The Board of Directors is not aware of any business to come before the Meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the Meeting, it is intended that holders of the proxies will act in accordance with their best judgment.

The cost of solicitation of proxies will be borne by the Company. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Company Common Stock. In addition to solicitation by mail, directors, officers and regular employees of the Company and the Bank may solicit proxies personally or by telephone, without additional compensation.

The Company's Annual Report to Stockholders, including consolidated financial statements, accompanies this Proxy Statement. Any stockholder who has not received a copy of such Annual Report may obtain a copy by writing to the Company. Such Annual Report is not to be treated as part of the proxy solicitation materials, or as having been incorporated herein by reference.

Elliot, Davis & Company, LLP, served as the Company's independent public accountants for the 1998 fiscal year. The Board of Directors has appointed Elliot, Davis & Company, LLP, to be its auditors for the 1999 fiscal year. Representatives of Elliot, Davis & Company, LLP are expected to be present at the Meeting to respond to appropriate questions from stockholders and will have the opportunity to make a statement should they desire to do so.

On January 20, 1998, the Company's Board of Directors, at the recommendation of its Audit Committee, terminated the engagement of KPMG Peat Marwick LLP, Greenville, South Carolina, as the Company's certifying accountants.

On January 20, 1998, the Company's Board of Directors, at the recommendation of its Audit Committee, engaged Elliott, Davis & Company, LLP, Greenville, South Carolina, as the Company's certifying accountants. The Company has not consulted with Elliott, Davis & Company, LLP during its two most recent fiscal years nor during any subsequent interim period prior to its engagement regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, or regarding the reportable condition set forth below.

The report of KPMG Peat Marwick LLP on the Company's financial statements for either of the last two fiscal years did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the Company's two most recent fiscal years and subsequent interim periods preceding the date of termination of the engagement of KPMG Peat Marwick LLP, the Company was not in disagreement with KPMG Peat Marwick LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of KPMG Peat Marwick LLP, would have caused KPMG Peat Marwick LLP to make reference to the subject matter of the disagreement in connection with its report.

KPMG Peat Marwick LLP issued a management letter, dated May 9, 1997, to the Company's Board of Directors containing a reportable condition as a result of their audit of the Company's financial statements at and for the fiscal year ended March 31, 1997. The reportable condition involved certain unreconciled general ledger accounts due to a data processing conversion to Jack Henry and staff turnover. The reconciliations involved three different areas and were addressed by KPMG Peat Marwick LLP as follows:

1. "First, we noted that as a result of the conversion, the loan and deposit trial balances were not in agreement with the supporting documentation as well as the final general ledger as of March 31, 1997. The accounting department has worked with Jack Henry to improve the loan and deposit trial balance reconciliation process and finally was able to reconcile these accounts at the end of May."

2. "We noted that some reconciliations, such as the Flo Thru Account and the FRB Clearing Account, were not being reconciled in a timely manner. Delays in reconciling these accounts could result in errors or misappropriations not being detected. In addition, these accounts become more difficult and timeconsuming to reconcile as time passes. Likewise, these accounts had many stale items on the reconciliation. Once these accounts were reconciled, we determined that the balances at year end were materially correct."

3. "We also noted the [Security Federal Bank] had not properly reconciled the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation custodial accounts which are currently on deposit with the Federal Home Loan Bank of Atlanta. It is our understanding that the conversion caused both of these accounts to become out of balance. It is also our understanding that the accounting department reconciled these balances as of the end of May without significant adjustments."

In a letter dated February 18, 1998, KPMG Peat Marwick LLP noted its agreement with the Company's reported statements with respect to the change in auditors.

A copy of the Annual Report on Form 10-KSB as filed with the SEC will be furnished without charge to stockholders as of the close of business on the Record Date upon written request to Robert E. Johnson, Secretary, Security Federal Corporation, P.O. Box 810, Aiken, South Carolina 29802.

BY ORDER OF THE BOARD OF DIRECTORS

                                  /s/Robert E. Johnson
                                  Robert E. Johnson
                                  Secretary

Aiken, South Carolina
June 23, 1998

EXHIBIT A

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is made as of _________ __, 1998 by and between Security Federal Corporation, a Delaware corporation ("Security-Delaware"), and Security Federal South Carolina Corporation, a South Carolina corporation ("Security-South Carolina"). Security-Delaware and Security-South Carolina are sometimes referred to herein as the "Constituent Corporations."

The authorized capital stock of Security-Delaware consists of 1,000,000 shares of common stock, $0.01 par value per share, of which _______ are issued and outstanding as of the date hereof, and 200,000 shares of serial preferred stock, $0.01 par value per share, none of which are issued and outstanding as of the dated hereof.

The authorized capital stock of Security-South Carolina consists of 1,000,000 shares of common stock, $0.01 par value per share, none of which are issued and outstanding as of the date hereof, and 200,000 shares of serial preferred stock, $0.01 par value per share, none of which are issued and outstanding as of the date hereof.

The directors of the Constituent Corporations have approved this Merger Agreement and deem it advisable and to the advantage of said corporations that Security-Delaware merge into Security-South Carolina upon the terms and conditions herein provided.

NOW, THEREFORE, the parties hereto agree as follows:

1. Merger. Security-Delaware shall be merged with and into Security-South Carolina ("Merger"), and Security-South Carolina shall be the surviving corporation ("Surviving Corporation"), effective upon the date when this Merger Agreement is made effective in accordance with applicable law ("Effective Time"). The corporate name of the Surviving Corporation shall be Security Federal Corporation.

2. Directors, Officers and Governing Documents. The directors of Security-Delaware immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the next annual meeting of stockholders and until their successors shall be duly elected and qualified. The officers of Security-Delaware immediately prior to the Effective Time shall be the officers of the Surviving Corporation, each to hold office in accordance with the Bylaws of the Surviving Corporation. The Articles of Incorporation of Security-South Carolina, as in effect immediately prior to the Effective Time, shall continue to be the Articles of Incorporation of the Surviving Corporation until it shall thereafter be duly altered, amended or repealed. The Bylaws of Security-South Carolina, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation without change or amendment until thereafter amended in accordance with the provisions thereof and applicable laws.

3. Succession. At the Effective Time, Security-South Carolina shall succeed to Security-Delaware in the manner and as more fully set forth in
Section 33-11-106 of the South Carolina Business Corporation Act, as amended.

4. Further Assurances. From time to time, as and when required by the Surviving Corporation or by its successors and assigns, there shall be executed and delivered on behalf of Security-Delaware such deeds and other instruments, and there shall be taken or caused to be taken by or on behalf of Security-Delaware such further and other action as shall be appropriate or necessary to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation the title to and possession of all the property, interests, assets, rights, privileges, immunities, powers, franchises and authority of Security-Delaware, and otherwise to carry out the purposes of this Merger Agreement, and the officers and directors of Security-South Carolina are fully authorized in the name and on behalf of Security-

Delaware or otherwise to take any and all such action and to execute and deliver any and all such deeds and other instruments.

5. Stock and Stock Certificates. At the Effective Time:

(a) each share of Security-Delaware common stock outstanding immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, shall be changed and converted into one fully paid and nonassessable share of Security-South Carolina common stock;

(b) all shares of Security-Delaware common stock presently issued and outstanding in the name of Security-Delaware, by virtue of the Merger and without any action on the part of Security-Delaware shall be cancelled and retired and resume the status of authorized and unissued shares of Security-Delaware common stock; and no shares of Security-Delaware common stock or other securities of Security-South Carolina shall be issued in respect thereof.

6. Stock Certificates. At and after the Effective Time, all of the outstanding certificates which immediately prior to the Effective Time represented shares of Security-Delaware common stock shall be deemed for all purposes to evidence ownership of, and to represent, shares of Security-South Carolina common stock into which the shares of Security-Delaware common stock formerly represented by such certificates have been converted as herein provided. The registered owner on the books and records of Security-Delaware or its transfer agent of any such outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or otherwise accounted for to Security-South Carolina or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividends and other distributions upon the shares of Security-Delaware common stock, evidenced by such outstanding certificate as above provided.

7. Condition to Merger. The Merger shall have received the requisite approval of the holders of Security-Delaware common stock pursuant to the Delaware Business Corporation Act, as amended ("DBCA"). The holders of Security-Delaware common stock shall have approval rights pursuant to Section 262 of the DBCA.

8. Options. At the Effective Time, each option to purchase shares of Security-Delaware common stock granted under the Security Federal Bank 1987 Stock Option and Incentive Plan ("Plan"), which is outstanding immediately prior to the Effective Time, shall be converted into and become an option to purchase the same number of shares of Security-South Carolina common stock at the same option price per share, upon the same terms and subject to the same conditions set forth in the option and in the Plan as in effect at the Effective Time. The same number of shares of Security-South Carolina Common Stock shall be reserved for purposes of the Plan as is equal to the number of shares of Security-Delaware Common Stock so reserved as of the Effective Time. As of the Effective Time, Security-South Carolina will assume the Plan and all obligations of Security-Delaware under the Plan, including the outstanding options granted pursuant to the Plan.

9. Other Employee Benefit Plans. At the Effective Time, Security-South Carolina will assume any and all other employee benefit plans (and all obligations of Security-Delaware thereunder) in effect as of the Effective Time or with respect to which employee rights or accrued benefits are outstanding as of the Effective Time.

10. Amendment. Subject to applicable laws, this Merger Agreement may be amended by written agreement of the parties hereto at any time prior to the Effective Time.

11. Abandonment. At any time prior to the Effective Time, this Merger Agreement may be terminated and abandoned by the unilateral action of the Board of Directors of Security-Delaware.

* * * * *

                                     By:
----------------------------            ------------------------------
Robert E. Johnson, Secretary            Timothy W. Simmons, President

                                     By:
----------------------------            ------------------------------
Robert E. Johnson, Secretary            Timothy W. Simmons, President

EXHIBIT B

ARTICLES OF INCORPORATION

OF

SECURITY FEDERAL SOUTH CAROLINA CORPORATION

ARTICLE I

Corporate Title

The name of the corporation is Security Federal South Carolina Corporation (hereinafter, the "Corporation").

ARTICLE II

Purpose and Powers

The purpose or purposes for which the Corporation is organized are to engage in any lawful act or activity for which corporations may be organized under the South Carolina Business Corporation Act of 1988, as amended (hereinafter, the "Act").

ARTICLE III

Duration

The duration of the Corporation is perpetual.

ARTICLE IV

Registered Office and Agent

The street address of the Corporation's registered office is 1705 Whiskey Road South, Aiken, South Carolina. The name of the Corporation's registered agent at that office is Timothy W. Simmons, P.O. Box 810, Aiken, South Carolina 29802.

ARTICLE V

Incorporator

The name and mailing address of the incorporator is as follows:

Timothy W. Simmons P.O. Box 810 Aiken, South Carolina 29802

ARTICLE VI

Capital Stock

The aggregate number of shares of all classes of capital stock which the Corporation has authority to issue is one million, two hundred thousand (1,200,000), of which one million (1,000,000) shall be common stock, par value $.01 per share, amounting in the aggregate to ten thousand dollars ($10,000), and of which two hundred thousand (200,000) shall be serial preferred stock, par value $.01 per share, amounting in the aggregate to two thousand dollars ($2,000). The shares may be issued by the Corporation from time to time as approved by its Board of Directors without the approval of its stockholders. The consideration for the issuance of the shares shall be paid in full before issuance and shall not be less than the par value per share. Neither promissory notes nor future services shall constitute payment or part payment for the issuance of the shares of the Corporation. The consideration for the shares shall be cash, services actually performed for the Corporation, personal property (tangible or intangible), real property, leases of real property or any combination of the foregoing. In the absence of actual fraud in the transaction, the judgment of the Board of Directors as to the value of such consideration shall be conclusive. Upon payment of such consideration such shares shall be deemed to be fully paid and nonassessable.

Nothing contained in this Article VI (or in any resolution or resolutions adopted by the Board of Directors pursuant hereto) shall entitle the holders of any class or series of capital stock to more than one vote per share.

A description of the different classes and series of the Corporation's capital stock, and a statement of the designations, powers, preferences and rights, and the qualifications, limitations and restrictions, of the shares of each class of and series of capital stock are as follows:

A. Common Stock. Except as provided in this Article VI (or in any resolution or resolutions adopted by the Board of Directors pursuant hereto), the holders of the common stock shall exclusively possess all voting power. Each holder of shares of common stock shall be entitled to one vote for each share held by such holder, including the election of directors. There shall be no cumulative voting rights in the election of directors.

Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and of sinking fund or retirement fund or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends, out of any assets legally available for the payment of dividends; but only when and as declared by the Board of Directors of the Corporation.

In the event of any liquidation, dissolution or winding up of the Corporation, after there shall have been paid or declared and set aside for the holders of any class having preferences over the common stock in the event of liquidation, dissolution or winding up the full preferential amounts of which they are respectively entitled, the holders of the common stock, and of any class or series of stock entitled to participate therewith, in whole or in part, as to distribution of assets, shall be entitled, after payment or provision for payment of all debts and liabilities of the Corporation, to receive the remaining assets of the Corporation available for distribution, in cash or in kind.

Each share of common stock shall have the same relative rights as and be identical in all respects with all the other shares of common stock.

B. Serial Preferred Stock. Except as provided in this Article VI, the Board of Directors is authorized, by resolution or resolutions from time to time adopted and by filing a certificate pursuant to the applicable law of the State of South Carolina, to provide for the issuance of serial preferred stock in series and to fix and state the powers, designations, preferences and relative, participating, optional or other special rights of the shares of each such series, and the qualifications, limitations or restrictions thereof to the full extent now or hereafter permitted by the Act. Without limiting the generality of the grant of authority contained in the preceding sentence, the Board of

Directors is authorized to determine any or all of the following, and the shares of each series may vary from the shares of any other series in any or all of the following respects:

(1) the distinctive serial designation and the number of shares constituting such series;

(2) the dividend rate or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends, and the participating or other special rights, if any, with respect to dividends;

(3) the voting powers, full or limited, if any, of the shares of such series;

(4) whether the shares of such series shall be redeemable and, if so, the price or prices at which, and the terms and conditions upon which such shares may be redeemed;

(5) the amount or amounts payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(6) whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and, if so entitled, the amount of such fund and the manner of its application, including the price or prices at which such shares may be redeemed or purchased through the application of such fund;

(7) whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation and, if so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(8) the price or other consideration for which the shares of such series shall be issued; and

(9) whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock.

Dividends on outstanding shares of preferred stock shall be paid, or declared and set apart for payment, before any dividends shall be paid or declared and set apart for payment on the common stock with respect to the same dividend period.

If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the assets available for distribution to holders of shares of preferred stock of all series shall be insufficient to pay such holders the full preferential amount to which they are entitled, then such assets shall be distributed ratably among the shares of all series of preferred stock in accordance with the respective preferential amounts (including unpaid cumulative dividends, if any) payable with respect thereto.

Each share of each series of serial preferred stock shall have the same relative powers, preferences and rights as, and shall be identical in all respects with, all the other shares of the same series.

ARTICLE VII

Preemptive Rights

Holders of the capital stock of the Corporation shall not be entitled to preemptive rights with respect to any shares or other securities of the Corporation which may be issued or any securities convertible into any such shares, including, without limitation, warrants, subscription rights and options to acquire shares.

ARTICLE VIII

Meetings of Stockholders

A. Notwithstanding any other provision of these Articles of Incorporation or the Bylaws of the Corporation, no action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.

B. Special meetings of stockholders may be called at any time, but only by the Chairman of the Board, the President, a majority of the Board of Directors or as otherwise required by law.

C. Meetings of stockholders may be held within or without the State of South Carolina, as the Bylaws may provide.

ARTICLE IX

Nominations and Business at Annual Meetings

A. Nominees. Only persons who are nominated in accordance with the procedures set forth in this paragraph shall be eligible for election as directors. Nominations of persons for election to the Board of Directors may be made at an annual meeting of stockholders by or at the direction of the Board of Directors or by any stockholder entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this paragraph. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 30 days nor more than 90 days prior to the annual meeting; provided, however, that in the event that less than 45 days' notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election as a director,
(a) the name, age, business address and residence address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of the Corporation's capital stock which are beneficially owned by such person, and (d) any other information relating to such person that is required to be disclosed in solicitations or proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A, or any successor regulation, under the Securities Exchange Act of 1934, as amended (hereinafter, the "Exchange Act") (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) as to the stockholder giving notice, (a) the name and address, as they appear on the Corporation's books, of such stockholder and (b) the class and number of shares of the Corporation's capital stock which are beneficially owned by such stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director unless nominated in accordance with the procedures set forth in this paragraph. The Chairman of the annual meeting shall, if the facts warrant, determine and declare

to the annual meeting that a nomination was not made in accordance with procedures prescribed by these Articles of Incorporation, and if he should so determine, he shall so declare to the annual meeting and the defective nomination shall be disregarded.

B. Business at Annual Meetings. At an annual meeting of stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder.

For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 30 days nor more than 90 days prior to the meeting; provided, however, than in the event that less than 45 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (iii) the class and number of shares of the Corporation's capital stock which are beneficially owned by the stockholder and (iv) any material interest of the stockholder in such business. Notwithstanding anything in these Articles of Incorporation to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this paragraph. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that a matter of business was not properly brought before the meeting in accordance with the provisions of these Articles of Incorporation, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

ARTICLE X

Directors

A. Number; Vacancies. Except as provided in this Article X, the Board of Directors of the Corporation shall consist of not less than seven (7) or more than fifteen (15) directors. The number of directors with this range shall be as provided from time to time in or in accordance with the Bylaws of the Corporation, provided that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director, and provided further that no action shall be taken to decrease or increase the number of directors from time to time unless at least two-thirds of the directors then in office shall concur in said action. Any vacancy in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, shall be filled by a vote of a majority of the directors then in office, whether or not a quorum, and any director so chosen shall hold office until the next stockholders' meeting at which directors are elected and until such director's successor shall have been elected and qualified. Directors need not be residents of any particular state, country or other jurisdiction.

Whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors, the Board of Directors shall consist of said directors so elected in addition to the number of directors fixed as provided in this Article.

B. Classified Board. Except as otherwise provided by Section 33-8-106 of the Act, the Board of Directors of the Corporation shall be divided into three classes of directors which shall be designated Class I, Class II and Class III. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. Such classes shall be as nearly equal in number as the then total number of directors constituting the entire board of directors shall permit, with the terms of office of all members of one class expiring each year. At

the first annual meeting of stockholders, directors in Class I shall be elected to hold office for a term expiring at the next succeeding annual meeting thereafter, directors of Class II shall be elected to hold office for a term expiring at the second succeeding meeting thereafter, and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting thereafter. Thereafter, at each succeeding annual meeting, directors whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualified unless his position on the Board of Directors shall have been abolished by action taken to reduce the size of the Board of Directors prior to said meeting.

Should the number of directors of the Corporation be reduced, the directorship(s) eliminated shall be allocated among classes as appropriate so that the number of directors in each class is as specified in the immediately preceding paragraph. The board of directors shall designate, by the name of the incumbent(s), the position(s) to be abolished. Notwithstanding the foregoing, no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Should the number of directors of the Corporation be increased, the additional directorships shall be allocated among classes as appropriate so that the number of directors in each class is as specified in the immediately preceding paragraph.

Whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the Board of Directors shall consist of said directors so elected in addition to the number of directors fixed as provided above in this Article X. Notwithstanding the foregoing, and except as otherwise may be required by law, whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders.

ARTICLE XI

Initial Directors

The names of the individuals who shall serve as the Board of Directors of the Corporation until the first annual meeting of stockholders, at which time they may stand for re-election, are Gasper L. Toole III, Thomas L. Moore, Harry O. Weeks, Jr., Robert E. Alexander, William Clyburn, Timothy W. Simmons and T. Clifton Weeks. The address of each such individual is 1705 Whiskey Road South, Aiken, South Carolina 29803.

ARTICLE XII

Removal of Directors

Notwithstanding any other provision of these Articles of Incorporation or the Bylaws of the Corporation, no director may be removed except for cause and then only by the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. At least 30 days prior to such meeting of stockholders, written notice shall be sent to the director or directors whose removal will be considered at such meeting.
Notwithstanding the foregoing, whenever the holders of any one or more series of preferred stock shall have the right, voting separately as a class, to elect one or more directors, the preceding provisions of this Article XII shall not apply with respect to the director or directors elected by such holders of preferred stock.

ARTICLE XIII

Limitations on Directors' Liability

No director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, other than liability (i) for the breach of the director's duty of loyalty to the

Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve gross negligence, intentional misconduct or a knowing violation of law, (iii) imposed under Section 33-8-330 of the Act (pertaining to liability for unlawful distributions), or (iv) for any transaction from which the director derived an improper personal benefit. If the Act is amended after the effective date of these Articles of Incorporation to further eliminate or limit the personal liability of directors, then the liability of a director shall be eliminated or limited to the fullest extent permitted by the Act.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director existing at the time of such repeal or modification.

ARTICLE XIV

Indemnification

A. Persons. The Corporation shall indemnify, to the extent provided in paragraphs B or D:

(1) any person who is or was a director, officer, employee, trustee or agent of the Corporation; and

(2) any person who serves or served at the Corporation's request as a director, officer, employee, partner, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

B. Extent. In case of a threatened, pending or completed suit, action or proceeding (whether civil, criminal, administrative or investigative), and any appeal therein, against a person named in paragraph A by reason of his holding a position named in paragraph A, the Corporation shall, unless prohibited by law, indemnify him if he satisfies the standard in paragraph C, against all expenses (including attorneys' fees), judgments, fines, penalties and amounts paid in settlement which are actually and reasonably incurred by him in connection with such suit, action or proceeding.

C. Standard. Subject to paragraph D, a person named in paragraph A shall be indemnified only if he acted in good faith in the transaction which is the subject of the suit, action or proceeding and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, including, but not limited to, the taking of any and all actions in connection with the Corporation's response to any tender offer or any offer or proposal of another party to engage in a Business Combination (as defined in Article
XVI) not approved by the Board of Directors, and, with respect to any criminal suit, action or proceeding, he had no reasonable cause to believe his conduct was unlawful. The termination of a suit, action or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, in itself, create a presumption that the person failed to satisfy the standard of this paragraph.

D. Authorization of Indemnification. Any indemnification under this Article XIV (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, trustee, or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraph C. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such suit, action or proceeding, (ii) if a quorum of disinterested directors so directs by independent legal counsel in a written opinion or (iii) by the stockholders. Such determination also may be made as to some matters but not as to others, and amounts to be indemnified may be reasonably prorated. To the extent, however, that a director, officer, employee, trustee or agent of the Corporation has been successful on the merits or otherwise in defense of any suit, action or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. No director, officer, employee, trustee or agent of the Corporation

shall be entitled to indemnification in connection with any suit, action or proceeding voluntarily initiated by such person unless the suit, action or proceeding was authorized by a majority of the entire Board of Directors.

E. Good Faith Defined. For purposes of any determination under paragraph D, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal suit, action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this paragraph shall mean any other corporation or any association, partnership, joint venture, trust or other enterprise of which such person is or was serving at the request of the corporation as a director, officer, employee, partner trustee or agent. The provisions of this paragraph shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in paragraph C, as the case may be.

F. Advance Payment of Expenses. The Corporation may pay in advance any expenses (including attorneys' fees) which may become subject to indemnification under paragraphs A-E if the person receiving the payment furnishes the Corporation a written affirmation of his good faith belief that he has met the standard of conduct described in paragraph C and undertakes in writing to repay the same if it is ultimately determined that he is not entitled to indemnification by the Corporation under paragraphs A-E and if a determination is made that the facts then known to those making the determination would not preclude indemnification.

G. Nonexclusive. The indemnification and advancement of expenses provided by paragraphs A-F or otherwise granted pursuant to South Carolina law shall not be exclusive of any other rights to which a person may be entitled by law, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

H. Continuation. The indemnification and advance payment provided by paragraphs A-F shall continue as to a person who has ceased to hold a position named in paragraph A and shall inure to his heirs, executors and administrators.

I. Insurance. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in paragraph A, against any liability incurred by him in any such position, or arising out of his status as such, whether or not the Corporation would have power to indemnify him against such liability under paragraphs A-F.

J. Meaning of "Corporation" for Purposes of this Article. For purposes of this Article XIV, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent as a director, officer, employee, partner, trustee or agent of another corporation, association partnership, joint venture, trust or other enterprise,shall stand in the same position under the provisions of this Article XIV with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

K. Savings Clause. If this Article XIV or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director, officer, employee and agent of the Corporation as to costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any suit, action or proceeding, whether civil criminal, administrative or investigative, including an action by or in the right of the corporation to the full extent permitted by any

applicable portion of this Article XIV that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE XV

Limitations on Acquisition of Capital Stock

No person shall acquire or offer to acquire ownership of any capital stock of the Corporation otherwise than as limited by this Article XV.

A. Approval by Stockholders or Board of Directors Required Prior to Acquisition of Beneficial Ownership of 15% of Voting Stock. No person shall acquire beneficial ownership of 15% or more of the voting stock, unless such acquisition has been approved prior to its consummation by the affirmative vote of the holders of at least two-thirds of the outstanding shares of the voting stock at a duly constituted meeting of stockholders called for such purpose or by the affirmative vote of at least two-thirds of the directors then in office at a duly constituted meeting called for such purpose.

B. Approval by Regulatory Authorities Required Prior to Acquisition of Beneficial Ownership of 10% of Voting Stock. No person shall acquire beneficial ownership of 10% or more of the voting stock without obtaining prior thereto all regulatory approvals required under applicable federal and state statutes and in the manner provided by all applicable regulations adopted thereunder. In the event that any person acquires beneficial ownership of 10% or more of the voting stock without obtaining all such regulatory approvals, such acquisition shall constitute a violation of this Article XV, and the Corporation shall be entitled to institute a private right of action to enforce such statutory and regulatory provisions.

C. Approval by Board of Directors or Regulatory Authorities Required Prior to Offers to Acquire Beneficial Ownership of 10% of Voting Stock. No person shall make any offer to acquire beneficial ownership of 10% or more of the voting stock, unless such person has received prior approval to make such offer by complying with either of the following procedures:

(1) The offer shall have been approved by the affirmative vote of two-thirds of the directors then in office at a duly constituted meeting called for such purpose, or

(2) The person proposing to make such offer shall have:

(a) obtained all required federal and state regulatory approvals; and

(b) furnished to the Board of Directors, concurrently with such person's filing thereof with federal and state regulatory authorities, a complete copy of all notices, submissions and documents (including all exhibits thereto) and other information filed by such person pursuant to applicable federal and state law and regulations.

D. Certain Definitions. For purposes of this Article XV:

(1) "Person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of the Corporation.

(2) "Offer" includes every offer to buy or otherwise acquire, solicitation of an offer to sell, tender offer for, or request for invitation for tenders of, a security or interest in a security for value.

(3) "Acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

(4) "Acting in concert" includes (i) knowing participation in a joint activity or conscious parallel action towards a common goal whether or not pursuant to an express agreement, and (ii) a combination or pooling of voting or other interest in the Corporation's outstanding shares for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; however, a group "acting in concert" shall not include the Board of Directors in its solicitation, holding and voting of proxies obtained by it.

(5) "Beneficial ownership" shall have the meaning defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of filing of these Articles of Incorporation; however, the solicitation, holding and voting of proxies obtained by the Board of Directors pursuant to a solicitation under Regulation 14A of the General Rules and Regulations under the Exchange Act shall not constitute beneficial ownership in violation of this Article XV.

(6) "Voting Stock" means the then outstanding shares of capital stock entitled to vote generally in the election of directors.

E. Inapplicability to Public Offering, Tax-Qualified Employee Stock Benefit Plans and Certain Relationships. This Article XV shall not apply to:

(1) the purchase of securities of the Corporation by underwriters in connection with a public offering of such securities;

(2) the purchase of such securities by a tax-qualified employee stock benefit plan of the Corporation or any of its subsidiaries; or

(3) the purchase of such securities by directors and officers of the Corporation or any of its subsidiaries or by members of their "immediate family;" provided, however, that such purchase is approved in advance by the affirmative vote of at least two-thirds of the disinterested directors then in office at a duly constituted meeting called for such purpose; and provided, further, that all applicable regulatory approvals with respect to such purchase shall have been received. For such purpose, the term "immediate family" shall mean, with respect to any natural person: (i) such person's spouse, father, mother, children, brothers, sisters, and grandchildren, (ii) the father, mother, brothers, and sisters of such person's spouse and (iii) the spouse of a child, brother, or sister of such person.

F. Grandfathering. This Article XV shall not apply to the acquisition of securities of the Corporation prior to the effective date of these Articles of Incorporation.

G. Construction of this Article. The majority of the Continuing Directors, as defined in Article XVI (provided a Continuing Director Quorum is present) shall have the power to construe and apply the provisions of this Article XV and to make all determinations necessary or desirable to implement such provisions, including, but not limited to, matters with respect to (i) the number of shares beneficially owned by any person, (ii) whether a person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iii) the application of any other definition or operative provision of this Article XV to the given facts, or (iv) any other matter relating to the applicability or effect of this Article XV. Any construction, application or determination made by the Continuing Directors pursuant to this Article XV in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders.

ARTICLE XVI

Approval of Certain Business Combinations

A. In addition to an other requirement imposed by law, the stockholder vote required to approve Business Combinations (as hereinafter defined) shall be set forth in this Article XVI.

(1) In addition to any other affirmative vote required by law or these Articles of Incorporation, and except as otherwise expressly provided in this Article, the affirmative vote of the holders of (i) at least 80% of the outstanding shares entitled to vote thereon (and, if any class or series of shares is entitled to vote thereon separately, the affirmative vote of the holders of at least 80% of the outstanding shares of each such class or series), and (ii) at least two-thirds of the outstanding shares entitled to vote thereon, not including shares deemed beneficially owned by a Related Person (as hereinafter defined), shall be required in order to authorize any of the following:

(a) any merger or consolidation of the Corporation with or into a Related Person (as hereinafter defined);

(b) any sale, lease, exchange, transfer or other disposition other than in the usual and regular course of business (in one transaction or a series of transactions in any twelve-month period), including without limitation, a mortgage, or any other security device, of all or any Substantial Part (as hereinafter defined) of the assets of the Corporation (including without limitation any voting securities of a subsidiary) or of a subsidiary, to a Related Person;

(c) any merger or consolidation of a Related Person with or into the Corporation or a subsidiary of the Corporation;

(d) any sale, lease, exchange, transfer or other disposition of all or any Substantial Part of the assets of a Related Person to the Corporation or a subsidiary of the Corporation;

(e) the issuance or transfer by the Corporation or a subsidiary of the Corporation (in one transaction or a series of transactions) of any equity securities of the Corporation or any subsidiary having an aggregate Market Value of five percent or more of the total Market Value of the outstanding shares of the Corporation to a Related Person, except pursuant to the exercise of warrants, rights or options to subscribe for or purchase securities offered, issued or granted pro rata to all holders of shares of capital stock entitled to vote generally in the election of directors or any other method affording substantially proportionate treatment to the holders of such capital stock.

(f) the acquisition by the Corporation or a subsidiary of the Corporation of any securities of a Related Person;

(g) any reclassification of the securities of the Corporation (including any reverse stock split), or any recapitalization involving the common stock of the Corporation; and

(h) any agreement, contract or other arrangement providing for any of the transactions described in this Article XVI.

(2) Such affirmative vote shall be required notwithstanding any other provision of these Articles of Incorporation any provision of law, or any agreement with any regulatory agency, national or affiliated securities association or national securities exchange which might otherwise permit a lesser vote or no vote.

(3) The term "Business Combination" as used in this Article XVI shall mean any transaction which is referred to any one or more of subparagraphs (a) through (h) above.

B. The provisions of paragraph A shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by any other provision of these Articles of Incorporation, any provision of law, or any agreement with any regulatory agency, national or affiliated securities association or national securities exchange, if the Business Combination shall have been approved by the affirmative vote of two-thirds of the Continuing Directors (as hereinafter defined); provided, however, that such approval shall only be effective if obtained at a meeting at which a Continuing Director Quorum (as hereinafter defined) is present.

C. For the purposes of this Article XVI the following definitions apply:

(1) The term "Related Person" means and includes (a) any individual, corporation, partnership or other person or entity which together with its "affiliates" (as that term is defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act), "beneficially owns" (as that term is defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act) in the aggregate 10% or more of the outstanding shares of the common stock of the Corporation; and (b) any "affiliate" (as that term is defined in Rule 12b-2 under the Exchange Act) of any such individual, corporation, partnership or other person or entity. Without limitation, any shares of the common stock of the Corporation which any Related Person has the right to acquire pursuant to any agreement, or upon exercise or conversion rights, warrants or options, or otherwise, shall be deemed "beneficially owned" by such Related Person.

(2) The term "Substantial Part" means more than 25% of the total assets of the Corporation, as of the end of its most recent fiscal year ending prior to the time the determination is made.

(3) The term "Continuing Director" means any member of the Board of Directors who is unaffiliated with the Related Person and was a member of the Board prior to the time that the Related Person became a Related Person, and any successor of a Continuing Director who is unaffiliated with the Related Person and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board.

(4) The term "Continuing Director Quorum" means two-thirds of the Continuing Directors capable of exercising the powers conferred on them.

(5) The term "Market Value" means:

(a) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the composite tape for New York Stock Exchange-listed stock or, if such stock is not quoted on the composite tape, on the New York Stock Exchange or, if such stock is not listed on such exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing sales price or bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotation System or any system then in use, or if no such quotations are available, the fair market value of a share of such stock on the date in question as determined by the Board of Directors in good faith; and

(b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Board of Directors in good faith.

ARTICLE XVII

Criteria for Evaluation of Business Combinations

In connection with the exercise of its judgment in determining what is in the best interests of the Corporation and of the stockholders, when evaluating a Business Combination (as defined in Article XVI) or a tender

or exchange offer, the Board of Directors shall, in addition to considering the adequacy of the amount to be paid in connection with any such transaction, give due consideration to all of the following factors and any other factors which it deems relevant (i) the social and economic effects of the transaction on the Corporation and its subsidiaries, employees, depositors, loan and other customers, creditors and other elements of the communities in which the Corporation and its subsidiaries operate or are located; (ii) the business and financial condition and earnings prospects of the acquiring person or entity, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the acquisition, and other likely financial obligations of the acquiring person or entity, and the possible effect of such conditions upon the Corporation and its subsidiaries and the other elements of the communities in which the Corporation and it subsidiaries operate or are located; and (iii) the competence, experience, and integrity of the acquiring person or entity and its or their management.

ARTICLE XVIII

Amendment of Bylaws

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of the Corporation by the affirmative vote of two- thirds of the directors then in office at a duly constituted meeting called for such purpose. Notwithstanding any other provision of these Articles of Incorporation or the Bylaws (and notwithstanding the fact that some lesser percentage may be specified by law), the Bylaws shall not be made, repealed, altered, amended or rescinded by the stockholders except by the vote of the holders of not less than two-thirds of the outstanding shares of capital stock entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose (provided that notice of such proposed adoption, repeal, alteration, amendment or rescission is included in the notice of such meeting) or, as set forth above, by the Board of Directors.

ARTICLE XIX

Amendment of Articles of Incorporation

Except as set forth in this Article XIX or as otherwise specifically required by law, no provision of these Articles of Incorporation shall be repealed, altered, amended or rescinded unless such repeal, alteration, amendment or recision has been first proposed by the Board of Directors upon the affirmative vote of at least two-thirds of the directors then in office at a duly constituted meeting of the Board of Directors called for such purpose and thereafter approved by the stockholders by the affirmative vote of the holders of at least a majority of the shares entitled to vote thereon at a duly called annual or special meeting of stockholders; provided, however, that the provisions set forth in Articles VII, VIII, IX, X, XII, XIII, XIV, XV, XVI, XVII, XVIII and this Article XIX may not be repealed, altered, amended or rescinded in any respect unless the same is approved by the affirmative vote of the holders of not less than two-thirds of the outstanding shares of capital stock entitled to vote thereon, rather than a majority, cast at a meeting of the stockholders called for that purpose (provided that notice of such proposed amendment is included in the notice of such meeting), unless approved by the affirmative vote of two-thirds of the Continuing Directors (as defined in Article XVI) at a meeting at which a Continuing Director Quorum (as defined in Article XVI) is present, in which case only such affirmative vote as is required by another provision of these Articles of Incorporation, any provision of law, or any agreement with any regulatory agency, national or affiliated securities association, or national securities exchange; and provided further, that the provision set forth in Article I may be altered or amended solely upon the affirmative vote of at least two-thirds of the directors then in office at a duly constituted meeting of the Board of Directors called for such purpose.

* * *

Executed this 16th day of June 1998.

/s/Timothy W. Weeks
---------------------------
Timothy W. Weeks
Incorporator

EXHIBIT C

Section 262 of the Delaware General Corporation Law

262 APPRAISAL RIGHTS. -(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to Section 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to Section 251, Section 252, Section 254, Section 257,
Section 258, Section 263 or Section 264 of this title:

(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 stockholders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of
Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 stockholders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under Section 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsections (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of his shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to Section 228 or Section 253 of this title, each constituent corporation, either before the effective date of the merger or consolidation or within ten days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section; provided that, if the notice is given on or after the effective date of the merger or consolidation, such notice shall be given by the surviving or resulting corporation to all such holders of any class or series of stock of a constituent corporation that are entitled to appraisal rights. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is

given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after his written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that he is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.

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