<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BEACH FIRST NATIONAL BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
BEACH FIRST NATIONAL BANCSHARES, INC.
1601 NORTH OAK STREET, SUITE 305
MYRTLE BEACH, SOUTH CAROLINA 29577
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Beach First National Bancshares, Inc. (the "Company").
This letter serves as notice that the Annual Meeting will be held at the Myrtle
Beach Convention Center, 2101 North Oak Street, Myrtle Beach, South Carolina
29577 on Wednesday, April 30, 1997, at 2:00 p.m., for the following purposes:
1. To elect five members to the Board of Directors;
2. To consider a proposal to approve the Company's 1997 Stock Option
Plan; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 19, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and at any
continuation or adjournment thereof. In addition to the specific matters to be
acted upon, there also will be a report on the operations of the Company, and
directors and officers of the Company will be present to respond to your
questions. Whether or not you plan to attend the annual meeting, please
complete, sign, date and return the accompanying proxy in the enclosed
postage-paid envelope as promptly as possible.
In accordance with the South Carolina Business Corporation Act (the "South
Carolina Law"), a list of shareholders entitled to vote at the Annual Meeting
shall be open to the examination of any shareholder for any purpose germane to
the Annual Meeting upon written notice during regular business hours at the
Company's offices located at 1601 North Oak Street, Suite 305, Myrtle Beach,
South Carolina 29577, beginning on the date on which notice of the meeting is
given, and the list shall be available for inspection at the Annual Meeting by
any shareholder that is present.
Please use this opportunity to take part in the affairs of the Company by
voting on the business to come before this Annual Meeting. We look forward to
seeing you at the Annual Meeting.
By Order of the Board of Directors,
RAYMOND E. CLEARY, III
Chief Executive Officer
Myrtle Beach, South Carolina
April 10, 1997
<PAGE> 3
BEACH FIRST NATIONAL BANCSHARES, INC.
1601 NORTH OAK STREET, SUITE 305
MYRTLE BEACH, SOUTH CAROLINA 29577
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1997
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are being furnished to the shareholders of Beach First National
Bancshares, Inc., a South Carolina corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors (the "Board") of the
Company for use at the 1997 Annual Meeting of Shareholders (the "Annual
Meeting"). The Annual Meeting will be held on Wednesday, April 30, 1997, at 2:00
p.m., at the Myrtle Beach Convention Center, 2101 North Oak Street, Myrtle
Beach, South Carolina 29577.
VOTING AND REVOCABILITY OF PROXY APPOINTMENTS
The Company has fixed March 19, 1997, as the record date (the "Record
Date") for determining the shareholders entitled to notice of and to vote at the
Meeting. The Company's only class of stock is its Common Stock, par value $1.00
per share (the "Common Stock"). At the close of business on the Record Date,
there were outstanding and entitled to vote 735,868 shares of Common Stock of
the Company with each share being entitled to one vote. There are no cumulative
voting rights. A majority of the outstanding shares of Common Stock represented
at the Meeting, in person or by proxy, will constitute a quorum.
All proxies will be voted in accordance with the instructions contained in
the proxies. If no choice is specified, proxies will be voted "FOR" the election
to the Board of Directors of all the nominees listed below under "ELECTION OF
DIRECTORS," "FOR" approval of the 1997 Stock Option Plan, and, at the proxy
holder's discretion, on any other matter that may properly come before the
Meeting. Any shareholder may revoke a proxy given pursuant to this solicitation
prior to the Meeting by delivering an instrument revoking it or by delivering a
duly executed proxy bearing a later date to the Secretary of the Company. A
shareholder may elect to attend the Meeting and vote in person even if he or she
has a proxy outstanding.
Management of the Company is not aware of any other matter to be presented
for action at the Meeting other than those mentioned in the Notice of Annual
Meeting of Shareholders and referred to in this Proxy Statement. If any other
matters come before the Meeting, it is the intention of the persons named in the
enclosed Proxy to vote on such matters in accordance with their judgment.
SOLICITATION
The costs of preparing, assembling and mailing the proxy materials and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy materials to the
beneficial owners of shares held of record will be borne by the Company. Certain
officers and regular employees of the Company or its subsidiaries, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies in addition to this solicitation by mail. The
Company expects to reimburse brokers, banks, custodians and other nominees for
their reasonable out-of-pocket expenses in handling proxy materials for
beneficial owners of the Common Stock.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Company's Bylaws provides that the Board of Directors shall be divided
into three classes with each class to be as nearly equal in number as possible.
The Bylaws also provide that the three classes of directors are to have
staggered terms, so that the terms of only approximately one-third of the Board
members will expire at each annual meeting of shareholders. The current Class I
directors are Raymond E. Cleary III, William Gary Horn, Joe N. Jarrett, Jr.,
Richard E. Lester, and Don J. Smith. The current Class II directors are Michael
Bert Anderson, Orvis Bartlett Buie, Michael D. Harrington, Diane W. Sammons, and
Rick H. Seagroves. The current
<PAGE> 4
Class III directors are Jack L. Green, Jr., Samuel Robert Spann, Jr., B. Larkin
Spivey, Jr., and James C. Yahnis. The current terms of the Class II directors
will expire at the Meeting. Each of the five current Class II directors has been
nominated for reelection and will stand for election at the Meeting for a three
year term. The terms of the Class III directors will expire at the 1998 Annual
Shareholders Meeting, and the terms of the Class I directors will expire at the
1999 Annual Shareholders Meeting.
It is the intention of the persons named as proxies in the accompanying
proxy to vote FOR the election of the nominees identified below to serve for a
three-year term, expiring at the 2000 Annual Meeting of Shareholders. If any
nominee is unable or fails to accept nomination or election (which is not
anticipated), the persons named in the proxy as proxies, unless specifically
instructed otherwise in the proxy, will vote for the election in his stead of
such other person as the Company's existing Board of Directors may recommend.
The directors shall be elected by a plurality of the votes cast at the
Meeting. Abstentions and broker non-votes will not be considered to be either
affirmative or negative votes.
Set forth below is certain information about the nominees, including each
nominee's age, position with the Company, and position with Beach First National
Bank (the "Bank"). All of the nominees are nominated as Class II directors and
are currently serving as directors of the Company. Each of the directors has
been a director of the Company since 1995.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINATED
INDIVIDUALS.
Michael Bert Anderson, age 38, is a Director of the Company and the Bank.
He is a native of the Myrtle Beach area. He graduated from Duke University in
1980 with a degree in Management Sciences/Accounting. Mr. Anderson returned home
after college to work in the family hotel business. The business has tripled in
size since 1980. Mr. Anderson is the managing owner of the Poindexter Ocean
Front Resort and helps to manage four other Anderson family-owned properties.
Mr. Anderson's community activities range from being the Lay Leader at the First
United Methodist Church in Myrtle Beach to working at every level of the Horry
County United Way drive. He is a member of the local Rotary Club (a Paul Harris
fellow). Mr. Anderson has served on the Myrtle Beach area Hospitality
Association and is currently retiring as the president of the 400-member trade
organization. As a volunteer for the City of Myrtle Beach, Mr. Anderson serves
on the Myrtle Beach Accommodations Tax Advisory Committee, having just completed
a four-year term as a member and vice-chairman of the Myrtle Beach Planning and
Zoning Board.
Orvis Bartlett Buie, age 48 is a Director of the Company and the Bank. He
has been a partner with Buie, Rabon & Jaskot, CPAs, since 1992. Prior to 1992,
Mr. Buie was a partner with Bates, Buie, Lindsay, Evans, Rabon & Kinard, CPAs.
He is the president of Damon's Eastern Carolina's, Ltd., the franchiser of
Damon's Ribs restaurants in North Carolina, South Carolina, and eastern
Tennessee. Mr. Buie received his bachelor's degree in Accounting from the
University of South Carolina in 1972. He has been a certified public accountant
since 1974 and is licensed to practice in both South Carolina and North
Carolina.
Michael D. Harrington, age 49, is a Director of the Company and the Bank.
He is president and general manager of Harrington Construction Company, Inc., a
Myrtle Beach general contracting firm organized in 1979. With over 30 years of
construction experience, Mr. Harrington specializes in commercial construction
in the Myrtle Beach and Grand Strand area. Originally from Sumter, South
Carolina, he served six years in the United States Marine Corps Reserves
immediately following high school. Presently, he serves on the Horry County
Advisory Council of Junior Achievement and as a board member of Myrtle Beach
Haven, a homeless shelter. Mr. Harrington served on the advisory board for
United Carolina Bank for three years. In addition, he is a member of Myrtle
Beach Masonic Lodge #353, Myrtle Beach Shrine Club, Omar Temple, Delta Lodge of
Perfection and Myrtle Beach Elks Lodge #771.
Diane W. Sammons, age 48, is a Director of the Company and the Bank. She is
a native of Horry County, has owned and operated Fully's Restaurant for seven
years and recently opened Droopy's Sports Bar. She was formerly a branch
coordinator and commercial lending officer with South Carolina National Bank for
nine years. During her employment with South Carolina National Bank, Ms. Sammons
received her certificate from the American Institute of Banking and attended the
South Carolina Bankers School. In 1974, Ms. Sammons was
2
<PAGE> 5
named Myrtle Beach Young Career Woman. During 1989, she served on the Myrtle
Beach area Council. In the community, Ms. Sammons has been actively involved
with youth athletics and children's homes. She received her bachelor's degree
from the University of South Carolina, where she was an active member of the
Beta Sigma Phi Sorority.
Rick H. Seagroves, age 40, is a Director of the Company and the Bank. He is
the owner and Chief Executive Officer of Inland Foods Corporation, which
operates sixteen Burger King restaurants located in the southeast portion of
South Carolina. He also owns TKS, Inc., which operates several of The Sea Store
convenience store/gas stations and is a franchisee with T.G.I. Friday's
restaurant group. Mr. Seagroves serves on several local business committees
including The Dunes Golf and Beach Club House Committee, The Myrtle Beach Area
Chamber of Commerce Finance Committee, and The First Presbyterian Church Budget
and Stewardship Committee. He also serves on the Board of Directors of The
Children's Museum of South Carolina and is a member of The Grand Strand Sertoma
Club. Mr. Seagroves works with several charities in the Myrtle Beach area and
has been instrumental in raising special project funds for Horry County schools.
He is a member of the First Presbyterian Church.
Set forth below is also information about each of the Company's other
directors and each of its executive officers.
Dr. Raymond E. Cleary III, age 48, has been a practicing general dentist in
SurfSide Beach, South Carolina since 1975. As a dentist, he served as an
officer/board member of the South Carolina Dental Association, 4th District of
South Carolina Dental Association, and the Grand Strand Dental Society. Dr.
Cleary is also a board member of the Florence Darlington Technical College,
Dental Hygienist/Assistant Program. He received his undergraduate degree and his
dental degree from the Ohio State University and College of Dentistry. In
business, Dr. Cleary was an initial organizer and director of Waccamaw State
Bank from 1980-1987. In 1987, Waccamaw State Bank merged into Anchor Bank, and
he was an advisory director of Anchor Bank from 1987-1994. In the community, Dr.
Cleary has served as a Webelo Boy Scout leader and a youth soccer coach. He has
been an officer or board member of the Grand Strand YMCA, the South Strand
Sertoma, the Grand Strand Soccer Association, the SurfSide Business and
Professional Association, the Better Business Bureau, and the Myrtle Beach
Chamber of Commerce. Additionally, Dr. Cleary has served as an Eucharistic
Minister, in a church men's group and on a church board. Dr. Cleary has served
as the acting chairperson of the Organizers since the group was formed.
Dr. Jack L. Green, Jr., age 53, has been a practicing orthodontist in
Myrtle Beach for the past twenty years. He is a graduate of Clemson University
and the Medical College of Virginia and has earned a master's degree from
Fairleigh Dickenson University. Dr. Green formerly served as president of the
Grand Strand Dental Society and president of the South Carolina Association of
Orthodontists. Dr. Green is a former member of the advisory board for
NationsBank and a member of the First Presbyterian Church.
William Gary Horn, age 47, is President and Chief Executive Officer of
Beach First National Bank and is a Director of the Company and the Bank. He
received a bachelor of science degree in 1973 from Georgia Southern University.
He received an advanced banking degree from the Stonier Graduate School of
Banking, Rutgers University, in 1986. In addition, he attended the Georgia State
University Credit School in 1977, the OMEGA Program for Commercial Lending in
1980, and the Georgia School of Banking at the University of Georgia in 1981.
Mr. Horn has over twenty-one years of experience in the commercial banking
industry, the last six years of which have been in community banking. From 1989
to 1992, Mr. Horn was employed by Embry National Bank, Atlanta, Georgia, as
Senior Vice President and Senior Loan Officer. He was in charge of lending and
implemented a loan documentation quality monitoring system. From 1993 to prior
to joining the Organizers, he was the Executive Vice President and Senior Loan
Officer at Summerville National Bank, Summerville, South Carolina. He was
responsible for managing the bank's entire loan portfolio and developing
products and business for the bank. Mr. Horn is currently a member of the
Chicora Rotary Club in Myrtle Beach and the Sertoma Club of Myrtle Beach.
Dr. Joe N. Jarrett, Jr., age 47, is a Board Certified Orthopaedic Surgeon.
Dr. Jarrett is on the board of directors of the Tara Hall Home for Boys and is a
member and past president of the Grand Strand Sertoma Club. Dr. Jarrett has been
extremely active serving the medical community. He is the immediate past
president of the South Carolina Orthopaedic Association and has previously
served as president of the Horry County Medical
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<PAGE> 6
Society. Dr. Jarrett is a member of the Grand Strand Regional Medical Center
Board of Trustees. He received his bachelor's degree in English from Dartmouth
College and his doctorate of medicine from West Virginia University.
Richard E. Lester, age 53, is a Chief Municipal Judge for the City of
Myrtle Beach. In addition to his capacity as Chief Municipal Judge, Judge Lester
practices real estate law. Judge Lester is also a member of the Horry County Bar
Association, the South Carolina Bar Association, and the American Bar
Association. He received his bachelor's degree in 1966 and his juris doctorate
degree in 1969 from the University of South Carolina. He was admitted to the
South Carolina Bar in 1969. From 1969 to 1973, Judge Lester was an agent with
the Federal Bureau of Investigation.
Don J. Smith, age 46, is vice president of marketing for Chicora
Development, a real estate firm in the Myrtle Beach and Grand Strand areas. He
is currently a member of the Planning and Development Board for the Town of
Briarcliffe Acres and the King of Glory Lutheran Church. He is also a member and
has served on various committees of the Myrtle Beach Chamber of Commerce. Mr.
Smith has been a member of the South Carolina Association of Realtors and the
Horry County Board of Realtors for 20 years and has served as a director for
those organizations for one year and six years, respectively. He holds a
bachelor's degree in Accounting from Western Carolina University.
Samuel Robert Spann, Jr., age 48, has served as president and CEO of Spann
Inc. for the past 21 years. Spann Inc. is a large regional roofing contractor
serving the eastern sectors of South Carolina and North Carolina. Mr. Spann
currently serves as a member on the Board of Visitors at the Wall School of
Business, Coastal Carolina University. He is also a director on the board of the
National Roofing Contractors Association and has been a past president of the
Carolina Roofing Association. Mr. Spann's extensive community involvement in the
past includes service as president and general campaign chairman of the United
Way of Horry County, as well as service on the board of directors of the Myrtle
Beach Rotary Club, the Dunes Golf and Beach Club, and the Myrtle Beach Area
Chamber of Commerce. Mr. Spann is a graduate of Clemson University and has
served proudly as an officer in the United States Air Force.
B. Larkin Spivey, Jr., age 56, has been president and general manager of
Birch Canoe Campground, Inc. for the past twelve years, operating a Kampgrounds
of America ("KOA") franchised camping resort with ancillary convenience store
and recreational vehicle sales business. Since 1986, he has been the general
partner of Spivey Limited Partnership, managing commercial real estate in Myrtle
Beach and Conway, South Carolina. He served for twenty years as an officer in
the United States Marine Corps, commanding various units including an infantry
company in combat during the Vietnam War. Mr. Spivey is a director and recent
past president of the Myrtle Beach Campground Owners Association and a past
director of the Myrtle Beach Area Hospitality Association. He served from 1982
to 1995 on the local advisory board of C&S National Bank and its successor,
NationsBank. Mr. Spivey graduated from The Citadel with a degree in Business
Administration in 1961 and received a master's degree in business administration
from George Washington University in 1972. He is currently a member of the
Vestry of Trinity Episcopal Church and the Cursillo of Christianity Secretariat,
Diocese of South Carolina.
James C. Yahnis, age 41, is currently President of Chris Yahnis Coastal,
Inc., a beer wholesaling company in Myrtle Beach. Holding the MAI designation,
he is associated with The Hazin Company, a real estate appraising firm. Mr.
Yahnis serves on the Board of Directors at Wachesaw Plantation. He has formerly
served on various professional committees for The Appraisal Institute. He
received a bachelor's degree in Economics from Davidson College and a master's
degree in Real Estate from the University of Florida.
William H. Howard, who was an organizer and original director of the
Company, resigned from the Bank in July 1996.
4
<PAGE> 7
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the cash compensation paid by the Bank to the
Company's Chief Executive Officer for the years ended December 31, 1995 and
December 31, 1996. No other executive officers of the Company or the Bank earned
total annual compensation, including salary and bonus, in excess of $100,000 for
the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION
- --------------------------- ---- -------- ------------
<S> <C> <C> <C>
Raymond E. Cleary, III...................................... 1996 $ 0 $ 0
Chairman and 1995 0 0
Chief Executive Officer
William Gary Horn........................................... 1996 103,750 1,500(1)
President 1995 $ 0 $ 0
</TABLE>
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(1) Includes Bank provided auto and country club dues
In April 1997, the Board of Directors intends to adopt a stock option plan
whereby directors, executive officers and certain other key employees of the
Company and the Bank can receive options to purchase shares of the Company's
Common Stock, and, as described below, Mr. Horn will be granted stock options in
accordance with the terms of his employment agreement with the Company. See
"Employment Agreement." The Board will present the Stock Option Plan to the
shareholders for their approval of the 1997 Annual Meeting of Shareholders.
EMPLOYMENT AGREEMENT
William Gary Horn and the Company entered into an Employment Agreement
pursuant to which Mr. Horn serves as the President and Chief Executive Officer
of the Bank. In addition, Mr. Horn was elected as the President of the Company
in March 1997. The Employment Agreement provided for a starting salary of
$75,000 per annum until the date the subscription proceeds were released from
escrow and $90,000 per annum thereafter. Mr. Horn is eligible to participate in
any management incentive program of the Bank or any long-term equity incentive
program and is eligible for grants of stock options, restricted stock, and other
awards thereunder. In addition, on September 23, 1997 (the first anniversary of
the opening date of the Bank), Mr. Horn becomes eligible to receive a cash bonus
in an amount determined by the Board of Directors. On each anniversary of the
opening date thereafter, Mr. Horn will be eligible to receive a cash bonus equal
to 5% of the net pre-tax income of the Bank (determined in accordance with
generally accepted accounting principles) if the Bank achieves certain
performance levels established by the Board of Directors from time to time. Upon
adoption of the Stock Option Plan, Mr. Horn will be granted an option to
purchase 36,793 shares of Common Stock, exercisable at $10.00 per share. The
options will vest at the rate of one-fifth per year for each of the first five
anniversaries of the opening date of the Bank, subject to Mr. Horn's being
employed by the Company on such date and meeting certain performance criteria.
The options will have a term of ten years. Additionally, Mr. Horn participates
in the Bank's retirement, welfare and other benefit programs and is entitled to
a life insurance policy and reimbursement for automobile expenses, club dues,
and travel and business expenses.
The Employment Agreement provides for an initial term commencing on the
date of the Employment Agreement and ending on the fifth anniversary of
September 23, 1996. On the last day of the Employment Agreement and on the
anniversary of such date for each year thereafter, the term of the Employment
Agreement shall be automatically extended for one additional year without
further action by the parties unless, prior to such last day, either party shall
serve written notice upon the other of its intention that the Employment
Agreement shall not be so extended.
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<PAGE> 8
In addition, the Employment Agreement provides that after a change in
control, Mr. Horn has the option by providing written notice to the Company
within 30 days of the change in control of: (i) automatically extending the term
of the Employment Agreement for a term commencing on the date of the change in
control and ending on the date which is one year and six months from the date
thereof or (ii) receiving, within 15 days of his notice, any sums due him under
the Employment Agreement plus severance compensation payable in one lump sum
payment in an amount equal to one and one-half times the Executive's
then-current annual base salary. Furthermore, in the event of a change in
control, the Company must remove any restrictions on outstanding incentive
awards, including the options, so that all such awards vest immediately.
For a period of two years following the date of termination, Mr. Horn may
not (a) be employed in the banking business as a director, officer, or
organizer, or promoter of, or consultant to, or acquire more than a 1% passive
investment in, any financial institution within the Territory, (b) solicit
customers of the Company or its affiliates for the purpose of providing
financial services, or (c) solicit employees of the Company or its affiliates
for employment. Under the Employment Agreement, "Territory" means Horry County,
South Carolina.
DIRECTOR COMPENSATION
The Company or the Bank did not pay directors' fees during the last fiscal
year, and does not presently intend to pay directors' fees in the initial years
of operation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The following table sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned at the Record Date by (a) each
executive officer of the Company, (b) each director of the Company, (c) all
executive officers and directors of the Company as a group, and (d) each person
or entity known to the Company to own more than 5% of the outstanding Common
Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NUMBER OF
NAME SHARES PERCENT
---- ----------- ---------
<S> <C> <C>
Michael Bert Anderson....................................... 14,000 1.90
Orvis Bartlett Buie......................................... 14,200 1.93
Raymond E. Cleary III....................................... 20,000 2.72
Jack L. Green, Jr. ......................................... 14,000 1.90
Michael D. Harrington....................................... 14,000 1.90
William Gary Horn(3)........................................ 5,000 0.68
Mary Kay Huntley............................................ 400 .05
Joe N. Jarrett, Jr. ........................................ 14,000 1.90
Richard E. Lester........................................... 14,000 1.90
Diane W. Sammons............................................ 14,000 1.90
Rick H. Seagroves........................................... 14,000 1.90
Don J. Smith................................................ 14,000 1.90
Samuel Robert Spann, Jr. ................................... 14,000 1.90
B. Larkin Spivey, Jr. ...................................... 14,000 1.90
James C. Yahnis............................................. 14,000 1.90
------- -----
Total............................................. 193,600 26.28%
</TABLE>
- ---------------
(1) Information relating to the beneficial ownership of Common Stock is based
upon "beneficial ownership" concepts set forth in rules of the Securities
Exchange Commission under Section 13(d) of the Securities Exchange Act of
1934. Under these rules a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power," which includes the
power to vote or direct the voting of each security,
6
<PAGE> 9
or "investment power," which includes the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to acquire
beneficial ownership within 60 days. Under the rules, more than one person
may be deemed to be a beneficial owner of the same securities, and a person
may be deemed to be a beneficial owner of securities as to which he has no
beneficial interest. For instance, beneficial ownership includes spouses,
minor children, and other relatives residing in the same household, and
trusts, partnerships, corporations or deferred compensation plans which are
affiliated with the principal.
(2) Percent is calculated by treating shares subject to options held by the
named individual for whom the percentage is held by the named individual for
whom the percentage is calculated which are exercisable within the next 60
days as if outstanding, but treating shares subject to options held by
another shareholder as not outstanding.
(3) Excludes shares potentially purchasable by Mr. Horn pursuant to stock
options to be granted to Mr. Horn pursuant to the Employment Agreement in
the amount of 5% of the Common Stock sold in the offering.
PROPOSAL NO. 2: APPROVAL OF THE 1997 STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company will adopt the Beach First National
Bancshares 1997 Stock Option Plan (the "Plan"), attached hereto as Exhibit A.
The Plan provides that restricted stock may be awarded, and stock options may be
granted, with respect to an aggregate of no more than 110,000 shares, subject to
adjustment upon changes in capitalization. Stock appreciation rights may also be
granted under the Plan. The purpose of the Plan is to advance the interest of
the Company, any subsidiaries, and its shareholders by affording certain
persons, principally directors and key employees of the Company, an opportunity
to acquire or increase their proprietary interests in the Company. The objective
of the issuance of the stock options and awards of restricted stock is to
promote the growth and profitability of the Company because the grantee or
recipients will be provided with an additional incentive to achieve the
Company's objectives through participation in its success and growth and by
encouraging their continued association with or service to the Company. The
effective date of the Plan will be April 30, 1997.
The class of persons eligible to participate in the Plan shall consist of
all persons whose participation in the Plan the Committee described below
determines to be in the best interests of the Company, which will include, but
not be limited to, all directors and employees, including but not limited to
executive personnel, of the Company or any subsidiary.
Stock options may be granted either as incentive stock options (which
qualify for certain favorable tax consequences, as described below) or as
nonqualified stock options. Options generally may not be transferred except by
will or by the laws of descent and distribution, and during an optionee's
lifetime may be exercised only by the optionee (or by his or her guardian or
legal representative, should one be appointed).
The Plan will be administered by a committee consisting of at least two
members of the Board of Directors. The committee will determine the employees
and directors who will receive options or restricted stock and, based on each
such person's position and current and potential contribution to the Company or
the Bank, the amount of restricted stock or the number of shares that will be
covered by their options. The committee will also determine the periods of time
(not exceeding ten years from the date of grant in the case of an incentive
stock option) during which options will be exercisable and will determine
whether termination of an optionee's employment under various circumstances
would terminate options granted under the Plan to that person. In addition, the
committee will determine the restriction period and vesting conditions, the
consequences of any termination of employment, and the other terms of any grant
of restricted stock. The option price per share is an amount to be determined by
the Board of Directors, but will not be less than 100% of the fair market value
per share on the date of grant for incentive stock options. Generally, the
option price will be payable in full upon exercise. The Company and the Bank
will receive no consideration upon the granting of an option.
Payment of the option price of any stock option may be made in cash, by
delivery of shares of Common Stock (valued at their fair market value at the
time of exercise), or by a combination of cash and stock. In the
7
<PAGE> 10
discretion of the committee, options under the Plan may include a "reload
option." A reload option, if included in the original option, would be triggered
when an optionee paid the exercise price of all or a portion of the original
option by delivering shares of Common Stock. In that event, the optionee would
automatically be granted an additional option to acquire the same number of
shares as had been delivered to pay such exercise price. The reload option would
be subject to all of the terms and conditions of the original option, except
that the option price per share would be equal to the fair market value of the
Common Stock on the date the original option was exercised, and except that the
committee could specify additional conditions or contingencies, such as
continued employment by the Company or the holding of the shares acquired upon
exercise of the original option for a specified period of time.
The Board of Directors will have the right at any time to terminate or
amend the Plan, but no such action may terminate options already granted or
otherwise affect the rights of any optionee under any outstanding option without
the optionee's consent. Without obtaining shareholder approval within twelve
months of the date of the proposed amendment, the Board of Directors may not
adopt any amendment of the Plan that would (i) increase the total number of
shares issuable pursuant to incentive stock options under the Plan or (ii)
change or modify the class of employees eligible to receive incentive stock
options that may participate in the Plan.
FEDERAL INCOME TAX CONSEQUENCES
There are no federal income tax consequences to the optionee or to the
Company or the Bank on the granting of options. The federal tax consequences
upon exercise will vary depending on whether the option is an incentive stock
option or a nonqualified stock option.
Incentive Stock Options. When an optionee exercises an incentive stock
option, the optionee will not at that time realize any income, and the Company
will not be entitled to a deduction. The optionee will recognize capital gain or
loss at the time of disposition of the shares acquired through the exercise of
an incentive stock option if the shares have been held for at least two years
after the option was granted and one year after it was exercised. The Company
will not be entitled to a tax deduction if the optionee satisfies these holding
period requirements. The net federal income tax effect to the holder of the
incentive stock options is to defer, until the acquired shares are sold,
taxation of any increase in the shares' value from the time of grant of the
option to the time of its exercise, and to tax such gain, at the time of sale,
at capital gain rates rather than at ordinary income rates.
If the holding period requirements are not met, then upon sale of the
shares the optionee generally recognizes as ordinary income the excess of the
fair market value of the shares at the date of exercise over the exercise price
stated in the option agreement; any increase in the value of the shares
subsequent to exercise is long or short-term capital gain to the optionee
depending on the optionee's holding period for the shares. However, if the sale
is for a price less than the value of the shares on the date of exercise, the
optionee might recognize ordinary income only to the extent the sales price
exceeded the option price. In either case, the Company is entitled to a
deduction to the extent of ordinary income recognized by the optionee.
Nonqualified Stock Options. Generally, when an optionee exercises a
nonqualified stock option, the optionee recognizes income in the amount of the
aggregate market price of the shares received upon exercise less the aggregate
amount paid for those shares, and the Company may deduct as an expense the
amount of income so recognized by the optionee. The holding period of the
acquired shares begins upon the exercise of the option, and the optionee's basis
in the shares is equal to the market price of the acquired shares on the date of
exercise.
Restricted Stock. Awards of restricted stock are shares of Common Stock
that are granted to employees or directors subject to conditions, such as
continued service with the Company, that are established at the time of the
award. Restricted stock will become nonforfeitable as its holder meets the
specified conditions. If the conditions are not satisfied, all or a portion of
the shares of restricted stock are forfeited to the Company. Until such time as
the restrictions have lapsed, the shares are nontransferable and nonassignable,
other than by will or the laws of descent and distribution.
Upon a grant of restricted stock, the market value of the stock at the date
of grant is included as a deduction from shareholders' equity in the Company's
balance sheet and is amortized as compensation expense on a straight-line basis
over the vesting period. The participant recognizes taxable income as the
restrictions lapse
8
<PAGE> 11
(subject to an election to accelerate the income recognition), based on the fair
market value of the shares on the date of lapse (or earlier acceleration), and
the Company is entitled to a corresponding tax deduction.
SHAREHOLDER APPROVAL REQUIRED
The affirmative vote of the holders of a majority of the votes entitled to
be cast at the Meeting is required for approval of the Plan. Abstentions and
broker non-votes will not be considered to be either affirmative or negative
votes. Because directors may receive options under the Plan, the directors of
the Company have a personal interest in seeing the Plan approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1997 FIRST
BANCSHARES STOCK OPTION PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and the Bank expect to have banking and other transactions in
the ordinary course of business with organizers, directors, and officers of the
Company and the Bank and their affiliates, including members of their families
or corporations, partnerships, or other organizations in which such organizers,
officers, or directors have a controlling interest, on substantially the same
terms (including price, or interest rates and collateral) as those prevailing at
the time for comparable transactions with unrelated parties. Such transactions
are not expected to involve more than the normal risk of collectability nor
present other unfavorable features to the Company and the Bank. The Bank is
subject to a limit on the aggregate amount it could lend to it and the Company's
directors and officers as a group equal to its unimpaired capital and surplus
(or, under a regulatory exemption available to banks with less than $100 million
in deposits, twice that amount), loans to individual directors and officers must
also comply with the Bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application is excluded from the
consideration of such loan application.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Among other Board committees, the Company has an audit committee and a
human resource committee. The Company's audit committee is composed of B. Larkin
Spivey, Michael Bert Anderson, Rick H. Seagroves, James C. Yahnis, and Samuel
Robert Spann, Jr. The audit committee did not meet in 1996. The audit committee
has the responsibility of reviewing the Company's financial statements,
evaluating internal accounting controls, reviewing reports of regulatory
authorities, and determining that all audits and examinations required by law
are performed. The committee recommends to the Board the appointment of the
independent auditors for the next fiscal year, reviews and approves the
auditor's audit plans, and reviews with the independent auditors the results of
the audit and management's response thereto. The audit committee is responsible
for overseeing the entire audit function and appraising the effectiveness of
internal and external audit efforts. The audit committee reports its findings to
the Board of Directors.
The Company's human resource committee is responsible for establishing the
compensation plans for the Company. Its duties include the development with
management of all benefit plans for employees of the Company, the formulation of
bonus plans, incentive compensation packages, and medical and other benefit
plans. This committee met one time during the year ended December 31, 1996. The
compensation committee is composed of Orvis Bartlett Buie, Michael D.
Harrington, Diane W. Sammons, Dr. Joe N. Jarrett, Jr., and Don J. Smith.
The Board of Directors of the Company held 8 meetings, and the Board of
Directors of the Bank held five meetings, during the year ended December 31,
1996. All of the directors of the Company and the Bank attended at least 75% of
the aggregate of such board meetings and the meetings of each committee on which
they served.
9
<PAGE> 12
OTHER MATTERS
The Board knows of no amendment or variation of the matters referred to in
the Notice of the Annual Meeting and of no other business to be brought before
the Annual Meeting. However, if any amendment, variation or other matter is
properly brought before the Annual Meeting, it is the intention of the persons
designated as proxies to vote in accordance with their best judgment on such
matters. If any other matter should come before the Annual Meeting, action on
such matter will be approved if the number of votes cast in favor of the matter
exceeds the number opposed.
DATED:
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN PROVIDED.
YOUR PROMPT RESPONSE WILL BE APPRECIATED.
10
<PAGE> 13
EXHIBIT A
BEACH FIRST NATIONAL BANCSHARES, INC.
1997 STOCK OPTION PLAN
<PAGE> 14
BEACH FIRST NATIONAL BANCSHARES, INC.
1997 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I
DEFINITIONS............................................................... 1
ARTICLE II
THE PLAN.................................................................. 3
2.1 Name........................................................ 3
2.2 Purpose..................................................... 3
2.3 Effective Date.............................................. 3
ARTICLE III
PARTICIPANTS.............................................................. 4
ARTICLE IV
ADMINISTRATION............................................................ 4
4.1 Duties and Powers of the Committee.......................... 4
4.2 Interpretation; Rules....................................... 4
4.3 No Liability................................................ 4
4.4 Majority Rule............................................... 4
4.5 Company Assistance.......................................... 4
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN........................................... 4
5.1 Limitations................................................. 4
5.2 Antidilution................................................ 5
ARTICLE VI
OPTIONS................................................................... 6
6.1 Types of Options Granted.................................... 6
6.2 Option Grant and Agreement.................................. 6
6.3 Optionee Limitations........................................ 6
6.4 $100,000 Limitation......................................... 6
6.5 Exercise Price.............................................. 7
6.6 Exercise Period............................................. 7
6.7 Option Exercise............................................. 7
6.8 Reload Options.............................................. 8
6.9 Nontransferability of Option................................ 8
6.10 Termination of Employment or Service........................ 8
6.11 Employment Rights........................................... 8
6.12 Certain Successor Options................................... 8
6.13 Effect of Change in Control................................. 8
ARTICLE VII
RESTRICTED STOCK.......................................................... 9
7.1 Awards of Restricted Stock.................................. 9
7.2 Non-Transferability......................................... 9
7.3 Lapse of Restrictions....................................... 9
7.4 Termination of Employment................................... 9
7.5 Treatment of Dividends...................................... 9
7.6 Delivery of Shares.......................................... 9
</TABLE>
i
<PAGE> 15
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VIII
STOCK APPRECIATION RIGHTS................................................. 10
8.1 SAR Grants.................................................. 10
8.2 Determination of Price...................................... 10
8.3 Exercise of a SAR........................................... 10
8.4 Payment for a SAR........................................... 10
8.5 Status of a SAR under the Plan.............................. 10
8.6 Termination of SARs......................................... 10
8.7 No Shareholder Rights....................................... 10
ARTICLE IX
STOCK CERTIFICATES........................................................ 11
ARTICLE X
TERMINATION AND AMENDMENT................................................. 11
10.1 Termination and Amendment................................... 11
10.2 Effect on Grantee's Rights.................................. 11
ARTICLE XI
RELATIONSHIP TO OTHER COMPENSATION PLANS.................................. 11
ARTICLE XII
MISCELLANEOUS............................................................. 11
12.1 Replacement or Amended Grants............................... 11
12.2 Forfeiture for Competition.................................. 12
12.3 Plan Binding on Successors.................................. 12
12.4 Singular, Plural; Gender.................................... 12
12.5 Headings, etc., No Part of Plan............................. 12
12.6 Interpretation.............................................. 12
Exhibit A................................................................ i
SCHEDULE A
SCHEDULE B
</TABLE>
ii
<PAGE> 16
BEACH FIRST NATIONAL BANCSHARES, INC.
1997 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
"Award" shall mean a grant of Restricted Stock or an SAR.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean theft or destruction of property of the Company, a
Parent, or a Subsidiary, disregard of Company rules or policies, or conduct
evincing willful or wanton disregard of the interests of the Company. Such
determination shall be made by the Committee based on information presented
by the Company and the Employee and shall be final and binding on all
parties hereto.
"Change in Control" shall mean the occurrence of either of the
following events:
(i) A change in the composition of the Board of Directors as a result
of which fewer than one-half of the incumbent directors are directors who
either:
(A) Had been directors of the Company 24 months prior to such
change; or
(B) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior to
such change and who were still in office at the time of the election
or nomination; or
(ii) Any "person" (as such term is used in sections 13(d) and 14(d) of
the Exchange Act), other than any person who is a shareholder of the
Company on or before the effective date of the Plan, by the acquisition or
aggregation of securities is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50 percent or more of
the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing under special circumstances)
having the right to vote at elections of directors (the "Base Capital
Stock"); except that any change in the relative beneficial ownership of the
Company's securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any securities of the
Company.
"Code" shall mean the United States Internal Revenue Code of 1986,
including effective date and transition rules (whether or not codified).
Any reference herein to a specific section of the Code shall be deemed to
include a reference to any corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed
from time to time by the Board, having the duties and authority set forth
herein in addition to any other authority granted by the Board; provided,
however, that with respect to any Options or Awards granted to an
individual who is also a Section 16 Insider, the Committee shall consist of
either the entire Board of Directors or a committee of at least two
Directors (who need not be members of the Committee with respect to Options
or Awards granted to any other individuals) who are Non-Employee Directors,
and all authority and discretion shall be exercised by such Non-Employee
Directors, and references herein to the "Committee" shall mean such
Non-Employee Directors insofar as any actions or determinations of the
Committee shall relate to or affect Options or Awards made to or held by
any Section 16 Insider. At any time that the Board shall not have appointed
a committee as described above, any reference herein to the Committee shall
mean a reference to the Board.
"Company" shall mean Beach First National Bancshares, Inc., a South
Carolina corporation.
<PAGE> 17
"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act, as determined
by reference to such Section 16 and to the rules, regulations, judicial
decisions, and interpretative or "no-action" positions with respect thereto
of the Securities and Exchange Commission, as the same may be in effect or
set forth from time to time.
"Employee" shall mean an employee of the Employer.
"Employer" shall mean the corporation that employs a Grantee.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any
reference herein to a specific section of the Exchange Act shall be deemed
to include a reference to any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price
of the Stock, regular way, on such date on the national securities exchange
having the greatest volume of trading in the Stock during the thirty-day
period preceding the day the value is to be determined or, if such exchange
was not open for trading on such date, the next preceding date on which it
was open; (ii) if the Stock is not traded on any national securities
exchange, the average of the closing high bid and low asked prices of the
Stock on the over-the-counter market on the day such value is to be
determined, or in the absence of closing bids on such day, the closing bids
on the next preceding day on which there were bids; or (iii) if the Stock
also is not traded on the over-the-counter market, the fair market value as
determined in good faith by the Board or the Committee based on such
relevant facts as may be available to the Board, which may include opinions
of independent experts, the price at which recent sales have been made, the
book value of the Stock, and the Company's current and future earnings.
"Grantee" shall mean a person who is an Optionee or a person who has
received an Award of Restricted Stock or an SAR.
"Incentive Stock Option" shall mean an option to purchase any stock of
the Company, which complies with and is subject to the terms, limitations
and conditions of Section 422 of the Code and any regulations promulgated
with respect thereto.
"Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the Exchange Act, as the same may be in effect from time to time, or
in any successor rule thereto, and shall be determined for all purposes
under the Plan according to interpretative or "no-action" positions with
respect thereto issued by the Securities and Exchange Commission.
"Officer" shall mean a person who constitutes an officer of the
Company for the purposes of Section 16 of the Exchange Act, as determined
by reference to such Section 16 and to the rules, regulations, judicial
decisions, and interpretative or "no-action" positions with respect thereto
of the Securities and Exchange Commission, as the same may be in effect or
set forth from time to time.
"Option" shall mean an option, whether or not an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of Article VI
hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder.
"Parent" shall mean any corporation (other than the Employer) in an
unbroken chain of corporations ending with the Employer if, at the time of
the grant (or modification) of the Option, each of the corporations other
than the Employer owns stock possessing 50 percent or more of the total
combined voting power of the classes of stock in one of the other
corporations in such chain.
"Permanent and Total Disability" shall have the same meaning as given
to that term by Code Section 22(e)(3) and any regulations or rulings
promulgated thereunder.
2
<PAGE> 18
"Plan" shall mean the Beach First National Bancshares, Inc. 1997 Stock
Option Plan, the terms of which are set forth herein.
"Purchasable" shall refer to Stock which may be purchased by an
Optionee under the terms of this Plan on or after a certain date specified
in the applicable Stock Option Agreement.
"Qualified Domestic Relations Order" shall have the meaning set forth
in the Code or in the Employee Retirement Income Security Act of 1974, or
the rules and regulations promulgated under the Code or such Act.
"Reload Option" shall have the meaning set forth in Section 6.8
hereof.
"Restricted Stock" shall mean Stock issued, subject to restrictions,
to a Grantee pursuant to Article VII hereof.
"Restriction Agreement" shall mean the agreement setting forth the
terms of an Award, and executed by a Grantee as provided in Section 7.1
hereof.
"SAR" means a stock appreciation right, which is the right to receive
an amount equal to the appreciation, if any, in the Fair Market Value of a
share of Stock from the date of the grant of the right to the date of its
payment, all as provided in Article VIII hereof.
"SAR Price" means the base value established by the Committee for a
SAR on the date the SAR is granted and which is used in determining the
amount of benefit, if any, paid to a Grantee.
"Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act.
"Stock" shall mean the Common Stock, par value $1.00 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for shares of a different stock or securities of
the Company or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean an agreement between the Company
and an Optionee under which the Optionee may purchase Stock hereunder, a
sample form of which is attached hereto as Exhibit A (which form may be
varied by the Committee in granting an Option).
"Subsidiary" shall mean any corporation (other than the Employer) in
an unbroken chain of corporations beginning with the Employer if, at the
time of the grant (or modification) of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
50 percent or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as "Beach First National Bancshares,
Inc. 1997 Stock Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries and its shareholders by affording certain employees
and Directors of the Company and its Subsidiaries, as well as key consultants
and advisors to the Company or any Subsidiary, an opportunity to acquire or
increase their proprietary interests in the Company. The objective of the
issuance of the Options and Awards is to promote the growth and profitability of
the Company and its Subsidiaries because the Grantees will be provided with an
additional incentive to achieve the Company's objectives through participation
in its success and growth and by encouraging their continued association with or
service to the Company.
2.3 Effective Date. The Plan shall become effective on April 30, 1997;
provided, however, that if the shareholders of the Company have not approved the
Plan on or prior to the first anniversary of such effective date, then all
options granted under the Plan shall be non-Incentive Stock Options.
3
<PAGE> 19
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in the Plan shall consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
all Directors and employees, including but not limited to executive personnel,
of the Company or any Subsidiary, as well as key consultants and advisors to the
Company or any Subsidiary.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be administered by
the Committee. The Committee shall select one of its members as its Chairman and
shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested parties. The
Committee shall have the power to grant Options or Awards in accordance with the
provisions of the Plan and may grant Options and Awards singly, in combination,
or in tandem. Subject to the provisions of the Plan, the Committee shall have
the discretion and authority to determine those individuals to whom Options or
Awards will be granted and whether such Options shall be accompanied by the
right to receive Reload Options, the number of shares of Stock subject to each
Option or Award, such other matters as are specified herein, and any other terms
and conditions of a Stock Option Agreement or Restriction Agreement. The
Committee shall also have the discretion and authority to delegate to any
Officer its powers to grant Options or Awards under the Plan to any person who
is an employee of the Company but not an Officer or Director. To the extent not
inconsistent with the provisions of the Plan, the Committee may give a Grantee
an election to surrender an Option or Award in exchange for the grant of a new
Option or Award, and shall have the authority to amend or modify an outstanding
Stock Option Agreement or Restriction Agreement, or to waive any provision
thereof, provided that the Grantee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of the Plan,
the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable for the administration of the Plan,
including, without limitation, the amending or altering of the Plan and any
Options or Awards granted hereunder as may be required to comply with or to
conform to any federal, state, or local laws or regulations.
4.3 No Liability. Neither any member of the Board nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued hereunder shall be 110,000. Any or all shares of
4
<PAGE> 20
Stock subject to the Plan may be issued in any combination of Incentive Stock
Options, non-Incentive Stock Options, Restricted Stock, or SARs, and the amount
of Stock subject to the Plan may be increased from time to time in accordance
with Article X, provided that the total number of shares of Stock issuable
pursuant to Incentive Stock Options may not be increased to more than 110,000
(other than pursuant to anti-dilution adjustments) without shareholder approval.
Shares subject to an Option or issued as an Award may be either authorized and
unissued shares or shares issued and later acquired by the Company. The shares
covered by any unexercised portion of an Option that has terminated for any
reason (except as set forth in the following paragraph), or any forfeited
portion of an Award, may again be optioned or awarded under the Plan, and such
shares shall not be considered as having been optioned or issued in computing
the number of shares of Stock remaining available for option or award hereunder.
If Options are issued in respect of options to acquire stock of any entity
acquired, by merger or otherwise, by the Company (or any Subsidiary of the
Company), to the extent that such issuance shall not be inconsistent with the
terms, limitations and conditions of Code section 422 or Rule 16b-3 under the
Exchange Act, the aggregate number of shares of Stock for which Options may be
granted hereunder shall automatically be increased by the number of shares
subject to the Options so issued; provided, however, that the aggregate number
of shares of Stock for which Options may be granted hereunder shall
automatically be decreased by the number of shares covered by any unexercised
portion of an Option so issued that has terminated for any reason, and the
shares subject to any such unexercised portion may not be optioned to any other
person.
5.2 Antidilution. (a) If (x) the outstanding shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend, (y) any spin-off, spin-out or other distribution of
assets materially affects the price of the Company's stock, or (z) there is any
assumption and conversion to the Plan by the Company of an acquired company's
outstanding option grants, then:
(i) the aggregate number and kind of shares of Stock for which Options
or Awards may be granted hereunder shall be adjusted proportionately by the
Committee; and
(ii) the rights of Optionees (concerning the number of shares subject
to Options and the Exercise Price) under outstanding Options and the rights
of the holders of Awards (concerning the terms and conditions of the lapse
of any then-remaining restrictions), shall be adjusted proportionately by
the Committee.
(b) If the Company shall be a party to any reorganization in which it does
not survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Committee, in its discretion,
may:
(i) notwithstanding other provisions hereof, declare that all Options
granted under the Plan shall become exercisable immediately notwithstanding
the provisions of the respective Stock Option Agreements regarding
exercisability, that all such Options shall terminate 30 days after the
Committee gives written notice of the immediate right to exercise all such
Options and of the decision to terminate all Options not exercised within
such 30-day period, and that all then-remaining restrictions pertaining to
Awards under the Plan shall immediately lapse; and/or
(ii) notify all Grantees that all Options or Awards granted under the
Plan shall be assumed by the successor corporation or substituted on an
equitable basis with options or restricted stock issued by such successor
corporation.
(c) If the Company is to be liquidated or dissolved in connection with a
reorganization described in Section 5.2(b), the provisions of such Section shall
apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof, cause
all then-remaining restrictions pertaining to Awards under the Plan to lapse,
and shall cause every Option outstanding under the Plan to terminate to the
extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth business day
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<PAGE> 21
following such adoption notwithstanding the provisions of the respective Stock
Option Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of this Section
5.2, and the manner of their application, shall be determined solely by the
Committee, and any such adjustment may provide for the elimination of fractional
share interests; provided, however, that any adjustment made by the Board or the
Committee shall be made in a manner that will not cause an Incentive Stock
Option to be other than an Incentive Stock Option under applicable statutory and
regulatory provisions. The adjustments required under this Article V shall apply
to any successors of the Company and shall be made regardless of the number or
type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan, grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options. Within the limitations provided in this Plan, both types of
Options may be granted to the same person at the same time, or at different
times, under different terms and conditions, as long as the terms and conditions
of each Option are consistent with the provisions of the Plan. Without
limitation of the foregoing, Options may be granted subject to conditions based
on the financial performance of the Company or any other factor the Committee
deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an Incentive Stock Option,
and whether the Option is to be accompanied by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement. No Incentive Stock Option
may be granted more than ten years after the earlier to occur of the effective
date of the Plan or the date the Plan is approved by the Company's shareholders.
Separate Stock Option Agreements may be used for Options intended to be
Incentive Stock Options and those not so intended, but any failure to use such
separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an Incentive Stock
Option to any person who, at the time the Incentive Stock Option is granted:
(a) is not an employee of the Company or any of its Subsidiaries; or
(b) owns or is considered to own stock possessing at least 10% of the
total combined voting power of all classes of stock of the Company or any
of its Parent or Subsidiary corporations; provided, however, that this
limitation shall not apply if at the time an Incentive Stock Option is
granted the Exercise Price is at least 110% of the Fair Market Value of the
Stock subject to such Option and such Option by its terms would not be
exercisable after five years from the date on which the Option is granted.
For the purpose of this subsection (b), a person shall be considered to
own: (i) the stock owned, directly or indirectly, by or for his or her
brothers and sisters (whether by whole or half blood), spouse, ancestors
and lineal descendants; (ii) the stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust in proportion to such
person's stock interest, partnership interest or beneficial interest
therein; and (iii) the stock which such person may purchase under any
outstanding options of the Employer or of any Parent or Subsidiary of the
Employer.
6.4 $100,000 Limitation. Except as provided below, the Committee shall not
grant an Incentive Stock Option to, or modify the exercise provisions of
outstanding Incentive Stock Options held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Employer and any Parent or Subsidiary of the
Employer, such that the aggregate Fair Market Value (determined as of the
respective dates of grant or modification of each option) of the stock with
respect to which such Incentive Stock Options are exercisable for the first time
during any calendar year is in excess of $100,000
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(or such other limit as may be prescribed by the Code from time to time);
provided that the foregoing restriction on modification of outstanding Incentive
Stock Options shall not preclude the Committee from modifying an outstanding
Incentive Stock Option if, as a result of such modification and with the consent
of the Optionee, such Option no longer constitutes an Incentive Stock Option;
and provided that, if the $100,000 limitation (or such other limitation
prescribed by the Code) described in this Section 6.4 is exceeded, the Incentive
Stock Option, the granting or modification of which resulted in the exceeding of
such limit, shall be treated as an Incentive Stock Option up to the limitation
and the excess shall be treated as an Option not qualifying as an Incentive
Stock Option.
6.5 Exercise Price. The Exercise Price of the Stock subject to each Option
shall be determined by the Committee. Subject to the provisions of Section
6.3(b) hereof, the Exercise Price of an Incentive Stock Option shall not be less
than the Fair Market Value of the Stock as of the date the Option is granted (or
in the case of an Incentive Stock Option that is subsequently modified, on the
date of such modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option Agreement
with respect to each Option intended to be an Incentive Stock Option shall
provide that such Option shall not be exercisable after the expiration of ten
years from the date of grant (or modification) of the Option.
6.7 Option Exercise. (a) Unless otherwise provided in the Stock Option
Agreement or Section 6.6 hereof, an Option may be exercised at any time or from
time to time during the term of the Option as to any or all full shares which
have become Purchasable under the provisions of the Option, but not at any time
as to less than 100 shares unless the remaining shares that have become so
Purchasable are less than 100 shares. The Committee shall have the authority to
prescribe in any Stock Option Agreement that the Option may be exercised only in
accordance with a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified number
of shares of Stock and (ii) payment to the Company at that office of the full
amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with the
involvement of a stockbroker in accordance with the federal margin rules set
forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for the
shares purchased until such payment has been made; provided, however, that in
lieu of cash, all or any portion of the Exercise Price may be paid by tendering
to the Company shares of Stock duly endorsed for transfer and owned by the
Optionee, or by authorization to the Company to withhold shares of Stock
otherwise issuable upon exercise of the Option, in each case to be credited
against the Exercise Price at the Fair Market Value of such shares on the date
of exercise (however, no fractional shares may be so transferred, and the
Company shall not be obligated to make any cash payments in consideration of any
excess of the aggregate Fair Market Value of shares transferred over the
aggregate Exercise Price); provided further, that the Board may provide in a
Stock Option Agreement (or may otherwise determine in its sole discretion at the
time of exercise) that, in lieu of cash or shares, all or a portion of the
Exercise Price may be paid by the Optionee's execution of a recourse note equal
to the Exercise Price or relevant portion thereof, subject to compliance with
applicable state and federal laws, rules and regulations.
(d) In addition to and at the time of payment of the Exercise Price, the
Optionee shall pay to the Company in cash the full amount of any federal, state,
and local income, employment, or other withholding taxes applicable to the
taxable income of such Optionee resulting from such exercise; provided, however,
that in the discretion of the Committee any Stock Option Agreement may provide
that all or any portion of such tax obligations, together with additional taxes
not exceeding the actual additional taxes to be owed by the Optionee as a result
of such exercise, may, upon the irrevocable election of the Optionee, be paid by
tendering to the Company whole shares of Stock duly endorsed for transfer and
owned by the Optionee, or by authorization to the Company to withhold shares of
Stock otherwise issuable upon exercise of the Option, in either case in that
number of shares having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such restrictions as to
the approval and timing of any such election as the Committee may from time to
time
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<PAGE> 23
determine to be necessary or appropriate to satisfy the conditions of the
exemption set forth in Rule 16b-3 under the Exchange Act, if such rule is
applicable.
(e) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until such
shares have been issued and transferred to the Optionee upon the exercise of the
Option.
6.8 Reload Options. (a) The Committee may specify in a Stock Option
Agreement (or may otherwise determine in its sole discretion) that a Reload
Option shall be granted, without further action of the Committee, (i) to an
Optionee who exercises an Option (including a Reload Option) by surrendering
shares of Stock in payment of amounts specified in Sections 6.7(c) or 6.7(d)
hereof, (ii) for the same number of shares as are surrendered to pay such
amounts, (iii) as of the date of such payment and at an Exercise Price equal to
the Fair Market Value of the Stock on such date, and (iv) otherwise on the same
terms and conditions as the Option whose exercise has occasioned such payment,
except as provided below and subject to such other contingencies, conditions, or
other terms as the Committee shall specify at the time such exercised Option is
granted; provided, that the shares surrendered in payment as provided above must
have been held by the Optionee for at least six months prior to such surrender.
(b) Unless provided otherwise in the Stock Option Agreement, a Reload
Option may not be exercised by an Optionee (i) prior to the end of a one-year
period from the date that the Reload Option is granted, and (ii) unless the
Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section 6.8(a)(i) for
a period of one year from the date of such exercise.
6.9 Nontransferability of Option. No Option shall be transferable by an
Optionee other than by will or the laws of descent and distribution or, in the
case of non-Incentive Stock Options, pursuant to a Qualified Domestic Relations
Order. During the lifetime of an Optionee, Options shall be exercisable only by
such Optionee (or by such Optionee's guardian or legal representative, should
one be appointed).
6.10 Termination of Employment or Service. The Committee shall have the
power to specify, with respect to the Options granted to a particular Optionee,
the effect upon such Optionee's right to exercise an Option of termination of
such Optionee's employment or service under various circumstances, which effect
may include immediate or deferred termination of such Optionee's rights under an
Option, or acceleration of the date at which an Option may be exercised in full;
provided, however, that in no event may an Incentive Stock Option be exercised
after the expiration of ten years from the date of grant thereof.
6.11 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.
6.12 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code section 422 and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code section 424(a).
6.13 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
on an accelerated basis in the event that a Change in Control occurs with
respect to the Company (and the Committee shall have the discretion to modify
the definition of a Change in Control in a particular Option Agreement). If the
Committee finds that there is a reasonable possibility that, within the
succeeding six months, a Change in Control will occur with respect to the
Company, then the Committee may determine that all outstanding Options shall be
exercisable on an accelerated basis.
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ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards of
Restricted Stock, which shall be governed by a Restriction Agreement between the
Company and the Grantee. Each Restriction Agreement shall contain such
restrictions, terms, and conditions as the Committee may, in its discretion,
determine, and may require that an appropriate legend be placed on the
certificates evidencing the subject Restricted Stock.
Shares of Restricted Stock granted pursuant to an Award hereunder shall be
issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted, provided that the Grantee has executed the Restriction
Agreement governing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the foregoing documents within any time period
prescribed by the Committee, the Award shall be void. At the discretion of the
Committee, Shares issued in connection with an Award shall be deposited together
with the stock powers with an escrow agent designated by the Committee. Unless
the Committee determines otherwise and as set forth in the Restriction
Agreement, upon delivery of the Shares to the escrow agent, the Grantee shall
have all of the rights of a shareholder with respect to such Shares, including
the right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
7.2 Non-Transferability. Until any restrictions upon Restricted Stock
awarded to a Grantee shall have lapsed in a manner set forth in Section 7.3,
such shares of Restricted Stock shall not be transferable other than by will or
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
hereunder shall lapse at such time or times (but, with respect to any award to a
Grantee who is also a Section 16 Insider, not less than six months after the
date of the Award) and on such terms and conditions as the Committee may, in its
discretion, determine at the time the Award is granted or thereafter.
7.4 Termination of Employment. The Committee shall have the power to
specify, with respect to each Award granted to any particular Grantee, the
effect upon such Grantee's rights with respect to such Restricted Stock of the
termination of such Grantee's employment under various circumstances, which
effect may include immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted Stock is
made the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (i) deferred until the lapsing of the relevant
restrictions and (ii) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the end
of each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum determined by the Committee. Payment
of deferred dividends, together with interest thereon, shall be made upon the
lapsing of restrictions imposed on such Restricted Stock, and any dividends
deferred (together with any interest thereon) in respect of Restricted Stock
shall be forfeited upon any forfeiture of such Restricted Stock.
7.6 Delivery of Shares. Except as provided otherwise in Article IX below,
within a reasonable period of time following the lapse of the restrictions on
shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such shares and such shares shall be
free of all restrictions hereunder.
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ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 SAR Grants. The Committee, in its sole discretion, may grant to any
Grantee a SAR. The Committee may impose such conditions or restrictions on the
exercise of any SAR as it may deem appropriate, including, without limitation,
restricting the time of exercise of the SAR to specified periods as may be
necessary to satisfy the requirements of Rule 16b-3.
8.2 Determination of Price. The SAR Price shall be established by the
Committee in its sole discretion. The SAR Price shall not be less than 100% of
Fair Market Value of the Stock on the date the SAR is granted for a SAR issued
in tandem with an Incentive Stock Option.
8.3 Exercise of a SAR. Upon exercise of a SAR, the Grantee shall be
entitled, subject to the terms and conditions of this Plan and the Agreement, to
receive the excess for each share of Stock being exercised under the SAR of (i)
the Fair Market Value of such share of Stock on the date of exercise over (ii)
the SAR Price for such share of Stock.
8.4 Payment for a SAR. At the sole discretion of the Committee, the
payment of such excess shall be made in (i) cash, (ii) shares of Stock, or (iii)
a combination of both. Shares of Stock used for this payment shall be valued at
their Fair Market Value on the date of exercise of the applicable SAR.
8.5 Status of a SAR under the Plan. Shares of Stock subject to an Award of
a SAR shall be considered shares of Stock which may be issued under the Plan for
purposes of Section 5.1 hereof, unless the Agreement making the Award of the SAR
provides that the exercise of such SAR results in the termination of an
unexercised Option for the same number of shares of Stock.
8.6 Termination of SARs. A SAR may be terminated as follows:
(a) During the period of continuous employment with the Company,
Parent or Subsidiary, a SAR will be terminated only if it has been fully
exercised or it has expired by its terms.
(b) Upon termination of employment, the SAR will terminate upon the
earliest of (i) the full exercise of the SAR, (ii) the expiration of the
SAR by its terms, and (iii) not more than three months following the date
of employment termination; provided, however, should termination of
employment (A) result from the death or Permanent and Total Disability of
the Grantee, the period referenced in clause (iii) hereof shall be one year
or (B) be for Cause, the SAR will terminate on the date of employment
termination. For purposes of the Plan, a leave of absence approved by the
Company shall not be deemed to be termination of employment unless
otherwise provided in the Agreement or by the Company on the date of the
leave of absence.
(c) Subject to the terms of the Agreement with the Grantee, if a
Grantee shall die or become subject to a Permanent and Total Disability
prior to the termination of employment with the Company, Parent or
Subsidiary and prior to the termination of a SAR, such SAR may be exercised
to the extent that the Grantee shall have been entitled to exercise it at
the time of death or disability, as the case may be, by the Grantee, the
estate of the Grantee or the person or persons to whom the SAR may have
been transferred by will or by the laws of descent and distribution.
(d) Except as otherwise expressly provided in the Agreement with the
Grantee, in no event will the continuation of the term of a SAR beyond the
date of termination of employment allow the Employee, or his beneficiaries
or heirs, to accrue additional rights under the Plan, have additional SARs
available for exercise, or receive a higher benefit than the benefit
payable as if the SAR had been exercised on the date of employment
termination.
8.7 No Shareholder Rights. The Grantee shall have no rights as a
shareholder with respect to a SAR. In addition, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or rights except as provided in Section 5.2 hereof.
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ARTICLE IX
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares which the Committee shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities
and Exchange Commission or any other governmental regulatory body;
(c) The obtaining of any approval or other clearance from any federal
or state governmental agency or body which the Committee shall determine to
be necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 Termination and Amendment. The Board may at any time terminate the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:
(a) Increase the total number of shares of Stock issuable pursuant to
Incentive Stock Options under the Plan, except as contemplated in Section
5.2 hereof; or
(b) Change the class of employees eligible to receive Incentive Stock
Options that may participate in the Plan.
10.2 Effect on Grantee's Rights. No termination, amendment, or
modification of the Plan shall affect adversely a Grantee's rights under a Stock
Option Agreement or Restriction Agreement without the consent of the Grantee or
his legal representative.
ARTICLE XI
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE XII
MISCELLANEOUS
12.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in substitution for them. However no
modification of an Option or Award shall adversely affect a Grantee's rights
under a Stock Option Agreement or Restriction Agreement without the consent of
the Grantee or his legal representative.
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12.2 Forfeiture for Competition. If a Grantee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Grantee while an Employee, then that
Grantee's rights under any Options outstanding hereunder shall be forfeited and
terminated, and any shares of Restricted Stock held by such Grantee subject to
remaining restrictions shall be forfeited, subject in each case to a
determination to the contrary by the Committee.
12.3 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
12.4 Singular, Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
12.5 Headings, etc., No Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience and reference; they do not constitute part
of the Plan.
12.6 Interpretation. With respect to Section 16 Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Plan administrators fails to so comply, it shall be
deemed void to the extent permitted by law and deemed advisable by the Plan
administrators.
* * * * *
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Exhibit A to
Beach First National Bancshares, Inc.
1997 Stock Option Plan --
Form of Stock Option Agreement
BEACH FIRST NATIONAL BANCSHARES, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of this
day of , , by and between Beach First National Bancshares,
Inc., a South Carolina corporation (the "Company"), and (the
"Optionee").
WHEREAS, on , 1997, the Board of Directors of the Company
adopted a stock option plan known as the "Beach First National Bancshares, Inc.
1997 Stock Option Plan" (the "Plan"), and recommended that the Plan be approved
by the Company's shareholders; and
WHEREAS, the Committee has granted the Optionee a stock option to purchase
the number of shares of the Company's common stock as set forth below, and in
consideration of the granting of that stock option the Optionee intends to
remain in the employ of the Company; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.
1. Incorporation of Plan. This option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.
2. Grant of Option. Subject to the terms, restrictions, limitations and
conditions stated herein, the Company hereby evidences its grant to the
Optionee, not in lieu of salary or other compensation, of the right and option
(the "Option") to purchase all or any part of the number of shares of the
Company's Common Stock, par value $1.00 per share (the "Stock"), set forth on
Schedule A attached hereto and incorporated herein by reference. The Option
shall be exercisable in the amounts and at the time specified on Schedule A. The
Option shall expire and shall not be exercisable on the date specified on
Schedule A or on such earlier date as determined pursuant to Section 8, 9, or 10
hereof. Schedule A states whether the Option is intended to be an Incentive
Stock Option.
3. Purchase Price. The price per share to be paid by the Optionee for the
shares subject to this Option (the "Exercise Price") shall be as specified on
Schedule A, which price shall be an amount not less than the Fair Market Value
of a share of Stock as of the Date of Grant (as defined in Section 11 below) if
the Option is an Incentive Stock Option.
4. Exercise Terms. The Optionee must exercise the Option for at least the
lesser of 100 shares or the number of shares of Purchasable Stock as to which
the Option remains unexercised. In the event this Option is not exercised with
respect to all or any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not exercised shall
no longer be subject to this Option.
5. Option Non-Transferable. No Option shall be transferable by an Optionee
other than by will or the laws of descent and distribution or, in the case of
non-Incentive Stock Options, pursuant to a Qualified Domestic Relations Order.
During the lifetime of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal representative, should one be
appointed).
6. Notice of Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule B) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in Section 14 hereof to the attention
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<PAGE> 29
of the President or such other officer as the Company may designate. Any such
notice shall (a) specify the number of shares of Stock which the Optionee or the
Optionee's administrators, executors or personal representatives, as the case
may be, then elects to purchase hereunder, (b) contain such information as may
be reasonably required pursuant to Section 12 hereof, and (c) be accompanied by
(i) a certified or cashier's check payable to the Company in payment of the
total Exercise Price applicable to such shares as provided herein, (ii) shares
of Stock owned by the Optionee and duly endorsed or accompanied by stock
transfer powers having a Fair Market Value equal to the total Exercise Price
applicable to such shares purchased hereunder, or (iii) a certified or cashier's
check accompanied by the number of shares of Stock whose Fair Market Value when
added to the amount of the check equals the total Exercise Price applicable to
such shares purchased hereunder. Upon receipt of any such notice and
accompanying payment, and subject to the terms hereof, the Company agrees to
issue to the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, stock certificates for the number of shares
specified in such notice registered in the name of the person exercising this
Option.
7. Adjustment in Option. The number of Shares subject to this Option, the
Exercise Price and other matters are subject to adjustment during the term of
this Option in accordance with Section 5.2 of the Plan.
8. Termination of Employment. (a) Except as otherwise specified in
Schedule A hereto, in the event of the termination of the Optionee's employment
with the Company or any of its Subsidiaries, other than a termination that is
either (i) for cause, (ii) voluntary on the part of the Optionee and without
written consent of the Company, or (iii) for reasons of death or disability or
retirement, the Optionee may exercise this Option at any time within 30 days
after such termination to the extent of the number of shares which were
Purchasable hereunder at the date of such termination.
(b) Except as specified in Schedule A attached hereto, in the event of a
termination of the Optionee's employment that is either (i) for cause or (ii)
voluntary on the part of the Optionee and without the written consent of the
Company, this Option, to the extent not previously exercised, shall terminate
immediately and shall not thereafter be or become exercisable.
(c) Unless and to the extent otherwise provided in Exhibit A hereto, in the
event of the retirement of the Optionee at the normal retirement date as
prescribed from time to time by the Company or any Subsidiary, the Optionee
shall continue to have the right to exercise any Options for shares which were
Purchasable at the date of the Optionee's retirement provided that, on the date
which is three months after the date of retirement, the Options will become void
and unexercisable unless on the date of retirement the Optionee enters into a
noncompete agreement with Beach First National Bancshares, Inc. and continues to
comply with such noncompete agreement. This Option does not confer upon the
Optionee any right with respect to continuance of employment by the Company or
by any of its Subsidiaries. This Option shall not be affected by any change of
employment so long as the Optionee continues to be an employee of the Company or
one of its Subsidiaries.
9. Disabled Optionee. In the event of termination of employment because of
the Optionee's becoming a Disabled Optionee, the Optionee (or his or her
personal representative) may exercise this Option, within a period ending on the
earlier of (a) the last day of the one year period following the Optionee's
death or (b) the expiration date of this Option, to the extent of the number of
shares which were Purchasable hereunder at the date of such termination.
10. Death of Optionee. Except as otherwise set forth in Schedule A with
respect to the rights of the Optionee upon termination of employment under
Section 8(a) above, in the event of the Optionee's death while employed by the
Company or any of its Subsidiaries or within three months after a termination of
such employment (if such termination was neither (i) for cause nor (ii)
voluntary on the part of the Optionee and without the written consent of the
Company), the appropriate persons described in Section 6 hereof or persons to
whom all or a portion of this Option is transferred in accordance with Section 5
hereof may exercise this Option at any time within a period ending on the
earlier of (a) the last day of the one year period following the Optionee's
death or (b) the expiration date of this Option. If the Optionee was an employee
of the Company at the time of death, this Option may be so exercised to the
extent of the number of shares that were Purchasable hereunder at the date of
death. If the Optionee's employment terminated prior to his or her death, this
Option may
ii
<PAGE> 30
be exercised only to the extent of the number of shares covered by this Option
which were Purchasable hereunder at the date of such termination.
11. Date of Grant. This Option was granted by the Board of Directors of
the Company on the date set forth in Schedule A (the "Date of Grant").
12. Compliance with Regulatory Matters. The Optionee acknowledges that the
issuance of capital stock of the Company is subject to limitations imposed by
federal and state law and the Optionee hereby agrees that the Company shall not
be obligated to issue any shares of Stock upon exercise of this Option that
would cause the Company to violate law or any rule, regulation, order or consent
decree of any regulatory authority (including without limitation the Securities
and Exchange Commission) having jurisdiction over the affairs of the Company.
The Optionee agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section 12.
13. Restriction on Disposition of Shares. The shares purchased pursuant to
the exercise of an Incentive Stock Option shall not be transferred by the
Optionee except pursuant to the Optionee's will, or the laws of descent and
distribution, until such date which is the later of two years after the grant of
such Incentive Stock Option or one year after the transfer of the shares to the
Optionee pursuant to the exercise of such Incentive Stock Option.
14. Miscellaneous. (a) This Agreement shall be binding upon the parties
hereto and their representatives, successors and assigns.
(b) This Agreement is executed and delivered in, and shall be governed by
the laws of, the State of South Carolina.
(c) Any requests or notices to be given hereunder shall be deemed given,
and any elections or exercises to be made or accomplished shall be deemed made
or accomplished, upon actual delivery thereof to the designated recipient, or
three days after deposit thereof in the United States mail, registered, return
receipt requested and postage prepaid, addressed, if to the Optionee, at the
address set forth below and, if to the Company, to the executive offices of the
Company at 1601 North Oak Street, Suite 305, Myrtle Beach, South Carolina 29577.
(d) This Agreement may not be modified except in writing executed by each
of the parties hereto.
IN WITNESS WHEREOF, the Board of Directors of the Company has caused this
Stock Option Agreement to be executed on behalf of the Company and the Company's
seal to be affixed hereto and attested by the Secretary or an Assistant
Secretary of the Company, and the Optionee has executed this Stock Option
Agreement under seal, all as of the day and year first above written.
<TABLE>
<S> <C>
BEACH FIRST NATIONAL BANCSHARES, INC. OPTIONEE
By:
- ------------------------------------------------------ ------------------------------------------------
Name: Name:
Title: Address:
ATTEST:
------------------------------------------------
------------------------------------------------
- ------------------------------------------------------
Secretary/Assistant Secretary
[SEAL]
</TABLE>
iii
<PAGE> 31
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
BEACH FIRST NATIONAL BANCSHARES, INC.
AND
DATED:
1. Number of Shares Subject to Option: Shares.
2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.
3. Option Exercise Price: $ per Share.
4. Date of Grant:
5. Option Vesting Schedule:
Check one:
[ ] Options are exercisable with respect to all shares on or after the
date hereof
[ ] Options are exercisable with respect to the number of shares indicated
below on or after the date indicated next to the number of shares:
<TABLE>
<CAPTION>
NO. OF SHARES VESTING DATE
- ------------- ------------
<S> <C>
</TABLE>
6. Option Exercise Period:
Check One:
[ ] All options expire and are void unless exercised on or before
, 19 .
[ ] Options expire and are void unless exercised on or before the date
indicated next to the number of shares:
<TABLE>
<CAPTION>
NO. OF SHARES EXPIRATION DATE
- ------------- ---------------
<S> <C>
</TABLE>
7. Effect of Termination of Employment of Optionee (if different from that set
forth in Sections 8 and 10 of the Stock Option Agreement):
<PAGE> 32
SCHEDULE B
NOTICE OF EXERCISE
The undersigned hereby notifies Beach First National Bancshares, Inc. (the
"Company") of this election to exercise the undersigned's stock option to
purchase shares of the Company's common stock, par value $1.00 per share
(the "Common Stock"), pursuant to the Stock Option Agreement (the "Agreement")
between the undersigned and the Company dated . Accompanying this
Notice is (1) a certified or a cashier's check in the amount of $
payable to the Company, and/or (2) shares of the Company's Common
Stock presently owned by the undersigned and duly endorsed or accompanied by
stock transfer powers, having an aggregate Fair Market Value (as defined in the
First Bancshares, Inc. 1997 Stock Option Plan) as of the date hereof of
$ , such amounts being equal, in the aggregate, to the purchase price
per share set forth in Section 3 of the Agreement multiplied by the number of
shares being purchased hereby (in each instance subject to appropriate
adjustment pursuant to Section 5.2 of the Agreement).
IN WITNESS WHEREOF, the undersigned has set his hand and seal, this day of
, 19 .
OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]
--------------------------------------
Name:
Position (if other than Optionee):
<PAGE> 33
APPENDIX A
BEACH FIRST NATIONAL BANCSHARES, INC.
1601 NORTH OAK STREET, SUITE 305
MYRTLE BEACH, SOUTH CAROLINA 29577
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Raymond E. Cleary III as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and to
vote as designated below all the share of common stock of Beach First National
Bancshares, Inc. held of record by the undersigned on March 19, 1997, at the
Annual Meeting of Shareholders to be held on April 30, 1997, or any adjournment
thereof.
1. Election of Directors (all nominees are nominated for Class II)
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
Michael Bert Anderson, Orvis Bartlett Buie, Michael D. Harrington, Diane W.
Sammons, and Rick H. Seagroves
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below)
-----------------------------------------------------------------------------
2. Approval of the Company's 1997 Stock Option Plan.
[ ] APPROVAL [ ] DISAPPROVAL [ ] ABSTENTION
3. In their discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED (I) FOR THE ELECTION OF ALL LISTED NOMINEES, (II) FOR THE APPROVAL OF
THE 1997 STOCK OPTION PLAN, AND (III) AT THE DISCRETION OF THE PROXY ON ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Dated: , 1997
-------------------
-------------------------------
Signature
-------------------------------
Please Print Name
-------------------------------
Signature if Held jointly
-------------------------------
Please Print Name
Please sign exactly as name
appears below. When shares are
held by joint tenants, both
should sign. When signing as
attorney, as executor, trustee
or guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
