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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
REGISTRATION NO. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SOUTHBANC SHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-2361245
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
907 N. Main Street
Anderson, South Carolina 29621
(864) 225-0241
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Paul M. Aguggia, Esq.
Victor L. Cangelosi, Esq.
Muldoon, Murphy & Faucette LLP
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
(202) 362-0840
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PER UNIT (2) OFFERING PRICE (2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 250,000 $21.625 $5,406,250 $1,503
$0.01 per share
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(1) Pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of shares of Common Stock that may be issued as a
result of stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee. Based
on the average of high and low prices reported on the Nasdaq National Market
as of May 18, 1999 pursuant to Rule 457(c).
</TABLE>
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May 28, 1999
Dear Shareholder:
Recently, the Board of Directors voted to establish the SouthBanc Shares,
Inc. Dividend Reinvestment Plan to provide shareholders of record of at least
twenty (20) shares with a convenient and economical way to automatically
reinvest all or part of their regular cash dividends in additional shares of
common stock. Beneficial owners whose shares are registered in the name of a
broker or bank nominee may also participate by making arrangements with the
broker or bank nominee. You pay no service charges or trading fees or
commissions for common stock purchased under the plan.
The plan is completely voluntary. If you decide to participate in the
plan, you may stop participating at any time. If you want participate in the
plan, complete and return the enclosed Enrollment Card. If you decide not to
participate in the plan, you will continue to receive your dividends, if and
when declared, by check from SouthBanc Shares or direct deposit.
All of the features, terms and conditions of the plan are detailed in the
enclosed prospectus, which you should read carefully before you return the
Enrollment Card. The prospectus, in simple question-and-answer format, should
answer most questions you may have about the plan. If you have additional
questions, please address them to ChaseMellon Shareholder Services, L.L.C., P.O.
Box 3338, South Hackensack, New Jersey 07606-1938, or call ChaseMellon toll free
at 1-800-756-3353.
SouthBanc Shares values its shareholders and we hope that you find this
new plan a convenient and economical means for holding your shares and
increasing your investment.
Sincerely,
/s/ Robert W. "Lujack" Orr
Robert W. "Lujack" Orr
President and Chief Executive Officer
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PROSPECTUS
SOUTHBANC SHARES, INC.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan provides shareholders of record of
SouthBanc Shares's common stock, par value $0.01 per share, with a convenient
and economical way to reinvest, at no cost, all or part of their regular cash
dividends in additional shares of common stock. Any special cash dividends or
any other cash distributions that SouthBanc Shares may declare and pay on the
common stock are ineligible for reinvestment.
If you are a holder of record of twenty (20) or more shares of common
stock, including shares held within the plan, you are eligible to participate in
the plan. If you are a beneficial owner whose shares are registered in another
person's name (E.G., registered in the name of a broker or bank nominee) and you
want to participate in the plan, you must first either become the record holder
of twenty (20) or more shares by transferring at least twenty (20) shares into
your own name or make arrangements to participate with the broker or bank
nominee in whose name the shares are registered.
If you are eligible and decide to participate in the plan, you may elect
to have regular cash dividends paid on all or part of your shares of common
stock automatically reinvested in additional shares of common stock. If you
choose not to participate in the plan, you will continue to receive regular cash
dividends on the shares registered in your name, when and if declared, by check
from SouthBanc Shares or direct deposit.
Shares of common stock purchased with reinvested dividends will be
purchased either directly from SouthBanc Shares or in the open market. The
purchase price for each share will be 100% of the market price on the relevant
investment date. See Question 12.
This prospectus relates to 250,000 shares of common stock that have been
registered for sale under the plan. These shares may be either authorized but
unissued shares or shares that SouthBanc Shares reacquires and holds in its
treasury. This prospectus also covers an indeterminate number of shares that
SouthBanc Shares may issue as a result of stock splits, stock dividends or
similar transactions. If you decide to participate in the plan, you should
retain this prospectus for future reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FOR A DISCUSSION OF CERTAIN RISKS THAT YOU SHOULD CONSIDER, SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
The date of this prospectus is May 28, 1999.
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WHERE YOU CAN FIND MORE INFORMATION
SouthBanc Shares files annual, quarterly, and special reports, proxy
statements and other information with the Securities and Exchange Commission
under the requirements of the Securities Exchange Act of 1934, as amended. You
can inspect these materials, and make copies of them at prescribed rates, at the
Securities and Exchange Commission's public reference facilities at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the
following two regional offices of the Securities and Exchange Commission: 7
World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621. You can obtain information on the
operation of the public reference room by calling the Securities and Exchange
Commission at 1-800-SEC-0330. You can also obtain copies of these materials free
of charge on the Internet at the Securities and Exchange Commission's World Wide
Web site at http://www.sec.gov. You may also inspect these materials at the
offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus constitutes part of a Registration Statement on Form S-3
that SouthBanc Shares has filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended. This prospectus omits certain of
the information contained in that registration statement as permitted by the
rules and regulations of the Securities and Exchange Commission. SouthBanc
Shares refers you to the registration statement and its exhibits for further
information regarding SouthBanc Shares and its common stock. Statements
contained in this prospectus concerning the provisions of any document are not
necessarily complete and, where SouthBanc Shares has filed a copy of a document
as an exhibit to the registration statement or otherwise with the Securities and
Exchange Commission, you are referred to the copy of the document as filed.
Every statement contained in this prospectus concerning the provisions of a
document that SouthBanc Shares has filed with the Securities and Exchange
Commission is qualified in its entirety by reference to the copy of the document
as filed.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
SouthBanc Shares has filed the following documents with the Securities and
Exchange Commission, which are incorporated in this prospectus by reference:
1. Annual Report on Form 10-K for its fiscal year ended September 30,
1998;
2. Quarterly Report on Form 10-Q for the quarter ended December 31,
1998; and
3. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
All documents that SouthBanc Shares files with the Securities and Exchange
Commission under the requirements of Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the date of this prospectus
and before the end of this offering shall be deemed to be incorporated in this
prospectus by reference from the filing date of those documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this prospectus shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
in any other document filed after the date of this prospectus, which also is or
is deemed to be incorporated by reference in this prospectus, modifies or
supersedes the statement. Any statement that is modified or superseded in that
manner shall be deemed to constitute a part of this prospectus only as so
modified or superseded.
SouthBanc Shares will provide, without charge, to every person to whom
this prospectus has been delivered, upon written or oral request, a copy of any
or all of the documents incorporated by reference in this prospectus, including
exhibits that are specifically incorporated by reference in those documents.
Written requests should be addressed to Sylvia B. Reed, Corporate Secretary,
SouthBanc Shares, Inc., 907 N. Main Street, Anderson, South Carolina, 29621.
Oral requests may be made by telephone to (864) 225- 0241.
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SUMMARY PLAN HIGHLIGHTS
BECAUSE THIS IS A SUMMARY, IT MAY NOT CONTAIN ALL THE INFORMATION THAT IS
IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE YOU
DECIDE TO PARTICIPATE IN THE PLAN.
PURPOSE OF THE PLAN
The purpose of the Dividend Reinvestment Plan is to provide record owners
of at least twenty (20) shares of common stock, par value $0.01 per share, of
SouthBanc Shares with a convenient and economical method of investing regular
cash dividends paid on their shares. A beneficial owner of common stock whose
shares are registered in a name other than his or her own (I.E., in the name of
a broker or bank nominee) can become eligible to participate either by having at
least twenty (20) shares transferred into his or her own name or by making
arrangements to participate with the broker or bank nominee in whose name the
shares are registered. Any special cash dividends or other cash distributions
that SouthBanc Shares may declare and pay on the common stock are ineligible for
reinvestment. If you are eligible but do not wish to participate in the plan,
you will continue to receive regular cash dividends, when and if declared and
paid, by check from SouthBanc Shares or direct deposit.
AUTOMATIC DIVIDEND REINVESTMENT
The plan is administered by ChaseMellon Shareholder Services, L.L.C. If
you enroll in the plan, ChaseMellon will automatically reinvest your regular
cash dividends in shares of common stock at no cost to you. Once enrolled, you
do not need to take any further action.
If a particular cash dividend is not enough to buy a whole share of stock,
ChaseMellon will credit your account with a fractional share computed to four
decimal places. Fractional shares also earn dividends that will be applied
toward your next regular cash dividend payment.
NO ADMINISTRATION FEES OR TRADING FEES FOR STOCK PURCHASES
SouthBanc Shares, not you, will pay trading fees or commissions or
administrative fees on purchases of common stock made through the plan. However,
you will have to pay trading fees to sell any shares held in the plan, plus a
$15.00 service fee. You will not pay a fee to have a stock certificate issued to
you for shares held in the plan.
SIMPLIFIED RECORD KEEPING
You will not receive any stock certificates for shares held in the plan,
unless you request them in writing. ChaseMellon will send you a report
confirming each purchase of common stock made for your account. The number of
shares purchased will be based on the amount of cash dividends reinvested and
the purchase price for the common stock.
HOW TO PARTICIPATE
If you want to participate in the plan, simply complete the enclosed
Enrollment Card and mail it to ChaseMellon in the postage-paid envelope
provided.
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If you have any questions regarding the plan, you may direct them to
either ChaseMellon at P.O. Box 3338, South Hackensack, New Jersey 07606-1938
(Toll Free: 1-800-756-3353) or SouthBanc Shares at 907 N. Main Street, Anderson,
South Carolina 29621 (telephone number 864-225-0241).
TERMINATION OR WITHDRAWAL OF SHARES
You can end your participation in the plan or withdraw part of your shares
from the plan at any time by notifying ChaseMellon in writing. If you end your
participation, ChaseMellon will issue to you certificates for the whole number
of shares of common stock credited to your account and a cash payment for any
fractional shares. Upon request, ChaseMellon will sell whole shares credited to
your account and pay you the proceeds after deducting any applicable service
charges and trading fees or commissions.
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SOUTHBANC SHARES, INC.
SouthBanc Shares, a Delaware corporation, is primarily engaged in the
business of planning, directing, and coordinating the business activities of its
wholly owned subsidiary, Perpetual Bank, A Federal Savings Bank. In April 1998,
SouthBanc Shares completed the sale of its common stock in connection with the
conversion of Perpetual Bank's former mutual holding company, SouthBanc Shares,
M.H.C., from the mutual to stock form of organization. Perpetual Bank is a
federally chartered savings bank that accepts savings and demand deposits and
provides mortgage, consumer and commercial loans to the general public.
Perpetual Bank conducts business principally in Anderson County, Oconee County
and adjacent counties in South Carolina.
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS
INVOLVES RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU
SHOULD CONSIDER THE FOLLOWING RISK FACTORS CAREFULLY BEFORE DECIDING TO
PARTICIPATE IN THE PLAN. THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING
STATEMENTS" (AS DEFINED IN THE FEDERAL SECURITIES LAWS) CONCERNING SOUTHBANC
SHARES'S AND PERPETUAL BANK'S PROPOSED OPERATIONS, PERFORMANCE AND FINANCIAL
CONDITION. THESE STATEMENTS ARE NOT HISTORICAL FACTS AND ARE BASED UPON A NUMBER
OF ASSUMPTIONS AND ESTIMATES BEYOND THE CONTROL OF SOUTHBANC SHARES OR PERPETUAL
BANK. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY
THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH BELOW.
RESTRICTIONS ON ABILITY TO PAY DIVIDENDS
Any future declarations and payments of dividends on the common stock will
depend upon the earnings and financial condition of SouthBanc Shares, its
liquidity and capital requirements, the general economic and regulatory climate
and other factors deemed relevant by SouthBanc Shares's Board of Directors.
SouthBanc Shares's principal source of funds to pay dividends on the shares of
common stock will be cash dividends that SouthBanc Shares receives from
Perpetual Bank. There are statutory and regulatory requirements applicable to
the payment of dividends by Perpetual Bank, as well as by SouthBanc Shares to
its shareholders.
Under the regulations of the Office of Thrift Supervision, Perpetual
Bank's primary federal regulator, Perpetual Bank, with prior notice to and the
non-objection of the Office of Thrift Supervision, could distribute up to 100%
of its net income during the calendar year plus 50% of its surplus capital ratio
at the beginning of the calendar year less any distributions previously paid
during the year. This qualitative limit applies so long as Perpetual Bank
remains a well-capitalized and well-managed institution as defined under
applicable Office of Thrift Supervision regulations. Otherwise, Perpetual Bank's
ability to pay dividends would be further limited.
The federal banking statutes prohibit federally insured institutions like
Perpetual Bank from making any capital distributions (including a dividend
payment) if, after making the distribution, the institution would be
"undercapitalized" as defined by statute. In addition, the relevant federal
regulatory agencies also have authority to prohibit an insured institution from
engaging in an unsafe or unsound practice, as determined by the agency, which
could include the payment of dividends.
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Under Delaware law, SouthBanc Shares generally is limited to paying
dividends in an amount equal to the excess of its net assets (total assets minus
total liabilities) over its statutory capital or, if such excess does not exist,
to its net profits for the current and/or immediately preceding fiscal year.
POSSIBLE DILUTIVE EFFECT OF THE PLAN
The plan allows SouthBanc Shares to issue authorized but unissued shares.
If SouthBanc Shares issues authorized but unissued shares under the plan, the
voting interests of existing shareholders will be diluted and net income per
share and stockholders' equity per share will decrease.
DEPENDENCE ON LOCAL ECONOMIC CONDITIONS
Perpetual Bank's success depends to a large extent upon general economic
conditions in the communities it serves. Perpetual Bank primarily operates in
Anderson County and Oconee County, South Carolina, and the surrounding area. A
decline in the area economy could have a material adverse effect on Perpetual
Bank's business, including the demand for new loans, refinancing activity, the
ability of borrowers to repay outstanding loans and the value of loan
collateral, and could adversely affect Perpetual Bank's asset quality, net
income and ability to pay dividends to SouthBanc Shares.
GOVERNMENT REGULATION
The banking industry is regulated by and subject to regular examination by
federal and state regulatory authorities. Under federal and state banking law,
SouthBanc Shares and Perpetual Bank are subject to supervision and limitations
with respect to extending credit, purchasing securities, paying dividends,
making acquisitions, branching and many other aspects of the banking business.
Banking laws are designed primarily to protect depositors and customers, not
investors, and include, among other things, minimum capital requirements,
limitations on products and services offered, geographical limits, consumer
credit regulations, community investment requirements and restrictions on
transactions with affiliated parties. Financial institution regulation has been
the subject of significant legislation in recent years, and may be the subject
of further significant legislation in the future, none of which is within the
control of SouthBanc Shares. This regulation substantially affects the business
and financial results of all financial institutions and holding companies,
including SouthBanc Shares and Perpetual Bank, and SouthBanc Shares is not able
to predict the impact of changes in such regulations on Perpetual Bank's
business and profitability, some or all which may be materially adverse to
SouthBanc Shares and/or Perpetual Bank.
COMPETITION
The banking business is highly competitive, and Perpetual Bank's
profitability depends principally upon its ability to compete in the market
areas in which it operates. Perpetual Bank competes with other commercial banks,
savings associations, credit unions, finance companies, mutual funds, insurance
companies, brokerage and investment banking firms, asset-based non-bank lenders
and certain other nonfinancial institutions, including retail stores which may
maintain their own credit programs, and certain governmental organizations which
may offer more favorable financing than Perpetual Bank. Many competitors may
have greater financial and other resources than Perpetual Bank.
Perpetual Bank has been able to compete effectively with other financial
institutions by emphasizing customer service, by establishing long-term customer
relationships and building customer loyalty, and by providing products and
services designed to address the specific needs of its customers. Although
Perpetual Bank has been able to compete effectively up until now, no assurance
may be given that it will be able to
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continue to do so. Furthermore, changes in government regulation of banking,
particularly recent legislation which removes restrictions on interstate banking
and permits interstate branching, are likely to increase competition by
out-of-state banking organizations or by other financial institutions in
Perpetual Bank's market areas.
CONTROL BY MANAGEMENT
As of May 1, 1999, the directors and officers of SouthBanc Shares
beneficially owned approximately 26.1% of the outstanding shares of Common Stock
(including shares subject to outstanding stock options and shares that may be
issued under various stock benefit plans). Accordingly, these persons have
substantial influence over the business, policies and affairs of SouthBanc
Shares, including the ability potentially to control the election of directors
and other matters requiring shareholder approval by simple majority vote.
INVESTMENT RISK
The shares of common stock to be issued under the plan are subject to
general investment risk. Periodically, the stock market experiences substantial
price and volume volatility. These market fluctuations may be unrelated to the
operating performance of particular companies whose shares are traded and may
adversely affect the market price of Common Stock. SouthBanc Shares cannot
assure you that the market price of common stock will not decline below the
price at which the shares are purchased under the plan.
INTEREST RATE RISK
As the holding company for Perpetual Bank, SouthBanc Shares's financial
condition and performance depends primarily on the financial condition and
performance of Perpetual Bank, which is greatly affected by changes in market
interest rates. The market value of Perpetual Bank's investment securities
fluctuate based on the level of market interest rates. In addition, Perpetual
Bank's earnings depend primarily on "rate differentials," which are the
differences between interest income earned on loans and investments and the
interest expense paid on deposits and other borrowings. These rates are highly
sensitive to many factors that are beyond Perpetual Bank's control, including
general economic conditions and the policies of various governmental and
regulatory authorities. Increases in the federal funds rate by the Federal
Reserve Bank usually lead to higher market interest rates, which affect
Perpetual Bank's interest income, interest expense and investment portfolio.
Also, governmental policies, such as the creation of a tax deduction for
individual retirement accounts, can increase savings and affect the cost of
funds. From time to time, maturities of assets and liabilities are not balanced,
and a rapid increase or decrease in interest rates could have an adverse effect
on the net interest margin and results of operations of Perpetual Bank. The
nature, timing and effect of any future changes in federal monetary and fiscal
policies on Perpetual Bank and its results of operations are not predictable.
POTENTIAL YEAR 2000 COMPUTER MALFUNCTIONS
The advent of the year 2000 presents significant issues regarding how a
company's software and operating systems will deal with the numerical value
representing the year 2000. This issue extends beyond individual companies to
include the effect on other companies with which they do business, or by which
they may be affected. SouthBanc Shares and Perpetual Bank have responded
proactively to address this issue with respect to their systems and management
believes that all operations affected by year 2000 issues will be tested and
compliant in advance of the year 2000. In addition, the financial impact to
SouthBanc Shares and Perpetual Bank to complete systems projects and ensure year
2000 compliance is not anticipated by
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management to be material to the financial position, results of operations or
cash flow of either entity. There can be no assurance, however, that there will
not be any year 2000 operating problems or expenses that will arise with respect
to SouthBanc Shares's and Perpetual Bank's computer systems and software, or in
connection with SouthBanc Shares's and Perpetual Bank's interface with the
computer systems and software of their suppliers, clients and other financial
institutions with which they interact. Because third-party systems or software
may not be year 2000 compliant, SouthBanc Shares or Perpetual Bank could be
required to incur unanticipated expenses to remedy any problems, which could
have a material adverse effect on their respective business, results of
operations and financial condition. The year 2000 issue may also have a material
impact on the financial condition of SouthBanc Shares and Perpetual Bank if
borrowers of Perpetual Bank become insolvent and are unable to repay their loans
as a result of year 2000 noncompliance.
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SOUTHBANC SHARES, INC.
DIVIDEND REINVESTMENT PLAN
On April 19, 1999, the Board of Directors of SouthBanc Shares voted to
adopt this plan under which authorized but unissued shares of SouthBanc Shares's
common stock, par value $0.01 per share, are available for issuance and sale to
the shareholders of SouthBanc Shares. The plan also allows SouthBanc Shares to
purchase of shares of common stock in the open market. The plan will remain in
effect until SouthBanc Shares amends, alters or terminates it. SouthBanc Shares
has reserved 250,000 shares of its common stock for issuance and sale under the
plan by means of this prospectus. The plan is presented below as a series of
questions and answers explaining its significant aspects.
PURPOSE AND ADVANTAGES
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide holders of record of at least twenty
(20) shares of common stock, including shares held under the plan, with a
convenient and economical method of investing regular cash dividends paid on the
common stock in additional shares of common stock without paying any trading
fees or commissions, service charges or other fees. A beneficial owner of common
stock whose shares are registered in a name other than his or her own (I.E., in
the name of a broker or bank nominee) can become eligible to participate either
by having at least twenty (20) shares transferred into his or her own name or by
making arrangements to participate with the broker or bank nominee in whose name
the shares are registered. Any special cash dividends or other cash
distributions that SouthBanc Shares may declare and pay on the Common Stock are
ineligible for reinvestment. Participants who elected to have their regular cash
dividends reinvested will be deemed to have applied such cash dividends to the
purchase of additional shares of common stock pursuant to the Plan. If those
additional shares are purchased directly from SouthBanc Shares, SouthBanc Shares
will receive additional funds to be used for general corporate purposes,
including increased lending and investment.
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
If you enroll as a participant in the plan, you may have (a) regular cash
dividends on all of your shares of common stock automatically reinvested or (b)
regular cash dividends on part of shares of common stock automatically
reinvested. The advantages of the plan include:
o FULL INVESTMENT. Full investment of funds is possible because
fractions of shares, as well as whole shares, will be credited to
your account. Further, dividends on fractional shares, as well as
whole shares, will be reinvested in additional shares and will be
credited to your account. You pay no trading fees or commissions,
service charges or other fees for purchases under the plan.
o SAFEKEEPING. If you participate in the plan, you avoid the need for
safekeeping of your stock certificates for shares credited to your
account under the plan because the plan holds your shares. In
addition, you may deposit for safekeeping in your plan account any
stock certificates registered in your name through the free
safekeeping service described in Question 22. Dividends on shares
deposited for safekeeping will also be reinvested (See Questions 22
and 23). By depositing shares for safekeeping, you are relieved of
the responsibility for loss, theft or destruction of the
certificates.
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o RECORDKEEPING. You will be mailed regular account statements as soon
as practicable after each purchase of common stock under the plan.
The account statements will show the investment date, the amounts
invested, the purchase price, the number and the market value of
shares of common stock purchased, and the number of shares in your
account, allowing for simplified record-keeping.
ADMINISTRATION
3. WHO ADMINISTERS THE PLAN FOR PARTICIPANTS?
ChaseMellon Shareholder Services, L.L.C., the transfer agent for SouthBanc
Shares's common stock, administers the plan for participants, maintains records,
sends account statements to participants and performs other duties relating to
the plan. ChaseMellon will hold for safekeeping shares of common stock that you
purchase or deposit for safekeeping until you decide to stop participating in
the plan or you write to ChaseMellon and ask it to issue a stock certificate for
all or a part of the shares in your account. Shares of common stock purchased
under the plan and held by ChaseMellon will be registered in its name or the
name of one of its nominees and will be credited to your account. As the record
holder of shares of common stock held for participants under the plan,
ChaseMellon will receive dividends on the shares, credit the dividends to each
participant's account based on the number of full and fractional shares held in
each account, and automatically reinvest the dividends in additional shares. If
ChaseMellon resigns or otherwise cease to act as agent for the plan, SouthBanc
Shares will make other arrangements for the administration of the plan as it
deems appropriate.
ChaseMellon may be contacted at:
ChaseMellon Shareholder Services, L.L.C.
P.O. Box 3338
South Hackensack, New Jersey 07606-1938
Toll-free: 1-800-756-3353
Please mention SouthBanc Shares Inc. in all correspondence.
PARTICIPATION
4. AM I ELIGIBLE TO PARTICIPATE IN THE PLAN, EVEN IF I HOLD MY SHARES IN AN
IRA?
If you are a holder of record of twenty (20) or more shares of common
stock, including shares held in the plan, then you are eligible to participate.
If you are a beneficial owner whose shares are held beneficially (I.E., in the
name of a broker or bank nominee) and wish to participate, you can become
eligible to participate either by becoming an owner of record of twenty (20) or
more shares by transferring at least twenty (20) shares into your own name or by
making arrangements to participate with the broker or bank nominee in whose name
your shares are registered.
You are eligible to participate in the plan through your IRA. If you have
an IRA which is the holder of record of at least twenty (20) shares of common
stock, you may designate the IRA as a participant in the plan. The IRA will be
subject to the plan in the same manner as other participants.
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<PAGE> 13
5. HOW DO I ENROLL IN THE PLAN?
If you are eligible to join the plan, simply complete the enclosed
Enrollment Card and return it to ChaseMellon in the postage-paid envelope
provided. You may obtain additional Enrollment Cards by writing to ChaseMellon
at the address set forth in Question 3, or to SouthBanc Shares, Inc., 907 N.
Main Street, Anderson, South Carolina 29621.
6. MUST I SEND MY STOCK CERTIFICATE TO CHASEMELLON TO PARTICIPATE IN THE
PLAN?
No. You may retain the stock certificates registered in your name and
indicate on the Enrollment Card whether the dividends on all or some of those
shares should be reinvested. Of course, if you want to take advantage of the
plan's safekeeping feature, you may send your stock certificates to ChaseMellon
as set forth in Question 22. All shares purchased under the plan will be held
within the plan for your account until you withdraw them.
7. WHEN CAN I JOIN THE PLAN?
If you are eligible to join the plan, you may do so at any time.
Investments will be made on your behalf as follows:
o If ChaseMellon receives your properly completed Enrollment Card at
least five (5) business days before the record date for a particular
dividend payment, reinvestment will begin on that dividend payment
date.
o If ChaseMellon receives your properly completed Enrollment Card less
than five (5) business days before the record date for a particular
dividend payment, reinvestment will begin on the dividend payment
date immediately following the next dividend record date, provided
that you are still a holder of record.
8. WHAT DOES THE ENROLLMENT CARD PROVIDE FOR?
The Enrollment Card provides for the purchase of additional shares of
common stock through the following reinvestment options:
A. "FULL DIVIDEND REINVESTMENT," which directs SouthBanc Shares to
pay ChaseMellon for reinvestment under the terms of the plan all of your
regular cash dividends on all shares of common stock then or subsequently
registered in your name.
B. "PARTIAL DIVIDEND REINVESTMENT," which directs SouthBanc Shares
to pay to ChaseMellon for reinvestment under the terms of the plan regular
cash dividends on less than all shares of common stock then registered in
your name while continuing to pay you cash dividends on your remaining
shares by check from SouthBanc Shares or direct deposit.
Regardless of the option selected, your account will be credited for all
regular cash dividends as a result of reinvestment of dividends and shares held
under the safekeeping deposit feature will be automatically reinvested in
accordance with the plan. You may change your election by writing to ChaseMellon
at the address set forth in Question 3.
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The Enrollment Card also appoints ChaseMellon as your agent and directs it
to apply your regular cash dividends according to the terms of the plan.
COSTS
9. DO I HAVE TO PAY ANY COSTS FOR PURCHASING STOCK UNDER THE PLAN?
No. SouthBanc Shares pays all administration costs of the Plan. You pay no
trading fees, service charges or other fees for purchase of shares under the
plan. However, if you ask ChaseMellon to sell shares held in your account, you
will pay any trading fees or commissions along with a $15.00 service charge (See
Question 21).
PURCHASES
10. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED UNDER THE PLAN?
SouthBanc Shares, at its discretion, may either issue authorized but
unissued shares or shares held in its treasury or it may purchase shares in the
open market, or both.
11. WHEN WILL SHARES BE PURCHASED UNDER THE PLAN?
In a month in which SouthBanc Shares pays a regular cash dividend on the
common stock, the investment date is the dividend payment date. In any case, if
an investment date falls on a day that is not a trading day, the investment date
will be the prior trading day.
Purchases of common stock from SouthBanc Shares will be made on the
investment date. Purchases in the open market will begin on the investment date
and will be completed no later than 30 days after that date unless if a later
date is necessary or advisable under any applicable federal securities laws. If
open market purchases cannot be completed within 30 days, any uninvested
dividends will be paid in cash. Open market purchases may be made in the
over-the-counter market on the Nasdaq National Market or by negotiated
transactions and under price, delivery, and other terms as to which ChaseMellon
may agree. Neither you nor SouthBanc Shares has any authority or power to direct
the time or price at which shares may be purchased or to select the broker or
dealer through or from whom purchases are to be made.
12. AT WHAT PRICE WILL SHARES OF COMMON STOCK BE PURCHASED?
The purchase price of each share purchased with reinvested dividends will
be 100% of the "market price." In the case of shares purchased from SouthBanc
Shares, the "market price" is the average of the high and low sales prices of a
share of common stock on the Nasdaq National Market on the investment date set
forth in Question 11. If there is no trading in the common stock on the Nasdaq
National Market for a substantial amount of time at the time of any investment
date, SouthBanc Shares will determine the market price based on market
quotations it deems appropriate. In the case of purchases in the open market,
the "market price" will be the weighted average purchase price of shares
purchased for the relevant investment date.
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<PAGE> 15
13. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED AT ANY ONE TIME?
The number of shares purchased depends on the amount of your reinvested
dividends and the applicable purchase price as determined in the manner
described in Question 12. Your account will be credited with that number of
shares, including fractions computed to four decimal places, equal to your total
amount of dividends to be invested divided by the applicable purchase price.
REPORTS TO PARTICIPANTS
14. WHAT KINDS OF REPORTS WILL I RECEIVE?
As soon as practicable after each investment date on which shares of
common stock have been purchased for your account, ChaseMellon will mail to you
an account statement. Each account statement will be cumulative for each
calendar year. The account statement is your continuing record of the cost of
your purchases and you should retain it for income tax purposes. In addition,
you will receive copies of communications sent to stockholders generally,
including SouthBanc Shares's Annual Report to Stockholders, Notice of Annual
Meeting and Proxy Statement, and any Internal Revenue Service information for
reporting dividend income.
DIVIDENDS ON FRACTIONS OF SHARES
15. WILL I BE CREDITED WITH DIVIDENDS ON FRACTIONS OF SHARES?
Yes. Dividends paid on fractions of shares held under the plan, as well as
on whole shares, will be credited to your account and will be reinvested in
additional shares.
ISSUANCE OF CERTIFICATES FOR COMMON STOCK
16. WILL I RECEIVE STOCK CERTIFICATES FOR SHARES PURCHASED UNDER THE PLAN?
No, unless you write to ChaseMellon and request it to issue a certificate
to you, or until your close your plan account. The number of shares of credited
to your account under the plan will be shown on your account statement. This
safekeeping service protects against loss, theft or destruction of stock
certificates.
At any time, you may write to ChaseMellon and request it to send you a
certificate for all part of the whole shares of common stock credited to your
account as described in Question 17. You will not pay a service fee to have a
stock certificate issued to you. Any remaining whole shares and any fractional
shares will continue to be credited to your account (See Question 18).
You may not pledge or assign shares credited to your account. If you wish
to do so, you must request that a certificate for the shares to be pledged or
assigned be issued in your name.
Certificates for a fractional share will not be issued to you under any
circumstances (See Questions 17 and 21).
An institution that is required by law to maintain physical possession of
stock certificates may request the issuance of certificates for whole shares
purchased under the plan. This request must be made for each payment date and
mailed to ChaseMellon at the address set forth in Question 3.
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17. CAN I WITHDRAW SHARES HELD UNDER THE PLAN?
Yes. Certificates for any number of whole shares held in your account will
be issued if ChaseMellon receives a written request signed by you and specifying
the number of whole shares to be withdrawn. You should send this request to
ChaseMellon at the address set forth in Question 3 and it should contain a
reference to SouthBanc Shares, Inc. Depending on your authorization, the
dividends on these withdrawn shares may continue to be reinvested (See Question
18).
18. WILL DIVIDENDS ON SHARES THAT I WITHDRAW FROM THE PLAN CONTINUE TO BE
REINVESTED?
If you have authorized "Full Dividend Reinvestment," cash dividends on
shares that you withdraw from your account will continue to be reinvested.
However, if cash dividends on only part of the shares registered in your name
are being reinvested, ChaseMellon will continue to reinvest dividends on only
the number of shares specified by you on your Enrollment Card, unless you
deliver to ChaseMellon a new Enrollment Card specifying a different number of
shares.
19. WHAT HAPPENS IF I SELL OR TRANSFER ALL OR PART OF THE SHARES REGISTERED IN
MY NAME?
If you are reinvesting the cash dividends on part of the shares registered
in your name and you dispose of some of these shares, ChaseMellon will continue
to reinvest the dividends on the remaining shares up to the number of shares
originally specified on your Enrollment Card, so long as you continues to hold
at least twenty (20) shares in your name or in the plan.
If you disposes of your shares, including shares credited to your account
under the plan, so that your total share balance is less than twenty (20)
shares, ChaseMellon will discontinue the investment of regular cash dividends on
the shares credited to your account under the plan, or otherwise, until your
share ownership increases to at least twenty (20) shares in the aggregate. You
will receive all dividends that are declared and paid in cash until your share
ownership increases to at least twenty (20) shares. If, after you dispose of
stock, your aggregate record ownership of the stock is less than twenty (20)
shares, SouthBanc Shares, in its sole discretion, may notify you in writing that
you are no longer eligible to participate in the plan. If you do not increase
your share ownership to at least twenty (20) shares within 30 days after
receiving this notice, SouthBanc Shares will instruct ChaseMellon to terminate
your account and issue to you a certificate for the full number of shares in
your account and a cash payment for any fractional shares. You will not pay a
service fee to have a stock certificate issued to you.
20. IF I REQUEST THE ISSUANCE OF A CERTIFICATE, IN WHOSE NAME WILL IT BE
REGISTERED?
Your plan account is maintained in the name(s) in which your stock
certificates were registered when you enrolled in the plan. Certificates for
whole shares of common stock will be similarly registered when issued. If you
want certificates registered in another name, you must indicate the name of the
other person in your request. You would be responsible for paying any transfer
taxes and for complying with any applicable transfer requirements. In addition,
federal backup withholding of 31% may apply to future dividends paid on these
re-registered shares unless you give ChaseMellon the taxpayer identification
number of the other person in whose name the shares are to be registered (See
Question 30).
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<PAGE> 17
TERMINATION OF PARTICIPATION
21. HOW MAY I WITHDRAW FROM AND STOP PARTICIPATING IN THE PLAN?
You may withdraw from the plan completely at any time by notifying
ChaseMellon in writing at the address set forth in Question 3. When you withdraw
from the plan, or if SouthBanc Shares terminates the plan, you will be issued a
certificate for the number of whole shares credited to your account and you will
receive a cash payment for any fractional share. This cash payment will be based
on the actual market price of a share of common stock, less any trading fees or
commissions, any other costs of sale and any transfer tax. Federal backup
withholding of 31% may apply to any cash payments (See Question 30).
If ChaseMellon receives your request to withdraw from the plan before the
record date for a dividend payment, it will process the withdrawal promptly
following receipt of the request. If ChaseMellon receives your request to
withdraw from the plan on or after the record date for a dividend payment, the
request may not become effective until any cash dividend paid on the dividend
payment date has been reinvested and the shares of common stock purchased with
the reinvested dividends are credited to your account. In these situations,
ChaseMellon, in its sole discretion, may either pay any dividend in cash or
reinvest it in shares of common stock on your behalf, and if it chooses to
reinvest the dividend, then your withdrawal request will be processed as
promptly as possible following the investment date.
After you withdraw from the plan, you will receive all subsequent
dividends in cash unless you re-enroll in the plan, which you may do at any time
by requesting an Enrollment Card from ChaseMellon or SouthBanc Shares.
In your written request to withdraw shares from the plan, you may also
request to sell all or part of the whole shares credited to your account. If you
do so, ChaseMellon will execute the sale as promptly as possible after
processing your request. You will receive the proceeds from sale, less any
trading fees or commissions, a $15.00 service fee, any other costs of sale, any
applicable transfer tax, and any applicable federal backup withholding.
SAFEKEEPING
22. HOW DO I DEPOSIT MY STOCK CERTIFICATES FOR SAFEKEEPING UNDER THE PLAN?
You may deposit your stock certificates registered in your name with
ChaseMellon for safekeeping under the plan. There is no charge for this
safekeeping service. By having ChaseMellon hold your certificates, you are
relieved of the responsibility for loss, theft or destruction of the
certificates. Dividends paid on shares held for safekeeping will be reinvested
in shares of common stock under the terms of the plan.
If you want to deposit your certificates with ChaseMellon for safekeeping,
you should send your certificates (which need not be endorsed) to ChaseMellon at
the address set forth in Question 3. Because you bear the risk of loss in
sending the certificates to ChaseMellon, you should send the certificates by
registered mail, return receipt requested and properly insured. Whenever
certificates are issued to you either at your request or when you withdraw from
the plan, you will receive new, differently numbered certificates.
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<PAGE> 18
23. MAY I DEPOSIT MY STOCK CERTIFICATES FOR SAFEKEEPING UNDER THE PLAN WITHOUT
HAVING THE DIVIDENDS ON THE SHARES REPRESENTED BY THOSE CERTIFICATES
REINVESTED?
No. If ChaseMellon holds your stock certificates for safekeeping, all
dividends paid on the common stock represented by those certificates will be
reinvested in additional shares of common stock until you withdraw the common
stock from participation in the plan.
OTHER INFORMATION
24. IF SOUTHBANC SHARES DECLARES AND PAYS A SPECIAL CASH DIVIDEND OR ANY OTHER
CASH DISTRIBUTION ON THE COMMON STOCK, IS IT ELIGIBLE FOR REINVESTMENT
UNDER THE PLAN?
No. Only regular cash dividends that SouthBanc Shares declares and pays on
its common stock are eligible for reinvestment.
25. IF SOUTHBANC SHARES CONDUCTS A RIGHTS OFFERING, HOW WILL THE RIGHTS ON THE
SHARES OF COMMON STOCK HELD UNDER THE PLAN BE HANDLED?
If you participate in the plan and are also entitled to participate in a
rights offering, you will receive rights certificates for only the number of
whole shares of common stock that you hold in your account under the plan.
26. WHAT HAPPENS IF SOUTHBANC SHARES SPLITS ITS STOCK OR DECLARES A DIVIDEND
OR OTHER DISTRIBUTION PAYABLE IN STOCK OR OTHER NONCASH ASSETS?
If SouthBanc Shares declares a dividend payable in shares of common stock
or it splits its shares of common stock, the additional shares will be credited
to your account. If SouthBanc Shares pays a dividend or makes any other
distribution payable in stock other than common stock, or makes a distribution
on the common stock payable with other noncash assets, on shares credited to
your account, it will be mailed directly to you in the same manner as to
shareholders who do not participate in the plan. Of course, all stock dividends,
split shares and other noncash distributions on shares registered in your name
and not held by the plan will also be mailed directly to you.
27. HOW WILL MY SHARES OF COMMON STOCK HELD IN THE PLAN BE VOTED AT
SHAREHOLDERS' MEETINGS?
Shares that ChaseMellon holds for you under the plan will be voted as you
direct in a proxy card provided for that purpose. You will be sent a proxy card
in connection with each annual or special meeting of shareholders, as you would
if did not participate in the plan. This proxy will apply to all whole shares of
common stock registered in your own name, if any, as well as to all shares
credited to your account under the plan. ChaseMellon will aggregate all shares
of plan participants voting in a certain way on each matter presented to the
shareholders. After completing this aggregation, any fractional share will not
be voted.
28. WHAT ARE THE RESPONSIBILITIES OF SOUTHBANC SHARES AND CHASEMELLON UNDER
THE PLAN?
SouthBanc Shares and ChaseMellon are not liable under the plan for any act
done in good faith or for any good faith omission to act including, without
limitation, any claim of liability arising out of failure to terminate a
participant's account upon death or with respect to the prices at which shares
of common stock
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<PAGE> 19
are purchased or sold for a participant's account, the times when purchases or
sales are made, or with respect to any fluctuation in market value of the common
stock.
Neither SouthBanc Shares nor ChaseMellon can assure you of a profit or
protect you against loss of principal on the common stock that you purchase
under the plan.
29. MAY SOUTHBANC SHARES CHANGE OR DISCONTINUE THE PLAN?
Notwithstanding any other provision of the plan, the Board of Directors of
SouthBanc Shares or any designated committee of the Board of Directors may
amend, suspend, modify or terminate the plan at any time (including the period
between a record date and a dividend payment date). You will be notified of any
of these actions if they occur. If the plan is terminated, certificates for
whole shares of common stock credited to your account under the plan will be
issued, and you will receive a cash payment for any fractional share credited to
your account. A cash payment may be subject to backup withholding and will be
based on the actual market price of a share of common stock, less any trading
fees or commissions, any other costs of sale and any transfer tax.
TAXES
30. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
REINVESTED DIVIDENDS. In the case of shares of common stock purchased
directly from SouthBanc Shares with reinvested dividends, you will be subject to
federal income tax on a taxable dividend in an amount equal to the number of
shares of common stock purchased with the reinvested dividends multiplied by the
fair market value (as defined below) on the investment date of the shares
acquired. Your tax basis in the shares will also equal the fair market value of
the shares on the relevant investment date.
Alternatively, when ChaseMellon purchases shares of common stock in the
open market with reinvested dividends, you will be subject to federal income tax
on a taxable dividend in an amount equal to the actual purchase price to
ChaseMellon of the shares acquired, plus the portion of any trading fees or
commissions that SouthBanc Shares may pay and which are allocable to the
purchase of your shares. Your tax basis in the shares will equal their actual
purchase price to ChaseMellon, plus allocable trading fees or commissions.
For purposes of this Question 30, the "fair market value" of shares on the
investment date will be determined under applicable Internal Revenue Service
regulations. Under those regulations, if the common stock trades on the
investment date, the fair market value is the average of the high and low sales
prices as reported on the Nasdaq National Market for that date, and if the
common stock does not trade on that date, the fair market value is the weighted
average of the mean of the high and low sales prices on the nearest trading
dates before and after the investment date.
RECEIPT OR DISPOSITION OF SHARES. You will not realize any taxable income
when you receive a stock certificate for whole shares of common stock credited
to your account, when you request the issuance of a certificate, when you
withdraw from the plan or when the plan is terminated.
You will realize gain or loss when shares of common stock are sold or
exchanged, when you withdraw from the plan or after the plan is terminated. In
the case of a fractional share credited to your account, you will realize gain
or loss when you receive a cash payment for it. The amount of any gain or
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<PAGE> 20
loss will be the difference between the amount which you receive for whole and
fractional shares and their tax basis.
ADDITIONAL INFORMATION. You will be sent a Form 1099 information statement
at year-end showing the amounts taxable to you during the year. A copy of the
Form 1099 will also be sent to the Internal Revenue Service.
SOUTHBANC SHARES AND CHASEMELLON URGE YOU TO CONSULT YOUR OWN TAX ADVISOR
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES, INCLUDING CONSEQUENCES UNDER STATE
AND LOCAL LAWS, WHICH MAY RESULT FROM YOUR PARTICIPATION IN THE PLAN AND IF YOU
SUBSEQUENTLY DISPOSE OF SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN. IF YOU
DO NOT RESIDE IN THE UNITED STATES, THE INCOME TAX CONSEQUENCES WILL VARY
BETWEEN JURISDICTIONS.
31. HOW DO THE FEDERAL BACKUP WITHHOLDING PROVISIONS APPLY TO ME IF I
PARTICIPATE IN THE PLAN?
Under the federal income tax law, you are required to provide your correct
taxpayer identification number to ChaseMellon. For an individual, the taxpayer
identification number is his or her social security number. If you do not
provide the correct number, any dividends paid on shares of common stock held
for you under the plan and dividends paid on shares held by you (including
dividends paid into the plan and including any deemed dividends resulting from
the payment of trading fees or commissions by SouthBanc Shares) may be subject
to backup withholding. In addition, cash distributions from the plan as
described in Questions 21 and 29 may be subject to backup withholding.
If backup withholding applies, 31% of any dividends or other payments must
be withheld. Exempt participants (including, among others, all corporations and
certain foreign individuals) are not subject to backup withholding and reporting
requirements. In order to qualify as exempt, a foreign individual must submit a
statement attesting to his or her exempt status.
You may obtain forms for certifying your taxpayer identification number
and for establishing a foreign exemption, as well as additional information
concerning the requirements for certification, by writing to ChaseMellon at the
address set forth in Question 3 or by calling ChaseMellon toll-free at
1-800-756-3353.
DESCRIPTION OF CAPITAL STOCK
SouthBanc Shares is authorized to issue 7,500,000 shares of common stock
and 250,000 shares of preferred stock, par value $0.01 per share. Each share of
common stock has the same relative rights and is identical in all respects with
every other share of common stock. The following summary does not purport to be
a complete description of the applicable provisions of SouthBanc Shares's
Certificate of Incorporation and Bylaws or of applicable statutory law, and is
qualified in its entirety by reference to the Certificate of Incorporation,
Bylaws or statutory law, as appropriate. See "WHERE YOU CAN FIND MORE
INFORMATION."
COMMON STOCK
VOTING RIGHTS. The holders of common stock possess exclusive voting rights
in SouthBanc Shares. Each holder is entitled to one vote for each share held of
record on all matters submitted to a vote of holders of common stock. Holders of
common stock are not entitled to cumulate votes for the election of directors.
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DIVIDENDS. The holders of common stock are entitled to dividends as the
Board of Directors may declare from time to time out of funds legally available
for their payment. Dividends from SouthBanc Shares depend upon the receipt by
SouthBanc Shares of dividends from its principal subsidiary, Perpetual Bank,
because SouthBanc Shares has no material source of income other than dividends
from Perpetual Bank.
LIQUIDATION. If there is a liquidation, dissolution or winding up of
SouthBanc Shares, the holders of shares of common stock are entitled to share
ratably in all assets remaining after payment of all debts and other liabilities
of SouthBanc Shares.
OTHER CHARACTERISTICS. Holders of common stock do not have any preemptive,
conversion or other subscription rights with respect to any additional shares of
common stock that SouthBanc Shares may issue. Therefore, the Board of Directors
of SouthBanc Shares may authorize the issuance and sale of shares of common
stock of SouthBanc Shares without first offering them to existing shareholders
of SouthBanc Shares. The common stock is not subject to any redemption or
sinking fund provisions.
PREFERRED STOCK
SouthBanc Shares's Certificate of Incorporation authorizes the Board of
Directors to issue from time to time one or more series of preferred stock with
such designations and preferences, relative, participating, optional and other
special rights and qualifications, limitations and restrictions thereon, as
permitted by law and as fixed from time to time by resolution of the Board of
Directors. Because of its broad discretion with respect to the creation and
issuance of any series of preferred stock without shareholder approval, the
Board of Directors could adversely affect the voting power of the holders of
common stock, and by issuing shares of preferred stock with certain voting,
conversion and/or redemption rights, could discourage any attempt to obtain
control of SouthBanc Shares in any transaction not approved by the Board of
Directors.
USE OF PROCEEDS
SouthBanc Shares does not know the number of shares of common stock that
ultimately will be sold under the plan, or the prices at which they will be
sold, but SouthBanc Shares intends to use the net proceeds from the sale of
common stock offered under the plan for general corporate purposes, including
increased lending and investment.
LEGAL OPINIONS
The validity of the shares of common stock offered by means of this
prospectus has been passed upon for SouthBanc Shares by Muldoon, Murphy &
Faucette LLP, Washington, D.C., special securities counsel for SouthBanc Shares.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from SouthBanc Shares's Annual Report on Form 10-K for the year ended
September 30, 1998, have been audited by Elliott, Davis & Company, L.L.P.,
independent auditors, as stated in its report, which is incorporated in this
prospectus by reference in reliance upon the report of Elliott, Davis & Company,
L.L.P. given upon its authority as experts in accounting and auditing.
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INDEMNIFICATION
SouthBanc Shares's Certificate of Incorporation requires indemnification
of directors, officers, employees and agents of SouthBanc Shares to the fullest
extent permitted by Delaware law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be permitted to
directors, officers or persons controlling SouthBanc Shares under the foregoing
provisions of the Certificate of Incorporation, SouthBanc Shares has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. NEITHER SOUTHBANC SHARES NOR
PERPETUAL BANK HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED BY THE PROSPECTUS IN ANY JURISDICTION
IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE BY MEANS OF THIS
PROSPECTUS SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF SOUTHBANC SHARES OR PERPETUAL BANK SINCE ANY OF THE DATES AS OF
WHICH INFORMATION IS FURNISHED IN THIS PROSPECTUS OR SINCE THE DATE OF THIS
PROSPECTUS.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information .........................................1
Incorporation of Certain Information by Reference............................1
Summary Plan Highlights......................................................2
SouthBanc Shares, Inc........................................................4
Risk Factors.................................................................4
SouthBanc Shares, Inc. Dividend Reinvestment Plan............................8
Description of Capital Stock................................................17
Use of Proceeds.............................................................18
Legal Opinions..............................................................18
Experts.....................................................................18
Indemnification.............................................................19
SOUTHBANC SHARES, INC.
COMMON STOCK
($0.01 PAR VALUE PER SHARE)
DIVIDEND REINVESTMENT PLAN
PROSPECTUS
May 28, 1999
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses are expected to be minimal and will be paid by
SouthBanc Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XVI of the Certificate of Incorporation of SouthBanc Shares, Inc.
requires indemnification of directors, officers and employees to the fullest
extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities:
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
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<PAGE> 25
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the shareholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her or incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a
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<PAGE> 26
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he or she reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ITEM 16. EXHIBITS
5. Opinion of Muldoon, Murphy & Faucette LLP
23.1 Consent of Muldoon, Murphy & Faucette LLP (contained in its opinion)
23.2 Consent of Elliott, Davis, & Company, L.L.P.
24. Power of attorney (contained in signature page)
99. Enrollment Card
ITEM 17. UNDERTAKINGS.
The undersigned hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Anderson, State of South Carolina, on the 27th day of
May, 1999.
SOUTHBANC SHARES, INC.
/s/Robert W. Orr
-------------------------------------
Robert W. Orr
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of SouthBanc Shares,
Inc. ("Corporation") do hereby severally constitute and appoint Robert W. Orr
true and lawful attorney and agent to do any and all things and acts in our
names in the capacities indicated below and to execute any and all instruments
for us and in our names in the capacities indicated below which said Robert W.
Orr may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933 in connection with the Registration Statement on Form S-3
relating to the offering of the Corporation's Common Stock, including
specifically, but not limited to, power and authority to sign for us or any of
us in our names in the capacities indicated below the Registration Statement and
any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Robert W. Orr shall do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
By:/s/Robert W. Orr Date: May 27, 1999
-----------------
Robert W. Orr
President, Chief Executive Officer
and Director (Principal Executive Officer)
By:/s/Thomas C. Hall Date: May 27, 1999
--------------------
Thomas C. Hall
Senior Vice President, Treasurer and Chief
Financial Officer (Principal Financial and
Accounting Officer)
By:/s/H.A. Pickens, Jr. Date: May 27, 1999
---------------------------
H.A. Pickens, Jr.
Chairman of the Board
<PAGE> 28
By:/s/Jack F. McIntosh Date: May 27, 1999
-------------------------
Jack F. McIntosh
Director
By:/s/Jim Gray Watson Date: May 27, 1999
--------------------------
Jim Gray Watson
Director
By:/s/Martha S. Clamp Date: May 27, 1999
-------------------------
Martha S. Clamp
Director
By/s/Richard C. Ballenger Date: May 27, 1999
-------------------------
Richard C. Ballenger
Director
By:/s/F. Stevon Kay Date: May 27, 1999
-------------------------
F. Stevon Kay
Director
By:/s/C.G. Seabrook, Jr. Date: May 27, 1999
-------------------------
C.G. Seabrook, Jr.
Director
EXHIBIT 5
[MULDOON, MURPHY & FAUCETTE LLP LETTERHEAD]
May 28, 1999
Board of Directors
SouthBanc Shares, Inc.
907 N. Main Street
Anderson, South Carolina 29621
Re: SouthBanc Shares, Inc.
Registration Statement on Form S-3 for the Offer and Sale of 250,000
Shares Under Dividend Reinvestment Plan
Gentlemen:
You have requested our opinion as special counsel for SouthBanc Shares,
Inc. (the "Corporation"), a Delaware corporation, in connection with the
above-referenced registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
In rendering this opinion, we understand that the common stock of the
Corporation will be offered and sold pursuant to the SouthBanc Shares, Inc.
Dividend Reinvestment Plan in the manner described in the Prospectus, which is
part of the registration statement. We have examined such records and documents
and made such examination as we have deemed relevant in connection with this
opinion.
Based upon and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that the 250,000 shares of common
stock of the Corporation covered by the registration statement, upon issuance
and payment therefor in the manner described in the Prospectus, will be legally
issued, fully paid and nonassessable.
The following provisions of the Corporation's Certificate of Incorporation
may not be given effect by a court applying Delaware law, but in our opinion the
failure to give effect to such provisions will not affect the legally issued,
fully paid and nonassessable status of the Common Stock:
Subsection (C)(3) of Article VII, which grants the Board the authority to
construe and apply the provisions of that Article, subsection (C)(4) of
Article VII, to the extent that subsection obligates any person to provide
to the Board the information that subsection authorizes the Board to
demand, and subsection (C)(1) of Article VII, to the extent that
subsection limits the amount of shares of Common Stock a shareholder may
vote, in each case to the extent, if any, that a court applying Delaware
law were to impose equitable limitations upon such authority.
This opinion is furnished for use as an exhibit to the registration
statement. We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to us under the heading "Legal
Opinions."
Very truly yours,
/s/Muldoon, Murphy & Faucette LLP
MULDOON, MURPHY & FAUCETTE LLP
EXHIBIT 23.2
[ELLIOT, DAVIS & COMPANY, L.L.P. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of SouthBanc Shares, Inc. ("Company"), on Form S-3 of our report dated
November 20, 1998, appearing in and incorporated by reference in the Annual
Report on Form 10-K of SouthBanc Shares, Inc. for the year ended September 30,
1998, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ Elliot, Davis & Company, L.L.P.
Greenville, South Carolina
May 27, 1999
<PAGE> 1
EXHIBIT 99
SOUTHBANC SHARES, INC.
DIVIDEND REINVESTMENT PLAN ENROLLMENT CARD
I (We) hereby appoint ChaseMellon Shareholder Services, L.L.C. (or any
successor) as my (our) agent to receive cash dividends that may hereafter become
payable to me (us) on shares of common stock, $0.01 par value per share, of
SouthBanc Shares, Inc. ("Common Stock") registered in my (our) names(s) as set
forth below, and authorize ChaseMellon Shareholder Services, L.L.C. to apply
such dividends to the purchase of full shares and fractional interest in shares
of such Common Stock.
I (We) acknowledge that the purchase will be made under the terms and
conditions of the Dividend Reinvestment Plan ("Plan") as described in the
Prospectus (and any supplements thereto), receipt of which by me (us) is hereby
acknowledged. I (We) also acknowledge that I (we) may revoke this appointment
and authorization at any time by notifying ChaseMellon Shareholder Services,
L.L.C., in writing, of my (our) desire to terminate my (our) participation. I
(We) also authorize ChaseMellon Shareholder Services, L.L.C. to take all action
provided for in the Plan.
Please indicate you participation below:
[ ] Full dividend reinvestment on all shares of Common Stock now or hereafter
registered in my (our) name(s).
[ ] Partial dividend reinvestment on only ______ shares of Common Stock
registered in my (our) name(s).
________________________________________________________________________________
Please Print Name(s) Exactly as Shown on Stock Certificate(s)
__________________________________________
Signature
__________________________________________
Signature
THIS IS NOT A PROXY. RETURN THIS CARD ONLY IF YOU WISH TO PARTICIPATE IN
---
THE PLAN.
