<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
LSB Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
<PAGE> 2
NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS OF
LSB BANCSHARES, INC.
ONE LSB PLAZA
LEXINGTON, NORTH CAROLINA 27292
To the Shareholders of LSB Bancshares, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of LSB
Bancshares, Inc. ("Bancshares"), called under authority of Article 2, Section 2,
of the Bylaws of Bancshares, will be held at the J. Smith Young YMCA, located at
119 West Third Avenue, Lexington, North Carolina 27292, on Wednesday, April 17,
1996 at 1:00 P.M. Shareholders of record at the close of business on March 1,
1996 are entitled to notice of and to vote at the meeting and any adjournment
thereof.
The purposes of the meeting are to consider and act upon the following
proposals:
- To elect five members of the Board of Directors;
- To ratify the appointment of Turlington and Company, Certified Public
Accountants, to conduct the independent audit for 1996;
- To approve the LSB Bancshares, Inc. 1996 Omnibus Stock Incentive Plan;
- To consider and act upon, if properly brought before the Annual
Meeting, a shareholder proposal by W. Robert Koontz relating to
minimum share ownership requirements for directors of Bancshares; and
- To consider such other business as may properly come before the
meeting.
We urge you to attend this meeting. It is extremely important that your shares
be represented regardless of the number you own. Please sign and return your
proxy to Bancshares in the enclosed envelope at your earliest convenience.
Unless you indicate to the contrary, your proxy will be cast for you in favor of
the nominees for director named in the accompanying Proxy Statement, for the
ratification of the appointment of Turlington and Company to conduct the
independent audit for 1996, for the approval of the LSB Bancshares, Inc. 1996
Omnibus Stock Incentive Plan and against the shareholder proposal relating to
minimum share ownership requirements for directors of Bancshares, each as
described in more detail in the accompanying Proxy Statement.
This 13th day of March, 1996.
Yours very truly,
LSB BANCSHARES, INC.
Monty J. Oliver
Secretary
<PAGE> 3
LSB BANCSHARES, INC.
ONE LSB PLAZA
LEXINGTON, NORTH CAROLINA 27292
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of Directors
of LSB Bancshares, Inc. ("Bancshares") for use at the Annual Meeting of
Shareholders to be held on Wednesday, April 17, 1996 at 1:00 P.M. at the J.
Smith Young YMCA, located at 119 West Third Avenue, Lexington, North Carolina
27292, and at any adjournment thereof. The entire cost of such solicitation will
be borne by Bancshares. In addition, personal solicitation may be conducted by
directors, officers and employees of Bancshares and its subsidiary, Lexington
State Bank (the "Bank"). This Proxy Statement and the accompanying proxy card
were first mailed to shareholders on or about March 13, 1996.
The shares of Bancshares common stock (the "Common Stock") represented by the
accompanying proxy card will be voted if the proxy card is properly signed,
dated and received by Bancshares prior to the time of the meeting. Where a
choice is specified on the proxy card as to the vote on any matter to come
before the meeting, the proxy will be voted in accordance with such
specification. If no choice is specified, the proxy will be voted in favor of
the nominees for director named herein, for the ratification of the appointment
of Turlington and Company to conduct the independent audit for 1996, for the
approval of the LSB Bancshares, Inc. 1996 Omnibus Stock Incentive Plan (the
"1996 Stock Incentive Plan") and against the shareholder proposal relating to
minimum share ownership requirements for directors of Bancshares. Any
shareholder giving a proxy has the right to revoke it. If a shareholder is a
participant in the Shareholder Dividend Reinvestment and Stock Purchase Plan,
the proxy represents the number of shares of Common Stock in the dividend
reinvestment account as well as shares held of record directly by the
shareholder.
VOTING PROCEDURES
Shareholders of record at the close of business on March 1, 1996 will be
entitled to vote at the Annual Meeting of Shareholders. At the close of business
on March 1, 1996, there were 5,382,760 shares of Common Stock outstanding and
entitled to vote. There is no other class of authorized stock. On all matters
considered at the meeting, shareholders are entitled to one vote for each share
held.
The laws of North Carolina, under which Bancshares is incorporated, provide
that, in connection with the election of directors, the persons receiving a
plurality of the votes cast will be elected as directors. The proposal to ratify
the appointment of Turlington and Company to conduct the independent audit of
Bancshares for 1996 will be approved if the number of votes cast "for" such
proposal exceeds the number of votes cast "against" such proposal. Approval of
the 1996 Stock Incentive Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present or represented by properly
executed and delivered proxies at the Annual Meeting. Shares held of record by a
broker or its nominee ("Broker
1
<PAGE> 4
Shares") and abstentions that are voted on any matter will be counted for
purposes of determining the existence of a quorum at the Annual Meeting. Broker
Shares that are not voted on any matter at the Annual Meeting will not be
included in determining whether a quorum is present at the Annual Meeting.
Abstentions and Broker Shares that are not voted on a particular proposal will
not be counted as votes for or against such proposals, and, with respect to the
approval of the 1996 Stock Incentive Plan, will have the same effect as a
negative vote. For information with respect to the votes needed to adopt the
shareholder proposal relating to minimum share ownership requirements by
directors, see "Shareholder Proposal Relating to Minimum Share Ownership By
Directors."
ELECTION OF DIRECTORS
Bancshares' Bylaws provide for a classified Board of Directors, consisting of
not less than nine and not more than 24 directors, the number to be determined
by resolution of a majority of the Board of Directors or by resolution of the
shareholders at any meeting thereof. The Board of Directors, by resolution, has
set the number of directors at 12. The persons nominated by the Board of
Directors to serve as directors for a three-year term expiring at the 1999
Annual Meeting, as set forth below, were elected as directors at the 1993 Annual
Meeting, except for Leonard H. Beck, who was appointed as a director by the
Board on December 12, 1995 to replace Robert L. Grubb, Jr., who died on October
16, 1995. The Board has also nominated Peggy B. Barnhardt to serve as a director
for a two-year term expiring at the 1998 Annual Meeting. Mrs. Barnhardt was
appointed by the Board on July 11, 1995 to replace John H. Frank, who resigned
as a director effective July 11, 1995. It is the intention of the persons named
on the accompanying proxy card to vote in favor of the nominees named below. It
is not anticipated that any of the nominees named below will be unable or
unwilling to serve, but, if that should occur, it is the intention of the
persons named on the accompanying proxy card to vote for such other person or
persons for the office of director as may be nominated by the Board of
Directors. Proxies cannot be voted for a greater number of nominees than the
number named in this Proxy Statement.
Years of service on the Board of Directors as indicated in the table that
follows include service on the Board of Directors of the Bank prior to the
incorporation of Bancshares.
2
<PAGE> 5
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
Name and Age
- ----------------------
Nominees for 3-Year
Terms Expiring at the Director Principal Occupation
1999 Annual Meeting Since for Past Five Years
- ---------------------- -------- --------------------------------------
<S> <C> <C>
Leonard H. Beck (60) 1995 President, Green Printing Company;
Director of The National Association
of Printers and Lithographers
Samuel R. Harris (54) 1990 Physician; Director and Treasurer,
Lexington Clinic for Women, P.A.
David A. Smith (57) 1990 Owner, Red Acres Dairy Farm
Burr W. Sullivan (49) 1987 President, Dorsett Printing and
Lithographic Corporation
- ----------------------
Nominee for a 2-Year
Term Expiring at the
1998 Annual Meeting
- ----------------------
Peggy B. Barnhardt (62) 1995 Retired Deputy Superintendent,
Davidson County Board of Education;
Director of the North Carolina
Association of School Administrators,
Davidson Medical Ministries and the
Kiwanis Club of Lexington
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
Name and Age
- --------------------------
Directors with 3-Year
Terms Expiring at the Director Principal Occupation
1998 Annual Meeting Since for Past Five Years
- -------------------------- -------- ----------------------------------
<S> <C> <C>
Michael S. Albert (41) 1995 President, CEO and Director of
Billings Freight Systems, Inc.;
Treasurer of Cargo Carriers, Inc.;
Assistant Finance Manager of Metro
Motor Express, Inc.
Walter A. Hill, Sr. (56) 1983 President, Hill Oil Company, Inc.;
Vice President and Secretary,
NorthCo, Inc. (construction
development)
Robert B. Smith, Jr. (57) 1969 Attorney
- --------------------------
Directors with 3-Year
Terms Expiring at the
1997 Annual Meeting
- --------------------------
Margaret Lee W. Crowell (67) 1991 Retired since 1986; formerly
Finance Officer of Lexington City
Schools
Robert F. Lowe (53) 1983 Chairman, President and CEO of
Bancshares, the Bank and Peoples
Finance Company of Lexington,
Inc., a subsidiary of the Bank;
President and a director of LSB
Financial Services, Inc., a
subsidiary of the Bank
Roberts E. Timberlake (59) 1979 Artist/Designer; President, The
Heritage Company, Inc. (art
gallery and distributorship);
President, The Land Company (real
estate); Secretary/Treasurer, The
Bob Timberlake Collection
(furniture and accessories)
Julius S. Young, Jr. (48) 1988 President, Jay Young Management,
Inc.
</TABLE>
4
<PAGE> 7
MANAGEMENT'S OWNERSHIP OF COMMON STOCK
The following table sets forth information about the beneficial ownership of
Common Stock held by each director, nominee for director and executive officer
named under the heading "Executive Compensation" herein, and by all directors
and executive officers as a group as of February 1, 1996, without giving effect
to the 25% stock split in the form of a stock dividend paid on February 15,
1996:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership of Common Stock
------------------------------------------------------------------
Name of Sole Voting And Shared Voting And %
Beneficial Owner Investment Power(1) Investment Power Total of Total
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael S. Albert 1,437 1,722 3,159 *
Peggy B. Barnhardt 505 505 *
Leonard H. Beck 1,313 1,313 *
Margaret Lee W. Crowell 4,139 7,849 11,988 *
Samuel R. Harris 1,801 1,801 *
Walter A. Hill, Sr. 6,585 5,007 11,592 *
Robert F. Lowe 35,826 25,519 61,345 1.4
David A. Smith 1,029 6,724 7,753 *
Robert B. Smith, Jr. 13,870 325(2) 14,195 *
Burr W. Sullivan 1,583 1,671 3,254 *
Roberts E. Timberlake 4,848 32,493(3) 37,341 *
Julius S. Young, Jr. 50,880 50,880 1.2
Monty J. Oliver 15,996 47 16,043 *
Ronald J. Meadley 9,427 6,936 16,363 *
H. Franklin Sherron, Jr. 19,759 8,007 27,766 *
All directors and
executive officers as
a group (15 persons) 168,998 96,300 265,298 6.1
</TABLE>
- ---------------
(*) Asterisk indicates less than one percent.
(1) Includes an aggregate 31,702 shares that may be acquired by Bancshares'
executive officers within 60 days under Bancshares' 1986 Employee Incentive
Stock Option Plan and an aggregate 6,800 shares that may be acquired by
Bancshares' non-management directors within 60 days under Bancshares' 1994
Director Stock Option Plan.
(2) Represents 325 shares held by the Bank as agent for Mr. Smith, over which
Mr. Smith shares investment power but has no voting power.
(3) Amount includes: (a) 2,299 shares held by the Bank as trustee of certain
trusts for the benefit of Mr. Timberlake's wife, over which Mr. Timberlake
shares investment authority but has no voting power; and (b) 2,017 shares
held in trusts for Mr. Timberlake's benefit, over which Mr. Timberlake
shares investment authority with the Bank as trustee, and over which the
Bank has exclusive voting power.
Management is aware of no person who beneficially owns more than five percent of
the outstanding shares of Common Stock.
5
<PAGE> 8
CORPORATE GOVERNANCE
The Board of Directors of Bancshares has standing Executive, Stock Option and
Compensation, and Audit Committees. There are no other committees of the Board
of Directors of Bancshares. The Board of Directors of Bancshares performs the
functions of a nominating or similar committee. The Executive Committee of
Bancshares reviews various matters and submits proposals or recommendations to
Bancshares' Board of Directors. The Executive Committee is empowered to and does
act for Bancshares' Board of Directors on certain matters.
Members of the Executive Committee are Messrs. Lowe, David A. Smith, Robert B.
Smith, Jr., Sullivan and Young (and, until his death on October 16, 1995, Mr.
Grubb). Bancshares' Executive Committee met once during 1995.
The Stock Option and Compensation Committee administers the 1986 Employee
Incentive Stock Option Plan, selects key employees for participation in the plan
and determines the timing, pricing and amount of stock options granted pursuant
to the plan within the terms of the plan. The Stock Option and Compensation
Committee is also responsible for administering the 1994 Director Stock Option
Plan and, if approved, will administer the 1996 Stock Incentive Plan. The Stock
Option and Compensation Committee, which met seven times during 1995, is
comprised of Messrs. Robert B. Smith, Jr., Sullivan, Timberlake and Young and
Mrs. Crowell (and, until his death on October 16, 1995, Mr. Grubb).
Members of Bancshares' Audit Committee are Messrs. Sullivan, Albert, Hill,
Robert B. Smith, Jr. and Young. Bancshares' Audit Committee reviews and approves
various audit functions and is responsible for reviewing and approving the
Bank's internal audits and the separate examinations of the Bank by the Federal
Deposit Insurance Corporation and the North Carolina Commissioner of Banks.
Bancshares' Audit Committee met twice during 1995.
The Board of Directors of the Bank has a standing Executive Committee. The
Executive Committee of the Bank reviews various matters and submits proposals or
recommendations to the Bank's Board of Directors. The Executive Committee is
empowered to and does act for the Bank's Board of Directors on certain matters.
The Bank's Executive Committee is comprised of Messrs. Lowe, David A. Smith,
Robert B. Smith, Jr., Sullivan and Young (and, until his death on October 16,
1995, Mr. Grubb). During 1995, there were eleven meetings of the Bank's
Executive Committee.
During 1995, the Board of Directors of Bancshares met 13 times and the Board of
Directors of the Bank met 12 times. All directors attended at least 75 percent
of the aggregate of the total number of meetings of the Board of Directors of
Bancshares and the Bank (held during the period for which each person was a
director) and the total number of meetings held by all committees of the Boards
on which such directors served during 1995, with the exception of Mr. Grubb who,
due to health reasons prior to his death, was able to attend only two meetings
of both the Board of Directors of Bancshares and the Bank.
Shareholders entitled to vote for the election of directors may nominate
candidates for consideration by the Board of Directors of Bancshares. Pursuant
to the Bylaws of
6
<PAGE> 9
Bancshares, notice of nominations made by shareholders with respect to the 1997
annual meeting must be received in writing by the Secretary of Bancshares no
earlier than December 28, 1996 and no later than January 22, 1997, and must set
forth (i) the name, age, business address and, if known, residence address of
the nominee, (ii) the principal occupation or employment of the nominee, (iii)
the nominee's qualifications to serve as a director, (iv) the number of shares
of Common Stock beneficially owned by the nominee, (v) a representation that the
nominee has consented to his name being placed in nomination, (vi) the name and
record address of the shareholder making the nomination, (vii) the number of
shares of Common Stock owned of record and beneficially by such shareholder, and
(viii) any material interest of such shareholder in the proposed nomination.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation earned by the executive
officers of Bancshares during each of the years ended December 31, 1995,
December 31, 1994 and December 31, 1993:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Securities
Name and Compensation Underlying All Other
Principal ------------ Options/ Compensation
Position Year Salary ($) SARs (#)(1) ($)(2)
- ----------------------- ---- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Robert F. Lowe 1995 175,000 12,500/0 6,873
President and CEO 1994 167,800 12,500/0 3,632
1993 158,800 10,000/0 2,480
Monty J. Oliver 1995 110,000 5,000/0 4,839
Secretary and 1994 106,000 5,000/0 2,385
Treasurer 1993 102,000 4,000/0 1,632
Ronald J. Meadley 1995 110,000 5,000/0 3,196
Vice President and 1994 106,000 5,000/0 2,385
Assistant Secretary 1993 102,000 4,000/0 1,632
H. Franklin Sherron, Jr. 1995 97,000 5,000/0 3,354
Vice President and 1994 91,000 5,000/0 2,047
Assistant Secretary 1993 85,000 4,000/0 1,360
</TABLE>
- ---------------
(1) The information concerning options does not give effect to the 25% stock
split in the form of a stock dividend paid on February 15, 1996.
(2) Compensation set forth in this column represents the following for 1995 (i)
amounts contributed by the Bank for the account of the executive officers
7
<PAGE> 10
under the Lexington State Bank Employees Savings Plus Plan, as follows: Mr.
Lowe, $4,620; Mr. Oliver, $3,196; Mr. Meadley, $3,196; and Mr. Sherron,
$2,819; and (ii) life insurance premiums paid by Bancshares, as follows: Mr.
Lowe, $2,253; Mr. Oliver, $1,643; and Mr. Sherron, $535.
The following table sets forth certain information regarding the stock options
granted to the executive officers of Bancshares in 1995. In addition, in
accordance with the rules of the Securities and Exchange Commission (the "SEC"),
there are shown the hypothetical gains or "option spreads" that would exist for
the respective options based on assumed rates of annually compounded Common
Stock price appreciation of 5% and 10% from the date the options were granted
over the full option term.
Option/SAR Grants in Last Fiscal Year(1)
<TABLE>
<CAPTION>
Individual Grants Potential
-------------------------------------------------- Realizable
Percent Value at Assumed
Number of of Total Annual Rates of
Securities Options/ Exercise Stock Price
Underlying SARs Granted or Appreciation
Options/ to Employees Base for Option Term
SARs in Fiscal Price Expiration ----------------
Name Granted(#)(2) Year ($/Sh) Date 5%($) 10%($)
- ----------------- ------------ ------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Lowe 12,500/0 30/0 $ 18 05/04/05 141,501 358,592
Monty J. Oliver 5,000/0 12/0 $ 18 05/04/05 56,600 143,436
Ronald J. Meadley 5,000/0 12/0 $ 18 05/04/05 56,600 143,436
H. Franklin
Sherron, Jr. 5,000/0 12/0 $ 18 05/04/05 56,600 143,436
</TABLE>
- ---------------
(1) The information concerning options does not give effect to the 25% stock
split in the form of a stock dividend paid on February 15, 1996.
(2) Options become exercisable in installments of 20% on each anniversary date
following the date of grant, and thereafter may be exercised in whole or in
part at any time prior to the expiration date.
8
<PAGE> 11
The following table sets forth certain information regarding stock options
exercised during 1995 by the executive officers of Bancshares, including the
aggregate value of gains on the date of exercise. In addition, this table
includes the number of shares of Common Stock covered by both exercisable and
unexercisable stock options as of December 31, 1995. Also reported are the
values for "in-the-money" options which represent the positive spread between
the exercise price of any such existing stock options and the year-end price of
Common Stock.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option SAR/Values(1)
<TABLE>
<CAPTION> Number of Value of
Securities Unexercised
Underlying In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
- -------------------- --------------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Robert F. Lowe 7,160 71,313 19,877/36,215 139,485/111,878
Monty J. Oliver 4,653 42,620 8,750/14,687 64,422/46,912
Ronald J. Meadley 4,653 49,135 8,750/14,687 64,422/46,912
H. Franklin Sherron, Jr. 4,653 50,345 8,750/14,687 64,422/46,912
</TABLE>
- ---------------
(1) The information concerning options does not give effect to the 25% stock
split in the form of a stock dividend paid on February 15, 1996.
9
<PAGE> 12
PENSION PLAN
The Bank's Employees' Pension Plan is a non-contributory plan that covers all
employees who work at least 1,000 hours annually, are at least 21 years old and
have completed one year of service. The plan is a defined benefit plan,
providing for benefits equal to .8 percent of final average monthly
compensation, multiplied by years of credited service, plus .65 percent of final
average monthly compensation in excess of the social security compensation
amount, multiplied by years of credited service not to exceed 35 years. Final
average compensation is the average of the five highest consecutive calendar
years of compensation paid during the 10 calendar years preceding retirement.
The compensation covered by the plan consists of base salary. A participant's
accrued benefit is fully vested and non-forfeitable upon reaching age 65. If a
participant terminates employment for any reason other than death, disability or
retirement, the participant's accrued benefits will vest after five years of
service. Benefits can be paid in a lump sum only if the distribution is $10,000
or less. Distributions over $10,000 must be paid in monthly payments. Benefits
also are provided for early retirement, deferred retirement, disability
retirement and death.
The following table shows estimated annual benefits payable upon retirement at
age 65 to participants under the plan.
Pension Plan Table
Estimated Years of Credited Service
Annual Benefit Payable on Retirement(1)
<TABLE>
<CAPTION>
Five-Year Average
Salary at Retirement 15 Years 20 Years 25 Years 30 Years 35 Years
- --------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
225,000 30,255 40,339 50,424 60,509 70,594
200,000 30,255 40,339 50,424 60,509 70,594
175,000 30,255 40,339 50,424 60,509 70,594
150,000 30,255 40,339 50,424 60,509 70,594
125,000 24,817 33,089 41,362 49,634 57,907
100,000 19,380 25,839 32,299 38,759 45,219
75,000 13,942 18,589 23,237 27,884 32,532
50,000 8,505 11,339 14,174 17,009 19,844
</TABLE>
- ---------------
(1) Some of the amounts shown exceed the limits imposed by federal law for
qualified plans.
Benefits payable as shown in the table are computed on a straight-life annuity
basis. Such amounts are not subject to deduction for Social Security benefits or
other amounts received by participants. Years of credited service for the
persons named in the compensation table above are as follows: Mr. Lowe (25); Mr.
Oliver (17); Mr. Meadley(16); and Mr. Sherron(5).
10
<PAGE> 13
PERFORMANCE GRAPH
The following graph and table compare, for the five year period ended December
31, 1995, the cumulative return to shareholders of Bancshares with the Standard
& Poor's 500 Stock Index and an index consisting of 21 major regional banks,
assuming investment of $100 at the beginning of the period and the reinvestment
of dividends.
Comparison of Five Year Cumulative Total Return
<TABLE>
<CAPTION>
LSB Major
Measurement Period Bancshares, S&P 500 Regional
(Fiscal Year Covered) Inc. Composite Banks
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 132.42 130.47 178.89
12/31/92 237.23 140.41 227.81
12/31/93 250.00 154.56 241.52
12/31/94 287.82 156.60 228.59
12/31/95 323.73 215.45 359.93
</TABLE>
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
The following report of the Stock Option and Compensation Committee of the Board
of Directors of Bancshares provides information with respect to the compensation
paid to Bancshares' Chief Executive Officer, Robert F. Lowe, and to its
executive officers in general.
Bancshares' executive compensation program is administered by the Stock Option
and Compensation Committee (the "Committee") of the Board of Directors of
Bancshares. The Committee is composed of the individuals listed below, each of
whom is a non-employee director of Bancshares. Bancshares' compensation program
for executive officers consists of the following elements: annual salary; annual
grants of options under the 1986 Employee Incentive Stock Option Plan (the "1986
Option Plan"); and annual matching contributions under the Lexington State Bank
Employees Savings Plus Plan (the "Bank Savings Plan"). The Committee grants
stock options under the 1986 Option Plan for management employees and recommends
to Bancshares' Board of Directors the salary levels for executive officers. The
Board of Directors of the Bank determines matching contributions under the Bank
Savings Plan.
11
<PAGE> 14
Bancshares' executive compensation program is designed to enable Bancshares to
attract, retain and reward executive officers. The Committee intends to keep
compensation levels competitive with the Bank's primary competitors.
Historically, Bancshares' executive compensation program has not included
performance thresholds or other measures that directly relate base salaries to
operating performance.
In 1995, the Committee concluded a comprehensive review of Bancshares' executive
compensation program with the assistance of compensation consultants on matters
pertaining to the strategy, structure and administration of Bancshares'
executive compensation program. As a result of this review, certain
modifications were made to Bancshares' executive compensation program to
strengthen the linkage between executive compensation, Bancshares' and
individual performance and shareholder interests. In the future, compensation
for executives is expected to become more performance driven.
In accordance with this strategy, in February 1996, Bancshares' Board of
Directors adopted the Management Incentive Plan (the "Incentive Plan"). Under
the Incentive Plan, executive officers selected by the Committee may earn
incentive payments if Bancshares achieves operating performance targets and the
executive officers achieve individual performances objectives established by the
Committee. The Committee believes the Incentive Plan will further motivate
Bancshares' executive officers to attain Bancshares' business goals.
The following sections of this Report describe the compensation program for
executive officers in effect in 1995.
Base Salary
Base salaries for executive officers are reviewed and approved by Bancshares'
Board of Directors based upon recommendations by the Committee. The Committee
recommends salaries based upon a range of salaries earned by executive officers
of the Bank's primary competitors, although there is no predetermined point
within such range at which the Committee targets salaries. In determining base
salaries, the Committee does not establish performance thresholds or other
measures that directly relate base salaries to operating performance.
The base salary earned by Bancshares' Chief Executive Officer, Robert F. Lowe,
during 1995 reflects the base salary policies described above. Mr. Lowe's 1995
salary was at the midpoint of the range of salaries earned by the chief
executive officers of the Bank's competitors. The Committee believes that Mr.
Lowe's 1995 salary, which is a 4.3% increase over his 1994 salary, is modest in
relation to Bancshares' performance and conservative in relation to salaries
earned by executives of the Bank's primary competitors.
Stock Options
The Committee awards stock options to executive officers as a long-term
incentive to align the executives' interests with those of other shareholders
and to encourage significant stock ownership. Under the 1986 Option Plan, the
Committee grants to eligible employees options to purchase Bancshares' Common
Stock at a price equal
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<PAGE> 15
to the fair market value of Bancshares' Common Stock on the date of grant.
Eligible employees under the 1986 Option Plan are those key employees who, in
the judgment of the Committee, are in a position to materially affect the
profits of Bancshares and its subsidiaries by reason of the nature and extent of
their duties.
In 1995, pursuant to the 1986 Option Plan the Committee granted options for
41,250 shares of Bancshares' Common Stock to employees of Bancshares and the
Bank, including options for 12,500 shares granted to Mr. Lowe and 5,000 shares
for each of Messrs. Oliver, Meadley and Sherron. The Committee has not adopted
any objective criteria that relates the level of options granted to the
executive officers to performance of Bancshares or the individuals. In approving
the grant to Mr. Lowe, the Committee considered numerous factors including
Bancshares' operating performance, Mr. Lowe's prior contributions and potential
to contribute in the future and practices within the Bank's peer group with
respect to granting options, although none of these factors was determinative.
The stock options become exercisable in one-fifth installments on each of the
first five anniversaries of the date of grant. The option recipients, including
Mr. Lowe, will receive value from these grants only if the price of Bancshares'
Common Stock increases above the grant price.
Matching Contributions
The Bank Savings Plan is a voluntary defined contribution benefit plan designed
to provide additional incentive and retirement security for eligible employees
of the Bank. All Bank employees over the age of 21 are eligible to participate
in the Plan. The executive officers of Bancshares participate in the Plan on the
same basis as all other eligible employees of the Bank. Under the Bank Savings
Plan, each eligible employee of the Bank may elect to contribute on a pre-tax
basis to the Bank Savings Plan 2% to 10% of his or her compensation, subject to
certain limitations that may lower the maximum contributions of more highly
compensated participants.
At the beginning of each year, the Bank determines the amount of its matching
contributions to be made during the year. In 1995, the Bank's matching
contributions totalled $112,010, including $4,620 contributed to Mr. Lowe,
$3,196 contributed to each of Messrs. Oliver and Meadley and $2,819 contributed
to Mr. Sherron.
This report is submitted by the Stock Option and Compensation Committee of the
Board of Directors of Bancshares.
STOCK OPTION AND COMPENSATION COMMITTEE:
Robert B. Smith, Jr.
Margaret Lee W. Crowell
Burr W. Sullivan
Roberts E. Timberlake
Julius S. Young, Jr.
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<PAGE> 16
COMPENSATION OF DIRECTORS
Members of the Board of Directors of Bancshares receive a fee of $150 for each
meeting attended plus an annual retainer of $2,000. Each non-management director
receives a fee of $100 for each committee meeting attended of Bancshares and the
Bank and a fee of $100 for each meeting attended of the Board of Managers for
branches of the Bank. Each year Bancshares also grants each non-management
director a five-year option to purchase 500 shares of Common Stock. The exercise
price of each option is the fair market value of Common Stock. The option is
granted on the date of the annual shareholders' meeting.
In addition, directors may participate in Bancshares' Deferred Compensation Plan
for Directors, under which a director may defer a designated amount of his or
her annual compensation until he or she retires, dies while still a director,
becomes permanently disabled or otherwise discontinues service as a director.
Interest on each director's deferred account is credited at the end of each
month at a rate of six percent per annum. Each director's interest in the plan
is nonassignable, although each director may name a beneficiary to receive his
or her deferred compensation in the event of the director's death.
During the last fiscal year, each director allocated 100% of his or her 1995
director's fees to his or her individual account, with the exception of Mr.
Grubb who did not defer his 1995 director's fees.
SECTION 16 REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires Bancshares'
executive officers, directors and persons who beneficially own more than ten
percent of the outstanding shares of Common Stock to file with the SEC reports
disclosing their initial ownership of Common Stock as well as subsequent reports
disclosing changes in such ownership. To Bancshares' knowledge, based solely on
a review of copies of such reports furnished to Bancshares and written
representations that no other reports were required during the year ended
December 31, 1995, Bancshares' executive officers and directors complied with
all Section 16(a) filing requirements, except that (i) Mr. Timberlake filed one
late report with respect to his purchase of shares of Common Stock and (ii) Mr.
Young filed one late report with respect to his purchase of shares of Common
Stock and one late report with respect to his sale of shares of Common Stock.
CERTAIN TRANSACTIONS
Certain directors and officers of Bancshares and companies with which directors
or officers are associated are customers of the Bank and as such may from time
to time borrow from the Bank within prescribed limitations. Any such loans and
commitments are made in the ordinary course of business, on terms no more
favorable, including interest rates and collateral, than those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectibility or present other unfavorable features. The
indebtedness of all directors and officers as a group represents 10.9 percent of
Bancshares' shareholders' equity.
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<PAGE> 17
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of Bancshares has appointed the firm of Turlington and
Company, Certified Public Accountants, for the purpose of auditing the financial
statements of Bancshares and its subsidiaries for the year 1996, and
shareholders are being asked to ratify this appointment. Turlington and Company
has been employed in this capacity by Bancshares since 1982. Fees charged by
this firm are furnished at rates and upon terms that are customarily charged by
other independent auditing firms. A representative of the firm will be present
at the Annual Meeting with an opportunity to make a statement if he desires to
do so and to respond to appropriate questions.
1996 OMNIBUS STOCK INCENTIVE PLAN
Bancshares proposes that the shareholders approve the 1996 Stock Incentive Plan.
The 1996 Stock Incentive Plan was adopted by Bancshares' Board of Directors on
February 13, 1996, subject to the approval of Bancshares' shareholders. Upon
approval of the 1996 Stock Incentive Plan by the shareholders, no further grants
will be made under the 1986 Employee Incentive Stock Option Plan.
The purposes of the 1996 Stock Incentive Plan are (i) to assist Bancshares in
recruiting and retaining officers and key employees with ability and initiative,
(ii) to provide greater incentive for officers and key employees and (iii) to
associate the interests of officers and key employees with those of Bancshares
and its shareholders though opportunities for increased stock ownership.
The principal features of the 1996 Stock Incentive Plan are summarized below.
This summary is subject in all respects to the terms of the 1996 Stock Incentive
Plan. Bancshares will provide promptly, upon request and without charge, a copy
of the full text of the 1996 Stock Incentive Plan to each person to whom this
proxy statement is delivered. Requests should be directed to: Monty J. Oliver,
Secretary, LSB Bancshares, Inc., One LSB Plaza, Lexington, North Carolina 27292.
Summary
The Stock Option and Compensation Committee will administer the 1996 Stock
Incentive Plan. The Stock Option and Compensation Committee may delegate its
authority to one or more officers of Bancshares. However, the Stock Option and
Compensation Committee may not delegate its authority with respect to employees
who are subject to Section 16 of the Securities Exchange Act of 1934, as
amended. As used in this summary, the term "Administrator" means the Stock
Option and Compensation Committee and any delegate, as appropriate.
Each employee of Bancshares or a related entity is eligible to participate in
the 1996 Stock Incentive Plan. The Administrator will select the employees who
will participate in the 1996 Stock Incentive Plan ("Participants"). The
Administrator may, from time to time, grant stock options, stock appreciation
rights ("SARs") or shares of Stock Awards to Participants. No person may
participate in the 1996 Stock Incentive Plan while he is a member of the Stock
Option and Compensation Committee.
15
<PAGE> 18
Options granted under the 1996 Stock Incentive Plan may be incentive stock
options ("ISOs") or nonqualified stock options. A stock option entitles the
Participant to purchase Common Stock from Bancshares at the option price. The
option price will be fixed by the Administrator at the time the option is
granted, but the price cannot be less than the fair market value of a Common
Stock on the date of the grant in the case of an ISO, or less than 85% of the
fair market value of a Common Stock on the date of the grant in the case of a
nonqualified stock option. The option price may be paid in cash or, with the
Administrator's consent, with Common Stock or a combination of cash and Common
Stock, or in installments. The expiration date of options will be determined by
the Administrator at the time of grant; the maximum period for options that are
ISOs is 10 years. The Administrator may provide that an option that is not an
ISO may be transferred to members of a Participant's family.
SARs generally entitle the Participant to receive the excess of the fair market
value of Common Stock on the date of exercise over the initial value of the SAR.
The initial value of the SAR is the fair market value of a Common Stock on the
date of grant. The 1996 Stock Incentive Plan provides that the Administrator may
prescribe that the Participant will realize appreciation on a different basis
than described in the preceding sentences. For example, the Administrator may
limit or increase the amount of appreciation that may be realized upon the
exercise of an SAR. The Administrator may provide that SARs may be transferred
in accordance with Section 16 of the Securities Exchange Act of 1934, as
amended.
SARs may be granted in relation to option grants ("Corresponding SARs") or
independently of option grants. The difference between these two types of SARs
is that to exercise a Corresponding SAR, the Participant must surrender
unexercised that portion of the stock option to which the Corresponding SAR
relates.
Participants may also be awarded shares of Common Stock pursuant to Stock
Awards. The Administrator, in its discretion, may prescribe that a Participant's
rights in a Stock Award is both nontransferable and forfeitable unless and until
certain conditions are satisfied. These conditions may include, for example, a
requirement that the Participant continue employment with Bancshares for a
specified period or that Bancshares or the Participant achieve stated
objectives.
A maximum of 250,000 shares of Common Stock may be issued upon the exercise of
options and SARs and the grant of Stock Awards under the 1996 Stock Incentive
Plan. As an additional limitation, a maximum of 125,000 shares of Common Stock
may be issued upon the grant of Stock Awards. These limitations will be
adjusted, as the Administrator determines is appropriate, in the event of a
change in the number of outstanding shares of capital stock by reason of a stock
dividend, stock split, combination, reclassification, recapitalization or other
similar event. The terms of outstanding awards also may be adjusted by the
Administrator to reflect such changes.
No option or SAR may be granted and no Stock Awards may be awarded under the
1996 Stock Incentive Plan after January 8, 2006. The Board of Directors of
Bancshares may, without further action by shareholders, terminate or suspend the
1996 Stock Incentive Plan in whole or in part. The Board of Directors also may
amend the 1996 Stock Incentive Plan, except that without shareholder approval no
16
<PAGE> 19
such amendment may increase the number of shares of Common Stock that may be
issued under the 1996 Stock Incentive Plan or change the class of individuals
who may be selected to participate in the 1996 Stock Incentive Plan.
Neither the number of individuals who will be selected to participate in the
1996 Stock Incentive Plan nor the type or size of awards that will be approved
by the Administrator can presently be determined. Bancshares is also unable to
determine the number of individuals who would have participated in the 1996
Stock Incentive Plan or the type or size of awards that would have been made
under the 1996 Stock Incentive Plan had it been in effect in 1995.
Federal Income Tax Consequences
No taxable income is recognized by a Participant at the time an option is
granted. If the option is an ISO, no income will be recognized upon the
Participant's exercise of the option. Income is recognized by a Participant when
he disposes of shares acquired under an ISO. The exercise of a nonqualified
stock option generally is a taxable event that requires the Participant to
recognize, as ordinary income, the difference between the fair market value of
the Common Stock received upon such exercise and the option price.
No income is recognized by a Participant upon the grant of an SAR. The exercise
of an SAR generally is a taxable event. The Participant generally must recognize
income equal to any cash that is paid, plus the fair market value of Common
Stock that is received, in settlement of an SAR.
Income is recognized on account of an award of Stock Awards when the shares
first become transferable or are no longer subject to a substantial risk of
forfeiture. At that time the Participant recognizes income equal to the fair
market value of the Stock Awards.
A Participant's employer (either Bancshares or an affiliate) will be entitled to
claim a federal income tax deduction on account of the exercise of a
nonqualified option or SAR or the vesting of a Stock Awards award. The amount of
the deduction is equal to the ordinary income recognized by the Participant. The
employer will not be entitled to a federal income tax deduction on account of
the grant or the exercise of an ISO. The employer may claim a federal income tax
deduction on account of certain dispositions of Common Stock received upon the
exercise of an ISO.
The Board of Directors UNANIMOUSLY recommends a vote FOR approval of the 1996
Stock Incentive Plan.
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<PAGE> 20
SHAREHOLDER PROPOSAL RELATING TO
MINIMUM SHARE OWNERSHIP BY DIRECTORS
Bancshares has been advised that W. Robert Koontz, 4630 W. Old U.S. 64,
Lexington, North Carolina 27292, intends to introduce the following resolution
at the meeting:
"RESOLVED: That the shareholders of LSB Bancshares, Inc. recommend that the
Board of Directors take the necessary steps to amend the company's governing
instruments to adopt the following:
"Beginning on the 1996 LSB Bancshares Annual Shareholders meeting,
excluding those directors elected in 1994, 1995, 1996, each director
before qualifying as a director of LSB Bancshares and at all times while
serving as a director, excluding stock options, convertible securities
and warrants, shall own 500 shares of common LSB Bancshares, Inc. Should
any director fail to comply with this ownership requirement, such
director shall have sixty (60) days from the date of non-compliance to
again comply. Failure to again comply, shall result in disqualification
and such director's position shall be declared vacant."
In support of the foregoing resolution, Mr. Koontz states:
"REASONS: One of the most important issues before the American people today
is accountability. In our government, our schools, our legal system and our
corporations, we have lost accountability. Every one wants to be under the
umbrella of tenure, seniority, guarantee, and Golden Parachutes. Why would
management or the Board of Directors object to its directors being mandated
to own 500 shares? Generally speaking, corporate management has created a
monopoly. It does not matter if a director knows anything about banking or
financial matters, just as long as he/she has a degree from a prestigious
school or a relationship with the officers or other directors. I am not
suggesting that the Board of Directors invest in 500 shares in some new or
unproven company, but a company with solid assets. If the Board of Directors
does not have confidence in themselves to direct LSB profitably, surely they
should not serve on the Board of Directors of LSB Bancshares.
"If you AGREE, please mark your proxy FOR a beginning to Accountability."
The Board of Directors UNANIMOUSLY recommends a vote AGAINST the above proposal.
Mr. Koontz's resolution is substantially identical to a resolution he introduced
at each of the 1993, 1994 and 1995 Annual Meetings. Shares representing less
than 15% of the outstanding Common Stock were voted in favor of Mr. Koontz's
resolution at each of the three previous shareholders' meetings.
The Board of Directors of Bancshares does not believe that minimum share
ownership requirements for directors of Bancshares will serve any useful
purpose. Under North Carolina law, each director of Bancshares who is also a
director of the Bank is required to own shares of Common Stock having an
aggregate book value of at least $1,000, or 53 shares at December 31, 1995. The
Board of Directors of
18
<PAGE> 21
Bancshares continues to believe that minimum share ownership requirements for
directors, over and above those imposed by North Carolina law, would not benefit
Bancshares but would unnecessarily restrict Bancshares' ability to attract and
retain qualified candidates to serve as directors of Bancshares.
In addition, the Board of Directors believes that the reasons given by Mr.
Koontz in support of his proposal are untrue as applied to the members of the
Board of Directors of Bancshares. The Board of Directors believes that
historically there has been no relationship between a director's contributions
to Bancshares and the level of his or her investment in Common Stock. Moreover,
contrary to Mr. Koontz's statements, directors of Bancshares are not selected on
the basis of their relationships with other directors or officers, the schools
they attended or any other improper factors. Directors are nominated by the
Board of Directors, and elected by the shareholders of Bancshares, on the basis
of their experience, individual accomplishments, knowledge, ability, judgment
and a number of other factors that may or may not include a special knowledge of
the banking industry. Bancshares has for a number of years sought to maintain
diversity on its Board of Directors, and the current composition of the Board
reflects this policy. Bancshares believes a diverse group of directors will
enhance the perspectives and collective talents of Board members and allow the
Board to better manage all facets of the business and affairs of Bancshares.
Accordingly, based on these facts, the Board of Directors strongly believes Mr.
Koontz's proposal is without merit and should not be supported by the
shareholders.
The shareholder proposal set forth above will be approved if the number of votes
cast "for" such proposal exceeds the number of votes cast "against" such
proposal.
SHAREHOLDERS' PROPOSALS
Any shareholder proposal to be included in the proxy materials relating to the
1997 Annual Meeting must be received by the Secretary of Bancshares, One LSB
Plaza, Lexington, North Carolina 27292, by November 13, 1996.
In addition to any other applicable requirements, for business to be properly
brought before the 1997 Annual Meeting by a shareholder even if the proposal is
not to be included in Bancshares' proxy statement, pursuant to Bancshares'
bylaws, the shareholder must give notice in writing to the Secretary of
Bancshares not later than January 12, 1997. As to each matter, the notice must
contain (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for addressing it at the annual meeting, (ii) the
name and record address of the shareholder proposing such business, (iii) the
number of shares of Common Stock owned of record and beneficially by such
shareholder and (iv) any material interest of the shareholder in such business.
19
<PAGE> 22
OTHER MATTERS
The Board of Directors of Bancshares knows of no other matters intended to be
presented for consideration at the meeting. However, if any other matters
properly come before the meeting, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their best
judgment.
Robert F. Lowe, President
March 13, 1996
20
<PAGE> 23
Appendix A
LSB BANCSHARES, INC.
1996 OMNIBUS STOCK INCENTIVE PLAN
<PAGE> 24
<TABLE>
<S> <C> <C> <C>
ARTICLE I DEFINITIONS
1.01. Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.05. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.06. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.07. Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.08. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.09. Corresponding SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.10. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.11. Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.12. Initial Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13. Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.16. SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.17. Stock Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PURPOSES
ARTICLE III ADMINISTRATION
ARTICLE IV ELIGIBILITY
ARTICLE V STOCK SUBJECT TO PLAN
5.01. Shares Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.02. Aggregate Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.03. Reallocation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI OPTIONS
6.01. Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.02. Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.03. Maximum Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.04. Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.05. Transferable Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.06. Employee Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.07. Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.08. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.09. Installment Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.10. Shareholder Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.11. Disposition of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C> <C>
ARTICLE VII SARS
7.01. Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.02. Maximum SAR Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.03. Nontransferability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.04. Transferable SARs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.05. Employee Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.06. Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.07. Settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.08. Shareholder Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII STOCK AWARDS
8.01. Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.02. Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.03. Performance Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.04. Employee Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.05. Shareholder Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX ADJUSTMENT UPON CHANGE IN
COMMON STOCK
ARTICLE X COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
ARTICLE XI GENERAL PROVISIONS
11.01. Effect on Employment and Service. . . . . . . . . . . . . . . . . . . . . . . 19
11.02. Unfunded Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.03. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XII AMENDMENT
ARTICLE XIII DURATION OF PLAN
ARTICLE XIV EFFECTIVE DATE OF PLAN
</TABLE>
<PAGE> 26
ARTICLE I
DEFINITIONS
1.01. Administrator means the Committee and any delegate of the
Committee that is appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary" or "parent" corporation
(within the meaning of Section 424 of the Code) of the Company.
1.03. Agreement means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Stock Award or an Option or SAR granted to such
Participant.
1.04. Board means the Board of Directors of the Company.
1.05. Code means the Internal Revenue Code of 1986, and any
amendments thereto.
1.06. Committee means the Stock Option and Compensation Committee
of the Board.
1.07. Common Stock means the common stock, $5.00 par value per
share, of the Company.
1.08. Company means LSB Bancshares, Inc.
1.09. Corresponding SAR means an SAR that is granted in relation
to a particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.10. Exchange Act means the Securities Exchange Act of 1934, as
amended.
1.11. Fair Market Value means, on any given date, the last sales
price of a share of Common Stock as reported on the NASDAQ National Market
System. The
<PAGE> 27
preceding sentence to the contrary notwithstanding, if the Common Stock is
listed upon any established stock exchange, the Fair Market Value on any given
day shall be the closing price of the Common Stock on such exchange. If the
Common Stock was not traded on the NASDAQ National Market System or on an
established stock exchange on such day, then the Fair Market Value is
determined with reference to the next preceding day that the Common Stock was
so traded.
1.12. Initial Value means, with respect to an SAR, the Fair Market
Value of one share of Common Stock on the date of grant.
1.13. Option means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock at the
price set forth in an Agreement.
1.14. Participant means an employee of the Company or an
Affiliate, including an employee who is a member of the Board, who satisfies
the requirements of Article IV and is selected by the Administrator to receive
a Stock Award, an Option, an SAR or a combination thereof.
1.15. Plan means the LSB Bancshares, Inc. 1996 Omnibus Stock
Incentive Plan.
1.16. SAR means a stock appreciation right that in accordance with
the terms of an Agreement entitles the holder to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the amount
determined by the Administrator and specified in an Agreement. In the absence
of such a determination, the holder shall be entitled to receive, with respect
to each share of Common Stock encompassed by the exercise of such SAR, the
excess of the Fair
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<PAGE> 28
Market Value on the date of exercise over the Initial Value. References to
"SARs" include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.
1.17. Stock Award means Common Stock awarded to a Participant
under Article VIII.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and each
Affiliate in recruiting and retaining individuals with ability and initiative
by enabling such persons to participate in the future success of the Company
and its Affiliates and to associate their interests with those of the Company
and its shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and
Options not so qualifying, and the grant of SARs and Stock Awards. No Option
that is intended to be an incentive stock option shall be invalid for failure
to qualify as an incentive stock option. The proceeds received by the Company
from the sale of Common Stock pursuant to the Plan shall be used for general
corporate purposes.
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ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have authority to grant Stock Awards, Options and SARs upon
such terms (not inconsistent with the provisions of the Plan) as the
Administrator may consider appropriate. Such terms may include conditions (in
addition to those contained in the Plan) on the exercisability of all or any
part of an Option or SAR or on the transferability or forfeitability of a Stock
Award. Notwithstanding any such conditions, the Administrator may, in its
discretion, accelerate the time at which any Option or SAR may be exercised, or
the time at which a Stock Award may become transferable or nonforfeitable. In
addition, the Administrator shall have complete authority to interpret all
provisions of the Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of the Plan. The express grant in the Plan of any specific
power to the Administrator shall not be construed as limiting any power or
authority of the Administrator. Any decision made, or action taken, by the
Administrator or in connection with the administration of the Plan shall be
final and conclusive. Neither the Administrator nor any member of the
Committee shall be liable for any act done in good faith with respect to the
Plan or any Agreement, Option, SAR or Stock Award. All expenses of
administering the Plan shall be borne by the Company.
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The Committee, in its discretion, may delegate to one or
more officers of the Company or the Executive Committee of the Board, all or
part of the Committee's authority and duties with respect to grants and awards
to individuals who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act. The Committee may revoke or amend the terms of
a delegation at any time but such action shall not invalidate any prior actions
of the Committee's delegate or delegates that were consistent with the terms of
the Plan.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of the Plan) is
eligible to participate in the Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate. Directors of the Company who are employees of the Company or an
Affiliate may be selected to participate in the Plan. A member of the
Committee may not participate in the Plan during the time that his
participation would prevent the Committee from being "disinterested" for
purposes of Securities and Exchange Commission Rule 16b-3 as in effect from
time to time.
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ARTICLE V
STOCK SUBJECT TO PLAN
5.01. Shares Issued. Upon the award of shares of Common Stock
pursuant to a Stock Award, the Company may issue shares of Common Stock from
its authorized but unissued Common Stock. Upon the exercise of any Option or
SAR, the Company may deliver to the Participant (or the Participant's broker if
the Participant so directs), shares of Common Stock from its authorized but
unissued Common Stock.
5.02. Aggregate Limit. The maximum aggregate number of shares of
Common Stock that may be issued under the Plan pursuant to the exercise of SARs
and Options and the grant of Stock Awards is 250,000 shares. The maximum
aggregate number of shares that may be issued under the Plan as Stock Awards is
125,000 shares. The maximum aggregate number of shares that may be issued
under the Plan and the maximum number of shares that may be issued as Stock
Awards shall be subject to adjustment as provided in Article X.
5.03. Reallocation of Shares. If an Option is terminated, in
whole or in part, for any reason other than its exercise or the exercise of a
Corresponding SAR that is settled with Common Stock, the number of shares of
Common Stock allocated to the Option or portion thereof may be reallocated to
other Options, SARs and Stock Awards to be granted under the Plan. If an SAR
is terminated, in whole or in part, for any reason other than its exercise or
the exercise of a related Option, the number
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of shares of Common Stock allocated to the SAR or portion thereof may be
reallocated to other Options, SARs and Stock Awards to be granted under the
Plan.
ARTICLE VI
OPTIONS
6.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by such awards.
6.02. Option Price. The price per share for Common Stock
purchased on the exercise of an Option shall be determined by the Administrator
on the date of grant; provided, however, that the price per share for Common
Stock purchased on the exercise of any Option shall not be less than
eighty-five percent (85%) of the Fair Market Value on the date the Option is
granted. Notwithstanding the preceding sentence, the price per share for
Common Stock purchased on the exercise of any Option that is an incentive stock
option shall not be less than the Fair Market Value on the date the Option is
granted.
6.03. Maximum Option Period. The maximum period in which an
Option may be exercised shall be determined by the Administrator on the date of
grant, except that no Option that is an incentive stock option shall be
exercisable after the expiration of ten years from the date such Option was
granted. The terms of any Option that is an incentive stock option may provide
that it is exercisable for a period less than such maximum period.
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6.04. Nontransferability. Except as provided in Section 6.05,
each Option granted under the Plan shall be nontransferable except by will or
by the laws of descent and distribution. In the event of any such transfer,
the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities. Except as set
forth in Section 6.05, during the lifetime of the Participant to whom the
Option is granted, the Option may be exercised only by the Participant. No
right or interest of a Participant in any Option shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
6.05. Transferable Options. Section 6.04 to the contrary
notwithstanding, if the Agreement provides, an Option that is not an incentive
stock option may be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family
members or a partnership in which such family members are the only partners;
provided, however, that Participant may not receive any consideration for the
transfer. In addition to transfers described in the preceding sentence the
Administrator may grant Options that are not incentive stock options that are
transferable on other terms and conditions as may be permitted under Securities
Exchange Commission Rule 16b-3 as in effect from time to time. The holder of
an Option transferred pursuant to this section shall be bound by the same terms
and conditions that governed the Option during the period that it was held by
the Participant. In the event of any such transfer, the Option and any
Corresponding SAR that relates to such Option must be transferred to the same
person or persons or entity or entities.
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6.06. Employee Status. For purposes of determining the
applicability of Section 422 of the Code (relating to incentive stock options),
or in the event that the terms of any Option provide that it may be exercised
only during employment or within a specified period of time after termination
of employment, the Administrator may decide to what extent leaves of absence
for governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment.
6.07. Exercise. Subject to the provisions of the Plan and the
applicable Agreement, an Option may be exercised in whole at any time or in
part from time to time at such times and in compliance with such requirements
as the Administrator shall determine; provided, however, that incentive stock
options (granted under the Plan and all plans of the Company and its
Affiliates) may not be first exercisable in a calendar year for stock having a
Fair Market (determined as of the date an Option is granted) exceeding
$100,000. An Option granted under the Plan may be exercised with respect to
any number of whole shares less than the full number for which the Option could
be exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with the Plan and the
applicable Agreement with respect to the remaining shares subject to the
Option. The exercise of an Option shall result in the termination of any
Corresponding SAR to the extent of the number of shares with respect to which
the Option is exercised.
6.08. Payment. Unless otherwise provided by the Agreement, payment
of the Option price shall be made in cash or a cash equivalent acceptable to
the Adminis-
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<PAGE> 35
trator. If the Agreement provides, payment of all or part of the Option price
may be made by surrendering shares of Common Stock to the Company. If Common
Stock is used to pay all or part of the Option price, the sum of the cash and
cash equivalent and the Fair Market Value (determined as of the day preceding
the date of exercise) of the shares surrendered must not be less than the
Option price of the shares for which the Option is being exercised.
6.09. Installment Payment. If the Agreement provides, and if the
Participant is employed by the Company on the date the Option is exercised,
payment of all or part of the Option price may be made in installments. In
that event the Company shall lend the Participant an amount equal to not more
than ninety percent (90%) of the Option price of the shares acquired by the
exercise of the Option. This amount shall be evidenced by the Participant's
promissory note and shall be payable in not more than five equal annual
installments, unless the amount of the loan exceeds the maximum loan value for
the shares purchased, which value shall be established from time to time by
regulations of the Board of Governors of the Federal Reserve System. In that
event, the note shall be payable in equal quarterly installments over a period
of time not to exceed five years. The Administrator, however, may vary such
terms and make such other provisions concerning the unpaid balance of such
purchase price in the case of hardship, subsequent termination of employment,
absence on military or government service, or subsequent death of the
Participant as in its discretion are necessary or advisable in order to protect
the Company,
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<PAGE> 36
promote the purposes of the Plan and comply with regulations of the Board of
Governors of the Federal Reserve System relating to securities credit
transactions.
The Participant shall pay interest on the unpaid balance at
the minimum rate necessary to avoid imputed interest or original issue discount
under the Code. All shares acquired with cash borrowed from the Company shall
be pledged to the Company as security for the repayment thereof. In the
discretion of the Administrator, shares of stock may be released from such
pledge proportionately as payments on the note (together with interest) are
made, provided the release of such shares complies with the regulations of the
Federal Reserve System relating to securities credit transactions then
applicable. While shares are so pledged, and so long as there has been no
default in the installment payments, such shares shall remain registered in the
name of the Participant, and he shall have the right to vote such shares and to
receive all dividends thereon.
6.10. Shareholder Rights. No Participant shall have any rights as
a shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.11. Disposition of Stock. A Participant shall notify the
Company of any sale or other disposition of Common Stock acquired pursuant to
an Option that was an incentive stock option if such sale or disposition occurs
(i) within two years of the grant of an Option or (ii) within one year of the
issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company.
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<PAGE> 37
ARTICLE VII
SARS
7.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by such awards. For purposes of the
preceding sentence, an Option and Corresponding SAR shall be treated as a
single award. In addition no Participant may be granted Corresponding SARs
(under all incentive stock option plans of the Company and its Affiliates) that
are related to incentive stock options which are first exercisable in any
calendar year for stock having an aggregate Fair Market Value (determined as of
the date the related Option is granted) that exceeds $100,000.
7.02. Maximum SAR Period. The maximum period in which an SAR may
be exercised shall be determined by the Administrator on the date of grant,
except that no Corresponding SAR that is related to an incentive stock option
shall be exercisable after the expiration of ten years from the date such
related Option was granted. The terms of any Corresponding SAR that is related
to an incentive stock option may provide that it is exercisable for a period
less than such maximum period.
7.03. Nontransferability. Except as provided in Section 7.04,
each SAR granted under the Plan shall be nontransferable except by will or by
the laws of descent and distribution. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same person
or persons or entity or entities.
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<PAGE> 38
Except as set forth in Section 7.04, during the lifetime of the Participant to
whom the SAR is granted, the SAR may be exercised only by the Participant. No
right or interest of a Participant in any SAR shall be liable for, or subject
to, any lien, obligation, or liability of such Participant.
7.04. Transferable SARs. Section 7.03 to the contrary
notwithstanding, the Administrator may grant transferable SARs to the extent
that, and on such terms as may be permitted by, Securities Exchange Commission
Rule 16b- 3 as in effect from time to time. In the event of any such transfer,
Corresponding SAR and the related Option must be transferred to the same person
or person or entity or entities. The holder of an SAR transferred pursuant to
this section shall be bound by the same terms and conditions that governed the
SAR during the period that it was held by the Participant.
7.05. Employee Status. If the terms of any SAR provide that it
may be exercised only during employment or within a specified period of time
after termination of employment, the Administrator may decide to what extent
leaves of absence for governmental or military service, illness, temporary
disability or other reasons shall not be deemed interruptions of continuous
employment.
7.06. Exercise. Subject to the provisions of the Plan and the
applicable Agreement, an SAR may be exercised in whole at any time or in part
from time to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that a Corresponding SAR that
is related to an incentive stock option may be exercised only to the extent
that the related Option is
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<PAGE> 39
exercisable and only when the Fair Market Value exceeds the option price of the
related Option. An SAR granted under the Plan may be exercised with respect to
any number of whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to exercise
the SAR from time to time in accordance with the Plan and the applicable
Agreement with respect to the remaining shares subject to the SAR. The
exercise of a Corresponding SAR shall result in the termination of the related
Option to the extent of the number of shares with respect to which the SAR is
exercised.
7.07. Settlement. At the Administrator's discretion, the amount
payable as a result of the exercise of an SAR may be settled in cash, Common
Stock, or a combination of cash and Common Stock. No fractional share will be
deliverable upon the exercise of an SAR but a cash payment will be made in lieu
thereof.
7.08. Shareholder Rights. No Participant shall, as a result of
receiving an SAR award, have any rights as a shareholder of the Company or any
Affiliate until the date that the SAR is exercised and then only to the extent
that the SAR is settled by the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock Award is to be
made and will specify the number of shares of Common Stock covered by such
awards.
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<PAGE> 40
8.02. Vesting. The Administrator, on the date of the award, may
prescribe that a Participant's rights in the Stock Award shall be forfeitable
or otherwise restricted for a period of time or subject to such conditions as
may be set forth in the Agreement. If a Stock Award is forfeitable and
non-transferable upon its grant, the period of restriction shall be at least
three years; provided, however, that the minimum period of restriction shall be
at least one year in the case of a Stock Award that will become transferable
and nonforfeitable on account of the satisfaction of performance objectives
prescribed by the Administrator.
8.03. Performance Objectives. In accordance with Section 8.02,
the Administrator may prescribe that Stock Awards will become vested or
transferable or both based on objectives stated with respect to the Company's
return on equity, earnings per share, total earnings, earnings growth, return
on capital, return on assets, Fair Market Value or other criteria. If the
Administrator, on the date of award, prescribes that a Stock Award shall become
nonforfeitable and transferable only upon the attainment of performance
objectives stated with respect to one or more of the foregoing criteria, the
shares subject to such Stock Award shall become nonforfeitable and transferable
only to the extent that the Administrator certifies that such objectives have
been achieved.
8.04. Employee Status. In the event that the terms of any Stock
Award provide that shares may become transferable and nonforfeitable thereunder
only after completion of a specified period of employment, the Administrator
may decide in each case to what extent leaves of absence for governmental or
military service, illness,
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<PAGE> 41
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment.
8.05. Shareholder Rights. During the time a Stock Award is
forfeitable, (in accordance with the applicable Agreement and while the shares
of Common Stock granted pursuant to the Stock Award may be forfeited or are
nontransferable), a Participant will have all rights of a shareholder with
respect to a Stock Award, including the right to receive dividends and vote the
shares; provided, however, that during such period (i) a Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares
of Common Stock granted pursuant to a Stock Award, (ii) the Company shall
retain custody of the certificates evidencing shares of Common Stock granted
pursuant to a Stock Award, and (iii) the Participant will deliver to the
Company a stock power, endorsed in blank, with respect to each Stock Award.
The limitations set forth in the preceding sentence shall not apply after the
shares of Common Stock granted under the Stock Award are transferable and are
no longer forfeitable.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs and
Stock Awards may be granted under the Plan, the terms of outstanding Stock
Awards, Options, and SARs, and the per individual limitations on the number of
shares or Units for which Options, SARs, and Stock Awards may be granted, shall
be adjusted
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<PAGE> 42
as the Committee shall determine to be equitably required in the event that (a)
the Company (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or (ii) engages in a transaction to
which Section 424 of the Code applies or (b) there occurs any other event
which, in the judgment of the Committee necessitates such action. Any
determination made under this Article IX by the Committee shall be final and
conclusive.
The issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the maximum number of shares as to which Options, SARs and
Stock Awards may be granted, the per individual limitations on the number of
shares for which Options, SARs and Stock Awards may be granted or the terms of
outstanding Stock Awards, Options or SARs.
The Committee may make Stock Awards and may grant Options
and SARs in substitution for performance shares, phantom shares, stock awards,
stock options, stock appreciation rights, or similar awards held by an
individual who becomes an employee of the Company or an Affiliate in connection
with a transaction described in the first paragraph of this Article IX.
Notwithstanding any provision of the Plan (other than the limitation of Section
5.02), the terms of such substituted Stock
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<PAGE> 43
Awards or Option or SAR grants shall be as the Committee, in its discretion,
determines is appropriate.
ARTICLE X
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall
be issued, no certificates for shares of Common Stock shall be delivered, and
no payment shall be made under the Plan except in compliance with all
applicable federal and state laws and regulations (including, without
limitation, withholding tax requirements), any listing agreement to which the
Company is a party, and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock when a Stock Award is granted or for which an Option or
SAR is exercised may bear such legends and statements as the Administrator may
deem advisable to assure compliance with federal and state laws and
regulations. No Option or SAR shall be exercisable, no Stock Award shall be
granted, no Common Stock shall be issued, no certificate for shares shall be
delivered, and no payment shall be made under the Plan until the Company has
obtained such consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.
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<PAGE> 44
ARTICLE XI
GENERAL PROVISIONS
11.01. Effect on Employment and Service. Neither the adoption of
the Plan, its operation, nor any documents describing or referring to the Plan
(or any part thereof) shall confer upon any individual any right to continue in
the employ or service of the Company or an Affiliate or in any way affect any
right and power of the Company or an Affiliate to terminate the employment or
service of any individual at any time with or without assigning a reason
therefor.
11.02. Unfunded Plan. The Plan, insofar as it provides for grants,
shall be unfunded, and the Company shall not be required to segregate any
assets that may at any time be represented by grants under the Plan. Any
liability of the Company to any person with respect to any grant under the plan
shall be based solely upon any contractual obligations that may be created
pursuant to the Plan. No such obligation of the Company shall be deemed to be
secured by any pledge of, or other encumbrance on, any property of the Company.
11.03. Rules of Construction. Headings are given to the articles
and sections of the Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
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<PAGE> 45
ARTICLE XII
AMENDMENT
The Board may amend or terminate the Plan from time to time;
provided, however, that no amendment may become effective until shareholder
approval is obtained if (i) the amendment increases the aggregate number of
shares of Common Stock that may be issued under the Plan, (ii) the amendment
changes the class of individuals eligible to become Participants or (iii) the
amendment materially increases the benefits that may be provided under the
Plan. No amendment shall, without a Participant's consent, adversely affect
any rights of such Participant under any outstanding Stock Award, Option, or
SAR outstanding at the time such amendment is made.
ARTICLE XIII
DURATION OF PLAN
No Stock Award, Option or SAR may be granted under the Plan
after January 8, 2006. Stock Awards, Options, and SARs granted before that
date shall remain valid in accordance with their terms.
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ARTICLE XIV
EFFECTIVE DATE OF PLAN
Options and SARs may be granted under the Plan upon its
adoption by the Board, provided that no Option or SAR shall be effective or
exercisable unless the Plan is approved by a majority of the votes of the
Company's shareholders, voting either in person or by proxy, present, or
represented, and entitled to vote, at a duly held shareholders' meeting within
twelve months of such adoption. Stock Awards may be granted under the Plan
upon the later of its adoption by the Board or its approval by shareholders in
accordance with the preceding sentence.
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<PAGE> 47
<TABLE>
APPENDIX B
<S> <C>
LSB BANCSHARES, INC. PROXY This Proxy is solicited on behalf of the Board of Directors.
ONE LSB PLAZA The undersigned hereby appoints Robert F. Lowe and Robert B. Smith, Jr. and each of
LEXINGTON, NORTH CAROLINA 27292 them as proxies (and if the undersigned is a proxy, as substitute proxies), with power
of substition, hereby authorizes each of them to represent and to vote, as designated
below, all of the es of LSB BANCSHARES, INC. held of record by the undersigned at the
close of business on March 1, 1996, at the Annual Meeting of Shareholders to be held
on April 17, 1996, at 1:00 p.m. at the Smith Young YMCA and any adjournments thereof.
1. ELECTION OF DIRECTORS
[ ] For all nominees named below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as indicated to the contrary below)
Leonard H. Beck, Samuel R. Harris, David A. Smith, Burr W. Sullivan and Peggy B. Barnhardt
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE SUCH NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW)
- -----------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" proposal No. 2.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF TURLINGTON AND COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, FOR THE YEAR ENDING
DECEMBER 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" proposal No. 3.
3. PROPOSAL TO APPROVE THE LSB BANCSHARES, INC. 1996 OMNIBUS STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "AGAINST" proposal No. 4.
4. SHAREHOLDER PROPOSAL BY W. ROBERT KOONTZ RELATING TO MINIMUM SHARE OWNERSHIP REQUIREMENTS FOR DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other business and matters incident to the conduct of the
meeting as may properly come before the meeting. 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 all the nominees for Director,
for Proposals 2 and 3 and against Proposal 4.
If a shareholder is a participant in the Shareholders Dividend Reinvestment Plan and Stock Purchase Plan, the proxy card
represents the number of shares in the dividend reinvestment account as well as shares owned of record directly by the
Shareholder.
-------------------------------------------------------------
Signature
-------------------------------------------------------------
Signature if held jointly
Please sign exactly as name appears above. When shares are held
by joint owners, both should sign. When signing as an executor,
administrator, trustee or guardian, please sign in full corporate
name by the president or other authorized officer. If a
partnership, please sign in the partnership name by an authorized
person.
DATED: , 1996
---------------------------------------
Please mark, sign, date and return
the proxy card promptly using the
enclosed envelope.
</TABLE>
