M&M FINANCIAL CORPORATION
307 NORTH MAIN STREET
MARION, SOUTH CAROLINA 29571
803/431-1000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 1997
To The Shareholders:
The Annual Meeting of Shareholders of M&M Financial Corporation (the "Company")
will be held at 5:30 p.m. on Thursday, April 17, 1997, at the Opera House, West
Godbold Street, Marion, South Carolina, for the following purposes:
1. To consider the election of the five persons named as nominee
in the Proxy Statement dated April 4, 1997, accompanying this
Notice;
2. To consider and vote on adoption of the proposed "M&M
Financial Corporation and First National South Incentive Stock
Option Plan of 1997," to be effective April 17, 1997.
3. To consider and vote on amendments to the Company's Articles
of Incorporation (i) to increase the authorized shares of
common stock, $5.00 par value, to 3,000,000 shares, and (ii)
to increase the amount of total authorized capital stock from
$4,000,000 to $15,000,000.
4. To consider the ratification of the selection of Tourville,
Simpson and Henderson as independent auditors for the Company
for the year ending December 31, 1997; and
5. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on Friday, April 4, 1997,
will be entitled to receive notice of and vote at the Annual Meeting.
M&M Financial Corporation's Proxy, Proxy Statement (providing important
shareholder information for the Annual Meeting), and its 1996 Annual Report to
Stockholders are enclosed with this Notice.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. IF YOU ATTEND THE
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors,
Marion, South Carolina Chester A. Duke
April 4, 1997 Chairman and President
<PAGE>
M&M FINANCIAL CORPORATION
PROXY STATEMENT
This Proxy Statement and the accompanying form of Proxy are first being sent to
shareholders on or about April 4, 1997.
SOLICITATION, VOTING AND REVOCABILITY OF PROXY
Solicitation
This solicitation of proxies for the Annual Meeting is being made on behalf of
the Board of Directors of M&M Financial Corporation (the "Company") for use at
the 1997 Annual Meeting of Shareholders to be held on Thursday, April 17, 1997
at 5:30 p.m. at the Opera House, West Godbold Street, Marion, South Carolina,
and any adjournments thereof. Only shareholders of record on April 4, 1997 will
be entitled to vote at the Annual Meeting. There were 335,372 shares of the
Company's Common Stock, par value $5 per share ("Common Stock"), issued and
outstanding on that date. Such Common Stock represents the only class of stock
outstanding of the Company.
All expenses of preparing, printing and mailing the Proxy and Proxy Statement
and all material used in the solicitation of the Proxy will be borne by the
Company. The Company, through its directors, officers and regular employees, may
solicit proxies by personal interview or telephone, but without additional
compensation for their services for such solicitation. The Company may request
brokers and others to send the Proxy Statement and proxy material to the
beneficial owners of the shares and may reimburse them for their reasonable
expense in connection therewith.
Voting
The presence, in person and by proxy, of a majority in number of the outstanding
shares of Common Stock entitled to vote at this Annual Meeting shall constitute
a quorum for the transaction of business.
In regard to Proposal 1, Shareholders have the right to cumulate their votes for
directors. The right to cumulate votes means that each Shareholder is entitled
to multiply the number of votes the Shareholder is entitled to cast by the
number of directors for whom the Shareholder is entitled to vote and cast the
product for a single candidate or distribute the product among two or more
candidates. Cumulative voting remains in effect although Shareholders voted on
the elimination of cumulative voting in the election of directors at the Annual
Meeting of Shareholders in 1996. That vote did not eliminate cumulative voting
due to a legal technicality associated with the notice for the vote on that
proposal.
1
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In regard to Proposal 2 regarding the proposed Incentive Stock Option Plan of
1997, Proposal 3 regarding the proposed amendment to the Articles of
Incorporation to increase the Company's authorized common shares to 3,000,000
shares, Proposal 4 regarding the ratification of Tourville, Simpson and
Henderson as independent auditors for the Company for the year ending December
31, 1997, and all other items which may be submitted to the Shareholders for
their consideration at this meeting, the affirmative vote of a majority of
shares of Common Stock present and voting is required for approval. Each
Shareholder is entitled to one vote for each share of Common Stock held on these
and all other matters submitted for a vote of Shareholders.
The Board of Directors unanimously recommends a vote in favor of Proposals 1, 2,
3 and 4. Each Proxy, unless the Shareholder otherwise indicates, will be voted
in favor of Proposals 1, 2, 3 and 4. In each case where a Shareholder has
appropriately specified how the Proxy is to be voted, it will be voted in
accordance with that specification. Executed but unmarked Proxies that are
returned to the Company will be voted in favor of Proposals 1, 2, 3 and 4.
Shareholders may designate a persons or person other than those named in the
enclosed Proxy to vote their shares at the Annual Meeting or any adjournment
thereof.
The Company does not intend to present any matters for action other than those
listed in the Notice of Annual Meeting and has not been informed that any
persons intend to present any other matters for action at the Annual Meeting. If
any other matters are properly brought before the meeting, the persons
designated as proxies will vote in accordance with their best discretion on such
matters.
Revocability of Proxies
Shareholders who give a Proxy may revoke it at any time prior to exercise by
filing a written request with the Secretary of the Company, by voting in person,
or by presenting a duly executed Proxy bearing a later date.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
To the knowledge of the Company, no Shareholder owned beneficially more than
five percent (5%) of the Company's outstanding Common Stock on the record date.
On the record date, the Company's Common Stock was owned by approximately 700
individuals and entities as record holders and/or as beneficial owners.
No change in control of the Company has occurred since the beginning of the
Company's last fiscal year, and as far as the Company's management is aware,
there are no plans for a later change in control of the Company.
SHAREHOLDER PROPOSALS
Shareholders may wish to submit proposals which they believe should be voted
upon by the Shareholders. The Securities and Exchange Commission ("SEC") has
adopted regulations which govern the inclusion of such proposals in the
Company's annual proxy materials. Any
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proposal that a Shareholder intends to present at the 1998 Annual Meeting of
Shareholders must be received by the Company at its principal offices, 307
North Main Street, Marion, South Carolina 29571, not later than November 18,
1997 (120 days prior to the anticipated date of the 1998 Proxy Statement) in
order to be eligible for inclusion in the Company's Proxy and Proxy Statement
for that annual meeting. Such proposals must meet the requirements specified in
Rule 14a-8 of Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and related regulations, in order to be included
in such Shareholder materials.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Articles of Incorporation and Bylaws of M&M Financial Corporation provide
that the Board of Directors shall consist of not less than 5 nor more than 25
shareholders. The Board currently consists of five directors.
The members of the Board of Directors of the Company also serve as members of
the Board of Directors of the Company's subsidiary, First National South (the
"Bank"), along with several other directors of the Bank.
The Board of Directors of the Company met 12 times in 1996. The Company
maintains no standing committees. The Board of Directors of the Bank, which met
12 times in 1996, has standing Executive, Funds Management, Loan, Audit,
Facilities & Planning, and Pension Committees. All directors attended at least
75% of the meetings of the Board of Directors of the Company and of the
Committees of the Board of the Bank on which they served during 1996.
Directors of the Bank received $450 per meeting attended in 1996. All committee
members received $50 for each committee meeting attended.
The members, functions and frequency of meetings for the Bank's Executive and
Audit Committees during 1996 were as follows:
EXECUTIVE COMMITTEE - The Executive Committee was composed of Chester A. Duke,
Chairman; J.M. McLendon, Charles B. McElveen, Bruce Siegal, Nancy B. Williams
and William F. Thompson. The Executive Committee is responsible for making
decisions and taking action on matters that occur between the regular meetings
of the Board of Directors. The Committee reviews recommendations from management
of the Bank and presents the findings and recommendations of the Committee to
the Board of Directors. Specific recommendations presented by management to this
Committee include salary adjustments and promotions for officers and employees
of the Bank. The Executive Committee also serves as the nominating committee to
fill any vacancies that occur on the Board of Directors of the Bank and as the
Compensation Committee for the Bank. During 1996, ten committee meetings were
held.
AUDIT COMMITTEE - The Audit Committee was composed of Charles McElveen, D.C.
McIntyre (Chairman), Robert E. Mottern, Jr., Jack L. Nye, Roy E. Roberts and
Robert
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Scott. The responsibilities of this Committee include meeting with the
internal auditor, compliance and Community Reinvestment Act ("CRA") officer of
the Bank on at least a quarterly basis to review compliance by the Bank with its
policies and regulatory requirements. This Committee reviews findings in various
reports submitted by the outside audit firm for the Bank, and reviews
recommendations submitted to the Committee by the Bank's internal auditor,
compliance and CRA officer. The Committee makes an annual recommendation to the
Board of Directors regarding the selection of an outside audit firm for the
Bank. The Committee met four times during 1996.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the 1997 Annual Meeting of Shareholders, five director nominees are being
considered for election. The nominees to the Board are shown on the following
chart with biographical summaries. The information is presented as of April 4,
1997.
It is not contemplated that any of the nominees will be unable or unwilling for
good cause to serve as directors, but if that should occur, it is the intention
of the persons named in the Proxy to vote for such other person or persons for
directors as may be nominated by the Board of Directors.
Nominees for Directors of M&M Financial Corporation
Name and Year Principal Occupation
Made Director(1) Age During the Past Five Years
- - ---------------- ----- ---------------------------
Chester A. Duke 57 Chairman, President & CEO
1981 of Company and Bank
Charles B. McElveen 49 President, Swamp Fox Timber
1985 Co., Inc. (Timber dealer)
J.M. McLendon 87 Attorney, McLendon & Sloan
1954
Bruce Siegal 50 President, Supreme
1986 Corporation (Light bulb mfg.)
Nancy B. Williams 48 Owner-Barringers Jewelers
1994
- - ----------------
(1) Year first a Director of the Company, the Bank or Davis National Bank, which
merged with the Bank in 1994.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the shares of the Company's Common Stock owned
beneficially by each Director of the Company and by all Directors and Executive
Officers of the Company as a group on January 27, 1997.
Form of Shares % of
Name Ownership Owned Ownership
- - ---- ----------- --------- ------------
Chester A. Duke (1) Direct 1147 0.34%
Indirect(2) 2154 0.64%
Charles McElveen (1) Direct 1600 0.48%
Indirect 1200 0.36%
J.M. McLendon (1) Direct 3200 0.95%
Bruce Siegal (1) Direct 617 0.18%
Indirect(2) 50 0.01%
Nancy B. Williams Direct 2700 0.81%
Indirect 2850 0.85%
Total Director
Ownership Direct 9264 2.76%
Indirect(2) 6254 1.86%
Total of all
Directors & Direct 10627 3.17%
Exec. Off.
as a Group (8) Indirect (2) 7383 2.20%
- - -------------
(1) The following directors of the Company disclaim beneficial ownership of
shares of the Company's Common Stock owned by their immediate family members as
indicated: Mr. Duke - 70 shares owned by his wife; Mr. McElveen - 900 shares
owned by his wife and 300 shares owned by his children; Mr. Siegal - 50 shares
owned by his wife; Mrs. Williams - 250 shares owned by husband and 2600 shares
owned by her children.
(2) The shares of the Company's Common Stock owned indirectly are held in
self-directed Individual Retirement Accounts of each of the individuals
indicated. In addition, Mr. Duke's shares include 400 shares he indirectly
controls as one of three Trustees of the W.H. Bryant Charitable Trust, which
owns such 400 shares.
EXECUTIVE COMPENSATION
The following table discloses compensation for services in all capacities for
the three years ended December 31, 1996, which were paid by M&M Financial
Corporation and First National South to their Chairman, President and Chief
Executive Officer.
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<TABLE>
<CAPTION>
Summary Compensation Table
Name and Annual Compensation (1) All Other
Principal Position Year Salary Bonus Compensation (1)(2)
- - ------------------ ------ -------- ----------------- -------------------
<S> <C> <C> <C> <C>
Chester A. Duke 1996 $ 132,300 $3,000.00 $10,774
Chairman, President & 1995 $ 126,000 $0.00 $13,502
Chief Executive Officer 1994 $ 96,091 $0.00 $10,407
of Company and Bank
- - ---------------------------
</TABLE>
(1) The aggregate amount of prerequisites and other personal benefits not
reported above during 1996 for the individual named above did not exceed the
lesser of either $50,000 or 10% of the total annual salary and bonus reported
for such named executive officer.
(2) The amounts disclosed in this column include $2367, $2,138,and $2,000, of
automobile expenses paid by First National South, and $2907, $2907 and $2907 of
premiums on life insurance for the benefit of Mr. Duke paid by First National
South in the years 1996, 1995 and 1994, respectively.
COMPENSATION COMMITTEE REPORT
The Executive Committee of the Bank, which serves as the compensation committee,
studies and analyzes the executive compensation for Bank officers. The Committee
has a goal of providing competitive levels of compensation based on First
National South's annual long term goals. The Committee writes a review of the
Chief Executive Officer's performance each year, without Mr. Duke's
participation, and presents its findings to the Board of Directors of the Bank
for consideration. The Committee is informed, through management and its
sources, about comparable salaries at similar financial institutions. The
Executive Committee also uses Sheshunoff's Bank Compensation Comparison Report
for comparative purposes.
Other officers of the Bank are reviewed by the President and the Executive
Officers of the Bank, and their findings are presented to the Executive
Committee with recommendations for salary adjustments. Consideration is given to
general economic conditions, the performance of First National South, and
achievement of specific goals.
EXECUTIVE COMMITTEE
FIRST NATIONAL SOUTH
Chester A. Duke J.M. McLendon
Charles B. McElveen Bruce Siegal
Nancy B. Williams William F. Thompson
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee of the Bank, which serves as the compensation committee,
is composed of non-employee directors who are disinterested persons, with the
exception of Mr. Duke, who is Chairman, President and Chief Executive Officer
of the Company and the Bank. Also, Mr. McLendon is a member of the Committee,
and his law firm, McLendon & Sloan, rendered legal services to the Company and
the Bank during 1996. The Committee was composed of Chester A. Duke, Chairman,
J.M. McLendon, Charles B. McElveen, Bruce Siegal, Nancy B. Williams and William
F. Thompson.
PERFORMANCE GRAPH
The Company is required to provide its Shareholders with a line graph comparing
the Company's cumulative total shareholder return with a performance indicator
of the overall stock market and either a published industry index or a Company
determined peer comparison. The purpose of this graph is to help Shareholders
determine the reasonableness of the Compensation Committee (the Executive
Committee of First National South) in its decisions with respect to the setting
of various levels of executive officer compensation. Shareholder return
(measured through increases in book value and payment of dividends) is the
benchmark used in this graph to assess corporate performance and the
reasonableness of compensation paid executive officers.
The performance graph shown below compares the Company's cumulative total return
over the most recent five year period with the NASDAQ Composite Index and the
NASDAQ Bank Index. Returns are shown on a total return basis, assuming the
reinvestment of dividends and a beginning stock index price of $100 per share.
<PAGE>
OTHER EMPLOYEE BENEFIT PROGRAMS
The Bank has a noncontributory defined benefit pension plan ("Pension Plan") and
a pre-tax savings plan ("401(k) Plan") which covers substantially all employees.
The Pension Plan's benefits are based on years of service and the employees
average compensation for the last five highest consecutive years out of the last
ten years of employment. The Bank's funding policy is to contribute annually the
maximum amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future. In 1996
the Board of Directors approved a contribution of $78,918 the Pension Plan.
The 401(k) Plan provides for the Bank to contribute an amount equal to 50% of a
participant's deferred contribution up to 10% of the participant's gross
compensation, and the 401(k) Plan allows for discretionary employer
contributions out of its net profits. For 1996 the Board of Directors approved a
discretionary employer contribution of $65,610.
Expenses and amounts contributed for these plans which are included as employee
benefits expense were $144,528, $184,244, and $155,883, for the years ended
December 31, 1996, 1995 and 1994, respectively.
First National South Pension Plan
Estimated Maximum Annual Benefit At Age 65
Fiscal Year 1996
CYOS CYOS CYOS CYOS CYOS CYOS
FAE 10 15 20 25 30 35
- - --- ------ ----- ----- ----- ----- -----
20,000 5,000 7,500 9,500 11,500 13,000 13,000
30,000 7,500 11,250 14,250 17,250 19,500 19,500
40,000 10,000 15,000 19,000 23,000 26,000 26,000
50,000 12,500 18,750 23,750 28,750 32,500 32,500
60,000 15,000 22,500 28,500 34,500 39,000 39,000
70,000 17,500 26,250 33,250 40,250 45,500 45,500
80,000 20,000 30,000 38,000 46,000 52,000 52,000
90,000 22,500 33,750 42,750 51,750 58,500 58,500
100,000 25,000 37,500 47,500 57,500 65,000 65,000
Benefits are guaranteed for ten years certain and life thereafter. Compensation
for benefit purposes is inclusive of Internal Revenue Code Section 401(k) Plan
elective deferrals and bonuses, overtime pay, and commissions.
<PAGE>
Mr. Duke's compensation and benefit level is within the above table. He now
has 15 years of credited service and would have 24 years of credited service at
age 65.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and officers
to file with the SEC initial reports of ownership and reports of the changes in
ownership of Company common stock and to furnish the Company with copies of all
forms filed.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the past fiscal year all Section 16(a) filing requirements
applicable to the Company's officers and directors were compiled with.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company and the Bank have had in the past, and expect to have in the future,
banking transactions in the ordinary course of their business with the
directors, officers, principal stockholders and their associates, on the same
terms, including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions with others, and do not involve more
than normal risk of collectibility or present other unfavorable features. There
were no material transactions with any of such persons during 1995 or 1996.
J.M. McLendon, director of the Company, is a partner in the law firm of McLendon
& Sloan, Attorneys. The law firm rendered legal services to the Company and its
subsidiaries during 1996. The fees paid for such legal services are considered
reasonable in relation to those fees that would have been paid to a third party.
PROPOSAL FOR INCENTIVE STOCK OPTION PLAN
(PROPOSAL 2)
The Board of Directors of the Company recommends approval of the proposed "M&M
Financial Corporation and First National South Incentive Stock Option Plan of
1997" ("ISOP") as described below. The proposed ISOP must be approved by the
holders of a majority of the common shares of the Company.
The stated purpose of the ISOP is to aid the Company and its subsidiary bank,
First National South, in securing and retaining key employees of outstanding
ability by making it possible to offer them an increased incentive, in the form
of a proprietary interest in the common shares of the Company, to join or
continue in service of the Company and/or its subsidiary bank or other
subsidiaries and to increase the welfare and success of the Company and its
subsidiaries. The total number of shares of the Company that may be optioned
under the ISOP is 26,000 shares of the Company's $5.00 par value common shares.
<PAGE>
The option price per share shall not be less than 100% of the fair market value
of the optioned stock at the time an option is granted pursuant to the ISOP. The
Company's Shareholders shall not be entitled to preemptive rights upon the
issuance of shares of Common Stock under the ISOP pursuant to an exception to
the applicability of preemptive rights under the provisions of South Carolina
Code ss.33-6-300.
The ISOP shall be administered by the Board of Directors of the Company which
shall have the power and authority to administer, construe and interpret the
ISOP and to make rules for carrying it out and to make changes in such rules.
The terms of each option granted under the proposed ISOP shall be as determined
from time to time by the Board of Directors and shall be set forth in an
Incentive Stock Option Agreement in the form attached as an exhibit to the ISOP
and approved by the Board of Directors, subject to the limitations set forth in
the ISOP.
The key employees who will be eligible to participate in the ISOP are defined to
include persons in the regular full-time common law employment of the Company or
any subsidiary as an executive or non-executive officer thereof, who in the
opinion of the Board of Directors of the Company, is or is expected to be
primarily responsible for the management, growth or protection of some part or
all of the business of the Company. As of the day hereof, it is anticipated that
the approximate number of persons who will be "key employees" as defined in the
ISOP is thirteen. Neither the dollar value nor the number of options that may be
available to any executive officer or other key employee are determinable as of
the date hereof. Such determination must be made by the Board of Directors of
the Company after the ISOP becomes effective.
AMENDMENT TO ARTICLES OF INCORPORATION
(PROPOSAL 3)
INCREASE OF AUTHORIZED SHARES OF COMMON STOCK. The Board of Directors of the
Company recommends an amendment to Article 4 of the Articles of Incorporation
("Articles") of the Company as set forth below. The proposed amendment must be
approved by the holders of a majority of the Common Stock of the Company.
The proposed amendment to Article 4 of the Articles would increase from 800,000
to 3,000,000 the number of shares of Common Stock the Company is authorized to
issue.
The holders of the Company's Common Stock will vote on amending Article 4 of the
Articles to read as follows:
The aggregate number of shares which the corporation is authorized to
issue is three million (3,000,000) of one class of common stock with a
par value of five dollars ($5.00) per share. All stock shall be common
stock of the same class.
<PAGE>
The holders of Common Stock are entitled to one vote per share and may cumulate
their shares whenever voting for the election of directors. The holders of
Common Stock have preemptive rights to purchase securities subsequently issued
by the Company, except as may be provided by South Carolina law. The holders of
Common Stock are entitled to receive dividends as may be declared by the Board
of Directors of the Company with respect to the Common Stock out of funds
legally available therefor. In the event of liquidation, dissolution or
winding-up of the affairs of the Company, the holders of outstanding shares of
Common Stock will be entitled to share pro rata according to their respective
interests in the Company's assets and funds remaining after payment or provision
for payment of all debts and other liabilities of the Company.
The proposed increase of the number of shares of Common Stock that the Company
is authorized to issue from 800,000 to 3,000,000 shares is intended to allow the
Company greater flexibility with respect to its capitalization and the number of
shares that shall be outstanding and to provide sufficient shares for the
proposed Incentive Stock Option Plan (see Proposal 2 above). The Board of
Directors will have discretion in regard to the issuance of the additional
authorized shares, subject to applicable laws and regulations that may require
shareholder vote.
The Company does not currently have any plans to issue the authorized shares,
but the Company will have the flexibility to issue such shares upon the exercise
of stock options or for sale or in an exchange transaction in connection with a
merger or acquisition or for other appropriate corporate purposes. If additional
shares are issued, the general effect upon the rights of existing security
holders may be to reduce their percentage of ownership if preemptive rights are
not fully exercised by the Company's Shareholders or are not otherwise available
under South Carolina law and, depending upon the consideration received for any
additional shares issued, may increase or decrease the value of the outstanding
shares.
The Company's Articles contain certain anti-takeover features as follows:
1. The affirmative vote of the holders of not less than 80% of
the outstanding voting stock of the Company is required in the
event that the Board does not recommend to the stockholders of
the Company a vote in favor of a merger or purchase or sale of
assets not in the ordinary course of business of the Company.
2. Whenever a merger or sale of assets is presented to the
shareholders for a vote and said transaction is not
recommended by the Board of Directors, a quorum will not be
established unless at least 80% of all outstanding shares are
present in person or by proxy.
<PAGE>
3. Unless waived by the vote of at least 82% of all members of
the Board of Directors, all directors must have been residents
of the corporate market area for at lest six months prior to
election.
These provisions in the Articles could have the effect of reducing the
attractiveness of the Company to persons who might wish to make a tender offer,
an exchange offer or other takeover bid for the Company's common stock, thereby
reducing the possibility that existing stockholders might be offered premiums
over the market value of their stock, a situation often association with
takeover bids. The provisions also may have the overall effect of rendering more
difficult the accomplishment of mergers or the assumption of control of the
Company, and thus make the removal of management more difficult. These
provisions could make the accomplishment of a future transaction more difficult
even if it is favorable to the interests of the shareholders. At the present
time, management of the Company has no knowledge of and no reason to believe
that any person or entity is considering an offer of the type which would be
affected by any of these provisions.
INCREASE THE AMOUNT OF AUTHORIZED CAPITAL STOCK. Article 5 of the
Articles sets forth that the total authorized capital stock is $4,000,000. This
equals the total par value of the current authorized shares (800,000 shares
multiplied by $5.00). The holders of the Company's Common Stock will vote on
amending Article 5 of the Articles to read as follows:
The authorized capital stock is $15,000,000.
This amended amount equals the total par value of the proposed new amount of
authorized common shares (3,000,000 shares multiplied by $5.00).
RATIFICATION OF SELECTION OF ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors of the Company have selected the firm of Tourville,
Simpson and Henderson, Columbia, South Carolina, as the Company's independent
certified public accountants to examine the financial statements of the Company
for the year ending December 31, 1997. The Company recommends that the
Shareholders ratify the selection by the Board of Directors of Tourville,
Simpson and Henderson as independent public accountants for the Company during
the year ending December 31, 1997.
It is expected that representatives of Tourville, Simpson and Henderson, who
also served as the Company's accounting firm for the past fiscal year, will be
present at the Annual Meeting and will be provided with an opportunity to make a
statement if they desire to do so and to answer appropriate questions which may
be raised at the meeting.
<PAGE>
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, including the financial
statements and schedules thereto, which is filed with the Securities and
Exchange Commission is available free of charge to each shareholder of record
upon written request to the Corporation Secretary, M&M Financial Corporation,
307 North Main Street, Marion, South Carolina 29571.
OTHER BUSINESS
Management of the Company knows of no other business to be presented at the
Annual Meeting. If other matters should properly come before the Annual Meeting
or any adjournment thereof, a vote may be cast pursuant to the accompanying
Proxy in accordance with the judgment of the person or persons voting the same.
------------------------------------
By Order of the Board of Directors,
Marion, South Carolina Chester A. Duke
Dated: April 4, 1997 Chairman and President
<PAGE>
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APPENDIX
M&M FINANCIAL CORPORATION AND FIRST NATIONAL SOUTH
INCENTIVE STOCK OPTION PLAN OF 1997
1. Purpose of Plan
The purpose of this Stock Option Plan ("Plan") is to aid M&M Financial
Corporation (the "Corporation") and First National South (the "Bank") in
securing and retaining as part of top management certain key employees of
outstanding ability by making it possible to offer them an increased incentive,
in the form of a proprietary interest in the Corporation, to join or continue in
the service of the Corporation and/or Bank and to increase their efforts for its
welfare and success.
2. Definitions
As used in this Plan, the following words shall have the following
meanings:
(a) "Board" means the Board of Directors of the Corporation;
(b) "Code" means the Internal Revenue Code of 1986, as amended;
(c) Intentionally Omitted;
(d) "Common Stock" means the $5.00 par value common stock of M&M
Financial Corporation;
(e) "Bank" means First National South, a national banking
association, which is a wholly-owned subsidiary of M&M Financial Corporation;
(f) "Corporation" means M&M Financial Corporation, a South Carolina
corporation with its principal office located in Marion, South Carolina;
(g) "Disability" means the Participant's inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months;
(h) "Incentive Stock Option" means a stock option to purchase shares of
Common Stock, which is intended to qualify as an incentive stock option defined
in Code Section 422;
(i) "Key Employee" means any person in the regular full-time common law
employment of the Corporation or any Subsidiary, as an executive or
non-executive officer thereof, who in the opinion of the Board, is or is
expected to be primarily responsible for the management, growth or protection of
some part or all of the business of the Corporation;
<PAGE>
(j) "Option" means an Incentive Stock Option;
(k) "Parent" means any corporation in an unbroken chain of corporations
if each of the corporations owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain;
(l) "Participant" means a person to whom an Option is granted
that has not expired and ceased to be exercisable under the Plan; and
(m) "Subsidiary" means any corporation (including the Bank) other than
the Corporation in an unbroken chain of corporations beginning with the
Corporation if each of the corporations other than the last corporation in the
unbroken chain owns fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
3. Administration of Plan
The Plan shall be administered by the Board. In the event that a
director of the Board is eligible to be selected for the grant of an Option,
during such membership as a director, such director shall recuse himself or
herself and not participate in the discussion nor vote on the award of the
Option to him or her. The Board shall have the power and authority to
administer, construe and interpret the Plan, to make rules for carrying it out
and to make changes in such rules.
4. Granting of Options and $100,000 Limitation
The Board may from time to time grant Options under the Plan to such
Key Employees and subject to the limitations of paragraph (a) of Section 7, for
such number of shares as the Board may determine after receiving recommendations
from the compensation committee or the executive officers of the Corporation
and/or Bank or other Subsidiary that employs the Participant. Subject to the
provisions of the Plan, the Board may impose such terms and conditions as it
deems advisable on the grant of an Option. Any of the foregoing to the contrary
notwithstanding, the following limitations shall apply to the grant of any
Incentive Stock Option:
(a) The aggregate fair market value, determined at the time the
Incentive Stock Option is granted, of the stock exercised by a Participant for
the first time during any calendar year shall not exceed $100,000.
(b) Any Option granted to a Participant, who immediately before such
grant owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock either of the Corporation or any Subsidiary
shall not be an Incentive Stock Option, unless (i) at the time such Option is
granted the Option price per share is not less than one hundred ten percent
(110%) of the optioned stock's then fair market value; and (ii) the Option shall
not be exercisable after the expiration of five (5) years from the date of the
grant of the Option.
<PAGE>
5. Terms of Options
The terms of each Option granted under the Plan shall be as determined
from time to time by the Board and shall be set forth in an Incentive Stock
Option Agreement in a form attached hereto as Exhibit "A" and approved by the
Board; provided, however, the terms of such agreement shall not exceed the
following limitations:
(a) Subject to paragraph (b) of Section 4 with regard to 10% owners,
the Option price per share shall not be less than one hundred percent (100%) of
the fair market value of the optioned stock at the time the Option is granted.
(b) Subject to paragraph (e) of this Section, the Option shall be
exercisable in whole or in part from time to time during the period beginning on
date of grant of the Option, and ending no later than the expiration of ten (10)
years from the date of grant of the Option, unless an earlier expiration date
shall be stated in the Option or the Option shall cease to be exercisable
pursuant to paragraph (d) of this Section 5.
(c) Payment in full of the Option price for shares purchased pursuant
to an Option shall be made upon exercise of the Option (in whole or in part) and
shall be made in cash.
(d) If a Participant's employment with the Corporation, the Bank, or
other Subsidiary terminates, the following rules shall apply:
(i) If a Participant's employment with the Corporation, the
Bank, or other Subsidiary terminates other than by reason of the Participant's
death, disability or retirement after reaching age 65, the Participant's Option
shall thereupon expire and cease to be exercisable upon the expiration of the
earlier of ten (10) years from the date of grant of the Option, or three (3)
months from the date of such termination.
(ii) If the Participant's employment with the Corporation, the
Bank or other Subsidiary terminates by reason of his death, the Participant's
Option shall terminate and cease to be exercisable upon the expiration of the
earlier of ten (10) years from the date of grant of the Option, or one (1) year
from the date of death. Such Option may be exercised by the duly appointed
personal representative of the deceased Participant's estate.
(iii) If a Participant's employment with the Corporation, the
Bank or other Subsidiary terminates by reason of Disability, the Participant's
Option shall terminate and cease to be exercisable upon the expiration of the
earlier of ten (10) years from the date of grant of the Option, or one (1) year
from the date of such termination in the case of disability.
<PAGE>
(iv) If a Participant's employment with the Corporation, the
Bank or other Subsidiary terminates by reason of retirement after reaching age
65 (other than for Disability), the Participant's Option shall expire and cease
to be exercisable upon the expiration of the earlier of ten (10) years from the
date of grant of the Option, or three (3) months from the date of such
termination.
(v) Notwithstanding anything contained herein to the contrary,
if a Participant's employment with the Corporation, the Bank or other Subsidiary
is terminated for cause (fraud, embezzlement, failure to perform job
responsibilities, etc.) as determined by the Board, in the Board's sole
discretion, or if a Participant competes with the Corporation, the Bank or other
Subsidiary, any Option granted to that Participant shall be immediately revoked
and terminated and the Participant shall have no further rights under this Plan.
For purposes of this Plan, competition with the Corporation, the Bank or other
Subsidiary shall include direct or indirect ownership of or employment with a
financial services business within a 100 mile radius of any office operated by
the Corporation or any of its subsidiaries.
(e) Notwithstanding any other provision herein, the options granted
hereunder shall vest and be exercisable in accordance with the following
schedule:
<TABLE>
<CAPTION>
Vesting for Participants After Grant
of Options Determined on Years of Service
at the Time Options Granted:
Years of Service 5 Years or Less 6 to 10 Years 11 to 20 Years
After Grant of Option of Service of Service of Service
- - --------------------- --------------- ---------------- -------------
<S> <C> <C> <C>
Immediate 5% 10% 20%
1 15% 20% 30%
2 25% 30% 40%
3 35% 40% 50%
4 45% 50% 60%
5 55% 60% 70%
6 65% 70% 80%
7 75% 80% 90%
8 85% 90% 100%
9 95% 100% 100%
10 100% 100% 100%
</TABLE>
<PAGE>
In the event that the Corporation has a change of control in
which 51% or more of the stock of the Corporation is acquired or the Corporation
is merged or consolidated with another corporation in an acquisition transaction
or the Corporation sells substantially all of the assets of the Corporation, or
the Bank which employs the Participant is merged or consolidated with another
Bank not owned at least 50% by the Corporation or its Subsidiary or such Bank
has a change of control in which 51% or more of the stock of the Bank is
acquired or such Bank sells substantially all of its assets, then immediately
prior to any such transaction, the vesting schedule set forth above shall not be
applicable and the holder of any options granted hereunder shall be 100% vested
in such options, subject to the other terms and conditions herein.
In the event the Participant is employed by the Corporation or a
Subsidiary other than the Bank, the Agreement will be revised to substitute the
Subsidiary name as appropriate.
6. Exercise of Options
The holder of an Option who decides to exercise the Option in whole or
in part shall give notice to the Secretary of the Corporation of such exercise
in writing on a form approved by the Board. Any exercise shall be effective as
of the date specified in the notice of exercise, but not earlier than the date
the notice of exercise and payment in full of the Option price is actually
received and in the hands of the Secretary of the Corporation.
7. Limitations and Conditions
(a) The total number of shares of Common Stock that may be optioned as
Incentive Stock Options under the Plan is twenty-six thousand (26,000) shares of
M&M Financial Corporation's $5.00 par value common stock. Such total number of
shares may consist, in whole or in part, of unissued shares or reacquired
shares. The foregoing numbers of shares may be increased or decreased by the
events set forth in Section 9.
(b) There shall be no limitations on the amount of shares of Common
Stock that may be optioned as Incentive Stock Options under the Plan as set
forth in Section 7(a) above, on an annual basis. The amount of shares to be
optioned, within the total limitation set forth in Section 7(a) above, shall be
determined solely at the discretion of the Board as set forth herein. If there
is a proposed acquisition, merger, change of control or other takeover of the
Corporation or the Bank that employs the Participant as defined in Section 5(e)
of this Plan, the Board, at its sole discretion, may issue any options
authorized under this Plan but unissued prior to such time.
(c) Any shares that have been optioned that cease to be subject to an
Option (other than by reason of exercise of the Option) shall again be available
for option and shall not be considered as having been theretofore optioned.
<PAGE>
(d) No Option shall be granted under the Plan after April 17, 2007, (10
years after the effective date), and the Plan shall terminate on such date, but
Options theretofore granted may extend beyond that date in accordance with the
Plan. At the time an Option is granted or amended or the terms or conditions of
an Option are changed, the Board may provide for limitations or conditions on
the exercisability of the Option.
(e) An Option shall not be transferable by the Participant otherwise
than by Will or by the laws of descent and distribution. During the lifetime of
the Participant, an Option shall only be exercisable by the Participant.
(f) No person shall have any rights of a stockholder as to shares under
option until, after proper exercise of the Option, such shares shall have been
recorded on the Corporation's official stockholder records as having been issued
or transferred.
(g) The Corporation shall not be obligated to deliver any shares until
there has been compliance with such laws or regulations as the Corporation may
deem applicable. The Corporation shall use its best efforts to effect such
compliance. In addition to the foregoing and not by way of limitation, the
Corporation may require that the person exercising the Option represent and
warrant at the time of such exercise that any shares acquired by exercise are
being acquired only for investment and without any present intention to sell or
distribute such shares, if, in the opinion of counsel for the Corporation, such
a representation is required under the Securities Act of 1933 or any other
applicable law, regulation or rule of any governmental agency.
8. Transfers and Leaves of Absence
For the purposes of the Plan: (a) a transfer of a Participant's
employment without an intervening period from the Corporation to a Subsidiary or
vice versa, or from one Subsidiary to another or from Parent to Subsidiary or
vice versa, shall not be deemed a termination of employment, and (b) a Key
Employee who is granted in writing a leave of absence of no more than ninety
(90) days, or if more than ninety (90) days, which guarantees his employment
with the Corporation, the Bank or other Subsidiary at the end of such leave,
shall be deemed to have remained in the employ of the Corporation, the Bank or
other Subsidiary during such leave of absence.
9. Stock Adjustments
In the event of any merger, consolidation, stock dividend, split-up,
combination or exchange of shares or recapitalization or change in
capitalization, the total number of shares set forth in paragraph (a) of Section
7 shall be proportionately and appropriately adjusted. In any such case, the
number and kind of shares that are subject to any Option (including any Option
outstanding after termination of employment) and the Option price per share
shall be proportionately and appropriately adjusted without any change in the
aggregate Option price to be paid therefor upon the exercise of the Option. The
determination by the Board as to the terms of any of the foregoing adjustments
shall be conclusive and binding.
<PAGE>
10. Amendment and Termination
(a) The Board shall have the power to amend the Plan, including the
power to change the amount of the aggregate fair market value of the shares for
which any Key Employee may be granted Incentive Stock Options under Section 4 to
the extent provided in Code Section 422. It shall not, however, except as
otherwise provided in the Plan, increase the maximum number of shares authorized
for the Plan, nor change the class of eligible employees to other than Key
Employees, nor reduce the basis upon which the minimum Option price is
determined, nor extend the period within which Options under the Plan may be
granted, nor provide for an Option that is exercisable during a period of more
than ten (10) years from the date it is granted. It shall have no power (without
the consent of the person or persons at the time entitled to exercise the
Option) to change the terms and conditions of any Option after the Option is
granted in a manner that would adversely affect the rights of such persons
except to the extent, if any, provided in the Option.
(b) The Board may suspend or terminate the Plan at any time. No such
suspension or termination shall affect Options then in effect.
11. No Employment Right
The grant of an Option hereunder shall not constitute an agreement or
understanding, expressed or implied, on the part of the Corporation, any Parent
or any Subsidiary, to employ the Participant for any specified period and shall
not confer upon any emplyee the right to continue in the employment of the
Corporation, any Parent or any Subsidiary, nor affect any right which the
Corporation, any Parent or Subsidiary may have to terminate the employment of
such employee.
12. Effective Date
The Plan is adopted on and shall be effective as of ____________, 1997.
_____________________________
Secretary of M&M Financial Corporation
_____________________________
Secretary of First National South
<PAGE>
M&M FINANCIAL CORPORATION AND FIRST NATIONAL SOUTH
INCENTIVE STOCK OPTION AGREEMENT UNDER
INCENTIVE STOCK OPTION PLAN OF 1997
THIS AGREEMENT, made this ___ day of ______________, 1997, by and
between M&M Financial Corporation, Inc. ("Corporation") with its principal
office located at 307 North Main Street, Marion, South Carolina, and First
National South ("Bank").
WITNESSETH:
WHEREAS, the Corporation on April 17, 1997, adopted, by action of its
shareholders, the "M&M Financial Corporation and First National South Incentive
Stock Option Plan of 1997" ("Plan"), effective April 17, 1997; and
WHEREAS, under such Plan, certain shares of the Corporation are made
available for purchase by key employees of the Corporation or the Bank which is
a subsidiary of the Corporation through the grant of options; and
WHEREAS, the Participant is an employee of the Bank and is a Key
Employee under the Plan, and therefore, eligible for the grant of stock options
thereunder; and
WHEREAS, the Board of Directors of the Bank under the Plan has
determined that the Participant shall be granted certain options under the Plan
as an incentive to his continued superior performance as an employee of the
Bank.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto do hereby agree as follows:
1. Grant of Option. The Bank and the Corporation hereby grant to the
Participant an option ("Option") to purchase ________________ (______) shares of
the $5.00 par value common shares of the Corporation, upon the terms and
conditions set forth below and in the Plan document. The date of such grant is
the date of this Agreement. The number of Options specified above in this
paragraph shall be adjusted as provided in Section 8 of the Plan.
2. Option Price. The Option shall be exercisable at the price of
_____________________ ($_______) per share, which price has been determined by
the Board to be at least one hundred percent (100%) or one hundred ten percent
(110%) for a 10% shareholder of the fair market value of such shares as of the
date of this Agreement.
3. Terms of Purchase. The purchase of any shares pursuant to
the Participant's exercise of the Option shall be for cash, payable in full
upon such exercise.
<PAGE>
4. Period of Option. The Option shall be exercisable over the
period described below.
(a) Earliest Date of Exercise. The Option granted hereby shall
become first exercisable as the Option is vested as provided in Section 5
hereof; provided, however, in no event shall any shares be available for
purchase hereunder prior to the date on which the Plan is approved by the
stockholders of the Corporation; provided, further, however, in no event shall
the number of shares available for purchase hereunder increase beyond that
available on the date of the Participant's termination of employment with the
Corporation, the Bank or other Subsidiary (as defined under the Plan),
irrespective of the date on which the Option shall expire under paragraph (b) of
this Section 4.
(b) Latest Date of Exercise. In no event shall any shares be
available for purchase hereunder and the Option shall expire upon the earlier of
(i) ten years from the date of grant of the Option or five years from the date
of grant of the Option in case the Participant is already a 10% shareholder of
the Corporation, and (ii)(A) in the event of the Participant's termination of
employment with the Corporation, the Bank or other Subsidiary for any reason
other than death or disability (as defined under the Plan), upon the expiration
of three (3) months from the date of such termination; (B) in the event of the
Participant's termination of employment as aforesaid by reason of his
disability, upon the expiration of one (1) year from the date of such
termination; or (C) in the event of the Participant's termination of employment
as aforesaid by reason of his death, upon the expiration of one (1) year from
his date of death. Notwithstanding anything to the contrary herein, if the
employment of the Participant is terminated for cause or the Participant
competes with the Corporation or the Bank or other Subsidiary as provided in the
Plan, this Option is immediately revoked and terminated.
(c) Prior Outstanding Options. This Option is exercisable
despite the existence of any other incentive option (defined under Section 422)
which was granted to the Participant, before the granting of this Option, and
which earlier incentive stock option is for the purchase of shares in the
Corporation or in a corporation which at the date of grant hereunder is a Parent
(as defined under the Plan) or a Subsidiary (as defined under the Plan) or a
predecessor of any of such corporations.
5. Vesting. The options granted hereunder may be exercised by
the Participant in accordance with the following schedule:
<PAGE>
Vesting for Participants After Grant
of Options Determined on Years of Service
at the Time Options Granted:
Years of Service 5 Years or Less 6 to 10 Years 11 to 20 Years
After Grant of Option of Service of Service of Service
- - --------------------- ---------------- ---------------- -------------
Immediate 5% 10% 20%
1 15% 20% 30%
2 25% 30% 40%
3 35% 40% 50%
4 45% 50% 60%
5 55% 60% 70%
6 65% 70% 80%
7 75% 80% 90%
8 85% 90% 100%
9 95% 100% 100%
10 100% 100% 100%
In the event that the Corporation has a change of control in
which 51% or more of the stock of the Corporation is acquired or the Corporation
is merged or consolidated with another corporation in an acquisition transaction
or the Corporation sells substantially all of the assets of the Corporation, or
the Bank is merged or consolidated with another corporation in an acquisition
transaction or the Corporation sells substantially all of the assets of the
Corporation, or the Bank which employs the Participant is merged or consolidated
with another Bank not owned at least 50% by the Corporation or its Subsidiary or
such Bank has a change of control in which 51% or more of the stock of the Bank
is acquired or such Bank sells substantially all of its assets, then immediately
prior to any such transaction, the vesting schedule set forth above shall not be
applicable and the holder of any options granted hereunder shall be 100% vested
in such options, subject to the other terms and conditions herein.
6. Nontransferability. The Option is not transferable by the
Participant, in whole or in part, to any person, except by Will or by any
applicable law of descent and distributions. The Option shall not be
exercisable, in whole or in part, during the lifetime of the Participant by any
person other than the Participant.
<PAGE>
7. Construction. The Option is intended to qualify for treatment as an
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended, and any questions arising hereunder shall be resolved, where
possible, consistent with such intention. This Agreement shall be construed in
accordance with the laws of the State of South Carolina.
8. Disposition of Stock and Reporting. In the event of a
disqualifying disposition of the stock issued pursuant to the option granted
hereby, the following provisions shall apply:
(a) Disqualifying Dispositions. A "disqualifying disposition"
is when the Participant disposes of the Stock before the required holding period
as set forth in Section 422(a) of the Internal Revenue Code of 1986 expires.
Under those requirements as of the effective date of the Plan, if the stock
received by the exercise of this option is disposed of within two years from the
date of the granting of the option or within one year after the transfer of the
stock to the Participant, this is a disqualifying distribution of the stock. The
effect of the disqualifying disposition on the Participant is that the
Participant must recognize the gain on the disposition as ordinary income for
federal income tax purposes. The gain is generally equal to the difference
between the option's exercise price and the Stock's fair market value at the
Date of Exercise. Notwithstanding anything herein to the contrary, the
disposition of the stock granted pursuant to each Option shall not be considered
a disqualifying disposition if the disposition occurs merely as the result of
death of the participant, unless the Corporation or the Bank is advised by
counsel or its financial advisors that said disposition does in fact result in
the recognition of gain as ordinary income on the disposition.
For purposes of determining whether there has been a
disqualifying disposition, all shares of the Incentive Stock Option will be
considered separately so that the disqualifying disposition of one share does
not result in the taxation of all other Incentive Stock Option grants.
In the year of a disqualifying disposition, the Bank may
deduct from income on the Bank's Federal income tax return, an amount equal to
the amount that the Participant recognizes as income due to the disqualifying
disposition, provided that the Bank reports such income on the Participant's
Form W-2.
(b) Withholding Obligations. In a disqualifying disposition, the
Bank shall not have any income tax withholding obligations on the income
recognized by the Participant unless applicable law provides otherwise.
9. No Contract of Employment. Neither this Agreement, nor the Plan
shall be construed to constitute an agreement or understanding, expressed or
implied, on the part of the Corporation or the Bank, or Parent or any
Subsidiary, to employ the Participant for any specified period and shall not
confer upon any employee the right to continue in the employment of the
Corporation, the Bank, any Parent or any Subsidiary nor affect any right which
the Corporation, the Bank, a Parent or Subsidiary may have to terminate the
employment of such employee.
<PAGE>
10. Withholding. As a condition to the issuance of shares pursuant to
any exercise of this Option, the Participant authorizes the Corporation or the
Bank to withhold in accordance with applicable law from any cash compensation
payable to him any taxes required to be withheld by the Corporation or the Bank
under federal, state or local law as a result of such exercise; provided,
however, if at the time of such exercise no such compensation remains payable,
the Participant agrees to remit the amount of any such required withholding, if
any, to the Corporation or the Bank.
11. Legal Restrictions. This Option may not be exercised if the
issuance of shares pursuant to such exercise would constitute a violation of any
applicable federal or state securities or other law or regulation. The person
exercising the Option, as a condition to such exercise, shall represent to the
Corporation that the shares acquired thereby are being acquired for investment
and not with a present view to distribution or resale, unless counsel for the
Corporation is then of the opinion that such representation is not required
under the Securities Act of 1933, as amended, or any other applicable law,
regulation or rule of any governmental agency.
12. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Participant and his heirs, and shall be binding
upon the Corporation and the Bank and their successors and assigns.
13. Incorporation of Plan. This Agreement is made pursuant to and is
subject to the terms and conditions of the Plan, which terms and conditions are
hereby incorporated by reference herein.
14. Amendment. This Agreement may be amended by the Corporation at any
time (i) if the Corporation determines, in its sole discretion, that amendment
is necessary or advisable in light of any addition to or change in the Internal
Revenue Code of 1986 or in the regulations issued thereunder, or any federal or
state securities law or other law or regulation, which change occurs after the
date of this Agreement and by its terms applies to the Agreement; or (ii) other
than in the circumstances described in clause (i), with the consent of the
Participant.
15. Governing Law. This Agreement shall be governed by South
Carolina law, except to the extent preempted by federal law, which shall to
that extent govern.
<PAGE>
IN WITNESS WHEREOF, the by its authorized representative, and the
Participant do hereby affix their signatures on the date first written above.
ATTEST: M&M FINANCIAL CORPORATION
_________________________ By:
Printed Name:
Title:
FIRST NATIONAL SOUTH
By:
Printed Name:
Title:
EXECUTIVE:
Printed Name:
<PAGE>
*******************************************************************************
APPENDIX
*******************************************************************************
PROXY
M&M FINANCIAL CORPORATION
MARION, SOUTH CAROLINA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF M&M FINANCIAL
CORPORATION.
The undersigned hereby appoints Marion E. Freeman, Corporate Secretary, and
George H. Hardwick, Executive Vice President, M&M Financial Corporation, or any
one of them as true and lawful attorneys in fact for the undersigned with full
power of substitution, and hereby authorizes them to vote as designated below
all the shares of Common Stock of M&M Financial Corporation held of record by
the undersigned on April 17, 1997, at the Annual Meeting of Shareholders to be
held on April 17, 1997, or any adjournment thereof:
1. / / FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY to
(EXCEPT AS MARKED TO THE VOTE FOR ALL NOMINEES
CONTRARY BELOW) LISTED BELOW
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Chester A. Duke J.M. McLendon
Charles B. McElveen Bruce Siegal
Nancy B. Williams
2. Proposal to adopt the proposed "M&M Financial Corporation and First
National South Incentive Stock Option Plan of 1997," to be effective
April 17, 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend M&M Financial Corporation's Articles of Incorporation
(i) to increase the authorized shares of Common Stock, $5.00 par value,
to 3,000,000 shares, and (ii) to increase the amount of total
authorized capital stock from $4,000,000 to $15,000,000.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to ratify the appointment of Tourville, Simpson and Henderson
as the independent auditors for M&M Financial Corporation for the year
ending December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before this Annual Meeting or any
adjournment thereof.
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 PROPOSALS 1, 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign, when signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
---------------------------------
DATED:______________, 1997 Signature
----------------------------------
Signature if held jointly
<PAGE>
