AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 2000
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AMERICAN COMMUNITY BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
NORTH CAROLINA 6712 56-2179531
<S> <C> <C>
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) INDUSTRIAL CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
2593 WEST ROOSEVELT BOULEVARD
MONROE, NORTH CAROLINA 28111-0418
(704) 225-8444
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
RANDY P. HELTON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN COMMUNITY BANK
2593 WEST ROOSEVELT BOULEVARD
MONROE, NORTH CAROLINA 28111-0418
(704) 225-8444
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
ANTHONY GAETA, JR., ESQ.
ERIK GERHARD, ESQ.
ANTHONY GAETA, JR., P.A.
808 SALEM WOODS DRIVE
SUITE 201
RALEIGH, NORTH CAROLINA 27615
(919) 845-2558
---------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC: The
date of mailing of the enclosed Prospectus/Proxy Statement to the shareholders
of American Community Bank.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [X]
---------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock $1.00 Par Value ..... 1,492,062 $ * $ * $ 4,037.51
</TABLE>
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- --------------------------------------------------------------------------------
* As provided in the Agreement and Plan of Reorganization and Share Exchange,
each outstanding share of common stock of American Community Bank will be
converted into and exchanged for one share of the common stock of the
Registrant. In accordance with Rule 457(f)(1), the registration fee for the
common stock is based upon the last sales price of American Community Bank
Stock on February 23, 2000.
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<PAGE>
AMERICAN COMMUNITY BANK
2593 West Roosevelt Boulevard
Monroe, North Carolina 28111-0418
--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2000
--------------------------------------------
American Community Bank (the "Bank") will hold its annual meeting of
shareholders at the Rolling Hills Country Club, Monroe, North Carolina, at
10:00 a.m. local time on April 26, 2000, to vote on the following proposals:
1. To approve the Agreement and Plan of Reorganization and Share Exchange,
dated as of February 16, 2000, between the Bank and American Community
Bancshares, Inc. ("Bancshares"), and the transactions contemplated by the
Agreement, including the holding company reorganization of the Bank by which
its shareholders will exchange their shares of the Bank common stock for shares
of the common stock of Bancshares, on a one-for-one basis.
2. To elect three members of the Board of Directors for terms of three
years as indicated.
3. To ratify the appointment of Dixon Odom PLLC as the Bank's independent
accountants for 2000.
4. Any other matters that properly come before the annual meeting, or any
adjournments or postponements of the annual meeting.
Record holders of the Bank's Common Stock at the close of business on
March 10, 2000, will receive notice of and may vote at the annual meeting,
including any adjournments or postponements. The Agreement for the holding
company reorganization requires approval by a majority of the shares of the
Bank's Common Stock outstanding on March 10, 2000. Holders of the Bank's Common
Stock may exercise dissenters' rights under Article 13 of the North Carolina
Business Corporation Act. We have attached a copy of that law as an appendix to
the accompanying Proxy Statement-Prospectus.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING. YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MATTERS THAT YOU WILL VOTE ON AT
THE ANNUAL MEETING.
By Order of the Board of Directors
DAN R. ELLIS, JR., SECRETARY
Monroe, North Carolina
March 24, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY .................................................................................. 1
GENERAL INFORMATION ...................................................................... 4
PROPOSAL 1: REORGANIZATION OF THE BANK INTO A HOLDING COMPANY ............................ 5
DESCRIPTION OF THE HOLDING COMPANY AGREEMENT ............................................. 6
DISSENTERS' RIGHTS ....................................................................... 9
DESCRIPTION OF BANCSHARES' CAPITAL STOCK ................................................. 13
COMPARISON OF THE RIGHTS OF SHAREHOLDERS ................................................. 15
PRO FORMA CONSOLIDATED CAPITALIZATION .................................................... 19
INFORMATION ABOUT THE BANK AND BANCSHARES ................................................ 19
MANAGEMENT AND CERTAIN TRANSACTIONS ...................................................... 22
PROPOSAL 2: ELECTION OF DIRECTORS ........................................................ 23
PROPOSAL 3: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS ............................... 27
OTHER MATTERS ............................................................................ 27
PROPOSALS FOR 2001 MEETING ............................................................... 27
ADDITIONAL INFORMATION ................................................................... 27
REGULATION AND SUPERVISION ............................................................... 28
LEGAL MATTERS ............................................................................ 32
EXPERTS .................................................................................. 32
FORWARD LOOKING STATEMENTS ............................................................... 32
WHERE YOU CAN GET MORE INFORMATION ....................................................... 33
INFORMATION INCORPORATED BY REFERENCE .................................................... 33
Appendix I: Agreement and Plan of Reorganization and Share Exchange
Appendix II: Article 13 of North Carolina Business Corporation Act regarding Dissenters'
Rights
</TABLE>
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS THE MATERIAL TERMS OF THIS PROXY
STATEMENT-PROSPECTUS. TO UNDERSTAND THE AMERICAN COMMUNITY BANK HOLDING COMPANY
REORGANIZATION FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF
THIS TRANSACTION, YOU SHOULD READ THIS ENTIRE DOCUMENT, AND THE DOCUMENTS WE
REFER YOU TO, CAREFULLY. SEE "WHERE YOU CAN GET MORE INFORMATION." (PAGE 33)
AMERICAN COMMUNITY BANK WILL REORGANIZE INTO A HOLDING COMPANY STRUCTURE (PAGE
6)
Under a holding company reorganization agreement between American
Community Bank (the "Bank") and American Community Bancshares, Inc.
("Bancshares"), all of the outstanding shares of the Bank stock will be
automatically converted into the right to receive shares of Bancshares stock in
a one-for-one exchange. As a result, the Bank will be owned by Bancshares and
the Bank will continue its current business and operations as a North Carolina
bank using its current name. So, for example, if you hold 100 shares of Bank
common stock, you would receive 100 shares of Bancshares' common stock in the
holding company reorganization. The total cost of forming the holding company
is estimated to be $ . The cost will be borne by the Bank.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 8)
We have structured the transaction so that Bank shareholders would not
recognize any gain or loss for federal income tax purposes. Lawyers will
furnish an opinion that Bank shareholders will not recognize any gain or loss
for federal income tax purposes as a result of the holding company
reorganization. These opinions are not binding on the Internal Revenue Service.
SINCE TAX MATTERS CAN BE COMPLICATED, AND TAX RESULTS MAY VARY AMONG
SHAREHOLDERS, WE URGE YOU TO CONTACT YOUR OWN TAX ADVISOR TO UNDERSTAND FULLY
HOW THE TRANSACTION WILL AFFECT YOU.
BOARD RECOMMENDS SHAREHOLDER APPROVAL (PAGE 6)
The Board of Directors of the Bank believes that the holding company
reorganization is in the best interests of shareholders and unanimously
recommends that the shareholders vote "FOR" its approval. The Board also
believes that a holding company structure will open up attractive opportunities
to increase growth and diversity in its lines of products, without sacrificing
its hometown philosophy and way of doing business.
ANNUAL MEETING (PAGE 4)
The Bank will hold its annual meeting of shareholders at 10:00 a.m. local
time on April 26, 2000, at the Rolling Hills Country Club, Monroe, North
Carolina.
THE COMPANIES (PAGE 19)
AMERICAN COMMUNITY BANK
2593 WEST ROOSEVELT BOULEVARD
MONROE, NORTH CAROLINA 28111-0418
(704) 225-8444
The Bank is a state-chartered commercial bank organized under the laws of
the State of North Carolina. The Bank's main office is in Monroe, North
Carolina at the address above.
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<PAGE>
AMERICAN COMMUNITY BANCSHARES, INC.
2593 WEST ROOSEVELT BOULEVARD
MONROE, NORTH CAROLINA 28111-0418
(704) 225-8444
Bancshares is a North Carolina corporation formed to be the owner of all
of the Bank's issued and outstanding shares. If the Bank's shareholders approve
the holding company reorganization agreement, then Bancshares will own all of
the shares of the Bank and the former Bank shareholders will become the owners
of all of Bancshares' shares.
AGREEMENT GOVERNING THE TRANSACTION IS ATTACHED
We have attached the holding company reorganization agreement as Appendix
I at the back of this Proxy Statement-Prospectus. We encourage you to read this
agreement as it is the legal document that governs the transaction.
MAJORITY VOTE REQUIRED TO APPROVE THE TRANSACTION (PAGE 6)
Approval of the holding company reorganization requires the affirmative
vote of the holders of at least a majority of the outstanding shares of the
Bank's common stock. A shareholder's failure to vote will have the effect of a
vote against approval of the transaction.
Directors and executive officers of the Bank own about 10.13% of the
shares that may be cast at the meeting, and we expect them to vote in favor of
the holding company reorganization.
Brokers who hold shares as nominees, or in "street name," will not have
the authority to vote such shares in the holding company reorganization unless
they receive instructions from the shareholder whose account they hold.
If we receive shareholder approval, we currently expect to complete the
holding company reorganization on May 15, 2000 assuming receipt of approvals
from all regulatory authorities.
RECORD DATE FOR THE MEETING IS MARCH 10, 2000
If you owned shares of American Community Bank at the close of business on
March 10, 2000, you may vote on the matters to be considered at the meeting.
On March 10, 2000, there were 1,492,062 shares of the Bank's common stock
outstanding. Each shareholder of the Bank will have one vote at the meeting for
each share of stock they owned on such date.
OTHER MATTERS TO BE ACTED ON
Since this is the annual meeting of shareholders, the shareholders are
being asked to also take the following actions at the annual meeting:
1. Elect three members of the Board of Directors for three year terms.
2. Ratify the appointment of the independent public accounting firm of
Dixon Odom PLLC as accountants for the Bank for 2000.
3. To act on any other matters that may lawfully be brought before the
annual meeting.
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DISSENTERS' RIGHTS (PAGE 9)
Shareholders who vote against or abstain from voting on the holding
company reorganization (Proposal 1) and properly exercise their dissenters'
rights prior to the annual shareholders' meeting have the right to receive a
cash payment for the fair value of their shares of the Bank's common stock. In
order to exercise these rights, shareholders must comply with Article 13 of the
North Carolina Business Corporation Act, which is attached as Appendix II to
this Proxy Statement-Prospectus. If you wish to dissent, please read this
information carefully as you must take affirmative steps to preserve your
rights.
LISTING OF BANCSHARES COMMON STOCK
It is expected that Bancshare's common stock will be traded on the Nasdaq
SmallCap Market under the trading symbol "ACBM".
EXCHANGE OF SHARE CERTIFICATES (PAGE 8)
Certificates representing shares of the Bank's stock will not
automatically represent shares of Bancshares' stock. Shareholders will need to
exchange their stock certificates of the Bank for Bancshares' stock
certificates after the transaction is completed. We will mail you information
following the date on which we complete the transactions.
3
<PAGE>
GENERAL INFORMATION
THE AMERICAN COMMUNITY BANK ANNUAL MEETING
GENERAL. This Proxy Statement-Prospectus is being furnished to the
shareholders of the Bank in connection with the solicitation by the Board of
Directors of the Bank of proxies for use at the Bank's annual meeting of
Shareholders. The purposes of the Bank's annual meeting are to consider and
vote on (a) the adoption and approval of the Agreement and Plan of
Reorganization and Share Exchange, dated as of February 16, 2000 (the "Holding
Company Agreement") pursuant to which the Bank will become a wholly-owned
subsidiary of Bancshares; (b) election of three directors for three year terms
as indicated; and (c) ratification of the appointment of Dixon Odom PLLC as the
Bank's independent accountants for 2000.
The principal executive offices of both Bancshares and the Bank are
located at 2593 West Roosevelt Boulevard, Monroe, North Carolina 28111-0418.
Their telephone number is (704) 225-8444.
This Proxy Statement-Prospectus is first being mailed to shareholders on
or about March 24, 2000.
RECORD DATE; VOTING RIGHTS. The Bank's Shareholders of record at the close
of business on March 10, 2000 (the "Record Date") are entitled to vote at the
annual meeting, or at any adjournment or postponement. As of the Record Date,
there were 1,492,062 shares of the Bank's Common Stock outstanding and entitled
to vote held of record by approximately persons. Each share of the Bank's
Common Stock entitles the holder to one vote on each matter submitted to a vote
at the meeting. Pursuant to the Bylaws of the Bank, a majority of the votes
entitled to be cast by holders of the Bank's Common Stock, represented in
person or by proxy, will constitute a quorum for the transaction of business at
the meeting. In accordance with North Carolina law, shareholders will not be
permitted to vote cumulatively in the election of directors.
In the case of Proposal 1 below, the affirmative vote of the holders of a
majority of the issued and outstanding shares of the Bank's Common Stock is
required by Article 11 of the North Carolina Business Corporation Act (the
"NCBCA") to approve the Holding Company Agreement and the reorganization of the
Bank into a holding company, as provided in that agreement. In the case of
Proposal 2 below, the three directors receiving the greatest number of votes
shall be elected. In the case of Proposal 3 below, for such a proposal to be
approved, the number of votes cast for approval must exceed the number of votes
cast against the Proposal.
The executive officers and directors of the Bank, together with their
affiliates, beneficially owned, directly or indirectly, as of December 31,
1999, an aggregate of 300,433 shares of the Bank's Common Stock constituting
approximately 18.30% of such shares outstanding including exercisable options.
Of that amount, non-employee directors own 250,137 shares of the Bank's Common
Stock or approximately 15.24% of the total, and principal officers of the
Bank's own 123,264 of such shares or less than 1.41% of the total.
Randy P. Helton, currently the sole director and officer of Bancshares,
owns one share of Bancshares Common Stock, or 100% of the total, with nominal
value. We expect that Bancshares will cancel Mr. Helton's share after
consummation of the holding company reorganization. The result will be that the
same persons who held the Bank's Common Stock before the transaction (except if
anyone exercises dissenters' rights) will own Bancshares Common Stock after the
transaction without any change in the number of their shares.
SOLICITATION, REVOCATION AND USE OF PROXIES. A proxy card is enclosed for
your use. YOU ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE BANK TO
COMPLETE, DATE, SIGN, AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE,
which is postage-paid if mailed in the United States.
Since we need a majority of all outstanding shares of the Bank to vote FOR
the Holding Company Agreement, if you neither submit a proxy card nor vote in
person at the annual meeting, you will, in effect, have voted AGAINST the
Holding Company Agreement and the reorganization of the Bank into a holding
4
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company. In addition, if you abstain, that will also be, in effect, a vote
AGAINST the proposal, although your shares would still be counted toward the
required quorum for the meeting.
You may revoke your proxy at any time before it is actually voted at the
annual meeting by delivering written notice of revocation to the Secretary of
the Bank, Dan R. Ellis, Jr., 2593 West Roosevelt Boulevard, Monroe, NC
28111-0418, by submitting a subsequently dated proxy, or by attending the
annual meeting and withdrawing the proxy. Each unrevoked proxy card properly
executed and received prior to the close of the annual meeting will be voted as
indicated. Where specific instructions are not indicated, the proxy will be
voted "FOR" each of the Proposals listed in the notice of the meeting.
The expense of preparing, printing and mailing this Proxy
Statement-Prospectus will be paid by the Bank. In addition to the use of the
mails, proxies may be solicited personally or by telephone by regular employees
of the Bank without additional compensation. The Bank will reimburse banks,
brokers and other custodians, nominees and fiduciaries for their costs in
sending the proxy materials to the beneficial owners of the Bank's Common
Stock.
AUTHORIZATION TO VOTE ON ADJOURNMENT AND OTHER MATTERS
By signing a proxy, the Bank's shareholders will be authorizing the
proxyholder to vote in his discretion regarding any procedural motions which
may come before the annual meeting. For example, this authority could be used
to adjourn the annual meeting if the Bank believes it is desirable to do so.
Adjournment or other procedural matters could be used to obtain more time
before a vote is taken in order to solicit additional proxies or to provide
additional information to shareholders. However, proxies voted against the
proposals will not be used to adjourn the annual meeting. The Bank does not
have any plans to adjourn the meeting at this time, but intends to do so, if
needed, to promote shareholder interests.
PROPOSAL 1: REORGANIZATION OF AMERICAN COMMUNITY BANK INTO A HOLDING COMPANY
THE FOLLOWING INFORMATION DESCRIBES MATERIAL ASPECTS OF THE PROPOSED
REORGANIZATION OF AMERICAN COMMUNITY BANK INTO A HOLDING COMPANY NAMED AMERICAN
COMMUNITY BANCSHARES, INC. THE HOLDING COMPANY AGREEMENT IS ATTACHED AS
APPENDIX I.
GENERAL
Bancshares and the Bank entered into the Holding Company Agreement
pursuant to which Bancshares will become a bank holding company with the Bank
as its wholly-owned subsidiary (the "Holding Company Reorganization"). A copy
of the Holding Company Agreement is attached as Appendix I to this Proxy
Statement-Prospectus. Bancshares is a newly-formed North Carolina corporation
that was organized by the Bank for the purpose of effecting the Holding Company
Reorganization and, therefore, has no operating history. If the Holding Company
Reorganization is approved by the holders of the Bank's Common Stock, and
subject to the satisfaction of all other conditions set forth in the Holding
Company Agreement, including receipt of all required regulatory approvals, all
of the outstanding shares of the Bank's Common Stock (other than shares held by
shareholders exercising dissenters' rights, if any) will be converted into the
right to receive an equal number of shares of Bancshares Common Stock in a
one-for-one exchange.
After the effective date of the Holding Company Reorganization, the Bank
will continue its existing business and operations as a wholly-owned subsidiary
of Bancshares. The consolidated assets, liabilities, shareholders' equity and
income of Bancshares immediately following the effective date will be the same
as those of the Bank immediately prior to the effective date. The Board of
Directors of Bancshares will be comprised of seven current members of the Board
of Directors of the Bank. The executive officers of Bancshares are, and upon
the effective date of the Holding Company Reorganization will continue to be,
5
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substantially the same as the current executive officers of the Bank. The Bank
will continue to operate under the name "American Community Bank" and its
deposit accounts will continue to be insured by the Bank Insurance Fund ("BIF")
of the Federal Deposit Insurance Corporation ("FDIC"). The corporate existence
of the Bank will continue unaffected and unimpaired by the Holding Company
Reorganization, except that all of the outstanding shares of the Bank's Common
Stock (other than shares held by shareholders exercising dissenters' rights, if
any) will be owned by Bancshares. The current shareholders of the Bank will own
all of the outstanding shares of Bancshares Common Stock after completion of
the Holding Company Reorganization.
VOTE REQUIRED
Approval of the Holding Company Agreement requires the approval of a
majority of the issued and outstanding shares of the Bank. The required vote of
shareholders is based upon the number of outstanding shares of the Bank's
Common Stock, and not the number of those shares that are actually voted.
Accordingly, as we explained on page 5, anything but a vote "FOR" this proposal
will have the effect of a vote "AGAINST" this proposal. That is why your vote
is very important. The failure to submit a proxy card or to vote in person at
the annual meeting or an abstention from voting will have the same effect as a
"NO" vote with respect to this proposal.
THE BANK'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED
HOLDING COMPANY REORGANIZATION AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL
AND ADOPTION OF THE HOLDING COMPANY AGREEMENT.
DESCRIPTION OF THE HOLDING COMPANY AGREEMENT
THE BANK
The Bank was incorporated under the laws of the State of North Carolina on
November 13, 1998, and commenced operations as a state-chartered banking
corporation on November 16, 1998. The Bank is not a member of the Federal
Reserve System and has no subsidiaries. As of December 31, 1999, the Bank had
assets of approximately $71.9 million, net loans outstanding of approximately
$59.3 million, deposits of approximately $55 million and stockholders' equity
of approximately $11.6 million.
BANCSHARES
Bancshares was incorporated on February 16, 2000 at the direction of the
Board of Directors of the Bank to become a bank holding company with the Bank
as its wholly-owned subsidiary. Bancshares, upon the approval by the Board of
Governors of the Federal Reserve System ("Federal Reserve Board") of an
application to become a bank holding company, will be subject to regulation by
the Federal Reserve Board. Upon consummation of the Holding Company
Reorganization, Bancshares will have no significant assets other than the
shares of the Bank's capital stock acquired in the Holding Company
Reorganization, and will have no significant liabilities. Initially, Bancshares
will neither own nor lease any property, but will instead use the premises,
equipment and furniture of the Bank. At the present time, Bancshares does not
intend to employ any persons other than certain executive officers, but will
utilize the support staff of the Bank from time to time. Additional employees
will be hired as appropriate, to the extent Bancshares expands its business in
the future.
REASONS FOR THE REORGANIZATION
The Bank's Board of Directors believes that the formation of a holding
company creates a more flexible organizational structure that could provide
benefits such as more options for funding the Bank's growth, the ability to
accommodate distinct subsidiaries for additional lines of business and
increased efficiency with
6
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regard to acquisition activities. Furthermore, the recent enactment of the
Gramm-Leach-Bliley Act of 1999 which made historic changes to the structure of
the financial services industry would require certain activities to only be
conducted through the holding company form of organization. While Bancshares
and the Bank have no current plans for additional lines of business, they might
consider such options in the future. Also, neither have any current plans for
funding additional growth, although they will evaluate acquisition
opportunities on a regular basis. Effecting any such acquisition may
necessitate additional capital funding. A holding company structure would be
consistent with the Bank's stated strategy of positioning the Bank to seize
opportunities that it expects to result from the consolidation of the financial
services industry.
HOLDING COMPANY EFFECTIVE DATE
The date and time on which the Holding Company Reorganization is effective
will be the first business day following the date on which Bancshares files
Articles of Share Exchange in accordance with the NCBCA. We refer to this date
and time as the "Holding Company Effective Date."
ACTIONS AT THE HOLDING COMPANY EFFECTIVE DATE
The Holding Company Reorganization will be accomplished through the
following steps:
o Bancshares has been incorporated as a North Carolina corporation. The
primary purpose of Bancshares is to become the bank holding company for
the Bank.
o At the Holding Company Effective Date, Bancshares will exchange shares of
its Common Stock for all the shares of the Bank's Common Stock issued and
outstanding immediately prior to the Holding Company Effective Date on a
one-for-one basis. As an example, if a Bank shareholder owned 100 shares
of the Bank's stock before the Holding Company Effective Date, he or she
would receive 100 shares of Bancshares in the Holding Company
Reorganization.
o Not more than 20 days following the Holding Company Effective Date,
Bancshares will cause Registrar and Transfer Company, Cranford, New
Jersey, the transfer agent for the Bank's Common Stock (the "Exchange
Agent"), to mail to each former shareholder of the Bank of record
immediately prior to the Holding Company Effective Date written
instructions and transmittal materials for use in surrendering shares of
the Bank Common Stock to the Exchange Agent.
o Upon the proper delivery to the Exchange Agent by the Bank shareholder of
his or her share certificates, the Exchange Agent will register in the
name of such shareholder the shares of Bancshares' Common Stock and
deliver new share certificates to the Bank shareholder.
o Bank shareholders have the right to dissent from the Holding Company
Reorganization if they follow the procedure in the NCBCA. We have
explained that procedure under "Dissenters' Rights" beginning on page 9
and have also included a copy of the statute itself in Appendix II to this
Proxy Statement-Prospectus.
CONDITIONS TO THE HOLDING COMPANY REORGANIZATION
The Holding Company Agreement provides that the obligations of the Bank
and Bancshares to consummate the Holding Company Reorganization are subject to
the satisfaction of the following conditions:
o the approval of the Holding Company Agreement by the affirmative vote of
the holders of a majority of the issued and outstanding shares of the
Bank's Common Stock;
o the approval by the Federal Reserve Board of Bancshares' application to
become a holding company under the Bank Holding Company Act of 1956 (the
"BHC Act");
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o the receipt of all other consents and approvals and the satisfaction of
all other requirements necessary to the consummation of the Holding
Company Reorganization;
o the receipt of a favorable opinion from the Bank's legal counsel as to
the federal income tax consequences of the Holding Company Reorganization;
and
o expiration of any waiting period required by any supervisory authority to
complete the transaction.
Although we have filed the appropriate application with the Federal
Reserve Board under the BHC Act, there are no assurances that all conditions
will be satisfied and that the Holding Company Reorganization will be
consummated.
TERMINATION
The Holding Company Agreement may be terminated prior to the Holding
Company Effective Date if:
o any condition precedent to the Holding Company Reorganization has not been
fulfilled or waived;
o any action, suit, proceeding or claim has been instituted, made or
threatened relating to the Holding Company Agreement which makes
consummation of the transaction inadvisable in the opinion of the Board of
Directors of the Bank or Bancshares;
o the number of shares of the Bank's Common Stock owned by dissenting
shareholders, if any, makes consummation inadvisable in the opinion of the
Bank or Bancshares; or
o for any other reason, consummation of the transaction is inadvisable in
the opinion of the Board of Directors of the Bank or Bancshares.
EXCHANGE OF STOCK CERTIFICATES
At the Holding Company Effective Date, a certificate representing one
share of the Bank's Common Stock will represent the right to be exchanged for
one share of Bancshares' Common Stock, except for certificates representing the
Bank's shares whose holders, if any, have exercised dissenters' rights. After
the Holding Company Effective Date, shareholders will exchange their present
certificates for new certificates representing shares of Bancshares' Common
Stock. The Bank's shareholders will be notified by Bancshares as to the
procedure for the exchange of the Bank's Common Stock certificates for
Bancshares' Common Stock certificates. Your present stock certificates will for
all purposes after the Holding Company Effective Date, until exchanged with the
Exchange Agent, evidence only the exchange rights for which the Holding Company
Agreement provides or, if applicable, the rights of a dissenting shareholder.
FEDERAL INCOME TAX CONSEQUENCES OF THE HOLDING COMPANY REORGANIZATION
The Bank expects to receive an opinion of Anthony Gaeta, Jr., P.A. to the
effect that, among other things:
o The proposed Holding Company Reorganization will constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the "Code").
o No gain or loss will be recognized by the Bank's shareholders on the
receipt of Bancshares' Common Stock in exchange for their Bank Common
Stock.
o The basis of each Bank shareholder in Bancshares' Common Stock received
by such shareholder will be the same as the basis of the Bank's Common
Stock surrendered in exchange therefor.
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o The holding period of Bancshares' Common Stock received by each Bank
shareholder will include the holding period of the Bank's Common Stock
surrendered in exchange therefor, provided that the Bank's Common Stock is
held as a capital asset at the effective time of the Holding Company
Reorganization.
o If a Bank shareholder dissents from the Holding Company Reorganization
and receives cash in exchange for his Bank Common Stock, the receipt of
such cash will be a taxable transaction and will be treated as a
distribution and redemption of his shares, subject to the provisions and
limitations of Sections 301 and 302 of the Code.
The opinion assumes, among other things, that the Holding Company
Reorganization will be consummated as described in the Holding Company
Agreement, and that payment to dissenters will not exceed the fair market value
of Bancshares' Common Stock issued in the Holding Company Reorganization as of
the Effective Time.
The tax opinion will not address state or local tax consequences, and
shareholders are advised to consult their own tax advisors for advice on these
matters.
The tax opinion is not binding on the Internal Revenue Service.
ACCOUNTING TREATMENT OF THE HOLDING COMPANY REORGANIZATION
The Holding Company Reorganization is expected to be characterized as, and
treated similarly to, a "pooling of interests" (rather than a "purchase") for
financial reporting and related purposes, with the result that the accounts of
the Bank and Bancshares will be combined.
DISSENTERS' RIGHTS
Article 13 (entitled "Dissenters' Rights") of the NCBCA sets forth the
rights of the Bank's shareholders who object to the Holding Company
Reorganization. The following is a summary of the material terms of the
statutory procedures to be followed by a holder of Bank Common Stock in order
to dissent from the Holding Company Reorganization and perfect dissenters'
rights under the NCBCA. A copy of Article 13 of the NCBCA is attached as
Appendix II hereto.
If a Bank shareholder elects to exercise such a right to dissent and
demand appraisal, such shareholder must satisfy each of the following
conditions:
(a) such shareholder must give to the Bank and the Bank must actually
receive, before the vote on approval or disapproval of the Holding
Company Reorganization is taken, written notice (the "Notice") of such
shareholder's intent to demand payment for such shareholder's shares if
the Holding Company Reorganization is effectuated (this Notice must be
in addition to and separate from any proxy or vote against the Holding
Company Reorganization; neither voting against, abstaining from voting,
nor failing to vote on the Holding Company Reorganization will
constitute a Notice within the meaning of the NCBCA); and
(b) such shareholder must not vote in favor of the Holding Company
Reorganization (a failure to vote will satisfy this requirement, but a
vote in favor of the Holding Company Reorganization, by proxy or in
person, or the return of a signed proxy which does not specify a vote
against approval of the Holding Company Reorganization or direction to
abstain, will constitute a waiver of such shareholder's Dissenters'
Rights).
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If the requirements of (a) and (b) above are not satisfied and the Holding
Company Reorganization becomes effective, a Bank shareholder will not be
entitled to payment for such shareholder's shares under the provisions of
Article 13 of the NCBCA.
Any Notices should be addressed to American Community Bank, 2593 West
Roosevelt Boulevard, Monroe, North Carolina 28111-0418, attention: Randy P.
Helton. The Notice must be executed by the holder of record of shares of Bank
Common Stock. A beneficial owner may assert Dissenters' Rights only if he
dissents with respect to all Bank Common Stock of which he is the beneficial
owner. With respect to shares of Bank Common Stock which are owned of record by
a voting trust or by a nominee, the beneficial owner of such shares may
exercise Dissenters' Rights if such beneficial holder also submits to the Bank
the record holder's written consent to such exercise not later than the time
such beneficial holder asserts the Dissenters' Rights. A record owner, such as
a broker, who holds shares of Bank Common Stock as a nominee for others, may
exercise Dissenters' Rights with respect to the shares held for all or less
than all beneficial owners of shares as to which such person is the record
owner, provided such record owner dissents with respect to all Bank Common
Stock beneficially owned by any one person. In such case, the Notice submitted
by such broker as record owner must set forth the name and address of the
shareholder who is objecting to the Holding Company Reorganization and
demanding payment for such person's shares.
If the Holding Company Reorganization is approved by both the Bank's
shareholders and all regulatory authorities, the Bank will be
required to mail by registered or certified mail, return receipt requested, a
written notice (the "Dissenters' Notice") to all shareholders who have
satisfied the requirements of (a) and (b) above. The Dissenters' Notice must be
sent no later than ten days after shareholder approval of the Holding Company
Reorganization, and must:
o state where the payment demand must be sent and where and when certificates
for shares of Bank Common Stock must be deposited;
o supply a form for demanding payment;
o set a date by which the Bank must receive the payment demand (not fewer
than 30 days nor more than 60 days after the Dissenters' Notice is mailed);
and
o include a copy of Article 13 of the NCBCA.
A shareholder who receives a Dissenters' Notice must demand payment and
deposit such shareholder's share certificates in accordance with the terms of
the Dissenters' Notice. A shareholder who demands payment and deposits such
shareholder's share certificates retains all other rights of a shareholder
until these rights are canceled or modified by the Holding Company
Reorganization. A shareholder who does not demand payment or deposit such
shareholder's share certificates where required, each by the date set in the
Dissenters' Notice, is not entitled to payment for their shares under the
NCBCA.
Within 30 days after receipt of a demand for payment, the Bank is required
to pay each dissenting shareholder the amount the Bank estimates to be the fair
value of such shareholder's shares, plus interest accrued from the effective
date of the Holding Company Reorganization to the date of payment. The payment
must be accompanied by:
o The Bank's most recent available balance sheet, income statement and
statement of cash flows as of the end of or for the fiscal year ending not
more than 16 months before the date of payment, and the latest available
interim financial statements, if any;
o an explanation of how the Bank estimated the fair value of the shares;
o an explanation of the interest calculation;
o a statement of the dissenters' right to demand payment (as described
below); and
o a copy of Article 13 of the NCBCA.
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If the Holding Company Reorganization is not consummated within 60 days
after the date set for demanding payment and depositing share certificates, the
Bank must, pursuant to the NCBCA, return the deposited certificates. If after
returning the deposited certificates the Holding Company Reorganization is
consummated, the Bank must send a new Dissenters' Notice and repeat the payment
demand procedure.
A shareholder may, however, notify the Bank in writing of such
shareholder's own estimate of the fair value of his shares and amount of
interest due, and demand payment of the excess of such shareholder's estimate
of the fair value of such shareholder's shares over the amount previously paid
by the Bank if: (a) the shareholder believes that the amount paid is less than
the fair value of the Bank Common Stock or that the interest is incorrectly
calculated; (b) the Bank fails to make payment of its estimate of fair value to
a shareholder within 30 days after receipt of a demand for payment; or (c) the
Holding Company Reorganization not having been consummated, the Bank does not
return the deposited certificates within 60 days after the date set for
demanding payment. A shareholder waives the right to demand payment unless such
shareholder notifies the Bank of such shareholder's demand in writing within 30
days of the Bank's payment of its estimate of fair value (with respect to
clause (a) above) or the Bank's failure to perform (with respect to clauses (b)
and (c) in this paragraph). A shareholder who fails to notify the Bank of his
demand within such 30-day period shall be deemed to have withdrawn such
shareholder's dissent and demand of payment.
If a demand for payment remains unsettled, the dissenting shareholder may
commence a proceeding within 60 days after the earlier of (a) the date of his
payment demand or (b) the date payment is made, by filing a complaint with the
Superior Court Division of the North Carolina General Court of Justice to
determine the fair value of the shares and accrued interest. If the dissenting
shareholder does not commence the proceeding within such 60-day period, the
dissenting shareholder shall be deemed to have withdrawn the dissent and demand
for payment.
The court in such an appraisal proceeding will determine all costs of the
proceeding and assess the costs as it finds equitable. The proceeding is to be
tried as in other civil actions; however, the dissenting shareholder will not
have the right to a trial by jury. The court may also assess the fees and
expenses of counsel and expenses for the respective parties, in the amounts the
court finds equitable: (a) against the Bank if the court finds that it did not
comply with the statutes; or (b) against the Bank or the dissenting
shareholder, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith. If
the court finds that the services of counsel for any dissenting shareholder
were of substantial benefit to other dissenting shareholders, and that the fees
for those services should not be assessed against the Bank, the court may award
to these counsel reasonable fees to be paid out of the amounts awarded the
dissenting shareholders who were benefited.
THE SUMMARY SET FORTH ABOVE DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF
THE PROVISIONS OF THE NCBCA RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE APPLICABLE SECTIONS OF THE
NCBCA, WHICH ARE INCLUDED AS APPENDIX II TO THIS PROXY STATEMENT-PROSPECTUS.
SHAREHOLDERS INTENDING TO EXERCISE THEIR DISSENTERS' RIGHTS ARE URGED TO REVIEW
CAREFULLY APPENDIX II AND TO CONSULT WITH LEGAL COUNSEL SO AS TO BE IN STRICT
COMPLIANCE THEREWITH.
The Holding Company Agreement provides that if the Board of Directors of
the Bank determines that the holders of a sufficient number of shares of Bank
Common Stock have dissented from the Holding Company Reorganization so that
consummation of the Holding Company Reorganization is inadvisable, the Board of
Directors of the Bank may terminate the Holding Company Agreement. In that
regard, the Bank currently anticipates that it would terminate the Holding
Company Agreement if more than 149,206 shares of Bank Common Stock dissent from
the Holding Company Reorganization. To comply with the requirements for a
reorganization under Section 368(a)(1)(B) of the Code, the Holding Company
Agreement provides that the Bank will establish an escrow fund from which all
payments to dissenting Bank shareholders (if any) will be made. Bancshares will
not contribute any funds to the escrow fund. Section 368(a)(1)(B) applies to
the
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acquisition by one corporation, in exchange solely for all or a part of its
voting stock, of stock of another corporation, and no cash consideration may be
paid by the acquiror. Accordingly, it is necessary that all cash payments to
dissenters of the acquired corporation be paid from funds of the acquired
corporation, and not from funds of the acquiring corporation. The escrow fund
mechanism described above was included in the Holding Company Agreement to
ensure that any and all Bank dissenters would be paid from the Bank's funds and
that the Holding Company Reorganization would remain eligible for treatment as
a reorganization under Section 368(a)(1)(B) of the Code.
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DESCRIPTION OF BANCSHARES' CAPITAL STOCK
The following is a summary of the material provisions of Bancshares'
Articles of Incorporation and Bylaws.
GENERAL
The Articles of Incorporation of Bancshares authorize the issuance of
10,000,000 shares of capital stock, consisting of 9,000,000 shares of common
stock, par value $1.00 per share, and 1,000,000 shares of preferred stock at no
par value. There is one share of Bancshares Common Stock currently issued and
outstanding, which is owned by Randy P. Helton. There is currently no
established public trading market for Bancshares Common Stock.
On the Holding Company Effective Date, the currently outstanding share of
Bancshares Common Stock will be redeemed and canceled, and there will be,
subject to the exercise of Dissenters' Rights, 1,492,062 shares outstanding as
a result of the exchange of shares of Bancshares Common Stock for shares of
Bank Common Stock.
In the future, the authorized but unissued and unreserved shares of
Bancshares Common Stock will be available for issuance for general purposes,
including, but not limited to, possible issuance as stock dividends or stock
splits, future mergers or acquisitions, or future private placements or public
offerings. Except as otherwise may be required to approve a merger or other
transaction in which the additional authorized shares of Bancshares Common
Stock would be issued, no shareholder approval will be required for the
issuance of those shares. See pages 15-18 for a discussion of the rights of the
holders of Bancshares Common Stock as compared to the holders of Bank Common
Stock.
COMMON STOCK
GENERAL. Each share of Bancshares Common Stock has the same relative
rights as, and is identical in all respects to, each other share of Bancshares
Common Stock.
DIVIDEND RIGHTS. As a North Carolina corporation, Bancshares will not be
directly subject to the restrictions on the payment of dividends applicable to
the Bank. Holders of shares of Bancshares' Common Stock will be entitled to
receive such cash dividends as the Board of Directors of Bancshares may declare
out of funds legally available therefor. However, the payment of dividends by
Bancshares will be subject to the restrictions of North Carolina law applicable
to the declaration of dividends by a business corporation. Under such
provisions, cash dividends may not be paid if a corporation will not be able to
pay its debts as they become due in the usual course of business after making
such cash dividend distribution or the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed to
satisfy certain liquidation preferential rights. After the Holding Company
Reorganization is consummated, the ability of Bancshares to pay dividends to
the holders of shares of Bancshares Common Stock will, at least initially, be
completely dependent upon the amount of dividends the Bank pays to Bancshares.
See "Comparison of the Rights of Shareholders -- Comparison of the Rights of
Holders of the Bank Common Stock and Bancshares Common Stock -- Payment of
Dividends".
VOTING RIGHTS. Each share of Bancshares Common Stock will entitle the
holder thereof to one vote on all matters upon which shareholders have the
right to vote. In addition, if the Board of Directors of Bancshares consists of
9 or more directors, its members will be classified so that approximately
one-third of the directors will be elected each year. Shareholders of
Bancshares are not entitled to cumulate their votes for the election of
directors. See "Comparison of the Rights of Shareholders -- Comparison of the
Rights of Holders of Bank Common Stock and Bancshares Common Stock -- Voting
Rights".
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LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of Bancshares, the holders of shares of Bancshares Common Stock will
be entitled to receive, after payment of all debts and liabilities of
Bancshares, all remaining assets of Bancshares available for distribution in
cash or in kind. In the event of any liquidation, dissolution or winding up of
the Bank, Bancshares, as the holder of all shares of Bank Common Stock upon
completion of the Holding Company Reorganization would be entitled to receive
payment of all debts and liabilities of the Bank (including all deposits and
accrued interest thereon) and all remaining assets of the Bank available for
distribution in cash or in kind.
PREEMPTIVE RIGHTS; REDEMPTION. Holders of shares of Bancshares Common
Stock will not be entitled to preemptive rights with respect to any shares that
may be issued. Bancshares Common Stock is not subject to call or redemption.
CERTAIN ARTICLES AND BYLAW PROVISIONS HAVING POTENTIAL ANTI-TAKEOVER EFFECTS
GENERAL. The following is a summary of the material provisions of
Bancshares' Articles of Incorporation and Bylaws which address matters of
corporate governance and the rights of shareholders. Certain of these
provisions may delay or prevent takeover attempts not first approved by the
Board of Directors of Bancshares (including takeovers which certain
shareholders may deem to be in their best interests). These provisions also
could delay or frustrate the removal of incumbent directors or the assumption
of control by shareholders. All references to the Articles of Incorporation and
Bylaws are to the Bancshares' Articles of Incorporation and Bylaws in effect as
of the date of this Proxy Statement-Prospectus.
CLASSIFICATION OF THE BOARD OF DIRECTORS. The Bylaws provide that if the
number of directors is nine or more (the number of directors is currently 7),
the Board of Directors of Bancshares shall be divided into three classes, Class
I, Class II and Class III, which shall be as nearly equal in number as
possible. If so classified, each director shall serve for a term ending on the
date of the third annual meeting of shareholders following the annual meeting
at which the director was elected (except for certain initial directors whose
terms may be shorter than three years as necessary to effect the classification
process). A director elected to fill a vacancy shall serve only until the next
meeting of shareholders at which directors are elected. If the Board of
Directors of Bancshares becomes classified, approximately one-third of the
members of the Board of Directors of Bancshares will be elected each year, and
two annual meetings will be required for Bancshares' shareholders to change a
majority of the members constituting the Board of Directors of Bancshares.
REMOVAL OF DIRECTORS; FILLING VACANCIES. Bancshares' Articles of
Incorporation provide that shareholders may remove one or more of the directors
with cause which includes (i) criminal prosecution and conviction during the
course of a director's service as a director of Bancshares of an act of fraud
embezzlement, theft, or personal dishonesty, (ii) the prosecution and
conviction of any criminal offense involving dishonesty or breach of trust, or
(iii) the occurrence of any event resulting in a director being excluded from
coverage, or having coverage limited as to the director when compared to other
covered directors under any of the fidelity bonds or insurance policies
covering its directors, officers or employees. Vacancies occurring in the Board
of Directors of Bancshares may be filled by the shareholders or a majority of
the remaining directors, even though less than a quorum, or by the sole
remaining director.
AMENDMENT OF BYLAWS. Subject to certain restrictions described below,
either a majority of the Board of Directors or the shareholders of Bancshares
may amend or repeal the Bylaws. A bylaw adopted, amended or repealed by the
shareholders may not be readopted, amended or repealed by the Board of
Directors of Bancshares. Generally, the shareholders of Bancshares may adopt,
amend, or repeal the Bylaws in accordance with the NCBCA.
The Board of Directors is permitted by Bancshares' Articles of
Incorporation to consider other constituents besides the shareholders if faced
with a proposal that could cause a change in control. Such constituents are
employees, depositors, customers, creditors and the communities in which
Bancshares and its subsidiaries conduct business. Further, the Board is
permitted to evaluate the competence, experience and
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integrity of any proposed acquiror as well as the prospects for success of such
a takeover proposal from a regulatory perspective.
SPECIAL MEETINGS OF SHAREHOLDERS. Bancshares' Bylaws provide that special
meetings of shareholders may be called only by the President or Board of
Directors of Bancshares.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Bancshares Common Stock is
expected to be Registrar and Transfer Company, Cranford, New Jersey, which
presently serves as such for the Bank.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
COMPARISON OF THE RIGHTS OF HOLDERS OF BANK COMMON STOCK AND BANCSHARES COMMON
STOCK.
NEITHER BANK COMMON STOCK NOR BANCSHARES COMMON STOCK ARE INSURED BY THE FDIC OR
GUARANTEED BY THE ISSUER AND ARE BOTH SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF VALUE.
GENERAL. Upon consummation of the Holding Company Reorganization,
shareholders of the Bank, other than those shareholders who properly exercise
Dissenters' Rights, will become shareholders of Bancshares. Certain legal
distinctions exist between owning Bancshares Common Stock and Bank Common
Stock. The shareholders of Bancshares will be governed by and subject to the
Articles of Incorporation and Bylaws of Bancshares rather than the Articles of
Incorporation and Bylaws of the Bank. Bancshares is a corporation governed by
the laws of the State of North Carolina applicable to business corporations,
while the Bank is a commercial bank governed by the banking laws of North
Carolina, which incorporate the corporate laws of North Carolina only to the
extent they do not conflict with the banking laws.
The following is a summary of the material differences in the rights of
holders of Bancshares Common Stock and of holders of Bank Common Stock.
Shareholders should consult with their own legal counsel with respect to
specific differences and changes in their rights as shareholders which will
result from the proposed Holding Company Reorganization.
CAPITAL STRUCTURE. The Bank's Articles of Incorporation authorize the
issuance of up to 10,000,000 shares of common stock, par value $5.00 per share,
and there are currently 1,492,062 shares issued and outstanding.
Bancshares' Articles of Incorporation authorize the issuance of up to
9,000,000 shares of $1.00 par value common stock and 1,000,000 shares of
preferred stock. The rights, privileges and preferences of the preferred stock
will be determined, in accordance with North Carolina law, by the Board of
Directors of Bancshares when, and if, any such shares of preferred stock are
issued. Because the exchange of shares of common stock by virtue of the Holding
Company Reorganization is to be one-for-one (and Bancshares will redeem and
cancel the single share previously issued by it for nominal consideration),
Bancshares will have the same number of shares issued and outstanding
immediately after consummation of the Holding Company Reorganization as the Bank
did before, except to the extent that any shareholders of the Bank perfect their
appraisal rights of dissent and receive cash rather than Bancshares Common
Stock.
VOTING RIGHTS. In general, each holder of Bank Common Stock and Bancshares
Common Stock is entitled to one vote per share on all matters submitted to a
vote of shareholders. In the election of directors, each holder of Bank Common
Stock and of Bancshares Common Stock has the right to vote the number of shares
owned by him or her on the record date for as many persons as there are
directors to be elected. Cumulative voting is not available with respect to the
election of directors of the Bank or Bancshares.
Under North Carolina banking law, the Bank may effect a merger with or
transfer of all of its assets and liabilities to another bank, or may dissolve,
only upon the affirmative vote of the holders of at least two-thirds of the
Bank's outstanding shares of Common Stock. Bancshares may effect a merger with
or transfer of all of its assets and liabilities to another corporation, or may
dissolve upon the affirmative vote of the holders of at
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least three-fourths of Bancshares' outstanding shares of Common Stock. However
only a majority of Bancshares' outstanding shares of Common Stock is required
if any such transaction shall have been approved by a majority of the members
of the Board of Directors unaffiliated with any other party to the proposed
transaction.
DIRECTORS. The Bylaws of both the Bank and Bancshares provide that the
Board of Directors shall have from 8 to 20 members. The Board of Directors of
the Bank is currently comprised of 10 members. The Board of Directors of
Bancshares is currently comprised of seven members all of whom are currently
directors of Bank. The Boards of Directors of both the Bank and Bancshares may
fill vacancies arising in their directorships.
The Bylaws of both the Bank and Bancshares provide that if the number of
directors is at least nine, the terms of the directors shall be staggered.
Pursuant to the Bylaws, the directors are divided into three classes, each
consisting of approximately one-third of the total directors. Each year, one
class of the directors comes up for election, resulting in director terms of
three years.
ASSESSMENT. Section 53-42 of the General Statutes of North Carolina
provides for the pro rata assessment of holders of capital stock of a state
bank in the event that its capital becomes impaired. Such assessment is to be
enforced by the sale, to the extent necessary, of the bank stock of any
shareholder who fails to pay his or her assessment. Accordingly, the shares of
Bank Common Stock are subject to assessment as provided by such statute.
All shares of Bancshares' Common Stock will, upon consummation of the
Holding Company Reorganization, be fully paid and non-assessable.
RIGHTS TO REPURCHASE STOCK. Under North Carolina banking law, the Bank may
repurchase its stock only after approval by holders of two-thirds of its
outstanding Common Stock and by the North Carolina Banking Commission. Under
the BHC Act, no prior approval is required and, therefore, Bancshares will be
allowed to purchase its own stock in the open market subject to applicable law
and the availability of funds therefor. Under certain circumstances, stock
repurchases by Bancshares will require the prior approval of the Federal
Reserve Bank of Richmond. Bancshares may consider repurchases of its stock in
the future, but there can be no assurance that Bancshares will conduct such
repurchases.
PAYMENT OF DIVIDENDS. The ability of the Bank to pay dividends on its
Common Stock is restricted by North Carolina banking law and by tax
considerations related to state-chartered banks. North Carolina law imposes
restrictions on the ability of all banks chartered under North Carolina law to
pay dividends. The Bank may only pay dividends out of undivided profits as
determined pursuant to North Carolina General Statutes Section 53-87. In
addition, regulatory authorities may limit payment of dividends by any bank when
it is determined that such a limitation is in the public interest and is
necessary to ensure the financial soundness of the bank. Further, without the
approval of the North Carolina Commissioner of Banks, no bank, like the Bank,
that has not been in existance for at least three years may pay any cash
dividends. Although Bancshares' ability to pay dividends will not be subject to
these restrictions, such restrictions will indirectly affect Bancshares because
dividends from the Bank will be the primary source of funds of Bancshares for
the payment of dividends to shareholders of Bancshares. Accordingly, Bancshares
will not be in a position to pay any cash dividends until November 2001 without
the foregoing approval.
Bancshares will be limited by certain restrictions imposed generally on
North Carolina corporations. Subject to certain limitations and exceptions,
cash dividends may not be paid if a corporation will not be able to pay its
debts as they become due in the usual course of business after making such cash
dividend distribution or the corporation's total assets would be less than the
sum of its total liabilities plus the amount that would be needed to satisfy
certain liquidation preferential rights.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND
EMPLOYEES. The Articles of Incorporation of both the Bank and Bancshares
eliminate a director's personal liability for breach of duty as a director to
the fullest extent permitted by law. As required by North Carolina banking law,
the Articles of
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Incorporation of the Bank qualify the elimination of liability for acts or
omissions as to which the elimination of liability would be inconsistent with
the provisions of North Carolina banking law or the business of banking.
The Bylaws of both the Bank and Bancshares provide for indemnification to
the fullest extent permitted by law. Under the Federal Deposit Insurance Act,
as amended ("FDIA"), both the Bank and Bancshares would be prohibited from
paying any indemnification with respect to any liability or legal expense
incurred by a director, officer, or employee as a result of an action or
proceeding by a federal banking agency resulting in a civil money penalty or
certain other remedies against such person.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling Bancshares
pursuant to the forgoing provisions, Bancshares has been informed that in the
opinion of the Securities and Exchange Commission ("SEC"), such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
CHANGE IN CONTROL REGULATION. Both the Bank and Bancshares are subject to
the North Carolina Shareholder Protection Act (the "Shareholder Protection
Act") and the North Carolina Control Share Acquisition Act (the "Control Share
Act"), each of which, if applicable, would hinder the ability of a third party
to acquire control of either company. The Shareholder Protection Act generally
requires that, unless certain "fair price" and other conditions are met, the
affirmative vote of the holders of 95% of the voting shares of a corporation is
necessary to adopt or authorize a business combination with any other entity,
if that entity is the beneficial owner, directly or indirectly, of more than
20% of the voting shares of the corporation. The Control Share Act provides
that any person or party who acquires "control shares" (defined as a number of
shares which, when added to other shares held, gives the holder voting power in
the election of directors equal to 20%, 33 1/3% or a majority of all voting
power) may only vote those shares if the remaining shareholders of the
corporation, by resolution, permit those shares to be voted. If the
shareholders of the corporation permit the "control shares" to be accorded
voting rights and the holder of the "control shares" has a majority of all
voting power for the election of directors, the other shareholders of the
corporation have the right to the redemption of their shares at the fair value
of the shares as of the date prior to the date on which the vote was taken
which gave voting rights to the "control shares." The provisions of the
Shareholder Protection Act and the Control Share Act may have the effect of
discouraging a change of control by allowing minority shareholders to prevent a
transaction favored by a majority of the shareholders. The primary purpose of
these provisions is to encourage negotiations with the board of directors of a
company by groups or corporations interested in acquiring control of the
company.
The acquisition of more than ten percent (10%) of either the outstanding
Bancshares Common Stock or the outstanding Bank Common Stock may, in certain
circumstances, be subject to the provisions of the Change in Bank Control Act
of 1978 (the "Change in Bank Control Act"). The FDIC has also adopted a
regulation pursuant to the Change in Bank Control Act which generally requires
persons who at any time intend to acquire control of an FDIC-insured
state-chartered non-member bank, either directly or indirectly through an
acquisition of control of its holding company, to provide 60 days prior written
notice and certain financial and other information to the FDIC. Control for the
purpose of this Act exists in situations in which the acquiring party has
voting control of at least twenty-five percent (25%) of any class of voting
stock or the power to direct the management or policies of the bank or the
holding company. However, under FDIC regulations, control is presumed to exist
where the acquiring party has voting control of at least ten percent (10%) of
any class of voting securities if (a) the bank or holding company has a class
of voting securities which is registered under Section 12 of the Exchange Act,
or (b) the acquiring party would be the largest holder of a class of voting
shares of the bank or the holding company. The statute and underlying
regulations authorize the FDIC to disapprove a proposed acquisition on certain
specified grounds.
Prior approval of the Federal Reserve Board would be required for any
acquisition of control of the Bank or Bancshares by any bank holding company
under the BHC Act. Control for purposes of the BHC Act would be based on, among
other things, a twenty-five percent (25%) voting stock test or on the ability
of the holding
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company otherwise to control the election of a majority of the Board of
Directors of the Bank or Bancshares. As part of such acquisition, the acquiring
company (unless already so registered) would be required to register as a bank
holding company under the BHC Act.
The Exchange Act requires that a purchaser of any class of a corporation's
securities registered under the Exchange Act notify the SEC and such
corporation within ten days after its purchases exceed five percent of the
outstanding shares of that class of securities. This notice must disclose the
background and identity of the purchaser, the source and amount of funds used
for the purchase, the number of shares owned and, if the purpose of the
transaction is to acquire control of the corporation, any plans to alter
materially the corporation's business or corporate structure. In addition, any
tender offer to acquire a corporation's securities is subject to the
limitations and disclosure requirements of the Exchange Act.
STATUTORY GOVERNANCE. The Bank, as a state chartered bank, is subject to
certain provisions of Chapter 53 of the North Carolina General Statutes whereas
the NCBCA, which governs bank holding companies does not contain similar
provisions. Therefore, although these provisions shall continue to govern the
Bank, they will only indirectly affect Bancshares. The relevant provisions of
Chapter 53 of the North Carolina General Statutes directly influencing the Bank
to which Bancshares is not subject are that:
o not less than three-fourths of the directors shall be residents of the
State of North Carolina;
o all directors are required to own stock of the Bank; and
o every director be required to take an oath.
BYLAW CHANGES. The Bylaws of Bancshares are substantially the same as the
Bylaws of the Bank. However, Bancshares' Bylaws do not include certain
bank-specific committees that are included in the Bank's Bylaws.
Upon request, the Bank will provide its shareholders with copies of the
Bylaws of both the Bank and Bancshares free of charge. Requests should be made
to Dan R. Ellis, Jr., at (704) 225-8444 or mailed to American Community Bank,
2593 West Roosevelt Boulevard, Monroe, North Carolina 28111-0418, Attention:
Dan R. Ellis, Jr.
18
<PAGE>
PRO FORMA CONSOLIDATED CAPITALIZATION
The following table presents the pro forma consolidated capitalization of
Bancshares and the Bank, as its subsidiary, at December 31, 1999, adjusted to
give effect to the Holding Company Reorganization as described in this Proxy
Statement-Prospectus. The authorized number of shares of Common Stock of
Bancshares is 9,000,000.
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
THE BANK BANCSHARES CAPITALIZATION
------------- ------------ ---------------
<S> <C> <C> <C>
SHAREHOLDERS' EQUITY
Common Stock ................................. $ 6,216,925 $ 1.00 (1) $ 1,492,062
Additional Paid-In Capital ................... 6,364,734 9.00 (1) 11,089,597
Retained Deficit ............................. (1,029,139) -- (1,029,139)
Total Shareholders' Equity ................... 11,552,520 10.00 (1) 11,552,520
</TABLE>
(1) To be redeemed and cancelled upon the Effective Date.
INFORMATION ABOUT THE BANK AND BANCSHARES
BANCSHARES
GENERAL. Bancshares is a business corporation incorporated under the laws
of the State of North Carolina on February 16, 2000. The only office of
Bancshares, and its principal place of business, is located at the
administrative office of the Bank at 2593 West Roosevelt Boulevard, Monroe,
North Carolina 28111-0418. Bancshares' telephone number is (704) 225-8444.
Bancshares was organized for the purpose of becoming the holding company
of the Bank. Pursuant to the Holding Company Reorganization, the Bank will
become a wholly-owned subsidiary of Bancshares, Bancshares will become a bank
holding company, and each shareholder of the Bank will, subject to the exercise
of Dissenters' Rights, become a shareholder of Bancshares without any change in
the number of shares owned or percentage ownership.
Bancshares has not yet undertaken any operating business activities and
does not currently propose to do so. In the future, Bancshares may become an
operating company or acquire other commercial banks or bank holding companies,
or engage in or acquire such other activities or businesses as may be permitted
by applicable law, although there are no present plans or intentions to do so.
PROPERTY. Initially, Bancshares will neither own nor lease any real or
personal property but will utilize the premises and property of the Bank
without the payment of any rental fees to the Bank.
COMPETITION. It is expected that for the near future the primary business
of Bancshares will be the ongoing business of the Bank. Therefore, the
competitive conditions to be faced by Bancshares will be the same as those
faced by the Bank. In addition, many banks and financial institutions have
formed, or are in the process of forming, holding companies. It is likely that
these holding companies will attempt to acquire banks, thrift institutions or
companies engaged in bank-related activities. Thus, Bancshares will face
competition in undertaking any such acquisitions and in operating subsequent to
any such acquisitions.
EMPLOYEES. At the present time, Bancshares does not intend to have any
employees other than its management. See "Management of Bancshares." It will
utilize the support staff of the Bank from time to time without the payment of
any fees to the Bank. If Bancshares acquires other financial institutions or
pursues other lines of business, it may at such time hire additional employees.
19
<PAGE>
THE BANK
GENERAL. The Bank was incorporated under the laws of the State of North
Carolina on November 13, 1998, and commenced operations as a state-chartered
banking corporation on November 16, 1998. The Bank is not a member of the
Federal Reserve System and has no subsidiaries. As of December 31, 1999, the
Bank had assets of approximately $71.9 million, net loans outstanding of
approximately $59.3 million and deposits of approximately $55 million. The
Bank's corporate and main office is located at 2593 West Roosevelt Boulevard,
Monroe, North Carolina 28111-0418, and its telephone number is (704) 225-8444.
In addition to the main office, the Bank has branch offices in Indian Trail and
Marshville, North Carolina as well as two additional branches in Monroe, one in
a Super Wal-Mart store.
The Bank is a community bank currently engaged in the general commercial
banking business in Union County, North Carolina. The Bank's market area
consists of the City of Monroe, North Carolina, and includes Union County and
parts of Mecklenburg County. Monroe is the largest city in Union County and
serves as the county seat. The area is a very strong and diversified economic
area. The total population of Union County is approximately 100,000.
The Bank offers a full range of banking services, including checking
accounts, savings accounts, NOW accounts, money market accounts and
certificates of deposit; loans for real estate, businesses, agriculture,
personal uses, home improvement and automobiles; equity lines of credit; credit
cards; individual retirement accounts; safe deposit boxes; bank money orders;
electronic funds transfer services including wire transfers; traveler's checks;
and free notary services to all Bank customers. The Bank has a Mortgage Loan
Department and an exclusive license through Factorworks, Inc. to provide a
factoring product to its commercial customers. In addition, the Bank provides
automated teller machine access to its customers for cash withdrawals through
nationwide ATM networks. At present, the Bank does not provide the services of
a trust department.
LENDING ACTIVITIES AND DEPOSITS. The Bank makes a variety of loans,
including loans secured by real estate, loans for commercial purposes and loans
to individuals for personal and household purposes. There are no large
concentrations of credit to any particular industry. The economic trends of the
area served by the Bank are influenced by the significant industries within the
region. Virtually all the Bank's business activity is with customers located in
Monroe and Union and Mecklenburg Counties. The ultimate collectibility of the
Bank's loan portfolio is susceptible to changes in the market conditions of
this geographic region.
FINANCIAL STATEMENTS. A copy of the Bank's 1999 Annual Report to
Shareholders, which includes audited statements of condition as of December 31,
1999 and for the period November 16, 1998 (date of commencement of operations)
through December 31, 1998 and the related audited statements of operations,
statements of changes in shareholders' equity and statements of cash flows for
the year ended December 31, 1999 and the period ended December 31, 1998,
prepared in conformity with generally accepted accounting principles,
accompanies this Prospectus/Proxy Statement. However, the 1999 Annual Report is
not considered to be a part of or incorporated into this Prospectus/Proxy
Statement.
COMPETITION
Commercial banking in North Carolina is extremely competitive in large
part due to statewide branching. The Bank competes in its market areas with
some of the largest banking organizations in the state and the country and
other financial institutions, such as federally and state-chartered savings and
loan institutions and credit unions, as well as consumer finance companies,
mortgage companies and other lenders engaged in the business of extending
credit. Many of the Bank's competitors have broader geographic markets and
higher lending limits than the Bank and are also able to provide more services
and make greater use of media advertising.
20
<PAGE>
The enactment of legislation authorizing interstate banking has caused
great increases in the size and financial resources of some of the Bank's
competitors. In addition, as a result of interstate banking, out-of-state
commercial banks may acquire North Carolina banks and heighten the competition
among banks in North Carolina.
Despite the competition in its market areas, the Bank believes that it has
certain competitive advantages that distinguish it from its competition. The
Bank believes that its primary competitive advantages are its strong local
identity and affiliation with the community and its emphasis on providing
specialized services to small and medium-sized business enterprises, as well as
professional and upper-income individuals. The Bank offers customers modern,
high-tech banking without forsaking community values such as prompt, personal
service and friendliness. The Bank offers many personalized services and
intends to attract customers by being responsive and sensitive to their
individualized needs. The Bank also relies on goodwill and referrals from
shareholders and satisfied customers, as well as traditional media to attract
new customers. To enhance a positive image in the community, the Bank supports
and participates in local events and its officers and directors serve on boards
of local civic and charitable organizations.
YEAR 2000 ISSUES
The issues surrounding the computer concerns with the turn into the 21st
Century resulted in no adverse effect upon the Bank. The service bureau
utilized by the Bank was able to recognize the year 2000 and continues to
process all the data processing for the Bank without error. Additionally, the
year 2000 concerns proved to be a non-issue for the Bank's third party vendors.
PROPERTIES
The following table sets forth the location and other related information
regarding the Bank's offices and other properties.
<TABLE>
<CAPTION>
OFFICES LOCATION STATUS
- -------------------------- ----------------------------------- -------
<S> <C> <C>
Main Office 2593 West Roosevelt Boulevard Leased
Monroe, North Carolina
Sunset Branch 120 East Sunset Drive Leased
Monroe, North Carolina
Indian Trail Branch 13860 East Independence Boulevard Leased
Indian Trail, North Carolina
Super Wal-Mart 2406 West Roosevelt Boulevard Leased
Branch Monroe, North Carolina
Marshville Branch 7001 East Marshville Boulevard Leased
Marshville, North Carolina
</TABLE>
EMPLOYEES
At December 31, 1999, the Bank had 42 full-time equivalent employees. None
of its employees is represented by any collective bargaining unit. The Bank
considers relations with its employees to be good.
LEGAL PROCEEDINGS
In the normal course of its operations, the Bank from time to time is
party to various legal proceedings. Based upon information currently available,
and after consultation with its counsel, management believes that
21
<PAGE>
such legal proceedings, in the aggregate, will not have a material adverse
effect on the Bank's business, financial position or results of operations.
MANAGEMENT AND CERTAIN TRANSACTIONS
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
As of December 31, 1999, no shareholder owned more than 5% of the Bank's
common stock.
As of December 31, 1999, the beneficial ownership of the Bank's common
stock by directors individually, and by directors and executive officers as a
group, was as follows:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS(3)
- ------------------------------------------------------ ----------------- ------------
<S> <C> <C>
Thomas J. Hall ................................ 24,790 1.51%
Larry S. Helms ................................ 24,919(4) 1.52%
Randy P. Helton ............................... 22,646 1.38%
Kenneth W. Long ............................... 56,138 3.42%
Zebulon Morris, Jr. ........................... 24,790 1.51%
L. Steven Phillips. ........................... 33,716 2.05%
L. Carlton Tyson .............................. 27,022 1.65%
David D. Whitley .............................. 20,292 1.24%
H. L. Williams, Jr. ........................... 24,790 1.51%
Gregory N. Wylie .............................. 29,750 1.81%
All Directors and Executive Officers as a group
(15 persons) ................................ 300,433 18.30%
</TABLE>
- --------
(1) Except as otherwise noted, to the best knowledge of the Bank's management,
the above individuals and group exercise sole voting and investment power
with respect to all shares shown as beneficially owned other than the
following shares as to which such powers are shared: Mr. Helton -- 720
shares, Mr. Long -- 240 shares, Mr. Tyson -- 11,040 shares, and Mr.
Whitley -- 4,327 shares.
(2) Included in the beneficial ownership tabulations are the following options
to purchase shares of common stock of the Bank: Mr. Hall -- 12,790 shares,
Mr. Helms -- 12,919 shares, Mr. Helton -- 11,684 shares,
Mr. Long -- 29,106 shares, Mr. Morris -- 12,790 shares, Mr. Phillips --
17,396 shares, Mr. Tyson -- 13,942 shares, Mr. Whitley -- 10,470 shares, Mr.
Williams -- 12,790 shares and Mr. Wylie -- 15,350 shares.
(3) The calculation of the percentage of class beneficially owned by each
individual and the group is based on the sum of (i) a total of 1,492,062
outstanding shares of common stock outstanding as of December 31, 1999,
and (ii) 149,287 options exercisable within 60 days of December 31, 1999.
(4) Mr. Helms disclaims beneficial ownership of the shares held by his spouse.
REQUIRED REPORTS OF BENEFICIAL OWNERSHIP
The Bank's directors and executive officers are required to file certain
reports with the Federal Deposit Insurance Corporation regarding the amount of
and changes in their beneficial ownership of the Bank's common stock
(including, without limitation, an initial report following the person's
election as an officer or director of the Bank and a report following the end
of each month during which there has been a change in a reporting person's
beneficial ownership). To the best knowledge of management of the Bank all such
reports were timely filed except for the late filing by all directors reporting
the grant of options on Form F-8. All such reports have been filed.
22
<PAGE>
PROPOSAL 2: ELECTION OF DIRECTORS
---------------------------------
The Bank's Bylaws provide that its Board of Directors shall consist of
between eight and twenty members, as determined by the Board of Directors or
the shareholders, and if nine or more members, they shall be staggered into
terms of one, two, and three years in as equal numbers as possible. The Board
has set the number of directors at ten. The three directors whose terms expire
at the Annual Meeting have been renominated to the Board for three-year terms.
<TABLE>
<CAPTION>
POSITION(S) DIRECTOR PRINCIPAL OCCUPATION AND
NAME AND AGE HELD SINCE BUSINESS EXPERIENCE DURING PAST 5 YEARS
- -------------------------- ------------- ---------- ----------------------------------------------------
<S> <C> <C> <C>
Larry S. Helms (54) Director 1998 Owner, Larry S. Helms and Associates, Indian Trail,
NC; former Manager, BellSouth Telecommunications,
Charlotte, NC, 1970-1996.
Zebulon Morris, Jr. (61) Director 1998 President, Milex Carolinas, Inc., Charlotte, NC
L. Carlton Tyson (57) Director 1998 President, Tyson Group, Monroe, NC
</TABLE>
INCUMBENT DIRECTORS
The Bank's Board of Directors includes the following directors whose terms
will continue after the Annual Meeting. Certain information regarding those
directors is set forth in the following table:
<TABLE>
<CAPTION>
DIRECTOR TERM PRINCIPAL OCCUPATION AND
NAME AND AGE SINCE EXPIRES BUSINESS EXPERIENCE DURING PAST 5 YEARS
- --------------------------------- ---------- --------- --------------------------------------------------
<S> <C> <C> <C>
Thomas J. Hall (52) 1998 2001 Chief Financial Officer, Petro Express, Inc.,
Charlotte, NC; former President, Halls, Inc.,
Charlotte, NC
David D. Whitley (53) 1998 2001 President, Whitley Mortgage Associates, Inc.,
Monroe, NC
H.L. ("Ben") Williams, Jr. (54) 1998 2001 Private Investor, former Chief Executive Officer,
Appearance Corporation,
Monroe, NC
Randy P. Helton (44) 1998 2002 President and Chief Executive Officer of the
Bank; former Vice President of the Private
Client Group, First Union National Bank,
Charlotte, NC; former Senior Vice President,
American Commercial Bank, Monroe, NC
Kenneth W. Long (51) 1998 2002 President, Click Tactics, Inc., Monroe, NC
L. Stephen Phillips (48) 1998 2002 Chief Executive Officer, Charlotte GreenCorp,
Inc., Charlotte, NC; former President, Tarheel
Natural Turf Company, Inc., Charlotte, NC
Gregory N. Wylie (45) 1998 2002 Chief Executive Officer of Metro Marketing,
Inc., Charlotte, NC
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR OF BANK OF ASHEVILLE AS SET FORTH ABOVE.
DIRECTOR RELATIONSHIPS
No director is a director of any company with a class of securities
registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of the Exchange Act, or any company registered as
an investment company under the Investment Company Act of 1940.
23
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Bank's Board of Directors held 11 regular meetings and no special
meetings during 1999. Each director attended 75% or more of the aggregate
number of meetings of the Board of Directors and any committees on which he or
she served.
The Bank's Board of Directors has several standing committees, including
an Audit Committee and a Compensation Committee.
<TABLE>
<CAPTION>
EXECUTIVE ASSET/LIABILITY COMPENSATION
COMMITTEE COMMITTEE LOAN COMMITTEE AUDIT COMMITTEE COMMITTEE
- ------------------ --------------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Randy P. Helton Randy P. Helton Thomas J. Hall Larry S. Helms Gregory N. Wylie
Kenneth W. Long Kenneth W. Long David D. Whitley L. Steven Phillips L. Carlton Phillips
Gregory N. Wylie Gregory N. Wylie Kenneth W. Long H.L. Williams Kenneth W. Long
David D. Whitley Thomas J. Hall Zebulon Morris, Jr. Gregory N. Wylie L. Steven Phillips
Larry S. Helms Dan R. Ellis (non-voting) Randy P. Helton David D. Whitley Randy P. Helton
</TABLE>
DIRECTOR COMPENSATION
BOARD FEES. As of January 2000, each director (other than directors who
also are salaried employees of the Bank) received no compensation.
1999 NONSTATUTORY STOCK OPTION PLAN FOR DIRECTORS. The shareholders of the
Bank ratified the 1999 Nonqualified Stock Option Plan for Directors (the
"Nonstatutory Option Plan") at the 1999 Annual Meeting of Shareholders pursuant
to which options on 124,338 shares of the Bank's common stock are available for
issuance to members of the Bank's Board of Directors and the board of any
subsidiary of the Bank. On April 14, 1999, all options were granted under the
Nonstatutory Option Plan.
EXECUTIVE OFFICERS
Set forth below is certain information regarding the Bank's executive
officers as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD BUSINESS EXPERIENCE
- --------------------- ----- ------------------------- ----------------------------------------------------
<S> <C> <C> <C>
Randy P. Helton 44 President and Former Vice President of the Private Banking Group,
Chief Executive Officer First Union National Bank, Charlotte, NC; former
Senior Vice President, American Commercial Bank,
Monroe, NC
William R. Adcock 43 Senior Vice President/ Former Commercial Lender, Bank of Union,
Monroe City Executive Monroe, NC
Richard M. Cochrane 47 Senior Vice President/ Former Vice President, South Trust Bank, Mint Hill,
Mortgage Manager/ NC
Factorworks Manager
Dan R. Ellis, Jr. 44 Senior Vice President/ Former Partner, Accupointe, Inc., Monroe, NC;
Chief Financial Officer former Vice President and Chief Financial Officer,
Coresource, Inc., Charlotte, NC
Farrell Richardson 59 Senior Vice President Former Vice President and Branch Manager, Bank of
Union, Indian Trail, NC
Donald A. Singleton 48 Senior Vice President/ Former Vice President, Wachovia Mortgage
Senior Credit Lender Company, Greenville, SC; former Vice President,
Real Estate Loan Officer and Assistant Credit
Administrator, United Carolina Bank, Greenville, SC
</TABLE>
24
<PAGE>
EXECUTIVE OFFICER COMPENSATION
EXECUTIVE COMPENSATION The Bank has entered into an employment agreement
with Randy P. Helton, President and Chief Executive Officer (dated April 15,
1998), to establish his duties and compensation and to provide for his
continued employment with the Bank. The employment agreement provides for an
individual term of employment of five years. The employment agreement provides
for an annual base salary of $110,000 to be reviewed by the Board of Directors
not less often than annually. For 2000 the base amount has been set at . In
addition, the employment agreement provides for discretionary bonuses,
participation in other pension and profit-sharing retirement plans maintained
by the Bank on behalf of its employees, as well as fringe benefits normally
associated with the officer's office or made available to all other employees.
The employment agreement provides that the officer may be terminated with or
without cause, as defined in the employment agreement, by the Bank, and
otherwise be terminated by the Bank (subject to vested rights) or by the
officer. The employment agreement provides that in the event of a "termination
event" following a change in control of the Bank (i) the employee shall be able
to terminate the agreement and receive 299% of his base amount of compensation
and (ii) the term of the agreement shall be not less than 24 months from the
employee's notice of termination of the agreement. A "termination event" will
occur if (i) the employee is assigned any duties or responsibilities that are
inconsistent with his position, duties, responsibilities or status at the time
of the change in control or with his reporting responsibilities or title with
the Bank in effect at the time of the change in control; (ii) the employee's
annual base salary rate is reduced below the annual amount in effect as of the
change in control; (iii) the employee's life insurance, medical or
hospitalization insurance, disability insurance, stock option plans, deferred
compensation plans, management retention plans, retirement plans or similar
plans or benefits being provided by the Bank to the employee as of the date of
the change in control are reduced in their level, scope or coverage, or any
such insurance, plans or benefits are eliminated, unless such reduction or
elimination applies proportionately to all salaried employees of the Bank who
participated in such benefits prior to the change in control; or (iv) the
employee is transferred to a location outside of Monroe, North Carolina without
the employee's express written consent. A change in control of the Bank will
occur if (i) any individual or entity, directly or indirectly, acquires
beneficial ownership of voting securities or acquires irrevocable proxies or
any combination of voting securities and irrevocable proxies, representing 25%
or more of any class of voting securities or the Bank, or acquires control in
any manner of the election of a majority of the directors of the Bank; (ii) the
Bank is consolidated or merged with or into another corporation, association or
entity where the Bank is not the surviving corporation; or (iii) all or
substantially all of the assets of the Bank are sold or otherwise transferred
to or are acquired by any other corporation, association or other person,
entity or group.
The following table shows the cash and certain other compensation paid to
or received or deferred by Randy P. Helton for services rendered in all
capacities during the fiscal years 1999 and 1998. No other executive officer of
the Bank received compensation for 1999 which exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- ---------------------------------------------------------
AWARDS PAYOUTS
------------------------- -------------------------------
OTHER SECURITIES
NAME AND ANNUAL RESTRICTED UNDERLYING
PRINCIPAL COMPENSATION STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) ($)(1) AWARD(S)($) SARS (#) PAYOUTS ($) COMPENSATION (2)
- ---------------------- ------ ------------ ----------- -------------- ------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randy P. Helton, 1999 116,000 -- -- -- -- -- 2,146
President and Chief
Executive Officer 1998 110,000 -- -- -- -- -- --
</TABLE>
- --------
(1) Perquisites and personal benefits awarded to Mr. Helton did not exceed 10%
of the total annual salary in any year reported.
(2) Includes life insurance premiums and Bank contribution to 401(k) Plan.
25
<PAGE>
STOCK OPTIONS
The shareholders approved the 1999 Incentive Stock Option Plan (the
"Incentive Option Plan") at the 1999 Annual Meeting of Shareholders pursuant to
which options on 124,338 shares of the Bank's common stock are available for
issuance to employees of the Bank and of any subsidiary of the Bank. The
following table contains information with regard to grants of stock options
during 1999 to Randy P. Helton, President and Chief Executive Officer of the
Bank.
STOCK OPTION GRANTS IN 1999
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED (#) (1) FISCAL YEAR PRICE ($) PER SHARE EXPIRATION DATE
- ----------------- ---------------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Randy P. Helton 65,684 36.19% $ 9.17 2009
</TABLE>
- --------
(1) Stock options granted under the Nonstatutory Option Plan vest upon grant.
Options granted under the Incentive Option Plan vest 20% per year
commencing in April, 2000.
401(K) SAVINGS PLAN. In 1999, the Bank adopted a tax-qualified savings
plan (the "Savings Plan") which covers all current full-time employees and any
new full-time employees who have been employed for six months and who have
completed 1,000 hours of service for the Bank. Under the Savings Plan, a
participating employee may contribute up to 10% of his or her base salary on a
tax-deferred basis through salary reduction as permitted under Section 401(k)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Bank may
make additional discretionary profit sharing contributions to the Savings Plan
on behalf of all participants. Total contributions (discretionary or otherwise)
may not exceed $30,000 per year. A participant's contributions and the Bank's
matching and profit sharing contributions under the Savings Plan will be held
in trust accounts for the benefit of participants. A participant is at all
times 100% vested with respect to his or her own contributions under the
Savings Plan, and becomes 100% vested in the account for the Bank's matching
and profit sharing contributions after completing seven years of service with
the Bank. The value of a participant's accounts under the Savings Plan becomes
payable to him or her in full upon retirement, total or permanent disability or
termination of employment for any other reason, or becomes payable to a
designated beneficiary upon a participant's death. The Savings Plan also will
contain provisions for withdrawals in the event of certain hardships. A
participant's contributions, vested matching and profit sharing contributions
of the Bank, and any income accrued on such contributions, are not subject to
federal or state taxes until such time as they are withdrawn by the
participant.
INDEBTEDNESS AND TRANSACTIONS OF MANAGEMENT
The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with certain of its current directors,
nominees for director, executive officers and their associates. All loans
included in such transactions were made on substantially the same terms,
including interest rates, repayment terms and collateral, as those prevailing
at the time such loans were made for comparable transactions with other
persons, and do not involve more than the normal risk of collectibility or
present other unfavorable features.
The highest aggregate outstanding balance of loans to current directors,
nominees for director, executive officers and their associates, as a group, in
Fiscal 1999, was $100,000, which represented approximately 1% of the Bank's
equity capital accounts.
Kenneth W. Long, Chairman of the Board, entered into a Consulting
Agreement with the organizers of the Bank in June 1998, and served as a special
consultant to assist the Bank in the development and implementation of its back
room systems and delivery of banking services from a technological standpoint.
26
<PAGE>
While he performed such services commencing in June 1998, Mr. Long deferred
receiving any fees under the contract until the Bank was operational and has
received fees and of $86,000. The contract has been consummated and no further
payments or services are to be forthcoming for such services.
J. Carlton Tyson's realty company, Ty-Par Realty, Inc., leased space to
the Bank for its temporary modular unit and the Bank paid the realty company
$3,300 per month in rental fees from June 1998 to March 1999. Mr. Tyson's
construction company, L.C. Tyson Construction, Inc., performed $51,300 in
upfitting of the modular unit. Ty-Par Realty, Inc. constructed the Bank's
headquarters building in Monroe, North Carolina. The first floor is leased to
the Bank for 30 years (11,250 square feet) at a rental of $19,237 per month,
subject to 7% increases every five years. The Bank obtained an independent
third party appraisal of the lease and believes its terms are fair and
reasonable to the Bank.
All such transactions have been negotiated on an arms-length basis at
terms no more favorable than would otherwise be obtained from an independent
third party.
PROPOSAL 3: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------------------------
The Board of Directors has appointed the firm of Dixon Odom PLLC,
Certified Public Accountants, as the Bank's independent public accountants for
2000. A representative of Dixon Odom PLLC, is expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
the opportunity to make a statement if he desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF DIXON ODOM PLLC, AS THE BANK'S INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
The Board of Directors knows of no other business that will be brought
before the Annual Meeting. Should other matters properly come before the Annual
Meeting, the proxies will be authorized to vote shares represented by each
appointment of proxy in accordance with their best judgment on such matters.
PROPOSALS FOR 2001 ANNUAL MEETING
It is anticipated that the 2001 Annual Meeting will be held on a date
during April 2001. Any proposal of a shareholder which is intended to be
presented at the 2001 Annual Meeting must be received by the Bank at its main
office in Monroe, North Carolina no later than November 15, 2000 in order that
any such proposal be timely received for inclusion in the proxy statement and
appointment of proxy to be issued in connection with that meeting. If a proposal
for the 2001 Annual Meeting is not expected to be included in the proxy
statement for that meeting, the proposal must be received by the Bank by
February 15, 2001 for it to be timely received and presented.
ADDITIONAL INFORMATION
THE BANK'S 1999 ANNUAL REPORT ON FORM 10-KSB WHICH SERVES AS THE BANK'S
ANNUAL DISCLOSURE STATEMENT AS REQUIRED BY THE FDIC WILL BE FILED WITH THE
FEDERAL DEPOSIT INSURANCE CORPORATION ON OR BEFORE MARCH 30, 2000. A COPY OF
THAT REPORT WILL BE PROVIDED WITHOUT CHARGE UPON THE WRITTEN REQUEST OF ANY
SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING. REQUESTS FOR COPIES SHOULD
BE DIRECTED TO DAN R. ELLIS, JR., SECRETARY, AMERICAN COMMUNITY BANK, 2593 WEST
ROOSEVELT BOULEVARD, MONROE, NORTH CAROLINA 28111-0418.
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REGULATION AND SUPERVISION
REGULATION OF THE BANK
The Bank is extensively regulated under both federal and state law.
Generally, these laws and regulations are intended to protect depositors and
borrowers, not shareholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in applicable law or regulation may have a material effect on the business of
Bancshares and the Bank.
STATE LAW. The Bank is subject to extensive supervision and regulation by
the North Carolina Commissioner of Banks (the "Commissioner"). The Commissioner
oversees state laws that set specific requirements for bank capital and
regulate deposits in, and loans and investments by, banks, including the
amounts, types, and in some cases, rates. The Commissioner supervises and
performs periodic examinations of North Carolina-chartered banks to assure
compliance with state banking statutes and regulations, and the Bank is
required to make regular reports to the Commissioner describing in detail the
resources, assets, liabilities and financial condition of the Bank. Among other
things, the Commissioner regulates mergers and consolidations of
state-chartered banks, the payment of dividends, loans to officers and
directors, record keeping, types and amounts of loans and investments, and the
establishment of branches.
DEPOSIT INSURANCE. As a member institution of the FDIC, the Bank's
deposits are insured up to a maximum of $100,000 per depositor through the BIF,
administered by the FDIC, and each member institution is required to pay
semi-annual deposit insurance premium assessments to the FDIC. The BIF
assessment rates have a range of 0 cents to 27 cents for every $100 in
assessable deposits. Banks with no premium are subject to an annual statutory
minimum assessment.
CAPITAL REQUIREMENTS. The federal banking regulators have adopted certain
risk-based capital guidelines to assist in the assessment of the capital
adequacy of a banking organization's operations for both transactions reported
on the balance sheet as assets and transactions, such as letters of credit, and
recourse arrangements, which are recorded as off balance sheet items. Under
these guidelines, nominal dollar amounts of assets and credit equivalent
amounts of off balance sheet items are multiplied by one of several risk
adjustment percentages which range from 0% for assets with low credit risk,
such as certain U.S. Treasury securities, to 100% for assets with relatively
high credit risk, such as business loans.
A banking organization's risk-based capital ratios are obtained by
dividing its qualifying capital by its total risk adjusted assets. The
regulators measure risk-adjusted assets, which include off balance sheet items,
against both total qualifying capital (the sum of Tier 1 capital and limited
amounts of Tier 2 capital) and Tier 1 capital. "Tier 1," or core capital,
includes common equity, qualifying noncumulative perpetual preferred stock and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangibles, subject to certain exceptions. "Tier 2," or
supplementary capital, includes among other things, limited-life preferred
stock, hybrid capital instruments, mandatory convertible securities, qualifying
subordinated debt, and the allowance for loan and lease losses, subject to
certain limitations and less required deductions. The inclusion of elements of
Tier 2 capital is subject to certain other requirements and limitations of the
federal banking agencies. Banks and bank holding companies subject to the
risk-based capital guidelines are required to maintain a ratio of Tier 1
capital to risk-weighted assets of at least 4% and a ratio of total capital to
risk-weighted assets of at least 8%. The appropriate regulatory authority may
set higher capital requirements when particular circumstances warrant. As of
December 31, 1999, the Bank was classified as "well-capitalized" with Tier 1
and Total Risk-Based Capital of 16.07% and 17.50% respectively.
The federal banking agencies have adopted regulations specifying that they
will include, in their evaluations of a bank's capital adequacy, an assessment
of the bank's interest rate risk ("IRR") exposure. The standards for measuring
the adequacy and effectiveness of a banking organization's IRR management
include a measurement of board of director and senior management oversight, and
a determination of whether a
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banking organization's procedures for comprehensive risk management are
appropriate for the circumstances of the specific banking organization.
Failure to meet applicable capital guidelines could subject a banking
organization to a variety of enforcement actions, including limitations on its
ability to pay dividends, the issuance by the applicable regulatory authority
of a capital directive to increase capital and, in the case of depository
institutions, the termination of deposit insurance by the FDIC, as well as the
measures described under the "Federal Deposit Insurance Corporation Improvement
Act of 1991" below, as applicable to undercapitalized institutions. In
addition, future changes in regulations or practices could further reduce the
amount of capital recognized for purposes of capital adequacy. Such a change
could affect the ability of the Bank to grow and could restrict the amount of
profits, if any, available for the payment of dividends to the shareholders.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991. In
December, 1991, Congress enacted the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), which substantially revised the bank
regulatory and funding provisions of the FDIA and made significant revisions to
several other federal banking statutes. FDICIA provides for, among other
things:
o publicly available annual financial condition and management reports for
certain financial institutions, including audits by independent
accountants,
o the establishment of uniform accounting standards by federal banking
agencies,
o the establishment of a "prompt corrective action" system of regulatory
supervision and intervention, based on capitalization levels, with greater
scrutiny and restrictions placed on depository institutions with lower
levels of capital,
o additional grounds for the appointment of a conservator or receiver, and
o restrictions or prohibitions on accepting brokered deposits, except for
institutions which significantly exceed minimum capital requirements.
FDICIA also provides for increased funding of the FDIC insurance funds and
the implementation of risk-based premiums.
A central feature of FDICIA is the requirement that the federal banking
agencies take "prompt corrective action" with respect to depository
institutions that do not meet minimum capital requirements. Pursuant to FDICIA,
the federal bank regulatory authorities have adopted regulations setting forth
a five-tiered system for measuring the capital adequacy of the depository
institutions that they supervise. Under these regulations, a depository
institution is classified in one of the following capital categories: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." An institution may be
deemed by the regulators to be in a capitalization category that is lower than
is indicated by its actual capital position if, among other things, it receives
an unsatisfactory examination rating with respect to asset quality, management,
earnings or liquidity.
FDICIA provides the federal banking agencies with significantly expanded
powers to take enforcement action against institutions which fail to comply
with capital or other standards. Such action may include the termination of
deposit insurance by the FDIC or the appointment of a receiver or conservator
for the institution. FDICIA also limits the circumstances under which the FDIC
is permitted to provide financial assistance to an insured institution before
appointment of a conservator or receiver.
MISCELLANEOUS. The dividends that may be paid by the Bank are subject to
legal limitations. In accordance with North Carolina banking law, dividends may
not be paid unless the Bank's capital surplus is at least 50% of its paid-in
capital. See "Comparison of the Rights of Shareholders -- Comparison of the
Rights of Holders of the Bank Common Stock and Bancshares Common
Stock -- Payment of Dividends."
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Shareholders of banks may be compelled by the Commissioner pursuant to
North Carolina law to invest additional capital in the event their bank's
capital shall have become impaired by losses or otherwise. Failure to pay such
an assessment could result in a forced sale of a shareholder's bank stock.
The earnings of the Bank will be affected significantly by the policies of
the Federal Reserve Board, which is responsible for regulating the United
States money supply in order to mitigate recessionary and inflationary
pressures. Among the techniques used to implement these objectives are open
market transactions in United States government securities, changes in the rate
paid by banks on bank borrowings, and changes in reserve requirements against
bank deposits. These techniques are used in varying combinations to influence
overall growth and distribution of bank loans, investments, and deposits, and
their use may also affect interest rates charged on loans or paid for deposits.
The monetary policies of the Federal Reserve Board have had a significant
effect on the operating results of commercial banks in the past and are
expected to continue to do so in the future. In view of changing conditions in
the national economy and money markets, as well as the effect of actions by
monetary and fiscal authorities, no prediction can be made as to possible
future changes in interest rates, deposit levels, loan demand or the business
and earnings of the Bank.
The Bank cannot predict what legislation might be enacted or what
regulations might be adopted, or if enacted or adopted, the effect thereof on
the Bank's operations.
REGULATION OF BANCSHARES
FEDERAL REGULATION. Following consummation of the Holding Company
Reorganization, Bancshares will be subject to examination, regulation and
periodic reporting under the BHC Act, as administered by the Federal Reserve
Board. The Federal Reserve Board has adopted capital adequacy guidelines for
bank holding companies on a consolidated basis.
Bancshares will be required to obtain the prior approval of the Federal
Reserve Board to acquire all, or substantially all, of the assets of any bank
or bank holding company. Prior Federal Reserve Board approval will be required
for Bancshares to acquire direct or indirect ownership or control of any voting
securities of any bank or bank holding company if, after giving effect to such
acquisition, it would, directly or indirectly, own or control more than five
percent of any class of voting shares of such bank or bank holding company.
Bancshares will be required to give the Federal Reserve Board prior
written notice of any purchase or redemption of its outstanding equity
securities if the gross consideration for the purchase or redemption, when
combined with the net consideration paid for all such purchases or redemptions
during the preceding 12 months, is equal to 10% or more of Bancshare's
consolidated net worth. The Federal Reserve Board may disapprove such a
purchase or redemption if it determines that the proposal would constitute an
unsafe and unsound practice, or would violate any law, regulation, Federal
Reserve Board order or directive, or any condition imposed by, or written
agreement with, the Federal Reserve Board. Such notice and approval is not
required for a bank holding company that would be treated as "well capitalized"
under applicable regulations of the Federal Reserve Board, that has received a
composite "1" or "2" rating at its most recent bank holding company inspection
by the Federal Reserve Board, and that is not the subject of any unresolved
supervisory issues.
The status of Bancshares as a registered bank holding company under the
BHC Act will not exempt it from certain federal and state laws and regulations
applicable to corporations generally, including, without limitation, certain
provisions of the federal securities laws.
In addition, a bank holding company is prohibited generally from engaging
in, or acquiring five percent or more of any class of voting securities of any
company engaged in, non-banking activities. One of the principal exceptions to
this prohibition is for activities found by the Federal Reserve Board to be so
closely
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related to banking or managing or controlling banks as to be a proper incident
thereto. Some of the principal activities that the Federal Reserve Board has
determined by regulation to be so closely related to banking as to be a proper
incident thereto are:
o making or servicing loans;
o performing certain data processing services;
o providing discount brokerage services;
o acting as fiduciary, investment or financial advisor;
o leasing personal or real property;
o making investments in corporations or projects designed primarily to
promote community welfare; and
o acquiring a savings and loan association.
Under the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA"), depository institutions are liable to the FDIC for losses
suffered or anticipated by the FDIC in connection with the default of a
commonly controlled depository institution or any assistance provided by the
FDIC to such an institution in danger of default. This law would be applicable
to the extent that Bancshares maintains as a separate subsidiary a depository
institution in addition to the Bank.
Subsidiary banks of a bank holding company are subject to certain
quantitative and qualitative restrictions imposed by the Federal Reserve Act on
any extension of credit to, or purchase of assets from, or letter of credit on
behalf of, the bank holding company or its subsidiaries, and on the investment
in or acceptance of stocks or securities of such holding company or its
subsidiaries as collateral for loans. In addition, provisions of the Federal
Reserve Act and Federal Reserve Board regulations limit the amounts of, and
establish required procedures and credit standards with respect to, loans and
other extensions of credit to officers, directors and principal stockholders of
the Bank, Bancshares, any subsidiary of Bancshares and related interests of
such persons. Moreover, subsidiaries of bank holding companies are prohibited
from engaging in certain tie-in arrangements (with the holding company or any
of its subsidiaries) in connection with any extension of credit, lease or sale
of property or furnishing of services.
BRANCHING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Riegle Act"), the Federal Reserve Board may approve bank holding
company acquisitions of banks in other states, subject to certain aging and
deposit concentration limits. As of June 1, 1997, banks in one state may merge
with banks in another state, unless the other state has chosen not to implement
this section of the Riegle Act. These mergers are also subject to similar aging
and deposit concentration limits.
North Carolina "opted-in" to the provisions of the Riegle Act. Since July
1, 1995, an out-of-state bank that did not already maintain a branch in North
Carolina was permitted to establish and maintain a de novo branch in North
Carolina, or acquire a branch in North Carolina, if the laws of the home state
of the out-of-state bank permit North Carolina banks to engage in the same
activities in that state under substantially the same terms as permitted by
North Carolina. Also, North Carolina banks may merge with out-of-state banks,
and an out-of-state bank resulting from such an interstate merger transaction
may maintain and operate the branches in North Carolina of a merged North
Carolina bank, if the laws of the home state of the out-of-state bank involved
in the interstate merger transaction permit interstate merger.
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RECENT LEGISLATIVE DEVELOPMENTS
The Gramm-Leach-Bliley Act of 1999 represents the most sweeping reform of
financial services regulation in over sixty years. The Act permits the creation
of new financial services holding companies that can offer a range of financial
products under a regulatory regime based on the principle of functional
regulation. The legislation eliminates legal barriers to affiliations among
banks and securities firms, insurance companies, and other financial services
companies. The Act provides financial organizations with flexibility in
structuring these new financial affiliations through a holding company
structure or a financial subsidiary, with appropriate safeguards.
On September 30, 1996, the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (the "Growth Act"), was enacted which contained a
comprehensive approach to recapitalize the FDIC's Savings Association Insurance
Fund (the "SAIF") and to assure payment of the Financing Corporation (the
"FICO") obligations. All of the Bank's deposits are insured by the FDIC's BIF.
Under the Growth Act, banks with deposits that are insured under the BIF are
required to pay a portion of the interest due on bonds that were issued by FICO
to help shore up the ailing Federal Savings and Loan Insurance Corporation in
1987. The Growth Act stipulates that the BIF assessment rate to contribute
toward the FICO obligations must be equal to one-fifth the SAIF assessment rate
through year-end 2000, or until the insurance funds are merged, whichever
occurs first. The amount of FICO debt service to be paid by all BIF-insured
institutions is approximately $0.0126 per $100 of BIF-insured deposits for each
year from 1997 through 2000 when the obligation of BIF-insured institutions
increases to approximately $0.0240 per $100 of BIF-insured deposits per year
through the year 2019, subject in all cases to adjustments by the FDIC on a
quarterly basis. The Growth Act also contained provisions protecting banks from
liability for environmental clean-up costs; prohibiting credit unions sponsored
by Farm Credit System banks; easing application requirements for most bank
holding companies when they acquire a thrift or a permissible non-bank
operation; easing Fair Credit Reporting Act restrictions between bank holding
company affiliates; and reducing the regulatory burden under the Real Estate
Settlement Procedures Act, the Truth-in-Savings Act, the Truth-in-Lending Act
and the Home Savings Mortgage Disclosure Act.
LEGAL MATTERS
The validity of the shares of Bancshares' Common Stock offered hereby has
been passed upon for Bancshares by Anthony Gaeta, Jr., P.A., Raleigh, North
Carolina.
EXPERTS
The financial statements of the Bank included in this Proxy
Statement-Prospectus have been audited by Dixon Odom PLLC, independent
auditors, as stated in their report appearing herein, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
FORWARD LOOKING STATEMENTS
We have made forward looking statements in this Proxy Statement-Prospectus
about the financial condition, results of operations, and business of
Bancshares following the consummation of the Holding Company Reorganization
that are subject to risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such forward looking
statements include, among other things, the following possibilities:
o competitive pressure in the banking industry increases significantly;
o changes in the interest rate environment reduce margins;
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o general economic conditions, either nationally or regionally, are less
favorable than expected, resulting in, among other things, a deterioration
in credit quality;
o no changes occur in the regulatory environment; and
o changes occur in business conditions and the rate of inflation.
When used in this Proxy Statement-Prospectus, the words "believes,"
"estimates," "plans," "expects," "should," "may," "might," "outlook," and
"anticipates," and similar expressions as they relate to Bancshares, or its
management are intended to identify forward looking statements.
WHERE YOU CAN GET MORE INFORMATION
The Bank files reports under the Exchange Act with the FDIC. These reports
include Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and
Current Reports on Form 8-K. These reports, as well as annual proxy statements
mailed to shareholders and other information are available for you to inspect
and copy, after paying a prescribed fee, at the FDIC's public reference
facilities at the Registration, Disclosure and Securities Operations Unit, 550
17th Street, N.W., Room 6043, Washington, DC 20429. The Registration,
Disclosure and Securities Operations Unit telephone number is (202) 898-8908
and their fax number is (202) 898-3909. After the Holding Company
Reorganization is completed, the Bank will no longer file these reports with
the FDIC. Instead, Bancshares will begin filing such reports with the SEC.
Bancshares has filed with the SEC a Registration Statement under the
Securities Act regarding the shares of Bancshares' Common Stock to be issued in
the Holding Company Reorganization. This Proxy Statement-Prospectus is part of
that registration statement and does not contain all of the information
contained in the Registration Statement since certain portions have been
omitted as the SEC permits. If you would like more information about Bancshares
and the Bancshares stock being issued, please refer to the Registration
Statement and its exhibits which you may read, without charge, at the SEC's
public reference facility at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. You can make copies of all or any part of the
Registration Statement at the SEC's office in Washington, D.C. upon payment of
prescribed SEC fees. In addition, copies of the exhibits to the Registration
Statement may be obtained from Dan R. Ellis, Jr., Secretary of American
Community Bank, 2593 West Roosevelt Boulevard, Monroe, North Carolina
28111-0418 (704) 225-8444.
We expect Bancshares to be subject to the informational requirements of
the Exchange Act and to file reports, proxy statements and other information
with the SEC. You can inspect and copy these materials, after they have been
filed, at the SEC's Public Reference Section, Room 1204, 450 Fifth Street,
N.W., Washington, DC 20549, and at the following Regional Offices of the SEC:
New York Regional Office, Room 1028, Federal Building, 26 Federal Plaza, New
York, New York 10006; and Chicago Regional Office, Room 1204, Everett McKinley
Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604. You may
also copy this material at the Public Reference Section of the SEC, 450 Fifth
Street, N.W. Washington, DC 20549 at prescribed rates. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants, such as Bancshares, that file electronically
with the SEC. The address of the SEC's Web site is (http://www.sec.gov).
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference information into this Proxy
Statement-Prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC or FDIC.
The information incorporated by reference is deemed to be part of this Proxy
Statement-Prospectus, except for any information superseded by information in
this Proxy Statement-Prospectus. This Proxy Statement-Prospectus incorporates
by reference: American Community Bank's Annual
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Report on Form 10-KSB for the year ended December 31, 1999 and the period
November 16, 1998 (date of commencement of operations) through December 31,
1998, which has been filed with the FDIC and is included as an exhibit to the
Registration Statement of which this Proxy Statement-Prospectus is a part.
Documents incorporated by reference are available from the Bank, excluding
all exhibits, unless we have specifically incorporated by reference such an
exhibit in this Proxy Statement-Prospectus. Bank shareholders may obtain
documents incorporated by reference in this Proxy Statement-Prospectus without
charge by requesting them in writing or by telephone from Dan R. Ellis, Jr.,
American Community Bank, 2593 West Roosevelt Boulevard, Monroe, North Carolina
28111-0418 (704) 225-8444.
WHEN DECIDING HOW TO CAST YOUR VOTE, YOU SHOULD RELY ONLY ON THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT-PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY
STATEMENT-PROSPECTUS. THIS PROXY STATEMENT-PROSPECTUS IS DATED MARCH 24, 2000.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT-PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND
NEITHER THE MAILING OF THE PROXY STATEMENT-PROSPECTUS TO SHAREHOLDERS NOR THE
ISSUANCE OF THE BANCSHARES COMMON STOCK SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
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APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE (this
"Agreement"), made and entered into as of February 16, 2000, by and between
American Community Bank, a banking corporation organized under the laws of the
State of North Carolina and having its principal place of business in the City
of Monroe, Union County, North Carolina (the "Bank"), and American Community
Bancshares, Inc., a North Carolina business corporation (the "Holding
Company").
W I T N E S S E T H
WHEREAS, the Boards of Directors of the Bank and the Holding Company
believe that it is in the best interests of their respective shareholders that
the Bank be reorganized into a bank holding company structure pursuant to which
the shareholders of the Bank (collectively, the "Shareholders" and
individually, a "Shareholder") would receive shares of the common stock of the
Holding Company in exchange for their shares of Bank common stock.
NOW, THEREFORE, in consideration of the mutual promises and conditions
herein contained, the Bank and the Holding Company hereby mutually agree to an
exchange of shares on the terms and conditions and in the manner and on the
basis hereinafter provided:
1. THE EXCHANGE.
(a) The name of the corporation whose shares will be acquired is
"American Community Bank" and the name of the acquiring corporation is
"American Community Bancshares, Inc."
(b) At the Effective Time (as defined in Section 2 below), upon the terms
and subject to the conditions set forth in this Agreement, and in accordance
with Article 11 of the North Carolina Business Corporation Act, as amended (the
"NCBCA"), each share of the $5 par value common stock of the Bank ("Bank
Stock") shall be exchanged (the "Exchange") for one (1) share of the $1.00 par
value common stock of the Holding Company (all such shares of Holding Company
common stock issued to the Shareholders, collectively, the "Shares").
(c) As soon as possible after the Effective Time, the Holding Company
shall furnish to each Shareholder transmittal forms and written instructions
with respect to the Exchange. Until shares of the Bank Stock are surrendered
for exchange in accordance with this Agreement, each outstanding certificate
which, prior to the Effective Time, represented shares of Bank Stock, shall for
all purposes evidence only the exchange rights established pursuant to this
Agreement or, if applicable, the rights described in Paragraph 3 of this
Agreement. The Holding Company may in its discretion elect not to treat any
such unsurrendered shares as shares of common stock of the Holding Company for
purposes of the payment of dividends or other distributions. If the Holding
Company in its discretion so elects, then unless and until any outstanding
certificate evidencing Bank Stock shall be so surrendered, no dividends payable
to the holders of common stock of the Holding Company shall be paid to the
holder of the unsurrendered Bank Stock certificate; provided, however, upon
surrender and exchange of each outstanding certificate evidencing Bank Stock
for a certificate evidencing outstanding common stock of the Holding Company,
there shall be paid to the holder thereof the amount, without interest, of all
dividends and other distributions, if any, which theretofore were declared and
became payable, but were not paid, with respect to said shares.
(d) At the Effective Time, all shares of common stock of the Holding
Company outstanding immediately prior to the Effective Time shall be redeemed
from the holder(s) thereof for the sum of $1.00 per share.
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2. CLOSING; EFFECTIVE TIME. Consummation of the Exchange and the other
transactions contemplated by this Agreement shall take place at 10:00 a.m. at
the offices of American Community Bank, 2593 West Roosevelt Boulevard, Union
County, Monroe, North Carolina 28111-0418 on May 15, 2000, or at such other
time and date as the Holding Company and the Bank shall determine (such
specified or other time and date, the "Closing"). The Exchange shall become
effective at the time specified in Articles of Share Exchange to be filed with
the Secretary of State of North Carolina (the "Effective Time").
3. RIGHTS OF DISSENTING SHAREHOLDERS. Any Shareholder who has not voted
for the Exchange at the meeting of Shareholders called to consider the
Exchange, and who has given notice in writing at or prior to such meeting that
he or she dissents from the Exchange, and who complies with the provisions of
Part 2 of Article 13 of the North Carolina Business Corporation Act ("NCBCA"),
shall be entitled to receive the fair value of the shares held by him or her.
Upon the receipt of any notice of a Shareholder's intent to assert dissenters'
rights pursuant to the NCBCA, the Bank shall establish an escrow fund (the
"Escrow Fund") from which all payments, whether before or after the Effective
Time, necessary with respect to the exercise of such dissenters' rights shall
be made. The Holding Company shall not directly or indirectly contribute any
funds to the Escrow Fund. The Bank shall deposit in the Escrow Fund an amount
that it reasonably believes is sufficient to pay fully the claims of all
Shareholders asserting dissenters' rights, and shall make additional deposits
to the Escrow Fund as it may reasonably determine to be necessary to satisfy
such claims. In the event funds remain in the Escrow Fund after all claims for
payment pursuant to dissenters' rights have finally expired, terminated, or
have been finally satisfied or settled, then any balance remaining in the
Escrow Fund shall be returned to the Bank.
4. LOST, DESTROYED, OR STOLEN CERTIFICATES. Shareholders whose
certificates evidencing shares of Bank Stock have been lost, destroyed or
stolen shall be entitled to receive certificates evidencing Shares for which
such shares of Bank Stock were exchanged pursuant to this Agreement in
compliance with the provisions of the Holding Company's bylaws.
5. STOCK OPTION AND OTHER PLANS. At the Effective Time, all outstanding
options under the Bank's existing stock option plans ("Plans") shall be
converted into options to acquire the number of shares of common stock of the
Holding Company that the holders of such options were entitled to acquire of
Bank Stock immediately prior to the Exchange on the same terms and conditions
as set forth in the Plans.
6. OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE TIME. The Bank and the
Holding Company shall, as soon as practicable take the following action:
(a) This Agreement shall be duly submitted to the Shareholders of the
Bank and the sole shareholder of the Holding Company for the purpose of
considering and acting upon the Exchange in the manner required by law and
their respective articles of incorporation and bylaws. The Bank and the Holding
Company shall use their best efforts to obtain the requisite approval of their
shareholders for the Exchange and the transactions contemplated by this
Agreement, and the Bank and the Holding Company shall, through their respective
officers, execute and file with the appropriate regulatory authorities,
including the Board of Governors of the Federal Reserve System and the North
Carolina Banking Commission, such applications, exhibits, documents and papers
as shall be necessary or appropriate to secure approval of this Agreement, the
Exchange and the other transactions contemplated hereby, as required by
applicable statutes, rules and regulations;
(b) The Holding Company shall use its best efforts to cause the issuance
of common stock of the Holding Company made pursuant to this Agreement and the
Exchange to be qualified or exempted under the Securities Act of 1933, as
amended, and the Blue Sky Laws of each state in which it deems such
qualification or exemption to be required;
(c) Until the Effective Time, neither the Bank nor the Holding Company
shall dispose of its assets except in the ordinary and normal course of
business.
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7. CONDITIONS PRECEDENT TO THE EXCHANGE. The Exchange shall be subject to
the satisfaction of the following conditions:
(a) Ratification and confirmation of this Agreement by approval of a
majority of the Shareholders and by approval of the sole shareholder of the
Holding Company as required by law;
(b) Approvals to the extent required, by the Board of Governors of the
Federal Reserve System and the North Carolina Banking Commission to the
Exchange and the transactions related thereto;
(c) Approval, to the extent required, of any other governmental or
regulatory authority;
(d) Receipt of a favorable opinion with respect to the tax consequences
of the proposed Exchange from the Bank's counsel; and
(e) Expiration of any waiting period required by any supervisory
authority.
8. TERMINATION. This Agreement may be terminated prior to the Effective
Time for any of the following reasons by written notice by either the Bank or
the Holding Company to the other upon authorization by resolution adopted by
either Board of Directors:
(a) Any condition precedent contained in Paragraph 7 has not been
fulfilled or waived;
(b) Any action, suit, proceeding, or claim has been instituted, made or
threatened, relating to the proposed Exchange that makes consummation of the
Exchange inadvisable in the opinion of the Board of Directors of either the
Bank or the Holding Company;
(c) The Board of Directors of the Bank determines that the holders of a
sufficient number of shares of Bank Stock have dissented from the Exchange so
that consummation of the Exchange is not in the best interests of the Bank;
(d) A determination by the Board of Directors of either the Bank or the
Holding Company that consummation of the Exchange is inadvisable in the opinion
of such Board of Directors.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the transactions contemplated hereby.
10. EFFECT OF AGREEMENT. The terms and conditions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
<PAGE>
IN WITNESS WHEREOF, the Bank and the Holding Company have caused this
Agreement to be executed by their duly authorized officers and their corporate
seals to be affixed hereto as of the date first above written.
AMERICAN COMMUNITY BANCSHARES, INC.
By: /S/ RANDY P. HELTON
-------------------------------------
RANDY P. HELTON, PRESIDENT
ATTEST:
/S/ DAN R. ELLIS, JR.
- ---------------------------------
DAN R. ELLIS, JR., SECRETARY
[corporate seal]
AMERICAN COMMUNITY BANK
By: /S/ RANDY P. HELTON
-------------------------------------
RANDY P. HELTON, PRESIDENT
ATTEST:
/S/ DAN R. ELLIS, JR.
- ---------------------------------
DAN R. ELLIS, JR., SECRETARY
[corporate seal]
<PAGE>
APPENDIX II
DISSENTERS' RIGHTS
N.C. GEN. STAT. CHAPTER 55, ARTICLE 13 WITH 1997 AMENDMENTS
GENERAL STATUTES OF NORTH CAROLINA
CHAPTER 55. NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13. DISSENTERS' RIGHTS
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
N.C. GEN. STAT. ss.55-13-01 (1996)
ss.55-13-01. DEFINITIONS
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and in
the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under
all the circumstances, giving due consideration to the rate currently paid by
the corporation on its principal bank loans, if any, but not less than the rate
provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
N.C. GEN. STAT. ss.55-13-02 (1996)
ss.55-13-02. RIGHT TO DISSENT
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other
than a parent corporation in a merger under G.S. 55-11-04) is a party
unless (i) approval by the shareholders of that corporation is not
required under G.S. 55-11-03(g) or (ii) such shares are then redeemable by
the corporation at a price not greater than the cash to be received in
exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
<PAGE>
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than as permitted by G.S. 55-12-01,
including a sale in dissolution, but not including a sale pursuant to
court order or a sale pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed in cash to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (i)
alters or abolishes a preferential right of the shares; (ii) creates,
alters, or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of
the shares; (iii) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (iv) excludes or limits
the right of the shares to vote on any matter, or to cumulate votes; (v)
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
G.S. 55-6-04; or (vi) changes the corporation into a nonprofit corporation
or cooperative organization;
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled
to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
(c) Notwithstanding any other provision of this Article, there shall be no
right of dissent in favor of holders of shares of any class or series which, at
the record date fixed to determine the shareholders entitled to receive notice
of and to vote at the meeting at which the plan of merger or share exchange or
the sale or exchange of property is to be acted on, were (i) listed on a
national securities exchange or (ii) held by at least 2,000 record
shareholders, unless in either case:
(1) The articles of incorporation of the corporation issuing the shares
provide otherwise;
(2) In the case of a plan of merger or share exchange, the holders of
the class or series are required under the plan of merger or share
exchange to accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of fractional shares of the
surviving or acquiring corporation, or of any other corporation which,
at the record date fixed to determine the shareholders entitled to
receive notice of and vote at the meeting at which the plan of merger
or share exchange is to be acted on, were either listed subject to
notice of issuance on a national securities exchange or held of record
by at least 2,000 record shareholders; or
c. A combination of cash and shares as set forth in sub-subdivisions
a. and b. of this subdivision.
N.C. GEN. STAT. ss.55-13-03 (1996)
ss.55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
<PAGE>
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder.
N.C. GEN. STAT. ss.55-13-04 (1996)
ss.55-13-04 THROUGH 55-13-19
Reserved for future codification purposes.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
N.C. GEN. STAT. ss.55-13-20 (1996)
ss.55-13-20. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters'
rights under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is
taken without a vote of shareholders, the corporation shall no longer than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this
section, such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
ss.55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to demand
payment for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his shares under this Article.
N.C. GEN. STAT. ss.55-13-22 (1996)
ss.55-13-22. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation shall mail
by registered or certified mail, return receipt requested, a written
dissenters' notice to all shareholders who satisfied the requirements of G.S.
55-13-21.
<PAGE>
(b) The dissenters' notice must be sent no later than 10 days after
shareholder approval, or if no shareholder approval is required, after the
approval of the board of directors, of the corporate action creating
dissenters' rights under G.S. 55-13-02, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date
the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
N.C. GEN. STAT. ss.55-13-23 (1996)
ss.55-13-23. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22
must demand payment and deposit his share certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this Article.
N.C. GEN. STAT. ss.55-13-24 (1996)
ss.55-13-24. SHARE RESTRICTIONS
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under
G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
N.C. GEN. STAT. ss.55-13-25 (1996)
ss.55-13-25. PAYMENT
(a) As soon as the proposed corporate action is taken, or within 30 days
after receipt of a payment demand, the corporation shall pay each dissenter who
complied with G.S. 55-13-23 the amount the corporation estimates to be the fair
value of his shares, plus interest accrued to the date of payment.
(b) The payment shall be accompanied by:
(1) The corporation's most recent available balance sheet as of the end
of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of cash flows for
that year, and the latest available interim financial statements, if any;
<PAGE>
(2) An explanation of how the corporation estimated the fair value of
the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
N.C. GEN. STAT. ss.55-13-26 (1996)
ss.55-13-26. FAILURE TO TAKE ACTION
(a) If the corporation does not take the proposed action within 60 days
after the date for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
N.C. GEN. STAT. ss.55-13-27 (1996)
ss.55-13-27 RESERVED FOR FUTURE CODIFICATION PURPOSES.
N.C. GEN. STAT. ss.55-13-28 (1996)
ss.55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH CORPORATION'S
PAYMENT OR FAILURE TO PERFORM
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of the amount in excess of the payment by the corporation under G.S. 55-13-25
for the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under G.S. 55-13-25 is
less than the fair value of his shares or that the interest due is
incorrectly calculated;
(2) The corporation fails to make payment under G.S. 55-13-25; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation made payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
N.C. GEN. STAT. ss.55-13-29 (1996)
ss.55-13-29
Reserved for future codification purposes.
<PAGE>
PART 3. JUDICIAL APPRAISAL OF SHARES
N.C. GEN. STAT. ss.55-13-30 (1996)
ss.55-13-30. COURT ACTION
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the earlier of (i) the
date payment is made under G.S. 55-13-25, or (ii) the date of the dissenter's
payment demand under G.S. 55-13-28 by filing a complaint with the Superior
Court Division of the General Court of Justice to determine the fair value of
the shares and accrued interest. A dissenter who takes no action within the
60-day period shall be deemed to have withdrawn his dissent and demand for
payment.
(a1) Repealed by Session Laws 1997-202, s.4, effective October 1, 1997.
(b) [Reserved for future codification purposes.]
(c) The court shall have the discretion to make all dissenters (whether or
not residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the complaint. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the superior court in which the proceeding is
commenced under subsection (a) is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The parties are entitled to
the same discovery rights as parties in other civil proceedings. The proceeding
shall be tried as in other civil actions. However, in a proceeding by a
dissenter in a corporation that was a public corporation immediately prior to
consummation of the corporate action giving rise to the right of dissent under
G.S. 55-13-02, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
ss.55-13-31. COURT ACTION
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, and shall
assess the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable.
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either or
any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 55-8-50 through 55-8-58 of the North Carolina General Statutes
permit a corporation to indemnify its directors, officers, employees or agents
under either or both a statutory or nonstatutory scheme of indemnification.
Under the statutory scheme, a corporation may, with certain exceptions,
indemnify a director, officer, employee or agent of the corporation who was,
is, or is threatened to be made, a party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative, or investigative, because of the fact that such person was a
director, officer, agent or employee of the corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. This indemnity may include the obligation to
pay any judgment, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan) and reasonable expenses incurred in
connection with a proceeding (including counsel fees), but no such
indemnification may be granted unless such director, officer, agent or employee
(i) conducted himself in good faith, (ii) reasonably believed (a) that any
action taken in his official capacity with the corporation was in the best
interest of the corporation or (b) that in all other cases his conduct at least
was not opposed to the corporation's best interest, and (iii) in the case of
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. Whether a director has met the requisite standard of conduct for the
type of indemnification set forth above is determined by the board of
directors, a committee of directors, special legal counsel or the shareholders
in accordance with Section 55-8-55. A corporation may not indemnify a director
under the statutory scheme in connection with a proceeding by or in the right
of the corporation in which the director was adjudged liable to the corporation
or in connection with a proceeding in which a director was adjudged liable on
the basis of having received an improper personal benefit.
In addition to, and separate and apart from the indemnification described
above under the statutory scheme, Section 55-8-57 of the North Carolina General
Statutes permits a corporation to indemnify or agree to indemnify any of its
directors, officers, employees or agents against liability and expenses
(including attorney's fees) in any proceeding (including proceedings brought by
or on behalf of the corporation) arising out of their status as such or their
activities in such capacities, except for any liabilities or expenses incurred
on account of activities that were, at the time taken, known or believed by the
person to be clearly in conflict with the best interests of the corporation.
The Bylaws of Bancshares provide for indemnification to the fullest extent
permitted under North Carolina law for persons who serve as directors or
officers of Bancshares, or at the request of Bancshares serve as an officer,
director, agent, partner, trustee, administrator or employee for any other
foreign or domestic entity, except to the extent such activities were at the
time taken known or believed by the potential indemnities to be clearly in
conflict with the best interests of Bancshares. Accordingly, Bancshares may
indemnify its directors, officers or employees in accordance with either the
statutory or non-statutory standards.
Sections 55-8-52 and 55-8-56 of the North Carolina General Statutes
require a corporation, unless its articles of incorporation provide otherwise,
to indemnify a director or officer who has been wholly successful, on the
merits or otherwise, in the defense of any proceeding to which such director or
officer was a party. Unless prohibited by the articles of incorporation, a
director or officer also may make application and obtain court-ordered
indemnification if the court determines that such director or officer is fairly
and reasonably entitled to such indemnification as provided in Sections 55-8-54
and 55-8-56.
Finally, Section 55-8-57 of the North Carolina General Statutes provides
that a corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent of the
corporation against certain liabilities incurred by such persons, whether or
not the corporation is otherwise authorized by the NCBCA to indemnify such
party. The Bank has purchased a standard directors' and officers liability
policy which will, subject to certain limitations, indemnify the Bank and its
officers and directors for damages they become legally obligated to pay as a
result of any negligent act, error, or omission committed by directors or
officers while acting in their capacity as such. Bancshares may also purchase
such a policy.
II-1
<PAGE>
As permitted by North Carolina law, Article 5 of Bancshares' Articles
limits the personal liability of directors for monetary damages for breaches of
duty as a director arising out of any legal action whether by or in the right
of Bancshares or otherwise, provided that such limitation will not apply to (i)
acts or omissions that the director at the time of such breach knew or believed
were clearly in conflict with the best interests of Bancshares, (ii) any
liability under Section 55-8-33 of the General Statutes of North Carolina, or
(iii) any transaction from which the director derived an improper personal
benefit (which does not include a director's reasonable compensation or other
reasonable incidental benefit for or on account of his service as a director,
officer, employee, independent contractor, attorney, or consultant of
Bancshares).
ITEM 21. EXHIBITS
The following documents are filed herewith and made a part of this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- ---------------- -------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization and Share Exchange dated as of
February 16, 2000, by and between American Community Bank and American
Community Bancshares, Inc. ("Bancshares") included as Appendix I to the Proxy
Statement - Prospectus
3.1 Articles of Incorporation of Bancshares
3.2 Bylaws of Bancshares
4.1 Specimen Common Stock Certificate of Bancshares
5.1 Opinion of Anthony Gaeta, Jr., P.A. regarding the legality of securities being
registered
8.1 Opinion of Anthony Gaeta, Jr., P.A. regarding certain federal income tax
consequences of the Holding Company Reorganization
10.1 Employment Agreement, dated April 15, 1998, between American Community
Bank and Randy P. Helton
10.2 Consulting Agreement, dated June 1998, between American Community Bank
and Kenneth W. Long, Sr.
10.3 American Community Bancshares, Inc., 1999 Incentive Stock Option Plan
10.4 American Community Bancshares, Inc., 1999 Nonstatutory Stock Option Plan
10.5 401(k) Savings Plan of American Community Bank
23.1 Consent of Dixon Odom PLLC (American Community Bank Financial
Statements) (to be filed by amendment)
23.3 Consent of Anthony Gaeta, Jr., P.A. (included with Exhibit 5.1 hereto)
24.1 Power of Attorney
27.1 Financial Data Schedule
99.1 Form of Proxy Card (American Community Bank)
99.2 1999 Annual Report on Form 10-KSB of American Community Bank (to be filed
by amendment)
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers and sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
II-2
<PAGE>
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities and 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this Registration Statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form and that every prospectus (i) that is filed pursuant to the
paragraph immediately preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. The undersigned registrant hereby undertakes to
respond to requests for information that are incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request. The
undersigned registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and American Community Bank
being acquired involved therein, that was not the subject of and included in
the Registration Statement when it became effective.
II-3
<PAGE>
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-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Monroe, State of North Carolina, on
February 25, 2000.
AMERICAN COMMUNITY BANCSHARES
By: /S/ RANDY P. HELTON
----------------------------------
RANDY P. HELTON
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on
February 25, 2000 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- ---------------------------------- ------------------------------------------
<S> <C>
/s/ RANDY P. HELTON President and Chief Executive Officer
- ---------------------------------
RANDY P. HELTON
/s/ DAN R. ELLIS, JR. Executive Vice President, Chief Financial
- --------------------------------- Officer
DAN R. ELLIS, JR.
/s/ THOMAS J. HALL Director
- ---------------------------------
THOMAS J. HALL
/s/ LARRY S. HELMS Chairman of its Board of Directors
- ---------------------------------
LARRY S. HELMS
/s/ KENNETH W. LONG Director
- ---------------------------------
KENNETH W. LONG
/s/ L. STEVEN PHILLIPS Director
- ---------------------------------
L. STEVEN PHILLIPS
/s/ DAVID D. WHITLEY Director
- ---------------------------------
DAVID D. WHITLEY
/s/ GREGORY N. WYLIE Director
- ---------------------------------
GREGORY N. WYLIE
</TABLE>
*By: /S/ RANDY P. HELTON
-----------------------------------
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
<S> <C>
2.1 Agreement and Plan of Reorganization and Share Exchange dated
February 16, 2000
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen stock certificate
5.1 Opinion of Anthony Gaeta, Jr. P.A. as to the legality
8.1 Opinion of Anthony Gaeta, Jr. P.A. as to the taxation
10.1 Employment Agreement with Randy P. Helton dated April 15, 1998
10.2 Consulting Agreement with Kenneth W. Long, Sr., dated June 1998
10.3 1999 Incentive Stock Option Plan
10.4 1999 Nonstatutory Stock Option Plan
10.5 401(k) Savings Plan of American Community Bank
23.1 Consent of Dixon Odom PLLC (to be filed by amendment)
23.3 Consent of Anthony Gaeta Jr. P.A. (included in Exhibit 5.1 hereof)
24.1 Power of Attorney
27.1 Financial Data Schedule
99.1 Form of Proxy Card
99.2 1999 Annual Report on Form 10-KSB of American Community Bank (to
be filed by amendment)
</TABLE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE (this
"Agreement"), made and entered into as of February 16, 2000, by and between
American Community Bank, a banking corporation organized under the laws of the
State of North Carolina and having its principal place of business in the City
of Monroe, Union County, North Carolina (the "Bank"), and American Community
Bancshares, Inc. , a North Carolina business corporation (the "Holding
Company").
W I T N E S S E T H
WHEREAS, the Boards of Directors of the Bank and the Holding Company
believe that it is in the best interests of their respective shareholders that
the Bank be reorganized into a bank holding company structure pursuant to which
the shareholders of the Bank (collectively, the "Shareholders" and individually,
a "Shareholder") would receive shares of the common stock of the Holding Company
in exchange for their shares of Bank common stock.
NOW, THEREFORE, in consideration of the mutual promises and conditions
herein contained, the Bank and the Holding Company hereby mutually agree to an
exchange of shares on the terms and conditions and in the manner and on the
basis hereinafter provided:
1. THE EXCHANGE.
(a) The name of the corporation whose shares will be acquired
is "American Community Bank" and the name of the acquiring corporation is
"American Community Bancshares, Inc.".
(b) At the Effective Time (as defined in Section 2 below),
upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with Article 11 of the North Carolina Business Corporation Act, as
amended (the "NCBCA"), each share of the $5 par value common stock of the Bank
("Bank Stock") shall be exchanged (the "Exchange") for one (1) share of the
$1.00 par value common stock of the Holding Company (all such shares of Holding
Company common stock issued to the Shareholders, collectively, the "Shares").
(c) As soon as possible after the Effective Time, the Holding
Company shall furnish to each Shareholder transmittal forms and written
instructions with respect to the Exchange. Until shares of the Bank Stock are
surrendered for exchange in accordance with this Agreement, each outstanding
certificate which, prior to the Effective Time, represented shares of Bank
Stock, shall for all purposes evidence only the exchange rights established
pursuant to this Agreement or, if applicable, the rights described in Paragraph
3 of this Agreement. The Holding Company may in its discretion elect not to
treat any such unsurrendered shares as shares of common stock of the Holding
Company for purposes of the payment of dividends or other distributions. If the
Holding Company in its discretion so elects, then unless and until any
outstanding certificate evidencing Bank Stock shall be so surrendered, no
dividends payable to the holders of common stock of the Holding Company shall be
paid to the holder of the
<PAGE>
unsurrendered Bank Stock certificate; provided, however, upon surrender and
exchange of each outstanding certificate evidencing Bank Stock for a certificate
evidencing outstanding common stock of the Holding Company, there shall be paid
to the holder thereof the amount, without interest, of all dividends and other
distributions, if any, which theretofore were declared and became payable, but
were not paid, with respect to said shares.
(d) At the Effective Time, all shares of common stock of the
Holding Company outstanding immediately prior to the Effective Time shall be
redeemed from the holder(s) thereof for the sum of $ 1.00 per share.
2. CLOSING; EFFECTIVE TIME. Consummation of the Exchange and the other
transactions contemplated by this Agreement shall take place at 10:00 a.m. at
the offices of American Community Bank, 2593 West Roosevelt Boulevard, Union
County, Monroe, North Carolina 28111-0418 on May 15, 2000, or at such other time
and date as the Holding Company and the Bank shall determine (such specified or
other time and date, the "Closing"). The Exchange shall become effective at the
time specified in Articles of Share Exchange to be filed with the Secretary of
State of North Carolina (the "Effective Time").
3. RIGHTS OF DISSENTING SHAREHOLDERS. Any Shareholder who has not voted
for the Exchange at the meeting of Shareholders called to consider the Exchange,
and who has given notice in writing at or prior to such meeting that he or she
dissents from the Exchange, and who complies with the provisions of Part 2 of
Article 13 of the North Carolina Business Corporation Act ("NCBCA"), shall be
entitled to receive the fair value of the shares held by him or her. Upon the
receipt of any notice of a Shareholder's intent to assert dissenters' rights
pursuant to the NCBCA, the Bank shall establish an escrow fund (the "Escrow
Fund") from which all payments, whether before or after the Effective Time,
necessary with respect to the exercise of such dissenters' rights shall be made.
The Holding Company shall not directly or indirectly contribute any funds to the
Escrow Fund. The Bank shall deposit in the Escrow Fund an amount that it
reasonably believes is sufficient to pay fully the claims of all Shareholders
asserting dissenters' rights, and shall make additional deposits to the Escrow
Fund as it may reasonably determine to be necessary to satisfy such claims. In
the event funds remain in the Escrow Fund after all claims for payment pursuant
to dissenters' rights have finally expired, terminated, or have been finally
satisfied or settled, then any balance remaining in the Escrow Fund shall be
returned to the Bank.
4. LOST, DESTROYED, OR STOLEN CERTIFICATES. Shareholders whose
certificates evidencing shares of Bank Stock have been lost, destroyed or stolen
shall be entitled to receive certificates evidencing Shares for which such
shares of Bank Stock were exchanged pursuant to this Agreement in compliance
with the provisions of the Holding Company's bylaws.
5. STOCK OPTION AND OTHER PLANS. At the Effective Time, all outstanding
options under the Bank's existing stock option plans ("Plans") shall be
converted into options to acquire the number of shares of common stock of the
Holding Company that the holders of such options were entitled to acquire of
Bank Stock immediately prior to the Exchange on the same terms and conditions as
set forth in the plans.
6. OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE TIME. The Bank and
the Holding Company shall, as soon as practicable take the following action:
(a) This Agreement shall be duly submitted to the Shareholders
of the Bank and the sole shareholder of the Holding Company for the purpose of
considering and acting upon the Exchange in the manner required by law and their
respective articles of incorporation and
<PAGE>
bylaws. The Bank and the Holding Company shall use their best efforts to obtain
the requisite approval of their shareholders for the Exchange and the
transactions contemplated by this Agreement, and the Bank and the Holding
Company shall, through their respective officers, execute and file with the
appropriate regulatory authorities, including the Board of Governors of the
Federal Reserve System and the North Carolina Banking Commission, such
applications, exhibits, documents and papers as shall be necessary or
appropriate to secure approval of this Agreement, the Exchange and the other
transactions contemplated hereby, as required by applicable statutes, rules and
regulations;
(b) The Holding Company shall use its best efforts to cause
the issuance of common stock of the Holding Company made pursuant to this
Agreement and the Exchange to be qualified or exempted under the Securities Act
of 1933, as amended, and the Blue Sky Laws of each state in which it deems such
qualification or exemption to be required;
(c) Until the Effective Time, neither the Bank nor the Holding
Company shall dispose of its assets except in the ordinary and normal course of
business.
7. CONDITIONS PRECEDENT TO THE EXCHANGE. The Exchange shall be subject
to the satisfaction of the following conditions:
(a) Ratification and confirmation of this Agreement by
approval of a majority of the Shareholders and by approval of the sole
shareholder of the Holding Company as required by law;
(b) Approvals to the extent required, by the Board of
Governors of the Federal Reserve System and the North Carolina Banking
Commission to the Exchange and the transactions related thereto;
(c) Approval, to the extent required, of any other
governmental or regulatory authority;
(d) Receipt of a favorable opinion with respect to the tax
consequences of the proposed Exchange from the Bank's counsel; and
(e) Expiration of any waiting period required by any
supervisory authority.
<PAGE>
8. TERMINATION. This Agreement may be terminated prior to the Effective
Time for any of the following reasons by written notice by either the Bank or
the Holding Company to the other upon authorization by resolution adopted by
either Board of Directors:
(a) Any condition precedent contained in Paragraph 7 has not
been fulfilled or waived;
(b) Any action, suit, proceeding, or claim has been
instituted, made or threatened, relating to the proposed Exchange that makes
consummation of the Exchange inadvisable in the opinion of the Board of
Directors of either the Bank or the Holding Company;
(c) The Board of Directors of the Bank determines that the
holders of a sufficient number of shares of Bank Stock have dissented from the
Exchange so that consummation of the Exchange is not in the best interests of
the Bank;
(d) A determination by the Board of Directors of either the
Bank or the Holding Company that consummation of the Exchange is inadvisable in
the opinion of such Board of Directors.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties with respect to the transactions contemplated hereby.
10. EFFECT OF AGREEMENT. The terms and conditions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
<PAGE>
IN WITNESS WHEREOF, the Bank and the Holding Company have caused this Agreement
to be executed by their duly authorized officers and their corporate seals to be
affixed hereto as of the date first above written.
AMERICAN COMMUNITY BANCSHARES, INC.
By: /s/ Randy P. Helton
------------------------------
Randy P. Helton, President
ATTEST:
/s/ Dan R. Ellis, Jr.
- --------------------------
Dan R. Ellis Jr., Secretary
[corporate seal]
AMERICAN COMMUNITY BANK
By: /s/ Randy P. Helton
------------------------------
Randy P. Helton, President
ATTEST:
/s/ Dan R. Ellis, Jr.
- --------------------------
Dan R. Ellis, Jr.,Secretary
[corporate seal]
EXHIBIT 3.1
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
AMERICAN COMMUNITY BANCSHARES, INC.
The undersigned entity hereby makes and acknowledges these Articles of
Incorporation for the purpose of forming a business corporation under and by
virtue of the laws of the State of North Carolina as contained in Chapter 55 of
the General Statutes of North Carolina, entitled "North Carolina Business
Corporation Act," and the several amendments thereto, and to that end hereby
sets forth the following:
ARTICLE I
The name of the corporation is American Community Bancshares, Inc. (herein
referred to as the "Corporation").
ARTICLE II
The Corporation shall have authority to issue a total of 10,000,000 shares of
capital stock. The capital stock shall consist of 9,000,000 shares of Common
Stock, $1.00 par value per share, each with one vote per share, and 1,000,000
shares of Preferred Stock, no par value. The preferences, limitations and
relative rights of the shares of Preferred Stock shall be as designated by the
Board of Directors and may be issued in one or more series.
ARTICLE III
The street address of the initial registered office of the Corporation is 2593
West Roosevelt Boulevard, Union County, Monroe, North Carolina 28111-0418; the
mailing address of the initial registered office of the Corporation is Post
Office Box 5035, Union County, Monroe, North Carolina 28110-5035; and, the name
of the initial registered agent at such address is Randy P. Helton.
ARTICLE IV
The name of the incorporator is Anthony Gaeta Jr., and the address of the
incorporator is 808 Salem Woods Drive, Suite 201, Wake County, Raleigh, North
Carolina 27615.
ARTICLE V
To the fullest extent permitted by the North Carolina Business Corporation Act
as it exists or may hereafter be amended, no person who is serving or who has
served as a director of the Corporation shall be personally liable to the
Corporation or any of its shareholders or otherwise
<PAGE>
for monetary damages for breach of any duty as a director. No amendment or
repeal of this article, nor the adoption of any provision to these Articles of
Incorporation inconsistent with this article, shall eliminate or reduce the
protection granted herein with respect to any matter that occurred prior to such
amendment, repeal, or adoption.
ARTICLE VI
In connection with the exercise of its or their judgment in determining what is
in the best interests of the Corporation and its shareholders, the Board of
Directors of the Corporation, any committee of the Board of Directors, or any
individual directors may, but shall not be required to, in addition to
considering the long-term and short-term interests of the shareholders, consider
any of the following factors and any other factors which it or they deem
relevant: (a) the social and economic effects of the matter to be considered on
the Corporation and its subsidiaries, its and their employees, depositors,
customers, and creditors, and the communities in which the Corporation and its
subsidiaries operate or are located; and (b) when evaluating a business
combination or a proposal by another Person or Persons to make a business
combination or a tender or exchange offer or any other proposal relating to a
potential change of control of the Corporation (i) the business and financial
condition and earnings prospects of the acquiring Person or Persons, including,
but not limited to, debt service and other existing financial obligations,
financial obligations to be incurred in connection with the acquisition, and
other likely financial obligations of the acquiring Person or Persons, and the
possible effect of such conditions upon the Corporation and its subsidiaries and
the communities in which the Corporation and its subsidiaries operate or are
located, (ii) the competence, experience, and integrity of the acquiring Person
or Persons and its or their management, and (iii) the prospects for successful
conclusion of the business combination, offer or proposal. The provisions of
this Article VI shall be deemed solely to grant discretionary authority to the
directors and shall not be deemed to provide to any constituency the right that
any factors, including but not limited to those detailed herein, be considered.
As used in this Article VI, the term "Person" means any individual, partnership,
firm, corporation, association, trust, unincorporated organization or other
entity; and, when two or more Persons act as a partnership, limited partnership,
syndicate, or other group acting in concert for the purpose of acquiring,
holding, voting or disposing of securities of the Corporation, such partnership,
limited partnership, syndicate or group shall also be deemed "Person" for
purposes of this Article VI.
ARTICLE VII
Any agreement, plan or arrangement providing for the merger, consolidation or
exchange of shares of the Corporation with any other corporation, foreign or
domestic, or the sale, lease or exchange of all or substantially all of the
assets of the Corporation which require prior shareholder approval under North
Carolina law shall only be effected after the prior approval of the holders of
at least three-fourths of the outstanding shares of all classes of capital stock
of the Corporation, voting together as a single class, unless class voting
rights are specifically permitted for any class of capital stock of the
Corporation. Notwithstanding the foregoing, the requirement of approval of at
least three-fourths of the outstanding shares as set forth above shall not be
2
<PAGE>
applicable and only such affirmative vote as is required by North Carolina law
shall be required, if any such transaction shall have been approved by a
majority of the members of the Board of Directors unaffiliated with any other
party to the proposed transaction.
ARTICLE VIII
Any person as a director of this Corporation may only be removed for "cause" by
the shareholders represented by a majority of all shares entitled to vote at an
annual or special meeting of this Corporation. The term "cause" for the purposes
of this paragraph shall mean (i) the criminal prosecution and conviction during
the course of the director's service as a director of this Corporation of an act
of fraud, embezzlement, theft or personal dishonesty (excepting minor traffic
and similar violations in the nature of a misdemeanor under North Carolina law),
(ii) the prosecution and conviction of any criminal offense involving dishonesty
or breach of trust, or (iii) the occurrence of any event resulting in a director
being excluded from coverage, or having coverage limited as to the director when
compared to other covered directors, under any of the Corporation's fidelity
bonds or insurance policies covering its directors, officers or employees.
This 14th day of February, 2000.
--------------------------------
Anthony Gaeta, Jr., Incorporator
3
EXHIBIT 3.2
BYLAWS
OF
AMERICAN COMMUNITY BANCSHARES, INC.
Effective as of February ____, 2000
<PAGE>
INDEX OF BYLAWS
OF
AMERICAN COMMUNITY BANCSHARES, INC.
ARTICLE I
OFFICES
Section 1. Principal Office
Section 2. Registered Office
Section 3. Other Offices
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting
Section 2. Substitute Annual Meeting
Section 3. Special Meetings
Section 4. Place of Meeting
Section 5. Notice of Meeting
Section 6. Waiver of Notice
Section 7. Closing of Transfer Books or
Fixing of Record Date
Section 8. Voting Lists
Section 9. Voting Groups
Section 10. Quorum
Section 11. Proxies
Section 12. Voting of Shares
Section 13. Votes Required
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers
Section 2. Number, Term and Qualifications
Section 3. Nominations
Section 4. Vacancies
Section 5. Compensation
2
<PAGE>
ARTICLE IV
MEETINGS OF DIRECTORS
Section 1. Regular Meetings
Section 2. Special Meetings
Section 3. Notice
Section 4. Waiver of Notice
Section 5. Quorum
Section 6. Manner of Acting
Section 7. Presumption of Assent
Section 8. Action by Directors Without Meeting
Section 9. Meetings by Conference Telephone
ARTICLE V
COMMITTEES OF THE BOARD
Section 1. Executive Committee
Section 2. Other Committees
Section 3. Vacancy
Section 4. Removal
Section 5. Minutes
Section 6. Responsibility of Directors
ARTICLE VI
OFFICERS
Section 1. Officers of the Corporation
Section 2. Appointment and Term
Section 3. Compensation of Officers
Section 4. Removal of Officers
Section 5. Resignation
Section 6. Bonds
Section 7. President
Section 8. Vice Presidents
Section 9. Secretary
Section 10. Assistant Secretaries
Section 11. Treasurer
Section 12. Assistant Treasurers
3
<PAGE>
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts
Section 2. Loans
Section 3. Checks and Drafts
Section 4. Deposits
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares
Section 2. Transfer of Shares
Section 3. Lost Certificates
Section 4. Holder of Record
ARTICLE IX
GENERAL PROVISIONS
Section 1. Distributions
Section 2. Seal
Section 3. Fiscal Year
Section 4. Pronouns
Section 5. Amendments
Section 6. Voting of Shares of Other Corporations
ARTICLE X
INDEMNIFICATION
Section 1. Coverage
Section 2. Payment
Section 3. Evaluation
Section 4. Consideration
Section 5. Definitions
4
<PAGE>
BYLAWS
OF
AMERICAN COMMUNITY BANCSHARES, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be located in Monroe, North Carolina, or at such other place as the
Board of Directors shall determine.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of North Carolina may be, but need
not be, identical to the principal office. The address of the registered office
may be changed from time to time by the Board of Directors.
Section 3. Other Offices. The corporation may, from time to time, have
offices at such places, either within or without the State of North Carolina, as
the Board of Directors may designate or as the business of the corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the third Tuesday in the month of April in each year, beginning with
the year 2001, at the hour of 11:00 a.m. or such other time on such day
designated in the notice of meeting, for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the State of
North Carolina, such meeting shall be held on the next succeeding business day.
Section 2. Substitute Annual Meeting. If the annual meeting shall not
be held on the day designated by these bylaws for the annual meeting of
shareholders, or at any adjournment thereof, then a substitute annual meeting
may be called in accordance with Section 3 of this Article and the meeting so
called may be designated and treated for all purposes as the annual meeting.
Section 3. Special Meetings. Special meetings of the shareholders may
be called by the President or by the Board of Directors.
6
<PAGE>
Section 4. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of North Carolina, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of North
Carolina, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal office of the corporation.
Section 5. Notice of Meeting. Written or printed notice stating the
time and place of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the record of shareholders of the corporation,
with postage thereon prepaid. In addition to the foregoing, notice of a
substitute annual meeting shall state that the annual meeting was not held on
the day designated by these bylaws and that such substitute annual meeting is
being held in lieu of and is designated as such annual meeting.
If a meeting of shareholders is adjourned to a different date, time or
place, notice need not be given of the new date, time or place if the new date,
time or place is announced at the meeting before adjournment. If a new record
date for the adjourned meeting is fixed, however, notice of the adjourned
meeting must be given to persons who are shareholders as of the new record date.
Section 6. Waiver of Notice.
(a) A shareholder may waive any notice required by law, the
articles of incorporation, or these bylaws before or after the date and
time stated in the notice. The waiver must be in writing, be signed by
the shareholder entitled to the notice, and be delivered to the
corporation for inclusion in the minutes or filing with the corporate
records.
(b) A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective
notice of the meeting, unless the shareholder at the beginning
of the meeting objects to holding the meeting or transacting
business at the meeting; and
(2) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the
shareholder objects to considering the matter before it is
voted upon.
Section 7. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may
7
<PAGE>
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, seventy (70) days. If the stock transfer books shall
be closed for the purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days and, in the
case of a meeting of shareholders, not less than ten (10) full days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of closing
has expired, and except where the Board of Directors fixes a new record date,
which it must do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
Section 8. Voting Lists. After fixing a record date for a meeting, the
Secretary of the corporation shall prepare an alphabetical list of the names of
all its shareholders who are entitled to notice of a shareholders' meeting. The
list shall be arranged by voting group (and within each voting group by class or
series of shares) and show the address of and number of shares held by each
shareholder. The shareholders' list shall be available for inspection by any
shareholder, beginning two (2) business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting, at the
corporation's principal office or at a place identified in the meeting notice in
the city where the meeting will be held. A shareholder, or his agent or
attorney, is entitled on written demand to inspect and, subject to the
requirements of N.C. Gen. Stat. ss.55-16-02(c), as may be hereafter amended, to
copy the list, during regular business hours and at his expense, during the
period it is available for inspection. The Secretary of the corporation shall
make the shareholders' list available at the meeting, and any shareholder or his
agent or attorney is entitled to inspect the list at any time during the meeting
or any adjournment.
Section 9. Voting Groups. All shares of one or more classes or series
that under the articles of incorporation or the North Carolina Business
Corporation Act are entitled to vote and be counted together collectively on a
matter at a meeting of shareholders constitute a voting group. All shares
entitled by the articles of incorporation or the North Carolina Business
Corporation Act to vote generally on a matter are for that purpose a single
voting group. Classes or series of shares shall not be entitled to vote
separately by voting group unless expressly authorized by the articles of
incorporation or specifically required by law.
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Section 10. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at the meeting only if a quorum of those shares
exists. A majority of the votes entitled to be cast on the matter by the voting
group constitutes a quorum of that voting group for action on that matter.
The shareholders at a meeting at which a quorum is present may continue
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of
shareholders, such meeting may be adjourned from time to time by a vote of the
majority of the shares voting on the motion to adjourn; and at any adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the original meeting.
Section 11. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written proxy executed by the shareholder or by his
duly authorized attorney in fact.
An appointment of a proxy is effective when received by the Secretary
or other officer or agent authorized to tabulate votes. An appointment is valid
for eleven (11) months unless a different period is expressly provided in the
appointment form.
Section 12. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
Except as otherwise provided by law, the articles of incorporation or
these bylaws, if a quorum exists, action on a matter by a voting group is
approved if the votes cast within the voting group favoring the action exceed
the votes cast opposing the action.
Shares of its own stock owned by the corporation directly, or
indirectly through a corporation in which it owns, directly or indirectly, a
majority of the shares entitled to vote for directors, shall not be voted at any
meeting and shall not be counted in determining the total number of outstanding
shares at a given time entitled to vote; provided that this provision does not
limit the power of the corporation to vote its own shares held by it in a
fiduciary capacity.
Section 13. Votes Required. The vote of a majority of the shares voted
at a meeting of shareholders, duly held at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting except as otherwise provided by law, by the articles of
incorporation or by these bylaws. Any provision in these bylaws prescribing the
vote required for any purpose as permitted by law may not itself be amended by a
vote less than the vote prescribed therein.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation
managed under the direction of, the Board of Directors.
Section 2. Number, Term and Qualifications. The number of directors
constituting the Board of Directors of the Corporation shall be not less than
eight(8) nor more than twenty (20) as from time to time may be fixed or changed
within said minimum and maximum by a majority of the full Board of Directors. If
there are less than nine (9) directors, they shall be elected for terms of one
(1) year. Provided there are nine (9) or more directors in number, the directors
shall be divided into three classes, as nearly equal in number as possible, with
the term of office of the first class to expire at the first annual meeting of
shareholders after their election, the term of office of the second class to
expire at the second annual meeting of shareholders after their election, and
the term of office of the third class to expire at the third annual meeting of
shareholders after their election. At each annual meeting of shareholders
following such initial classification and election, directors elected to succeed
those directors whose terms expire shall be elected for a term of three years or
until their successors are elected and shall qualify. In the event of any
increase or decrease in the number of directors, the additional or eliminated
directorships shall be so classified or chosen so that all classes of directors
shall remain and become equal in number, as nearly as possible. In the event of
the death, resignation, retirement, removal or disqualification of a director, a
successor shall be elected to serve only until the next meeting of shareholders
at which directors are elected.
Section 3. Nominations. Nominations for election to the Board of
Directors may be made by the Board of Directors or a committee thereof, and,
subject to the conditions described below, any shareholder of common stock
entitled to vote at that meeting for the election of directors. To be eligible
for consideration at the meeting of shareholders, all nominations for election
to the Board of Directors, other than those made by the Board of Directors or
its committee, shall be in writing and must be delivered to the Secretary of the
Corporation not less than one hundred and twenty (120) days prior to the meeting
of shareholders.
Section 4. Vacancies. Except as otherwise provided by law or the
articles of incorporation, any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of a majority of the remaining directors even
though less than a quorum or by the sole remaining director.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected.
At a special meeting of shareholders the shareholders may elect a
director to fill any vacancy not filled by the directors.
Section 5. Compensation. The Board of Directors may compensate
directors for their services as such and may provide for the payment of all
expenses incurred by directors in attending meetings of the Board.
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ARTICLE IV
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of North Carolina for the holding of additional regular
meetings without other notice than such resolution.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by the President or any two directors. The person or persons
authorized to call special meetings of the Board of Directors may fix any place,
either within or without the State of North Carolina, as the place for holding
any special meeting of the Board of Directors called by them.
Section 3. Notice. The person calling the meeting shall give or cause
to be given oral or written notice of special meetings of the Board of Directors
to each director not less than three (3) days before the date of the meeting.
Neither the business transacted at, nor the purposes of, any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 4. Waiver of Notice.
(a) A director may waive any notice required by law, the
articles of incorporation, or these bylaws before or after the date and
time stated in the notice. Except as provided by subsection (b), the
waiver must be in writing, signed by the director entitled to the
notice, and delivered to the corporation for filing with the minutes or
corporate records.
(b) A director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless the director at
the beginning of the meeting (or promptly upon his arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
Section 5. Quorum. Unless the articles of incorporation or these bylaws
provide otherwise, a majority of the number of directors fixed by or pursuant to
these bylaws shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, or if no number is so fixed, the number of
directors in office immediately before the meeting begins shall constitute a
quorum.
Section 6. Manner of Acting. If a quorum is present when a vote is
taken, the affirmative act of the majority of the directors present is the act
of the Board of Directors, except as otherwise provided in these bylaws.
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Section 7. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors when
corporate action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting business at the meeting;
(b) His dissent or abstention from the action taken is entered
in the minutes of the meeting; or
(c) He files written notice of his dissent or abstention with
the presiding officer of the meeting before its adjournment or with the
corporation immediately after adjournment of the meeting. The right of
dissent or abstention is not available to a director who votes in favor
of the action taken.
Section 8. Action by Directors Without Meeting. Action required or
permitted by law to be taken at a Board of Directors' meeting may be taken
without a meeting if the action is taken by all members of the Board. The action
must be evidenced by one or more written consents signed by each director before
or after such action, describing the action taken, and included in the minutes
or filed with the corporate records. Action taken under this Section is
effective when the last director signs the consent unless the consent specifies
a different effective date. A consent signed under this Section has the effect
of a meeting vote and may be described as such in any document.
Section 9. Meetings by Conference Telephone. Any one or more directors
may participate in a meeting of the Board or a committee by means of a
conference telephone or similar communications device by which all directors
participating may simultaneously hear each other during the meeting, and such
participation in a meeting shall be deemed presence in person at such meeting.
ARTICLE V
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed by these bylaws, may
designate two or more directors to constitute an Executive Committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors to the extent permitted
by applicable law.
Section 2. Other Committees. The Board of Directors may create one or
more other committees and appoint members of the Board of Directors to serve on
them. Each committee must have two or more members, who serve at the pleasure of
the Board of Directors. The creation of a committee and appointment of members
to it must be approved by the greater of:
(a) A majority of all the directors in office when the action
is taken; or
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(b) The number of directors constituting a quorum under the
articles of incorporation or these bylaws.
Section 3. Vacancy. Any vacancy occurring in any committee shall be
filled by a majority of the number of directors fixed by these bylaws at a
regular or special meeting of the Board of Directors.
Section 4. Removal. Any member of a committee may be removed at any
time with or without cause by a majority of the number of directors fixed in
accordance with these bylaws.
Section 5. Minutes. Each committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
Section 6. Responsibility of Directors. The designation of a committee
and the delegation thereto of authority shall not operate to relieve the Board
of Directors, or any member thereof, of any responsibility or liability imposed
upon it or him by law.
Any resolutions adopted or other action taken by a committee within the
scope of the authority delegated to it by the Board of Directors shall be deemed
for all purposes to be adopted or taken by the Board of Directors.
If action taken by a committee is not thereafter formally considered by
the Board, a director may dissent from such action by filing his written
objection with the Secretary with reasonable promptness after learning of such
action.
ARTICLE VI
OFFICERS
Section 1. Officers of the Corporation. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer and such Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers as the Board of
Directors may from time to time appoint. The same individual may simultaneously
hold more than one office in the corporation, but no individual may act in more
than one capacity where action of two or more officers is required.
Section 2. Appointment and Term. The officers of the corporation shall
be appointed by the Board of Directors and each officer shall hold office until
his death, resignation, retirement, removal, disqualification or his successor
shall have been appointed and qualified.
Section 3. Compensation of Officers. The compensation of all officers
of the corporation shall be fixed by the Board of Directors and no officer shall
serve the corporation in any other capacity and receive compensation therefor
unless such additional compensation has been authorized by the Board of
Directors. The appointment of an officer does not itself create contract rights.
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Section 4. Removal of Officers. The Board of Directors may remove any
officer at any time with or without cause, but such removal shall not itself
affect the officer's contract rights, if any, with the corporation.
Section 5. Resignation. An officer may resign at any time by
communicating his or her resignation to the corporation, orally or in writing. A
resignation is effective when communicated unless it specifies in writing a
later effective date. If a resignation is made effective at a later date that is
accepted by the corporation, the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that the successor does not take
office until the effective date. An officer's resignation does not affect the
corporation's contract rights, if any, with the officer.
Section 6. Bonds. The Board of Directors may by resolution require any
officer, agent, or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of his respective office or position, and to comply with such other
conditions as may from time to time be required by the Board of Directors.
Section 7. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders.
He shall sign any deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these bylaws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
Section 8. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice Presidents, in the
order of the seniority of their titles or if they shall all be the same level of
Vice President in the order of their length of uninterrupted service at such
level of Vice President, unless otherwise determined by the Board of Directors,
shall perform the duties of the President, and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice
President shall perform such other duties as from time to time may be assigned
to him by the President or Board of Directors.
Section 9. Secretary. The Secretary shall: (a) attend all meetings of
the shareholders and of the Board of Directors, keep the minutes of such
meetings in one or more books provided for that purpose, and perform like duties
for the standing committees when required; (b) see that all notices are duly
given in accordance with the provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents, the execution
of which on behalf of the corporation under its seal is duly authorized; (d)
keep a register of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholder; (e) have general charge of the
stock transfer books of the corporation; and (f) in general perform all duties
incident to the office
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of secretary and such other duties as from time to time may be assigned to him
by the Board of Directors or by the President, under whose supervision he shall
be.
The Secretary shall keep or cause to be kept at the corporation's
principal office a record of the corporation's shareholders, giving the names
and addresses of all shareholders and the number and class of shares held by
each, and such other records as are required to be kept at the corporation's
principal office by N.C. Gen. Stat.ss.55-16-01 and any successor to such
statute.
Section 10. Assistant Secretaries. In the absence of the Secretary or
in the event of his death, inability or refusal to act, any Assistant Secretary,
unless otherwise determined by the Board of Directors, shall perform the duties
of the Secretary, and when so acting shall have all the powers of and be subject
to all the restrictions upon the Secretary. They shall perform such other duties
as may be assigned to them by the Secretary, by the President or by the Board of
Directors.
Section 11. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; receive
and give receipts for money due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the provisions of Article
VII, Section 4 of these bylaws; and (b) in general perform all of the duties
incident to the office of Treasurer, including preparing, or causing to be
prepared, all financial statements required by law, and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors.
Section 12. Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the Assistant Treasurers in
the order of their length of service as Assistant Treasurer, unless otherwise
determined by the Board of Directors, shall perform the duties of the Treasurer,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the Treasurer. They shall perform such other duties as may be
assigned to them by the Treasurer, by the President or by the Board of
Directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks and Drafts. All checks, drafts or other orders for
the payment of money, issued in the name of the corporation, shall be signed by
such officer or officers, agent or agents of the corporation and in such manner
as shall from time to time be determined by resolution of the Board of
Directors.
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Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such depositories as the Board of Directors may select.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. The Board of Directors may
authorize the issuance of some or all of the shares of the corporation's classes
or series without issuing certificates to represent such shares. If shares are
represented by certificates, the certificates shall be in such form as shall be
determined by the Board of Directors. Certificates shall be signed by the
President or a Vice President and by the Secretary or an Assistant Secretary.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number and class of shares and the date of issue,
shall be entered on the stock transfer books of the corporation. When shares are
represented by certificates, the corporation shall issue and deliver, to each
shareholder to whom such shares have been issued or transferred, certificates
representing the shares owned by him. When shares are not represented by
certificates, then within a reasonable time after the issuance or transfer of
such shares, the corporation shall send the shareholder to whom such shares have
been issued or transferred a written statement of the information required by
law to be on certificates.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, and, when shares
are represented by certificates, on surrender for cancellation of the
certificate for such shares.
Section 3. Lost Certificates. The Board of Directors or the President
may direct a new certificate to be issued in place of any certificate
theretofore issued by the corporation claimed to have been lost or destroyed,
upon receipt of an affidavit of such fact from the shareholder. When authorizing
such issuance of a new certificate, the Board of Directors or the President may
require that the shareholder give the corporation a bond in such sum as the
Board or the President may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate claimed to have
been lost or destroyed or may require the shareholder to agree to indemnify the
corporation against any claims that may be made against the corporation with
respect to the certificate claimed to have been lost or destroyed.
Section 4. Holder of Record. The corporation may treat as an absolute
owner of shares the person in whose name the shares stand of record on its books
just as if that person had full competency, capacity and authority to exercise
all rights of ownership irrespective of any knowledge or notice to the contrary
or any description indicating a representative, pledge or other fiduciary
relation or any reference to any other instrument or to the rights of any other
person appearing upon its records or upon the share certificate except that any
person furnishing to the
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corporation proof of his appointment as a fiduciary shall be treated as if he
were a holder of record of its shares.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Distributions. The Board of Directors may from time to time
authorize, and the corporation may grant, distributions and share dividends
pursuant to law and subject to the provisions of its articles of incorporation.
Section 2. Seal. The corporate seal of the corporation shall consist of
two concentric circles between which is the name of the corporation and in the
center of which is inscribed SEAL; and such seal, as impressed on the margin
hereof, is hereby adopted as the corporate seal of the corporation.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors.
Section 4. Pronouns. Each reference to pronouns herein shall be
construed in the masculine, feminine, neuter, singular or plural, as the context
may require.
Section 5. Amendments. The Board of Directors may amend or repeal the
bylaws, except to the extent otherwise provided by law, the articles of
incorporation or a Bylaw adopted by the shareholders, and except that a Bylaw
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the Board of Directors unless the articles of incorporation or a
Bylaw adopted by the shareholders authorizes the Board of Directors to adopt,
amend or repeal that particular Bylaw or the bylaws generally.
Section 6. Voting of Shares of Other Corporations. Authority to vote
shares of another corporation or of any association held by this corporation,
and to execute proxies and written waivers and consents in relation thereto,
shall be vested exclusively in the President or such officer(s) and employee(s)
of this corporation as shall be expressly identified by name or title from time
to time by the Board of Directors of this corporation in resolutions formally
adopted for that purpose.
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ARTICLE X
INDEMNIFICATION
Section 1. Coverage. Any person who at any time serves or has served as
a director, officer, agent or employee of the corporation, or in such capacity
at the request of the corporation for any other corporation, partnership, joint
venture, trust or other enterprise, or as a trustee or administrator under an
employee benefit plan, shall have a right to be indemnified by the corporation
to the fullest extent permitted by law against (a) reasonable expenses,
including reasonable attorneys' fees, actually incurred by him in connection
with any threatened, pending or completed action, suit or proceeding (and any
appeal thereof), whether civil, criminal, administrative, investigative or
arbitrative, and whether or not brought by or on behalf of the corporation,
seeking to hold him liable by reason of the fact that he is or was acting in
such capacity, and (b) reasonable payments made by him in satisfaction of any
judgment, money decree, fine (including, without limitation, an excise tax
assessed with respect to an employee benefit plan), penalty or settlement for
which he may have become liable in any such action, suit or proceeding.
Section 2. Payment. Expenses incurred by such person shall be paid in
advance of the final disposition of such investigation, action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the corporation.
Section 3. Evaluation. The Board of Directors of the corporation shall
take all such action as may be necessary and appropriate to authorize the
corporation to pay the indemnification required by this Article X, including
without limitation, to the extent needed, making a determination that
indemnification is permissible under the circumstances and a good faith
evaluation of the manner in which the claimant for indemnity acted and of the
amount of indemnity due him, and giving notice to and obtaining approval by the
shareholders of the corporation.
Section 4. Consideration. Any person who at any time after the adoption
of this Article X serves or has served in any of the aforesaid capacities for or
on behalf of the corporation shall be deemed to be doing or to have done so in
reliance upon, and as consideration for, the right of indemnification provided
herein. Such right shall inure to the benefit of the legal representatives of
any such person and shall not be exclusive of any other rights to which such
person may be entitled apart from the provisions of this Article X. Any repeal
or modification of these indemnification provisions shall not affect any rights
or obligations existing at the time of such repeal or modification.
Section 5. Definitions. For purposes of this Article X, terms defined
by the North Carolina Business Corporation Act and used but not defined herein
shall have the meanings assigned to them by the Act.
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EXHIBIT 4.1
SPECIMEN COMMON STOCK CERTIFICATE
[specimen common stock certificate]
Incorporated Under the Laws of the State of North Carolina
Number of Shares of Common Stock: _________________ of American Community
Bancshares, Inc. $1.00 par value per share.
This Capital Stock of American Community Bancshares, Inc. is transferable only
on the books of the Corporation by the holder hereof in person or by Attorney
upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _____ day of _______, 2000.
- -------------------------- --------------------------
President Secretary
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Certificate Number:___________ for ____________ Shares of Capital Stock
For Value Received, _____________ hereby sell, assign, and transfer unto
___________ Shares of the Capital Stock represented by the within Certificate,
said Stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated: ______________, 2000.
In the presence of ___________________.
EXHIBIT 5.1
OPINION OF ANTHONY GAETA, JR., P.A.
February , 2000
American Community Bancshares, Inc.
2593 West Roosevelt Boulevard
Monroe, NC 28111-0418
RE: Registration Statement
Gentlemen:
We have acted as counsel to American Community Bancshares, Inc. (the "Company"),
in connection with the preparation of a Registration Statement on Form S-4 (the
"Registration Statement") to be filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to the registration of up to 1,492,062 shares (the "Shares") of the
Company's common stock, $1.00 par value per share ("Common Stock"). This opinion
is furnished pursuant to the requirement of Item 601(b)(5) of Regulation S-K
under the Act.
We have examined the Articles of Incorporation filed by the Company with the
North Carolina Secretary of State, the Bylaws of the Company, minutes of
meetings of its Board of Directors, and such other corporate records of the
Company and other documents and have made such examinations of law as we have
deemed necessary for purposes of this opinion.
Based on and subject to the foregoing and to the additional qualifications set
forth below, it is our opinion that the Shares that are being offered and sold
by the Company pursuant to the Registration Statement, when issued by the
Company as contemplated by the Registration Statement, will be legally issued,
fully paid and nonassessable.
We hereby consent to the reference to our firm in the Registration Statement
under the heading "Legal Matters" and to the filing of this opinion as an
exhibit to the Registration Statement. Such consent shall not be deemed to be an
admission that this firm is within the category of persons whose consent is
required under Section 7 of the Act or the regulations promulgated pursuant to
the Act.
<PAGE>
This opinion is limited to the laws of the State of North Carolina and no
opinion is expressed as to the laws of any other jurisdiction.
This opinion expressed herein does not extend to compliance with federal and
state securities law relating to the sale of the Shares.
This opinion is rendered solely for your benefit in connection with the
transaction described above and may not be used or relied upon by any other
person without prior written consent in each instance.
Very truly yours,
ANTHONY GAETA, JR., P.A.
Anthony Gaeta, Jr.
EXHIBIT 8.1
FORM OF OPINION
___________, 2000
Board of Directors
American Community Bank
2593 West Roosevelt Boulevard
Monroe, NC 28111-0418
RE: AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE DATED AS OF
FEBRUARY 16, 2000 BY AND BETWEEN AMERICAN COMMUNITY BANK AND
AMERICAN COMMUNITY BANCSHARES, INC. ("ACB").
Gentlemen:
You have asked for our opinion in connection with the proposed exchange (the
"Exchange") of shares of the $1.00 par value common stock of ACB, a North
Carolina corporation, for the shares of $5 par value common stock of American
Community Bank , a North Carolina-chartered bank, pursuant to the terms of the
Agreement and Plan of Reorganization and Share Exchange dated as of February 16,
2000 by and between American Community Bank and ACB (the "Exchange Agreement").
All capitalized terms, unless otherwise specified, have the meaning assigned to
them in the Exchange Agreement.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the Exchange Agreement, the Registration Statement filed with the Securities and
Exchange Commission on February 25, 2000 and such other documents as we have
deemed necessary or appropriate in order to enable us to render the opinion
expressed below. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such copies.
In rendering the opinions set forth below, we have relied, with your permission,
upon certain written factual representations of American Community Bank and ACB
dated as of the date of this letter. We have assumed that any representation or
statement made in connection with such representations that is made "to the best
of knowledge" or similarly qualified is correct without such qualification. We
have also assumed that when a person or entity making a representation has
represented that such person or entity either is not a party to or does not
have, or is not aware
<PAGE>
of, any plan or intention, understanding or agreement as to a particular matter,
there is in fact no such plan, intention, understanding or agreement. We also
have assumed that all such written representations will be true as of the
Effective Time of the Exchange.
In rendering our opinion, we have considered the applicable provisions of the
Code, the Treasury Regulations, pertinent judicial authorities, interpretive
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant, all as of the date hereof. All of such authorities are
subject to change, possibly with retroactive effect. Any such change could
affect the opinions rendered below. Our opinion does not address the federal
income tax consequences of the Exchange to American Community Bank shareholders
in special circumstances, including insurance companies, tax-exempt
organizations, financial institutions and broker-dealers, persons who do not
hold American Community Bank Common Stock as capital assets, individuals who
received American Community Bank Common Stock as compensation, and non-U.S.
persons.
Based upon and subject to the foregoing, and subject to the discussions of the
continuity of interest requirement and the applicability of Section 351 which
follow, we are of the opinion that:
(i) The Exchange will constitute a tax-free reorganization under Section
368(a)(1)(B) of the Code, and American Community Bank and ACB will each
be a party to the reorganization within the meaning of Section 368(b)
of the Code.
(ii) The American Community Bank shareholders will not recognize any gain or
loss on the receipt of the ACB Common Stock in exchange for their
Common Stock in American Community Bank.
(iii) The basis of each shareholder of American Community Bank in ACB's
Common Stock received by such shareholder will be the same as the basis
of such shareholder in the Common Stock of American Community Bank
surrendered in exchange therefor.
(iv) The holding period of ACB's Common Stock received by each shareholder
of American Community Bank in the Exchange will include the holding
period of the Common Stock of American Community Bank surrendered in
exchange therefor, provided that the Common Stock at American Community
Bank is held as a capital asset at the Effective Time of the Exchange.
(v) If an American Community Bank shareholder dissents from the Exchange
and receives cash for his American Community Bank Common Stock, the
receipt of such cash will be a taxable transaction and will be treated
as a distribution and redemption of his shares, subject to the
provisions and limitations of Sections 301 and 302 of the Code.
Continuity of Interest Requirement
In order for the Exchange to qualify as a reorganization, among other
requirements, the shareholders of American Community Bank must exchange a
substantial portion of the proprietary interests in American Community Bank for
a proprietary interest in ACB. The IRS takes the
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position for advance ruling purposes that this "continuity of interest"
requirement is satisfied in a potential reorganization if the value of the
acquiring corporation's stock received in the reorganization by the acquired
corporation's shareholders equals or exceeds 50% of the total consideration paid
for the stock of the acquired corporation in the potential reorganization.
Based on the foregoing, the continuity of interest requirement will be satisfied
in the Exchange if, at the Effective Time of the Exchange, the value of the ACB
Common Stock issued in the Exchange equals or exceeds the amount of any cash and
the fair market value of any other property received by dissenting shareholders
of American Community Bank in exchange for their Common Stock in American
Community Bank. For purposes of this opinion, we have therefore assumed that the
cash and the fair market value of any property paid to dissenting shareholders
in American Community Bank will not exceed the fair market value at the
Effective Time of the Exchange of the ACB Common Stock issued in the Exchange.
Our opinion expressed in this letter is based on current law and upon facts and
assumptions as of the date of this letter. Our opinion is subject to change in
the event of a change in the applicable law, a change in the interpretation of
the applicable law by the courts or by the Internal Revenue Service or a change
in any of the facts or assumptions upon which the opinion is based. There is no
assurance that legislative, regulatory, administrative or judicial developments
may not be forthcoming which would significantly modify the statements or
opinion expressed in this letter. Any such developments may or may not be
retroactive. This opinion represents our best legal judgment but has no binding
effect or official status of any kind. As a result, no assurance can be given
that the opinion expressed in this letter will be sustained by a court if
contested. No ruling will be obtained from the Internal Revenue Service with
respect to the Exchange.
Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state, local or foreign, of the Exchange or of any
transactions related to the Exchange or contemplated by the Exchange Agreement.
This opinion is being furnished only to you in connection with the Exchange and
solely for your benefit in connection therewith and may not be used or relied
upon for any other purpose and may not be circulated, quoted or otherwise
referred to for any other purpose without our express written consent. We hereby
consent to the filing of
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this opinion as an exhibit to the Registration Statement with the Securities and
Exchange Commission.
Very truly yours,
ANTHONY GAETA, JR., P.A.
Anthony Gaeta, Jr.
4
EXHIBIT 10.1
STATE OF NORTH CAROLINA
COUNTY OF UNION
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of ___________________, 19____ by and
between AMERICAN COMMUNITY BANK (hereinafter referred to as the "Bank") and
RANDY P. HELTON (hereinafter referred to as "Helton").
W I T N E S S E T H:
WHEREAS, the expertise and experience of Helton and his relationships
and reputation in the financial institutions industry are extremely valuable to
the Bank; and
WHEREAS, it is in the best interests of the Bank and its shareholders
to maintain an experienced and sound executive management team to manage the
Bank and to further the Bank's overall strategies to protect and enhance the
value of its shareholders' investments; and
WHEREAS, the Bank and Helton desire to enter into this Agreement to
establish the scope, terms and conditions of Helton's employment by the Bank;
and
WHEREAS, the Bank and Helton desire to enter into this Agreement also
to provide Helton with security in the event of a change of control of the Bank
and to insure the continued loyalty of Helton during any such change of control
in order to maximize shareholder value as well as the continued safe and sound
operation of the Bank.
NOW, THEREFORE, for and in consideration of the premises and mutual
promises, covenants and conditions hereinafter set forth, and other good and
valuable considerations, the receipt and sufficiency of which hereby are
acknowledged, the Bank and Helton hereby agree as follows:
1. EMPLOYMENT. The Bank hereby agrees to employ Helton, and
Helton hereby agrees to serve as an officer of the Bank, all upon the terms and
conditions stated herein. As an officer of the Bank, Helton will (i) serve as
President and Chief Executive Officer of the Bank, and (ii) have such other
duties and responsibilities, and render to the Bank such other management
services, as are customary for persons in Helton's position with the Bank or as
shall otherwise be reasonably assigned to him from time to time by the Bank.
Helton shall faithfully and diligently discharge his duties and responsibilities
under this Agreement and shall use his best efforts to implement the policies
established by the Bank. Helton hereby agrees to devote such number of hours of
his working time and endeavors to the employment granted hereunder
<PAGE>
as Helton and the Bank shall deem to be necessary to discharge his duties
hereunder, and, for so long as employment hereunder shall exist, Helton shall
not engage in any other occupation which requires a significant amount of
Helton's personal attention during the Bank's regular business hours or which
otherwise interferes with Helton's attention to or performance of his duties and
responsibilities as an officer of the Bank hereunder except with the prior
written consent of the Bank. However, nothing herein contained shall restrict or
prevent Helton from personally, and for Helton's own account, trading in stocks,
bonds, securities, real estate or other forms of investment for Helton's own
benefit so long as said activities do not interfere with Helton's attention to
or performance of his duties and responsibilities as an officer of the Bank
hereunder.
During the term of this Agreement, Helton shall be allowed, in
his sole discretion, to maintain his primary work location in Monroe, North
Carolina.
2. COMPENSATION. For all services rendered by Helton to the
Bank under this Agreement, the Bank shall pay Helton a base salary at a rate of
One Hundred Ten Thousand Dollars and 00/100's ($110,000.00) per annum; provided
that the rate of such salary shall be reviewed by the Board of directors not
less often than annually. Salary paid under this Agreement shall be payable in
cash not less frequently than monthly. All compensation hereunder shall be
subject to customary withholding taxes and such other employment taxes as are
required by law. In the event of a Change in Control (as defined in Paragraph
8), Helton's base salary shall be increased not less than six percent (6%.)
annually during the term of this Agreement.
3. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS;
FRINGE BENEFITS. Subject to the terms and conditions of this Agreement, Helton
shall be entitled to participate in any and all employee benefit programs and
compensation plans from time to time maintained by the Bank and available to all
employees of the Bank, all in accordance with the terms and conditions
(including eligibility requirements) of such programs and plans of the Bank,
resolutions of the Bank's Board of Directors establishing such programs and
plans, and the Bank's normal practices and established policies regarding such
programs and plans.
In addition to the other compensation and benefits described
in this Agreement, the Bank shall :
(i) Provide Helton with three weeks of paid vacation leave
notwithstanding the policy of the Bank for all other employees and a fourth week
at the discretion of the
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Compensation Committee of the Board of Directors. Further, in the event of a
Change in Control (as defined in Paragraph 8), Helton shall be entitled to six
weeks paid vacation per year;
(ii) The Bank shall assume payment of Helton's civic club dues
and the dues of Rolling Hills Country Club, Monroe, North Carolina provided that
Helton shall be responsible for all personal expenses for use of such clubs;
(iii) The Bank shall reimburse Helton for all reasonable
expenses incurred by him in the performance of his duties under this Agreement
and documented to the reasonable satisfaction of the Bank pursuant to
established policies;
(iv) The Bank shall provide Helton and his immediate family
major medical insurance coverage at no cost to Helton which will be a policy at
least equivalent to the major medical insurance coverage generally provided to
active full-time employees of the Bank from time to time; and
(v) The Bank shall provide Helton, for his personal and
business use, with a late model automobile as determined by the Compensation
Committee or with a car allowance, in the discretion of Helton. The automobile
shall be replaced every two years by another automobile, the costs of which
shall be assumed by the Bank as provided herein. The Bank shall assume the costs
associated with ownership of such automobile, including, but not limited to,
taxes, insurance, and maintenance, provided, however, that Helton shall be
responsible for fuel expenses incurred with his personal use of the automobile.
4. TERM. Unless sooner terminated as provided in this
Agreement and subject to the right of either Helton or the Bank to terminate
Helton's employment at any time as provided herein, the initial term of this
Agreement and Helton's employment with the Bank hereunder shall be for a period
commencing on the date hereof and continuing for a period of five (5) years. At
the end of each year during the term of this Agreement, the term of this
Agreement shall automatically be extended for an additional one year period
unless written notice from the Bank or Helton is received 30 days prior to such
date notifying the other party that this Agreement shall not be further
extended; provided further that the Board of Directors shall annually review
Helton's performance and shall make a specific determination pursuant to such
review to permit this Agreement to renew annually.
5. CONFIDENTIALITY. Helton hereby acknowledges and agrees that
(i) in the course of his service as an officer of the Bank, he will gain
substantial knowledge of and
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familiarity with the Bank's customers and its dealings with them, and other
information concerning the Bank's business, all of which constitutes valuable
assets and privileged information that is particularly sensitive due to the
fiduciary responsibilities inherent in the banking business; and, ii) in order
to protect the Bank's interest in and to assure it the benefit of its business,
it is reasonable and necessary to place certain restrictions on Helton's ability
to compete against the Bank and on his disclosure of information about the
Bank's business and customers. For that purpose, and in consideration of the
Bank's agreements contained herein, Helton covenants and agrees as provided
below.
For the purposes of this Paragraph 5, the following terms
shall have the meanings set forth below:
CUSTOMER. The term "Customer" means any
Person with whom, as of the effective date of termination of this Agreement or
Helton's employment with the Bank for any reason, the Bank has or has had a
depository, loan and/or other banking relationship.
FINANCIAL INSTITUTION. The term "Financial Institution" means
any federal or state chartered bank, savings bank, savings and loan association
or credit union, or any holding company for or corporation that owns or controls
any such entity, or any other Person engaged in the business of making loans of
any type or receiving deposits, other than the Bank.
PERSON. The term "Person" means any natural
person or any corporation, partnership, proprietorship, joint venture, limited
liability company, trust, estate, governmental agency or instrumentality,
fiduciary, unincorporated association or other entity.
(A) CONFIDENTIALITY COVENANT. Helton covenants and
agrees that any and all data, figures, projections, estimates, lists, files,
records, documents, manuals or other such materials or information (financial or
otherwise) relating to the Bank and its banking business, regulatory
examinations, financial results and condition, lending and deposit operations,
customers (including lists of the Bank's customers and information regarding
their accounts and business dealings with the Bank), policies and procedures,
computer systems and software, shareholders, employees, officers and directors
(herein referred to as "Confidential Information") are proprietary to the Bank
and are valuable, special and unique assets of the Bank's business to which
Helton will have access during his employment with the Bank. Helton agrees that
(i) all such Confidential Information shall be considered and kept as the
confidential, private and privileged records and information of the Bank, and
(ii) at all times during the term of his
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employment with the Bank and following the termination of this Agreement or his
employment for any reason, and except as shall be required in the course of the
performance by Helton of his duties on behalf of the Bank or otherwise pursuant
to the direct, written authorization of the Bank, Helton will not: divulge any
such Confidential Information to any other Person or Financial Institution;
remove any such Confidential Information in written or other recorded form from
the Bank's premises; or make any use of any Confidential Information for his own
purposes or for the benefit of any Person or Financial Institution other than
the Bank. However, following the termination of Helton's employment with the
Bank, this subparagraph (b) shall not apply to any Confidential Information
which then is in the public domain (provided that Helton was not responsible,
directly or indirectly, for permitting such Confidential Information to enter
the public domain without the Bank's consent), or which is obtained by Helton
from a third party which or who is not obligated under an agreement of
confidentiality with respect to such information.
(B) REMEDIES FOR BREACH. Helton understands and
agrees that a breach or violation by him of the covenants contained in Paragraph
5(a) of this Agreement will be deemed a material breach of this Agreement and
will cause irreparable injury to the Bank, and that it would be difficult to
ascertain the amount of monetary damages that would result from any such
violation. In the event of Helton's actual or threatened breach or violation of
the covenants contained in Paragraph 5 (a) , the Bank shall be entitled to bring
a civil action seeking an injunction restraining Helton from violating or
continuing to violate those covenants or from any threatened violation thereof,
or for any other legal or equitable relief relating to the breach or violation
of such covenant. Helton agrees that, if the Bank institutes any action or
proceeding against Helton seeking to enforce any of such covenants or to recover
other relief relating to an actual or threatened breach or violation of any of
such covenants, Helton shall be deemed to have waived the claim or defense that
the Bank has an adequate remedy at law and shall not urge in any such action or
proceeding the claim or defense that such a remedy at law exists. However, the
exercise by the Bank of any such right, remedy, power or privilege shall not
preclude the Bank or its successors or assigns from pursuing any other remedy or
exercising any other right, power or privilege available to it for any such
breach or violation, whether at law or in equity, including the recovery of
damages, all of which shall be cumulative and in addition to all other rights,
remedies, powers or privileges of the Bank.
5
<PAGE>
Notwithstanding anything contained herein to the
contrary, Helton agrees that the provisions of Paragraph 5(a) above and the
remedies provided in this Paragraph 5(b) for a breach by Helton shall be in
addition to, and shall not be deemed to supersede or to otherwise restrict,
limit or impair the rights of the Bank under the Trade Secrets Protection Act
contained in Article 24, Chapter 66 of the North Carolina General Statutes, or
any other state or federal law or regulation dealing with or providing a remedy
for the wrongful disclosure, misuse or misappropriation of trade secrets or
other proprietary or confidential information.
(C) SURVIVAL OF COVENANTS. Helton's covenants and
agreements and the Bank's rights and remedies provided for in this Paragraph 5
shall survive any termination of this Agreement or Helton's employment with the
Bank.
6. TERMINATION AND TERMINATION PAY.
(A) Helton's employment under this Agreement may be
terminated at any time by Helton upon sixty (60) days written notice to the
Bank. Upon such termination, Helton shall be entitled to receive compensation
through the effective date of such termination; provided, however, that the
Bank, in its sole discretion, may elect for Helton not to serve out part or all
of said notice period.
(B) Helton's employment under this Agreement shall be
terminated upon the death of Helton during the term of this Agreement. Upon any
such termination, Helton estate shall be entitled to receive any compensation
due to Helton computed through the last day of the calendar month in which his
death shall have occurred but which remains unpaid.
(C) In the event Helton becomes disabled during the
term of his employment hereunder and it is determined by the Bank that Helton is
permanently unable to perform his duties under this Agreement, the Bank shall
continue to compensate Helton at the level of compensation described in
Paragraph 2 above, and shall continue to provide Helton each of the other
benefits set forth or described in this Agreement, for the remaining term of
this Agreement, less any other payments provided under any disability income
plan of the Bank which is applicable to Helton. In the event of any disagreement
between Helton and the Bank as to whether Helton is physically or mentally
incapacitated such as will result in the termination of Helton's employment
pursuant to this Paragraph 6(c), the question of such incapacity shall be
submitted to an impartial and reputable physician for determination, selected by
mutual agreement of Helton and the Bank or, failing such agreement, by two (2)
physicians (one (1) of
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whom shall be selected by the Bank and the other by Helton), and such
determination of the question of such incapacity by such physician or physicians
shall be final and binding on Helton and the Bank. The Bank shall pay the
reasonable fees and expenses of such physician or physicians in making any
determination required under this Paragraph 6 (c) .
(D) The Bank may terminate Helton's employment at any
time for any reason with or without "Cause" (as defined below), but any
termination by the Bank other than termination for "Cause", (as defined below)
shall not prejudice Helton's right to compensation or other benefits under this
Agreement for its remaining term. Following any termination of Helton's
employment by the Bank for "Cause", Helton shall have no further rights under
this Agreement (including any right to receive compensation or other benefits
for any period after such termination).
For purposes of this Paragraph 6 (d) , the Bank shall have
"Cause" to terminate Helton's employment upon:
(I) A determination by the Bank, in good faith, that
Helton (A) has breached in any material respect any of the terms or conditions
of this Agreement, or (B) is engaging or has engaged in willful misconduct or
conduct which is detrimental to the business prospects of the Bank or which has
had or likely will have a material adverse effect on the Bank's business or
reputation. Prior to any termination by the Bank of Helton's employment for a
breach, failure to perform or conduct described in this subparagraph (i), the
Bank shall give Helton written notice which describes such breach, failure to
perform or conduct and if during a period of five business (5) days following
such notice Helton cures or corrects the same to the reasonable satisfaction of
the Bank, then this Agreement shall remain in full force and effect. However,
notwithstanding the above, if the Bank has given written notice to Helton on a
previous occasion of the same or a substantially similar breach, failure to
perform or conduct, or of a breach, failure to perform or conduct which the Bank
determines in good faith to be of substantially similar import, or if the Bank
determines in good faith that the then current breach, failure to perform or
conduct is not reasonably curable, then termination under this subparagraph (i)
shall be effective immediately and Helton shall have no right to cure such
breach, failure to perform or conduct.
(II) The violation by Helton of any
applicable federal or state law, or any applicable rule, regulation, order or
statement of policy promulgated by any
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governmental agency or authority having jurisdiction over the Bank or any of its
affiliates or subsidiaries (a "Regulatory Authority", including without
limitation the Federal Deposit Insurance Corporation, the North Carolina
Commissioner of Banks or any other banking regulator having legal jurisdiction
over the Bank), which results from Helton's gross negligence, willful misconduct
or intentional disregard of such law, rule, regulation, order or policy
statement and results in any substantial damage, monetary or otherwise, to the
Bank or any of its affiliates or subsidiaries or to the Bank's reputation;
(III) The commission in the course of
Helton's employment with the Bank of an act of fraud, embezzlement, theft or
proven personal dishonesty (whether or not resulting in criminal prosecution or
conviction);
(IV) The conviction of Helton of any felony
or any criminal offense involving dishonesty or breach of trust, or the
occurrence of any event described in Section 19 of the Federal Deposit Insurance
Act or any other event or circumstance which disqualifies Helton from serving as
an employee or executive officer of, or a party affiliated with, the Bank or its
bank holding company;
(V) Helton becomes unacceptable to, or is
removed, suspended or prohibited from participating in the conduct of the Bank's
affairs (or if proceedings for that purpose are commenced) by any Regulatory
Authority; and,
(VI) The occurrence of any event believed by
the Bank, in good faith, to have resulted in Helton being excluded from
coverage, or having coverage limited as to Helton as compared to other covered
officers or employees, under the Bank's then current "blanket bond" or other
fidelity bond or insurance policy covering its directors, officers or employees.
7. ADDITIONAL REGULATORY REQUIREMENTS. Notwithstanding
anything contained in this Agreement to the contrary, it is understood and
agreed that the Bank (or its successors in interest) shall not be required to
make any payment or take any action under this Agreement if (A) the Bank is
declared by any Regulatory Authority to be insolvent, in default or operating in
an unsafe or unsound manner, or if (B) in the opinion of counsel to the Bank
such payment or action (I) would be prohibited by or would violate any provision
of state or federal law applicable to the Bank, including without limitation the
Federal Deposit Insurance Act and Chapter 53 of the North Carolina General
Statutes as now in effect or hereafter amended, (II)
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would be prohibited by or would violate any applicable rules, regulations,
orders or statements of policy, whether now existing or hereafter promulgated,
of any Regulatory Authority, or (III) otherwise would be prohibited by any
Regulatory Authority.
8. CHANGE IN CONTROL
(A) In the event of a "Change in Control" (as defined
in Subparagraph (d) below), of the Bank, Helton shall be entitled to terminate
this Agreement upon the occurrence within twenty-four (24) months following a
change in control of any Termination Event as defined in Subparagraph (b) below.
(B) A Termination Event shall mean the occurrence
of any of the following events:
(i) Helton is assigned any duties and/or
responsibilities that are inconsistent with
his position, duties, responsibilities, or
status at the time of the Change in Control
or with his reporting responsibilities or
titles with the Bank in effect at such time;
(ii) Helton's annual base salary is reduced
below the amount in effect as of the
effective date of a Change in Control or as
the same shall have been increased from time
to time following such effective date;
(iii) Helton's life insurance, medical or
hospitalization insurance, disability
insurance, dental insurance, stock option
plans, stock purchase plans, deferred
compensation plans, management retention
plans, retirement plans, or similar plans or
benefits being provided by the Bank to Helton
as of the effective date of the Change in
Control are reduced in their level, scope, or
coverage, or any such insurance, plans, or
benefits are eliminated, unless such
reduction or elimination applies
proportionately to all salaried employees of
the Bank who participated in such benefits
prior to such Change in Control; or
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(iv) Helton is transferred to a location
outside of Monroe, North Carolina, without
Helton's express written consent.
A Termination Event shall be deemed to have occurred
on the date such action or event is implemented or takes effect.
(C) In the event that Helton terminates this
Agreement or the Bank terminates this Agreement pursuant to this Paragraph 8,
the Bank will be obligated to pay or cause to be paid to Helton all amounts due
and owing to the end of the term of this Agreement and an amount equal to two
hundred ninety-nine percent (299%) of Helton's "base amount" as defined in
Section 28OG(b) (3) (A) of the Internal Revenue Code of 1986, as amended (the
"Code") .
(D) For the purposes of this Agreement, the term
Change in Control shall mean any of the following events:
(i) After the effective date of this
Agreement, any "person" (as such term is
defined in Section 7 (j) (8) (A) of the
Change in Bank Control Act of 1978) ,
directly or indirectly, acquires beneficial
ownership of voting stock, or acquires
irrevocable proxies or any combination of
voting stock and irrevocable proxies,
representing twenty-five percent (25%) or
more of any class of voting securities of the
Bank, or acquires control of in any manner
the election of a majority of the directors
of the Bank;
(ii) The Bank consolidates or merges with or
into another corporation, association, or
entity, or is otherwise reorganized, where
the Bank is not the surviving corporation in
such transaction; or
(iii) All or substantially all of the assets
of the Bank are sold or otherwise transferred
to or are acquired by any other corporation,
association, or other person, entity, or
group.
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Notwithstanding the other provisions of this
Paragraph 8, a transaction or event shall not be considered a Change in Control
if, prior to the consummation or occurrence of such transaction or event, Helton
and the Bank agree in writing that the same shall not be treated as a Change in
Control for purposes of this Agreement.
(E) Amounts payable pursuant to this Paragraph 8
shall be paid, at the option of Helton either in one lump sum or in equal
monthly payments over the remaining term of this Agreement.
(F) Following a Termination Event which gives rise to
Helton's rights hereunder, Helton shall have twenty-four (24) months from the
date of occurrence of the Termination Event to terminate this Agreement pursuant
to this Paragraph 8. Any such termination shall be deemed to have occurred only
upon delivery to the Bank or any successor thereto, of written notice of
termination which describes the Change in Control and Termination Event. If
Helton does not so terminate this Agreement within such twenty-four month
period, Helton shall thereafter have no further rights hereunder with respect to
that Termination Event, but shall retain rights, if any, hereunder with respect
to any other Termination Event as to which such period has not expired.
(G) It is the intent of the parties hereto that all
payments made pursuant to this Agreement be deductible by the Bank for federal
income tax purposes and not result in the imposition of an excise tax on Helton.
Notwithstanding anything contained in this Agreement to the contrary, any
payments to be made to or for the benefit of Helton which are deemed to be
"parachute payments" as that term is defined in Section 28OG(b) (2) of the Code,
shall be modified or reduced to the extent deemed to be necessary by the Bank's
Board of Directors to avoid the imposition of an excise tax on Helton under
Section 4999 of the Code or the disallowance of a deduction to the Bank under
Section 28OG(a) of the Code.
(H) In the event any dispute shall arise between Helton and
the Bank as to the terms or interpretation of this Agreement, including this
Paragraph 8, whether instituted by formal legal proceedings or otherwise,
including any action taken by Helton to enforce the terms of this Paragraph 8 or
in defending against any action taken by the Bank, the Bank shall reimburse
Helton for all costs and expenses, proceedings or actions, in the event Helton
prevails in any such action.
9. SUCCESSORS AND ASSIGNS.
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(A) This Agreement shall inure to the benefit of and
he binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by conversion, merger, consolidation, purchase
or otherwise, all or substantially all of the assets of the Bank.
(B) The Bank is contracting for the unique and
personal skills of Helton. Therefore, Helton shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Bank.
10. MODIFICATION; WAIVER; AMENDMENTS. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the parties hereto. No waiver
by either party hereto, at any time, of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.
11. APPLICABLE LAW. This Agreement shall be governed in all
respects whether as to validity, construction, capacity, performance or
otherwise, by the laws of North Carolina, except to the extent that federal law
shall be deemed to apply.
12. SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal and in such form as to be binding as of the day and year first
hereinabove written.
AMERICAN COMMUNITY BANK
By: __________________________________________
_________________________________, Chairman
ATTEST:
12
<PAGE>
- -----------------------------
____________________, Secretary
------------------------------------------
Randy P. Helton
13
EXHIBIT 10.2
CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into as of the _____ day of _______,
1998, by and between American Community Bank, a North Carolina chartered bank
(the "Bank"), and Kenneth W. Long, Sr. ("Consultant")
Preliminary Statement
---------------------
The Bank desires to employ the consulting services of Consultant as set
forth herein and Consultant is willing to provide such services all pursuant to
the terms and conditions herein.
Statement of Agreement
----------------------
In consideration of the foregoing premises, the mutual promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties intending to be
legally bound, agree as follows:
1. Engagement. The Bank agrees to engage Consultant, and Consultant
agrees to provide consulting services to the Bank, as an independent contractor,
upon the terms and conditions herein set forth.
2. Term. The term of this Agreement shall commence on the date hereof,
and shall continue for one (1) year unless earlier terminated by mutual written
consent or in accordance with Section 6 below.
3. Duties of Consultant.
a. Consultant shall undertake and assume the responsibility of
performing for and on behalf of the Bank certain consulting services and/or such
other similar duties as may be reasonably assigned to Consultant by the Bank at
any time and from time to time related to the following: monitoring the
performance of the back-room computer service providers for the Bank, including,
but not limited to, supervision of the installation of computer hardware and
software systems, supervision of maintenance thereof, hiring and supervision of
computer staff, training, supervision of repair of computer system and
recommendations and implementation with respect to bankwide computer systems and
technology. For purposes of this Agreement, Consultant shall report to the Vice
Chairman of the Board of Directors and shall take assignments only from Randy P.
Helton, President of the Bank or such other official of the Bank from time to
time designated in writing by Mr. Helton or by the Board of Directors of the
Bank.
b. Consultant covenants and agrees that at all times during
the term of this Agreement, Consultant shall be an independent contractor and
shall devote sufficient time and efforts to his duties to satisfy the needs of
the Bank and as the Bank reasonably directs.
c. Consultant further covenants and agrees that Consultant
will not, directly or indirectly, engage or participate in any activities at any
time during the term of this Agreement in
<PAGE>
conflict with the best interests of the Bank and will conduct all Consultant's
activities in strict loyalty to the Bank.
4. Compensation. As compensation for the services to be rendered by
Consultant for the Bank under this Agreement, Consultant shall be compensated by
the Bank on the following basis:
a. Consulting Fee. $86,000 to be paid in equal monthly
installments in arrears.
b. Reimbursement for Expenses. Reimbursement of all reasonable
Bank business related expenses (including, without limitation, mileage, postage,
telephone, travel, and similar expenses) incurred by Consultant at the specific
direction of (and approved in writing in advance by) the Bank in the performance
of his duties hereunder.
Consultant shall be solely responsible for all federal and state
withholding taxes, if any, in respect of amounts paid pursuant to this Section
4. The compensation stated in this Section is intended to be the total
compensation paid to Consultant for his consulting services hereunder.
5. Secrecy. Consultant acknowledges that in and as a result of his
obligations hereunder, he will be making use of, acquiring and/or adding to
confidential information of a special and unique nature and value relating to
such matters of the business of the Bank, including, without limitation,
locations and lists of customers, and potential customers or contracts, vendor
relationships, sales and marketing materials and methods, proprietary
information, trade secrets, trademarks, systems, procedures, manuals,
confidential reports, records, credit information, operational expertise,
financial records and data, contracts, tax information, business plans and
prospects, advertising assignment, sales relationships and the nature and type
of services rendered by the Bank (all of which are deemed for all purposes
confidential and proprietary). As a material inducement to the Bank to enter
into this Agreement and to pay to Consultant the compensation stated in Section
4, Consultant covenants and agrees that he shall not, at any time during the
term of this Agreement, and for a period of three (3) years after the
termination of this Agreement, divulge or disclose for any purpose whatsoever
any confidential information that has been developed or obtained by, or
disclosed to, Consultant as a result of his services to the Bank or the Bank's
affiliates at any time before or after the date hereof. Such information already
in the public domain, in the accumulated form possessed by the Bank, is not
deemed confidential information for purposes of this Section 5, and the
restrictions of this Section 5 shall not apply to the extent that Consultant is
compelled by law or a court to disclose such information.
6. Termination. Notwithstanding any other provision hereof, the Bank or
Consultant may terminate this Agreement for any reason by giving to the other
party thirty (30) days advance written notice of the intent to terminate. At the
effective date of such termination, all of Consultant's duties to provide
consulting services under Section 3 of this Agreement, and all of the Bank's
obligations to make payments under Section 4 of this Agreement shall terminate
and be thereafter null and void. In the event that the effective date of such
termination by Consultant
2
<PAGE>
is any time other than the end of a monthly payment period, any compensation
paid to Consultant shall be paid on a pro rata basis to the date of termination.
7. Independent Contractor. It is mutually understood and agreed that
Consultant shall be and at all times shall act and perform as an independent
contractor. Consultant shall have no authority to bind the Bank in any capacity
except as the Bank may expressly authorize Consultant in writing hereafter. As
an independent contractor, Consultant shall be responsible for the payment of
all applicable federal, state and local taxes.
8. Assignment. This Agreement and any rights hereunder are personal to
Consultant and shall not be assigned or otherwise transferred by Consultant.
Neither this Agreement nor any rights hereunder may be assigned or otherwise
transferred by the Bank, except to any person, corporation, company, or
partnership controlling, controlled by, or under common control with the Bank,
or in connection with the acquisition, merger, or the sale of substantially all
of the assets of the Bank.
9. Indemnity. To the fullest extent permitted by law, Consultant shall
indemnify and hold harmless the Bank against all claims, damages, losses
(including but not limited to loss of attorney's fees) arising our of or
resulting from the performance of the services covered by this Agreement caused
in whole or in part by any negligent, intentional, or willful act or omission of
Consultant or his agents. In the event that such claim, damage, loss or expense
arises, Consultant as additional consideration for this Agreement, agrees to
set-off and recoupment against the compensation described in Section 4 for the
amount of such claim, damage, loss or expense.
10. Burden and Benefit. This Agreement shall inure to the benefit of
and be binding upon the Bank's successors and assigns and Consultant's heirs,
personal and legal representatives, successors, and assigns.
11. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity and enforceability of
the other provision.
12. Usage. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Term such as "hereof", "hereunder",
"hereto", "herein", and words of similar import shall refer to this Agreement in
its entirety and all references shall refer to specified portions of this
Agreement, unless the context clearly requires otherwise.
13. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of North Carolina.
14. Notice. Any notice, approval, consent, or other communication
provided for or permitted hereunder shall be in writing, signed by an authorized
representative of the sender and addressed to the respective party at the
address set forth below:
CONSULTANT: Kenneth W. Long, Sr.
3
<PAGE>
2753 Rolling Hills Drive
Monroe, North Carolina 28110
BANK: American Community Bank
2593 West Roosevelt Boulevard
Monroe, North Carolina 28110
A party may change its respective address by notice in writing given to
the other party to this Agreement. Any notice, approval, consent, or other
communication shall be effective upon the first to occur of the following: (i)
when delivered to the party to whom such notice, approval, consent, or other
communication is being given, or (ii) three (3) business days after being
deposited in the U.S. Mail, certified, return receipt requested.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding by and between the Bank and Consultant with respect to the
consulting services of Consultant, and no representatives, promises, agreements,
or understandings, written or oral, not contained herein related to such
services shall be of any force or effect. No change or modification of this
Agreement shall be valid or binding unless it is in writing and signed by the
party intended or bound. No waiver of any provision of this Agreement shall be
valid unless it is in writing and signed by the party against whom the waiver is
sought to be enforced. No valid waiver of any provision of this Agreement at any
time shall be deemed a waiver of any other provision of this Agreement at such
time or at any other time.
In Witness Whereof, the Bank and Consultant have duly executed this
Consulting Agreement to be legally binding and effective as of the day and year
first above written.
AMERICAN COMMUNITY BANK
By: __________________________
Randy P. Helton, President
------------------------------
Kenneth W. Long, Sr.
4
EXHIBIT 10.3
AMERICAN COMMUNITY BANK
1999 INCENTIVE STOCK OPTION PLAN
American Community Bank, a North Carolina banking corporation
(hereinafter referred to as the "Bank"), does herein set forth the terms of the
American Community Bank 1999 Incentive Stock Option Plan (hereinafter referred
to as this "Plan") which was adopted by the Bank's Board of Directors
(hereinafter referred to as the "Board") subject to shareholder and regulatory
approval as provided in Paragraph 22 hereof.
1. PURPOSE OF THE PLAN. The purpose of this Plan is to provide for the
grant of Incentive Stock Options (hereinafter referred to as "Option" or
"Options") qualifying for the tax treatment afforded by Section 422 of the
Internal Revenue Code of 1986, as amended, to eligible officers and employees of
the Bank and its subsidiaries (hereinafter referred to as "Eligible Employees")
who wish to invest in the Bank's common stock (hereinafter referred to as
"Common Stock"). The Bank believes that participation in the ownership of the
Bank by Eligible Employees will be to the mutual benefit of the Bank and
Eligible Employees. The existence of this Plan will enhance the Bank's ability
to attract capable individuals to employment in key employee positions.
2. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Compensation Committee
of the Board (hereinafter referred to as the "Committee"). The Committee shall
consist of three (3) members of the Board all of whom shall qualify as
disinterested persons as provided in Section 16(b) and the rules and regulations
thereunder of the Securities Exchange Act of 1934, as amended. The members of
the Committee shall be appointed by the Board and shall serve at the pleasure of
the Board, which may remove members from, add members to, or fill vacancies in
the Committee.
(b) The Committee shall decide to whom Options shall be granted
under this Plan, the number of shares as to which Options shall be granted
subject to the limitations set forth in Paragraph 11 of this Plan, the Option
Price (as hereinafter defined) for such shares and such additional terms and
conditions for such Options as the Committee deems appropriate.
(c) A majority of the Committee shall constitute a quorum and the
acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved unanimously in writing by the Committee, shall be
considered as valid actions by the Committee.
(d) The Board may designate any officers or employees of the Bank
to assist in the administration of this Plan. The Board may authorize such
individuals to execute documents on its behalf and may delegate to them such
other ministerial and limited discretionary duties as the Board may deem fit.
<PAGE>
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. The maximum number of
shares of Common Stock that shall be available initially for Options under this
Plan is One Hundred Twenty-Four Thousand Three Hundred Thirty (124,330) shares,
subject to adjustment as provided in Paragraph 15 hereof. Shares subject to
Options which expire or terminate prior to the issuance of the shares of Common
Stock shall again be available for future grants of Options under this Plan.
4. ELIGIBILITY. Options under this Plan may be granted to any Eligible
Employee as determined by the Committee. An individual may hold more than one
Option under this or other plans adopted by the Bank.
5. GRANT OF OPTIONS.
(a) The Committee shall authorize that Options for shares of
Common Stock shall be granted to certain Eligible Employees of the Bank which
Options shall be granted based upon the past service and the continued
participation of those individuals in the operations of the Bank. The allocation
of said Options shall be as determined by a majority vote of the Committee at
one or more meetings called for such purpose.
(b) Upon the forfeiture of an Option for whatever reason prior to
the expiration of the Option Period (as defined in Paragraph 10 hereof) the
shares of Common Stock covered by a forfeited Option shall be available for the
granting of additional Options to Eligible Employees during the remaining term
of this Plan upon such terms and conditions as may be determined by the
Committee. The number of additional Options to be granted to specific Eligible
Employees during the term of this Plan shall be determined by the Committee as
provided in Subparagraph 2(b) hereof.
6. VESTING OF OPTIONS.
(a) Options granted under this Plan shall vest and the right of an
Optionee to exercise an Option shall be nonforfeitable in accordance with the
following schedules:
(i) With respect to the Options which are granted as of the
Effective Date (as hereinafter defined):
2
<PAGE>
Date When Such Options Percentage of Such
Become Vested Options Vested
Effective Date of Plan 0%
First Anniversary of Effective Date 20%
Second Anniversary of Effective Date 20%
Third Anniversary of Effective Date 20%
Fourth Anniversary of Effective Date 20%
Fifth Anniversary of Effective Date 20%
(ii) With respect to any Options which may be granted after
the Effective Date:
Date When Such Options Percentage of Such
Become Vested Options Vested
Date of grant 0%
First Anniversary of the date of grant 20%
Second Anniversary of the date of grant 20%
Third Anniversary of the date of grant 20%
Fourth Anniversary of the date of grant 20%
Fifth Anniversary of the date of grant 20%
(b) In determining the number of shares of Common Stock under each
Option vested under the above vesting schedules, an Optionee shall not be
entitled to exercise an Option to purchase a fractional number of shares of the
Common Stock. If the product resulting from multiplying the vested percentage
times the Option results in a fractional number of shares of Common Stock, then
an Optionee's vested right shall be to the whole number of shares of Common
Stock disregarding any fractional shares of Common Stock.
(c) In the event that the employment of an Optionee at the Bank
terminates for any reason, other than the Optionee's disability, death,
retirement, or following a "change in control" of the Bank, the Optionee's
Options under this Plan shall be forfeited and shall be available again for
grant to Eligible Employees as may be determined by the Committee.
(d) In the event that the employment of an Optionee with the Bank
should terminate because of such Optionee's disability, death, or retirement, or
following a "change in control" of the Bank prior to the date when all Options
allocated to the Optionee would be 100% vested in accordance with the applicable
schedule in subparagraph 6(a) above, then, notwithstanding the foregoing
schedules in subparagraph 6(a) above, all Options allocated to such Optionee
shall immediately become fully vested and nonforfeitable. For purposes of this
Plan, the term disability shall be defined in the same manner as such term is
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
When used in this Plan, the phrase "change in control" refers to (i) the
acquisition by any person, group of persons or entity of the beneficial
ownership or power to vote more than twenty-five (25%) percent of the Bank's
outstanding stock, (ii) during any period of two (2) consecutive years, a change
in the majority of
3
<PAGE>
the Board unless the election of each new Director was approved by at least
two-thirds of the Directors then still in office who were Directors at the
beginning of such two (2) year period, or (iii) a reorganization, merger, or
consolidation of the Bank with one or more other entities in which the Bank is
not the surviving entity, or the transfer of all or substantially all of the
assets or shares of the Bank to another person or entity. Notwithstanding
anything else herein, for purposes of this Plan the term "change in control,"
shall not include a transaction approved by the Board which results in the Bank
merging with, transferring its assets to or becoming the subsidiary of a
corporation newly formed at the direction of the Board for the purpose of such
transaction or serving as a bank holding company for the Bank, and in connection
with which transaction the Bank's shareholders (other than those who exercise
statutory rights of dissent and appraisal) become the holders of substantially
all of the voting stock of such corporation. Further, notwithstanding anything
else herein, a transaction or event shall not be considered a change in control
if, prior to the consummation or occurrence of such transaction or event, the
Optionee and the Bank agree in writing that the same shall not be treated as a
change in control for purposes of this Plan.
7. OPTION PRICE.
(a) The price per share of each Option granted under this Plan
(hereinafter called the "Option Price") shall be determined by the Committee as
of the effective date of grant of such Option, but in no event shall the Option
Price be less than 100% of the fair market value of Common Stock on the date of
grant. If an Optionee (as hereinafter defined) at the time that an Option is
granted owns stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the Bank, then the Option Price per
share of each Option granted under this Plan shall be no less than 110% of the
fair market value of Common Stock on the date of grant and such Option shall not
be exercisable more than five (5) years from the date of grant. An Option shall
be considered as granted on the date that the Committee acts to grant such
Option or such later date as the Committee shall specify in an Option Agreement
(as hereinafter defined).
(b) The fair market value of a share of Common Stock shall be
determined as follows: (i) if on the date as of which such determination is
being made, Common Stock being valued is admitted to trading on a securities
exchange or exchanges for which actual sale prices are regularly reported, or
actual sale prices are otherwise regularly published, the fair market value of a
share of Common Stock shall be deemed to be equal to the mean of the closing
sale price as reported on each of the five (5) trading days immediately
preceding the date as of which such determination is made; provided, however,
that, if a closing sale price is not reported for each of the five (5) trading
days immediately preceding the date as of which such determination is made, then
the fair market value shall be equal to the mean of the closing sale prices on
those trading days for which such price is available, or (ii) if on the date as
of which such determination is made, no such closing sale prices are reported,
but quotations for Common Stock being valued are regularly listed on the
National Association of Securities Dealers Automated Quotation System or another
comparable system, the fair market value of a share of Common Stock shall be
deemed to be equal to the mean of the average of the closing bid and asked
prices for such Common Stock quoted on such system on each of the five (5)
trading days preceding the date as of which such determination is made, but if a
closing bid and asked price is
4
<PAGE>
not available for each of the five (5) trading days, then the fair market value
shall be equal to the mean of the average of the closing bid and asked prices on
those trading days during the five-day period for which such prices are
available, or (iii) if no such quotations are available, the fair market value
of a share of Common Stock shall be deemed to be the average of the closing bid
and asked prices furnished by a professional securities dealer making a market
in such shares, as selected by the Committee, for the trading date first
preceding the date as of which such determination is made. If the Committee
determines that the price as determined above does not represent the fair market
value of a share of Common Stock, the Committee may then consider such other
factors as it deems appropriate and then fix the fair market value for the
purposes of this Plan.
8. PAYMENT OF OPTION PRICE. Payment for shares subject to an Option may
only be made in cash.
9. TERMS AND CONDITIONS OF GRANT OF OPTIONS. Each Option granted
pursuant to this Plan shall be evidenced by a written Incentive Stock Option
Agreement (hereinafter referred to as "Option Agreement") with each Eligible
Employee (hereinafter referred to as "Optionee") to whom an Option is granted;
such agreement shall be substantially in the form attached hereto as "Exhibit
A," unless the Committee shall adopt a different form and, in each case, may
contain such other, different, or additional terms and conditions as the
Committee may determine. The Option shall terminate as provided in paragraph 13
hereof. In addition to any further conditions provided herein and in the Option
Agreement, the right of an Optionee to exercise the Option to purchase the
Option Shares, either in whole or in part, shall be conditioned upon the
completion by the Optionee of one (1) full year of service in the employment of
the Bank following the date of grant of the Option. Furthermore, Options granted
pursuant to this Plan shall be subject to the right of the North Carolina
Commissioner of Banks (the "Commissioner") and the Federal Deposit Insurance
Corporation ("FDIC") to direct the Bank to require an Optionee to exercise or
forfeit his or her stock rights if the Bank's capital falls below the minimum
requirements, as determined by the Commissioner or FDIC.
10. OPTION PERIOD. Each Option Agreement shall set forth a period
during which such Option may be exercised (hereinafter referred to as the
"Option Period"); provided, however, that the Option Period shall not exceed ten
(10) years after the date of grant of such Option as specified in an Option
Agreement.
11. LIMITATION ON GRANT OF INCENTIVE STOCK OPTIONS. No one Optionee
shall be granted more than 40% of the shares reserved for issuance under this
Plan pursuant to the provisions of Paragraph 3 hereof. Moreover, notwithstanding
any other provision of this Plan, no person shall be granted an Option under
this Plan which would cause such person's "annual vesting amount" to exceed
$100,000.00. With respect to any calendar year, a person's "annual vesting
amount" is the aggregate fair market value of stock subject to incentive stock
options with respect to which such options are first exercisable during such
calendar year. For purposes of the foregoing, the aggregate fair market value of
stock with respect to which incentive stock options are first exercisable during
any calendar year shall be determined by taking into account all such options
granted to such person under all incentive stock option plans of the Bank or of
any of its parent or subsidiary Banks.
5
<PAGE>
12. EXERCISE OF INCENTIVE STOCK OPTIONS. An Option shall be exercised
by written notice to the Committee signed by an Optionee or by such other person
as may be entitled to exercise such Option. In the exercise of an Option, the
aggregate Option Price for the shares being purchased may only be paid in cash
and must be accompanied by a notice of exercise. The written notice shall state
the number of shares with respect to which an Option is being exercised and,
shall either be accompanied by the payment of the aggregate Option Price for
such shares or shall fix a date (not more than ten (10) business days from the
date of such notice) by which the payment of the aggregate Option Price will be
made. An Optionee shall not exercise an Option to purchase less than 100 shares,
unless the Committee otherwise approves or unless the partial exercise is for
the remaining shares available under such Option. A certificate or certificates
for the shares of Common Stock purchased by the exercise of an Option shall be
issued in the regular course of business subsequent to the exercise of such
Option and the payment therefor. During the Option Period, no person entitled to
exercise any Option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any shares of Common Stock issuable
upon exercise of such Option, until certificates representing such shares shall
have been issued and delivered and the individual's name entered as a
shareholder of record on the books of the Bank for such shares.
13. EFFECT OF TERMINATION OF EMPLOYMENT, RETIREMENT, DISABILITY OR
DEATH.
(a) In the event of the termination of employment of an Optionee
either by reason of (i) being discharged for cause or (ii) voluntary separation
on the part of such Optionee for a reason other than the Optionee's death,
retirement, disability, or following a "change in control" of the Bank (as
defined in Paragraph 6(d)), any Option or Options granted to the Optionee under
this Plan, to the extent not previously exercised or expired, and regardless of
any vesting pursuant to Paragraph 6 hereof shall immediately terminate. The
phrase "discharged for cause" shall include termination at the sole discretion
of the Board because of such Optionee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses), a final cease
and desist order, or material breach of any provision of any employment
agreement that such Optionee may have with the Bank.
(b) In the event of the termination of employment of an Optionee
as a result of such Optionee's retirement, all Options granted such Optionee
shall vest and such Optionee shall have the right to exercise an Option granted
under this Plan, to the extent that it has not previously been exercised or
expired, for a period of three (3) months after the date of retirement, but in
no event may any Option be exercised later than the end of the Option Period
provided in such Option Agreement in accordance with Paragraph 10 hereof. For
purposes of this Plan, the term "retirement" shall mean, subject to Board
approval in each instance, (i) termination of an Optionee's employment under
conditions which would constitute retirement under any tax qualified retirement
plan maintained by the Bank or any of its subsidiaries or (ii) attaining age 65.
6
<PAGE>
(c) In the event of the termination of employment of an Optionee
by reason of such Optionee's disability, all Options granted such Optionee shall
vest and such Optionee shall have the right to exercise an Option granted under
this Plan, to the extent that it has not previously been exercised or expired,
at any time within twelve (12) months after the last date on which such Optionee
provides services as an officer or an employee of the Bank before being
disabled, but in no event may any Option be exercised later than the end of the
Option Period provided in such Option Agreement in accordance with Paragraph 10
hereof. For purposes of this Plan, the term "disability" shall be defined in the
same manner as such term is defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended.
(d) Notwithstanding anything else herein, in the event that an
Optionee should die (i) while employed by the Bank or any of its subsidiaries,
(ii) within three (3) months after retirement, (iii) within three (3) months
after Optionee's termination following a change in control, or (iv) within
twelve (12) months after Optionee's termination by reason of Optionee's
disability, any Option or Options granted to the Optionee under this Plan and
not previously exercised or expired shall vest and shall be exercisable,
according to their respective terms, by the personal representative of such
Optionee or by any person or persons who acquired such Options by bequest or
inheritance from such Optionee, notwithstanding any limitations placed on the
exercise of such Options by this Plan or an Option Agreement, immediately in
full and at any time within twelve (12) months after the date of death of such
Optionee, but in no event may any Option be exercised later than the end of the
Option Period provided in such Option Agreement in accordance with Paragraph 10
hereof. Any references herein to an Optionee shall be deemed to include any
person entitled to exercise an Option under the terms of this Plan after the
death of such Optionee under the terms of this Plan.
(e) In the event of the termination of employment of an Optionee
following a "change in control" of the Bank (as defined in Paragraph 6(d)), all
Options granted such Optionee shall vest and such Optionee shall have the right
to exercise any Option or Options granted to the Optionee under this Plan, to
the extent they have not previously been exercised or expired, for a period of
three (3) months after the date of termination, but in no event may any Option
be exercised later than the end of the Option period provided in such Option
Agreement in accordance with Paragraph 10 hereof.
14. EFFECT OF PLAN ON EMPLOYMENT STATUS. The fact that the Committee
has granted an Option to an Optionee under this Plan shall not confer on such
Optionee any right to employment with the Bank or to a position as an officer or
an employee of the Bank, nor shall it limit the right of the Bank to remove such
Optionee from any position held by the Optionee or to terminate the Optionee's
employment at any time.
7
<PAGE>
15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; DISSOLUTION OR
LIQUIDATION.
(a) In the event of a change in the number of shares of Common
Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment,
prior to the termination of an Optionee's rights under this Plan, equitable
proportionate adjustments shall be made by the Committee in (i) the number and
kind of shares which remain available under this Plan and (ii) the number, kind,
and the Option Price of shares subject to unexercised Options under this Plan.
The adjustments to be made shall be determined by the Committee and shall be
consistent with such change or changes in the Bank's total number of outstanding
shares; provided, however, that no adjustment shall change the aggregate Option
Price for the exercise of Options granted under this Plan.
(b) The grant of Options under this Plan shall not affect in any
way the right or power of the Bank or its shareholders to make or authorize any
adjustment, recapitalization, reorganization, or other change in the Bank's
capital structure or its business, or any merger or consolidation of the Bank,
or to issue bonds, debentures, preferred or other preference stock ahead of or
affecting Common Stock or the rights thereof, or the dissolution or liquidation
of the Bank, or any sale or transfer of all or any part of the Bank's assets or
business.
(c) Except upon a "change in control" as defined in Paragraph 6(d)
hereof, upon the effective date of the dissolution or liquidation of the Bank,
this Plan and any Options granted hereunder, shall terminate.
16. NON-TRANSFERABILITY. Any Option granted under this Plan shall not
be assignable or transferable except, in the case of the death of an Optionee,
by will or by the laws of descent and distribution. In the event of the death of
an Optionee, the personal representative, the executor or the administrator of
such Optionee's estate, or the person or persons who acquired by bequest or
inheritance the rights to exercise such Option, may exercise any Option or
portion thereof to the extent not previously exercised by an Optionee or
expired, in accordance with its terms and Subparagraph 13(d) hereof.
17. TAX WITHHOLDING. The employer of a person granted an Option under
this Plan shall have the right to deduct or otherwise effect a withholding of
any amount required by federal or state laws to be withheld with respect to the
grant, exercise or the sale of stock acquired upon the exercise of an Option in
order for the employer to obtain a tax deduction otherwise available as a
consequence of such grant, exercise or sale, as the case may be.
18. LISTING AND REGISTRATION OF OPTION SHARES. Any Option granted under
the Plan shall be subject to the requirement that if at any time the Committee
shall determine, in its discretion, that the listing, registration, or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issuance or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless and
until such listing, registration, qualification,
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consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.
19. EXCULPATION AND INDEMNIFICATION. In connection with this Plan, no
member of the Committee shall be personally liable for any act or omission to
act in such person's capacity as a member of the Committee, nor for any mistake
in judgment made in good faith, unless arising out of, or resulting from, such
person's own bad faith, gross negligence, willful misconduct, or criminal acts.
To the extent permitted by applicable law and regulation, the Bank shall
indemnify and hold harmless the members of the Committee, and each other officer
or employee of the Bank or of any subsidiary thereof to whom any duty or power
relating to the administration or interpretation of this Plan may be assigned or
delegated, from and against any and all liabilities (including any amount paid
in settlement of a claim with the approval of the Board) and any costs or
expenses (including counsel fees) incurred by such persons arising out of, or as
a result of, any act or omission to act in connection with the performance of
such person's duties, responsibilities, and obligations under this Plan, other
than such liabilities, costs, and expenses as may arise out of, or result from,
the bad faith, gross negligence, willful misconduct, or criminal acts of such
persons.
20. AMENDMENT AND MODIFICATION OF THE PLAN. The Board may at any time
and from time to time amend or modify this Plan (including the form of Option
Agreement) in any respect consistent with applicable regulations; provided,
however, that no amendment or modification shall be made that increases the
total number of shares of Common Stock covered by this Plan or effects any
change in the categories of persons who may receive Options under this Plan or
materially increases the benefits accruing to Optionees under this Plan unless
such change is approved by the holders of two-thirds (2/3) of the issued and
outstanding shares of Common Stock and the amended Plan is approved by the
Commissioner. Any amendment or modification of this Plan shall not materially
reduce the benefits under any Option theretofore granted to an Optionee under
this Plan without the consent of such Optionee or the transferee thereof in the
event of the death of such Optionee.
21. TERMINATION AND EXPIRATION OF THE PLAN. This Plan may be abandoned,
suspended, or terminated at any time by the Board; provided, however, that
abandonment, suspension, or termination of this Plan shall not affect any
Options then outstanding under this Plan. No Option shall be granted pursuant to
this Plan after ten (10) years from the effective date of this Plan as provided
in Paragraph 22 hereof.
22. EFFECTIVE DATE; SHAREHOLDER APPROVAL; REGULATORY APPROVAL. This
Plan shall not be effective until approved by the holders of two-third of the
issued and outstanding shares of Common Stock present or represented at an
annual or special meeting (the "Effective Date") and the Plan is approved by the
North Carolina Commissioner of Banks.
23. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, the singular number the
plural, and vice versa, whenever such meanings are appropriate.
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24. EXPENSES OF ADMINISTRATION OF PLAN. All costs and expenses incurred
in the operation and administration of this Plan shall be borne by the Bank or
one or more of its subsidiaries.
25. GOVERNING LAW. Without regard to the principles of conflicts of
laws, the laws of the State of North Carolina shall govern and control the
validity, interpretation, performance, and enforcement of this Plan.
26. INSPECTION OF PLAN. A copy of this Plan, and any amendments thereto
or modification thereof, shall be maintained by the Secretary of the Bank and
shall be shown to any proper person making inquiry about it.
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STATE OF NORTH CAROLINA EXHIBIT A
COUNTY OF UNION
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (hereinafter referred to as this
"Agreement") is made and entered into as of this ___ day of __________, _____,
between AMERICAN COMMUNITY BANK, a North Carolina Bank (hereinafter referred to
as the "Bank"), and _____________ a resident of __________ County, North
Carolina (hereinafter referred to as the "Optionee").
WHEREAS, the Board of Directors of the Bank (hereinafter referred to as
the "Board") has adopted the American Community Bank 1999 Incentive Stock Option
Plan (hereinafter referred to as the "Plan") subject to approval by the Bank's
shareholders and the North Carolina Commissioner of Banks; and
WHEREAS, the shareholders of the Bank at an annual meeting duly called
and held on March 18, 1999, approved the Plan (the "Effective Date"); and
WHEREAS, the Plan provides that the Compensation Committee (hereinafter
referred to as the "Committee") of the Board will make available to certain
officers and employees of the Bank and its subsidiaries (the "Employer") the
right to purchase shares of the Bank's common stock (hereinafter referred to as
"Common Stock"); and
WHEREAS, the Committee has determined that the Optionee should be
granted an option to purchase shares of Common Stock under the Plan;
NOW, THEREFORE, the Bank and the Optionee agree as follows:
1. DATE OF GRANT OF OPTION. The date of grant of the option granted
under this Agreement is the ____ day of _____________,______.
2. GRANT OF OPTION. Pursuant to the Plan, the Bank grants to the
Optionee the right (hereinafter referred to as the "Option") to purchase from
the Bank all or any part of an aggregate of ___________________________ (______)
shares of Common Stock (hereinafter referred to as the "Option Shares") which
shall be authorized but unissued shares.
3. VESTING OF OPTIONS.
(a) Periodic Vesting. Subject to subparagraphs 3(b) and 3(c)
below, the Option _________________ shall vest and become exercisable in
accordance with the following schedules as applicable:
(i) With respect to any Options which are granted under the
Plan as of Effective Date:
<PAGE>
Effective Date of the Plan: 0% vested
First anniversary of the Effective Date of the Plan: 20% vested
Second anniversary of the Effective Date of the Plan: 40% vested
Third anniversary of the Effective Date of the Plan: 60% vested
Fourth anniversary of the Effective Date of the Plan: 80% vested
Fifth anniversary of the Effective Date of the Plan: 100% vested
(ii) With respect to any Options which may be granted after
the Effective Date:
Date of grant: 0% vested
First anniversary of the date of grant: 20% vested
Second anniversary of the date of grant: 40% vested
Third anniversary of the date of grant: 60% vested
Fourth anniversary of the date of the grant: 80% vested
Fifth anniversary of the date of grant: 100% vested
(b) Fractional Option Shares. In determining the number of Option
Shares vested under the above vesting schedule, an Optionee shall not be
entitled to exercise an Option for a fractional number of Option Shares. If the
product resulting from multiplying the vested percentage times the allocated
Option results in a fractional number of Option Shares, then the Optionee's
vested right shall be to the whole number of Option Shares, disregarding any
fractional number.
(c) Accelerated Vesting. Notwithstanding paragraph 3(a) above, all
Options previously not vested and subject to forfeiture shall become 100% vested
and the right of the Optionee to exercise such Options shall become
nonforfeitable upon the death, disability or retirement of the Optionee, or upon
a "change in control" of the Bank. For purposes of this Agreement, the term
"disability" shall be defined in the same manner as such term is defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
(d) Other Terminations of Employment. In the event any Optionee's
employment with the Bank terminates for any reason, other than the Optionee's
death, disability, retirement, or following a change in control of the Bank,
then the Optionee's Options, to the extent unexercised, shall be forfeited and
shall be available again for grant to other officers and employees as may be
determined by the Committee. Such forfeiture shall apply whether or not any such
options have vested.
4. OPTION PRICE. The price to be paid for the Option Shares shall be
_______ and __/100 Dollars ($_____) per share (hereinafter referred to as the
"Option Price") which is the fair market value of the Option Shares as
determined by the Committee as of the date of grant of this Option.
5. WHEN AND EXTENT TO WHICH OPTIONS MAY BE EXERCISED. Subject to any
further restrictions in this Agreement, the right of the Optionee to exercise
the Option to purchase
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the Option Shares, either in whole or in part, shall be conditioned upon the
completion by the Optionee of one (1) full year of service in the employment of
the Employer following the date of grant of the Option set forth in paragraph 1
hereof. At such time as the Option shall become exercisable in accordance with
this Agreement, the Optionee, in his discretion, may exercise all or any portion
of the Option, subject to paragraphs 3 and 7 hereof. The Option shall terminate
as provided in paragraph 8 hereof. Furthermore and notwithstanding anything else
herein, Options granted pursuant to this Plan shall be subject to the right of
the North Carolina Commissioner of Banks (the "Commissioner") and the Federal
Deposit Insurance Corporation (the "FDIC") to direct the Bank to require an
Optionee to exercise or forfeit his or her stock rights if the Bank's capital
falls below the minimum requirements, as determined by the Commissioner or FDIC.
6. CHANGE IN CONTROL. When used herein, the phrase "change in control"
refers to (i) the acquisition by any person, group of persons or entity of the
beneficial ownership or power to vote more than twenty-five (25%) percent of the
Bank's outstanding stock, (ii) during any period of two (2) consecutive years, a
change in the majority of the Board unless the election of each new Director was
approved by at least two-thirds of the Directors then still in office who were
Directors at the beginning of such two (2) year period or (iii) a
reorganization, merger, or consolidation of the Bank with one or more other
entities in which the Bank is not the surviving entity, or the transfer of all
or substantially all of the assets or shares of the Bank to another person or
entity. Notwithstanding anything else herein, for purposes of this Agreement the
term "change in control," shall not include a transaction approved by the Board
which results in the Bank merging with, transferring its assets to or becoming
the subsidiary of a corporation newly formed at the direction of the Board for
the purpose of such transaction or serving as a bank holding company for the
Bank, and in connection with which transaction the Bank's shareholders (other
than those who exercise statutory rights of dissent and appraisal) become the
holders of substantially all of the voting stock of such corporation. Further,
notwithstanding anything else herein, a transaction or event shall not be
considered a change in control if, prior to the consummation or occurrence of
such transaction or event, the Optionee and the Bank agree in writing that the
same shall not be treated as a change in control for purposes of this Agreement.
7. METHOD OF EXERCISE. The Option shall be exercised by written notice
to the Committee signed by the Optionee or by such other person as may be
entitled to exercise the Option. In the exercise of the Option, the aggregate
Option Price for the shares being purchased may only be paid in cash and must be
accompanied by a notice of exercise. The written notice shall state the number
of shares with respect to which the Option is being exercised and, shall either
be accompanied by the payment of the aggregate Option Price for such shares or
shall fix a date (not more than ten (10) business days from the date of such
notice) by which the payment of the aggregate Option Price will be made. The
Optionee shall not exercise the Option to purchase less than one hundred (100)
shares, unless the Committee otherwise approves or unless the partial exercise
is for the remaining shares available under the Option. A certificate or
certificates for the shares of Common Stock purchased by the exercise of the
Option shall be issued in the regular course of business subsequent to the
exercise of the Option and the payment therefor. During the Option Period, no
person entitled to exercise the Option granted under this Agreement shall have
any of the rights or privileges of a shareholder with respect to any shares of
Common Stock issuable upon exercise of the Option, until certificates
representing such
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shares shall have been issued and delivered and the individual's name entered as
a shareholder of record on the books of the Bank for such shares.
8. TERMINATION OF OPTION. The Option shall terminate as follows:
(a) Except as provided in subparagraphs (b), (c), (d) and (e)
below, the Option granted under this Agreement, to the extent that it has not
been exercised or expired, and regardless of any vesting pursuant to paragraph 3
hereof, shall terminate on the earlier of (i) the date that the Optionee is
discharged for cause, (ii) the date the Optionee gives notice that the Optionee
terminates his or her employment with the Employer for a reason other than
retirement or disability or following a "change in control" of the Bank or (iii)
the date which is ten (10) years from the date of grant of the Option set forth
in paragraph 1 hereof. Options which terminate within ten (10) years from the
date of grant set forth in paragraph 1 shall be available again for grant to
certain officers and employees as may be determined by the Committee. The phrase
"discharged for cause" shall include termination at the sole discretion of the
Board of Directors of the Employer of the Optionee because of the Optionee's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or a final cease and desist order, or material breach of any
provision of any employment agreement that the Optionee may have with the
Employer.
(b) In the event the Optionee retires prior to the date which is
ten (10) years after the date of grant of the Option, the Optionee shall have
the right to exercise the Option, to the extent that it has not been exercised
by the Optionee or expired, immediately in full and at any time within three (3)
months after the date of retirement, but in no event may the Option be exercised
later than ten (10) years after the date of grant of the Option set forth in
paragraph 1 hereof. For purposes of this Agreement, the term "retirement" shall
mean, subject to Board approval in each instance, (i) termination of the
Optionee's employment under conditions which would constitute retirement under
any tax qualified retirement plan maintained by the Employer or (ii) attaining
age 65.
(c) In the event the Optionee becomes disabled prior to the date
which is ten (10) years after the date of grant of the Option, the Optionee
shall have the right to exercise the Option, to the extent that it has not been
exercised by the Optionee or expired, notwithstanding any limitation placed on
the exercise of the Option by the Plan or by this Agreement, immediately in full
and at any time within twelve (12) months after the last date on which the
Optionee provided services as an officer or an employee of the Employer before
being disabled, but in no event may the Option be exercised later than ten (10)
years after the date of grant of the Option set forth in paragraph 1 hereof. For
purposes of this Agreement, the term "disability" shall be defined in the same
manner as such term is defined in Section 22(e)(3) of the Code.
(d) Notwithstanding anything else herein, in the event that an
Optionee should die (i) while employed by the Bank or any of its subsidiaries,
(ii) within three (3) months after retirement, (iii) within three (3) months
after Optionee's termination following a change in control, or (iv) within
twelve (12) months after Optionee's termination by reason of Optionee's
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<PAGE>
disability, the Option, to the extent it has not been exercised by the Optionee
or expired, shall be exercisable, according to its terms, by the personal
representative, the executor or administrator of the Optionee's estate, or any
person or persons who acquired the Option by bequest or inheritance from the
Optionee, notwithstanding any limitation placed on the exercise of the Option by
the Plan or by this Agreement, immediately in full and at any time within twelve
(12) months after the date of death of the Optionee, but in no event may the
Option be exercised later than ten (10) years from the date of grant of the
Option as set forth in paragraph 1 hereof.
(e) In the event the Optionee's employment with the Employer is
terminated following a "change in control" of the Bank, the Optionee shall have
the right to exercise the Option, to the extent that it has not been exercised
by the Optionee or expired, immediately in full and at any time within three (3)
months after the date of termination, but in no event may the Option be
exercised later than ten (10) years after the date of grant of the Options set
forth in paragraph 1 hereof.
9. EFFECT OF AGREEMENT ON EMPLOYMENT STATUS OF OPTIONEE. The fact that
the Committee has granted the Option to the Optionee under this Agreement shall
not confer on the Optionee any right to employment with the Employer or to a
position as an officer or an employee of the Employer, nor shall it limit the
right of the Employer to remove the Optionee from any position held by the
Optionee or to terminate his or her employment at any time.
10. LISTING AND REGISTRATION OF OPTION SHARES.
(a) The Bank's obligation to issue shares of Common Stock upon
exercise of the Option is expressly conditioned upon (i) the completion by the
Bank of any registration or other qualification of such shares under any state
or federal law or regulations or rulings of any government regulatory body or
(ii) the making of such investment representations or other representations and
agreements by the Optionee or any person entitled to exercise the Option in
order to comply with the requirements of any exemption from any such
registration or other qualification of the Option Shares which the Committee
shall, in its sole discretion, deem necessary or advisable. Notwithstanding the
foregoing, the Bank shall be under no obligation to register or qualify the
Option Shares under any state or federal law. The required representations and
agreements referenced above may include representations and agreements that the
Optionee, or any other person entitled to exercise the Option, (i) is purchasing
such shares on his or her own behalf as an investment and not with a present
intention of distribution or re-sale and (ii) agrees to have placed upon any
certificates representing the Option Shares a legend setting forth any
representations and agreements which have been given to the Committee or a
reference thereto and stating that such shares may not be transferred except in
accordance with all applicable state and federal securities laws and
regulations, and further representing that, prior to making any sale or other
disposition of the Option Shares, the Optionee, or any other person entitled to
exercise the Option, will give the Bank notice of the intention to sell or
dispose of such shares not less than five (5) days prior to such sale or
disposition.
11. ADJUSTMENT UPON CHANGE IN CAPITALIZATION; DISSOLUTION OR
LIQUIDATION.
5
<PAGE>
(a) In the event of a change in the number of shares of Common
Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment,
prior to the termination of the Optionee's rights under this Agreement,
equitable proportionate adjustments shall be made by the Committee in the
number, kind, and the Option Price of shares subject to the unexercised portion
of the Option granted under this Agreement. The adjustments to be made shall be
determined by the Committee and shall be consistent with such change or changes
in the Bank's total number of outstanding shares; provided, however, that no
adjustment shall change the aggregate Option Price for the exercise of the
Option granted under this Agreement.
(b) The grant of the Option under this Agreement shall not affect
in any way the right or power of the Bank or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in
the Bank's capital structure or its business, or any merger or consolidation of
the Bank, or to issue bonds, debentures, preferred or other preference stock
ahead of or affecting Common Stock or the rights thereof, or the dissolution or
liquidation of the Bank, or any sale or transfer of all or any part of the
Bank's assets or business.
(c) Except upon a change in control as set forth in paragraph 6
hereof, upon the effective date of the dissolution or liquidation of the Bank,
the Option granted under this Agreement shall terminate.
12. NONTRANSFERABILITY. The Option granted under this Agreement shall
not be assignable or transferable except, in the event of the death of the
Optionee, by will or by the laws of descent and distribution. In the event of
the death of the Optionee, the personal representative, the executor or the
administrator of the Optionee's estate, or the person or persons who acquired by
bequest or inheritance the right to exercise the Option may exercise the
unexercised Option or a portion thereof, in accordance with the terms of this
Agreement, prior to the date which is ten (10) years after the date of grant of
Option as set forth in paragraph 1 hereof.
13. NOTICES. Any notice or other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given when delivered personally or when deposited in the
United States mail as Certified Mail, return receipt requested, properly
addressed with postage prepaid, if to the Bank at its principal office at 2593
West Roosevelt Boulevard, Monroe, North Carolina 28110; and, if to the Optionee
to his or her last address appearing on the books of the Employer. The Employer
and the Optionee may change their address or addresses by giving written notice
of such change as provided herein. Any notice or other communication hereunder
shall be deemed to have been given on the date actually delivered or as of the
third (3rd) business day following the date mailed, as the case may be.
14. CONSTRUCTION CONTROLLED BY PLAN. This Agreement shall be construed
so as to be consistent with the Plan; and the provisions of the Plan shall be
deemed to be controlling in the event that any provision hereof should appear to
be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of
the Plan from the Bank.
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<PAGE>
15. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provisions or part
thereof, shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.
16. MODIFICATION OF AGREEMENT; WAIVER. This Agreement may be modified,
amended, suspended, or terminated, and any terms, representations or conditions
may be waived, but only by written instrument signed by each of the parties
hereto. No waiver hereunder shall constitute a waiver with respect to any
subsequent occurrence or other transaction hereunder or of any other provision
hereof.
17. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Agreement. As used herein,
the masculine gender shall include the feminine and neuter, the singular number
the plural, and vice versa, whenever such meanings are appropriate.
18. GOVERNING LAW; VENUE AND JURISDICTION. Without regard to the
principles of conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and enforcement of
this Agreement. The parties hereto agree that any suit or action relating to
this Agreement shall be instituted and prosecuted in the courts of the County of
Union, State of North Carolina, and each party hereby does waive any right or
defense relating to such jurisdiction and venue.
19. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the Bank, its successors and assigns, and shall be
binding upon and inure to the benefit of the Optionee, his heirs, legatees,
personal representatives, executors, and administrators.
20. ENTIRE AGREEMENT. This Agreement constitutes and embodies the
entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Bank, has caused this instrument to be executed
in its corporate name by its Chairman and attested by its Secretary or one of
its Assistant Secretaries, and its corporate seal to be hereto affixed, all by
authority of its Board of Directors first duly given, and the Optionee has
hereunto set his or her hand and adopted as his or her seal
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the typewritten word "SEAL" appearing beside his or her name, all done this the
day and year first above written.
AMERICAN COMMUNITY BANK
By: _____________________________________
Kenneth W. Long, Chairman
ATTEST:
- -------------------------------------
____________, Corporate Secretary
[Corporate Seal]
OPTIONEE
By: ___________________________(SEAL)
---------------------------
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EXHIBIT A
NOTICE OF EXERCISE OF
INCENTIVE STOCK OPTION
To: The Compensation Committee of the Board of Directors of
American Community Bank
The undersigned hereby elects to purchase ________ whole shares of Common Stock
of American Community Bank (the "Bank") pursuant to the Incentive Stock Option
granted to the undersigned in that certain Incentive Stock Option Agreement
between the Bank and the undersigned dated the _____________ day of _________,
______. The aggregate purchase price for such Shares is $____________, which
amount is (i) being tendered herewith, (ii) will be tendered on or before
_________________, (cross out provision which does not apply) in cash. The
effective date of this election shall be ____________________, , or the date of
receipt of this Notice by the Bank if later.
Executed this __________ day of _______________, ______, at ___________________.
------------------------------------
------------------------------------
------------------------------------
(Social Security Number)
9
EXHIBIT 10.4
AMERICAN COMMUNITY BANK
1999 NONSTATUTORY STOCK OPTION PLAN
American Community Trust Bank, a North Carolina banking corporation
(hereinafter referred to as the "Bank"), does herein set forth the terms of the
American Community Bank 1999 Nonstatutory Stock Option Plan (hereinafter
referred to as this "Plan"), which was adopted by the Board of Directors
(hereinafter referred to as the "Board") of the Bank subject to shareholder and
regulatory approval as provided in paragraph 21 hereof.
1. PURPOSE OF THIS PLAN. The purpose of this Plan is to provide for the
grant of Nonstatutory Stock Options (hereinafter referred to as "Options" or
singularly, "Option") to Eligible Directors (as hereinafter defined) of the Bank
who wish to invest in the Bank's common stock (hereinafter referred to as
"Common Stock"). The Board believes that participation in the ownership of the
Bank by the Eligible Directors will be to the mutual benefit of the Bank and the
Eligible Directors. In addition, the existence of this Plan will make it
possible for the Bank to attract capable individuals to serve on the Board. As
used herein, the term "Eligible Directors" or singularly, "Eligible Director,"
shall mean those members of the Board who are not employed by the Bank and are
ineligible to participate in American Community Bank 1999 Incentive Stock Option
Plan.
2. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall be administered by the Board. The Board shall
have full power and authority to construe, interpret and administer this Plan.
All actions, decisions, determinations, or interpretations of the Board shall be
final, conclusive, and binding upon all parties.
(b) The Board may designate any officers or employees of the Bank
or of any of its subsidiaries to assist in the administration of this Plan. The
Board may authorize such individuals to execute documents on its behalf and may
delegate to them such other ministerial and limited discretionary duties as the
Board may see fit.
3. SHARES OF COMMON STOCK SUBJECT TO THIS PLAN. The maximum number of
shares of Common Stock that shall be offered under this Plan is One Hundred
Twenty-Four Thousand Three Hundred Thirty (124,330) shares, subject to
adjustment as provided in paragraph 14. Shares subject to Options which expire
or terminate prior to the issuance of the shares of Common Stock shall lapse and
the shares of Common Stock originally subject to such Options shall again be
available for future grants of Options under this Plan.
4. ELIGIBILITY; GRANT OF OPTIONS. Each Eligible Director serving on the
Board shall receive an Option to purchase shares of Common Stock in the amount
as shall be determined by the Board of Directors by a majority vote. Any Options
not granted hereby may be reserved for future issuance by a majority vote of the
entire Board.
<PAGE>
5. VESTING OF OPTIONS. Options granted under this Plan shall be fully
vested upon grant.
6. OPTION PRICE.
(a) The price per share of each Option granted under this Plan
(hereinafter called the "Option Price") shall be determined by the Board as of
the effective date of grant of such Option, but in no event shall such Option
Price be less than 100% of the fair market value of Common Stock on the date of
grant. An Option shall be considered as granted on the later of (i) the date
that the Board acts to grant such Option, or (ii) such later date as the Board
shall specify in an Option Agreement (as hereinafter defined).
(b) The fair market value of a share of Common Stock shall be
determined as follows: (i) if on the date as of which such determination is
being made, Common Stock being valued is admitted to trading on a securities
exchange or exchanges for which actual sale prices are regularly reported, or
actual sale prices are otherwise regularly published, the fair market value of a
share of Common Stock shall be deemed to be equal to the mean of the closing
sale price as reported for each of the five (5) trading days immediately
preceding the date as of which such determination is made; provided, however,
that, if a closing sale price is not reported for each of the five (5) trading
days immediately preceding the date as of which such determination is made, then
the fair market value shall be equal to the mean of the closing sale prices on
those trading days for which such price is available, or (ii) if on the date as
of which such determination is made, no such closing sale prices are reported,
but quotations for Common Stock being valued are regularly listed on the
National Association of Securities Dealers Automated Quotation System or another
comparable system, the fair market value of a share of Common Stock shall be
deemed to be equal to the mean of the average of the closing bid and asked
prices for such Common Stock quoted on such system on each of the five (5)
trading days preceding the date as of which such determination is made, but if a
closing bid and asked price is not available for each of the five (5) trading
days, then the fair market value shall be equal to the mean of the average of
the closing bid and asked prices on those trading days during the five-day
period for which such prices are available, or (iii) if no such quotations are
available, the fair market value of a share of Common Stock shall be deemed to
be the average of the closing bid and asked prices furnished by a professional
securities dealer making a market in such shares, as selected by the Board, for
the trading date first preceding the date as of which such determination is
made. If the Board determines that the price as determined above does not
represent the fair market value of a share of Common Stock, the Board may then
consider such other factors as it deems appropriate and then fix the fair market
value for the purposes of this Plan.
7. PAYMENT OF OPTION PRICE. Payment for shares subject to an Option may
only be made in cash.
8. TERMS AND CONDITIONS OF GRANT OF OPTIONS. Each Option granted
pursuant to this Plan shall be evidenced by a written Nonstatutory Stock Option
Agreement (hereinafter referred to as "Option Agreement") with each Eligible
Director (hereinafter referred to as "Optionee") to whom an Option is granted;
such agreement shall be substantially in the form attached hereto as "Exhibit
A," unless the Board shall adopt a different form and, in each case,
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may contain such other, different, or additional terms and conditions as the
Board may determine. The Option shall terminate as provided in paragraph 12
hereof. Furthermore, Options granted pursuant to this Plan shall be subject to
the right of the North Carolina Commissioner of Banks (the "Commissioner") and
the Federal Deposit Insurance Corporation ("FDIC") to direct the Bank to require
an Optionee to exercise or forfeit his or her stock rights if the Bank's capital
falls below the minimum requirements, as determined by the Commissioner or FDIC.
9. OPTION PERIOD. Each Option Agreement shall set forth a period during
which such Option may be exercised (hereinafter referred to as the "Option
Period"); provided, however, that the Option Period shall not exceed ten (10)
years after the date of grant of such Option as specified in an Option
Agreement.
10. LIMITATION ON GRANT OF STOCK OPTIONS. No one individual shall be
granted Options under this Plan in excess of 40% of the shares reserved for
issuance pursuant to Paragraph 3 hereof.
11. EXERCISE OF OPTIONS. An Option shall be exercised by written notice
to the Board signed by an Optionee or by such other person as may be entitled to
exercise such Option. In the case of the exercise of an Option, the aggregate
Option Price for the shares being purchased may only be paid in cash and must be
accompanied by a notice of exercise. The written notice shall state the number
of shares with respect to which an Option is being exercised and shall either be
accompanied by the payment of the aggregate Option Price for such shares or
shall fix a date (not more than ten (10) business days after the date of such
notice) by which the payment of the aggregate Option Price will be made. An
Optionee shall not exercise an Option to purchase less than 100 shares, unless
the Board otherwise approves or unless the partial exercise is for the remaining
shares available under such Option. A certificate or certificates for the shares
of Common Stock purchased by the exercise of an Option shall be issued in the
regular course of business subsequent to the exercise of such Option and the
payment therefor. During the Option Period, no person entitled to exercise any
Option granted under this Plan shall have any of the rights or privileges of a
shareholder with respect to any shares of Common Stock issuable upon exercise of
such Option, until certificates representing such shares shall have been issued
and delivered and the individual's name entered as a shareholder of record on
the books of the Bank for such shares.
12. EFFECT OF LEAVING THE BOARD OR DEATH.
(a) In the event that an Optionee leaves the Board for any reason
other than retirement, disability, death, or following a "change in control" of
the Bank (as defined in paragraph 12(e)) any Option granted to the Optionee
under this Plan, to the extent not previously exercised by the Optionee or
expired, shall immediately terminate and shall be available again for the
granting of additional options to Eligible Directors during the remaining term
of this Plan upon such terms and conditions as may be determined by the Board.
(b) In the event that an Optionee should leave the Board as a
result of such Optionee's retirement, such Optionee shall have the right to
exercise an Option granted under this Plan, to the extent that it has not
previously been exercised by the Optionee or expired, for such
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period of time as may be determined by the Board and specified in an Option
Agreement, but in no event may any Option be exercised later than the end of the
Option Period provided in the Option Agreement in accordance with paragraph 8
hereof. For purposes of this Plan, the term "retirement" shall mean termination
of an Eligible Director's membership on the Board (i) at any time after
attaining age 65 with the approval of the Board; or (ii) at the election of the
Eligible Director, at any time after not less than five (5) years service as a
member of the Board, such service shall be computed cumulatively for purposes of
this clause (ii).
(c) In the event that an Optionee should leave the Board by reason
of such Optionee's disability, such Optionee shall have the right to exercise an
Option granted under this Plan, to the extent that it has not previously been
exercised or expired, for such period of time as may be determined by the Board
and specified in an Option Agreement, but in no event may any Option be
exercised later than the end of the Option Period provided in the Option
Agreement in accordance with paragraph 8 hereof. For purposes of this Plan, the
term "disability" shall be defined as may be determined by the Board, from time
to time, or as determined at any time with respect to any individual Optionee.
(d) In the event that an Optionee should die while serving on the
Board or after leaving by reason of disability or retirement or following a
change in control during the Option Period provided in an Option Agreement in
accordance with paragraph 8 hereof, an Option granted under this Plan, to the
extent that it has not previously been exercised or expired, shall be
exercisable, in accordance with its terms, by the personal representative of
such Optionee, the executor or administrator of such Optionee's estate, or by
any person or persons who acquired such Option by bequest or inheritance from
such Optionee, notwithstanding any limitations placed on the exercise of such
Option by this Plan or an Option Agreement, at any time within twelve (12)
months after the date of death of such Optionee, but in no event may an Option
be exercised later than the end of the Option Period provided in an Option
Agreement in accordance with paragraph 8 hereof. Any references herein to an
Optionee shall be deemed to include any person entitled to exercise an Option
after the death of such Optionee under the terms of this Plan.
(e) In the event an Optionee shall leave the Board as a result of
a "change in control" of the Bank, such Optionee shall have the right to
exercise the Option granted under this Plan, to the extent that it has not
previously been exercised by the Optionee or expired, for such period of time as
may be determined by the Board as specified in an Option Agreement, but in no
event may any Option be exercised later than the end of the Option Period
provided in the Option Agreement in accordance with paragraph 8 hereof. For
purposes of this Plan, the phrase "change in control" refers to (i) the
acquisition by any person, group of persons or entity of the beneficial
ownership or power to vote more than twenty-five percent (25%) of the Bank's
outstanding stock, (ii) during any period of two (2) consecutive years, a change
in the majority of the Board unless the election of each new Director was
approved by at least two-thirds of the Directors then still in office who were
Directors at the beginning of such two (2) year period, or (iii) a
reorganization, merger, or consolidation of the Bank with one or more other
entities in which the Bank is not the surviving entity, or the transfer of all
or substantially all of the assets or shares of the Bank to another person or
entity. Notwithstanding anything else herein, for purposes of this Plan the term
"change in control" shall not include a transaction approved by the Board which
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results in the Bank merging with, transferring its assets to or becoming the
subsidiary of a corporation newly formed at the direction of the Board for the
purpose of such transaction or serving as a bank holding company for the Bank,
and in connection with which transaction the Bank's shareholders (other than
those who exercise statutory rights of dissent and appraisal) become the holders
of substantially all of the voting stock of such corporation. Further,
notwithstanding anything else herein, a transaction or event shall not be
considered a change in control if, prior to the consummation or occurrence of
such transaction or event, the Optionee and the Bank agree in writing that the
same shall not be treated as a change in control for purposes of this Plan.
13. EFFECT OF PLAN ON STATUS AS MEMBER OF A BOARD. The fact that an
Eligible Director has been granted an Option under this Plan shall not confer on
such Eligible Director any right to continued service on the Board, nor shall it
limit the right of the Bank to remove such Eligible Director from the Board at
any time.
14. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; DISSOLUTION OR
LIQUIDATION.
(a) In the event of a change in the number of shares of Common
Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment
prior to the termination of an Optionee's rights under this Plan, equitable
proportionate adjustments shall be made by the Board in (i) the number and kind
of shares which remain available under this Plan, and (ii) the number, kind, and
the Option Price of shares subject to the unexercised portion of an Option under
this Plan. The adjustments to be made shall be determined by the Board and shall
be consistent with such change or changes in the Bank's total number of
outstanding shares; provided, however, that no adjustment shall change the
aggregate Option Price for the exercise of Options granted under this Plan.
(b) The grant of Options under this Plan shall not affect in any
way the right or power of the Bank or its shareholders to make or authorize any
adjustment, recapitalization, reorganization, or other change in the Bank's
capital structure or its business, or any merger or consolidation of the Bank,
or to issue bonds, debentures, preferred or other preference stock ahead of or
affecting Common Stock or the rights thereof, or the dissolution or liquidation
of the Bank, or any sale or transfer of all or any part of the Bank's assets or
business.
(c) Except upon a "change in control", upon the effective date of
the dissolution or liquidation of the Bank, this Plan and any Options granted
hereunder, shall terminate.
15. NON-TRANSFERABILITY. An Option granted under this Plan shall not be
assignable or transferable except, in the event of the death of an Optionee, by
will or by the laws of descent and distribution. In the event of the death of an
Optionee, his personal representative, the executor or the administrator of such
Optionee's estate, or the person or persons who acquired by bequest or
inheritance the rights to exercise such Options, may exercise any Option or
portion thereof to the extent not previously exercisable or surrendered by an
Optionee or expired, in
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accordance with its terms, prior to the expiration of
the exercise period as specified in subparagraph 12(d) hereof.
16. TAX WITHHOLDING. The Bank or any of its subsidiaries shall have the
right to deduct or otherwise effect a withholding of any amount required by
federal or state laws to be withheld with respect to the grant, exercise or the
sale of stock acquired upon the exercise of an Option in order for the Bank or
any of its subsidiaries to obtain a tax deduction otherwise available as a
consequence of such grant, exercise or sale, as the case may be.
17. LISTING AND REGISTRATION OF OPTION SHARES. Any Option granted under
this Plan shall be subject to the requirement that if at any time the Board
shall determine, in its discretion, that the listing, registration, or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issuance or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless and
until such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.
18. EXCULPATION AND INDEMNIFICATION. In connection with this Plan, no
member of the Board shall be personally liable for any act or omission to act in
such person's capacity as a member of the Board, nor for any mistake in judgment
made in good faith, unless arising out of, or resulting from, such person's own
bad faith, gross negligence, willful misconduct, or criminal acts. To the extent
permitted by applicable law and regulation, the Bank shall indemnify and hold
harmless the members of the Board, and each other officer or employee of the
Bank or of any of its subsidiaries to whom any duty or power relating to the
administration or interpretation of this Plan may be assigned or delegated, from
and against any and all liabilities (including any amount paid in settlement of
a claim with the approval of the Board) and any costs or expenses (including
counsel fees) incurred by such persons arising out of or as a result of, any act
or omission to act in connection with the performance of such person's duties,
responsibilities, and obligations under this Plan, other than such liabilities,
costs, and expenses as may arise out of, or result from, the bad faith, gross
negligence, willful misconduct, or criminal acts of such persons.
19. AMENDMENT AND MODIFICATION OF THIS PLAN. The Board may at any time,
and from time to time, amend or modify this Plan (including the form of Option
Agreement) in any respect consistent with applicable regulations; provided,
however, that no amendment or modification shall be made that increases the
total number of shares covered by this Plan or effects any change in the
category of persons who may receive Options under this Plan or materially
increases the benefits accruing to Optionees under this Plan unless such change
is approved by the holders of two thirds (2/3) of the issued and outstanding
shares of Common Stock and the amended Plan is approved by the Commissioner. Any
amendment or modification of this Plan shall not materially reduce the benefits
under any Option theretofore granted to an Optionee under this Plan without the
consent of such Optionee or the transferee in the event of the death of such
Optionee.
20. TERMINATION AND EXPIRATION OF THIS PLAN. This Plan may be
abandoned, suspended, or terminated at any time by the Board; provided, however,
that abandonment,
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suspension, or termination of this Plan shall not affect any Options then
outstanding under this Plan. No Option shall be granted pursuant to this Plan
after ten (10) years from the effective date of this Plan as provided in
paragraph 21 hereof.
21. EFFECTIVE DATE; SHAREHOLDER APPROVAL; REGULATORY APPROVAL. This
Plan shall not be effective until approved by the holders of two-thirds of the
issued and outstanding shares of Common Stock present or represented at an
annual or special shareholders' meeting (the "Effective Date") and approved by
the North Carolina Commissioner of Banks.
22. CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, the singular number, the
plural, and vice versa, whenever such meanings are appropriate.
23. EXPENSES OF ADMINISTRATION OF PLAN. All costs and expenses incurred
in the operation and administration of this Plan shall be borne by the Bank or
by one of its subsidiaries.
24. GOVERNING LAW. Without regard to the principles of conflicts of
laws, the laws of the State of North Carolina shall govern and control the
validity, interpretation, performance, and enforcement of this Plan.
25. INSPECTION OF PLAN. A copy of this Plan, and any amendments thereto
or modifications thereof, shall be maintained by the Secretary of the Bank and
shall be shown to any proper person making inquiry about it.
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STATE OF NORTH CAROLINA EXHIBIT A
COUNTY OF UNION
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (hereinafter referred to as
this "Agreement") is made and entered into as of this ____ day of __________,
______, between AMERICAN COMMUNITY BANK, a North Carolina Bank (hereinafter
referred to as the "Bank"), and _________________________________, a resident of
_______________ County, North Carolina (hereinafter referred to as the
"Optionee").
WHEREAS, the Board of Directors of the Bank (hereinafter referred to as
the "Board") has adopted the American Community Bank 1999 Nonstatutory Stock
Option Plan (hereinafter referred to as the "Plan") subject to approval by the
Bank's shareholders as provided in the Plan; and
WHEREAS, the shareholders of the Bank at an annual meeting duly called
and held on March 18, 1999, approved the Plan (the "Effective Date") and the
North Carolina Commissioner of Banks has approved the Plan; and
WHEREAS, the Plan provides that the Board will make available to the
Directors (as defined in the Plan) of the Bank, the right to purchase shares of
the Bank's common stock (hereinafter referred to as "Common Stock"); and
WHEREAS, the Board has determined that the Optionee is entitled to
purchase shares of Common Stock under the Plan;
NOW, THEREFORE, the Bank and the Optionee agree as follows:
1. DATE OF GRANT OF OPTION. The date of grant of the option granted
under this Agreement _____________________________ is the ______ day of _______,
______.
2. GRANT OF OPTION. Pursuant to the Plan, the Bank grants to the
Optionee the right (hereinafter referred to as the "Option") to purchase from
the Bank all or a portion of an aggregate number of __________________ (______)
shares of Common Stock (hereinafter referred to as the "Option Shares") which
shall be authorized but unissued shares.
3. VESTING OF OPTIONS. The Option shall fully vest upon grant.
4. OPTION PRICE. The price to be paid for the Option Shares shall be
_______________ Dollars ($_____) per share (hereinafter referred to as the
"Option Price") which is the fair market value of the Option Shares as
determined by the Board as of the date of grant of this Option.
<PAGE>
5. WHEN AND EXTENT TO WHICH OPTIONS MAY BE EXERCISED . At such time as
the Option shall become exercisable in accordance with this Agreement, the
Optionee, in his discretion, may exercise all or any portion of the Option,
subject to paragraph 7 hereof. The Option shall terminate as provided in
paragraph 8 hereof. Furthermore, Options granted pursuant to this Plan shall be
subject to the right of the North Carolina Commissioner of Banks (the
"Commissioner") and the Federal Deposit Insurance Corporation (the "FDIC") to
direct the Bank to require an Optionee to exercise or forfeit his or her stock
rights if the Bank's capital falls below the minimum requirements, as determined
by the Commissioner or the FDIC.
6. CHANGE IN CONTROL. When used herein, the phrase "change in control"
refers to (i) the acquisition by any person, group of persons or entity of the
beneficial ownership or power to vote more than twenty-five (25%) percent of the
Bank's outstanding stock, (ii) during any period of two (2) consecutive years, a
change in the majority of the Board unless the election of each new Director was
approved by at least two-thirds of the Directors then still in office who were
Directors at the beginning of such two (2) year period, or (iii) a
reorganization, merger, or consolidation of the Bank with one or more other
Banks in which the Bank is not the surviving Bank, or the transfer of all or
substantially all of the assets or shares of the Bank to another person or
entity. Notwithstanding anything else herein, for purposes of this Plan the term
"change in control" shall not include a transaction approved by the Board which
results in the Bank merging with, transferring its assets to or becoming the
subsidiary of a corporation newly formed at the direction of the Board for the
purpose of such transaction or serving as a bank holding company for the Bank,
and in connection with which transaction the Bank's shareholders (other than
those who exercise statutory rights of dissent and appraisal) become the holders
of substantially all of the voting stock of such corporation. Further,
notwithstanding anything else herein, a transaction or event shall not be
considered a change in control if, prior to the consummation or occurrence of
such transaction or event, the Optionee and the Bank agree in writing that the
same shall not be treated as a change in control for purposes of this Plan.
7. METHOD OF EXERCISE. The Option shall be exercised by written notice
to the Board signed by the Optionee or by such other person as may be entitled
to exercise the Option. In the exercise of the Option, the aggregate Option
Price for the shares being purchased may only be paid in cash and must be
accompanied by a notice of exercise. The written notice shall state the number
of shares with respect to which the Option is being exercised and, shall either
be accompanied by the payment of the aggregate Option Price for such shares or
shall fix a date (not more than ten (10) business days after the date of such
notice) by which the payment of the aggregate Option Price will be made. The
Optionee shall not exercise the Option to purchase less than 100 shares, unless
the Board otherwise approves or unless the partial exercise is for the remaining
shares available under the Option. A certificate or certificates for the shares
of Common Stock purchased by the exercise of the Option shall be issued in the
regular course of business subsequent to the exercise of the Option and the
payment therefor. Neither the Optionee, nor any other person who may be entitled
to exercise the Option, shall have any of the rights or privileges of a
shareholder with respect to any shares of Common Stock issuable upon exercise of
the Option, until certificates representing such shares shall have been issued
and delivered and the individual's name entered as a shareholder of record on
the books of the Bank for such shares.
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8. TERMINATION OF OPTION. The Option shall terminate, and shall
thereupon be available again for grant to Eligible Directors as may be
determined by the Board, as follows:
(a) Except as provided in subparagraphs (b), (c), (d) and (e)
below, the Option, to the extent that it has not been exercised or expired,
shall terminate on the earlier of (i) the date the Optionee leaves the Board for
any reason other than the Optionee's retirement, disability, death, or following
a change in control of the Bank or (ii) the date which is ten (10) years after
the date of grant of the Option as set forth in paragraph 1 hereof.
(b) In the event the Optionee retires prior to the date which is
ten (10) years after the date of grant of the Option as set forth in paragraph 1
hereof, the Optionee shall have the right to exercise all Options, to the extent
not exercised or expired, for the remainder of such ten (10) year period. For
purposes of the plan, the term "retirement" shall mean any termination of an
Optionee's membership on the Board (i) at any time after attaining age 65 with
the approval of the Board, or (ii) at the election of the Optionee, at any time
after not less than five years service as a member of the Board, computed on a
cumulative basis.
(c) In the event the Optionee leaves the Board by reason of such
Optionee's disability prior to the date which is ten (10) years after the date
of grant of the Option as set forth in paragraph 1 hereof, the Optionee shall
have the right to exercise all Options, to the extent not exercised by him or
expired, for the remainder of such ten (10) year period. For purposes of the
Plan, the term "disability" shall be defined as may be determined by the Board,
from time to time, or as determined at any time with respect to any individual
Optionee.
(d) In the event the Optionee dies while serving on the Board or
after his or her retirement or after his or her leaving by reason of disability
or following a change in control and prior to the date which is ten (10) years
after the date of grant of the Option as set forth in paragraph 1 hereof, all
Options, to the extent not exercised by the Optionee or expired, shall be
exercisable, according to its terms, by the personal representative, the
executor or the administrator of the Optionee's estate, or the person or persons
who acquired the Option by bequest or inheritance from the Optionee, at any time
within twelve (12) months after the date of death of the Optionee, but in no
event may the Option be exercised later than ten (10) years after the date of
grant of the Option as set forth in paragraph 1 hereof.
(e) In the event the Optionee leaves the Board following a change
in control of the Bank, prior to the date which is ten (10) years after the date
of grant of Options as set forth in paragraph 1 hereof, the Optionee shall have
the right to exercise the Option, to the extent that it has not been exercised
by him or her or expired, for the remainder of such ten (10) year period.
9. EFFECT OF AGREEMENT ON STATUS OF OPTIONEE. The fact that the
Optionee has been granted the Option under the Plan shall not confer on the
Optionee any right to continued service on the Board, nor shall it limit the
right of the Bank to remove the Optionee from the Board at any time.
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10. LISTING AND REGISTRATION OF OPTION SHARES. The Bank's obligation to
issue shares of Common Stock upon exercise of the Option is expressly
conditioned upon the completion by the Bank of any registration or other
qualification of such shares under any state or federal law or regulations or
rulings of any governmental regulatory body or the making of such investment
representations or other representations and agreements by the Optionee or any
person entitled to exercise the Option in order to comply with the requirements
of any exemption from any such registration or other qualification of the Option
Shares which the Board shall, in its discretion, deem necessary or advisable.
Notwithstanding the foregoing, the Bank shall be under no obligation to register
or qualify the Option Shares under any state or federal law. The required
representations and agreements referenced above may include representations and
agreements that the Optionee, or any other person entitled to exercise the
Option, (i) is purchasing such shares on his or her own behalf as an investment
and not with a present intention of distribution or re-sale and (ii) agrees to
have placed upon any certificates representing the Option Shares a legend
setting forth any representations and agreements which have been given to the
Board or a reference thereto and stating that such shares may not be transferred
except in accordance with all applicable state and federal securities laws and
regulations, and further representing that, prior to making any sale or other
disposition of the Option Shares, the Optionee, or any other person entitled to
exercise the Option, will give the Bank notice of the intention to sell or
dispose of such shares not less than five (5) days prior to such sale or
disposition.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; DISSOLUTION OR
LIQUIDATION.
(a) In the event of a change in the number of shares of Common
Stock outstanding by reason of a stock dividend, stock split, recapitalization,
reorganization, merger, exchange of shares, or other similar capital adjustment,
prior to the termination of the Optionee's rights under this Agreement,
equitable proportionate adjustments shall be made by the Board in the number,
kind, and the Option Price of shares subject to the unexercised portion of the
Option. The adjustments to be made shall be determined by the Board and shall be
consistent with such changes or changes in the Bank's total number of
outstanding shares; provided, however, that no adjustment shall change the
aggregate Option Price for the exercise of the Option granted.
(b) The grant of the Option under this Agreement shall not affect
in any way the right or power of the Bank or its shareholders to make or
authorize any adjustment, recapitalization, reorganization, or other change in
the Bank's capital structure or its business, or any merger or consolidation of
the Bank, or to issue bonds, debentures, preferred or other preference stock
ahead of or affecting Common Stock or the rights thereof, or the dissolution or
liquidation of the Bank, or any sale or transfer of all or any part of the
Bank's assets or business.
(c) Except upon a change in control as set forth in paragraph 6
hereof, upon the effective date of the dissolution or liquidation of the Bank,
the Option granted under this Agreement shall terminate.
12. NON-TRANSFERABILITY. The Option granted under this Agreement shall
not be assignable or transferable except, in the event of the death of the
Optionee, by will or by the
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laws of descent and distribution. In the event of the death of the Optionee, the
personal representative, the executor or the administrator of the Optionee's
estate, or the person or persons who acquired by bequest or inheritance the
right to exercise the Option may exercise the unexercised Option or portion
thereof, in accordance with its terms and paragraph 8(d) hereof, prior to the
date which is ten (10) years after the date of grant of the Option as set forth
in paragraph 1 hereof.
13. TAX WITHHOLDING. The grant of the Option and Option Shares
delivered pursuant to this Agreement, and any amounts distributed with respect
thereto, may be subject to applicable federal, state and local withholding for
taxes. The Optionee expressly acknowledges and agrees to such withholding, where
applicable, without regard to whether the Option Shares may then be sold or
otherwise transferred by the Optionee.
14. NOTICES. Any notices or other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given if delivered personally or when deposited in the United
States mail as Certified Mail, return receipt requested, properly addressed and
postage prepaid, if to the Bank, at its principal office at 2593 West Roosevelt
Boulevard, Monroe, North Carolina 28110; and, if to the Optionee, at his or her
last address appearing on the books of the Bank. The Bank and the Optionee may
change their address or addresses by giving written notice of such change as
provided herein. Any notice or other communication hereunder shall be deemed to
have been given on the date actually delivered or as of the third (3rd) business
day following the date mailed, as the case may be.
15. CONSTRUCTION CONTROLLED BY PLAN. This Agreement shall be construed
so as to be consistent with the Plan; and the provisions of the Plan shall be
deemed to be controlling in the event that any provision hereof should appear to
be inconsistent therewith. The Optionee hereby acknowledges receipt of a copy of
the Plan from the Bank.
16. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be valid and enforceable under
applicable law, but if any provision of this Agreement is determined to be
unenforceable, invalid or illegal, the validity of any other provision or part
thereof, shall not be affected thereby and this Agreement shall continue to be
binding on the parties hereto as if such unenforceable, invalid or illegal
provision or part thereof had not been included herein.
17. MODIFICATION OF AGREEMENT; WAIVER. This Agreement may be modified,
amended, suspended or terminated, and any terms, representations or conditions
may be waived, but only by a written instrument signed by each of the parties
hereto. No waiver hereunder shall constitute a waiver with respect to any
subsequent occurrence or other transaction hereunder or of any other provision
hereof.
18. CAPTIONS AND HEARINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part hereof, and shall not serve as a
basis for interpretation or in construction of this Agreement. As used herein,
the masculine gender shall include the feminine
5
<PAGE>
and neuter, the singular number, the plural, and vice versa, whenever such
meanings are appropriate.
19. GOVERNING LAW; VENUE AND JURISDICTION. Without regard to the
principles of conflicts of laws, the laws of the State of North Carolina shall
govern and control the validity, interpretation, performance, and enforcement of
this Agreement. The parties hereto agree that any suit or action relating to
this Agreement shall be instituted and prosecuted in the courts of the County of
Union, State of North Carolina, and each party hereby does waive any right or
defense relating to such jurisdiction and venue.
20. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the Bank, its successors and assigns, and shall be
binding upon and inure to the benefit of the Optionee, his heirs, legatees,
personal representatives, executors, and administrators.
21. ENTIRE AGREEMENT. This Agreement constitutes and embodies the
entire understanding and agreement of the parties hereto and, except as
otherwise provided hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties hereto relating to the matters
addressed herein.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed an
original, but all of which taken together shall constitute but one and the same
instrument.
6
<PAGE>
IN WITNESS WHEREOF, the Bank has caused this instrument to be executed
in its corporate name by its President, or one of its Vice Presidents, and
attested by its Secretary or one of its Assistant Secretaries, and its corporate
seal to be hereto affixed, all by authority of its Board of Directors first duly
given, and the Optionee has hereunto set his or her hand and adopted as his or
her seal the typewritten word "SEAL" appearing beside his or her name, all done
this the day and year first above written.
AMERICAN COMMUNITY BANK
By: ________________________________
Kenneth W. Long, Chairman
Attest:
- ---------------------------------
________________, Corporate Secretary
[CORPORATE SEAL]
__________________________(SEAL)
________________________, Optionee
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF
NONSTATUTORY STOCK OPTION
To: The Board of Directors of American Community Bank
The undersigned hereby elects to purchase ________ whole shares of Common Stock
of American Community Bank (the "Bank") pursuant to the Nonstatutory Stock
Option granted to the undersigned in that certain Nonstatutory Stock Option
Agreement between the Bank and the undersigned dated the ____ day of _________,
______. The aggregate purchase price for such shares is $_______________, which
amount is (i) being tendered herewith, (ii) will be tendered on or before
_______________, ________, (cross out provision which does not apply) in cash.
The effective date of this election shall be ____________________, ________, or
the date of receipt of this Notice by the Bank if later.
Executed this ___ day of ___________________,_______, at ______________________.
___________________________________
___________________________________
___________________________________
(Social Security Number)
EXHIBIT 10.5
ADOPTION AGREEMENT #004
NONSTANDARDIZED CODE SS.401(K) PROFIT SHARING PLAN
The undersigned, American Community Bank ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the Miles &
Associates, Inc. Defined Contribution Prototype Plan (basic plan document #01)
by adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The Employer makes the following elections granted
under the provisions of the Prototype Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (CHOOSE
(A) OR (B))
[X] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.
[ ] (b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan.
[NOTE: THE EMPLOYER MAY NOT ELECT OPTION (B) IF A CUSTODIAN EXECUTES
THE ADOPTION AGREEMENT.]
1.03 PLAN. The name of the Plan as adopted by the Employer is American
Community Bank 401(k) Plan.
1.07 EMPLOYEE. The following Employees are not eligible to participate
in the Plan: (CHOOSE (A) OR AT LEAST ONE OF (B) THROUGH (G))
[X] (a) No exclusions.
[ ] (b) Collective bargaining employees (as defined in Section 1.07 of
the Plan). [NOTE: IF THE EMPLOYER EXCLUDES UNION EMPLOYEES FROM THE
PLAN, THE EMPLOYER MUST BE ABLE TO PROVIDE EVIDENCE THAT RETIREMENT
BENEFITS WERE THE SUBJECT OF GOOD FAITH BARGAINING.]
[ ] (c) Nonresident aliens who do not receive any earned income (as
defined in Code ss.911(d)(2)) from the Employer which constitutes
United States source income (as defined in Code ss.861(a)(3)).
[ ] (d) Commission Salesmen.
[ ] (e) Any Employee compensated on a salaried basis.
[ ] (f) Any Employee compensated on an hourly basis.
[ ] (g) (SPECIFY)___________________________________________________.
LEASED EMPLOYEES. Any Leased Employee treated as an Employee under Section
1.31 of the Plan, is: (CHOOSE (H) OR (I))
[X] (h) Not eligible to participate in the Plan.
[ ] (i) Eligible to participate in the Plan, unless excluded by reason
of an exclusion classification elected under this Adoption Agreement
Section 1.07.
RELATED EMPLOYERS. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07. In addition: (CHOOSE (J) OR (K))
[X] (j) No other related group member's Employees are eligible to participate in
the Plan.
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[ ] (k) The following nonparticipating related group member's Employees
are eligible to participate in the Plan unless excluded by reason of
an exclusion classification elected under this Adoption Agreement
Section 1.07:________________________________.
1.12 COMPENSATION.
TREATMENT OF ELECTIVE CONTRIBUTIONS. (CHOOSE (A) OR (B))
[X] (a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
[ ] (b) "Compensation" does not include elective contributions.
MODIFICATIONS TO COMPENSATION DEFINITION. (CHOOSE (C) OR AT LEAST ONE OF (D)
THROUGH (J))
[X] (c) No modifications other than as elected under Options (a) or (b).
[ ] (d) The Plan excludes Compensation in excess of $____________________
----------------.
[ ] (e) In lieu of the definition in Section 1.12 of the Plan,
Compensation means any earnings reportable as W-2 wages for Federal
income tax withholding purposes, subject to any other election under
this Adoption Agreement Section 1.12.
[ ] (f) The Plan excludes bonuses.
[ ] (g) The Plan excludes overtime.
[ ] (h) The Plan excludes Commissions.
[ ] (i) Compensation will not include Compensation from a related employer
(as defined in Section 1.30 of the Plan) that has not executed a
Participation Agreement in this Plan unless, pursuant to Adoption
Agreement Section 1.07, the Employees of that related employer are
eligible to participate in this Plan.
[ ] (j) (SPECIFY)____________________________________.
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
SPECIAL DEFINITION FOR MATCHING CONTRIBUTIONS. "Compensation" for purposes of
any matching contribution formula under Article III means: (CHOOSE (K) OR (L)
ONLY IF APPLICABLE)
[X] (k) Compensation as defined in this Adoption Agreement Section 1.12.
[ ] (l) (SPECIFY)____________________________________.
SPECIAL DEFINITION FOR SALARY REDUCTION CONTRIBUTIONS. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (CHOOSE (M) OR AT LEAST ONE OF (N) OR (O), IF APPLICABLE)
[X] (m) No exceptions.
2
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[ ] (n) If the Employee makes elective contributions to another plan
maintained by the Employer, the Advisory Committee will determine the
amount of the Employee's salary reduction contribution for the
withholding period: (CHOOSE (1) OR (2))
[ ] (1) After the reduction for such period of elective
contributions to the other plan(s).
[ ] (2) Prior to the reduction for such period of elective
contributions to the other plan(s).
[ ] (o) (SPECIFY)_____________________________________.
1.17 PLAN YEAR/LIMITATION YEAR.
PLAN YEAR. Plan Year means: (CHOOSE (A) OR (B))
[X] (a) The 12 consecutive month period ending every 12/31.
[ ] (b) (SPECIFY)_____________________________________.
LIMITATION YEAR. The Limitation Year is: (CHOOSE (C) OR (D))
[X] (c) The Plan Year.
[ ] (d) The 12 consecutive month period ending every___________.
1.18 EFFECTIVE DATE.
NEW PLAN. The "Effective Date" of the Plan is July 1, 1999.
------------
RESTATED PLAN. The restated Effective Date is______________.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established ________________. [NOTE: SEE THE EFFECTIVE DATE
ADDENDUM.]
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is:
(CHOOSE (A) OR (B))
[X] (a) The actual method.
[ ] (b) The_____________________ equivalency method, except:
[ ] (1) No exceptions.
[ ] (2) The actual method applies for purposes of: (CHOOSE AT
LEAST ONE)
[ ] (i) Participation under Article II.
[ ] (ii) Vesting under Article V.
[ ] (iii) Accrual of benefits under Section 3.06.
[NOTE: ON THE BLANK LINE, INSERT "DAILY," "WEEKLY," "SEMI-MONTHLY PAYROLL
PERIODS" OR "MONTHLY."]
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1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s): N/A. Service
with the designated predecessor employer(s) applies: (CHOOSE AT LEAST ONE OF (A)
OR (B); (C) IS AVAILABLE ONLY IN ADDITION TO (A) OR (B))
[ ] (a) For purposes of participation under Article II.
[ ] (b) For purposes of vesting under Article V.
[ ] (c) Except the following Service:_________________________________.
[NOTE: IF THE PLAN DOES NOT CREDIT ANY PREDECESSOR SERVICE UNDER THIS PROVISION,
INSERT "N/A" IN THE FIRST BLANK LINE. THE EMPLOYER MAY ATTACH A SCHEDULE TO THIS
ADOPTION AGREEMENT, IN THE SAME FORMAT AS THIS SECTION 1.29, DESIGNATING
ADDITIONAL PREDECESSOR EMPLOYERS AND THE APPLICABLE SERVICE CREDITING
ELECTIONS.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the
Plan and also participates in a plan maintained by the leasing organization:
(CHOOSE (A) OR (B))
[X] (a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking
into account the Leased Employee's allocation, if any, under the
leasing organization's plan.
[ ] (b) The Advisory Committee will reduce a Leased Employee's allocation
of Employer nonelective contributions (other than designated qualified
nonelective contributions) under this Plan by the Leased Employee's
allocation under the leasing organization's plan, but only to the
extent that allocation is attributable to the Leased Employee's service
provided to the Employer. The leasing organization's plan:
[ ] (1)Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan,
irrespective of whether the safe harbor exception applies.
[ ] (2)Must satisfy the features and, if a defined benefit
plan, the method of reduction described in an addendum to
this Adoption Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
ELIGIBILITY CONDITIONS. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions: (CHOOSE (A) OR (B) OR BOTH; (C) IS
OPTIONAL AS AN ADDITIONAL ELECTION)
[X] (a) Attainment of age 21 (SPECIFY AGE, NOT EXCEEDING 21).
[X] (b) Service requirement. (CHOOSE ONE OF (1) THROUGH (3))
[X] (1) One Year of Service.
[ ] (2) ____ months (not exceeding 12) following the Employee's
Employment Commencement Date.
[ ] (3) One Hour of Service.
4
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[ ] (c) Special requirements for non-401(k) portion of plan. (MAKE
ELECTIONS UNDER (1) AND UNDER (2))
(1) The requirements of this Option (c) apply to participation in:
(CHOOSE AT LEAST ONE OF (I) THROUGH (III))
[ ] (i) The allocation of Employer nonelective contributions
and Participant forfeitures.
[ ] (ii) The allocation of Employer matching contributions
(including forfeitures allocated as matching
contributions).
[ ] (iii) The allocation of Employer qualified nonelective
contributions.
(2) For participation in the allocations described in (1), the
eligibility conditions are: (CHOOSE AT LEAST ONE OF (I) THROUGH (IV))
[ ] (i) (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section
2.03(A) of the Plan) if the requirement is two Years of
Service.
[ ] (ii)_____ months (not exceeding 24) following the
Employee's Employment Commencement Date.
[ ] (iii) One Hour of Service.
[ ] (iv) Attainment of age______________(SPECIFY AGE, NOT
EXCEEDING 21).
PLAN ENTRY DATE. "Plan Entry Date" means the Effective Date and: (CHOOSE (D),
(E) OR (F))
[X] (d) Semi-annual Entry Dates. The first day of the Plan Year and the
first day of the seventh month of the Plan Year.
[ ] (e) The first day of the Plan Year.
[ ] (f) (SPECIFY ENTRY DATES)_____________________________________.
TIME OF PARTICIPATION. An Employee will become a Participant (and, if
applicable, will participate in the allocations described in Option (c)(1)),
unless excluded under Adoption Agreement Section 1.07, on the Plan Entry Date
(if employed on that date): (CHOOSE (G), (H) OR (I))
[X] (g) immediately following
[ ] (h) immediately preceding
[ ] (i) nearest
the date the Employee completes the eligibility conditions described in Options
(a) and (b) (or in Option (c)(2) if applicable) of this Adoption Agreement
Section 2.01. [NOTE: THE EMPLOYER MUST COORDINATE THE SELECTION OF (G), (H) OR
(I) WITH THE "PLAN ENTRY DATE" SELECTION IN (D), (E) OR (F). UNLESS OTHERWISE
EXCLUDED UNDER SECTION 1.07, THE EMPLOYEE MUST BECOME A PARTICIPANT BY THE
EARLIER OF: (1) THE FIRST DAY OF THE PLAN YEAR BEGINNING AFTER THE DATE THE
EMPLOYEE COMPLETES THE AGE AND SERVICE REQUIREMENTS OF CODE SS.410(A); OR (2) 6
MONTHS AFTER THE DATE THE EMPLOYEE COMPLETES THOSE REQUIREMENTS.]
DUAL ELIGIBILITY. The eligibility conditions of this Section 2.01 apply to:
(CHOOSE (J) OR (K))
[ ] (j) All Employees of the Employer, except: (CHOOSE (1) OR (2))
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<PAGE>
[ ] (1) No exceptions.
[ ] (2) Employees who are Participants in the Plan as of the
Effective Date.
[X] (k) Solely to an Employee employed by the Employer after July 1, 1999.
If the Employee was employed by the Employer on or before the
specified date, the Employee will become a Participant: (CHOOSE (1),
(2) OR (3))
[X] (1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age 21 (not to
exceed 21).
[ ] (2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. If the restated
Plan required more than one Year of Service to participate,
the eligibility condition under this Option (2) for
participation in the Code ss.401(k) arrangement under this
Plan is one Year of Service for Plan Years beginning after
December 31, 1988. [FOR RESTATED PLANS ONLY]
[ ] (3) (SPECIFY)________________________________.
2.02 YEAR OF SERVICE - PARTICIPATION.
HOURS OF SERVICE. An Employee must complete: (CHOOSE (A) OR (B))
[X] (a) 1,000 Hours of Service
[ ] (b)______________________ Hours of Service
during an eligibility computation period to receive credit for a Year of
Service. [NOTE: THE HOURS OF SERVICE REQUIREMENT MAY NOT EXCEED 1,000.]
ELIGIBILITY COMPUTATION PERIOD. After the initial eligibility computation period
described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (CHOOSE (C) OR (D))
[ ] (c) The 12 consecutive month period beginning with each anniversary
of an Employee's Employment Commencement Date.
[X] (d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (CHOOSE (A) OR (B))
[X] (a) Does not apply to the Employer's Plan.
[ ] (b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (CHOOSE (A) OR (B))
[X] (a) Does not permit an eligible Employee or a Participant to elect not
to participate.
[ ] (b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following
rules: (COMPLETE (1), (2), (3) AND (4))
(1) An election is effective for a Plan Year if filed no later than
-------------------------------------------------------.
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<PAGE>
(2) An election not to participate must be effective for at least
_________________________________ Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
[ ] (i)May not again elect not to participate for any subsequent Plan
Year.
[ ] (ii) May again elect not to participate, but not earlier than
the __________________ Plan Year following the Plan Year in which
the re-election first was effective.
(4) (SPECIFY)_______________________________________________________
[INSERT "N/A" IF NO OTHER RULES APPLY].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
PART I. [OPTIONS (A) THROUGH (G)] AMOUNT OF EMPLOYER'S CONTRIBUTION. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01. (CHOOSE ANY COMBINATION OF (A), (B), (C) AND (D), OR CHOOSE (E))
[X] (a) DEFERRAL CONTRIBUTIONS (CODESS.401(K) ARRANGEMENT). (CHOOSE (1) OR
(2) OR BOTH)
[X] (1) Salary reduction arrangement. The Employer must
contribute the amount by which the Participants have
reduced their Compensation for the Plan Year, pursuant to
their salary reduction agreements on file with the
Advisory Committee. A reference in the Plan to salary
reduction contributions is a reference to these amounts.
[ ] (2) Cash or deferred arrangement. The Employer will
contribute on behalf of each Participant the portion of
the Participant's proportionate share of the cash or
deferred contribution which he has not elected to receive
in cash. See Section 14.02 of the Plan. The Employer's
cash or deferred contribution is the amount the Employer
may from time to time deem advisable which the Employer
designates as a cash or deferred contribution prior to
making that contribution to the Trust.
[X] (b) MATCHING CONTRIBUTIONS. The Employer will make matching
contributions in accordance with the formula(s) elected in Part II of
this Adoption Agreement Section 3.01.
[ ] (c) DESIGNATED QUALIFIED NONELECTIVE CONTRIBUTIONS. The Employer, in
its sole discretion, may contribute an amount which it designates as a
qualified nonelective contribution.
[X] (d) NONELECTIVE CONTRIBUTIONS. (CHOOSE ANY COMBINATION OF (1) THROUGH
(4))
[X] (1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem
advisable.
[ ] (2) The amount (or additional amount) the Employer may
from time to time deem advisable, separately determined
for each of the following classifications of
Participants: (CHOOSE (I) OR (II))
[ ] (i)Nonhighly Compensated Employees and Highly
Compensated Employees.
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<PAGE>
[ ] (ii) (SPECIFY CLASSIFICATIONS)_________________________.
Under this Option (2), the Advisory Committee will allocate the
amount contributed for each Participant classification in
accordance with Part II of Adoption Agreement Section 3.04, as
if the Participants in that classification were the only
Participants in the Plan.
[ ] (3) _____% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for
which it makes the contribution. [NOTE: THE PERCENTAGE
SELECTED MAY NOT EXCEED 15%.]
[ ] (4) _____% of Net Profits but not more than $__________.
[ ] (e) FROZEN PLAN. This Plan is a frozen Plan effective . The Employer
will not contribute to the Plan with respect to any period following
the stated date.
NET PROFITS. The Employer: (CHOOSE (F) OR (G))
[X] (f) Need not have Net Profits to make its annual contribution under
this Plan.
[ ] (g) Must have current or accumulated Net Profits exceeding $_______ to
make the following contributions: (CHOOSE AT LEAST ONE)
[ ] (1) Cash or deferred contributions described in Option (a)(2).
[ ] (2) Matching contributions described in Option (b), except:
----------------------------------------.
[ ] (3) Qualified nonelective contributions described in Option
(c).
[ ] (4) Nonelective contributions described in Option (d).
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "Net Profits" specifically
excludes_________________________________________. [NOTE: ENTER "N/A" IF NO
EXCLUSIONS APPLY.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits under Option (g), it will reduce the
matching contribution under a fixed formula on a prorata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this Adoption
Agreement, each participating member will determine Net Profits separately but
will not apply this reduction unless, after combining the separately determined
Net Profits, the aggregate Net Profits are insufficient to satisfy the matching
contribution liability. "Net Profits" includes both current and accumulated Net
Profits.
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<PAGE>
PART II. [OPTIONS (H) THROUGH (J)] MATCHING CONTRIBUTION FORMULA. [NOTE: IF THE
EMPLOYER ELECTED OPTION (B), COMPLETE OPTIONS (H), (I) AND (J).]
[X] (h) AMOUNT OF MATCHING CONTRIBUTIONS. For each Plan Year, the
Employer's matching contribution is: (CHOOSE ANY COMBINATION OF (1),
(2), (3), (4) AND (5))
[ ] (1) An amount equal to % of each Participant's eligible
contributions for the Plan Year.
[ ] (2) An amount equal to % of each Participant's first
tier of eligible contributions for the Plan Year, plus
the following matching percentage(s) for the following
subsequent tiers of eligible contributions for the Plan
---------------------------------------------------.
[X] (3) Discretionary formula.
[X] (i)An amount (or additional amount) equal to a
matching percentage the Employer from time to time
may deem advisable of the Participant's eligible
contributions for the Plan Year.
[ ] (ii) An amount (or additional amount) equal to a
matching percentage the Employer from time to time
may deem advisable of each tier of the
Participant's eligible contributions for the Plan
Year.
[ ] (4) An amount equal to the following percentage of each
Participant's eligible contributions for the Plan Year,
based on the Participant's Years of Service:
Number of Years of Service Matching Percentage
-------------------------- -------------------
------ ------ %
------ ------ %
------ ------ %
------ ------ %
The Advisory Committee will apply this formula by
determining Years of Service as follows:______________________________________.
[ ] (5) A Participant's matching contributions may not:
(CHOOSE (I) OR (II))
[ ] (i) Exceed______________________________________.
[ ] (ii)Be less than________________________________.
RELATED EMPLOYERS. If two or more related employers (as defined in
Section 1.30) contribute to this Plan, the related employers may elect
different matching contribution formulas by attaching to the Adoption
Agreement a separately completed copy of this Part II. NOTE: SEPARATE
MATCHING CONTRIBUTION FORMULAS CREATE SEPARATE CURRENT BENEFIT
STRUCTURES THAT MUST SATISFY THE MINIMUM PARTICIPATION TEST OF CODE
SS.401(A)(26).]
[X] (i) DEFINITION OF ELIGIBLE CONTRIBUTIONS. Subject to the requirements
of Option (j), the term "eligible contributions" means: (CHOOSE ANY
COMBINATION OF (1) THROUGH (3))
[X] (1) Salary reduction contributions.
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<PAGE>
[ ] (2) Cash or deferred contributions (including any part
of the Participant's proportionate share of the cash or
deferred contribution which the Employer defers without
the Participant's election).
[ ] (3) Participant mandatory contributions, as designated
in Adoption Agreement Section 4.01. See Section 14.04 of
the Plan.
[X] (j) AMOUNT OF ELIGIBLE CONTRIBUTIONS TAKEN INTO ACCOUNT. When
determining a Participant's eligible contributions taken into account
under the matching contributions formula(s), the following rules
apply: (CHOOSE ANY COMBINATION OF (1) THROUGH (4))
[X] (1) The Advisory Committee will take into account all
eligible contributions credited for the Plan Year.
[ ] (2) The Advisory Committee will disregard eligible
contributions exceeding_________________________________.
[ ] (3) The Advisory Committee will treat as the first tier
of eligible contributions, an amount not exceeding:
-------------------------------------------------------.
The subsequent tiers of eligible contributions are:
-------------------------------------------------------.
[ ] (4)(SPECIFY)___________________________________________.
PART III. [OPTIONS (K) AND (L)]. SPECIAL RULES FOR CODESS.401(K) ARRANGEMENT.
(CHOOSE (K) OR (L), OR BOTH, AS APPLICABLE)
[X] (k) SALARY REDUCTION AGREEMENTS. The following rules and restrictions
apply to an Employee's salary reduction agreement: (MAKE A SELECTION
UNDER (1), (2), (3) AND (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (CHOOSE (I) OR AT LEAST ONE OF (II) OR (III))
[X] (i) No maximum limitation other than as provided in the
Plan.
[ ] (ii) May not exceed % of Compensation for the Plan
Year, subject to the annual additions limitation
described in Part 2 of Article III and the 402(g)
limitation described in Section 14.07 of the Plan.
[ ] (iii)Based on percentages of Compensation must equal at least
-----------------------------------------------------.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (CHOOSE (I), (II), (III) OR (IV))
[ ] (i) Once during any Plan Year but not later than of the
Plan Year.
[ ] (ii) As of any Plan Entry Date.
[X] (iii) As of the first day of any month.
[ ] (iv) (SPECIFY, BUT MUST BE AT LEAST ONCE PER PLAN YEAR)
----------------------------------------------------.
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<PAGE>
(3) An Employee who revokes his salary reduction agreement may file a
new salary reduction agreement with an effective date: (CHOOSE (I),
(II), (III) OR (IV))
[ ] (i) No earlier than the first day of the next Plan Year.
[X] (ii) As of any subsequent Plan Entry Date.
[ ] (iii) As of the first day of any month subsequent to the
month in which he revoked an Agreement.
[ ] (iv) (SPECIFY, BUT MUST BE AT LEAST ONCE PER PLAN YEAR
FOLLOWING THE PLAN YEAR OF REVOCATION)______________________
--------------------------------------.
(4) A Participant may increase or may decrease, on a prospective
basis, his salary reduction percentage or dollar amount: (CHOOSE (I),
(II), (III) OR (IV))
[ ] (i) As of the beginning of each payroll period.
[ ] (ii) As of the first day of each month.
[X] (iii) As of any Plan Entry Date.
[ ] (iv) (SPECIFY, BUT MUST PERMIT AN INCREASE OR A
DECREASE AT LEAST ONCE PER PLAN YEAR)_________________
-------------------------------------------.
[ ] (l) CASH OR DEFERRED CONTRIBUTIONS. For each Plan Year for which the
Employer makes a designated cash or deferred contribution, a
Participant may elect to receive directly in cash not more than the
following portion (or, if less, the 402(g) limitation described in
Section 14.07 of the Plan) of his proportionate share of that cash or
deferred contribution: (CHOOSE (1) OR (2))
[ ] (1) All or any portion.
[ ] (2) ____________________________________________%.
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions in accordance with Section 14.06 and
the elections under this Adoption Agreement Section 3.04.
PART I. [OPTIONS (A) THROUGH (D)]. SPECIAL ACCOUNTING ELECTIONS. (CHOOSE
WHICHEVER ELECTIONS ARE APPLICABLE TO THE EMPLOYER'S PLAN)
[X] (a) MATCHING CONTRIBUTIONS ACCOUNT. The Advisory Committee will
allocate matching contributions to a Participant's: (CHOOSE (1) OR
(2); (3) IS AVAILABLE ONLY IN ADDITION TO (1))
[X] (1) Regular Matching Contributions Account.
[ ] (2) Qualified Matching Contributions Account.
[ ] (3) Except, matching contributions under Option(s) of
Adoption Agreement Section 3.01 are allocable to the
Qualified Matching Contributions Account.
[ ] (b) SPECIAL ALLOCATION DATES FOR SALARY REDUCTION CONTRIBUTIONS. The
Advisory Committee will allocate salary reduction contributions as of
the Accounting Date and as of the following additional allocation
dates:_______________________________________________________________.
11
<PAGE>
[ ] (c) SPECIAL ALLOCATION DATES FOR MATCHING CONTRIBUTIONS. The
Advisory Committee will allocate matching contributions as of the
Accounting Date and as of the following additional allocation dates:
------------------------------------------------------------.
[ ] (d) DESIGNATED QUALIFIED NONELECTIVE CONTRIBUTIONS - DEFINITION OF
PARTICIPANT. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (CHOOSE (1), (2) OR
(3))
[ ] (1) All Participants.
[ ] (2) Participants who are Nonhighly Compensated Employees for
the Plan Year.
[ ] (3) (SPECIFY)______________________________________________.
PART II. METHOD OF ALLOCATION - NONELECTIVE CONTRIBUTION. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Section 3.04. If the
Employer elects Option (e)(2), Option (g)(2) or Option (h), for the first 3% of
Compensation allocated to all Participants, "Compensation" does not include any
exclusions elected under Adoption Agreement Section 1.12 (other than the
exclusion of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (CHOOSE AN
ALLOCATION METHOD UNDER (E), (F), (G) OR (H); (I) IS MANDATORY IF THE EMPLOYER
ELECTS (F), (G) OR (H); (J) IS OPTIONAL IN ADDITION TO ANY OTHER ELECTION.)
[X] (e) NONINTEGRATED ALLOCATION FORMULA. (CHOOSE (1) OR (2))
[X] (1) The Advisory Committee will allocate the annual
nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year.
[ ] (2) The Advisory Committee will allocate the annual
nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year.
For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements
of Section 3.06 for the Plan Year, any other Participant
entitled to a top heavy minimum allocation under Section
3.04(B), but such Participant's allocation will not
exceed 3% of his Compensation for the Plan Year.
[ ] (f) TWO-TIERED INTEGRATED ALLOCATION FORMULA - MAXIMUM DISPARITY.
First, the Advisory Committee will allocate the annual Employer
nonelective contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for
the Plan Year. The allocation under this paragraph, as a percentage of
each Participant's Compensation plus Excess Compensation, must not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the
Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
12
<PAGE>
[ ] (g) THREE-TIERED INTEGRATED ALLOCATION FORMULA. First, the Advisory
Committee will allocate the annual Employer nonelective contributions
in the same ratio that each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation may not exceed the applicable percentage
(5.7%, 5.4% or 4.3%) listed under the Maximum Disparity Table
following Option (i). Solely for purposes of the allocation in this
first paragraph, "Participant" means, in addition to a Participant who
satisfies the requirements of Section 3.06 for the Plan Year: (CHOOSE
(1) OR (2))
[ ] (1) No other Participant.
[ ] (2) Any other Participant entitled to a top heavy
minimum allocation under Section 3.04(B), but such
Participant's allocation under this Option (g) will not
exceed 3% of his Compensation for the Plan Year.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Excess
Compensation, may not exceed the allocation percentage in the first
paragraph.
Finally, the Advisory Committee will allocate any remaining
nonelective contributions in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
[ ] (h) FOUR-TIERED INTEGRATED ALLOCATION FORMULA. First, the Advisory
Committee will allocate the annual Employer nonelective contributions
in the same ratio that each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year, but not exceeding 3% of each Participant's Compensation. Solely
for purposes of this first tier allocation, a "Participant" means, in
addition to any Participant who satisfies the requirements of Section
3.06 for the Plan Year, any other Participant entitled to a top heavy
minimum allocation under Section 3.04(B) of the Plan.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the
annual Employer contributions in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year
bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph,
as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (2.7%, 2.4% or
1.3%) listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
13
<PAGE>
[ ] (i) EXCESS COMPENSATION. For purposes of Option (f), (g) or (h),
"Excess Compensation" means Compensation in excess of the following
Integration Level: (CHOOSE (1) OR (2))
[ ] (1) ______________% (not exceeding 100%) of the taxable
wage base, as determined under Section 230 of the Social
Security Act, in effect on the first day of the Plan
Year: (CHOOSE ANY COMBINATION OF (I) AND (II) OR CHOOSE
(III))
[ ] (i) Rounded to______________________________________
(but not exceeding the taxable wage base).
[ ] (ii) But not greater than $__________________________
-------------------.
[ ] (iii) Without any further adjustment or limitation.
[ ] (2) $____________________________________________________
[NOTE: NOT EXCEEDING THE TAXABLE WAGE BASE FOR THE
PLAN YEAR IN WHICH THIS ADOPTION AGREEMENT FIRST IS
EFFECTIVE.]
MAXIMUM DISPARITY TABLE. For purposes of Options (f), (g) and (h), the
applicable percentage is:
<TABLE>
<CAPTION>
Integration Level (as Applicable Percentages for Applicable Percentages
percentage of taxable wage base) Option (f) or Option (g) for Option (h)
- -------------------------------- -------------------------- --------------------------
<S> <C> <C>
100% 5.7% 2.7%
More than 80% but less than 100% 5.4% 2.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3% 1.3%
20% (or $10,000, if greater) or less 5.7% 2.7%
</TABLE>
[ ] (j) ALLOCATION OFFSET. The Advisory Committee will reduce a
Participant's allocation otherwise made under Part II of this Section
3.04 by the Participant's allocation under the following qualified
plan(s) maintained by the Employer:__________________________________.
The Advisory Committee will determine this allocation reduction:
(CHOOSE (1) OR (2))
[ ] (1) By treating the term "nonelective contribution" as
including all amounts paid or accrued by the Employer
during the Plan Year to the qualified plan(s) referenced
under this Option (j). If a Participant under this Plan
also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes
for or during a Plan Year on behalf of a particular
Participant under such other plan as an amount allocated
under this Plan to that Participant's Account for that
Plan Year. The Advisory Committee will make the
computation of allocation required under the immediately
preceding sentence before making any allocation of
nonelective contributions under this Section 3.04.
[ ] (2) In accordance with the formula provided in an
addendum to this Adoption Agreement, numbered 3.04(j).
14
<PAGE>
TOP HEAVY MINIMUM ALLOCATION - METHOD OF COMPLIANCE. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (CHOOSE (K) OR (L))
[X] (k) The Employer will make any necessary additional contribution to
the Participant's Account, as described in Section 3.04(B)(7)(a) of
the Plan.
[ ] (l) The Employer will satisfy the top heavy minimum allocation under
the following plan(s) it maintains:__________________________________.
However, the Employer will make any necessary additional contribution
to satisfy the top heavy minimum allocation for an Employee covered
only under this Plan and not under the other plan(s) designated in
this Option (l). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
RELATED EMPLOYERS. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
nonelective contributions (and forfeitures treated as nonelective contributions)
to each Participant in the Plan, in accordance with the elections in this
Adoption Agreement Section 3.04: (CHOOSE (M) OR (N))
[X] (m) Without regard to which contributing related group member employs
the Participant.
[ ] (n) Only to the Participants directly employed by the contributing
Employer. If a Participant receives Compensation from more than one
contributing Employer, the Advisory Committee will determine the
allocations under this Adoption Agreement Section 3.04 by prorating
among the participating Employers the Participant's Compensation and,
if applicable, the Participant's Integration Level under Option (i).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will allocate a
Participant forfeiture in accordance with Section 3.04: (CHOOSE (A) OR (B); (C)
AND (D) ARE OPTIONAL IN ADDITION TO (A) OR (B))
[X] (a) As an Employer nonelective contribution for the Plan Year in which
the forfeiture occurs, as if the Participant forfeiture were an
additional nonelective contribution for that Plan Year.
[ ] (b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (CHOOSE (1) OR (2))
[ ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the
forfeiture occurs.
[X] (c) To the extent attributable to matching contributions: (CHOOSE
(1), (2) OR (3))
[ ] (1) In the manner elected under Options (a) or (b).
[ ] (2) First to reduce Employer matching contributions for
the Plan Year: (CHOOSE (I) OR (II))
[ ] (i) in which the forfeiture occurs,
[ ] (ii)immediately following the Plan Year in which
the forfeiture occurs,then as elected in Options
(a) or (b).
[X] (3) As a discretionary matching contribution for the Plan
Year in which the forfeiture occurs, in lieu of the
manner elected under Options (a) or (b).
15
<PAGE>
[ ] (d) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year and then will allocate any remaining
forfeitures in the manner described in Options (a), (b) or (c),
whichever applies. If the Employer elects Option (c), the forfeitures
used to reduce Plan expenses:
(CHOOSE (1) OR (2))
[ ] (1) relate proportionately to forfeitures described in
Option (c) and to forfeitures described in Options (a) or
(b).
[ ] (2) relate first to forfeitures described in Option
----------------.
ALLOCATION OF FORFEITED EXCESS AGGREGATE CONTRIBUTIONS. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (CHOOSE (E), (F) OR (G))
[X] (e) To reduce Employer matching contributions for the Plan Year:
(CHOOSE (1) OR (2))
[ ] (1) in which the forfeiture occurs.
[X] (2) immediately following the Plan Year in which the
forfeiture occurs.
[ ] (f) As Employer discretionary matching contributions for the Plan
Year in which forfeited, except the Advisory Committee will not
allocate these forfeitures to the Highly Compensated Employees who
incurred the forfeitures.
[ ] (g) In accordance with Options (a) through (d), whichever applies,
except the Advisory Committee will not allocate these forfeitures
under Option (a) or under Option (c)(3) to the Highly Compensated
Employees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
COMPENSATION TAKEN INTO ACCOUNT. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any cash or deferred contribution, designated qualified nonelective contribution
or nonelective contribution by taking into account: (CHOOSE (A) OR (B))
[ ] (a) The Employee's Compensation for the entire Plan Year.
[X] (b) The Employee's Compensation for the portion of the Plan Year in
which the Employee actually is a Participant in the Plan.
ACCRUAL REQUIREMENTS. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if any,
for the Plan Year, a Participant must satisfy the conditions described in the
following elections: (CHOOSE (C) OR AT LEAST ONE OF (D) THROUGH (F))
[ ] (c) SAFE HARBOR RULE. If the Participant is employed by the Employer
on the last day of the Plan Year, the Participant must complete at
least one Hour of Service for that Plan Year. If the Participant is
not employed by the Employer on the last day of the Plan Year, the
Participant must complete at least 501 Hours of Service during the
Plan Year.
[X] (d) HOURS OF SERVICE CONDITION. The Participant must complete the
following minimum number of Hours of Service during the Plan Year:
(CHOOSE AT LEAST ONE OF (1) THROUGH (5))
[X] (1) 1,000 Hours of Service.
16
<PAGE>
[ ] (2) (SPECIFY, BUT THE NUMBER OF HOURS OF SERVICE MAY
NOT EXCEED 1,000)______________________________________.
[X] (3) No Hour of Service requirement if the Participant
terminates employment during the Plan Year on account of:
(CHOOSE (I), (II) OR (III))
[X] (i) Death.
[X] (ii)Disability.
[X] (iii) Attainment of Normal Retirement Age in the
current Plan Year or in a prior Plan Year.
[ ] (4)___________________________________________________
Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).
[X] (5) No Hour of Service requirement for an allocation of
the following contributions: Safe Harbor contributions.
[X] (e) EMPLOYMENT CONDITION. The Participant must be employed by the
Employer on the last day of the Plan Year, irrespective of whether he
satisfies any Hours of Service condition under Option (d), with the
following exceptions: (CHOOSE (1) OR AT LEAST ONE OF (2) THROUGH (5))
[ ] (1) No exceptions.
[X] (2) Termination of employment because of death.
[X] (3) Termination of employment because of disability.
[X] (4) Termination of employment following attainment of
Normal Retirement Age.
[X] (5) No employment condition for the following contributions:
Safe Harbor contributions.
[ ] (f) (SPECIFY OTHER CONDITIONS, IF APPLICABLE):______________________
---------------------------.
SUSPENSION OF ACCRUAL REQUIREMENTS. The suspension of accrual requirements of
Section 3.06(E) of the Plan: (CHOOSE (G), (H) OR (I))
[X] (g) Applies to the Employer's Plan.
[ ] (h) Does not apply to the Employer's Plan.
[ ] (i) Applies in modified form to the Employer's Plan, as described in
an addendum to this Adoption Agreement, numbered Section 3.06(E).
17
<PAGE>
SPECIAL ACCRUAL REQUIREMENTS FOR MATCHING CONTRIBUTIONS. If the Plan allocates
matching contributions on two or more allocation dates for a Plan Year, the
Advisory Committee, unless otherwise specified in Option (l), will apply any
Hours of Service condition by dividing the required Hours of Service on a
prorata basis to the allocation periods included in that Plan Year. Furthermore,
a Participant who satisfies the conditions described in this Adoption Agreement
Section 3.06 will receive an allocation of matching contributions (and
forfeitures treated as matching contributions) only if the Participant satisfies
the following additional condition(s): (CHOOSE (J) OR AT LEAST ONE OF (K) OR
(L))
[ ] (j) No additional conditions.
[ ] (k) The Participant is not a Highly Compensated Employee for the
Plan Year. This Option (k) applies to: (CHOOSE (1) OR (2))
[ ] (1) All matching contributions.
[ ] (2) Matching contributions described in Option(s) of
Adoption Agreement Section 3.01.
[X] (l) (SPECIFY) A Participant will forfeit any matching
contribution attributable to an excess contribuiton or to an
excess aggregate contribution, unless distributed pursuant
to Sections 14.08 or 14.09 of the Plan..
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (CHOOSE (A), (B) OR
(C))
[ ] (a) The product of:
(i) the total Excess Amount allocated as of such date (including
any amount which the Advisory Committee would have allocated but
for the limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as
of such date under this Plan divided by (2) the total amount
allocated as of such date under all qualified defined
contribution plans (determined without regard to the limitations
of Code ss.415).
[X] (b) The total Excess Amount.
[ ] (c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
APPLICATION OF LIMITATION. The limitation under Section 3.18 of the Plan:
(CHOOSE (A) OR (B))
[X] (a) Does not apply to the Employer's Plan because the Employer does
not maintain and never has maintained a defined benefit plan covering
any Participant in this Plan.
[ ] (b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce:
(CHOOSE (1) OR (2))
[ ] (1) The Participant's projected annual benefit under
the defined benefit plan under which the Participant
participates.
[ ] (2) Its contribution or allocation on behalf of the
Participant to the defined contribution plan under which
the Participant participates and then, if necessary, the
Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
18
<PAGE>
[NOTE: IF THE EMPLOYER SELECTS (A), THE REMAINING OPTIONS IN THIS SECTION 3.18
DO NOT APPLY TO THE EMPLOYER'S PLAN.]
COORDINATION WITH TOP HEAVY MINIMUM ALLOCATION. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications: (CHOOSE (C) OR AT LEAST ONE OF (D) OR (E))
[ ] (c) No modifications.
[ ] (d) For Non-Key Employees participating only in this Plan, the top
heavy minimum allocation is the minimum allocation described in
Section 3.04(B) determined by substituting % (not less than 4%) for
"3%," except: (CHOOSE (I) OR (II))
[ ] (i) No exceptions.
[ ] (ii) Plan Years in which the top heavy ratio exceeds 90%.
[ ] (e) For Non-Key Employees also participating in the defined benefit
plan, the top heavy minimum is: (CHOOSE (1) OR (2))
[ ] (1) 5% of Compensation (as determined under Section
3.04(B) or the Plan) irrespective of the contribution
rate of any Key Employee, except: (CHOOSE (I) OR (II))
[ ] (i) No exceptions.
[ ] (ii) Substituting "7 1/2%" for "5%" if the top
heavy ratio does not exceed 90%.
[ ] (2) 0%. [NOTE: THE EMPLOYER MAY NOT SELECT THIS
OPTION (2) UNLESS THE DEFINED BENEFIT PLAN SATISFIES THE
TOP HEAVY MINIMUM BENEFIT REQUIREMENTS OF CODESS.416
FOR THESE NON-KEY EMPLOYEES.]
ACTUARIAL ASSUMPTIONS FOR TOP HEAVY CALCULATION. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
- -----------------------------------------------------.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (CHOOSE (A)
OR (B); (C) IS AVAILABLE ONLY WITH (B))
[X] (a) Does not permit Participant nondeductible contributions.
[ ] (b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
[ ] (c) The following portion of the Participant's nondeductible
contributions for the Plan Year are mandatory contributions under
Option (i)(3) of Adoption Agreement Section 3.01: (CHOOSE (1) OR (2))
[ ] (1) The amount which is not less than:__________________
----------------------------------------.
19
<PAGE>
[ ] (2) The amount which is not greater than:_______________
----------------------------------------.
ALLOCATION DATES. The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates: (CHOOSE (D) OR (E))
[ ] (d) No other allocation dates.
[ ] (e) (SPECIFY)____________________________________________________.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (e), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Mandatory Contributions Account, if any, prior to his Separation
from Service: (CHOOSE (A) OR AT LEAST ONE OF (B) THROUGH (D))
[ ] (a) No distribution options prior to Separation from Service.
[ ] (b) The same distribution options applicable to the Deferral
Contributions Account prior to the Participant's Separation from
Service, as elected in Adoption Agreement Section 6.03.
[ ] (c) Until he retires, the Participant has a continuing election to
receive all or any portion of his Mandatory Contributions Account if:
(CHOOSE (1) OR AT LEAST ONE OF (2) THROUGH (4))
[ ] (1) No conditions.
[ ] (2) The mandatory contributions have accumulated for at
least Plan Years since the Plan Year for which
contributed.
[ ] (3) The Participant suspends making nondeductible
contributions for a period of months.
[ ] (4) (SPECIFY)_________________________________________.
[ ] (d) (SPECIFY)________________________________________________.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(CHOOSE (A) OR (B))
[X] (a) 65 [STATE AGE, BUT MAY NOT EXCEED AGE 65].
[ ] (b) The later of the date the Participant attains years of age or
the anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. [THE AGE SELECTED MAY
NOT EXCEED AGE 65 AND THE ANNIVERSARY SELECTED MAY NOT EXCEED THE
5TH.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (CHOOSE (A) OR CHOOSE ONE OR BOTH OF (B) AND (C))
[ ] (a) Does not apply.
20
<PAGE>
[X] (b) Applies to death.
[X] (c) Applies to disability.
5.03 VESTING SCHEDULE.
DEFERRAL CONTRIBUTIONS ACCOUNT/QUALIFIED MATCHING CONTRIBUTIONS
ACCOUNT/QUALIFIED NONELECTIVE CONTRIBUTIONS ACCOUNT/MANDATORY CONTRIBUTIONS
ACCOUNT. A Participant has a 100% Nonforfeitable interest at all times in his
Deferral Contributions Account, his Qualified Matching Contributions Account,
his Qualified Nonelective Contributions Account and in his Mandatory
Contributions Account.
REGULAR MATCHING CONTRIBUTIONS ACCOUNT/EMPLOYER CONTRIBUTIONS ACCOUNT. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(CHOOSE (A) OR (B); (C) AND (D) ARE AVAILABLE ONLY AS ADDITIONAL OPTIONS)
[ ] (a) Immediate vesting. 100% Nonforfeitable at all times. [NOTE: THE
EMPLOYER MUST ELECT OPTION (A) IF THE ELIGIBILITY CONDITIONS UNDER
ADOPTION AGREEMENT SECTION 2.01(C) REQUIRE 2 YEARS OF SERVICE OR MORE
THAN 12 MONTHS OF EMPLOYMENT.]
[X] (b) Graduated Vesting Schedules.
<TABLE>
<CAPTION>
TOP HEAVY SCHEDULE NON TOP HEAVY SCHEDULE
(MANDATORY) (OPTIONAL)
Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage
------- ---------- ------- ----------
<S> <C> <C> <C>
Less than 1...................................0% Less than 1.................................... %
- --
1..................................0% 1................................... %
- --
2.................................20% 2................................... %
-- --
3.................................40% 3................................... %
-- --
4.................................60% 4................................... %
-- --
5.................................80% 5................................... %
-- --
6 or more........................100% 6................................... %
--
7 or more .........................100%
</TABLE>
[ ] (c) Special vesting election for Regular Matching Contributions
Account. In lieu of the election under Options (a) or (b), the
Employer elects the following vesting schedule for a Participant's
Regular Matching Contributions Account: (CHOOSE (1) OR (2))
[ ] (1) 100% Nonforfeitable at all times.
[ ] (2) In accordance with the vesting schedule described
in the addendum to this Adoption Agreement, numbered
5.03(c). [NOTE: IF THE EMPLOYER ELECTS THIS OPTION
(C)(2), THE ADDENDUM MUST DESIGNATE THE APPLICABLE
VESTING SCHEDULE(S) USING THE SAME FORMAT AS USED IN
OPTION (B).]
[NOTE: UNDER OPTIONS (B) AND (C)(2), THE EMPLOYER MUST COMPLETE A TOP HEAVY
SCHEDULE WHICH SATISFIES CODESS.416. THE EMPLOYER, AT ITS OPTION, MAY COMPLETE A
NON TOP HEAVY SCHEDULE. THE NON TOP HEAVY SCHEDULE MUST SATISFY CODE
SS.411(A)(2). ALSO SEE SECTION 7.05 OF THE PLAN.]
[ ] (d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (CHOOSE (1) OR (2))
[ ] (1) Only in a Plan Year for which the Plan is top
heavy.
21
<PAGE>
[ ] (2) In the Plan Year for which the Plan first is top
heavy and then in all subsequent Plan Years. [NOTE: THE
EMPLOYER MAY NOT ELECT OPTION (D) UNLESS IT HAS COMPLETED
A NON TOP HEAVY SCHEDULE.]
MINIMUM VESTING. (CHOOSE (E) OR (F))
[X] (e) The Plan does not apply a minimum vesting rule.
[ ] (f) A Participant's Nonforfeitable Accrued Benefit will never be less
than the lesser of $_______ or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.
LIFE INSURANCE INVESTMENTS. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (CHOOSE (G) OR
(H))
[X] (g) Subject to the vesting election under Options (a), (b) or (c).
[ ] (h) 100% Nonforfeitable at all times, irrespective of the vesting election
under Options (b) or (c)(2).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in
Section 5.04(C) of the Plan: (CHOOSE (A) OR (B))
[ ] (a) Does not apply.
[X] (b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a
Deferral Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
VESTING COMPUTATION PERIOD. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods: (CHOOSE (A) OR (B))
[X] (a) Plan Years.
[ ] (b) Employment Years. An Employment Year is the 12 consecutive month
period measured from the Employee's Employment Commencement Date and
each successive 12 consecutive month period measured from each
anniversary of that Employment Commencement Date.
HOURS OF SERVICE. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (CHOOSE (C) OR (D))
[X] (c) 1,000 Hours of Service.
[ ] (d) __________ Hours of Service. [NOTE: THE HOURS OF SERVICE
REQUIREMENT MAY NOT EXCEED 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (CHOOSE (A) OR AT LEAST ONE OF (B)
THROUGH (E))
[X] (a) None other than as specified in Section 5.08(a) of the Plan.
[ ] (b) Any Year of Service before the Participant attained the age of .
Note: The age selected may not exceed age 18.]
22
<PAGE>
[ ] (c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
[ ] (d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or
the aggregate number of the Years of Service prior to the Break. This
exception applies only if the Participant is 0% vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break
in Service. Furthermore, the aggregate number of Years of Service
before a Break in Service do not include any Years of Service not
required to be taken into account under this exception by reason of
any prior Break in Service.
[ ] (e) Any Year of Service earned prior to the effective date of ERISA
if the Plan would have disregarded that Year of Service on account of
an Employee's Separation from Service under a Plan provision in effect
and adopted before January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
CODE SS.411(D)(6) PROTECTED BENEFITS. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
DISTRIBUTION DATE. A distribution date under the Plan means the first day of the
third month of the plan year. [NOTE: THE EMPLOYER MUST SPECIFY THE APPROPRIATE
DATE(S). THE SPECIFIED DISTRIBUTION DATES PRIMARILY ESTABLISH ANNUITY STARTING
DATES AND THE NOTICE AND CONSENT PERIODS PRESCRIBED BY THE PLAN. THE PLAN ALLOWS
THE TRUSTEE AN ADMINISTRATIVELY PRACTICABLE PERIOD OF TIME TO MAKE THE ACTUAL
DISTRIBUTION RELATING TO A PARTICULAR DISTRIBUTION DATE.]
NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $3,500. Subject to the limitations
of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (CHOOSE (A), (B), (C),
(D) OR (E))
[X] (a) the distribution date of the first Plan Year beginning after the
Participant's Separation from Service.
[ ] (b)___________________________________________________________________
following the Participant's Separation from Service.
[ ] (c)___________________________________________________________________
of the Plan Year after the Participant incurs __________ Break(s) in
Service (as defined in Article V).
[ ]
(d)___________________________________________________________________
following the Participant's attainment of Normal Retirement Age, but
not earlier than _____ days following his Separation from Service.
[ ] (e) (SPECIFY)______________________________________________________.
NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500. See the elections under Section
6.03.
DISABILITY. The distribution date, subject to Section 6.01(A)(3), is: (CHOOSE
(F), (G) OR (H))
[ ] (f)___________________________________________________________________
after the Participant terminates employment because of disability.
23
<PAGE>
[X] (g) The same as if the Participant had terminated employment without
disability.
[ ] (h) (SPECIFY)______________________________________________________.
HARDSHIP. (CHOOSE (I) OR (J))
[X] (i) The Plan does not permit a hardship distribution to a Participant who
has separated from Service.
[ ] (j) The Plan permits a hardship distribution to a Participant who
has separated from Service in accordance with the hardship
distribution policy stated in: (CHOOSE (1), (2) OR (3))
[ ] (1) Section 6.01(A)(4) of the Plan.
[ ] (2) Section 14.11 of the Plan.
[ ] (3) The addendum to this Adoption Agreement, numbered
Section 6.01.
DEFAULT ON A LOAN. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (CHOOSE (K), (L) OR (M))
[X] (k) Treats the default as a distributable event. The Trustee, at the
time of the default, will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable
Accrued Benefit. To the extent the loan is attributable to the
Participant's Deferral Contributions Account, Qualified Matching
Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued
Benefit unless the Participant has separated from Service or unless
the Participant has attained age 59 1/2.
[ ] (l) Does not treat the default as a distributable event. When an
otherwise distributable event first occurs pursuant to Section 6.01 or
Section 6.03 of the Plan, the Trustee will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default
(plus accrued interest) or the Plan's security interest in that
Nonforfeitable Accrued Benefit.
[ ] (m) (SPECIFY)____________________________________________________.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (CHOOSE (A) OR
AT LEAST ONE OF (B), (C), (D) AND (E))
[X] (a) No modifications.
[ ] (b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available:______________________________________.
[ ] (c) An installment distribution: (CHOOSE (1) OR AT LEAST ONE OF (2)
OR (3))
[ ] (1) Is not available under the Plan.
[ ] (2) May not exceed the lesser of years or the maximum
period permitted under Section 6.02.
[ ] (3) (SPECIFY)_________________________________________.
[ ] (d) The Plan permits the following annuity options:_________________
--------------------.
24
<PAGE>
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See
Section 6.04(E). [NOTE: THE EMPLOYER MAY SPECIFY ADDITIONAL ANNUITY
OPTIONS IN AN ADDENDUM TO THIS ADOPTION AGREEMENT, NUMBERED 6.02(D).]
[ ] (e) If the Plan invests in qualifying Employer securities, as
described in Section 10.03(F), a Participant eligible to elect
distribution under Section 6.03 may elect to receive that distribution
in Employer securities only in accordance with the provisions of the
addendum to this Adoption Agreement, numbered 6.02(e).
6.03 BENEFIT PAYMENT ELECTIONS.
PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (CHOOSE AT LEAST
ONE OF (A) THROUGH (C))
[X] (a) As of any distribution date, but not earlier than the first
distribution date of the first Plan Year beginning after the
Participant's Separation from Service.
[ ] (b) As of the following date(s): (CHOOSE AT LEAST ONE OF OPTIONS (1)
THROUGH (6))
[ ] (1) Any distribution date after the close of the Plan
Year in which the Participant attains Normal Retirement
Age.
[ ] (2) Any distribution date following his Separation from
Service with the Employer.
[ ] (3) Any distribution date in the________________________
Plan Year(s) beginning after his Separation from Service.
[ ] (4) Any distribution date in the Plan Year after the
Participant incurs ____Break(s) in Service (as defined in
Article V).
[ ] (5) Any distribution date following attainment of age
__________________and completion of at least_____________
Years of Service (as defined in Article V).
[ ] (6) (SPECIFY)___________________________________________.
[ ] (c) (SPECIFY)______________________________________________________.
The distribution events described in the election(s) made under Options
(a), (b) or (c) apply equally to all Accounts maintained for the Participant
unless otherwise specified in Option (c).
PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE - REGULAR MATCHING
CONTRIBUTIONS ACCOUNT AND EMPLOYER CONTRIBUTIONS ACCOUNT. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (CHOOSE (D) OR AT LEAST ONE OF (E)
THROUGH (H))
[X] (d) No distribution options prior to Separation from Service.
[ ] (e) Attainment of Specified Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his
Nonforfeitable interest in these Accounts after he attains: (CHOOSE
(1) OR (2))
[ ] (1) Normal Retirement Age.
[ ] (2) _____________ years of age and is at least
_____________% vested in these Accounts. [NOTE: IF THE
PERCENTAGE IS LESS THAN 100%, SEE THE SPECIAL VESTING
FORMULA IN SECTION 5.03.]
25
<PAGE>
[ ] (f) After a Participant has participated in the Plan for a period of
not less than years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or
any portion of the Accounts. [NOTE: THE NUMBER IN THE BLANK SPACE MAY
NOT BE LESS THAN 5.]
[ ] (g) Hardship. A Participant may elect a hardship distribution prior
to his Separation from Service in accordance with the hardship
distribution policy: (CHOOSE (1), (2) OR (3); (4) IS AVAILABLE ONLY AS
AN ADDITIONAL OPTION)
[ ] (1) Under Section 6.01(A)(4) of the Plan.
[ ] (2) Under Section 14.11 of the Plan.
[ ] (3) Provided in the addendum to this Adoption Agreement,
numbered Section 6.03.
[ ] (4) In no event may a Participant receive a hardship
distribution before he is at least % vested in these
Accounts. [NOTE: IF THE PERCENTAGE IN THE BLANK IS LESS
THAN 100%, SEE THE SPECIAL VESTING FORMULA IN SECTION
5.03.]
[ ] (h) (SPECIFY)_____________________________________________________.
[NOTE: THE EMPLOYER MAY USE AN ADDENDUM, NUMBERED 6.03, TO PROVIDE ADDITIONAL
LANGUAGE AUTHORIZED BY OPTIONS (B)(6), (C), (G)(3) OR (H) OF THIS ADOPTION
AGREEMENT SECTION 6.03.]
PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE - DEFERRAL CONTRIBUTIONS
ACCOUNT, QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT AND QUALIFIED NONELECTIVE
CONTRIBUTIONS ACCOUNT. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (CHOOSE (I) OR AT LEAST ONE OF (J)
THROUGH (L))
[ ] (i) No distribution options prior to Separation from Service.
[ ] (j) Until he retires, the Participant has a continuing election to
receive all or any portion of these Accounts after he attains: (CHOOSE
(1) OR (2))
[ ] (1) The later of Normal Retirement Age or age 59 1/2.
[ ] (2) Age_____________ (at least 59 1/2).
[X] (k) Hardship. A Participant, prior to his Separation from Service, may
elect a hardship distribution from his Deferral Contributions Account
in accordance with the hardship distribution policy under Section
14.11 of the Plan.
[ ] (l) (SPECIFY)___________________________________________________.
[NOTE: OPTION (L) MAY NOT PERMIT IN SERVICE DISTRIBUTIONS PRIOR TO
AGE 59 1/2 (OTHER THAN HARDSHIP) AND MAY NOT MODIFY THE HARDSHIP
POLICY DESCRIBED IN SECTION 14.11.]
SALE OF TRADE OR BUSINESS/SUBSIDIARY. If the Employer sells substantially all of
the assets (within the meaning of Code ss.409(d)(2)) used in a trade or business
or sells a subsidiary (within the meaning of Code ss.409(d)(3)), a Participant
who continues employment with the acquiring corporation is eligible for
distribution from his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account: (CHOOSE
(M) OR (N))
[ ] (m) Only as described in this Adoption Agreement Section 6.03 for
distributions prior to Separation from Service.
26
<PAGE>
[X] (n) As if he has a Separation from Service. After March 31, 1988, a
distribution authorized solely by reason of this Option (n) must
constitute a lump sum distribution, determined in a manner consistent
with Code ss.401(k)(10) and the applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (CHOOSE (A) OR (B))
[X] (a) Apply only to a Participant described in Section 6.04(E) of the
Plan (relating to the profit sharing exception to the joint and
survivor requirements).
[ ] (b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other
than a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (CHOOSE (A), (B) OR (C))
[X] (a) 0% per annum. [NOTE: THE PERCENTAGE MAY EQUAL 0%.]
[ ] (b) The 90 day Treasury bill rate in effect at the beginning of the
current valuation period.
[ ] (c) (SPECIFY)__________________________________________________.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(COMPLETE ONLY THOSE ITEMS, IF ANY, WHICH ARE APPLICABLE TO THE EMPLOYER'S
PLAN.)
[X] (a) For salary reduction contributions, the Advisory Committee will:
(CHOOSE (1), (2), (3), (4) OR (5))
[X] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in
Section 14.12.
[ ] (3) Use the weighted average method described in Section
14.12, based on a _____ weighting period.
[ ] (4) Treat as part of the relevant Account at the
beginning of the valuation period________ % of the salary
reduction contributions: (CHOOSE (I) OR (II))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time:_________
-------------------------------------.
[ ] (5) Apply the allocation method described in the
addendum to this Adoption Agreement numbered 9.11(a).
[X] (b) For matching contributions, the Advisory Committee will: (CHOOSE
(1), (2), (3) OR (4))
[X] (1) Apply Section 9.11 without modification.
27
<PAGE>
[ ] (2) Use the weighted average method described in
Section 14.12, based on a______________ weighting period.
[ ] (3) Treat as part of the relevant Account at the
beginning of the valuation period % of the matching
contributions allocated during the valuation period.
[ ] (4) Apply the allocation method described in the addendum
to this Adoption Agreement numbered 9.11(b).
[ ] (c) For Participant nondeductible contributions, the Advisory
Committee will: (CHOOSE (1), (2), (3), (4) OR (5))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in
Section 14.12.
[ ] (3) Use the weighted average method described in
Section 14.12, based on a_______________________________
weighting period.
[ ] (4) Treat as part of the relevant Account at the
beginning of the valuation period________% of the
Participant nondeductible contributions: (CHOOSE (I) OR
(II))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time:_________
------------------------------.
[ ] (5) Apply the allocation method described in the
addendum to this Adoption Agreement numbered 9.11(c).
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (CHOOSE (A) OR (B))
[ ] (a) May not exceed 10% of Plan assets.
[X] (b) May not exceed 0% of Plan assets. [NOTE: THE PERCENTAGE MAY NOT
EXCEED 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the
Trustee must value the Trust Fund on the following valuation date(s): (CHOOSE
(A) OR (B))
[X] (a) No other mandatory valuation dates.
[ ] (b) (SPECIFY)______________________________________________.
28
<PAGE>
EFFECTIVE DATE ADDENDUM
(RESTATED PLANS ONLY)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (CHOOSE WHICHEVER ELECTIONS APPLY)
[ ] (a) COMPENSATION DEFINITION. The Compensation definition of Section
1.12 (other than the $200,000 limitation) is effective for Plan Years
beginning after ___________ . [NOTE: MAY NOT BE EFFECTIVE LATER THAN
THE FIRST DAY OF THE FIRST PLAN YEAR BEGINNING AFTER THE EMPLOYER
EXECUTES THIS ADOPTION AGREEMENT TO RESTATE THE PLAN FOR THE TAX
REFORM ACT OF 1986, IF APPLICABLE.]
[ ] (b) ELIGIBILITY CONDITIONS. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning
after____________.
[ ] (c) SUSPENSION OF YEARS OF SERVICE. The suspension of Years of
Service rule elected under Adoption Agreement Section 2.03 is
effective for Plan Years beginning after_____________.
[ ] (d) CONTRIBUTION/ALLOCATION FORMULA. The contribution formula
elected under Adoption Agreement Section 3.01 and the method of
allocation elected under Adoption Agreement Section 3.04 is effective
for Plan Years beginning after______________.
[ ] (e) ACCRUAL REQUIREMENTS. The accrual requirements of Section 3.06
are effective for Plan Years beginning after_____________.
[ ] (f) EMPLOYMENT CONDITION. The employment condition of Section 3.06
is effective for Plan Years beginning after______________.
[ ] (g) ELIMINATION OF NET PROFITS. The requirement for the Employer not
to have net profits to contribute to this Plan is effective for Plan
Years beginning after ________ . [NOTE: THE DATE SPECIFIED MAY NOT BE
EARLIER THAN DECEMBER 31, 1985.]
[ ] (h) VESTING SCHEDULE. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after
------------.
[ ] (i) ALLOCATION OF EARNINGS. The special allocation provisions
elected under Adoption Agreement Section 9.11 are effective for Plan
Years beginning after ____________.
[ ] (j) (SPECIFY)____________________________________________________.
For Plan Years prior to the special Effective Date, the terms of the
Plan prior to its restatement under this Adoption Agreement will control for
purposes of the designated provisions. A special Effective Date may not result
in the delay of a Plan provision beyond the permissible Effective Date under any
applicable law requirements.
29
<PAGE>
EXECUTION PAGE
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Prototype Plan and Trust. The Employer hereby agrees to the provisions of this
Plan and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this__________________
day of___________________________________________ ,_____________.
Name and EIN of Employer: American Community Bank
-----------------------
Signed:__________________________________________
Dan R. Ellis
Name(s) of Trustee: Dan R. Ellis and Sherrie C. Lemmond
------------------------------------
Signed:__________________________________________________
--------------------------------------------------
Name of Custodian:_______________________________________________________
Signed:__________________________________________________
[NOTE: A TRUSTEE IS MANDATORY, BUT A CUSTODIAN IS OPTIONAL. SEE SECTION 10.03 OF
THE PLAN.]
PLAN NUMBER. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: 001.
USE OF ADOPTION AGREEMENT. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Regional Prototype Plan Sponsor's recordkeeping purposes and does not
necessarily correspond to the plan number the Employer designated in the prior
paragraph.
RELIANCE ON NOTIFICATION LETTER. The Employer may not rely on the Regional
Prototype Plan Sponsor's notification letter covering this Adoption Agreement.
For reliance on the Plan's qualification, the Employer must obtain a
determination letter from the applicable IRS Key District office.
30
<PAGE>
PARTICIPATION AGREEMENT
FOR PARTICIPATION BY RELATED GROUP MEMBERS (PLAN SECTION 1.30)
The undersigned Employer, by executing this Participation Agreement,
elects to become a Participating Employer in the Plan identified in Section 1.03
of the accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Prototype
Plan as made by________________________________________________________________,
the Signatory Employer to the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in
the designated Plan is:___________________.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ ] (b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified
as__________________________, and having an original effective date
of___________________________.
Dated this___________________________ day of ______________________,
--------------------.
Name of Participating Employer:__________
-----------------------------------------
Signed:__________________________
Participating Employer's EIN:____________
ACCEPTANCE BY THE SIGNATORY EMPLOYER TO THE EXECUTION PAGE OF THE ADOPTION
AGREEMENT AND BY THE TRUSTEE.
Name of Signatory Employer:______________
----------------------
Accepted:_________________________
[Date] Signed:______________________________
Name(s) of Trustee:______________________
-----------------------------------------
----------
Accepted:__________________________
[Date] Signed:_______________________________
[NOTE: EACH PARTICIPATING EMPLOYER MUST EXECUTE A SEPARATE PARTICIPATION
AGREEMENT. SEE THE EXECUTION PAGE OF THE ADOPTION AGREEMENT FOR IMPORTANT
PROTOTYPE PLAN INFORMATION.]
31
EXHIBIT 24.1
POWER OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of American Community
Bancshares, Inc., and the several undersigned Officers and Directors thereof
whose signatures appear below hereby makes, constitutes and appoints Randy P.
Helton and Dan R. Ellis, or either of them, its and his or her true and lawful
attorneys, with full power of substitution to execute, deliver and file in its
or his or her name and on its or his or her behalf, and in each of the
undersigned Officer's and Director's capacity or capacities as shown below, (a)
Registration Statement on Form S-4 (or other appropriate form) with respect to
the registration under the Securities Act of 1933, as amended, of the shares of
common stock of American Community Bancshares, Inc., $1.00 par value per share,
to be issued in connection with the exchange of shares pursuant to the Agreement
and Plan of Reorganization and Share Exchange between American Community Bank
and American Community Bancshares, Inc. dated February 16, 2000, all documents
in support thereof or supplemental thereto and any and all amendments, including
any and all post-effective amendments, to the foregoing (hereinafter called the
"Registration Statement"), and (b) such registration statement, petitions,
applications, consents to service of process or other instruments, any and all
documents in support thereof or supplemental thereto, and any and all amendments
or supplements to the foregoing, as may be necessary or advisable to qualify or
register the securities covered by said Registration Statement; and each of
American Community Bancshares, Inc. and said Officers and Directors hereby
grants to said attorneys, or any of them, full power and authority to do and
perform each and every act and thing whatsoever as said attorneys may deem
necessary or advisable to carry out fully the intent of this power of attorney
to the same extent and with the same effect as American Community Bancshares,
Inc. might or could do, and as each of said Officers and Directors might or
could do personally in his or her capacity or capacities as aforesaid, and each
of American Community Bancshares, Inc. and said Officers and Directors hereby
ratifies and confirms all acts and things which said attorneys might do or cause
to be done by virtue of this power of attorney and its or his or her signatures
as the same may be signed by said attorneys to any or all of the following
(and/or any and all amendments and supplements to any or all thereof); such
Registration Statement filed under the Securities Act of 1933, as amended, and
all such registration statement, petitions, applications, consents to service of
process and other instruments, and all documents in support thereof or
supplemental thereto, filed under such securities laws, regulations and
requirements as may be applicable.
IN WITNESS WHEREOF, American Community Bancshares, Inc. has caused
this power of attorney to be signed on its behalf, and each of the undersigned
Officers and Directors in the capacity or capacities noted has hereunto set his
or her hand on the date indicated below.
AMERICAN COMMUNITY BANCSHARES, INC.
(Registrant)
By:
--------------------------------------
Randy P. Helton, President and CEO
Dated: February 16, 2000
<PAGE>
SIGNATURE CAPACITY
- --------- --------
____________________________________ President and Chief Executive
Randy P. Helton Officer
____________________________________ Executive Vice President, Secretary, and
Dan R. Ellis, Jr. Treasurer and Chief Financial Officer
____________________________________ Director
Thomas J. Hall
____________________________________ Director
Larry S. Helms
____________________________________ Chairman and Director
Kenneth W. Long
____________________________________ Director
L. Steven Phillips
____________________________________ Director
David D. Whitley
____________________________________ Director
Gregory N. Wylie
EXHIBIT 99.1
PROXY
AMERICAN COMMUNITY BANK
2593 WEST ROOSEVELT BOULEVARD
MONROE, NORTH CAROLINA 28110-5035
APPOINTMENT OF PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints William R, Adcock, Richard M. Cochrane,
and Farrell Richardson, or any of them, as attorneys and proxies, with full
power of substitution, to vote all shares of the common stock of American
Community Bank (the "Bank") held of record by the undersigned on March 10, 2000,
at the Annual Meeting of shareholders of the Bank to be held at the Rolling
Hills Country Club, Monroe, North Carolina, at 10:00 a.m. on April 26, 2000,
and at any adjournments thereof. The undersigned hereby directs that the shares
represented by this appointment of proxy be voted as follows on the proposals
listed below:
1. REORGANIZATION INTO BANK HOLDING COMPANY: To approve the Agreement and Plan
of Reorganization and Share Exchange between American Community Bank and
American Community Bancshares, Inc. and the transactions contemplated
thereby including the holding company reorganization of American Community
Bank by which its shareholders will exchange their shares of common stock
for shares of the common stock of American Community Bancshares, Inc. on a
one-for-one basis.
|__| FOR |__| AGAINST |__| ABSTAIN
2. ELECTION OF DIRECTORS: Proposal to elect three directors of the Bank for
three-year terms as indicated below or until their successors are duly
elected and qualified.
|__| FOR all nominees listed below |__| WITHHOLD AUTHORITY to vote
(except as indicated otherwise for all nominees listed below
below)
Nominees:
Larry S. Helms
Zebulon Morris, Jr.
Carlton Tyson
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS: Proposal to ratify the appointment
of Dixon Odom PLLC as the Bank's independent public accountants for 2000.
|__| FOR |__| AGAINST |__| ABSTAIN
4. OTHER BUSINESS: On such other matters as may properly come before the
Annual Meeting, the proxies are authorized to vote the shares represented
by this appointment of proxy in accordance with their best judgement.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY
ON THE REVERSE SIDE AND RETURN TO THE BANK OF ASHEVILLE
<PAGE>
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS
DIRECTED ABOVE. IN THE ABSENCE OF ANY DIRECTION, SUCH SHARES WILL BE VOTED FOR
THE ELECTION OF EACH OF THE NOMINEES LISTED IN PROPOSAL 2 BY CASTING AN EQUAL
NUMBER OF VOTES FOR EACH SUCH NOMINEE, AND FOR PROPOSALS 1 AND 3. IF, AT OR
BEFORE THE TIME OF THE MEETING, ANY NOMINEE LISTED IN PROPOSAL 2 HAS BECOME
UNAVAILABLE FOR ANY REASON, THE PROXIES ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE
NOMINEE. THIS APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF THE SHARES TO
WHICH IT RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY
OF THE BANK A WRITTEN INSTRUMENT REVOKING IT OR DULY EXECUTED APPOINTMENT OF
PROXY BEARING A LATER DATE OR BY ATTENDING THE ANNUAL MEETING AND ANNOUNCING HIS
OR HER INTENTION TO VOTE IN PERSON.
Dated: ____________________, 2000
- - - - - - - - - - - - - - - - - - - - - - -
Signature
- - - - - - - - - - - - - - - - - - - - - - -
Signature if held jointly
Instruction: Please sign above exactly as your name
appears on this appointment of proxy. Joint
owners of shares should both sign.
Fiduciaries or other persons signing in a
representative capacity should indicate the
capacity in which they are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT, PLEASE SEND IN YOUR APPOINTMENT
OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. EVEN IF YOU SEND
IN YOU APPOINTMENT OF PROXY, YOU WILL BE ABLE TO VOTE IN PERSON AT THE MEETING
IF YOU SO DESIRE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> OTHER YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> NOV-16-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 DEC-31-1999
<CASH> 303 1,809
<INT-BEARING-DEPOSITS> 14,684 8,468
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 4,780 59,306
<ALLOWANCE> 71 813
<TOTAL-ASSETS> 20,353 71,894
<DEPOSITS> 7,678 54,987
<SHORT-TERM> 0 5,000
<LIABILITIES-OTHER> 222 354
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 6,217 6,217
<OTHER-SE> 5,336 6,236
<TOTAL-LIABILITIES-AND-EQUITY> 20,353 71,894
<INTEREST-LOAN> 43 3,262
<INTEREST-INVEST> 94 395
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 137 3,657
<INTEREST-DEPOSIT> 22 1,398
<INTEREST-EXPENSE> 22 1,424
<INTEREST-INCOME-NET> 115 2,233
<LOAN-LOSSES> 71 742
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 174 2,884
<INCOME-PRETAX> (129) (900)
<INCOME-PRE-EXTRAORDINARY> (129) (900)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (129) (900)
<EPS-BASIC> (.09) (.60)
<EPS-DILUTED> (.09) (.60)
<YIELD-ACTUAL> 6.23 8.65
<LOANS-NON> 0 0
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 20
<ALLOWANCE-OPEN> 0 71
<CHARGE-OFFS> 0 0
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 71 813
<ALLOWANCE-DOMESTIC> 71 813
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
