares, or any merger, consolidation
or any change in the corporate structure or shares of the Company, without
receipt or payment of consideration by the Company, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive. Any shares of stock or other securities received, as a result of any
of the foregoing, by a Recipient with respect to Restricted Stock shall be
subject to the same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and
deposited with the Escrow Agent in the manner provided in Section 6.05.
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the Plan in any
instrument evidencing any Award under the Plan may be assigned, encumbered or
transferred (within the meaning of Code Section 83) except, in the event of the
death of a Recipient, by will or the laws of descent and distribution until such
Award is earned.
9. Key Employee Rights under the Plan
No Key Employee shall have a right to be selected as a Recipient nor,
having been so selected, to be selected again as a Recipient and no Key Employee
or other person shall have any claim or right to be granted an Award under the
Plan or under any other incentive or similar plan of the Bank or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as giving
any Key Employee any right to be retained in the employ of the Bank or any
Affiliate.
B-6
<PAGE>
10. Outside Director Rights under the Plan
Neither the Plan nor any action taken thereunder shall be construed as
giving any Outside Director any right to be retained in the service of the Bank
or any Affiliate.
11. Withholding Tax
Upon the termination of the Restricted Period with respect to any shares of
Restricted Stock (or at any such earlier time that an election is made by the
Recipient under Section 83(b) of the Code, or any successor provision thereto,
to include the value of such shares in taxable income), the Bank or the Company
shall have the right to require the Recipient or other person receiving such
shares to pay the Bank or the Company the amount of any taxes that the Bank or
the Company is required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell without notice, a sufficient number of shares held by
it to cover the amount required to be withheld. The Bank or the Company shall
have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Bank or the Company is
required to withhold with respect to such dividend payments.
12. Amendment or Termination
The Board of the Company may amend, suspend or terminate the Plan or any
portion thereof at any time, provided, however, that no such amendment,
suspension or termination shall impair the rights of any Recipient, without his
consent, in any Award theretofore made pursuant to the Plan. Any amendment or
modification of the Plan or an outstanding Award under the Plan shall be
approved by the Committee, or the full Board of the Company.
13. Governing Law
The Plan shall be governed by the laws of the State of Delaware.
14. Term of Plan
The Plan shall become effective on the date of, or a date determined by the
Board of Directors following, approval of the Plan by the Company's
stockholders. It shall continue in effect until the earlier of (i) ten years
from the Effective Date unless sooner terminated under Section 12 hereof, or
(ii) the date on which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
B-7
<PAGE>
