<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
JOHN J. GORMAN, LUSE LEHMAN GORMAN POMERENK & SCHICK
- --------------------------------------------------------------------------------
(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(j)(2).
[ ] $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:
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Notes:
<PAGE>
SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
110 SOUTH CONGRESS STREET
WINNSBORO, SOUTH CAROLINA 29180
(803) 635-5536
November 8, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of South
Carolina Community Bancshares, Inc. (the "Company"), which will be held in the
Meeting Room of the Fairfield Motel, 115 S. 321 By-Pass, Winnsboro, South
Carolina at 10:30 a.m. (South Carolina Time) on Wednesday, December 11, 1996.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the meeting we will also report on the
operations of the Company and Community Federal Savings and Loan Association
(the "Association"), the wholly-owned subsidiary of the Company. Directors and
officers of the Company and Association will be present to respond to any
questions that stockholders may have. Also enclosed for your review is our
Annual Report on Form 10-KSB, which serves as the Annual Report to Stockholders,
and which contains detailed information concerning the activities and operating
performance of the Association.
The business to be conducted at the Annual Meeting consists of the election of
two directors and the ratification of the appointment of independent auditors
for the Company for the fiscal year ending June 30, 1997. The Board of Directors
of the Company has determined that the matters to be considered at the Annual
Meeting are in the best interest of the Company and its stockholders, and the
Board of Directors unanimously recommends a vote "FOR" each matter to be
considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Alan W. Pullen
Alan W. Pullen
President and Chief Executive Officer
<PAGE>
SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
110 SOUTH CONGRESS STREET
WINNSBORO, SOUTH CAROLINA 29180
(803) 635-5536
NOTICE OF
1996 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 11, 1996
Notice is hereby given that the 1996 Annual Meeting of the Stockholders of
South Carolina Community Bancshares, Inc. (the "Company") will be held in the
Meeting Room of the Fairfield Motel, 115 S. 321 By-Pass, Winnsboro, South
Carolina, on Wednesday, December 11, 1996 at 10:30 a.m. South Carolina time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of two directors;
2. The ratification of Crisp, Hughes & Co., L.L.P. as independent auditors
of the Company for the fiscal year ending June 30, 1997; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which the Annual Meeting
may be adjourned. Stockholders of record at the close of business on November 1,
1996, are the stockholders entitled to vote at the Annual Meeting, and any
adjournments thereof. A list of stockholders entitled to vote at the Annual
Meeting will be available at Community Federal Savings and Loan Association, 110
South Congress Street, Winnsboro, South Carolina for a period of ten days prior
to the Annual Meeting and will also be available for inspection at the meeting
itself.
By Order of the Board of Directors
/s/ Terri C. Robinson
Terri C. Robinson
Secretary
Winnsboro, South Carolina
November 8, 1996
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
110 SOUTH CONGRESS STREET
WINNSBORO, SOUTH CAROLINA 29180
(803) 635-5536
_______________________________________
PROXY STATEMENT
_____________________________________
1996 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 11, 1996
_____________________________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of South Carolina Community
Bancshares, Inc. (the "Company") to be used at the 1996 Annual Meeting of
Stockholders of the Company (the "Annual Meeting"), which will be held in the
Meeting Room of the Fairfield Motel, 115 S. 321 By-Pass, Winnsboro, South
Carolina, on Wednesday, December 11, 1996, at 10:30 a.m., South Carolina Time,
and at all adjournments of the Annual Meeting. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first being mailed
to stockholders on or about November 11, 1996.
Regardless of the number of shares of Common Stock owned, it is important
that stockholders be represented by proxy or be present in person at the Annual
Meeting. Stockholders are requested to vote by completing the enclosed Proxy
Card and returning it, signed and dated, in the enclosed postage-paid envelope.
Stockholders are urged to indicate the way they wish to vote in the spaces
provided on the proxy card. Proxies solicited by the Board of Directors of the
Company will be voted in accordance with the directions given therein. Where no
instructions are indicated, signed proxies will be voted FOR the election of the
nominees for director named in this Proxy Statement, and FOR the ratification of
Crisp, Hughes & Co., L.L.P. as independent auditors of the Company for the
fiscal year ending June 30, 1997.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
<PAGE>
Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED "FOR" THE PROPOSALS
SET FORTH IN THIS PROXY STATEMENT FOR CONSIDERATION AT THE ANNUAL MEETING.
Proxies may be revoked at any time prior to its exercise by sending written
notice of revocation to the Secretary of the Company, Terri C. Robinson, at the
address of the Company shown above, or by delivering to the Company a duly
executed proxy bearing a later date. The presence at the Annual Meeting of any
stockholder who had given a proxy shall not revoke such proxy unless the
stockholder delivers his or her ballot in person at the Annual Meeting or
delivers a written revocation to the Secretary of the Company prior to the
voting of such proxy.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. Proxies may also be solicited personally or by mail,
telephone or telegraph by the Company's Directors, officers and regular
employees, without additional compensation therefor. The Company will also
request persons, firms and corporations holding shares in their names, or in the
name of their nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners, and will reimburse
such holders for their reasonable expenses in doing so.
VOTING SECURITIES
Holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock") as of the close of business on November 1, 1996 (the
"Record Date") are entitled to one vote for each share then held, except as
described below. As of the Record Date, the Company had 735,410 shares of
Common Stock issued and outstanding. The presence, in person or by proxy, of at
least a majority of the total number of shares of Common Stock outstanding and
entitled to vote is necessary to constitute a quorum at this Annual Meeting. In
the event there are not sufficient votes for a quorum, or to approve or ratify
any matter being presented, at the time of this Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board to implement and
apply the Limit.
2
<PAGE>
VOTING PROCEDURES AND METHOD OF COUNTING VOTES
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote FOR the election of the two
nominees proposed by the Board, or to WITHHOLD AUTHORITY to vote for the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which authority to
vote for the nominees being proposed is withheld.
As to the ratification of the appointment of independent auditors, the
proxy card being provided by the Board of Directors enables a stockholder to
check the appropriate box on the proxy card to (i) vote "FOR", (ii) vote
"AGAINST", or (iii) vote to "ABSTAIN" from voting on, such matter. An
affirmative vote of the holders of a majority of the Common Stock present at the
Annual Meeting, in person or by proxy, and entitled to vote is required to
constitute ratification by the stockholders. Shares as to which the "ABSTAIN"
box has been selected on the proxy card will be counted as shares present and
entitled to vote and will have the effect of a vote against the matter for which
the "ABSTAIN" box has been selected. In contrast, broker non-votes will not be
counted as shares present and entitled to vote and will have no effect on the
vote on the matter presented.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of the Common
Stock are required to file certain reports with the Company and with the
Securities and Exchange Commission (the "SEC") regarding such ownership pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"). The following
table sets forth information regarding each person known to be beneficial owners
of more than 5% of the Company's outstanding shares of Common Stock on the
Record Date.
<TABLE>
<CAPTION>
AMOUNT OF SHARES
OWNED AND NATURE PERCENT OF SHARES
NAME AND ADDRESS OF OF BENEFICIAL OF COMMON STOCK
BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ---------------------------------------------- ----------------- ------------------
<S> <C> <C>
Community Federal Savings and Loan 62,422 (1) 8.49%
Association Employee Stock Ownership Trust
110 South Congress Street
Winnsboro, South Carolina 29180
</TABLE>
________________________________
(1) Under the Community Federal Savings and Loan Association Employee Stock
Ownership Plan (the "ESOP"), shares allocated to participants' accounts are
voted in accordance with the participants' directions. Unallocated shares
held by the ESOP are voted by the Trustees in the manner calculated to most
accurately reflect the instructions it has received from the participants
regarding the allocated shares. As of the Record Date, 7,372 shares of
Common Stock have been allocated to the accounts of employees under the
ESOP. The Trustees of the ESOP are Directors of the Company.
3
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The Company's Board of Directors consists of six members. Directors of the
Company are generally elected to serve for a three-year period or until their
respective successors shall have been elected and shall qualify. Each of the
Directors of the Company also serves on the board of directors of Community
Federal Savings and Loan Association (the "Association"). Two directors will be
elected at the Annual Meeting to serve for a three-year period or until a
successor has been elected and qualified. The Board of Directors has nominated
Alan W. Pullen and Philip C. Wilkins to serve as directors. Each of the
nominees is currently a member of the Board of Directors.
The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. It is intended that the proxies solicited on behalf of the Board of
Directors will be voted at the Annual Meeting for the election of the nominees
identified below (unless otherwise directed on the proxy card). If a nominee is
unable to serve, the shares represented by all such proxies will be voted for
the election of such substitute as the Board of Directors may recommend. At
this time, the Board of Directors knows of no reason why the nominees might be
unable to serve, if elected.
<TABLE>
<CAPTION>
Term to Shares of
Expire follow- Common Stock
Positions ing Fiscal Beneficially
Held in the Director Year Ending Owned on Percent
Name Age Company Since June 30 Record Date Of Class
- ----------- --- ----------- -------- -------------- ------------ --------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Alan W. Pullen 39 President 1987 (1) 1996 8,358 1.14%
Philip C. Wilkins Director 1996 (3) 1996 3,000 0.41
DIRECTORS CONTINUING IN OFFICE
Richard H. Burton 78 Director 1986 (1) 1998 5,390 0.73%
George R.
Lauderdale, Jr. 72 Director 1987 (1) 1998 15,390 2.09
John S. McMeekin 42 Director 1995 1997 7,111 0.97
Quay W. McMaster 70 Chairman of the Board 1978 (1) 1997 31,744 4.32
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Terri C. Robinson 37 Chief Financial
Officer n/a n/a 1,748 0.24%
All Directors and Executive Officers 72,771(2) 9.90%
as a Group (7 persons)
</TABLE>
- ------------------
(1) Reflects initial appointment to the Board of Directors of Community Federal
Savings and Loan Association, the Company's subsidiary.
(2) Excludes 62,422 shares of Common Stock, or 8.49% of the shares of Common
Stock outstanding, owned by the Company's ESOP for the benefit of the
employees of the Association. The ESOP Administrative Committee
administers the ESOP. Under the terms of the ESOP, shares of Common Stock
allocated to the account of employees are voted in accordance with the
instructions of the respective employees. Unallocated shares are voted by
the ESOP Trustee in the manner calculated
4
<PAGE>
to most accurately reflect the instructions it has received from the
participants regarding the allocated shares, unless their fiduciary duties
require otherwise. As of the Record Date, 7,372 shares of Common Stock
have been allocated under the ESOP. The Trustees of the ESOP are Directors
of the Company.
(3) Mr. Wilkins became a Director of the Company on September 25, 1996.
The principal occupation during the past five years of each director and
executive officer of the Company is set forth below. All directors have held
their present positions for five years unless otherwise stated.
Quay W. McMaster is the owner, President and Chief Executive Officer of
Winnsboro Plywood Co., Inc. and Winnsboro Veneer Co., Inc. He has served as
Mayor of the Town of Winnsboro since 1973. Mr. McMaster is the Past President
of the Association, having served from July 1992 to December 1993, when he was
elected Chairman of the Board. In addition, Mr. McMaster was Vice President of
the Association from 1989 to July 1992.
Richard H. Burton retired in 1980. Prior to his retirement, he was Plant
Manager of the Winnsboro plant of Uniroyal, Inc. Mr. Burton has served as a
director of the Association since May 1986, and he was elected Vice-Chairman of
the Board in December 1993. In addition, Mr. Burton served as Vice President of
the Association from July 1992 through December 1993.
Alan W. Pullen is the President and Chief Executive Officer of the
Association, having been elected to that position in December 1993. From
January 1, 1987 through December 1993, Mr. Pullen served as Executive Vice
President of the Association.
George W. Lauderdale was the Treasurer of Fairfield County, South Carolina
prior to his retirement on July 1, 1987. Mr. Lauderdale was elected to the
Board of Directors in November 1987, and he has served as Treasurer of the
Association since 1993, and Vice President since October, 1994.
John S. McMeekin is president of Winnsboro Furniture Company. He was first
elected to the Board of Directors of the Association in September, 1994, and to
the Board of Directors of the Company in April, 1995.
Philip C. Wilkins, DMD, is a dentist with offices in Winnsboro, South
Carolina. He was first elected to the Board of Directors of the Association in
June, 1996, and to the Board of Directors of the Company in September, 1996.
Terri C. Robinson, has been employed by the Association since 1984 in various
capacities, most recently as Bookkeeper, Secretary-Treasurer, and since December
1993, as Chief Financial Officer.
5
<PAGE>
COMMITTEES AND ANNUAL MEETINGS OF THE BOARD OF DIRECTORS
The business of the Company and the Association is conducted through regular
and special meetings of the Board of Directors and its committees. The Board of
Directors of the Company met 23 times during fiscal 1996. During the fiscal year
ended June 30, 1996, the Board of Directors of the Association held 13 meetings.
No director attended fewer than 75% of the total meetings held by the Board of
Directors and the committees on which such director served, with respect to each
of the Company and the Association. The following is a discussion of certain
committees of the Association. The Association's Audit Committee functions as
the audit committee of the Company, and the Association's Personnel Committee
functions as the personnel committee of the Company.
The Loan Committee is composed of any two members of the Board of Directors,
excluding Alan W. Pullen, President and Chief Executive Officer of the Company
and Association. The Loan Committee meets periodically in between the regular
monthly meetings of the Board of Directors in order to grant mortgage loan
approvals. The actions of the Loan Committee are required to be approved by the
full Board at its next regular meeting. During the 1996 fiscal year, the Loan
Committee held 21 meetings.
The Personnel Committee is composed of Directors McMaster (Chairman) and
Burton, and it meets periodically during the year as needed to review the
Association's salary and benefit policies and to set salary increases for the
Association's officers and employees. The Personnel Committee met two times
during fiscal 1996.
The Audit Committee consists of Directors Lauderdale (Chairman) and McMeekin.
The Audit Committee meets as needed to review the audit reports prepared by the
Association's independent auditor, and meets periodically with the Association's
management in order to set asset classifications. In addition, the committee
annually reviews the Association's audit policies and recommends any necessary
changes to the Board of Directors. During fiscal 1996, the Audit Committee held
four meetings.
The Investment Committee meets periodically to review the Association's
investment policies, and it is authorized to make security investments on behalf
of the Association. The Investment Committee is composed of Directors McMaster
and Pullen, and in the absence of either member, any one of the other members of
the Board of Directors may be substituted for the absent member of the
committee. During fiscal 1996, this committee met four times.
Neither the Association nor the Company has a standing Nominating Committee,
but rather the full Board of Directors, except for the directors standing for
re-election, serves as the nominating committee. While the Board will consider
nominees recommended by the stockholders, it has not actively solicited
recommendations from stockholders. Nominations by stockholders must comply with
certain procedural and informational requirements set forth in the Company's
Bylaws. See "Advance Notice of Business to be Conducted at an Annual Meeting."
The Board of Directors met once in its capacity as the nominating committee
during fiscal year 1996.
6
<PAGE>
DIRECTOR COMPENSATION
The Association pays a $5,000 annual retainer to each of its directors, in
addition to a $200 per meeting fee. The Company pays a fee of $50 per board
meeting attended. Directors have received awards of stock options and stock
grants under plans approved by the stockholders.
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended June 30, 1996, 1995,
and 1994, certain information as to the total remuneration paid by the
Association and the Company to the Chief Executive Officer of the Association
and the Company (the "Named Executive Officer").
<TABLE>
<CAPTION>
====================================================================================================================
Annual Compensation Long-Term Compensation
--------------------------------------------------
Awards
-------------------------
Restricted Options/ All Other
NAME AND Year Ended Salary Stock SARS (#) Compensation
PRINCIPAL POSITION June 30, (1) Bonus Awards (2) (3) (4)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan W. Pullen President 1996 $65,000 $5,000 $ -- -- $13,850
and Chief Executive 1995 66,605 5,000 129,654 19,507 8,606
Officer 1994 47,768 5,830 -- -- 2,388
====================================================================================================================
</TABLE>
(1) Salary includes directors fees for the June 30, 1996 fiscal year.
(2) Relates to an award as to 9,604 shares of Common Stock granted pursuant to
the Company's Recognition and Retention Plan in December 1994. The market
value per share of the Common Stock was $13.50 on the date of grant. Such
award vests in five equal installments, and will be 100% vested upon
termination of employment due to death, disability or following a change in
control. When such shares become vested and are distributed, the recipient
will also receive an amount equal to the accumulated dividends and earnings
thereon.
(3) Relates to options granted pursuant to the Company's 1994 Stock Option Plan,
which become exercisable in equal installments at a rate of 20% per year
commencing one year from the date of grant, and are fully exercisable
following a change in control. The first installment of options became
exercisable on December 13, 1995.
(4) Represents $2,850, $3,025 and $2,388, respectively, of contributions made by
the Association on Mr. Pullen's behalf pursuant to the Association's 401(k)
Plan for the fiscal years ended June 30, 1996, 1995 and 1994. Also
includes, for fiscal 1996 and 1995, $5,581 relating to the market value of
stock allocated to Mr. Pullen under the Bank's ESOP as of June 30, 1996.
EMPLOYMENT AGREEMENT. The Association has entered into an employment
agreement with Alan Pullen, President and Chief Executive Officer of the Company
and the Association. The employment agreement for Mr. Pullen with the
Association and the Company provides for a three-year term. Commencing on the
first anniversary date and continuing each anniversary date thereafter, the
employment agreement renews for an additional year, such that the remaining
7
<PAGE>
term shall be three years unless written notice of nonrenewal is given by the
Board of Directors after conducting a performance evaluation of the executive.
The agreement provides that the base salary of the executive will be reviewed
annually. The initial base salary of Mr. Pullen is $55,505. In addition to the
base salary, the employment agreement provides that the executive is to receive
all benefits provided to permanent full-time employees of the Association,
including among other things, participation in stock benefit plans and other
fringe benefits applicable to executive personnel, as well as director fees.
The employment agreement provides for the termination by the Association of the
executive's employment for cause at any time. In the event the Association
chooses to terminate Mr. Pullen's employment for reasons other than for cause,
or upon the termination of his employment for reasons other than upon retirement
or death, or in the event of his resignation from the Association or the Company
upon: (i) failure to re-elect him to his current office; (ii) a material change
in his functions, duties or responsibilities which change would cause his
position to become one of lesser responsibility, importance or scope; (iii)
relocation of his principal place of employment by more than 30 miles; (iv) the
liquidation or dissolution of the Association or the Company; or (v) a breach of
the agreement by the Association, the executive, or in the event of death, his
beneficiary, would be entitled to receive an amount equal to the greater of the
remaining payments, including base salary, bonuses and other payments due under
the remaining term of the employment agreement or three times the average of the
executive's base salary, including bonuses and other cash compensation paid, and
the amount of any benefits received pursuant to any employee benefit plans
maintained by the Association, over the five fiscal years preceding such
termination. The Association would also continue the executive's life, health,
and disability coverage for the remaining unexpired term of the employment
agreement to the extent allowed by the plan or policies maintained by the
Association or the Company from time to time.
SEVERANCE AGREEMENTS. The Association has entered into Severance
Agreements (the "Severance Agreements") with Ms. Robinson and a senior officer
of the Association which will provide such officers with certain benefits in the
event of a change of control of the Association or the Company. The Severance
Agreements provide for up to a 3-year term. Commencing on the first anniversary
date, and continuing on each anniversary date thereafter, the Board of Directors
may extend either of the Severance Agreements for an additional year. Following
a change of control of the Company or the Association, as defined in the
Severance Agreement, an officer shall be entitled to a payment under the
Severance Agreement if the participant terminates employment during the term of
such agreement, following any demotion, loss of title, office or significant
authority, reduction in his or her annual compensation or benefits, or
relocation of his principal place of employment by more than 30 miles. In the
event that a participant in the Severance Agreement is entitled to receive
payments pursuant to the Severance Agreement, he or she shall receive a cash
payment up to a maximum of three times such participant's annual compensation
prior to termination of employment, plus such participant shall be entitled to
receive life and medical coverage for a period of up to 36 months from the date
of termination.
STOCK OPTIONS. The Board of Directors of the Company has adopted the 1994
Stock Option Plan (the "Stock Option Plan"), which has been approved by the
stockholders. Certain directors, officers and employees of the Association and
the Company are eligible to participate
8
<PAGE>
in the Stock Option Plan. The Stock Option Plan is administered by a committee
of outside directors (the "Committee"). The Stock Option Plan authorizes the
grant of stock options and limited rights equal to 78,028 shares of Common
Stock. The Stock Option Plan provides for the grant of (i) options to purchase
Common Stock intended to qualify as incentive stock options under Section 422 of
the Internal Revenue Code, (ii) options that do not so qualify ("nonstatutory
options") and (iii) limited rights that are exercisable only upon a change in
control of the Company. Non-employee directors of the Association and the
Company are only eligible to receive nonstatutory options under the Stock Option
Plan. Options granted to employees are determined by the Committee. Options
granted to directors under the Stock Option Plan are awarded under a formula
pursuant to which each non-employee director of both the Company and the
Association receives an option to purchase 3,901 shares of Common Stock of the
Company. Options must be exercised within 10 years from the date of grant.
Stock options may be exercised for up to one year following termination of
service or such later period as determined by the Committee. The exercise price
of the options must be at least 100% of the fair market value of the underlying
Common Stock at the time of the grant. Upon the exercise of "limited rights" in
the event of a change in control, the optionee will be entitled to receive a
lump sum cash payment equal to the difference between the exercise price of the
option and the fair market value of the shares of Common Stock subject to the
option on the date of exercise of the right in lieu of purchasing the stock
underlying the option.
No options were granted under the Stock Option Plan to the Named Executive
Officer during the year ended June 30, 1996.
Set forth below is certain additional information concerning options
outstanding to the Named Executive Officer at June 30, 1996. No options were
exercised during fiscal 1996.
<TABLE>
<CAPTION>
===================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
===================================================================================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
FISCAL YEAR-END YEAR-END (1)
-----------------------------------------------------
SHARES ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME UPON EXERCISE REALIZED (#) ($)
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<S> <C> <C> <C> <C>
Alan W. Pullen -- $ -- 3,901 /15,606 $11,703/46,818
===================================================================================================
</TABLE>
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(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on June
30, 1996, at which date the average of the bid and ask price of the Common
Stock as quoted on the Nasdaq Small-Cap Market was $16.50.
9
<PAGE>
RECOGNITION AND RETENTION PLAN. Under the Company's Recognition and Retention
Plan, which has been approved by the stockholders, 23,408 shares are available
to be awarded to executive officers and employees and 7,803 shares are available
to be awarded to non-employee directors. These shares will be acquired through
open market purchases or from authorized but unissued shares. A Committee of
the Board of Directors of the Association and the Company composed of non-
employee directors administers the Recognition Plan, and makes awards to
executive officers pursuant to the Recognition Plan. However, awards to outside
directors are fixed by the terms of the Recognition Plan. Awards of Common
Stock that are restricted by the Recognition Plan ("Restricted Stock") are
nontransferable and nonassignable. All awards under the Recognition Plan will
vest at a rate of 20% per year. The Committee may extend the vesting rate of
any awards made after the effective date of the Recognition Plan. When a
participant's shares become vested in accordance with the Recognition Plan, the
participant will recognize income equal to the fair market value of the
Restricted Stock so vested at that time, unless the participant has made an
irrevocable election to be taxed on the shares of Restricted Stock awarded to
him in the year of the award. The amount of income recognized by a participant
will be a deductible expense of the Company for Federal income tax purposes.
When shares become vested and are actually distributed in accordance with the
Recognition Plan, participants will also receive amounts equal to any accrued
dividends with respect thereto.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Under banking regulations applicable to the Association, all loans or
extensions of credit to executive officers and directors must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public and
must not involve more than the normal risk of repayment or present other
unfavorable features. In addition, loans made to a director or executive
officer in excess of the greater of $25,000 or 5% of the Association's capital
and surplus (or in any event greater than $500,000) must be approved in advance
by a majority of the disinterested members of the Board of Directors. The
Association provides loans to employees who are not "executive officers" for
bank regulatory purposes, at reduced rates and/or with points waived or reduced.
The only such loan to any current executive officer that exceeded $60,000 since
July 1, 1994, was a first mortgage loan to Terri C. Robinson. The largest
principal amount outstanding on such loan during the fiscal year ended June 30,
1996 was $68,415, the amount outstanding as of October 31, 1996 was $66,316, and
the interest rate on such loan at October 31, 1996 was 5.89%. Loans are made to
directors and executive officers in the ordinary course of business on the same
terms and conditions as the Association would make to any other customer in the
ordinary course of business and do not involve more than a normal risk of
collectibility or present other unfavorable features. Other than as described
in this paragraph, all loans that exceeded $60,000 at any time during fiscal
year ended June 30, 1996 to executive officers, directors, immediate family
members of executive officers and directors, or organizations with which
executive officers and directors are affiliated, were made in the ordinary
course of business, on substantially the same terms including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons.
10
<PAGE>
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1996
were Crisp, Hughes & Co., L.L.P. The Company's Board of Directors has
reappointed Crisp, Hughes & Co., L.L.P. to continue as independent auditors for
the Company for the fiscal year ending June 30, 1997, subject to ratification of
such appointment by the stockholders. It is not expected that a representative
of Crisp, Hughes & Co., L.L.P. will attend the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF CRISP, HUGHES & CO., L.L.P. AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the date fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, and describe
briefly the proposed business, the reasons for bringing the business before the
annual meeting, and any material interest of the stockholder in the proposed
business. In the case of nominations to the Board, certain information regarding
the nominee must be provided. Nothing
11
<PAGE>
in this paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to an annual meeting any stockholder proposal which
does not meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy material for next
year's Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's office, 110 South Congress
Street, Winnsboro, South Carolina 29180, no later than July 11, 1997. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Terri C. Robinson
Terri C. Robinson
Secretary
Winnsboro, South Carolina
November 8, 1996
12
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 11, 1996
The undersigned hereby appoints the official proxy committee of the Board
of Directors, with full powers of substitution, to act as attorneys and proxies
for the undersigned to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote at the 1996 Annual Meeting of Stockholders
("Annual Meeting") to be held in the Annual Meeting Room of the Fairfield
Motel, 115 S. 321 By-Pass, Winnsboro, South Carolina, on December 11, 1996, at
10:30 a.m. The official proxy committee is authorized to cast all votes to
which the undersigned is entitled as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as director of the nominees listed [ ] [ ]
below.
Alan W. Pullen
Philip C. Wilkins
FOR AGAINST ABSTAIN
--- -------- -------
2. The ratification of the appointment of Crisp, [ ] [ ] [ ]
Hughes & Co., L.L.P. as the Company's
independent auditors for the fiscal year ending
June 30, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSITIONS STATED ABOVE. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT
THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE PROXY COMMITTEE OF THE
BOARD OF DIRECTORS IN THEIR BEST JUDGEMENT.
(CONTINUED, AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
This proxy may be revoked by sending written notice to the Secretary of the
Company at the address set forth on the Notice of Annual Meeting of
Stockholders, and by the filing of a later dated proxy prior to a vote
being taken at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting and of a Proxy
Statement, each dated November 8, 1996.
Dated: _________________, 1996
___________________________ ___________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
____________________________ ___________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder may sign, but only one
signature is required.
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PLEASE COMPLETE AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
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