<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ABC BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
ABC BANCORP
310 FIRST STREET, S.E.
MOULTRIE, GEORGIA 31768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1998
To the Shareholders of ABC Bancorp:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of ABC Bancorp (the "Company") will be held at Sunset Country Club,
Thomasville Highway, Moultrie, Georgia 31768, on Tuesday, May 12, 1998,
commencing at 4:15 p.m., local time, for the following purposes:
(1) To elect two Class I directors for a three-year term of office;
(2) To consider and vote upon (i) an amendment to the Bylaws to provide
that any vacancy on the Board of Directors shall be filled by the directors
remaining in office; (ii) an amendment to the Articles of Incorporation to
provide that a majority of the directors would constitute a quorum of the
Board of Directors; (iii) amendments to the Company's Articles of
Incorporation and Bylaws to provide that a director may be removed only for
cause; (iv) an amendment to the Company's Bylaws to provide that advance
notice of shareholder nominations to the Board of Directors must be given
to the Company and certain information provided in connection therewith;
and (v) amendments to the Company's Articles of Incorporation and Bylaws to
require the affirmative vote of at least 75% of the shareholders entitled
to vote to alter, amend or repeal the provisions of the Articles of
Incorporation and Bylaws with respect to the foregoing matters and the
provisions of the Bylaws with respect to the classification and staggered
terms of the directors, or to adopt any provision of the Articles of
Incorporation or the Bylaws inconsistent with any of the foregoing;
(3) To ratify the appointment of Mauldin & Jenkins, Certified Public
Accountants and Consultants, LLC, as the Company's independent accountants
for the fiscal year ending December 31, 1997; and
(4) To transact any other business that may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The close of business on March 6, 1998 has been fixed as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournment or postponement thereof. Only shareholders
of record at the close of business on the record date are entitled to notice
of, and to vote at, the Annual Meeting.
Shareholders may receive more than one proxy because of shares registered in
different names or addresses. Each such proxy should be marked, dated, signed
and returned. Please check to be certain of the manner in which your shares
are registered--whether individually, as joint tenants, or in a representative
capacity--and sign the related proxy accordingly.
A complete list of shareholders entitled to vote at the Annual Meeting will
be available for examination by any shareholder, for any purpose germane to
the Annual Meeting, during normal business hours, for a period of at least ten
days prior to the Annual Meeting at the Company's corporate offices located at
the address set forth above.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to do so, please mark, date and sign the enclosed proxy and mail it
promptly in the enclosed postage-prepaid envelope. Returning your proxy does
not deprive you of your right to attend the Annual Meeting and to vote your
shares in person.
By Order of the Board of Directors
/s/ Williard Lasseter
Willard Lasseter, Chairman
Moultrie, Georgia
March 20, 1998
<PAGE>
ABC BANCORP
310 FIRST STREET, S.E.
MOULTRIE, GEORGIA 31768
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy (which were first
sent or given to shareholders on or about March 16, 1998) are furnished to
shareholders of ABC Bancorp (the "Company") in connection with the
solicitation by and on behalf of the Board of Directors of the Company (the
"Board") of proxies for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held at Sunset Country Club, Thomasville Highway, Moultrie,
Georgia, on Tuesday, May 12, 1998, at 4:15 p.m., local time, and any
adjournment or postponement thereof.
A proxy may be revoked at any time before the shares represented by it are
voted at the Annual Meeting by delivering to the Secretary of the Company
either a written revocation or a duly executed proxy bearing a later date, or
by voting in person at the Annual Meeting. All shares represented by a
properly executed, unrevoked proxy will be voted on all matters presented at
the Annual Meeting on which the shares are entitled to vote, unless the
shareholder attends the Annual Meeting and votes in person. Proxies solicited
will be voted in accordance with the instructions given on the enclosed form
of proxy. UNLESS AUTHORITY IS WITHHELD IN THE MANNER INDICATED ON THE ENCLOSED
FORM OF PROXY, IT IS INTENDED THAT PROXIES IN THE ACCOMPANYING FORM WILL BE
VOTED FOR THE ELECTION AS A DIRECTOR OF EACH OF THE NOMINEES NAMED HEREIN.
Only shareholders of record at the close of business on March 6, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, the Company had 7,524,718 shares of common stock (the
"Common Stock") outstanding and entitled to vote. All holders of Common Stock
are entitled to cast one vote per share held as of the Record Date.
The cost of preparing and mailing proxy materials will be borne by the
Company. In addition to solicitation by mail, solicitations may be made by
officers and other employees of the Company in person or by telephone,
telecopier or telegraph. Brokerage houses, custodians, nominees and
fiduciaries will be reimbursed for the expenses of sending proxy materials to
the beneficial owners of Common Stock held of record on behalf of such
persons.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Principal Shareholders. There are currently no persons who are known to the
Board to own beneficially five percent or more of the outstanding Common
Stock.
Security Ownership of Management and Others. The following table sets forth
certain information with respect to the beneficial ownership of the Common
Stock, as of the Record Date, by directors, nominees for election as
directors, executive officers named in the Summary Compensation Table set
forth under the caption "Executive Compensation and Other Information," and by
all directors and executive officers as a group.
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
POSITION WITH THE AS OF MARCH 6, PERCENT
NAME OF BENEFICIAL OWNER COMPANY 1998(1) OF CLASS
- ------------------------ ----------------- ------------------ --------
<S> <C> <C> <C>
Johnny W. Floyd (2)..... Director 46,069.1567 *
J. Raymond Fulp......... Director 29,589.7350 *
Kenneth J. Hunnicutt Chief Executive Officer, 136,469.3088 1.8
(3)..................... President and Director
Daniel B. Jeter......... Director 2,350.3493 *
Willard Lasseter (4).... Director 79,166.0000 1.1
Bobby B. Lindsey (5).... Director 66,004.0000 *
Hal L. Lynch (6)........ Director 174,416.3088 2.3
Eugene M. Vereen, Jr. Director 81,646.0000 1.1
(7).....................
Doyle Weltzbarker (8)... Director 74,000.3088 *
Henry C. Wortman (9).... Director 32,462.5553 *
All directors and executive officers as a group
(16 persons, including those listed above)....... 727,251.3791 9.7
</TABLE>
- --------
*Less than 1%.
(1) Except as otherwise specified, each individual has sole and direct
beneficial ownership interest and voting rights with respect to all shares
of Common Stock indicated.
(2) Includes 7,433 shares owned by Mr. Floyd's wife and 22,282 shares owned by
his two children, with whom Mr. Floyd shares investment and voting power
pursuant to an oral agreement.
(3) Includes options to acquire 64,583 shares (See "EXECUTIVE COMPENSATION AND
OTHER INFORMATION"); 4,966 shares owned by a partnership in which Mr.
Hunnicutt is a partner; and 2,250 shares owned by a partnership of which
Mr. Hunnicutt's wife is a partner.
(4) Includes 36,666 shares owned by Lasseter Tractor Company, a corporation of
which Mr. Lasseter is President.
(5) Includes 12,476 shares owned by Mr. Lindsey's three children, with whom
Mr. Lindsey shares investment and voting power; 957 shares owned jointly
by Mr. Lindsey and his son; and 832 shares owned by Mr. Lindsey's wife,
with whom he shares investment and voting power. Also includes 10,041
shares owned by Dixie Oil Co., 7,541 shares owned by Dixie Gas & Oil Co.,
7,541 shares owned by Dixie Petroleum Co.; 10,041 shares owned by L & L
Oil Co., Inc. and 9,875 shares owned by L.D. Advertising Co., with respect
to all of which Mr. Lindsey is President.
(6) Includes 162,496 shares owned by Mr. Lynch's family members, with whom Mr.
Lynch shares voting and investment power.
(7) Includes 2,300 shares owned by M.I.A., Co., a corporation of which Mr.
Vereen is President; 4,000 shares owned by his wife.
(8) Includes 20,355 shares held by the West-End Milling Company ESOP Trust, of
which Mr. Weltzbarker serves as trustee and as to which Mr. Weltzbarker
disclaims beneficial ownership.
(9) Includes 3,367 shares owned by Mr. Wortman's wife, with whom Mr. Wortman
shares investment and voting power; and 7,976.789 shares held as co-
trustee with Mr. Wortman's wife for the benefit of their two children; and
1,256.8892 shares owned jointly by Mr. Wortman and spouse.
2
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
The Company has a classified Board consisting of three Class I directors
(Messrs. Floyd and Jeter), four Class II directors (Messrs. Fulp, Lindsey,
Lynch and Wortman), and four Class III directors (Messrs. Vereen, Hunnicutt,
Lasseter and Weltzbarker). The Class I, Class II and Class III directors
currently serve until the annual meetings of shareholders to be held in 1998,
1999 and 2000, respectively, and after the Annual Meeting, until 1999, 2000
and 2001, respectively, and until their respective successors are elected and
qualified. At each annual meeting of shareholders, directors are elected for a
full term of three years to succeed those whose terms are expiring. Vacancies
on the Board and newly created directorships can generally be filled by vote
of a majority of the directors then in office. Executive officers are elected
annually by the Board and serve at the discretion of the Board.
At the Annual Meeting, shareholders are being asked to elect two directors
to serve as Class I directors until the 2001 annual meeting of shareholders
and until their successors are duly elected and qualified.
In order to be elected, a nominee for director must receive an affirmative
vote of a majority of the shares of Common Stock present or represented at the
Annual Meeting and entitled to vote.
Unless otherwise directed, the persons named in the enclosed form of proxy
intend to vote "FOR" the election of the nominees listed below as directors
for the ensuing term and until their successors are elected and qualified. In
the event any such nominee for any reason should not be available as a
candidate for director, votes will be cast pursuant to authority granted by
the enclosed proxy for such other candidate or candidates as may be nominated
by management. The Board knows of no reason to anticipate that the nominees
will not be candidates. Except as set forth below, each of the nominees has
been engaged in his principal occupation during the past five years. There is
no family relationship between any of the directors and executive officers of
the Company.
The Board, the Company and its officers, directors and employees wish to
extend their condolences to the family of John M. Mobley, who has been a
director of the Company since 1997 and who was a nominee for election as a
Class I director. Mr. Mobley passed away on February 24, 1998. The Board has
not appointed a replacement for Mr. Mobley, and his seat on the Board is
currently vacant.
The following sets forth certain information as of March 6, 1998, concerning
the nominees for election as directors of the Company and the other directors
whose terms of office will continue after the Annual Meeting.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS WITH TERMS EXPIRING IN 2001
Johnny W. Floyd (age 59) has been a director of the Company since 1995. Mr.
Floyd currently serves as the Chairman of the Board of Directors of Central
Bank and Trust, of which he has been a director since 1996. Mr. Floyd is the
President of Floyd Timber Company, a forestry products company, and the
President of Cordele Realty.
Daniel B. Jeter (age 46) has been a director since 1997. Mr. Jeter is the
Vice-President and a major shareholder of Standard Discount Corporation
("Standard"), a consumer finance company. Mr. Jeter joined the family-owned
business in March 1979, and is an officer and director of each of Standard's
several affiliates, Colquitt Loan Company, Globe Loan Company of Hazelhurst,
Globe Loan Company of Tifton, Globe Loan Company of Moultrie, Peach Finance
Company, Personal Finance Service of Statesboro, Globe Financial Services of
Thomasville, Classic Insurance Company, Ltd, and Cavalier Insurance Company
(where he serves as President). In addition, Mr. Jeter serves as a director of
the Georgia Industrial Loan Association and of the Georgia Financial Services
Association.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL
I.
3
<PAGE>
BOARD OF DIRECTORS
DIRECTORS
J. Raymond Fulp (age 53) became a director of the Company in 1989 and has
been a director of Citizens Security Bank-Tifton since 1987. Mr. Fulp has been
a pharmacist since 1969. Since 1974, Mr. Fulp has been co-owner of Midtown
Pharmacy in Tifton. Mr. Fulp's term expires in the year 1999.
Bobby B. Lindsey (age 68) was appointed to the Board in 1994. Mr. Lindsey is
also Chairman of the Board of Directors of Citizens Security Bank (formerly
known as The Citizens Bank of Tifton) ("Citizens Security Bank") since 1986.
Mr. Lindsey serves as President of Dixie Oil Company, Gasmarts, Inc., Dixie
Gas & Oil Company, Dixie Petroleum Company, Dixie Oil Distributing Company,
Dixie Oil, Florida, L & L Oil Company, Dixie Petroleum Company of Alabama, Red
Diamond Oil Company, Best Petroleum Company, Dixie Refineries, Inc., each of
which is engaged in the petroleum business, Lenox Enterprises, Inc., an oil
retail company and L.D. Advertising Company, an advertising agency, all since
prior to 1978. Mr. Lindsey also serves on the Board of Directors of the
Georgia Oilman's Association. Mr. Lindsey's term expires in the year 1999.
Hal L. Lynch (age 68) has been a director since 1992. Mr. Lynch is President
of Lynch Management Company, which manages automobile dealerships in Florida
and Georgia, Daytona Lincoln-Mercury, Thomasville Sales and North Florida
Lincoln-Mercury. Mr. Lynch has been in the automobile business since 1953. Mr.
Lynch's term expires in the year 1999.
Henry C. Wortman (age 59) has been a director since 1990. Mr. Wortman has
also been Vice Chairman and a director of Heritage Community Bank (formerly
known as The Bank of Quitman)("Heritage Community Bank") since 1988. Mr.
Wortman has been a principal partner of Jackson & Wortman, a dairy, pecans,
timber and general farming operation based in Quitman, Georgia, since 1965.
Mr. Wortman is also the Chairman of the Board of Directors of the Georgia
Agricultural Commodity Commission, a member of the Board of Directors of the
Georgia-Florida Fertilizer Company and the Treasurer of Georgia Milk
Producers. Mr. Wortman's term expires in the year 1999.
Eugene M. Vereen, Jr. (age 77) has been a director since 1981. Mr. Vereen
was the Chairman of the Board from 1981 to April 19, 1995 and Chief Executive
Officer from 1981 to 1994. From 1971 to present, Mr. Vereen has also served as
a director of American Banking Company. From the time of their acquisition to
1995, Mr. Vereen also served as a director of Heritage Community Bank, Bank of
Thomas County, Citizens Security Bank and Cairo Banking Company, each of which
is a wholly-owned subsidiary of the Company. Mr. Vereen is President of
M.I.A., Co., a real estate holding and investment company, and has previously
served as Senior President of American Banking Company. He now serves as
Chairman Emeritus of the Company and President Emeritus of American Banking
Company. From 1951 until its sale in 1983, Mr. Vereen served as Chairman of
the Board of Moultrie Insurance Agency. Mr. Vereen's term expires in the year
2000.
Kenneth J. Hunnicutt (age 61) has been a director since 1981. Mr. Hunnicutt
has also been Chief Executive Officer of the Company since 1994 and President
since 1981. Mr. Hunnicutt served as Senior President of American Banking
Company from 1989 to 1991 and as President of American Banking Company from
1975 to 1989 and currently serves as a director of American Banking Company,
Heritage Community Bank, Bank of Thomas County, Citizens Security Bank-Tifton,
Citizens Security Bank-Douglas, Citizens Security Bank-Ocilla, Cairo Banking
Company, Southland Bank, Central Bank & Trust, First National Bank of South
Georgia and Merchants & Farmers Bank, each of which is a wholly-owned
subsidiary of the Company. Mr. Hunnicutt's term expires in the year 2000.
Willard Lasseter (age 68) has been a director of the Company since 1982 and
Chairman of the Board of Directors since April 19, 1995. Mr. Lasseter served
as Vice Chairman of the Board from 1992 to 1995, Chairman of the Board of
Directors of American Banking Company from 1990 to 1997 and a director of
American Banking Company since 1971. Mr. Lasseter also served as Vice Chairman
of the Board of Directors of American Banking Company from 1984 to 1990. Since
1959, Mr. Lasseter has owned and operated Lasseter Tractor Company, a
4
<PAGE>
John Deere dealership. Mr. Lasseter is also the President of Chevron Food Mart
of Moultrie, Inc. Mr. Lasseter's term expires in the year 2000.
Doyle Weltzbarker (age 63) has been a director since 1985, Vice Chairman of
the Board of Directors since 1995 and a director of Heritage Community Bank
since 1975. From 1982 until 1987, Mr. Weltzbarker served as Vice Chairman, and
currently serves as Chairman, of the Board of Directors of Heritage Community
Bank. Since 1985, Mr. Weltzbarker has served as a director and President of
West End Milling Company, a feed manufacturing business, and Brooksco Dairy,
Inc. and Dixie Hog Corporation, both of which are livestock and farming
businesses. Mr. Weltzbarker is also a member of Superior Swine International,
LLC and LEHY Pork, LLC, which are livestock breeding and production
businesses. Mr. Weltzbarker also serves as a director of Georgia-Florida
Fertilizer Co. and the Georgia Agribusiness Council and serves on the advisory
board of Norfolk Southern Corporation, which owns the Norfolk Southern
Railroad. Mr. Weltzbarker's term expires in the year 2000.
The backgrounds of the directors with terms expiring in 1998 are summarized
above.
COMMITTEES OF THE BOARD
The Company's Executive Committee is comprised of six directors, a majority
of whom are neither officers nor employees of the Company. The Executive
Committee is authorized to exercise all of the powers of the Board, except the
power to declare dividends, elect directors, amend the bylaws, issue stock or
recommend any action to shareholders. The Executive Committee, among other
things, considers and makes recommendations to the Board regarding the size
and composition of the Board, recommends and nominates candidates to fill
Board vacancies that occur and recommends to the Board the director nominees
for whom the Board will solicit proxies. The current members of the Executive
Committee are Messrs. Vereen, Hunnicutt, Lasseter, Lindsey, Lynch and
Weltzbarker.
The Company's Executive Loan Committee is comprised of five members. Four of
the Executive Loan Committee members are directors of the Company, and the
remaining member is the Company's Senior Credit Officer. The Executive Loan
Committee is responsible for reviewing and approving all of the Company's and
the Subsidiary Banks' loan and credit requests with principal amounts between
$1.5 million and $3.0 million. The current members of the Executive Loan
Committee are Messrs. Hunnicutt, Lasseter, Weltzbarker, Wortman and J. Michael
Allen.
The members of the Compensation Committee of the Board (the "Compensation
Committee"), established in 1992, are Messrs. Vereen, Hunnicutt, Lasseter and
Weltzbarker. Mr. Mobley also served as a member of the Compensation Committee
until February 1998. The duties of the Compensation Committee are generally to
establish the salaries, bonuses, management perquisites and other compensation
of the officers of the Company and each of the Company's nine subsidiary banks
(the "Banks"). The Compensation Committee also has the authority to administer
and interpret the ABC Bancorp Omnibus Stock Ownership and Long Term Incentive
Plan and the 1997 Incentive Stock Option Plan for Kenneth J. Hunnicutt,
including the selection of eligible participants in such plans and the type,
amount, duration and acceleration and vesting of individual grants and awards
made thereunder.
The Company also has an Audit Committee consisting of seven members. One of
the Audit Committee members is a director of the Company, and each of the
remaining six members is a Bank director. Mr. Lasseter currently represents
the Company on this committee. The other members of the Audit Committee are
Grady Williams (Chairman), Raymond Fulp, Henry Wortman, John Briggs, Lynn
Jones and Maurice Chastain. The Audit Committee meets as required to review
the audits performed by the Federal Deposit Insurance Corporation, the
Department of Banking and Finance of the State of Georgia, the Company's
independent accountants and the internal auditors of the Company and the
Banks.
In 1997, the Board held 12 meetings. The Executive Committee held 12
meetings, the Executive Loan Committee held 17 meetings, the Compensation
Committee held four meetings and the Audit Committee held
5
<PAGE>
two meetings. Each director attended at least 75% of all meetings of the full
Board and of those Committees on which he served in 1997.
The Company does not have a standing nominating committee.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table and notes present the cash and non-cash compensation
paid or accrued during each of the last three fiscal years to the Company's
Chief Executive Officer and to each of its other executive officers whose
total cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- --------------------------------
AWARDS PAYOUTS ALL OTHER
------------------------ ------- ANNUAL
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED LTIP COMPEN-
POSITION YEAR SALARY(1) BONUS COMPENSATION STOCK AWARD OPTIONS/SARS PAYOUTS SATION
------------------ ---- --------- ----- ------------ ----------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth J. Hunnicutt,
Chief Executive Officer, 1997 $253,703(2) $88,469 -- -- -- -- $55,102(3)
President and Director 1996 $221,250(2) $83,944 -- -- -- -- $53,602(3)
1995 $176,860(2) $42,771 -- -- -- -- $54,138(3)
</TABLE>
- --------
(1) Includes directors' fees.
(2) Contributions to the investment account under the Deferred Compensation
Agreement are disclosed as "All Other Annual Compensation." See footnote
(3), below.
(3) For each of 1995, 1996 and 1997, the Company made contributions for the
benefit of Mr. Hunnicutt to a Simplified Employee Pension Plan in the
amount of $22,500, $22,500 and $24,000 respectively; to the investment
account under the Deferred Compensation Agreement in the amount of $15,300
each year; and to the investment account under the Salary Continuation
Agreement in the amount of $16,338, $15,802 and $15,802, respectively.
Amounts contributed under the Salary Continuation Agreement were
inadvertently omitted from the Company's Proxy Statements prior to the
Proxy Statement for the 1997 Annual Meeting of Shareholders.
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1997
The following table sets forth information with respect to options granted
to Kenneth J. Hunnicutt under the ABC Bancorp 1997 Incentive Stock Option Plan
for Kenneth J. Hunnicutt during 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
------------------------------------------ -------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE
OPTIONS EMPLOYEES (PER EXPIRATION
NAME GRANTED(1) IN 1997 SHARE) DATE 5% 10%
- ---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Hunnicutt.... 45,000(3) 100% $17.00 01/21/07 $481,104 $1,219,213
</TABLE>
OPTION GRANTS DURING 1997
- --------
(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant. Such options may not be
exercised later than 10 years after the date of grant.
(2) These amounts represent certain assumed rates of appreciation as set forth
by the rules of the Securities and Exchange Commission. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock and overall market conditions. The amounts reflected in
this table may not necessarily be achieved.
(3) These options vested immediately on the date of grant, but are exercisable
in the following manner: (i) options to purchase 5,300 shares were
exercisable on the date of grant; (ii) options to purchase an additional
5,800 shares were exercisable on January 1, 1998; (iii) options to
purchase an additional 5,800 shares
6
<PAGE>
become exercisable each year thereafter for the next five years; and (iv)
options to purchase 4,900 shares become exercisable on January 1, 2004.
STOCK OPTION EXERCISES DURING 1997 AND STOCK OPTION YEAR-END VALUES
The following table sets forth information with respect to options exercised
by the named executive officer in the last fiscal year and the number and
value of unexercised options and SARs held as of the end of the last fiscal
year for the executive officer named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES OPTIONS/ SARS AT FY-END THE-MONEY OPTIONS/SARS AT
ACQUIRED VALUE (#)(4) FY-END ($) (2)
ON REALIZED ------------------------- -------------------------
NAME EXERCISE (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Hunnicutt.... -- $-- 1,667 6,667(3) 21,671 $86,671(3)
</TABLE>
- --------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) The fiscal-year end values are calculated based upon the last known sales
price for the Common Stock on December 31, 1997.
(3) This option was granted pursuant to the Company's 1997 Incentive Stock
Option Plan for Kenneth J. Hunnicutt at an exercise price of $6.75 per
share. The option became exercisable in 1997 and vests at a rate of 1,667
shares per year.
(4) All share amounts have been adjusted to reflect the Company's 5-for-4
stock split effected in the form of a 25% stock dividend on shares
outstanding as of April 15, 1997.
DEFERRED COMPENSATION AGREEMENT
The Company has entered into a Deferred Compensation Agreement with Mr.
Hunnicutt. Pursuant to the Deferred Compensation Agreement, which is fully
funded by insurance, the Company has agreed to pay Mr. Hunnicutt deferred
compensation in the event of his retirement, disability or death or
termination of his employment, in the amounts and for the periods set forth
below.
<TABLE>
<CAPTION>
EVENT AMOUNT NUMBER OF MONTHS
----- ------ ----------------
<S> <C> <C>
Normal retirement $3,750/month 180
Early retirement Value of investment account (1) 120
$3,750/month if during normal
Disability retirement 180
Value of investment account if prior
to retirement (1) 120
Death during normal retirement $5,000/month Balance of 180 months
Death during early retirement $5,000/month Balance of 120 months
Death prior to retirement $5,000/month 180
Termination of employment Value of investment account (1)(2) 120
</TABLE>
- --------
(1) The balance of the investment account as of the dates set forth below is
as follows:
<TABLE>
<CAPTION>
DATE BALANCE
---- --------
<S> <C>
12/15/95........................................... $244,000
12/15/96........................................... $265,000
12/15/97........................................... $286,000
12/15/98........................................... $310,000
12/15/99........................................... $336,000
12/15/2000......................................... $360,000
</TABLE>
7
<PAGE>
(2) Mr. Hunnicutt may elect (i) not to receive the value of the investment
account upon termination of his employment; and (ii) to receive normal
retirement benefits of $3,750 per month for 180 months when he reaches
normal retirement age.
In the fiscal year ended December 31, 1997, $31,872 was accrued, but not
paid, to Mr. Hunnicutt pursuant to the Deferred Compensation Agreement.
SALARY CONTINUATION AGREEMENT
The Company has entered into a Salary Continuation Agreement with Mr.
Hunnicutt. The Salary Continuation Agreement, which is fully funded by
insurance, provides that if Mr. Hunnicutt remains in the Company's employ
until he reaches age 68, he will be entitled to receive 15 annual payments of
$33,750 each in compensation for various consulting and advisory services to
be provided to the Company and/or its senior executives over a 15-year period.
EXECUTIVE EMPLOYMENT AGREEMENT
The Company entered into an Executive Employment Agreement with Mr.
Hunnicutt effective as of September 20, 1994, amended as of September 30, 1996
(the "Executive Employment Agreement"), pursuant to which Mr. Hunnicutt has
agreed to serve as the President and Chief Executive Officer of the Company
for an initial term of five years. The term is automatically extended for an
additional one year term on the anniversary of the effective date of the
Executive Employment Agreement unless either party gives written notice to the
other party not to so extend the term within 90 days prior to any such
anniversary, in which case no further extension will occur and the term will
end two years after the anniversary of the date of the notice not to extend.
Notwithstanding any notice by the Company not to extend, the term of the
Executive Employment Agreement will not expire prior to the expiration of 24
months after the occurrence of a Change of Control (as such term is defined in
the Executive Employment Agreement) of the Company. The Executive Employment
Agreement, which automatically terminates when Mr. Hunnicutt attains age 68,
provides that Mr. Hunnicutt will receive a minimum base salary of $150,000.
In addition, the Executive Employment Agreement provides that Mr. Hunnicutt
is entitled to receive an annual bonus and to participate in all present and
future employee benefit, retirement and compensation plans of the Company
consistent with his salary and his position as the President and Chief
Executive Officer of the Company. The Executive Employment Agreement further
provides that, in the event of termination of Mr. Hunnicutt's employment with
the Company, the Company will pay to Mr. Hunnicutt (i) his base salary and
annual bonus through the date of termination if he is terminated by the Board
for "cause" (as defined in the Executive Employment Agreement) and (ii) his
base salary and annual bonus through the date of termination and, for three
additional 12-month periods, his base salary and a bonus in an amount
determined pursuant to the terms of the Executive Employment Agreement if he
terminates his employment for "good reason" (as defined in the Executive
Employment Agreement).
If Mr. Hunnicutt elects to terminate his employment upon 90 days notice,
then the Company is obligated to pay him his annual salary and annual bonus
through the date of termination. In the event of Mr. Hunnicutt's death, the
Company is obligated to purchase, under certain circumstances, all outstanding
stock options previously granted to Mr. Hunnicutt, whether or not such options
are then exercisable, at a cash purchase price equal to the amount by which
the aggregate fair market value of such options exceed their exercise price.
Finally, the Executive Employment Agreement also included certain restrictive
covenants which limit Mr. Hunnicutt's ability to compete with the Company or
divulge certain confidential information concerning the Company.
EXECUTIVE CONSULTING AGREEMENT
On September 20, 1994, the Company entered into an Executive Consulting
Agreement with Eugene M. Vereen, Jr., as amended on March 30, 1995 (the
"Executive Consulting Agreement"), pursuant to which Mr.
8
<PAGE>
Vereen has agreed to provide certain consulting services to the Company
following his retirement or resignation as Chairman of the Board for a period
of six years, provided that the Executive Consulting Agreement automatically
terminates upon Mr. Vereen's 80th birthday. Mr. Vereen retired as Chairman of
the Board on April 19, 1995. The Executive Consulting Agreement provides that
Mr. Vereen will provide consulting services to the Company when requested by
the Company's Chief Executive Officer and that the Company will pay Mr. Vereen
the sum of $87,500 per year for his services thereunder. In addition, Mr.
Vereen is entitled to reimbursement for his reasonable expenses incurred in
connection with his duties under the Executive Consulting Agreement. Finally,
the Executive Consulting Agreement includes certain restrictive covenants
which limit Mr. Vereen's ability to compete with the Company or divulge
certain confidential information concerning the Company.
COMPENSATION OF DIRECTORS
All directors receive a fee of $300 per month. Board meetings are held
monthly. Members of the Executive Committee (except Mr. Hunnicutt) receive a
fee of $300 per month, and members of the Audit Committee receive $200 per
meeting. Mr. Wortman receives $200 per meeting for his services on the
Executive Loan Committee and is the only member of the Executive Loan
Committee to receive compensation for service thereon.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Mr. Hunnicutt served as the Company's President and Chief
Executive Officer and also served on the Compensation Committee. No other
member of the Compensation Committee is or was an officer or employee of the
Company or any of its subsidiaries.
The Company and the Banks have had, and expect to have in the future,
banking transactions in the ordinary course of business with members of the
Compensation Committee, including corporations, partnerships and other
organizations in which such members have an interest. The Board believes that
the terms of such loans (including interest rates, collateral and repayment
terms) are fair and equitable and are substantially the same as terms
prevailing at the time such loans were made for comparable transactions with
unrelated parties. Such transactions do not involve more than the normal risk
of collectibility or present other unfavorable features.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
The Company's executive compensation programs are administered by the
Compensation Committee. During 1997, the Compensation Committee was composed
of Messrs. Vereen, Hunnicutt, Lasseter, Mobley and Weltzbarker.
The Company's executive compensation is designed to attract and retain
highly qualified executives and to motivate them to maximize shareholder
returns. The base salary for executives is determined in relation to their
level of responsibility. Salary ranges are reviewed on an annual basis, taking
into consideration, among other things, the financial performance of the
Company, and are adjusted as necessary. Executives' salaries are reviewed on
an annual basis, and salary changes are based primarily upon individual
performance.
In reviewing the performance of Mr. Hunnicutt, the Company's President and
Chief Executive Officer, the Compensation Committee took into account Mr.
Hunnicutt's employment agreement, which establishes his base compensation from
year to year. The Company may consider and declare from time to time increases
in Mr. Hunnicutt's base compensation, and if operating results of the Company
are significantly less favorable in a given year, may decrease the base
compensation of executive officers generally, including Mr. Hunnicutt. In
determining Mr. Hunnicutt's compensation, the Compensation Committee
considered the effects of inflation, adjustments to the salaries of other
senior management personnel and Mr. Hunnicutt's past performance and the
contribution which he made to the business and profits of the Company during
fiscal year 1997. The Company's performance in 1997 reflected net income of
$7.4 million, or $1.03 per share of Common Stock, an increase of
9
<PAGE>
2.8% over net income for 1996 of $7.2 million, and an appreciation in the
price of the Common Stock from $13.50 per share on December 31, 1996 (adjusted
for stock splits prior to February 13, 1998) to $19.75 per share on December
31, 1997, an increase of 46.3%. The Company significantly expanded its
operations during 1997 with the acquisition of Irwin Bankcorp, Inc. and the
Douglas, Georgia branch of NationsBank, which together increased the Company's
total assets from $673 million in 1996 to $692 million in 1997, an increase of
3%. The Company experienced an increase in total loans of 8% from $446 million
in 1996 to $483 million in 1997 and an increase in total deposits of 4% from
$578 million in 1996 to $600 million in 1997. The Company also maintained a
net interest margin of 5.4% for 1997, which the Company believes is high by
industry standards. Accordingly, the Compensation Committee awarded Mr.
Hunnicutt an annual incentive bonus of $54,278 and increased Mr. Hunnicutt's
base salary by 15.0% for 1998. Mr. Hunnicutt did not participate in the
deliberations of the Compensation Committee concerning his compensation.
Submitted by the Compensation Committee on February 17, 1998
Eugene M. Vereen, Jr.
Kenneth J. Hunnicutt
Willard Lasseter
John M. Mobley
Doyle Weltzbarker
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the change in the cumulative total
shareholder return on the Common Stock against the cumulative return of the
NASDAQ Stock Market (US Companies) and the index of Nasdaq Bank Stocks for the
period commencing May 19, 1994 through December 31, 1997. In May 1994, the
Company sold 747,500 shares of Common Stock pursuant to a registered public
offering (the "Offering"). Prior to the Offering, quotations for the Common
Stock were not reported on any market, and there was no established public
trading market for the Common Stock. The graph shows the value at December 31,
1992, December 31, 1993, December 30, 1994, December 29, 1995, December 31,
1996, and December 31, 1997 assuming an investment of $100 on May 19, 1994 and
reinvestment of dividends and other distributions to shareholders.
[GRAPH APPEARS HERE]
LEGEND
<TABLE>
<CAPTION>
CRSP Total Returns Index for: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ABC BANCORP -- -- 94.4 153.7 186.3 278.8
Nasdaq Stock Market (US Companies) 92.2 106.8 103.6 145.4 178.1 217.9
Nadaq Bank Stocks 83.7 95.5 95.1 141.6 187.0 315.9
</TABLE>
Notes:
A. The lines represent montly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 5/19/94.
11
<PAGE>
PROPOSAL II: AMENDMENT TO THE ARTICLES OF INCORPORATION AND BYLAWS (I) TO
PROVIDE THAT VACANCIES ON THE BOARD SHALL BE FILLED BY THE DIRECTORS IN
OFFICE; (II) TO PROVIDE THAT A MAJORITY OF THE BOARD CONSTITUTES A QUORUM
THEREOF; (III) TO PROVIDE THAT THE SHAREHOLDERS MAY REMOVE A DIRECTOR
ONLY FOR CAUSE; (IV) TO REQUIRE ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS
TO THE BOARD; AND (V) TO REQUIRE THE AFFIRMATIVE VOTE OF AT LEAST 75% OF
THE SHAREHOLDERS TO MODIFY, AMEND OR REPEAL THE FOREGOING OR THE
PROVISIONS OF THE BYLAWS WITH RESPECT TO THE CLASSIFICATION AND STAGGERED
TERMS OF THE DIRECTORS
The Board has adopted resolutions unanimously approving and recommending to
the Company's shareholders for their approval (i) amendments to the Company's
Articles of Incorporation, as amended (the "Articles") and Bylaws, as amended
(the "Bylaws"), to provide that any vacancy on the Board shall be filled by
the directors remaining in office; (ii) amendments to the Articles and the
Bylaws to provide that a majority of the directors would constitute a quorum
of the Board; (iii) amendments to the Articles and the Bylaws to provide that
a director may be removed only for cause; (iv) an amendment to the Bylaws to
provide that advance notice of shareholder nominations to the Board must be
given to the Company and certain information provided in connection therewith;
and (v) an amendment to the Articles to provide that the affirmative vote of
the holders of at least 75% of the voting power of all outstanding shares of
the Company's capital stock then entitled to vote in an election of director,
voting as a single class, shall be required to alter, amend or repeal the
provisions of the Articles and the Bylaws with respect to the foregoing and
the provisions of the Bylaws with respect to the classification and staggered
terms of the directors, or to adopt any provision inconsistent with any of the
foregoing ("Proposal II"). This Proposal II is qualified in its entirety by
reference to the terms of the proposed amendments to the Articles, which are
set forth in Appendix A attached hereto and incorporated herein by this
reference, and the terms of the proposed amendments to the Bylaws, which are
set forth in Appendix B attached hereto and incorporated herein by this
reference.
Subject to the Georgia Business Corporation Code (the "GBCC") and the terms
of the Company's shares then outstanding, Proposal II expressly delegates to
incumbent directors sole power to fill vacancies whether occurring by an
increase in the number of directors or otherwise (except in cases where
directors are removed by the shareholders for cause). A director elected to
fill a vacancy would hold office for the unexpired portion of the term of the
director who was being replaced. A director elected to fill a newly created
directorship would hold office until the next election for the class to which
such director was elected. If the size of the Board is increased, the
additional directors would be apportioned among the three classes of directors
to keep all such classes as nearly equal as possible.
Proposal II, if approved, would also provide that a majority of the
directors would constitute a quorum for the transaction of business. The
Bylaws presently provide that a majority of the directors shall constitute a
quorum, but the Bylaws may be amended by the holders of a majority of the
Company's total authorized voting power.
Under the GBCC, directors serving on a classified board may be removed by
the shareholders only for cause unless the articles of incorporation provide
otherwise. The Articles currently do not address the removal of a director by
the shareholders, and the Bylaws provide that a director may be removed with
or without cause. In order to remove any ambiguity with respect to the removal
of directors, the Board proposes to (i) amend the Articles by adding a new
Article XII to provide that a director may be removed only for cause and only
by the affirmative vote of the holders of at least a majority of all
outstanding shares of capital stock of the Company, and (ii) amend the Bylaws
by deleting the words "or without" from the third line of Article III, Section
9 thereof.
The Board also proposes to amend the Bylaws to provide a notification
procedure to follow for shareholder nominations of directors to serve on the
Board. Proposal II provides that nominations of persons for election to
12
<PAGE>
the Board may be made by or at the direction of the Board or by any
shareholder of record entitled to vote in the election of directors. However,
Proposal II also provides a special procedure for shareholder nominations
which is not applicable to nominations by or at the direction of the Board.
Shareholders intending to nominate director candidates for election must
deliver written notice thereof to the Secretary of the Company not less than
120 days in advance of the date which is one year later than the date of the
proxy statement of the Company released to shareholders in connection with the
previous year's annual meeting (or by other specified dates in certain
circumstances, including a meeting which is not an annual meeting).
Proposal II further provides that the notice must set forth certain
information concerning such shareholder and the nominee(s), including their
names, ages, addresses, occupations, and stock ownership in the Company, a
description of all arrangements and understandings between the shareholder and
each nominee and any other person relating to the proposed nomination, any
other information that would be required to be included in solicitations of
proxies for the election of directors of the Company, and the consent of each
nominee to being named as a nominee and to serve as a director of the Company
if elected. The chairman of the meeting must refuse to accept the nomination
of any person not made in compliance with the foregoing procedure.
The Board also proposes to amend the Articles and the Bylaws to limit the
shareholders' ability to repeal the foregoing amendments to the Articles and
the Bylaws and the provisions of the Bylaws with respect to the classification
and staggered terms of the directors. Under the GBCC, amendments to the
Articles generally require approval of the holders of a majority of the
outstanding stock entitled to vote on such amendments and of the outstanding
stock of each class (if any) entitled to vote on such amendments as a class,
and the Bylaws provide that amendments thereto may be approved by the
affirmative vote of a majority of the shares having voting power with respect
to such amendments at the meeting at which such amendments are considered. As
permitted by the provisions of the GBCC, Proposal II provides that the
affirmative vote of the holders of at least 75% of the voting power of all
outstanding shares of capital stock of the Company then entitled to vote in an
election of directors, voting as a single class, shall be required for the
alteration, amendment or repeal of the provisions contained in the Articles
and the Bylaws with respect to the matters set forth in Proposal II (which
includes the requirement for such 75% vote) and the provisions of the Bylaws
with respect to the classification and staggered terms of the directors, or
for the adoption of any provision in the Articles or the Bylaws inconsistent
with any of the foregoing. This required vote is in addition to any separate
class vote that might in the future be accorded by the Board to any class or
series of preferred stock of the Company which might be outstanding at the
time any such alteration, amendment, repeal or adoption of inconsistent
provisions is submitted to shareholders for a vote. However, except to the
extent specified in Proposal II with respect to alteration, amendment or
repeal of the provisions thereof or the adoption of inconsistent provisions,
as set forth above, Proposal II will not affect (i) the concurrent authority
of the Board and the shareholders to alter, amend or repeal Bylaws of the
Company and (ii) the vote required for the exercise of such powers by the
Board or the shareholders.
The Board believes that the adoption of Proposal II is advantageous to the
Company and its shareholders for a number of reasons.
Public companies are potentially subject to attempts by various individuals
and entities to acquire significant minority positions in the company with the
intent either of obtaining actual control of the company by electing their own
slate of directors, or of achieving some other goal, such as the repurchase of
their shares by the company at a premium. Public companies also are
potentially subject to inadequately priced or coercive bids for control
through majority share ownership. Accordingly, the Company has taken action to
discourage such activities.
On February 17, 1998, the Board declared a dividend of one preferred share
purchase right (each, a "Right") for each outstanding share of Common Stock.
The dividend is payable on the Record Date to the shareholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, no par value (the "Preferred Shares"),
13
<PAGE>
of the Company at a price of $81.00 per one one-hundredth of a Preferred
Share, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement between the Company and SunTrust Bank, as Rights
Agent.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons have acquired
beneficial ownership of 15% or more of the outstanding Common Stock or (ii) 10
business days (or such later date as may be determined by action of the Board
prior to such time as any person or group of affiliated persons have acquired
such beneficial ownership of the outstanding Common Stock) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Stock
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificate with a
copy of this Summary of Rights attached thereto. The Rights are not
exercisable until the Distribution Date, and the Rights will expire on March
6, 2008, unless such expiration date is extended or unless the Rights are
earlier redeemed or exchanged by the Company.
The distribution of the Rights was designed to protect the shareholders
against the adverse consequences of partial takeovers and other abusive
takeover tactics which the Board believes are not in the best interests of the
shareholders by providing for certain rights to acquire the Preferred Shares
(and by conversion thereof, the Common Stock) or the securities of an
Acquiring Person upon the occurrence of certain events. The Rights, however,
should they become exercisable, could deter an acquisition attempt by which an
acquiror may be able to change the composition of the Board, including a
tender offer or other transaction that some, or a majority, of the Company's
shareholders might believe to be in their best interests or in which
shareholders might receive a premium for their shares over the then current
market price for such shares.
In addition to the foregoing, the provisions classifying the Board and
staggering the terms of the directors, which were approved by the shareholders
last year, discourage potential purchasers because such provisions operate to
delay the purchaser's ability to obtain control of the Board by requiring a
purchaser to take two annual meetings of the shareholders to elect a majority
of the Board.
Proposal II would similarly delay shareholders who do not approve of
policies of the Board from replacing a majority of the directors, unless they
can show cause, obtain the requisite vote and then convince the remaining
directors to elect more acceptable replacements. For the same reasons, the
adoption of Proposal II may also deter certain mergers, tender offers and
other takeover attempts, the assumption of control by a holder of a larger
block of the Common Stock or the removal of incumbent management, one or more
of which some or a majority of the holders of the Company's voting stock may
deem to be in their best interests.
The Articles and the Bylaws presently do not address shareholder
nominations. The advance notice requirement of Proposal II, by regulating
shareholder nominations at any meeting of shareholders, affords the Board the
opportunity to consider the qualifications of the proposed nominees and, to
the extent deemed necessary or desirable by the Board, inform shareholders
about such qualifications. Although Proposal II does not give the Board any
power to approve or disapprove of shareholder nominations of persons for
election as directors, Proposal II may have the effect of precluding a contest
for the election of directors if the procedures established by Proposal II are
not followed and may discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors, without regard to
whether this might be harmful or beneficial to the Company and its
shareholders. In addition, this provision would prevent the nomination at a
shareholder's meeting of a candidate as to whom no information had been
provided or made available in advance to the Company's shareholders, many of
whom typically vote by proxy and do not personally attend the meeting and
therefore would have no opportunity to obtain information about such
candidate.
The requirement in the Articles of an increased shareholder vote on
alteration, amendment or repeal of the provisions of the Articles and the
Bylaws with respect to the foregoing matters and the classification and
14
<PAGE>
staggered terms of the directors or the adoption of inconsistent provisions,
will give minority shareholders a veto power over any changes to such
provisions, or the adoption of inconsistent provisions, even if the Board or a
simple majority of the shareholders favors such changes or inconsistent
provisions. However, such requirement will also prevent a shareholder with
less than the requisite majority of voting stock from avoiding the
requirements of the provisions of Proposal II by simply repealing them.
The Board has no knowledge of any present effort to gain control of the
Company or to organize a proxy contest. In addition, there has been no problem
in the past or at the present time with the Board's continuity or stability.
However, the Board believes that adopting Proposal II is prudent, advantageous
and in the best interests of shareholders because Proposal II, together with
the provisions of the Bylaws that provide for a classified Board and staggered
terms, will give the Board more time to fulfill its responsibilities to
shareholders, and it will provide greater assurance of continuity and
stability in the composition and policies of the Board. The Board also
believes such advantages outweigh any disadvantage relating to discouraging
potential acquirors from attempting to obtain control of the Company.
In proposing the amendments to the Articles and the Bylaws summarized in
Proposal II, the Board unanimously recommended that such proposed amendments
be submitted to the Company's shareholders for approval. As noted herein,
however, certain of these provisions might make it significantly more
difficult to change control of the Board. Accordingly, to the extent that
management might be deemed to benefit from the increased protections afforded
by such proposed amendments, the Board might be viewed as having a conflict of
interest in recommending such proposed amendments to the shareholders for
approval.
Approval of Proposal II requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting. Unless otherwise directed, the persons named in the enclosed
form of proxy intend to vote "FOR" Proposal II. If approved by the
shareholders, the amendment to the Articles will become effective upon filing
with the Secretary of State of Georgia Articles of Amendment to the Company's
Articles of Incorporation, which filing is expected to take place promptly
after the Annual Meeting. If approved by the shareholders, the Board plans to
adopt various conforming amendments to the Bylaws, which will become effective
immediately upon adoption by the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL
II.
PROPOSAL III: RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company has appointed Mauldin & Jenkins, Certified Public Accountants
and Consultants, LLC ("Mauldin & Jenkins"), as its independent accountants for
the fiscal year ended December 31, 1997. Mauldin & Jenkins has served as the
Company's independent accountants since 1985. Service provided to the Company
and its subsidiaries by Mauldin & Jenkins in the fiscal year ended December
31, 1996 included the examination of the Company's consolidated financial
statements, limited review of quarterly reports, services related to filings
with the Securities and Exchange Commission (the "SEC") and consultation with
respect to various tax matters.
Representatives of Mauldin & Jenkins will be present at the Annual Meeting,
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions by shareholders.
Ratification of the appointment of Mauldin & Jenkins as the Company's
independent accountants for the fiscal year ended December 31, 1997 requires
the affirmative vote of a majority of votes cast by the outstanding shares of
Common Stock present or represented at the Annual Meeting and entitled to
vote. Unless otherwise specified, the proxy holders designated in the proxy
will vote the shares covered thereby at the Annual Meeting "FOR" ratification
of the appointment of Mauldin & Jenkins. In the event that the shareholders do
not ratify the appointment of Mauldin & Jenkins, the appointment will be
reconsidered by the Audit Committee and the Board.
15
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL
III.
CERTAIN TRANSACTIONS
The Company and the Banks have engaged in, and in the future expect to
engage in, banking transactions in the ordinary course of business with
directors and officers of the Company and the Banks and their associates,
including corporations, partnerships and other organizations in which such
directors and officers have an interest. At December 31, 1997, certain
officers and directors, and companies in which such officers and directors
have a 10% or more beneficial interest, were indebted to the Banks in the
aggregate amount of approximately $6,285,450. The Board believes that the
terms of such loans (including interest rates, collateral and repayment terms)
are fair and equitable and are substantially the same as terms prevailing at
the time such loans were made for comparable transactions with unrelated
parties. Such transactions do not involve more than the normal risk of
collectibility or present other unfavorable features.
Since November 1, 1991, the Company has leased a building from Mr. Hunnicutt
and an unrelated third party that is used as the Company's operations center
in Moultrie, Georgia. On November 1, 1996, the Company renewed the lease
increasing the monthly rent payments from $2,500 to $3,334 per month. Rent
payments under the lease, which expires on November 1, 2001, totalled $40,000
for 1997 and will total $40,000 per year thereafter, payable in monthly
installments of $3,334 each.
Since February 1996, the Company has leased a building from Mr. Hunnicutt
and an unrelated third party that is used for storage and office space for the
Company's Facilities Manager in Moultrie, Georgia. The lease for this space is
on a month-to-month basis, with annual rent payments of $7,200, payable in
monthly installments of $600 each.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended requires
the Company's directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock. They
are also required to furnish the Company with copies of all Section 16(a)
forms they file with the SEC.
To the Company's knowledge, based solely on its review of the copies of such
reports furnished to it and written representations that no other reports were
required, during the fiscal year ended December 31, 1997, all the Company's
officers, directors and greater than ten percent shareholders complied with
all applicable Section 16(a) filing requirements.
OTHER MATTERS
The Board does not contemplate bringing before the Annual Meeting any matter
other than those specified in the Notice of Annual Meeting of Shareholders,
nor does it have information that other matters will be presented at the
Annual Meeting. If other matters come before the Annual Meeting, signed
proxies will be voted upon such questions in accordance with the best judgment
of the persons acting under the proxies.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 1999 Annual Meeting
of Shareholders and to be included in the Company's proxy statement and form
of proxy for that meeting must be received by the Company, directed to the
attention of the Secretary, not later than December 4, 1998. Any such proposal
must comply in all respects with the rules and regulations of the SEC.
16
<PAGE>
ANNUAL REPORT ON FORM 10-K
Upon receipt of a written request, the Company will, without charge, furnish
any owner of Common Stock a copy of its Annual Report to the SEC on Form 10-K
for the fiscal year ended December 31, 1997, including financial statements and
the schedules thereto. Copies of exhibits to the Form 10-K are also available
upon specific request and payment of a reasonable charge for reproduction. Such
request should be directed to the Secretary of the Company at the address
indicated on the front of this Proxy Statement.
By Order of the Board of Directors
/s/ Willard Lasseter
Willard Lasseter, Chairman
Moultrie, Georgia
March 20, 1998
17
<PAGE>
APPENDIX A
FORM OF
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ABC BANCORP
(A GEORGIA CORPORATION)
I.
The name of the corporation is ABC Bancorp (the "Corporation").
II.
The Articles of Incorporation of the Corporation are hereby amended by
adding the following as Article XII. thereof:
"XII.
(1) Vacancies on the Board of Directors of the Corporation and newly
created directorships resulting from an increase in the authorized number
of members of the Board of Directors of the Corporation may be filled only
by a majority of the directors, then in office, although less than a
quorum, or by a sole remaining director.
(2) Each director, including a director elected to fill a vacancy or a
newly created directorship, shall hold office until the next election of
the class of directors to which such director belongs and until his or her
successor is elected and qualified or until his or her earlier death,
resignation, or removal from office for cause.
(3) Any director or the entire Board of Directors of the Corporation may
be removed from any office at any time but only for cause and only by the
affirmative vote of the holders of at least a majority of all outstanding
shares of capital stock of the Corporation then entitled to vote in an
election of directors of the Corporation, voting as a single class.
(4) A majority of total directors shall constitute a quorum for the
transaction of business."
III.
The Articles of Incorporation of the Corporation are hereby amended by
adding the following as Article XIII. thereof:
"XIII.
Notwithstanding any provisions of these Articles of Incorporation or the
Bylaws of the Corporation to the contrary, the affirmative vote of the
holders of at least seventy-five percent (75%) of the voting power of all
outstanding shares of capital stock of the Corporation then entitled to
vote in an election of directors of the Corporation, voting as a single
class, shall be required to alter, amend or repeal the provisions of
Article XII hereof, this Article XIII or Article III, Section 2 of the
Bylaws of the Corporation or to adopt any provision of these Articles of
Incorporation or the Bylaws of the Corporation which is inconsistent with
the provisions of Article XII hereof, this Article XIII or Article III,
Section 2 of the Bylaws of the Corporation."
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APPENDIX B
PROPOSED ABC BANCORP BYLAWS AMENDMENTS
1. The Bylaws of ABC Bancorp shall be amended by deleting Article III,
Section 2 in its entirety and substituting the following in lieu thereof:
"Section 2. Number, Election, Term and Retirement; Nominations by
Shareholders. (a) The number of directors which shall constitute the whole
Board of Directors shall be not less than seven nor more than 15. The Board
of Directors of the corporation shall be divided into three classes which
shall be as nearly equal in number as is possible. At the first election of
directors to such classified Board of Directors, each Class 1 director
shall be elected to serve until the next ensuing annual meeting of
shareholders, each Class 2 director shall be elected to serve until the
second ensuing annual meeting of shareholders and each Class 3 director
shall be elected to serve until the third ensuing annual meeting of
shareholders. At each annual meeting of shareholders following the meeting
at which the Board of Directors is initially classified, the number of
directors equal to the number of the class whose term expires at the time
of such meeting shall be elected to serve until the third ensuing annual
meeting of shareholders. In the event of any change in the authorized
number of directors, the number of directors in each class shall be
adjusted so that thereafter each of the three classes shall be composed, as
nearly as may be possible, of one-third of the authorized number of
directors; provided that any change in the authorized number of directors
shall not increase or shorten the term of any director, and any decrease
shall become effective only as and when the term or terms of office of the
class or classes of directors affected thereby shall expire, or a vacancy
or vacancies in such class or classes shall occur. The number of directors
may be increased or decreased from time to time by the Board of Directors
by amendment of this by-law, but no decrease shall have the effect of
shortening the term of an incumbent director. The directors shall be
elected by plurality vote at the annual meeting of shareholders, except as
hereinafter provided, and each director elected shall hold office until his
successor is elected and qualified or until his earlier resignation,
removal from office or death. Directors shall be natural persons who have
attained the age of 18 years, but need not be residents of the State of
Georgia or shareholders of the corporation. Employees of subsidiary
corporations shall not be eligible to serve as directors. With the
exception of Eugene M. Vereen, Jr., each director shall retire at the
annual meeting following the date such director attains the age of 70.
(b) Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders of the Corporation
either by or at the direction of the Board of Directors of the Corporation
or by any shareholder or record entitled to vote in the election of
directors at such meeting who has complied with the notice procedures set
forth in this Section 2(b). A shareholder who desires to nominate a person
for election to the Board of Directors of the Corporation at a meeting of
shareholders of the Corporation and who is eligible to make such nomination
must give timely written notice of the proposed nomination to the secretary
of the Corporation. To be timely, a shareholder's notice given pursuant to
this Section 2(b) must be received at the principal executive office of the
Corporation not less than one hundred twenty (120) calendar days in advance
of the date which is one year later than the date of the proxy statement of
the Corporation released to shareholders in connection with the previous
year's annual meeting of shareholders of the Corporation; provided,
however, that if no annual meeting of shareholders of the Corporation was
held in the previous year or if the date of the forthcoming annual meeting
of shareholders has been changed by more than thirty (30) calendar days
from the date contemplated at the time of the previous year's proxy
statement or if the forthcoming meeting is not an annual meeting of
shareholders of the Corporation, then to be timely such shareholder's
notice must be so received not later than the close of business on the
tenth day following the earlier of (i) the day on which notice of the date
of the forthcoming meeting was mailed or given to shareholders by or on
behalf of the Corporation or (ii) the day on which public disclosure of the
date of the forthcoming meeting was made by or on behalf of the
Corporation. Such shareholder's notice to the secretary of the Corporation
shall set forth (i) as to each person whom the shareholder proposes to
nominate for election or re-election as a director (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person,
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(C) the class and number of shares of capital stock of the Corporation
which then are beneficially owned by such person, (D) any other information
relating to such person that is required by law or regulation to be
disclosed in solicitations of proxies for the election of directors of the
Corporation, and (E) such person's written consent to being named as a
nominee for election as a director and to serve as a director if elected
and (ii) as to the shareholder giving notice (A) the name and address, as
they appear in the stock records of the Corporation, of such shareholder,
(B) the class and number of shares of capital stock of the Corporation
which then are beneficially owned by such shareholder, (C) a description of
all arrangements or understandings between such shareholder and each
nominee for election as director and any other person or persons (naming
such person or persons) relating to the nomination proposed to be made by
such shareholder, and (D) any other information required by law or
regulation to be provided by a shareholder intending to nominate a person
for election as a director of the Corporation. At the request of the Board
of Directors of the Corporation, any person nominated by or at the
direction of the Board of Directors of the Corporation for election as
director of the Corporation shall furnish to the secretary of the
Corporation the information concerning such nominee which is required to be
set forth in a shareholder's notice of a proposed nomination. No person
shall be eligible for election as a director of the Corporation unless
nominated in compliance with the procedures set forth in this Section 2(b).
The chairman of a meeting of shareholders of the Corporation shall refuse
to accept the nomination of any person not made in compliance with the
procedures set forth in this Section 2(b), and such defective nomination
shall be disregarded."
2. The Bylaws of ABC Bancorp shall be amended by deleting Article III,
Section 3 in its entirety and substituting the following in lieu thereof:
"Section 3. Vacancies. Vacancies on the Board of Directors of the
Corporation and newly created directorships resulting from an increase in
the authorized number of members of the Board of Directors of the
Corporation may be filled only by a majority of the directors, then in
office, although less than a quorum, or by a sole remaining director, and a
director so chosen shall hold office until the next election of the class
of directors to which such director belongs and until his successor is duly
elected and qualified unless sooner displaced."
3. The Bylaws of ABC Bancorp shall be amended by deleting the words "or
without" from the third line of Article III, Section 9 of the Bylaws.
B-2
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LOGO
ABC BANCORP
310 FIRST STREET, S.E.
MOULTRIE, GEORGIA 31768
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints WILLARD LASSETER and KENNETH J. HUNNICUTT,
and each of them, with full power of substitution, the proxies and attorneys of
the undersigned at the Annual Meeting of Shareholders of ABC Bancorp to be held
on Tuesday, May 12, 1998 (the "Annual Meeting") at Sunset Country Club,
Thomasville Highway, Moultrie, Georgia, at 4:15 p.m., local time, and at any
adjournment or postponement thereof, and hereby authorizes them to vote as
designated below at the Annual Meeting all the shares of Common Stock of ABC
Bancorp held of record by the undersigned as of March 6, 1998. The undersigned
hereby acknowledges receipt of the Annual Report of the Company for the fiscal
year ended December 31, 1997 and the Notice of Annual Meeting and Proxy
Statement of the Company for the Annual Meeting.
I.Election of the following nominees to the Board of Directors in Class I for
three-year terms of office:
[_] FOR the [_] WITHHOLD
nominees listed AUTHORITY to
below (except vote for the
as marked to nominees
the contrary listed below
below)
CLASS I
Johnny W. Floyd Daniel B. Jeter
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
WRITE THE NAME(S) OF SUCH NOMINEE(S) IN THE SPACE PROVIDED BELOW.
<PAGE>
LOGO
IF THIS FORM OF PROXY IS EXECUTED BY THE UNDERSIGNED IN SUCH MANNER AS NOT TO
WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE, THIS FORM OF PROXY
SHALL BE DEEMED TO GRANT SUCH AUTHORITY.
II. Amendments to the Company's Articles of Incorporation and Bylaws (i) to
provide that any vacancy on the Board of Directors shall be filled by the
directors remaining in office; (ii) to provide that a majority of the
directors would constitute a quorum of the Board of Directors; (iii) to
provide that a director may be removed only for cause; (iv) to require
advance notice of shareholder nominations to the Board of Directors must be
given to the Company and certain information provided in connection
therewith; and (v) to require the affirmative vote of at least 75% of the
shareholders entitled to vote to alter, amend or repeal the provisions of
the Articles of Incorporation and Bylaws with respect to the foregoing
matters and the provisions of the Bylaws with respect to the classification
and staggered terms of the directors, or to adopt any provision of the
Articles of Incorporation or the Bylaws inconsistent with any of the
foregoing;
[_] FOR [_] AGAINST [_] ABSTAIN
III. To ratify the appointment of Mauldin & Jenkins, Certified Public
Accountants and Consultants, LLC, as the Company's independent accountants
for the fiscal year ended December 31, 1997
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF EACH NOMINEE, AND IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Print Name(s) _____________________________
Signature _________________________________
Signature if Held Jointly _________________
Dated: _____________________________ , 1998
Please date and sign in the same manner in which your shares are registered.
When signing as executor, administrator, trustee, guardian, attorney or
corporate officer, please give full title as such. Joint owners should each
sign.
