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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (under Rule 14a- 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ' 240.14a-11(c) or ' 240.14a-12
Guaranty State Bancorp
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fees (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
Guaranty State Bancorp
302 West Main Street
Durham, North Carolina 27702
March 31, 1997
Dear Shareholders:
It is a pleasure to invite you to Guaranty State Bancorp's 1997 Annual Meeting
of Shareholders to be held on May 1, 1997, at the Omni Durham Hotel and
Convention Center, 201 Foster Street, Durham, North Carolina. The annual
meeting is scheduled to begin at 2:00 p.m., local time.
The matters scheduled for consideration at the meeting are described in detail
in the enclosed Notice of Annual Meeting of Shareholders and Proxy Statement.
Whether you own a few or many shares of stock, and whether or not you plan to
attend the meeting in person, it is important that your shares be voted on the
matters that come before the meeting. If you are unable to attend the meeting or
prefer to vote by proxy, please complete the enclosed proxy and return it to us
no later than April 30, 1997. A shareholder who gives a proxy may revoke it any
time before it is voted, and any shareholder who attends in person may vote in
person at the meeting, if he or she wishes to do so, even though he or she may
have previously sent in a proxy. Proxies may be revoked in person or in writing
any time prior to or at the meeting by contacting J. Edwin Causey, Jr.,
Secretary.
We hope your schedule allows you to be at the Omni Durham Hotel and Convention
Center for the annual meeting. We look forward to seeing you on May 1.
Very truly yours,
Charles J. Stewart
President and Chief Executive Officer
<PAGE>
GUARANTY STATE BANCORP
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To The Shareholders of Guaranty State Bancorp:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Guaranty
State Bancorp will be held at the Omni Durham Hotel and Convention Center, 201
Foster Street, Durham, North Carolina 27701, at 2:00 p.m. on Thursday, May 1,
1997, for the following purposes:
1. To amend Article IV of the Articles of Incorporation of the
Corporation to provide for both common stock and preferred stock.
2. To amend the Articles of Incorporation of the Corporation by
adding Article XIV to provide that directors may be removed only
for "cause".
3. To elect three directors with terms expiring in 2000.
4. To consider and act upon a proposal to ratify the selection of
Coopers & Lybrand, L.L.P. as independent public accountants to
audit the books of the Corporation for the fiscal year ending
December 31, 1997.
5. To act upon such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 14, 1997 will
be entitled to notice of and to vote at the annual meeting or any adjournment
thereof. You are requested to date, sign, and return the enclosed proxy
promptly so that if you are unable to attend the meeting your shares can
nevertheless be voted at the meeting. If you attend, your proxy will be
returned to you upon request.
BY ORDER OF THE BOARD OF DIRECTORS
J. Edwin Causey, Jr., Secretary
Durham, North Carolina
March 31, 1997
Guaranty State Bancorp
Annual Meeting of Shareholders
Location: Omni Durham Hotel and Convention Center
201 Foster Street
Durham, North Carolina 27701
Date: Thursday, May 1, 1997
Time: 2:00 p.m
<PAGE>
GUARANTY STATE BANCORP
POST OFFICE BOX 1731
302 W. MAIN STREET
DURHAM, NORTH CAROLINA 27702
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Guaranty State
Bancorp (the "Corporation") in connection with the solicitation by the Board of
Directors of the Corporation of proxies for the Annual Meeting of Shareholders
to be held at 2:00 p.m., Thursday, May 1, 1997, or any adjournment thereof, at
the Durham Omni Hotel and Convention Center, 201 Foster Street, Durham, North
Carolina 27701, for the purposes set forth in the Notice of Annual Meeting of
Shareholders, which is enclosed along with the form of proxy.
All proxies that are properly executed and received prior to the meeting
will be voted at the meeting. If a shareholder specifies how the proxy is to be
voted on any of the business to come before the meeting, the proxy will be voted
in accordance with such specification. If no specification is made, the proxy
will be voted in favor of (1) approval of the amendment to the Articles of
Incorporation to provide for both common and preferred stock; (2) approval of
the amendment to the Articles of Incorporation to provide for directors removal
only for "cause"; (3) the election of each of the nominees for director; and (4)
for the ratification of the selection of independent certified public
accountants. The Board of Directors does not know of any other matter which
will be presented for action at the meeting, but the persons named in the proxy
intend to vote or act with respect to any proposal which may be presented for
action in accordance with their best judgment. A shareholder who gives a proxy
may revoke it at any time before it is voted, and any shareholder who attends
the meeting in person may vote in person at the meeting, if he or she wishes to
do so, even though he or she sent in a proxy. Proxies may be revoked in person
or in writing at any time prior to or at the meeting by contacting J. Edwin
Causey, Jr., Secretary.
This Proxy Statement and accompanying proxy are being mailed to
shareholders on or about March 31, 1997.
The Corporation will bear the entire cost of preparing this Proxy Statement
and of soliciting proxies. Proxies may be solicited by employees of the
Corporation personally, by special letter or by telephone. The Corporation may
also request brokers and others to send solicitation material to beneficial
owners of stock and may reimburse them for this purpose.
VOTING SECURITIES
Only shareholders of record at the close of business on March 14, 1997 (the
"Record Date") are entitled to vote at the meeting. As of the Record Date, the
Corporation had outstanding 881,553 shares of common stock, par value $1.00 per
share (the "Common Stock"), which shares constitute the only class of stock of
the Corporation entitled to notice of and to vote at the meeting. As of the
same date, the Corporation had approximately 286 shareholders of record.
The representation in person or by proxy of a majority of the votes
entitled to be cast is necessary to provide a quorum at the Annual Meeting. At
the Annual Meeting, each shareholder will be entitled to cast one vote for each
share of Common Stock held of record on the Record Date for each matter
submitted for voting and, in the election of directors, for each director to be
elected.
In voting for directors under Proposal 3, the three nominees receiving the
highest number of votes will be elected. Votes may be cast in favor of director
nominees or withheld. Withheld votes are not treated as votes cast and,
therefore, will have no effect on the election of directors. There is no
cumulative voting with respect to the election of directors. In the case of the
other proposals, for each such proposal to be approved, the number of votes cast
for approval must exceed the number of votes cast against approval. Under the
<PAGE>
rules of the New York Stock Exchange (the "NYSE"), broker-dealers who hold
shares in street name have the authority to vote on certain routine items when
they have not received voting instructions from beneficial owners. Proposals 1
and 2 are not considered routine matters under the rules of the NYSE.
Accordingly, broker-dealers who hold shares in street name and have not received
instructions from beneficial owners will not have authority to vote on these two
proposals ("broker non- votes"). Under North Carolina law, broker non-votes are
not treated as votes cast and, therefore, will have no effect on the vote for
Proposals 1 and 2. Similarly, abstentions are not treated as votes cast and,
therefore, will have no effect on the vote for any proposal.
Guaranty State Bancorp was incorporated under North Carolina law on March
26, 1993 for the purpose of becoming the holding corporation of Guaranty State
Bank (the "Bank"). The Corporation's business activities consist solely of the
operation of the Bank as a wholly-owned subsidiary commercial bank.
The principal executive offices of the Corporation and the Bank are located
at 302 W. Main Street, Durham, North Carolina 27701, telephone (919) 688-9361.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning beneficial
ownership of the Common Stock by (i) each person known by the Corporation to be
a beneficial owner of more than five percent (5%) of the outstanding Common
Stock, (ii) each director and nominee for director of the Corporation, (iii)
each of the executive officers named in the Summary Compensation Table, and (iv)
all directors and executive officers of the Corporation as a group, as of March
14, 1997. The percentages are based on total shares outstanding as well as
immediately exercisable stock options. Except as otherwise noted, the person
named had sole voting and investment power with respect to the shares reflected
in the table.
Amount and Nature
of Beneficial Percent of
Name Ownership Common Stock
- ---- --------- ------------
Dwight G. Howard 119,996(1) 12.73%
Frank A. Ward 56,222(2) 5.96%
Wachovia Bank of N. C., NA 45,000(3) 4.77%
Executor of the Estate of
Laurance D. Kirkland, Jr.
Charles J. Stewart 67,984(4) 7.21%
David W. Wiggins 24,136(5) 2.56%
B. W. Harris, III 19,190(6) 2.04%
N. Wayne Campbell 14,290(7) 1.52%
Robert F. Baker 5,049(8) *
Stancil B. Roberts 3,347(9) *
2
<PAGE>
W. L. Douglas Townsend, Jr. 2,550(10) *
Susan Cranford Ross 800(11) *
E. Spurgeon Booth, Jr. 500(12) *
Phillip H. Pearce, M.D. 300(13) *
All Directors and Executive
Officers as a Group 167,124(14) 17.73%
(13 persons)
___________________________________
* Less than one percent.
(1) Mr. Howard's address is Post Office Box 1962, Durham, North Carolina 27702.
(2) Mr. Ward's address is 518 South Duke Street, Durham, North Carolina 27701.
(3) Wachovia's address is Post Office Box 2252, Durham, North Carolina 27702.
As executor, Wachovia has sole voting power for the shares held in the
estate. Wachovia does not have voting power for 2,250 shares held in the
name of Eva D. Kirkland. Mrs. Kirkland is beneficiary of the Estate of Mr.
Kirkland.
(4) Includes 41,880 shares subject to a presently exercisable stock option and
900 shares held by Mr. Stewart's spouse.
(5) Includes 300 shares held by Mr. Wiggins' children under the North Carolina
Uniform Transfers to Minors Act, and 750 shares held by Mr. Wiggins'
spouse. Mr. Wiggins' address is Post Office Box 71244, Durham, North
Carolina 27722.
(6) Includes 4,500 shares subject to a presently exercisable stock option. Mr.
Harris' address is 3942 Nottaway Road, Durham, North Carolina 27707.
(7) Includes 825 shares held by Mr. Campbell's spouse. Mr. Campbell's address
is 1920 Redding Lane, Durham, North Carolina 27712.
(8) Mr. Baker's address is Post Office Box 891, Durham, North Carolina 27702.
(9) Mr. Roberts' address is 2202 Thunder Road, Durham, North Carolina 27712.
(10) Includes 360 shares held by Mr. Townsend's spouse. Mr. Townsend's address
is 2204 Whitley Drive, Durham, North Carolina 27707.
(11) Mr. Booth's address is Post Office Box 2916, Durham, North Carolina 27715.
(12) Ms. Ross' address is 4102 Westfield Drive, Durham, North Carolina 27705.
(13) Dr. Pearce's address is 30 Brookside Place, Durham, North Carolina 27705.
(14) Includes 61,005 shares subject to presently exercisable stock options.
3
<PAGE>
INTRODUCTION TO PROPOSALS 1 AND 2
Proposals 1 and 2 have been unanimously approved by the Board of Directors
and, under North Carolina law, must be approved by the shareholders to become
effective. Proposal 1 seeks an amendment to the Articles of Incorporation of
the Corporation to provide for both common stock and a separate class of
preferred stock that may be issued from time to time at the direction of the
Board of Directors. Proposal 2 seeks an additional amendment to the Articles of
Incorporation (collectively, Proposal 1 and Proposal 2 are referred to as the
"Charter Amendments") to permit directors to be removed only for "cause" as
defined in the amendment. Because the Charter Amendments have an impact upon
the rights of shareholders and could be characterized as anti-takeover measures
which, if adopted, may tend to insulate management and make the accomplishment
of certain transactions involving a potential change of control of the
Corporation more difficult, each shareholder should carefully study the
description of the proposals contained herein and the text of the amendments as
set forth in Exhibits A and B to this Proxy Statement. The Board of Directors
has no present intention to put before the shareholders any additional proposals
which would operate as a significant impediment to an attempt by a third party
to obtain control of the Corporation.
Existing Anti-takeover Provisions
Statutory Provisions. The Corporation, as a bank holding company
incorporated under the laws of the State of North Carolina, presently has
certain statutory anti-takeover provisions in effect. The Corporation and the
Bank are subject to the Change in Bank Control Act, administered by the Board of
Governors of the Federal Reserve System as to the Corporation and the Federal
Deposit Insurance Corporation as to the Bank, which requires federal regulatory
approval before any one person can acquire 10% or more of the outstanding Common
Stock. North Carolina banking law has similar prior approval requirements which
are administered by the North Carolina Commissioner of Banks. The Corporation
has elected to be subject to the North Carolina Shareholder Protection Act,
which generally requires the affirmative vote of at least 95% of the voting
shares of a corporation to adopt or authorize most business combinations unless
certain fair price and procedural requirements are satisfied. The Corporation
also has elected to be subject to the North Carolina Control Share Acquisition
Act, which generally provides that in the event a potential acquiror acquires a
certain percentage of the total voting power of a corporation, the power to vote
such shares is subject to approval by a majority of the shares held by persons
other than the potential acquiror. If the potential acquiror obtains voting
powers in this manner, under certain circumstances the other shareholders will
have the right to have their shares redeemed by the Corporation at fair market
value.
Articles of Incorporation and Bylaw Provisions. The Corporation's Articles
of Incorporation and Bylaws also contain certain provisions which may have an
anti-takeover effect. The Articles of Incorporation provide that shareholders of
the Corporation shall not have preemptive rights to acquire additional shares.
The existence of preemptive rights would significantly restrict the
Corporation's flexibility to enter into friendly or "white knight" acquisitions
involving the issuance of large blocks of additional shares to repel a hostile,
unsolicited potential acquiror. The Articles of Incorporation do not authorize
cumulative voting for directors, which makes it more difficult for minority
shareholders to gain representation on the Board of Directors. The Bylaws
include a super-majority voting provision which has been approved by the
shareholders and which requires approval of certain business combinations by
66.7% of all outstanding shares of voting stock. The Bylaws of the Corporation
do not permit special meetings of shareholders to be called other than by the
Chairman, any Vice Chairman, President or the Board of Directors.
Other Agreements. The Corporation's 1986 Incentive Stock Option Plan
provides for the grant of options pursuant to Section 422 of the Internal
Revenue Code to officers and other key employees of the Corporation. The Plan
provides that upon a change of control of the Corporation, all outstanding
options that have not vested will immediately vest and become exercisable. Such
immediate vesting could make more difficult a change in control of the
4
<PAGE>
Corporation through an unsolicited or hostile proposal to acquire control. (See
"Executive Compensation")
PROPOSAL 1: AMENDMENT OF THE ARTICLES OF INCORPORATION TO PROVIDE FOR COMMON
AND PREFERRED STOCK.
The Proposed Amendment
The Board of Directors has unanimously approved and recommends that the
shareholders approve the amendment to the Articles of Incorporation which
would amend Article IV in its entirety to provide for both Common Stock and
Preferred Stock. The text of the amendment to Article IV is provided in
Exhibit A to this Proxy Statement. The Articles of Incorporation currently
authorize the issuance of 2,500,000 shares of capital stock, all of which
are in a single class designated "Common Stock" having a par value of $1.00
per share. The amendment would authorize the Corporation to issue up to
5,000,000 shares of capital stock, 4,000,000 of which will be $1.00 par
value Common Stock and 1,000,000 will be Serial Preferred Stock. The
Corporation has no present intention to issue any additional shares of
Common Stock or to authorize and issue any shares of Preferred Stock. There
will be no difference in the presently authorized and issued Common Stock
and the Common Stock that will be authorized in the future, assuming the
amendment is approved. Preferred Stock may be issued from time to time with
such rights, privileges and preferences as the Board of Directors may
determine to be in the best interest of the Corporation. If additional
shares of common stock or new shares of preferred stock are issued, there
will be a dilutive effect on the then outstanding shares of common stock.
Reasons for the Proposed Amendment
While the Corporation has no present intention to issue any additional
shares of Common Stock or to authorize a series or class of Preferred Stock to
be issued and outstanding, the ability to issue additional shares of Common
Stock and one or more series of Preferred Stock will give the Corporation
flexibility in its future capital planning. With approval of the Amendment, the
Board of Directors will have the authority to act quickly, should the best
interests of the Corporation be deemed to be served, to issue additional shares
of Common or to create one or more series of Preferred Stock, should capital
needs of the Corporation arise. With the authority to create one or more series
of Preferred Stock, the Articles of Incorporation will be modernized and give
the Corporation the same powers other bank holding companies have in structuring
their capital accounts.
The overall effect of the Amendment also may be considered to have an
anti-takeover effect since the Board of Directors would have the authority to
issue a large block of Common Stock or to create one or more series of Preferred
Stock and to sell them to a friendly party should the Corporation be faced with
a hostile, unsolicited offer which the Board of Directors believes not to be in
the best interest of the Corporation and its shareholders. The ability, without
the necessity of obtaining prior shareholder approval, to issue large blocks of
additional shares of Common or Preferred stock which may have differing voting
requirements (such as a series of Preferred Stock which would be required, under
North Carolina law, to vote its majority shares in favor of any change in
control proposal) can deter unsolicited, hostile offers and other attempts at
gaining control of the Corporation due to the dilutive effect such issuance
would have on existing shareholders. If the Amendment is adopted, the Board of
Directors has no present intention to issue any additional shares of Common
Stock or any series of Preferred Stock but could do so if it deemed such
issuance and sale to be in the best interest of the Corporation.
Recommendation
The Board of Directors recommends a vote "FOR" approval of the Amendment
and all proxies received will be voted in favor thereof unless directed
otherwise on the proxy by the shareholder.
5
<PAGE>
PROPOSAL 2: AMENDMENT OF THE ARTICLES OF INCORPORATION REGARDING
REMOVAL OF DIRECTORS
The Proposed Amendment
The Board of Directors has unanimously approved and recommends that the
shareholders approve an Amendment to the Articles of Incorporation which adds a
new Article XIV to provide for removal of directors only for "cause" as set
forth therein. Under North Carolina law, only a charter provision recommended
by the Board of Directors and approved by the shareholders is effective to
permit directors to be removed only for "cause" . At the present time,
directors may be removed with or without "cause". The Amendment would provide
that directors may only be removed for one or more of the following reasons
defined as "cause": (i) the criminal prosecution and conviction of the director
of an act of fraud, embezzlement, theft or personal dishonesty; (ii) prosecution
and conviction of a criminal offense involving dishonesty or breach of trust
described by the Federal Deposit Insurance Act; (iii) the occurrence of an event
causing such director to be "unbondable" under any of the Corporation's fidelity
bonds or insurance policies covering its directors; or (iv) such director being
absent without excuse from 25% of the Board of Director's meetings held during
any 12 consecutive month period.
Reasons for the Proposed Amendment
At the present time directors may be removed with or without "cause". The
current Bylaws provide for a classified or "staggered" board of directors with
terms of three years. Such a classified board structure can be nullified
without a provision in the Articles of Incorporation that directors may only be
removed for "cause". The primary intent of a classified board is to delay the
takeover of a majority of the positions on the Board of Directors beyond the
elapse of one year's time. By eliminating the shareholder's right to remove
directors "without cause", a potential acquiror of a controlling interest of the
Common Stock of the Corporation could not gain control of the Board of Directors
unless, with respect to a majority of incumbent directors, there exist
circumstances which constitute "cause" as defined in the Amendment. Accordingly,
the Amendment makes the classification of the Board of Directors effective.
Otherwise, an acquiring shareholder could remove the entire board of directors
without "cause" and thereby gain total control of the Corporation by obtaining
only a majority of the ownership of the Corporation.
Recommendation
The Board of Directors recommends a vote "FOR" approval of the Amendment
and all proxies received will be voted in favor thereof unless directed
otherwise on the proxy by the shareholder.
PROPOSAL 3: ELECTION OF DIRECTORS
The Corporation's Bylaws provide that the number of directors constituting
the Board of Directors shall be not less than nine nor more than fifteen, which
are divided into three classes, as nearly equal in number as possible. As of
the date hereof, there are ten directors and the Board is divided into three
staggered classes. Members serving on the Corporation's Board of Directors are
appointed to the Bank's Board in the same class in which they serve on the
Corporation's Board. There are three nominees for election as directors. Each
of the nominees upon election will serve for a three year term expiring in 2000
or until his successor is elected and qualified.
Of the nominees for directors, all are members of the present Board of
Directors and were elected in 1994. In the absence of any specification to the
contrary, proxies will be voted for the election of all three of the nominees
listed in the table below by casting an equal number of votes for each such
nominee. If, at any time before the meeting, any of the nominees listed below
have become unavailable for any reason, the proxy holders have the discretion to
6
<PAGE>
vote for a substitute nominee or nominees. The Board currently knows of no
reason why any nominee listed below is likely to become unavailable.
Set forth below is a table showing the name, age, initial year of election
to the Board and principal occupation and employment for the past five years of
each of the three nominees for election to three year terms to the Board of
Directors.
Director Principal Occupations
Name Age Since During the Past Five Years
- ---- --- -------- --------------------------
Nominees
Susan Cranford Ross 41 1994 Associate Dean and Director of
Arts and Sciences Development,
Duke University
David W. Wiggins 51 1994 Staff Systems and Procedures
Analyst, International Business
Machines Corporation
Charles J. Stewart 47 1993 President and Chief Executive
*1979 Officer, Guaranty State
Bancorp and Guaranty State Bank
Terms Expiring in 1998
E. Spurgeon Booth, Jr. 64 1993 Secretary-Treasurer, Booth Real
*1977 Estate and Insurance, Inc.
N. Wayne Campbell 54 1993 President, Credit Financial
*1980 Information Service Inc. (credit
reporting agency)
W. L. Douglas Townsend, Jr. 38 1993 Managing Director and CEO,
*1988 Townsend Frew & Co.,
L.L.C.(January, 1996-present;
investment banking); Senior Vice
President, Corporate Development,
Coastal Physician Group, Inc.
(1991- 1995)
Stancil B. Roberts 55 1995 Principal, Knott & Roberts,
Engineering Associates, P.A.
Terms Expiring in 1999
Robert F. Baker 61 1993 Partner, Spears, Barnes,
*1972 Baker, Wainio, Brown
and Whaley (law firm)
B. W. Harris, III 58 1993 Principal, Harris, Harris
*1968 & Company, CPA's,
PLLC(November, 1995 -present);
Principal, Bailey, Self, Harris
and Company (certified public
accountants, 1960-1995)
Philip H. Pearce, M.D. 61 1993 Partner, The Durham Women's
Clinic, P.A. (OB/GYN clinic
______________________
* Director of Bank since year stated.
7
<PAGE>
Meetings of the Board of Directors and Committees of the Board
During the fiscal year ended December 31, 1996, there were twelve meetings
of the Board of Directors of the Corporation and twelve meetings of the Board of
Directors of the Bank. No director of the Corporation attended fewer than 75%
of the number of meetings of the Board and of standing committees of the
Corporation to which they were elected.
The Board of Directors of the Corporation has established an Executive
Committee to serve as an advisory committee to the Board of Directors on matters
relating to the policies and business affairs of the Corporation and the Bank.
During the intervals between meetings of the Board, the Executive Committee has
the same authority as the Board of the Corporation. The Executive Committee
also acts as the Loan Committee authorized by applicable North Carolina law in
reviewing and approving loans. The members of the Executive Committee are B.W.
Harris, III, N. Wayne Campbell, W. L. Douglas Townsend, Jr. and Charles J.
Stewart. The Executive Committee meets on a monthly basis and held twelve
meetings in fiscal year 1996. The Board of Directors of the Bank has
established an Executive Committee, whose members are the same as the members of
the Executive Committee of the Corporation. The Executive Committee of the Bank
meets on a monthly basis and held 12 meetings in fiscal year 1996.
The Board of Directors of the Corporation has established an Audit
Committee, which is vested with the authority to cause audits to be made at the
Corporation, to review the scope of internal and external audits, and to report
directly to the Board of Directors with respect to these functions. The Audit
Committee does not select the independent accountants for the Corporation. Such
selection is made by the Board of Directors. The members of the Audit Committee
are Robert F. Baker, E. Spurgeon Booth, Jr. and Philip H. Pearce. The Audit
Committee meets quarterly and held four meetings in fiscal year 1996. The Board
of Directors of the Bank has established an Audit Committee, whose members are
the same as the members of the Audit Committee of the Corporation. The Audit
Committee of the Bank also meets on a quarterly basis and held four meetings in
fiscal year 1996.
In 1996, the Corporation and the Bank did not have a nominating committee
or compensation committee. Functions typically performed by such committees are
performed by the respective Board of Directors.
Members of the Boards of Directors of the Corporation and the Bank are paid
$225 for each meeting they attend. If the Boards and committees of the
Corporation and the Bank are held concurrently, members of both Boards and
committees are paid for one meeting. All Board and committee meetings were held
concurrently in 1996. Executive and Audit Committee members of the Corporation
and the Bank are paid $400 and $225, respectively, for each committee meeting
they attend.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Corporation, each of which serves in the same capacity
for the Bank:
Name Age Position
- ---- --- --------
Charles J. Stewart 47 President and
Chief Executive Officer
Jean R. Turner 51 Senior Vice President
Joseph M. Johnson 41 Senior Vice President
J. Edwin Causey, Jr. 53 Senior Vice
President and Secretary
8
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Charles J. Stewart has been employed by the Bank since 1972. Mr. Stewart
has served as President and Chief Executive Officer of the Bank since 1979 and
of the Corporation since 1993.
Jean R. Turner joined the Bank in 1986 and serves as Chief Administrative
Officer. Ms. Turner was appointed a Senior Vice President of the Bank in 1987
and of the Corporation in 1993.
Joseph M. Johnson joined the Bank in 1987 and serves as the Bank's Chief
Lending Officer. Mr. Johnson was appointed a Senior Vice President of the Bank
in 1991 and of the Corporation in 1993.
J. Edwin Causey, Jr. has been employed by the Bank since 1967 and has
served as a Senior Vice President of the Bank since 1986. Mr. Causey was
appointed a Senior Vice President of the Corporation in 1993. He serves as the
Bank's security officer.
EXECUTIVE COMPENSATION
Mr. Charles J. Stewart has entered into an Employment Agreement with
the Bank effective January 14, 1988 to serve in a principal executive and
management capacity under the title of President and Chief Executive
Officer. The Agreement is for a term of one year and is automatically
renewable on a year-to-year basis, subject to the termination provisions.
The Board of Directors establishes the base salary on an annual basis and
the Agreement provides for the normal and customary benefits for persons
serving in similar bank executive capacities. The Agreement may be
terminated by either party and if terminated by the Bank without cause, the
Bank shall be obligated to give twelve (12) months' notice or the Bank may
remove Mr. Stewart prior to the expiration of the twelve-month notice period
in which event the Bank shall pay the compensation and benefits which would
have been paid and provided to Mr. Stewart during the balance of the
twelve-month notice period, subject to reduction should Mr. Stewart obtain
employment with a bank in Durham County, North Carolina. Additionally, the
Bank has purchased a split-dollar life insurance policy and contract as part
of a supplemental executive retirement benefit for Mr. Stewart. The
contract provides for up to $1,200,000 in death benefit in the event of Mr.
Stewart's death prior to age 60 and declines thereafter at varying age
levels. Upon the payment of death benefits the Bank recovers all premiums
paid, plus interest.
The following table sets forth certain information relating to
compensation received by the Corporation's Chief Executive Officer for
fiscal years 1994, 1995 and 1996. No other executive officer of the
Corporation received total annual salary and bonus in excess of $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Securities Underlying All Other
Principal Position Year Salary ($) Bonus ($) Options Compensation ($)1
- ------------------ ---- ---------- ---------- --------------------- -----------------
<S> <S> <S> <S> <S> <S>
Charles J. Stewart 1996 117,480 44,000 - 8,173
President and Chief 1995 111,881 40,000 6,000 9,056
Executive Officer 1994 106,723 30,000 - 7,495
___________________
</TABLE>
(1) Consists of the Corporation's matching and discretionary contributions to
the Corporation's 401(k) profit-sharing plan. In 1996, the Board of Directors
approved a non-qualified Executive Retirement Plan for Mr. Stewart. No expense
was incurred in 1996 for this plan.
The following table summarizes options exercised by Charles J. Stewart during
the fiscal year ended December 31, 1996 and presents the value of unexercised
options held by Mr. Stewart as of December 31, 1996. No options were granted to
Mr. Stewart or any other executive officer in 1996.
9
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal Year 1996
and Fiscal Year-End Option Values
---------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
Shares Acquired Value Fiscal Year-End (#) at Fiscal Year-End ($)
Name on Exercise (#) Realized ($) (Exercisable/Unexercisable) (Exercisable/Unexercisable)
- ---- --------------- ------------ --------------------------- ---------------------------
<C> <S> <S> <S> <S>
Charles J. Stewart 1,650 12,840 41,880/0 657,602/0
President and Chief
Executive Officer
</TALBE>
Profit-Sharing Plan
The Corporation's Section 401(k) profit-sharing plan is designed to
encourage participants to save on a regular basis and to provide such
participants with deferred compensation and additional performance incentives.
Employee participants may elect to contribute from 1% to 15% of compensation
with the Corporation matching 50% of each participant's contribution up to 2% of
the participant's salary and 100% of the participant's contribution between 2%
and 4% of his or her salary. The plan provides for additional discretionary
employer contributions, as approved annually by the Board of Directors. Any
such discretionary contributions are allocated among all eligible employees,
including those who have not elected to make voluntary contributions through
salary reduction.
CERTAIN TRANSACTIONS
The Bank has engaged in, and expects to continue to engage in, lending
transactions with the Corporation's directors and officers and with corporations
and other entities with which such individuals are shareholders or principals.
During the last two years, all of such loans were made in the ordinary course of
business, were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than the normal risk of collectibility
or present other unfavorable features.
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Coopers & Lybrand, L.L.P.,
independent certified public accountants, to audit the accounts of the
Corporation for fiscal year 1997. Management is not aware that any member of
this firm or any of its associates had any direct financial interest or any
material indirect financial interest in the Corporation or any of its affiliates
during 1996.
Representatives of Coopers & Lybrand, L.L.P., are expected to be present at
the shareholders' meeting with the opportunity to make a statement, if they
desire to do so, and are expected to be available to respond to appropriate
questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Corporation's directors and executive officers, and persons who own more than
10% of a registered class of the Corporation's equity securities, file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Corporation. Officers, directors and greater than 10% shareholders are required
by the Securities and Exchange Commission regulations to furnish the Corporation
with copies of all Section 16(a) forms that they file.
10
<PAGE>
To the Corporation's knowledge, based solely on its review of the copies of
such reports furnished to the Corporation, and written representations that no
other reports were required, all Section 16(a) filing requirements applicable to
the Corporation's officers, directors and greater than 10% shareholders were met
during the fiscal year ended December 31, 1996.
SHAREHOLDER PROPOSALS
Under regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1998 annual
meeting of shareholders must present such proposal to the Corporation at its
principal office at 302 W. Main Street, Durham, North Carolina, by November 14,
1997, for the proposal to be considered for inclusion in the Corporation's proxy
statement.
ANNUAL REPORT
Accompanying this proxy statement is a copy of the Corporation's 1996
Annual Report to Shareholders, which includes the Company's financial statements
as of and for the fiscal year ended December 31, 1996 and certain other
information.
The Corporation's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, as filed with the Securities and Exchange Commission, will be
furnished to any shareholder without charge (other than a reasonable fee for
inclusion of exhibits to such Annual Report), if requested in writing. Written
requests for this Annual Report should be directed to Jean R. Turner, Senior
Vice President, Guaranty State Bancorp, Post Office Box 1731, Durham, North
Carolina 27702.
You are encouraged to promptly execute the enclosed Proxy and return it in
the enclosed envelope that requires no postage if mailed in the United States.
For the Board of Directors,
J. Edwin Causey, Jr., Secretary
March 31, 1997
11
<PAGE>
Exhibit A
---------
Proposal 1
----------
RESOLVED, that the Board of Directors hereby proposes and adopts the
following amendments to the Articles of Incorporation of the Corporation,
subject to the approval of the shareholders at the 1997 Annual Meeting, by
eliminating Article IV in its entirety and replacing it as follows:
ARTICLE IV
The total number of shares of capital stock which the Corporation has
authority to issue is 5,000,000, of which 4,000,000 shall be common stock,
$1.00 par value, and 1,000,000 shall be serial preferred stock. The shares
may be issued from time to time as approved by the Board of Directors
without further approval of the shareholders, except as otherwise provided
in this Article IV or to the extent that such approval is required by North
Carolina law. The consideration for the issuance of the shares shall be
paid in full before their issuance and shall not be less than the par value
per share, or if designated as no par value, the stated value as determined
by the Board of Directors. Neither promissory notes nor future services
shall constitute payment or part payment for the issuance of shares of the
Corporation. The consideration for the shares shall be cash, tangible or
intangible property, labor or services actually performed for the
Corporation or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor or services,
shall be conclusive. Upon payment of such consideration, such shares shall
be deemed to be fully paid and nonassessable. In the case of a stock
dividend, that part of the surplus of the Corporation which is transferred
to stated capital upon the issuance of shares as a stock dividend shall be
deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the designations, relative
rights, preferences and limitations of the shares of each class and series
of capital stock are as follows:
A. Common Stock. Except as provided in this Article IV (or in
any supplementary sections hereto), the holders of the common stock
exclusively shall possess all voting power. Each holder of shares of
common stock shall be entitled to one (1) vote for each share held by such
holder.
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.
In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, the holders of the common stock (and the
holders of any class or series of stock entitled to participate with the
common stock in the distribution of assets) shall be entitled to receive,
in cash or in kind, the assets of the Corporation available for
distribution remaining after (i) payment or provision for payment of the
Corporation's debts and liabilities, and (ii) distributions or provision
for distributions to holders of any class or series of stock having
preference over the common stock in the liquidation, dissolution or winding
up of the affairs of the Corporation. Each share of common stock shall
have the same relative rights as, and be identical in all respects with,
all other shares of common stock.
12
<PAGE>
B. Preferred Stock. The Corporation may provide in
supplementary sections to these Articles of Incorporation for one or more
classes of preferred stock, each of which shall be separately identified.
The shares of any class may be divided into and issued in series, with each
series separately designated so as to distinguish the shares thereof from
the shares of all other series and classes. The terms of each series shall
be set forth in a supplementary section to the Articles of Incorporation.
All shares of the same class shall be identical except as to the following
designations, relative rights, preferences and limitations, as to which
there may be variations between different series:
(1) The distinctive serial designation and the number of
shares constituting such series;
(2) The dividend rates 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 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 on
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 affairs 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 of stock of
the Corporation and, if so, 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.
Each share of each series of serial preferred stock shall have
the same designations, relative rights, preferences and limitations as, and
be identical in all respects with, all the other shares of the same series.
The directors shall have authority to divide, by the adoption of
supplementary sections to these Articles of Incorporation, any authorized
class or preferred stock into series and, within the limitations set forth
in this Article IV or otherwise in these Articles of Incorporation, to fix
13
<PAGE>
and determine the designations, relative rights, preferences and
limitations of the shares of any series so established.
Prior to the issuance of any preferred shares of a series
established by a supplementary section to the Articles of Incorporation
adopted by the directors, the Corporation shall file with the North
Carolina Secretary of State a dated copy of that supplementary section of
these Articles of Incorporation establishing and designating the series and
fixing and determining the designations, relative rights, preferences and
limitations thereof.
Exhibit B
---------
Proposal 2
----------
RESOLVED, that the Board of Directors hereby proposes and adopts the
following amendment to the Articles of Incorporation of the Corporation,
subject to the approval of the shareholders of the 1997 Annual Meeting, by
adding a new Article XIV which shall read in its entirety as follows:
ARTICLE XIV
Any person serving as a director of this Corporation may only be
removed for "cause" by the shareholders represented by a majority of all
shares entitled to vote at an annual or special meeting of this
Corporation. The term "cause" for the purposes of this Section shall mean
(i) the criminal prosecution and conviction during the course of the
director's service as a director of this Corporation of an act of fraud,
embezzlement, theft or personal dishonesty (excepting minor traffic and
similar violations in the nature of a misdemeanor under North Carolina
law); (ii) the prosecution and conviction of any criminal offense involving
dishonesty or breach of trust described in the Federal Deposit Insurance
Act, as amended, or any successor federal statute that would disqualify
such director from serving as a director of the Corporation or any of its
wholly owned depository institution subsidiaries; (iii) the occurrence of
any event resulting in a director being excluded from coverage, or having
coverage limited as to the director when compared to other covered
directors, under any of the Corporation's fidelity bonds or insurance
policies covering its directors, officers or employees; or (iv) such
director being absent without excuse from 25% of the Board of Directors
meetings held during any 12 consecutive month period.
Exhibit C
---------
RESOLVED, that the Board of Directors hereby adopts the following
amendments to the bylaws of the Corporation, such amendments being adopted,
upon advice of counsel, to modernize and streamline the bylaws of the
Corporation without the necessity of shareholder approval:
ARTICLE II
Section 4. Special Meetings. Shall be amended in its entirety to
read as follows: "Special meetings of the shareholders may be called at any
time by the Chairman, any Vice Chairman, President, Secretary or by the
Board of Directors of the Corporation."
14
<PAGE>
Section 9. Informal Action by Shareholders. Shall be amended by
eliminating Section 9 in its entirety and Section 10 shall be renumbered as
Section 9.
ARTICLE III
NOMINATING COMMITTEE
Article III shall be amended by adding new Sections 11 and 12 to read
as follows:
Section 11. Nominating Committee. Only persons who are
nominated in accordance with the provisions set forth in these bylaws shall
be eligible to be elected as directors at an annual or special meeting of
shareholders. Nomination for election to the Board of Directors shall be
made by or at the direction of the Board of Directors or a Nominating
Committee appointed by the Board of Directors. Such Nominating Committee
shall meet at the request of the President at least annually and shall
include at least three (3) directors.
Nomination for election of any person to the Board of Directors
may also be made by a shareholder entitled to vote on such election if
written notice of the nomination of such person shall have been delivered
to the Secretary of the Corporation at the principal office of the
Corporation not less than 60 days nor more than 90 days prior to any annual
or special meeting called for the purpose of electing directors; provided,
however, that if less than 70 days' notice or prior public disclosure of
the date of such meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the
date of such meeting or such public disclosure was made. Each such notice
shall set forth: (a) the name and address of the shareholder who intends
to make the nomination; (b) a representation that such shareholder is a
holder of record of shares of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) as to each
person to be nominated (i) such person's name and address, employment
history for the past five years, affiliations, if any, with the Corporation
and other corporations, the class and number of shares of the Corporation
that are owned of record or beneficially by such person and information
concerning any transactions in such shares within the prior 60 days,
whether such person has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) within the past five years and
the details thereof, whether such person has been a party to any proceeding
or subject to any judgment, decree or final order with respect to
violations of federal or state securities laws within the past five years
and the details thereof, and the details of any contract, arrangement,
understanding or relationships with any person with respect to any
securities of the Corporation, (ii) such person's written consent to being
named as a nominee and to serving as a director if elected, and (iii) a
description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
the shareholder. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
Section 12. Retirement Policy for Directors. Each director
shall retire at the regularly scheduled meeting of shareholders following
his attainment of the age of 70 years whether or not such director's term
as a director has expired.
15
<PAGE>
GUARANTY STATE BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GUARANTY STATE BANCORP
The undersigned, revoking all prior proxies, hereby appoints Robert F. Baker, E.
Spurgeon Booth, Jr. and N. Wayne Campbell, or any of them, with full power of
substitution, attorneys-in-fact and proxies to appear and vote, as indicated
below, all of the true and lawful shares of Common Stock of Guaranty State
Bancorp (the "Corporation") that the undersigned would be entitled to vote at
the annual meeting of shareholders to be held at 2:00 p.m. on May 1, 1997, at
the Omni Durham Hotel and Convention Center, 201 Foster Street, Durham, North
Carolina, and at any and all adjournments thereof, as follows:
1. AMENDMENT OF ARTICLE IV OF THE ARTICLES OF INCORPORATION TO PROVIDE FOR
COMMON AND PREFERRED STOCK.
The amendment in its entirety of Article IV of the Articles of Incorporation
of the Corporation to increase the number of authorized shares from
2,500,000 shares of common stock to 4,000,000, and to authorize the issuance
of up to 1,000,000 shares of serial preferred stock which may be issued from
time to time by the Board of Directors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
2. AMENDMENT OF THE ARTICLES OF INCORPORATION TO PROVIDE FOR REMOVAL OF
DIRECTORS ONLY FOR "CAUSE".
To provide for a new Article XIV to the Articles of Incorporation whereby
directors may only be removed for "cause".
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
<PAGE>
3. ELECTION OF DIRECTORS.
The election to the Board of Directors of the following three nominees of the
Board of Directors of the Corporation, all of whom have consented to being
nominated and all of whom will serve, if elected, for a term of three years or
until his successor is duly elected.
Susan C. Ross
Charles J. Stewart
David W. Wiggins
[ ] FOR the nominees listed as a group.
[ ] FOR the nominees listed except as marked to the contrary.
[ ] WITHHOLD AUTHORITY to vote for the nominees listed as a
group.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME.)
4. RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
The ratification of the selection by the Board of Directors of Coopers &
Lybrand, L.L.P. as the Corporation's independent certified public accountants to
audit its accounts and financial statements for the fiscal year ending December
31, 1997.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
5. OTHER BUSINESS.
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
MARKED HEREIN. IF INSTRUCTIONS ARE NOT INCLUDED HEREIN, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 4 AND FOR THE ELECTION OF EACH OF THE NOMINEES FOR
DIRECTOR AS LISTED IN PROPOSAL 3 BY CASTING AN EQUAL NUMBER OF VOTES FOR EACH
SUCH NOMINEE. IF, AT OR BEFORE THE TIME OF THE MEETING, ANY NOMINEE LISTED IN
PARAGRAPH 3 BECOME UNAVAILABLE FOR ANY REASON, THE PROXIES ARE AUTHORIZED TO
VOTE FOR A SUBSTITUTE NOMINEE.
<PAGE>
Please sign exactly as your name appears on your stock certificate(s). If the
holder is a corporation or partnership, please sign its name and add your own
name and title. When signing as attorney, executor, administrator, trustee or
guardian, please also give your full title. If shares are held jointly, EACH
holder should sign. Persons signing in any capacity other than as an individual
should give full title and authority.
The undersigned hereby further acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated March 26, 1997, and the Proxy Statement furnished
therewith.
Sign: _________________________________________________________
Sign: _________________________________________________________
Please type or print
Name: ________________________________________________________
Date: ________________________________________________________
IMPORTANT: Please MARK, SIGN AND DATE this Proxy and return it promptly in the
enclosed envelope. No postage is required if mailed in the United States.
<PAGE>
</TABLE>
