SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GUARANTY FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
................................................................
4) Proposed maximum aggregate value of transaction:
................................................................
5) Total fee paid:
................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................
2) Form, Schedule or Registration Statement No.:
.................................................
3) Filing Party:
.................................................
4) Date Filed:
.................................................
<PAGE>
GUARANTY FINANCIAL CORPORATION
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Guaranty Financial Corporation ("Guaranty"), which will be held on December
11, 1996 at 5:00 p.m., at the Farmington Country Club, 1 Country Club Circle,
Charlottesville, Virginia (the "Meeting"). At the Meeting, three directors will
be elected for terms of three years each and one director will be elected for a
one year term. Shareholders also will vote on a proposal to amend Guaranty's
1991 Incentive Plan.
Whether or not you plan to attend in person, it is important that your
shares be represented at the Meeting. Please complete, sign, date and return
promptly the form of proxy that is enclosed in the outer addressed pouch of this
mailing. If you decide to attend the meeting and vote in person, or if you wish
to revoke your proxy for any reason prior to the vote at the Meeting, you may do
so, and your proxy will have no further effect.
The Board of Directors and management of Guaranty appreciate your
continued support and look forward to seeing you at the Meeting.
Sincerely yours,
THOMAS P. BAKER
President and
Chief Executive Officer
Charlottesville, Virginia
November 14, 1996
<PAGE>
GUARANTY FINANCIAL CORPORATION
1700 Seminole Trail
Charlottesville, Virginia 22906
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on December 11, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the holders of
shares of Common Stock ("Common Stock") of Guaranty Financial Corporation
("Guaranty") will be held at the Farmington Country Club, 1 Country Club Circle,
Charlottesville, Virginia on December 11, 1996, at 5:00 p.m., for the following
purposes:
1. To elect three directors to serve on Guaranty's Board of
Directors for terms of three years each and one director for
a term of one year, or until their successors are elected and
qualify;
2. To consider and vote on a proposal to amend Guaranty's 1991
Incentive Plan; and
3. To transact such other business as may properly come before
the Meeting.
Holders of shares of Common Stock of record at the close of business on
October 24, 1996, will be entitled to vote at the Meeting.
You are requested to fill in, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the Meeting. A postage-paid
return envelope is enclosed for your convenience.
If you are present at the Meeting, you may vote in person even if you
have already returned your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Kathleen M. Focht
Secretary
Charlottesville, Virginia
November 14, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE
PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
PROXY STATEMENT OF GUARANTY FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1996
GENERAL INFORMATION
This Proxy Statement is furnished to holders of common stock, par value
$1.25 per share ("Common Stock"), of Guaranty Financial Corporation ("Guaranty")
in connection with the solicitation of proxies by the Board of Directors of
Guaranty to be used at the Annual Meeting of Shareholders to be held on December
11, 1996 at 5:00 p.m. at the Farmington Country Club, 1 Country Club Circle,
Charlottesville, Virginia, and any adjournment thereof (the "Meeting").
At the Meeting, three directors will be elected for terms of three
years each, and one director will be elected for a term of one year.
Shareholders also will vote on a proposal to amend Guaranty's 1991 Incentive
Plan.
The principal executive offices of Guaranty are located at 1700
Seminole Trail, Charlottesville, Virginia 22906. The approximate date on which
this Proxy Statement and the accompanying proxy card are being mailed to
Guaranty's shareholders is November 14, 1996.
The Board of Directors has fixed the close of business on October 24,
1996 as the record date (the "Record Date") for the determination of the holders
of Common Stock entitled to receive notice of and to vote at the Meeting. At the
close of business on the Record Date, there were 919,168 shares of Common Stock
outstanding held by 622 shareholders of record. Each share of Common Stock is
entitled to one vote on all matters to be acted upon at the Meeting.
In the election of directors, those receiving the greatest number of
votes will be elected even if they do not receive a majority. The proposal to
amend Guaranty's 1991 Incentive Plan will be approved if a majority of the
shares voted, in person or by proxy, vote in favor of the proposal.
As of the Record Date, directors and executive officers of Guaranty and
their affiliates, persons and entities as a group, owned of record and
beneficially a total of 377,020 shares of Common Stock, or approximately 41.02%
of the shares of Common Stock outstanding on such date. Directors and executive
officers of Guaranty have indicated an intention to vote their shares of Common
Stock FOR the election of the nominees set forth on the enclosed proxy and FOR
the proposed amendments to the 1991 Incentive Plan.
A shareholder may abstain or (only with respect to the election of
directors) withhold his vote (collectively, "Abstentions") with respect to each
item submitted for shareholder approval. Abstentions will be counted for
purposes of determining the existence of a quorum. Abstentions will not be
counted as voting in favor of the relevant item.
A broker who holds shares in "street name" has the authority to vote on
certain items when it has not received instructions from the beneficial owner.
Except for certain items for which brokers are prohibited from exercising their
discretion, a broker is entitled to vote on matters put to shareholders without
instructions from the beneficial owner. Where brokers do not have or do not
exercise such discretion, the inability or failure to vote is referred to as a
"broker nonvote." Under the circumstances where the broker is not permitted to,
or does not, exercise its discretion, assuming proper disclosure to Guaranty of
such
<PAGE>
inability to vote, broker nonvotes will not be counted for purposes of
determining the existence of a quorum, and also will not be counted as not
voting in favor of the particular matter.
Shareholders of Guaranty are requested to complete, date and sign the
accompanying form of proxy and return it promptly to Guaranty in the enclosed
envelope. If a proxy is properly executed and returned in time for voting, it
will be voted as indicated thereon. If no voting instructions are given, proxies
received by Guaranty will be voted for approval of the proposal to amend the
1991 Incentive Plan and for approval of the directors nominated for election.
Any shareholder who executes a proxy has the power to revoke it at any
time before it is voted by giving written notice of revocation to Guaranty, by
executing and delivering a substitute proxy to Guaranty or by attending the
Meeting and voting in person. If a shareholder desires to revoke a proxy by
written notice, such notice should be mailed or delivered, so that it is
received on or prior to the meeting date, to Kathleen M. Focht, Secretary,
Guaranty Financial Corporation, 1700 Seminole Trail, Charlottesville, Virginia
22906.
The cost of soliciting proxies for the Meeting will be borne by
Guaranty.
ELECTION OF DIRECTORS
Three Directors are to be elected at the Meeting to serve for terms of
three years each, and one Director will be elected for a term of one year. The
Board of Directors acts as a Nominating Committee for selecting the nominees for
election as Directors. The Board of Directors has no reason to believe that any
of the nominees will be unavailable. Five other Directors have been elected to
terms that end either in 1997 or in 1998, as indicated below.
Under Guaranty's Bylaws, notice of a proposed nomination or a
shareholder proposal meeting certain specified requirements must be received by
Guaranty not less than 60 nor more than 90 days prior to any meeting of
shareholders called for the election of directors, provided in each case that if
fewer than 70 days' notice of the meeting is given to shareholders, such written
notice shall be received not later than the close of the tenth day following the
day on which notice of the meeting was mailed to shareholders.
The Bylaws of Guaranty require that the shareholder's notice set forth
as to each nominee (i) the name, age, business address and residence address of
such nominee, (ii) the principal occupation or employment of such nominee, (iii)
the class and number of shares of Guaranty that are beneficially owned by such
nominee, and (iv) any other information relating to such nominee that is
required under federal securities laws to be disclosed in solicitations of
proxies for the election of directors, or is otherwise required (including,
without limitation, such nominee's written consent to being named in a proxy
statement as nominee and to serving as a director if elected). The Bylaws of
Guaranty further require that the shareholder's notice set forth as to the
shareholder giving the notice (i) the name and address of such shareholder and
(ii) the class and amount of such shareholder's beneficial ownership of
Guaranty's capital stock. If the information supplied by shareholder is
deficient in any material aspect or if the foregoing procedure is not followed,
the chairman of the annual meeting may determine that such shareholder's
nomination should not be brought before the annual meeting and that such nominee
shall not be eligible for election as a director of Guaranty.
The following information sets forth the names, ages, principal
occupations and business experience for all nominees and incumbent directors.
The date shown for first election as a director in the information below
represents the year in which the nominee or incumbent director was first elected
to the Board of
<PAGE>
Directors of Guaranty or previously to the Board of Directors of Guaranty
Savings and Loan, F.A. Unless otherwise indicated, the business experience and
principal occupations shown for each nominee or incumbent director has extended
five or more years.
Nominees for Election
For Terms Expiring in 1999
Thomas P. Baker, 50, has been a director since 1990.
Mr. Baker has served as the President and Chief Executive Officer of
Guaranty since January 1, 1990.
Charles R. Borchardt, 64, has been a director since 1981.
Dr. Borchardt is an oral surgeon practicing in Charlottesville,
Virginia.
Harry N. Lewis, 69, has been a director since 1976 and has served as Vice
Chairman since 1990.
Mr. Lewis is President of Lewis Insurance Agency, Inc., an insurance
sales company in Charlottesville, Virginia, where he has worked since
July 1952. Mr. Lewis is an alumnus of the Colgate Darden Graduate
School of Business Administration and is a member of the Board of
Directors of the United Way. He is also a member of the Board of
Directors of Keller & George and is the past president of the Central
Virginia Chapter of the C.P.C.U.
Nominee for Election
For Term Expiring in 1997
James R. Sipe, Jr., 40, was appointed to the Board of Directors on June 27,
1996.
Mr. Sipe is an associate broker with Prudential Funkhouser &
Associates, a real estate sales company in Harrisonburg, Virginia.
Incumbent Directors Serving
For Terms Expiring in 1998
Henry J. Browne, 64, has been a director since 1976.
Mr. Browne is an architect in private practice with studios in Keswick,
Virginia, and Boca Grande, Florida. He is past President of Browne,
Eichmon, Dalgliesh, Gilpin & Paxton, an architecture firm in
Charlottesville, Virginia, where he worked from March 1958 to April
1996. Mr. Browne is a past director of Farmington Country Club, past
president of the Virginia Chapter of the American Institute of
Architects and past president of Downtown Charlottesville, Inc.
Robert P. Englander, 77, has been a director since 1976.
Mr. Englander is President of the Englander Agency, a life insurance
company in Charlottesville, Virginia.
Oscar W. Smith, Jr., 66, has been a director since 1976.
Mr. Smith is President of K-B Management Co., Charlottesville,
Virginia. Mr. Smith is a director of Smith/Eastman, Inc. and is the
past president of the Albemarle County Rotary Club. He is a master
mason and the past president of the University of Virginia Touchdown
Club.
<PAGE>
Incumbent Directors Serving
For Terms Expiring in 1997
Douglas E. Caton, 53, has been a director since 1981 and has been Chairman of
the Board since 1990.
Mr. Caton is a commercial real estate developer and President of
Management Services Corp., a real estate management company, where
he has worked since 1972. Mr. Caton is a member of the Virginia State
Bar and is a Major General in the United States Army Reserve.
John R. Metz, 58, has been a director since 1980.
Mr. Metz has been a pharmacist at Martha Jefferson Hospital in
Charlottesville, Virginia, since October 1967. Mr. Metz is a member
of the Board of Directors of the Virginia Pharmaceutical Association
Research and Education Foundation.
Meetings of the Board of Directors are held regularly each month, and
there is also an organizational meeting following the conclusion of the Annual
Meeting of Shareholders. The Board of Directors held 13 meetings in the year
ended June 30, 1996. For the year ended June 30, 1996, none of Guaranty's
directors attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings of
committees on which the respective directors served.
The Board of Directors has a Loan Committee, an Audit Committee, a
Compensation Committee and a Planning Committee.
For fiscal 1996, the Loan Committee consisted of all directors. The
duties of this committee are to review actions of the Management Loan Committee
and the Asset Management Committee. It also acts on loans in amounts that exceed
the Management Loan Committee's authority. The Loan Committee met 12 times in
the year ended June 30, 1996.
The Audit Committee consists of Mr. Metz, as Chairman, Dr. Borchardt
and Mr. Englander. The Audit Committee is responsible for the selection and
recommendation of the independent accounting firm for the annual audit and to
establish, and assure the adherence to, a system of internal controls. It
reviews and accepts the reports of Guaranty's independent auditors and federal
examiners. The Audit Committee met 2 times during the year ended June 30, 1996.
The Compensation Committee, which reviews senior management's
performance and compensation, and reviews and sets guidelines for compensation
of all employees, consists of Mr. Englander, Chairman, and Messrs. Metz and
Browne. The Compensation Committee met 10 times during the year ended June 30,
1996.
The Planning Committee, which reviews proposed improvements to
existing facilities and proposed new facilities consists of Mr. Browne,
Chairman, and Messrs. Englander and Smith. The Planning Committee met 7 times in
the year ended June 30, 1996.
Security Ownership of Management
The following table sets forth information as of October 24, 1996
regarding the number of shares of Common Stock beneficially owned by all
directors and by all directors and executive officers as a group. Beneficial
ownership includes shares, if any, held in the name of the spouse, minor
children or other relatives of the nominee living in such person's home, as well
as shares, if any, held in the name of another person under an arrangement
whereby the director or executive officer can vest title in himself at once or
at some future time.
<PAGE>
Common Stock Percentage of
Name Beneficially Owned Class
---- ------------------ -----
Directors:
Thomas P. Baker (1) 20,800 2.26%
Charles R. Borchardt 23,564 2.56
Henry J. Browne 31,662 3.44
Douglas E. Caton 252,840 27.51
Robert R. Englander 9,760 1.06
Harry N. Lewis 4,888 .53
John R. Metz 13,192 1.44
James R. Sipe, Jr. 100 .01
Oscar W. Smith, Jr. 19,234 2.09
All present executive
officers and directors
as a group (12 Persons) 377,020 41.02%
- --------------------
(1) Includes beneficial ownership of 14,000 shares issuable upon the
exercise of stock options exercisable within 60 days of October 24,
1996.
Security Ownership of Certain Beneficial Owners
Douglas E. Caton, 4 Deer Park, Earlysville, Virginia owns 252,840
shares or 27.51% of Common Stock of Guaranty. To the knowledge of Guaranty, no
other person owns 5% or more of Common Stock of Guaranty.
Executive Officers Who Are Not Directors
Kathleen M. Focht, 36, was appointed Chief Financial Officer of
Guaranty in April 1995. Ms. Focht has been Secretary and Treasurer of Guaranty
since October 1989. Ms. Focht served as Assistant Vice President and Controller
of Guaranty from 1988 until 1991, when she was promoted to Vice President and
retained her position as Controller.
Rita J. Lynch, 41, was appointed Guaranty's Vice President of
Retail Operations in May 1995. From October 1989 until May 1995, Ms. Lynch
served as Guaranty's Manager of Retail Services.
Donna W. Richards, 33, was appointed Guaranty's Vice President of
Mortgage Lending in April 1995. Ms. Richards has been employed by Guaranty since
April 1993 and has served in the past as Manager of Loan Originations and Loan
Officer. From December 1991 to April 1993, she was a Senior Loan Processor for
Virginia Federal.
Rex L. Smith, 38, was appointed Guaranty's Senior Vice President of
Commercial Lending in September 1996. From March 1993 until August 1996, he was
Vice President/Senior Business Manager of Crestar Financial Corporation. From
September 1991 to March 1993, he was Division Manager/Acquisition Analyst of
Virginia Capital Group.
<PAGE>
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended June 30, 1994,
1995 and 1996, the cash compensation paid by Guaranty, as well as certain other
compensation paid or accrued for those years, to the named Executive Officer in
all capacities in which he served:
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation(1)
Name and Principal Position Year Salary Bonus All Other Compensation(2)
--------------------------- ---- ------ ----- -------------------------
<S> <C> <C> <C> <C>
Thomas P. Baker 1996 $113,700 -0- $1,137
President and 1995 113,700 -0- 1,137
Chief Executive Officer 1994 113,700 -0- 1,421
- --------------------
<FN>
(1) All benefits that might be considered of a personal nature did not exceed the lesser of $50,000 or 10%
of total annual salary and bonus for the officer named in the table.
(2) Amounts reflect Guaranty's matching contribution under its Section 401(k) retirement plan.
</FN>
</TABLE>
Stock Option Grants
Guaranty's named Executive Officer was not granted stock options or
stock appreciation rights during the fiscal year ended June 30, 1996.
Option Exercises and Holdings
Set forth in the table below is information concerning each exercise of
stock options during the fiscal year ended June 30, 1996 by the named Executive
Officer and the year end value of unexercised options.
<TABLE>
<CAPTION>
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Options/SAR Value
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Options/SARs at FY-End ($) (2)
-----------------
at FY-End(#) (1)
Shares Acquired Value
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas P. Baker 3,600 11,700 14,000 -0- 41,500 -0-
- --------------------
<FN>
(1) Each of these options relates to Common Stock.
(2) These values are based on $7.50, the closing price of Common Stock on June 30, 1996.
</FN>
</TABLE>
<PAGE>
Directors' Fees
Directors, excluding directors who are officers of Guaranty, received
fees of $450 for each meeting of the Board of Directors attended and $300 for
each Compensation, Planning and Audit Committee meeting attended during fiscal
1996. Mr. Caton, who is an ex officio of all Committees and devotes additional
time to Guaranty's affairs as Chairman of the Board of Directors, received a fee
of $25,200 in the fiscal year ended June 30, 1996 in lieu of any fees for
attending Board of Directors and Committee meetings.
Employment Agreements
Guaranty and Thomas P. Baker are parties to an employment agreement
that provides for Mr. Baker to serve as President and Chief Executive Officer of
Guaranty. The agreement is for a three year period ending June 30, 1997 and
provides for a base salary of $105,000, which the Board of Directors may
increase. If Mr. Baker's employment is terminated for reasons other than cause
or if substantially all of Guaranty's assets and liabilities are transferred to
another financial institution and Mr. Baker either does not become an employee
of the transferee or his employment by the transferee terminates for any reason
within six months of the transfer, he will be entitled to receive severance pay
equal to one-half of his annual base salary in effect at the time.
If termination of employment due to a change in control had occurred in
fiscal 1996, Mr. Baker would be entitled to severance payments amounting to
approximately $56,850.
Transactions with Management
Some of the directors and officers of Guaranty are at present, as in
the past, customers of Guaranty and, Guaranty has had, and expects to have in
the future, banking transactions in the ordinary course of its business with
directors, officers, principal shareholders and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with others.
These transactions do not involve more than the normal risk of collectibility or
present other unfavorable features. The largest aggregate outstanding balance of
loans to directors, executive officers and their associates, as a group in the
fiscal year ended June 30, 1996 was approximately $491,276. Such balances
totaled $266,621 at June 30, 1996, or 4.2% of Guaranty's equity capital at that
date.
There are no legal proceedings to which any director, officer,
principal shareholder or associates is a party that would be material and
adverse to the Bank.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Guaranty's directors and executive officers, and any
persons who own more than 10% of Common Stock, to file with the Securities and
Exchange Commission ("SEC") reports of ownership and changes in ownership of
common stock. Officers and directors are required by SEC regulation to furnish
Guaranty with copies of all Section 16(a) forms that they file. Based solely on
review of the copies of such reports furnished to Guaranty or written
representation that no other reports were required, Guaranty believes that,
during fiscal year 1996, all filing requirements applicable to its officers and
directors were complied with except that Douglas A. Caton, Director,
inadvertently filed one late report on Form 4 in April 1996 covering the
purchase of 900 shares of Common Stock in March 1996 and Henry J. Browne,
Director, inadvertently filed one late report on Form 4 in May 1996 covering the
purchase of 500 shares of Common Stock in March 1996.
<PAGE>
APPROVAL OF THE
1991 INCENTIVE PLAN
AS AMENDED OCTOBER 7, 1996
Introduction
On February 20, 1991, the Board of Directors of Guaranty approved the
1991 Incentive Plan (the "Incentive Plan"), which was approved by the
shareholders on October 23, 1991. The proposed amendments to the Incentive Plan
were approved by the Board of Directors on October 7, 1996.
The Incentive Plan, as amended, is intended to provide a means for
selected key employees and directors of Guaranty to increase their personal
financial interest in Guaranty, thereby stimulating the efforts of these
employees and directors and strengthening their desire to remain with Guaranty.
References to "Guaranty" in this section will include any subsidiary
corporation.
The principal features of the Incentive Plan, as amended, are
summarized below. The summary is qualified by reference to the complete text of
the Incentive Plan, as amended, which is attached as Exhibit A.
General
The Incentive Plan initially authorized the issuance of up to 50,000
shares of Common Stock to assist Guaranty in recruiting and retaining key
management personnel. Options to purchase 36,000 shares have been granted and
14,000 shares remain available for grants and awards under the Incentive Plan.
The Incentive Plan, as amended, reserves 111,000 shares, increasing the shares
available for new grants under the Incentive Plan from 14,000 shares to 75,000
shares. At October 7, 1996, the market value of the 61,000 additional shares
that will be issuable under the Incentive Plan, as amended, was $518,500. In
addition to increasing the number of shares issuable, the Incentive Plan has
been amended to make directors eligible for grants and awards; to provide that
the Incentive Plan will be administered by the Board of Directors, rather than
the Compensation Committee; and to extend the termination date of the Incentive
Plan from August 23, 2000 to October 7, 2006. The benefits receivable by
directors and employees of Guaranty under the Incentive Plan, as amended, are
not determinable. For the year ended June 30, 1996, there were no grants or
awards under the Incentive Plan.
The Incentive Plan will permit the award of shares of Restricted Stock,
Incentive Stock Options and Non-Qualified Stock Options to directors and
eligible officers and key employees upon such terms as the Board of Directors
may determine, consistent with the terms of the Incentive Plan.
Administration
The Incentive Plan, as amended, is administered by the Board of
Directors. The Board of Directors has the sole discretion, subject to certain
limitations, to interpret the Incentive Plan; to select Incentive Plan
participants; to determine the type, size, terms and conditions of awards under
the Incentive Plan; to authorize the grant of such awards; and to adopt, amend
and rescind rules relating to the Incentive Plan. All determinations of the
Board of Directors are conclusive. All expenses of administering the Incentive
Plan will be borne by Guaranty.
<PAGE>
Eligibility
Any director, officer or employee of Guaranty or its subsidiaries who,
in the judgment of the Board of Directors, has contributed significantly or can
be expected to contribute significantly to the profits or growth of Guaranty or
a subsidiary is eligible to participate in the Incentive Plan, as amended.
Individual Agreements
The Committee has broad authority to fix the terms and conditions of
the individual agreements with participants. All awards granted under the Plan
are intended to comply with the applicable requirements of Rule 16b-3
promulgated under the Exchange Act, which exempts, grants and awards under
qualifying employee benefit plans from certain "short-swing" profit recovery
provisions of the Exchange Act.
Shares Available
Subject to the provisions of the Incentive Plan providing for
proportional adjustments in the event of various changes in the capitalization
of Guaranty, no more than 111,000 shares of authorized but unissued Common Stock
may be issued pursuant to the Incentive Plan. Under the Incentive Plan, options
to purchase 36,000 shares of Common Stock have been granted. Any shares of
Common Stock subject to an Incentive Stock Option or Non-Qualified Stock Option
that are not issued prior to the expiration of such awards, or any Restricted
Stock award that is forfeited, will again be available for award under the
Incentive Plan.
Incentive Stock Options and Non-Qualified Stock Options ("Options")
The Board of Directors may authorize the grant of either Incentive
Stock Options ("ISOs"), as defined under Section 422 of the Internal Revenue
Code of 1986, as amended, or Non-Qualified Stock Options ("NQSOs"), which are
subject to certain terms and conditions including the following: (1) the option
price per share will be determined by the Board of Directors, but for ISOs will
not, in any event, be less than 100 percent of the fair market value of Common
Stock on the date that the Option is granted; (2) the term of the Option will be
fixed by the Board of Directors, but the maximum period in which an ISO may be
exercised shall not, in any event, exceed ten years from the date that the ISO
is granted; (3) Options will not be transferable other than by will or the laws
of descent and distribution; (4) the purchase price of Common Stock issued upon
exercise of an Option will be paid in full to Guaranty at the time of the
exercise of the Option in cash, or at the discretion of the Board of Directors,
by surrender to Guaranty of previously acquired shares of Common Stock, which
will be valued at the fair market value of such shares on the date preceding the
date that the Option is exercised; (5) an Option may expire upon termination of
employment or within a specified period of time after termination of employment
as provided by the Board of Directors; (6) the aggregate fair market value
(determined on the date of grant) of the shares of Common Stock with respect to
which ISOs are exercisable for the first time by any individual during any
calendar year shall not exceed $100,000; and (7) the Board of Directors may
elect to cash out all or part of the portion of any Option to be exercised by a
participant by payment in cash or Common Stock of an amount determined in
accordance with the Plan.
Restricted Stock
The Board of Directors may authorize the award of Restricted Stock to a
participant. In the case of Restricted Stock, the Board of Directors may
prescribe that the participant's rights in the Restricted Stock shall be
forfeited or otherwise restricted for a period of time set by the Board of
Directors and/or until certain financial performance objectives are satisfied as
determined by the Board of Directors in its sole discretion. During the period
of restriction, a participant will be entitled to beneficial ownership of the
<PAGE>
Restricted Stock, including the right to receive dividends, warrants and rights
and the right to vote the shares, but will not be entitled to certificates
representing the Restricted Stock or to sell, transfer, assign, pledge or
otherwise dispose of the shares. Subject to any restrictions that may be imposed
by applicable securities or other laws or regulations, the Board of Directors
may award Common Stock to a participant that is not forfeitable and is free of
all other restrictions.
Change of Control
At the discretion of the Board of Directors, in the event of a Change
in Control, any outstanding Option may become fully exercisable and vested to
the full extent of the original grant, and any restrictions applicable to
Restricted Stock outstanding on the date of a Change in Control shall lapse,
such that the Restricted Stock becomes free of all restrictions and fully
vested, nonforfeited and transferable to the full extent of the original grant.
The Board of Directors may also provide that under such circumstances a
participant may elect to receive, in exchange for shares that were Restricted
Stock, a cash payment equal to the fair market value of the shares surrendered.
Under the Incentive Plan, a "Change of Control" shall be deemed to have taken
place if: (i) a third person, excluding certain directors of Guaranty, but
including a "group" as defined in Section 13(d)(3) of the Exchange Act becomes
the beneficial owner of shares of Common Stock having 20% or more of the total
number of votes that may be cast for the election of directors of Guaranty, or
(ii) as the result of, or in connection with, any cash or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were Directors of Guaranty before the Transaction shall cease to constitute a
majority of the Board of Directors of Guaranty or any successor to Guaranty.
Amendment or Termination
The Board of Directors may amend or terminate the Incentive Plan;
however, no amendment may become effective until shareholder approval is
obtained if the amendment (i) materially increases the aggregate number of
shares that may be issued pursuant to Options and Common Stock or Restricted
Stock awards, (ii) materially increases the benefits to participants under the
Incentive Plan, or (iii) materially changes the requirements as to eligibility
for participation in the Incentive Plan. No amendment shall, without a
participant's consent, adversely affect any rights of such participant under any
Option, SAR, Restricted Stock or Phantom Stock award outstanding at the time
that such amendment is made. No amendment shall be made if it would disqualify
the Incentive Plan from the exemption provided by Rule 16b-3.
Duration of Plan
No Option, Common Stock or Restricted Stock award may be granted under
the Incentive Plan, as amended, after October 7, 2006. Options and Restricted
Stock awards granted before October 7, 2006, shall remain valid in accordance
with their terms.
Tax Status
Under current Federal income tax laws, the principal Federal tax
consequences to participants and to Guaranty of the grant and exercise of
Incentive Stock Options and Non-Qualified Stock Options or the award of
Restricted Stock and the lapse of restriction thereon, pursuant to the
provisions of the Incentive Plan, are summarized below.
1. Incentive Stock Options. No income results to a participant upon the
grant or exercise of an Incentive Stock Option, provided that (1) there is no
disqualifying disposition of option stock within two
<PAGE>
years after grant of the Option or one year after the transfer of such option
stock to the participant; and (2) the participant is an employee of Guaranty or
a subsidiary at all times during the period commencing on the date of grant and
ending on the date three months (or 12 months in the case of a participant who
is totally and permanently disabled) prior to the date of exercise. In the event
of a disposition of option stock following the expiration of two years after the
grant of the Option and one year after the transfer of such stock to the
participant, any gain or loss, equal to the difference between the amount
realized upon such disposition and the option price, generally will be taxable
as long-term capital gain or loss. In the event of a disqualifying disposition
of option stock prior to the expiration of the two or one year holding periods,
the participant will recognize ordinary income equal to the excess of the fair
market value of the option stock at the time of exercise or the amount realized
upon the disqualifying disposition exceeds the fair market value of the option
stock at the time of exercise, the excess will be taxable as short-term capital
gain. If the amount realized upon the disqualifying disposition is less than the
option price, the participant will not recognize ordinary income but will
recognize a short-term capital loss equal to the excess of the option price over
the amount realized. Gain realized upon the exercise of an Incentive Stock
Option will also be taken into account in computing the participant's liability
for the alternative minimum tax.
No deduction is allowable to Guaranty upon the grant or exercise of an
Incentive Stock Option. In the event that a participant recognizes ordinary
income as a result of a disqualifying disposition of the option stock, Guaranty
generally will be entitled to a deduction in an amount equal to the ordinary
income recognized by the participant.
2. Non-Qualified Stock Options. No income is recognized upon the grant
of a Non-Qualified Stock Option to a participant assuming that the Option does
not have a readily ascertainable fair market value at the time of the grant. The
participant recognizes ordinary income upon exercise of the Non-Qualified Stock
Option equal to the excess of the fair market value of the option stock on the
date of exercise over the option price. If the participant is subject to the
provisions of Section 16(b) of the Exchange Act, recognition of income upon
exercise and receipt of Common Stock may be postponed until any applicable
Section 16(b) holding periods or restrictions have lapsed, unless the
participant elects to be taxed at the date of exercise. Guaranty is allowed a
corresponding tax deduction at the time that ordinary income is recognized by
the participant.
3. Restricted Stock. A participant generally will not recognize taxable
income upon the award of Restricted Stock. Instead, ordinary income is
recognized at the time that the restrictions lapse equal to the fair market
value of the Restricted Stock on that date. If the participant is also subject
to the provisions of Section 16(b) of the Exchange Act, recognition of income
upon the lapse of restrictions on the Restricted Stock may be further postponed
until any applicable Section 16(b) holdings periods or restrictions have lapsed.
A participant, however, may elect to be taxed at the time of the award of
Restricted Stock and, if this election is made, the participant will recognize
ordinary income equal to the fair market value of such stock at the time of the
award determined without regard to any of the restrictions thereon.
Guaranty will generally be entitled to a corresponding tax deduction at
the time that the participant recognizes ordinary income with respect to the
Restricted Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE
AMENDMENTS TO THE 1991 INCENTIVE PLAN. AN AFFIRMATIVE VOTE OF A MAJORITY OF THE
SHARES PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING IS
REQUIRED FOR APPROVAL OF THIS PROPOSAL.
<PAGE>
INDEPENDENT AUDITORS
BDO Seidman, LLP, has been appointed to perform the audit of Guaranty's
financial statements for the year ending June 30, 1997. BDO Seidman, LLP, has
acted as Guaranty's auditors for the past three years and has reported on
financial statements during that period. A representative from BDO Seidman, LLP,
will be present at the Meeting, will have the opportunity to make a statement if
he desires to do so, and is expected to be available to respond to appropriate
questions.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of Guaranty's Annual Report to Shareholders for the year ended
June 30, 1996 has been furnished to shareholders. Additional copies may be
obtained by written request to the Secretary of Guaranty at the address
indicated below. Such Annual Report is not part of the proxy solicitation
materials.
UPON RECEIPT OF A WRITTEN REQUEST OF ANY PERSON WHO, ON THE RECORD
DATE, WAS RECORD OWNER OF COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH THAT HE
OR SHE WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK ENTITLED TO VOTE AT
THE ANNUAL MEETING OF SHAREHOLDERS, GUARANTY WILL FURNISH TO SUCH PERSON,
WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 1996 AND THE EXHIBITS THERETO REQUIRED TO BE FILED WITH THE SEC
UNDER THE EXCHANGE ACT. ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO KATHLEEN
M. FOCHT, SECRETARY, GUARANTY FINANCIAL CORPORATION, 1700 SEMINOLE TRAIL,
CHARLOTTESVILLE, VIRGINIA 22906. THE FORM 10-KSB IS NOT PART OF THE PROXY
SOLICITATION MATERIALS.
PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal which a shareholder wishes to have presented at the next
annual meeting of shareholders, to be held in November 1997, must be received no
later than July 17, 1997. If such proposal complies with all the requirements of
Rule 14a-8 of the Exchange Act, it will be included in the Proxy Statement and
set forth in the form of proxy issued for the next Annual Meeting of
Shareholders. It is urged that any such proposals be sent by certified mail,
return receipt requested.
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented for
action at the meeting other than as set forth herein. However, if any other
matters properly come before the Meeting, or any adjournment thereof, the person
or persons voting the proxies will vote them in accordance with their best
judgment.
By Order of The Board of Directors
Kathleen M. Focht,
Secretary
November 14, 1996
<PAGE>
EXHIBIT A
GUARANTY FINANCIAL CORPORATION
1991 INCENTIVE STOCK PLAN
AS AMENDED
ARTICLE I
Definitions
1.01 Affiliate means any entity that is a parent corporation or
subsidiary corporation of Guaranty Financial Corporation. For this purpose,
"parent corporation" means any corporation (other than Guaranty Financial
Corporation) in an unbroken chain of corporations ending with Guaranty Financial
Corporation if, at the time of the granting of the Option or award of the
Restricted Stock, each of the corporations other than Guaranty Financial
Corporation owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one or more of the other corporations in
such chain. For this purpose, "subsidiary corporation" means any corporation
(other than Guaranty Financial Corporation) in an unbroken chain of corporations
beginning with Guaranty Financial Corporation if, at the time of the granting of
the Option or award of the Restricted Stock, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50 percent or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
1.02 Agreement means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of an Option or Restricted Stock award granted to such
Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Code means the Internal Revenue Code of 1986 and any
amendments thereto.
1.05 Committee means a Committee of the Board to which the Board
delegates all or part of its authority under this Plan.
<PAGE>
1.06 Common Stock means the common stock of the Company.
1.07 Company means Guaranty Savings and Loan Association, F.A.
1.08 Fair Market Value means, on any given date, (i) the mean
between the bid and asked prices of the Common Stock for such date or, if the
Common Stock was not traded on such day, then on the next preceding day that the
Common Stock was so traded, or (ii) in the event the Board determines that the
bid and asked prices for the Common Stock are not available to do not provide an
accurate measure of Fair Market Value, such other amount as the Committee shall
determine based upon a good faith method of valuation to be the Fair Market
Value.
1.09 Option means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock at the price
set forth in an Agreement.
1.10 Participant means an employee or Director of the Company or
of an Affiliate who satisfies the requirements of Article IV and is selected by
the Board to receive an Option, a Restricted Stock award, or both.
1.11 Plan means the Guaranty Financial Corporation 1991 Incentive
Plan.
1.12 Restricted Stock means shares of Common stock awarded to a
Participant under Article XI. Shares of Common stock shall cease to be
Restricted Stock when, in accordance with the terms of the applicable Agreement,
they become transferable and free of substantial risks of forfeiture.
<PAGE>
ARTICLE II
Purposes
The Plan is intended to foster and promote the long-term growth and
financial success of the Company and its Affiliates by assisting the Company in
recruiting and retaining Directors and key employees with ability and initiative
by enabling individuals who contribute significantly to the Company or an
Affiliate to participate in its future success and to associate their interests
with those of the Company. The proceeds received by the Company from the sale of
Common Stock pursuant to this Plan shall be used for general corporate purposes.
The Plan is not expected to have any material effect on the value of issued and
outstanding shares of the Company's Common Stock.
The Plan is intended to enable stock options granted under the Plan to
qualify as incentive stock options ("Incentive Stock Options") under Section
422A of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code").
ARTICLE III
Administration
3.01 The Board. The Plan shall be administered by the Board. The
Board shall have authority to grant Options and award Restricted Stock upon such
terms (not inconsistent with the provisions of this Plan) as the Board may
consider appropriate. Such terms may include conditions (in addition to those
contained in the Plan) on the exercisability of all or any part of an Option or
on the transferability or forfeitability of Restricted Stock. In addition, the
Board shall have complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements; to adopt, amend and rescind rules and
regulations pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Board shall not be
construed as limiting any power or authority of the Board. Any decision made, or
action taken, by the Board or in connection with the administration of this Plan
shall be final and conclusive. No
<PAGE>
member of the Board shall be liable for any act done in good faith with respect
to this Plan or any Agreement, Option or Restriction Stock award. All expenses
of administering this Plan shall be borne by the Company.
3.02 The Committee. Any action or decision that the Board may take
under this Plan may also be taken by the Committee under an express delegation
of authority to the Committee.
ARTICLE IV
Eligibility
4.01 General. Any Director or employee of the Company or of any
Affiliate (including any corporation that becomes an Affiliate after the
adoption of this Plan) who, in the judgment of the Board, has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company or an Affiliate may receive one or more Options,
Restricted Stock awards, or both.
4.02 Grants. The Board shall designate individuals to whom Options
and Restricted Stock awards are to be granted and will specify the number of
shares of Common Stock subject to each grant. All Options and Restricted Stock
awards granted under this Plan shall be evidenced by Agreements which shall be
subject to applicable provisions of this Plan and to such other provisions as
the Board may adopt.
ARTICLE V
Shares Subject to Plan
Upon the exercise of any Option or the award of Restricted Stock, the
Company may deliver to the Participant authorized but unissued Common Stock. The
maximum aggregate number of shares of Common Stock that may be issued pursuant
to the exercise of Options and the award of Restricted Stock under this
Plan is 111,000, subject to the adjustment as provided in Article XIII. If an
Option is cancelled by mutual agreement of the Company and a Participant or
terminated, in whole or in part, for any reason other than its
<PAGE>
exercise, the number of shares of Common Stock allocated to the Option or
portion thereof may be reallocated to other Options and Restricted Stock awards
to be granted under this Plan. Any shares of Restricted Stock that are forfeited
may be reallocated to other Options or Restricted Stock awards to be granted
under this Plan.
ARTICLE VI
Tax Character of Options
The Board shall have the discretion to designate whether Options shall
be Incentive Stock Options or non statutory options. To the extent that an
Option exceeds the limitation described in Article X, the Option shall not be an
Incentive Stock Option.
ARTICLE VII
Price
The price per share paid by a Participant in connection with an award
of Restricted Stock or for Common Stock purchased on the exercise of an
Incentive Stock Option shall be equal to the Fair Market Value per share of the
Company's Common stock on the date the Option or the Restricted Stock award is
granted. In the discretion of the Committee, the price per share paid by a
Participant in connection with a non-statutory stock Option may be less then at
the Fair Market Value per share of the Company's Common Stock on the date the
Option is granted.
<PAGE>
ARTICLE VIII
Exercise of Options
8.01 Maximum Option Period. No Option shall be exercisable after
the expiration of ten years from the date Option was granted. The Board, at the
time of grant, may direct that an Option be exercisable for a period of less
than such maximum period.
8.02 Nontransferability. Any Option granted under this Plan shall
be nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the Option is granted, the Option
may be exercised only the Participant. No right or interest of the Participant
in any Option shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
8.03 Employee Status. In the event that the terms of any Option
provide that it may be exercised only during employment or within a specified
period of time after termination of employment, the Board may decide in each
case to what extent leaves of absences for governmental or military service,
illness, temporary disability, or other reason shall not be deemed interruptions
of continuous employment.
ARTICLE IX
Method of Exercise of Options
9.01 Exercise. Subject to the provision of Articles VIII and XIV,
an Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Board shall
determine. An Option granted under this Plan may be exercised with respect to
any number of whole shares less then the full number for which the Option could
be exercised. Such partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan with respect
to remaining shares subject to the Option.
<PAGE>
9.02 Payment. Unless otherwise provided by the Agreement, payment
of the Option price shall be made in cash or a cash equivalent acceptable to the
Board. If the Agreement provides, payment of all or part of the Option price may
be made by surrendering shares of Common Stock to the Company. If Common Stock
is used to pay all or part of the Option price, the shares surrendered must have
a Fair market Value (determined as of the day preceding the date of exercise)
that is not less than such price or part thereof.
9.03 Shareholder rights. No Participant shall, as a result of
receiving an Option, have any rights as a shareholder until the date he
exercises such Option.
ARTICLE X
Limitations on Incentive Stock Options
No Incentive Stock Option shall be granted to any optionee which would
cause the aggregate Fair Market Value of the stock with respect to which
Incentive Stock Options are exercisable by such optionee for the first time
during any calendar year to exceed $100,000. For the purposes of this Article,
Incentive Stock Options include all Incentive Stock Options under plans of
Guaranty Savings and Loan Association, F.A. and its Affiliates.
ARTICLE XI
Restricted Stock
11.01 Award. In accordance with the provisions of Article IV, the
Board will designate individuals to whom an award of Restricted Stock is to be
made and will specify the number of shares of Common Stock covered by the award.
<PAGE>
11.02 Vesting. The Board, on the date of the award, may prescribe
that the Participant's rights in the Restricted Stock shall be forfeitable or
otherwise restricted for a period of time set forth in the Agreement. By way of
example and not limitation, the restrictions may postpone transferability of the
shares or may provide that the shares will be subject to repurchase by the
Company or forfeited if the Participant separates from the service of the
Company and its Affiliates before the expiration of a stated term.
11.03 Shareholder Rights. Prior to their forfeiture in accordance
with the terms of the Agreement and while the shares are Restricted Stock, a
Participant will have all rights of a shareholder with respect to Restricted
Stock, including the right to receive dividends and vote the shares; provided,
however, that (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Stock, (ii) the Company shall
retain custody of the certificates evidencing shares of Restricted Stock, and
(iii) the Participant will deliver to the Company a stock power, endorsed in
blank, with respect to each award of Restricted Stock. The limitations set forth
in the preceding sentence shall not apply after the shares cease to be
Restricted Stock.
ARTICLE XII
Change in Control
12.01 Options. Each Option that is outstanding on a Change in
Control Date shall be exercisable in whole or in part on that date and
thereafter during the remainder of the option period stated in the Agreement. In
lieu of exercising an Option, a Participant may elect, by written notice to the
Company within sixty days after the Change in Control Date, to receive, in
exchange for the cancellation of the Option or any portion thereof, a cash
payment equal to the difference between the Fair Market value of the number of
shares for which the Option is cancelled and the aggregate option price of those
shares.
12.02 Restricted Stock. A Participant's interest in Restricted
Stock shall be nonforfeitable and transferable as of a Change in Control Date. A
Participant may elect, by written notice to the Company
<PAGE>
within sixty days after the Change in Control Date, to receive, in exchange for
shares that were Restricted Stock immediately before the Change in Control, a
cash payment equal to the Fair Market Value of the shares surrendered.
12.03 Change in Control. A Change in Control occurs if, after the
date of the Agreement, (i) any person who is not a Director of the Company on
the date that this Plan is adopted by the shareholders of the Company, including
a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes the owner or beneficial owner of Company securities having 20% or more
of the combined voting power of the then outstanding Company securities that may
be cast for the election of the Company's directors (other than as a result of
an issuance of securities initiated by the Company, or open market purchases
approved by the Board, as long as the majority of the Board approving the
purchases is a majority at the time the purchases are made); or (ii) as the
direct or indirect result of, or in connection with, a cash tender or exchange
offer, a merger or other business combination, a sale of assets, a contested
election, or any combination of these transactions, the persons who were
Directors of the Company before such transactions cease to constitute a majority
of the Company's Board, or any successor's board, within two years of the last
of such transactions; or (iii) with respect to a Participant employed by an
Affiliate, an event occurs with respect to the employer such that, after the
event, the employer is no longer an Affiliate and the Participant is not longer
employed by the Company or an Affiliate. For purposes of this Agreement, the
Control Change Date is the date on which an event described in (i), (ii) or
(iii) occurs. If a Change in Control occurs on account of a series of
transactions, the Control Change Date is the date of the last of such
transactions.
ARTICLE XIII
Adjustment Upon Change in Common Stock
Should the Company effect one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares, the number of shares as to which
Options and Restricted Stock awards may be granted under this Plan shall be
proportionately adjusted and the terms of Options and Restricted Stock
<PAGE>
awards shall be adjusted as the Board shall determine to be equitably required.
Any determination made under this Article XIII by the Board shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefore, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
Options or Restricted Stock awards.
ARTICLE XIV
Compliance with Law and
Approval of Regulatory Bodies
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, an no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitations, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock for which an Option is exercised or Restricted Stock
awarded may bear such legends and statements as the Board may deem advisable to
assure compliance with federal and state laws and regulations. No Option shall
be exercisable, no Common Stock shall be issued, no certificate for shares shall
be delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Board may deem advisable from
regulatory bodies having jurisdiction over such matters.
<PAGE>
ARTICLE XV
General Provisions
15.01 Effect of Employment. Neither the adoption of this Plan, nor
any documents describing or referring to this Plan (or any part thereof) shall
confer upon any employee any right to continue in the employ of the Company or
an Affiliate or in any way affect any right and power of the Company or an
Affiliate to terminate the employment of any employee at any time with or
without assigning a reason therefor.
15.02 Unfunded Plan. The Plan, insofar as it provides for grants
shall be unfunded, and neither the Company nor any Affiliate shall be required
to segregate any assets that may at any time be represented by grants under this
Plan. Any liability of the Company or an Affiliate to any person with respect to
any grant under this Plan shall be based solely upon any contractual obligations
that may be created pursuant to this Plan. No such obligation of the Company or
an Affiliate shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company or an Affiliate.
15.03 Rules of Construction. Headings are given to the articles of
this Plan solely as a convenience to facilitate reference. The reference to any
statute, regulations, or other provision of law shall be construed to include
any amendment to or successor of such provision of law.
ARTICLE XVI
Amendment
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment (i) materially increases the aggregate number of
shares that may be issued pursuant to Options or awards of Restricted Stock,
(ii) materially increases the benefits accruing to Participants under the Plan,
or (iii) materially changes the class of employees eligible to become
Participants. No amendment shall, without a Participant's
<PAGE>
consent, adversely affect any rights of such Participant under an Option or
Restricted Stock award outstanding at the time such amendment is made.
ARTICLE XVII
Duration of Plan
No Option or Restricted Stock award may be granted under this Plan
after October 7, 2006. Options and Restricted Stock awards granted before such
date shall remain valid in accordance with their terms.
<PAGE>
PLEASE MARK VOTES
|X| AS IN THIS EXAMPLE
REVOCABLE PROXY
Guaranty Financial Corporation
Proxy Solicited on Behalf of The Board of Directors
The undersigned hereby appoints Robert P. Englander and Oscar W. Smith,
Jr., jointly and severally, proxies, with full power to act alone, and with full
power of substitution, to represent the undersigned and to vote, as designated
below and upon any and all other matters which may properly be brought before
such meeting, all shares of Common Stock which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of Guaranty Financial Corporation, a
Virginia corporation (the "Corporation") to be held at the Farmington Country
Club, 1 Country Club Circle, Charlottesville, Virginia on December 11, 1996 at
5:00 p.m., local time, or any adjournments thereof, for the following purposes:
1. To elect as directors the four persons listed as nominees
below, all of whom, except James R. Sipe, Jr., will be elected to three-year
terms, with Mr. Sipe to be elected to a one-year term.
[ ] For [ ] Withhold [ ] For All Except
Thomas P. Baker
Charles R. Borchardt
Harry N. Lewis
James R. Sipe, Jr.
INSTRUCTION: To withhold authority to vote for any individual
nominee, mark "For All Except" and write that nominee's name
in the space provided below.
---------------------------------------------------------
2. To approve the Corporation's 1991 Incentive Plan, as amended.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the proxies are authorized to vote
upon any other business that may properly come before the meeting, or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
In signing as Attorney, Administrator, Executor, Guardian or Trustee,
please add your title as such.
------------------------------------------
Please be sure to sign and date Date
this Proxy in the box below
- ------------------------------------- ------------------------------------------
Shareholder sign above Co-holder (if any) sign above
- ------------------------------------- ------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
GUARANTY FINANCIAL CORPORATION
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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