Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(843) 537-7656
September 16, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders of
Great Pee Dee Bancorp, Inc. (the "Company"), which will be held at the Matheson
Memorial Library, 227 Huger Street, Cheraw, South Carolina at 2:00 p.m. (South
Carolina time) on Wednesday, October 15, 2003.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the meeting we will also report on the
operations of the Company and Sentry Bank and Trust (the "Bank"), the wholly
owned subsidiary of the Company. Directors and officers of the Company and the
Bank will be present to respond to any questions that stockholders may have.
Also enclosed for your review is our Annual Report to Stockholders, which
contains detailed information concerning the activities and operating
performance of the Company.
The business to be conducted at the Annual Meeting consists of the election of
two directors, the approval of the Great Pee Dee Bancorp, Inc. 2003 Long-Term
Incentive Stock Benefit Plan and the ratification of the appointment of
independent auditors for the fiscal year ending June 30, 2004. The Board of
Directors of the Company has determined that the matters to be considered at the
Annual Meeting are in the best interest of the Company and its stockholders, and
the Board of Directors unanimously recommends a vote "FOR" each matter to be
considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Herbert W. Watts
Herbert W. Watts
President and Chief Executive Officer
Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(843) 537-7656
NOTICE OF
2003 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On October 15, 2003
Notice is hereby given that the Annual Meeting of Stockholders of Great
Pee Dee Bancorp, Inc. (the "Company") will be held at the Matheson Memorial
Library, 227 Huger Street, Cheraw, South Carolina, on Wednesday, October 15,
2003 at 2:00 p.m., South Carolina time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of two directors;
2. The approval of the Great Pee Dee Bancorp, Inc. 2003 Long-Term
Incentive Stock Benefit Plan;
3. The ratification of Dixon Odom PLLC as independent auditors for the
fiscal year ending June 30, 2004; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which the Annual
Meeting may be adjourned. Stockholders of record at the close of business on
September 5, 2003, are the stockholders entitled to vote at the Annual Meeting,
and any adjournments thereof. A list of stockholders entitled to vote at the
Annual Meeting will be available at Sentry Bank & Trust, 515 Market Street,
Cheraw, South Carolina for a period of ten days prior to the Annual Meeting and
will also be available for inspection at the meeting itself.
By Order of the Board of Directors
/s/ Johnnie L. Craft
Johnnie L. Craft
Secretary
Cheraw, South Carolina
September 16, 2003
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
Great Pee Dee Bancorp, Inc.
515 Market Street
Cheraw, South Carolina 29520
(843) 537-7656
-------------------------------------
PROXY STATEMENT
-------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
October 15, 2003
-------------------------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Great Pee Dee Bancorp, Inc.
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
(the "Annual Meeting"), which will be held at the Matheson Memorial Library, 227
Huger Street, Cheraw, South Carolina, on Wednesday, October 15, 2003, at 2:00
p.m., South Carolina time, and at all adjournments of the Annual Meeting. The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are first being mailed to stockholders on or about September 17, 2003.
Regardless of the number of shares of Common Stock owned, it is
important that stockholders be represented by proxy or be present in person at
the Annual Meeting. Stockholders are requested to vote by completing the
enclosed Proxy Card and returning it, signed and dated, in the enclosed
postage-paid envelope. Stockholders are urged to indicate the way they wish to
vote in the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxies will be voted "FOR"
the election of the nominees for director named in this Proxy Statement, "FOR"
the approval of the Great Pee Dee Bancorp, Inc. 2003 Long-Term Incentive Stock
Benefit Plan and "FOR" the ratification of Dixon Odom PLLC as independent
auditors for the fiscal year ending June 30, 2004.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof.
Proxies may be revoked at any time prior to exercise by sending written
notice of revocation to the Secretary of the Company, Johnnie L. Craft, at the
address of the Company shown on the cover page of this Proxy Statement, or by
delivering to the Company a duly executed proxy bearing a later date. The
presence at the Annual Meeting of any stockholder who
1
had given a proxy shall not revoke the proxy unless the stockholder delivers his
or her ballot in person at the Annual Meeting or delivers a written revocation
to the Secretary of the Company prior to the voting of such proxy. If you are a
stockholder whose shares are not registered in your own name, however, you will
need appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. Proxies may also be solicited personally or by mail and
telephone by the Company's Directors, officers and regular employees, without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
VOTING SECURITIES
Holders of record of the Company's common stock, par value $0.01 per
share (the "Common Stock") as of the close of business on September 5, 2003 (the
"Record Date") are entitled to one vote for each share then held, except as
described below. As of the Record Date, the Company had 1,767,755 shares of
Common Stock issued and outstanding (excluding treasury shares). The presence,
in person or by proxy, of at least a majority of the total number of shares of
Common Stock outstanding and entitled to vote is necessary to constitute a
quorum at the Annual Meeting. In the event there are not sufficient votes for a
quorum, or to approve or ratify any matter being presented, at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board to implement and
apply the Limit.
VOTING PROCEDURES AND METHOD OF COUNTING VOTES
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote "FOR" the election of the two
nominees proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which authority to
vote for the nominees being proposed is withheld.
As to the approval of the Company's 2003 Long-Term Incentive Stock
Benefit Plan, the proxy card being provided by the Board of Directors enables a
stockholder to check the appropriate box on the proxy card to (i) vote "FOR,"
(ii) vote "AGAINST," or (iii) vote to
2
"ABSTAIN" from voting on such matter. The affirmative vote of a majority of the
votes cast at the Annual Meeting, in person or by proxy, is required for
approval by the stockholders. Broker non-votes and shares as to which the
"ABSTAIN" box has been selected will not be counted as votes cast and will have
no effect on the vote on the matter presented.
As to the ratification of the appointment of independent auditors, the
proxy card being provided by the Board of Directors enables a stockholder to
check the appropriate box on the proxy card to (i) vote "FOR," (ii) vote
"AGAINST," or (iii) vote to "ABSTAIN" from voting on such matter. The
affirmative vote of a majority of the votes cast at the Annual Meeting, in
person or by proxy, is required to constitute ratification by the stockholders.
Broker non-votes and shares as to which the "ABSTAIN" box has been selected will
not be counted as votes cast and will have no effect on the vote on the matter
presented.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by an inspector of election designated by the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of the Common
Stock are required to file certain reports with the Company and with the
Securities and Exchange Commission (the "SEC") regarding such ownership pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"). The following table
sets forth information regarding each person known to be the beneficial owner of
more than 5% of the Company's outstanding shares of Common Stock on the Record
Date.
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
---------------- --------- -----------
The Great Pee Dee Bancorp, Inc. 186,051(1) 10.5%
Employee Stock Ownership Plan and Trust
515 Market Street
Cheraw, South Carolina 29520
First Citizens Bancorporation of South Carolina, Inc. 119,000(2) 6.7%
1230 Main Street
Columbia, South Carolina 29201
Herbert W. Watts 123,263(3) 6.8%
515 Market Street
Cheraw, South Carolina 29520
- --------------------------------
(1) Under The Great Pee Dee Bancorp, Inc. Employee Stock Ownership Plan and
Trust (the "ESOP"), shares allocated to participants' accounts are voted in
accordance with the participants' directions. Unallocated shares held by
the ESOP are voted by the Trustees in the manner calculated to most
accurately reflect the instructions they have received from the
participants regarding the allocated shares. As of the Record Date, 62,128
shares of Common Stock have been allocated to the accounts of employees
under the ESOP. The Trustees of the ESOP are the Outside Directors of the
Company.
(Footnotes continued on following page)
3
(2) Based on a Schedule 13D filed November 12, 1998.
(3) Includes 53,767 shares that may be acquired pursuant to presently
exercisable options, which are deemed to be beneficially owned by Mr.
Watts.
PROPOSAL 1--ELECTION OF DIRECTORS
Directors of the Company are generally elected to serve for a
three-year period and until their respective successors shall have been elected
and shall qualify. Two directors will be elected at the Annual Meeting, each to
serve for a three-year period and until a successor has been elected and
qualified. The Board of Directors has nominated William R. Butler and H. Malloy
Evans, Jr. to serve as directors, each of whom currently serves as a member of
the Board of Directors.
The table below sets forth certain information regarding the Company's
Board of Directors and nominees. It is intended that the proxies solicited on
behalf of the Board of Directors will be voted at the Annual Meeting for the
election of the nominees identified below (unless otherwise directed on the
proxy card). If a nominee is unable to serve, the shares represented by all such
proxies will be voted for the election of such substitute as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why the nominees might be unable to serve, if elected.
Term to Shares of
Positions Expire Following Common Stock
Held in the Fiscal Year Beneficially
Company and/or Director Ending Owned on Percent
Name Age(1) the Bank Since(2) June 30 Record Date(3) Of Class
----- ------ -------- -------- ------- -------------- --------
NOMINEES
William R. Butler 54 Director 1992 2006 77,012(4)(5)(6) 4.3%
H. Malloy Evans, Jr. 61 Director 2000 2006 29,485(5)(7) 1.1
DIRECTORS CONTINUING IN OFFICE
Henry P. Duvall, IV 72 Director 1964 2004 36,287(5)(8) 2.0
John S. Long 49 President and Chief 1998 2004 58,964(9)(10) 3.1
Operating Officer of the
Bank and Director
Robert M. Bennett, Jr. 49 Director 2001 2004 36,598(5)(11) 1.5
Herbert W. Watts 59 President and Chief 1977 2005 123,263(12)(13) 6.8
Executive Officer
of the Company
and Director
James C. Crawford, III 47 Chairman 1992 2005 54,349(5)(14) 3.1
Cornelius B. Young 70 Director 1985 2005 69,312(5)(6)(15) 3.9
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
John M. Digby 57 Senior Vice President n/a n/a -- --
and Chief Financial
Officer of the Bank
Michael O. Blakeley 57 Senior Vice President n/a n/a 16,258(16) *
of the Bank
Johnnie L. Craft 60 Secretary and Treasurer n/a n/a 38,565(17) 2.2
All Directors, nominees and Executive Officers 588,173(18) 30.3%
as a Group (11 persons)
4
* Less than 1%.
(1) As of June 30, 2003.
(2) Reflects initial appointment to the Board of Directors of the Company or
the Bank.
(3) Includes shares owned directly and indirectly.
(4) Includes 14,534 options granted pursuant to the Company's 1998 Stock Option
Plan (the "Option Plan"), which are currently exercisable.
(5) Includes 10,465 shares held by a deferred compensation plan for the benefit
of Messrs. Watts and Long, as to which all outside directors serve as
trustees.
(6) Includes 22,000 shares owned by the First Federal Savings and Loan
Association of Cheraw Foundation, as to which Messrs. Young and Butler
serve as directors.
(7) Includes 4,334 options granted pursuant to the Option Plan, which are
currently exercisable.
(8) Includes 13,246 options granted pursuant to the Option Plan, which are
currently exercisable.
(9) Includes 36,957 options granted pursuant to the Option Plan, which are
currently exercisable.
(10) Includes 2,651 shares held by a deferred compensation plan.
(11) Includes 3,852 options granted pursuant to the Option Plan, which are
currently exercisable.
(12) Includes 53,767 options granted pursuant to the Option Plan, which are
currently exercisable.
(13) Includes 7,814 shares held by a deferred compensation plan.
(14) Includes 5,534 options granted pursuant to the Option Plan, which are
currently exercisable.
(15) Includes 10,893 options granted pursuant to the Option Plan, which are
currently exercisable.
(16) Includes 2,200 shares granted under the Company's 1998 Recognition and
Retention Plan, which are subject to future vesting but as to which voting
may be currently directed, and 7,334 options granted pursuant to the Option
Plan, which options are currently exercisable.
(17) Includes 24,223 options granted pursuant to the Option Plan, which are
currently exercisable.
(18) Includes 174,674 options granted pursuant to the Option Plan, which are
currently exercisable. Excludes shares of Common Stock owned by the
Company's ESOP for the benefit of the employees of the Bank other than
executive officers. The ESOP Administrative Committee administers the ESOP.
Under the terms of the ESOP, shares of Common Stock allocated to the
account of employees are voted in accordance with the instructions of the
respective employees. Unallocated shares are voted by the ESOP Trustees in
the manner calculated to most accurately reflect the instructions they have
received from the participants regarding the allocated shares, unless their
fiduciary duties require otherwise. As of the Record Date, the ESOP held
186,051 shares of Common Stock, of which 62,128 shares have been allocated,
including 40,675 shares allocated to the executive officers and included in
the above table. The Trustees of the ESOP are Directors of the Company.
Directors
The principal occupation during the past five years of each director
and executive officer of the Company is set forth below. All directors have held
their present positions for at least five years unless otherwise stated.
Robert M. Bennett, Jr. is Vice President-Secretary of Bennett Motor
Company, a General Motors dealership located in Cheraw, South Carolina.
William R. Butler is the owner of P&H Pharmacy, which is a retail
pharmacy located in Cheraw, South Carolina. Mr. Butler is a licensed pharmacist.
James C. Crawford III is the President and Chief Operating Officer of
B.C. Moore & Sons, Inc., a department store chain.
Henry P. Duvall IV is retired. Prior to his retirement, Mr. Duvall was
the President and Chief Executive Officer of Cheraw Hardware and Supply Company.
H. Malloy Evans, Jr. is the President and Treasurer and a Director of
Cheraw Yarn Mill, Inc., where he has been employed since 1971. Mr. Evans is also
the past President of the American Yarn Spinners Association.
5
John S. Long became Vice President of the Bank in November 1997 and
Chief Operating Officer in June 1998 and President in January 2003. Prior to
joining the Bank, Mr. Long was Senior Vice President of The County Bank.
Herbert W. Watts is the Chief Executive Officer of the Bank, and was
President and Chief Executive Officer of the Bank from 1981 until January 2003.
Mr. Watts has served as the President and Chief Executive Officer of the Company
since its formation in 1997, and has been employed by the Bank in various
capacities since 1973.
Cornelius B. Young is retired. Prior to his retirement, Mr. Young was a
Senior Manager of Delta Mills, a division of Delta-Woodside, Inc., a textile
manufacturing company.
Executive Officers Who Are Not Directors
Michael O. Blakeley has been Senior Vice President of the Bank since
May 2000 and serves as city executive of the Bank's office located in Florence,
South Carolina. Before joining the Bank, Mr. Blakeley served as the Vice
President and Senior Business Banker of the Pee Dee Region for Wachovia Bank.
Johnnie L. Craft has been the Secretary and Treasurer of the Bank since
1988 and the Company since its incorporation in 1997.
John M. Digby was appointed Senior Vice President and Chief Financial
Officer of the Bank in June 2003. From 1998 until 2002, Mr. Digby served as the
Chief Financial Officer of First Capital Bank, located in Bennettsville, South
Carolina.
Committees and Meetings of the Board of Directors
The business of the Company and the Bank is conducted through regular
and special meetings of the Board of Directors and its committees. The Board of
Directors of the Company met six times during fiscal 2003. During the fiscal
year ended June 30, 2003, the Board of Directors of the Bank held 25 meetings.
No director attended fewer than 75% of the total meetings held by the Board of
Directors and the committees on which such director served, with respect to each
of the Company and the Bank. The following is a discussion of certain committees
of the Bank. The Bank's Audit Committee functions as the audit committee of the
Company, and the Bank's Personnel Committee functions as the personnel committee
of the Company.
The Audit Committee consists of all nonemployee directors. The Audit
Committee reviews the scope and results of the year-end audit with the
independent accountants and reviews with management and the independent
accountants the Company's year-end audit. In addition, the committee annually
reviews the Company's audit policies and recommends any necessary changes to the
Board of Directors. During fiscal 2003, the Audit Committee held four meetings.
Each member of the Audit Committee is "independent" as defined in the listing
standards of the National Association of Securities Dealers.
6
The Budget and Finance Investments Committee meets periodically to
review the Company's investment policies, and is authorized to make security
investments on behalf of the Company. The Budget and Finance Investments
Committee is composed of Directors Watts, Young, Long and Evans, and in the
absence of a member, any one of the other members of the Board of Directors may
be substituted for the absent member of the committee. During fiscal 2003, this
committee met four times.
The Personnel Committee consists of all outside Directors. The
Personnel Committee reviews compensation, officer promotions, benefits and other
matters of personnel policy and practice. During fiscal 2003, this committee met
one time.
The entire Board of Directors serves as the nominating committee. While
the Board will consider nominees recommended by the stockholders, it has not
actively solicited recommendations from stockholders. Nominations by
stockholders must comply with certain procedural and informational requirements
set forth in the Company's Bylaws. See "Advance Notice of Business to be
Conducted at an Annual Meeting." The Board of Directors met once in its capacity
as the nominating committee during fiscal 2003.
Audit Committee Report
In accordance with rules established by the SEC, the Audit Committee
has prepared the following report. The Board of Directors has adopted a written
charter for the Audit Committee.
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended June
30, 2003;
o Discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended; and
o Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees,
and has discussed with the independent auditors their
independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2003 and be filed with the SEC.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the
7
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Audit Committee
William R. Butler
Henry P. Duvall, IV
Cornelius B. Young
Robert M. Bennett, Jr.
H. Malloy Evans, Jr.
James C. Crawford, III
Director Compensation
The Bank pays a $700 monthly retainer to each of its directors, except
for the Chairman, who is paid a $1,600 monthly retainer. Each director is also
paid $150 for each meeting attended. The Company does not pay fees to its
directors.
Executive Compensation
The following table sets forth certain information as to the
compensation paid to the President and Chief Executive Officer of the Company
and the President and Chief Operating Officer of the Bank (the "Named Executive
Officers") for the fiscal years ended June 30, 2003, 2002 and 2001. No other
officer of the Company earned $100,000 in salary and bonus for the 2003 fiscal
year.
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
Annual Compensation(1) Awards
- ------------------------------------------------------------------------------------------ -----------------------
Other Restricted
Annual Stock Options/ All Other
Name and Principal Fiscal Compensation Award SARs Compensation
Position Year(1) Salary($) Bonus($) ($)(2) ($) (#) ($)(4)
- ------------------------------------------------------------------------------------------ ----------------------- -------------
Herbert W. Watts, 2003 93,512 12,500 13,350 -- 21,316(3) 49,230
President and Chief Executive 2002 89,012 11,500 12,750 -- -- 60,034
Officer of the Company and Director 2001 85,011 11,000 13,050 -- -- 32,971
John S. Long, President 2003 93,512 25,500 13,350 -- 10,734(3) 36,048
and Chief Operating Officer 2002 87,500 16,500 12,300 -- -- 35,321
of the Bank and Director 2001 81,000 12,500 12,750 -- -- 14,086
========================================================================================== ====================== ==============
- ---------------
(1) For the fiscal year ended June 30.
(2) Consists of director's fees and deferred compensation.
(3) Represents reload options received upon the exercise of stock options when
previously-owned shares of common stock were utilized to pay the option
exercise price.
(4) Represents the market value at June 30 of shares allocated to the
executive's account under the ESOP during the fiscal year.
Employment Agreements. The Bank has entered into employment agreements
with Mr. Watts and Mr. Long that provide for a term of thirty-six months. On
each anniversary date,
8
the agreements may be extended for an additional twelve months, so that the
remaining term shall be thirty-six months. If the agreements are not renewed,
the agreements will expire thirty-six months following the anniversary date. The
current Base Salary for Mr. Watts is $97,500 and for Mr. Long is $107,000. The
Base Salary may be increased but not decreased. In addition to the Base Salary,
the agreement provides for, among other things, participation in stock benefit
plans and other employee and fringe benefits applicable to executive personnel.
The agreements provide for termination by the Bank for cause at any time. In the
event the Bank terminates the executive's employment for reasons other than for
cause, or in the event of the executive's resignation from the Bank upon (i)
failure to re-elect the executive to his current offices, (ii) a material change
in the executive's functions, duties or responsibilities, or relocation of his
principal place of employment by more than thirty (30) miles, (iii) liquidation
or dissolution of the Bank, or (iv) a breach of the agreement by the Bank, the
executive, or in the event of death, his beneficiary, would be entitled to a
severance payment in an amount equal to three times the annual rate of Base
Salary (which includes any salary deferred at the election of Mr. Watts or Mr.
Long) at the time of termination, plus the highest annual cash bonus paid to him
during the prior three years. The Bank would also continue the executive's life,
health, dental and disability coverage for the remaining unexpired term of the
agreement.
The executive's employment may be terminated upon his attainment of
normal retirement age (i.e., age 65) or in accordance with any retirement policy
established by the Bank (with executive's consent). Upon retirement, the
executive will be entitled to all benefits available to him under any retirement
or other benefit plan maintained by the Bank. In the event of the executive's
disability for a period of six months, the Bank may terminate the agreement
provided that the Bank will be obligated to pay the executive his Base Salary
for the remaining term of the agreement or one year, whichever is longer,
reduced by any benefits paid to the executive pursuant to any disability
insurance policy or similar arrangement maintained by the Bank. In the event of
the executive's death, the Bank will pay his Base Salary to his named
beneficiaries for one year following his death, and will also continue medical,
dental, and other benefits to his family for one year.
The employment agreements provide that, following termination of
employment, the executive will not compete with the Bank for a period of one
year, provided, however, that in the event of a termination in connection with a
change in control, the non-compete provisions will not apply.
9
Equity Compensation Plans. The Company does not have any equity
compensation program that was not approved by stockholders, other than its
employee stock ownership plan. Set forth below is certain information as of June
30, 2003 regarding equity compensation to directors and executive officers of
the Company that has been approved by stockholders.
============================================================================================================================
Number of securities to be Number of securities
Equity compensation plans issued upon exercise of Weighted average remaining available for
approved by stockholders outstanding options and rights exercise price issuance under plan
- ----------------------------------------------------------------------------------------------------------------------------
Stock Option Plan 174,674 $11.59 7,234
- ----------------------------------------------------------------------------------------------------------------------------
Recognition and Retention
Plan 2,200(1) Not Applicable 7,482
- ----------------------------------------------------------------------------------------------------------------------------
Total 176,874 $11.59 14,716
============================================================================================================================
- ---------------
(1) Represents shares that have been granted but have not yet vested.
Stock Option Plan. The Board of Directors of the Company has
established, and the stockholders have approved, the Stock Option Plan, which
provides for discretionary awards of options to officers and key employees. The
granting of awards under the Stock Option Plan is determined by the Personnel
Committee of the Board of Directors. Set forth in the table that follows is
information relating to options granted under the Stock Option Plan to the Named
Executive Officers during the fiscal year ended June 30, 2003.
======================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
======================================================================================================================
Individual Grants
======================================================================================================================
Percent of Total Exercise
Options Granted or Base
Options to Employees in Price Expiration Grant Date Present Value
Name Granted FY 2002 ($)(2) Date ($)(3)
- ---------------------------- ---------------- ------------------- ------------ ------------ --------------------------
Herbert W. Watts 21,316(1) 66.5% 14.38 1/7/08 57,340
John S. Long 10,734(1) 33.5% 13.97 1/7/08 28,874
============================ ================ =================== ============ ============ ==========================
- ---------------
(1) Represents reload options received upon the exercise of stock options when
previously-owned shares of common stock were utilized to pay the option
exercise price.
(2) The exercise price of the options is equal to the fair market value of the
underlying shares on the date of the award.
(3) Based on a grant date present value of $2.69 per share derived using the
Black-Scholes option pricing model with the following assumptions:
volatility of 35%; risk free rate of return of 2%; dividend yield of 3.5%;
and a 6-year option life.
10
Set forth below is certain information concerning options outstanding
to the Named Executive Officers at June 30, 2003.
====================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
====================================================================================================================
Value of Unexercised
Number of Unexercised In-The-Money Options at
Options at Year-End Year-End (1)
- -------------------------- ----------------- ------------------ ------------------------- --------------------------
Shares Acquired Exercisable/Unexercisable Exercisable/Unexercisable
Name Upon Exercise Value Realized (#) ($)
- -------------------------- ----------------- ------------------ ------------------------- --------------------------
Herbert W. Watts 28,107 $ 97,970 53,767/0 145,886/0
John S. Long 13,746 $ 42,077 36,957/0 118,334/0
========================== ================= ================== ========================= ==========================
- ---------------
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on June
30, 2003, at which date the last trade price of the Common Stock as quoted
on the Nasdaq National Market was $15.00.
Transactions With Certain Related Persons
The Bank has a policy of offering to its directors and officers real
estate mortgage loans secured by their principal residence as well as other
loans. All of the loans to the directors and officers are made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with the general public, and do not involve
more than minimal risk of collectibility. Loans to directors, executive officers
and their associates totaled $1,084,765 at June 30, 2003.
PROPOSAL 2--APPROVAL OF THE GREAT PEE DEE BANCORP, INC.
2003 LONG-TERM INCENTIVE STOCK BENEFIT PLAN
The Board of Directors of the Company has adopted the 2003 Long-Term
Incentive Stock Benefit Plan (the "2003 Stock Benefit Plan") to provide
officers, employees and directors of the Company and its affiliates with
additional incentives to share in the growth and performance of the Company. The
following is a summary of the material features of the 2003 Stock Benefit Plan,
which is qualified in its entirety by reference to the provisions of the 2003
Stock Benefit Plan attached hereto as Appendix A.
General
The 2003 Stock Benefit Plan will remain in effect for a period of ten
years following adoption by stockholders. The 2003 Stock Benefit Plan authorizes
the issuance of up to 88,388 shares of Common Stock pursuant to grants of stock
options or stock awards; provided, however, that the maximum number of shares
that may be subject to awards as stock options to any one employee of the
Company is 26,516.
11
The 2003 Stock Benefit Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors, which will consist of either
at least two "Non-employee Directors" or the entire Board of Directors. The
Committee has the power within the limitations set forth in the 2003 Stock
Benefit Plan to make all decisions and determinations regarding the selection of
participants and the granting of awards; establishing the terms and conditions
relating to each award; adopting rules, regulations and guidelines for carrying
out the plan's purposes; and interpreting and otherwise construing the 2003
Stock Benefit Plan. The 2003 Stock Benefit Plan may be amended by the Board of
Directors or the Committee, but no such amendments may adversely affect any
outstanding awards under the 2003 Stock Benefit Plan without the consent of the
holders thereof.
Eligibility
Employees and outside directors of the Company and its affiliates are
eligible to receive awards under the 2003 Stock Benefit Plan.
Types of Awards
The Committee may determine the type and terms and conditions of awards
under the 2003 Stock Benefit Plan. Awards may be granted in a combination of
options, stock appreciation rights, accelerated ownership option rights and
stock awards. Such awards may have terms providing that the settlement or
payment of one type of award automatically reduces or cancels the remaining
award. Awards may include, but are not limited to, the following:
Stock Options. A stock option gives the recipient the right to purchase
shares of Common Stock at a specified price for a specified period of time. The
exercise price of each option may not be less than 100% (110% in the case of 10%
stockholders) of fair market value on the date of grant. Fair market value means
the reported closing price of the Common Stock as reported by the Nasdaq stock
market on the day the option is granted or, if the Common Stock is not traded on
such date, on the next preceding day on which the Common Stock was traded. Fair
market value can never be less than the par value of the Common Stock. Once a
stock option has been awarded at fair market value, the Committee shall not have
the authority to reprice the stock option so that the new exercise price of the
stock option is less than the exercise price on the date of grant.
Stock options are either "incentive" stock options or "non-qualified"
stock options. Incentive stock options have certain tax advantages and must
comply with the requirements of Section 422 of the Internal Revenue Code (the
"Code"). Only employees are eligible to receive incentive stock options. A stock
option may be exercised in whole or in installments, which may be cumulative.
Shares of Common Stock purchased upon the exercise of a stock option must be
paid for in full at the time of exercise either in cash, stock of the Company,
or via a "cashless exercise." Stock options are generally subject to vesting
conditions as determined by the Committee.
Stock Appreciation Rights. A stock appreciation right ("SAR") gives the
option holder the right to receive the excess of the fair market value of the
shares represented by the SAR on
12
the date exercised over the exercise price. In the case of SAR's granted
retroactively in tandem or in substitution for another award, the exercise price
of the SAR may be no less than the fair market value of a share on the date such
other award was granted. Payment upon exercise of a SAR will be in cash or
Common Stock as determined by the Committee.
Accelerated Ownership Option Rights. Accelerated ownership option
rights entitle the option holder, who has delivered shares of Common Stock as
payment of the exercise price for option stock, to a new option to acquire
additional shares equal in an amount to the shares the option holder has traded.
The option price at which additional shares of stock may be purchased through
the exercise of an accelerated ownership option right is the fair market value
of the Common Stock that was surrendered to pay the exercise price of the option
at the time it was surrendered. The option period during which the reload option
may be exercised expires at the same time as that of the original option that
was exercised.
Stock Awards. Stock awards may constitute actual shares of Common Stock
or may be denominated in stock units that entitle the recipient to receive
future payments in either shares, cash, or a combination thereof. Stock awards
will be subject to conditions established by the Committee which are set forth
in the award agreement, and may include continuous service with the Company,
achievement of specific business objectives, and other measurements of
performance. Any stock awards will be evidenced by agreements approved by the
Committee which set forth the terms and conditions of each award.
Generally, all awards granted under the 2003 Stock Benefit Plan, except
non-incentive stock options, will be nontransferable except by will or in
accordance with the laws of descent and distribution or pursuant to a domestic
relations order. A participant may designate a beneficiary to exercise his or
her rights under the 2003 Stock Benefit Plan upon the participant's death.
Termination of Employment
Upon termination of employment for any reason other than Disability,
Retirement, Change in Control, death or Termination for Cause (as those terms
are defined in the 2003 Stock Benefit Plan), an employee's stock options will be
exercisable only as to those shares immediately purchasable by or vested in the
employee at the date of termination, and such options may be exercised only for
three months following termination. All unvested stock awards shall be
forfeited. Upon termination because of Disability, Change in Control, Retirement
or death, the employee's stock options will be exercisable as to all shares,
whether or not then exercisable, and stock awards will vest as to all shares
subject to an outstanding award, whether or not then vested, and options may be
exercised for one year (five years in the event of Retirement) following
termination. In order to obtain Incentive Stock Option treatment for options
exercised by heirs or devisees of an optionee, the optionee's death must have
occurred while employed or within three (3) months of termination of employment.
In no event will the exercise period extend beyond the expiration of the stock
option term. In the event of Termination for Cause, awards not exercised or
vested will expire upon such termination.
13
Termination of Service as a Director
Upon termination of a director's service for any reason other than
Disability, Retirement, Change in Control, death or Termination for Cause, the
director's stock options will be exercisable only as to those shares immediately
exercisable by or vested in the director at the date of termination, and such
options may be exercised for one year following termination. All unvested stock
awards will be forfeited. Upon termination of a director's service because of
Disability, Change in Control, Retirement or death, the director's stock options
will be exercisable as to all shares, whether or not then exercisable, and stock
awards will vest as to all shares subject to an outstanding award, whether or
not then vested, and options may be exercised for one year (five years in the
event of Retirement) following termination. In no event will the exercise period
extend beyond the expiration of the stock option term. In the event of
Termination for Cause, awards will expire upon such termination.
Tax Consequences
The following are the federal tax consequences generally arising with
respect to awards granted under the 2003 Stock Benefit Plan. The grant of an
option will create no tax consequences for a recipient or the Company. The
recipient will have no taxable income upon exercising an incentive stock option
and the Company will receive no deduction when an incentive stock option is
exercised, however, the spread between the fair market value of the Common Stock
and the exercise price on the date of exercise is a tax adjustment item for
purposes of the alternative minimum tax. Upon exercising a non-qualified option,
the recipient must recognize ordinary income equal to the difference between the
exercise price and the fair market value of the stock on the date of exercise,
and the Company will be entitled to a deduction for the same amount. The tax
treatment for a recipient on a disposition of shares acquired through the
exercise of an option depends on how long the shares have been held and whether
such shares were acquired by exercising an incentive stock option or a
non-qualified option. Generally, there will be no tax consequences to the
Company in connection with the disposition of shares acquired pursuant to an
option, except that the Company may be entitled to a deduction if shares
acquired pursuant to an incentive stock option are sold before the required
holding periods have been satisfied.
With respect to other awards granted under the 2003 Stock Benefit Plan
that are settled either in cash or in stock, the participant must recognize
ordinary income equal to the cash or the fair market value of shares or other
property received and the Company will be entitled to a deduction for the same
amount. With respect to awards that are settled in stock, the participant must
recognize ordinary income equal to the fair market value of the shares received
at the time the shares become transferable or not subject to substantial risk of
forfeiture, whichever occurs earlier. The Company will be entitled to a
deduction for the same amount.
No awards have been granted under the 2003 Stock Benefit Plan as of the
date of this Proxy Statement. There are six outside directors of the Company and
its subsidiaries and 29 employees eligible to participate in the 2003 Stock
Benefit Plan.
14
As of June 30, 2003, the last sale price of the Common Stock, as
reported on the Nasdaq National Market, was $15.00. The affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting, in person or by
proxy, is required to approve the 2003 Stock Benefit Plan. The purpose of
obtaining stockholder approval of the 2003 Stock Benefit Plan is to qualify the
plan for the granting of incentive stock options and to satisfy the requirement
for listing the Common Stock on the Nasdaq National Market.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE GREAT
PEE DEE BANCORP, INC. 2003 LONG-TERM INCENTIVE STOCK BENEFIT PLAN.
PROPOSAL 3--RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30,
2003 were Dixon Odom PLLC. The Company's Board of Directors has reappointed
Dixon Odom PLLC to continue as independent auditors of the Company for the
fiscal year ending June 30, 2004, subject to ratification of such appointment by
the stockholders. It is expected that a representative of Dixon Odom PLLC will
attend the Annual Meeting and will be given the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions from shareholders present at the Annual Meeting.
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by Dixon Odom PLLC during the fiscal year
ended June 30, 2003:
Audit Fees $ 37,223
Financial Information Systems
Design and Implementation Fees $ --
All Other Fees $ 31,725
The Audit Committee has considered whether the provision of non-audit
services, which relate primarily to tax services rendered, is compatible with
maintaining Dixon Odom PLLC's independence. The Audit Committee concluded that
performing such services does not affect Dixon Odom PLLC's independence in
performing its function as auditor of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DIXON ODOM PLLC AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR
THE FISCAL YEAR ENDING JUNE 30, 2004.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for
certain business, or nominations to the Board of Directors, to be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the
15
Board of Directors, the stockholder must give written notice to the Secretary of
the Company not less than ninety (90) days before the date fixed for such
meeting; provided, however, that in the event that less than one hundred (100)
days notice or prior public disclosure of the date of the meeting is given or
made, notice by the stockholder to be timely must be received not later than the
close of business on the tenth day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. The
notice must include the stockholder's name, record address and number of shares
owned by the stockholder, describe briefly the proposed business, the reasons
for bringing the business before the annual meeting, and any material interest
of the stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to an annual meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received.
The date on which the 2004 Annual Meeting of Stockholders is expected
to be held is October 13, 2004. Accordingly, advance written notice of business
or nominations to the Board of Directors to be brought before the 2004 Annual
Meeting of Stockholders must be given to the Company no later than July 15,
2004.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy material
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office, 515 Market
Street, Cheraw, South Carolina 29520, no later than May 19, 2004. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Johnnie L. Craft
Johnnie L. Craft
Secretary
Cheraw, South Carolina
September 16, 2003
16
Appendix A
GREAT PEE DEE BANCORP, INC.
2003 LONG-TERM INCENTIVE STOCK BENEFIT PLAN
1. PURPOSE. The purpose of the Great Pee Dee Bancorp, Inc. 2003
Long-term Incentive Stock Benefit Plan (the "Plan") is to advance the interest
of Great Pee Dee Bancorp, Inc. (the "Company") and to increase shareholder value
by providing outside directors and key employees of the Company and its
affiliates, upon whose judgment, initiative and efforts the successful conduct
of the business of the Company and its affiliates largely depends, with
additional incentive in the form of a proprietary interest in the growth and
performance of the Company and to encourage their continued service with the
Company and its affiliates. A purpose of the Plan is also to attract and retain
people of experience and ability to the Company and its affiliates.
2. TERM. The Plan shall be effective as of the date of stockholder
approval, which is expected to be October 15, 2003 (the "Effective Date") and
shall remain in effect for ten years thereafter, unless sooner terminated by the
Company's Board of Directors (the "Board"). After termination of the Plan, no
future awards may be granted but previously made awards shall remain outstanding
in accordance with their applicable terms and conditions and the terms and
conditions of the Plan.
3. PLAN ADMINISTRATION. A committee (the "Committee") appointed by the
Board shall be responsible for administering the Plan. The Committee shall be
comprised of either (i) at least two "Non-Employee Directors" of the Company, or
(ii) the entire Board of the Company. A "Non-Employee Director" means, for
purposes of the Plan, a director who (a) is not employed by the Company or an
affiliate; (b) does not receive compensation directly or indirectly as a
consultant (or in any other capacity than as a director) greater than $60,000;
(c) does not have an interest in a transaction requiring disclosure under Item
404(a) of Regulation S-K; or (d) is not engaged in a business relationship for
which disclosure would be required pursuant to Item 404(b) of Regulation S-K.
Actions and decisions of the Committee shall be approved by a majority of the
members of the Committee. The Committee shall have full and exclusive power to
interpret, construe and implement the Plan and any rules, regulations,
guidelines or agreements adopted hereunder and to adopt such rules, regulations
and guidelines for carrying out the Plan as it may deem necessary or proper.
These powers shall include, but not be limited to, (i) determination of the type
or types of awards to be granted under the Plan; (ii) determination of the terms
and conditions of any awards under the Plan; (iii) determination of whether, to
what extent and under what circumstances awards may be settled, paid or
exercised in cash, shares, other securities, or other awards, or other property,
or accelerated, canceled, extended, forfeited or suspended; (iv) adoption of
modifications, amendments, procedures, subplans and the like as are necessary;
(v) subject to the rights of participants, modification, change, amendment or
cancellation of any award to correct an administrative error; and (vi) taking
any other action the Committee deems necessary or desirable for the
administration of the Plan. All determinations, interpretations, and other
decisions under or with respect to the Plan or any award by the Committee shall
be final, conclusive and binding upon the Company, any participant, any holder
or beneficiary of any award under the Plan and any employee of the Company.
A-1
4. ELIGIBILITY. Any employee of the Company shall be eligible to
receive Incentive Stock Options, Non-Statutory Stock Options, Stock Awards,
Stock Appreciation Rights, and Accelerated Ownership Option Rights under the
Plan. Outside directors shall be eligible to receive Non-Statutory Stock
Options, Accelerated Ownership Option Rights and Stock Awards under the Plan.
The term "Company" includes any entity that is directly or indirectly controlled
by the Company or any entity in which the Company has a significant equity
interest, as determined by the Committee. An "outside director" means a director
of the Company or an Affiliate who is not an employee of the Company or an
Affiliate.
5. SHARES OF STOCK SUBJECT TO THE PLAN. There shall be 88,388 shares of
Common Stock in the aggregate reserved for issuance under the Plan, which shares
shall be available for issuance (subject to adjustment as provided in Section 6)
pursuant to the exercise of stock options, granted under Sections 7(a) and (c)
of the Plan, stock appreciation rights, granted under Section 7(b) of the Plan,
or Stock Awards, granted under Section 7(d) of the Plan. The maximum number of
shares that may be subject to awards as stock options granted to any one
employee of the Company is 26,516.
In instances where a stock appreciation right ("SAR") or other award is
settled in cash or any form other than shares, then the shares covered by these
settlements shall not be deemed issued and shall remain available for issuance
under the Plan. Any shares that are issued by the Company, and any awards that
are granted by, or become obligations of, the Company, through the assumption by
the Company or an affiliate of, or in substitution for, outstanding awards
previously granted by an acquired company shall not be counted against the
shares available for issuance under the Plan. In addition, any shares that are
used for the full or partial payment of the exercise price of any option in
connection with an Accelerated Ownership Option Right will not be counted as
issued under the Plan and will be available for future grants under the Plan.
Any shares issued under the Plan may consist in whole or in part, of
authorized and unissued shares or of treasury shares, and no fractional shares
shall be issued under the Plan. Cash may be paid in lieu of any fractional
shares in settlements of awards under the Plan.
6. ADJUSTMENTS AND REORGANIZATIONS.
(a) Changes in Stock. If the number of outstanding shares of Common
Stock is increased or decreased or the shares of Common Stock are
changed into or exchanged for a different number of kind of
shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or
other distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration
by the Company occurring after the Effective Date, the number and
kinds of shares for which grants of Stock Options or Stock Awards
may be made under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of
shares for which grants are outstanding shall be adjusted
proportionately and accordingly so that the proportionate
interest of the grantee immediately following such event shall,
to the extent practicable, be the same as immediately before such
event. Any such adjustment in outstanding Stock Options shall not
change the aggregate
A-2
Stock Option purchase price payable with respect to shares that
are subject to the unexercised portion of the Stock Option
outstanding but shall include a corresponding proportionate
adjustment in the Stock Option purchase price per share.
(b) Reorganization in Which the Company Is the Surviving Entity and
in Which No Change of Control Occurs. Subject to Section 22
hereof, if the Company shall be the surviving entity in any
reorganization, merger, or consolidation of the Company with one
or more other entities, any Stock Option or Stock Awards
theretofore granted pursuant to the Plan shall pertain to and
apply to the securities to which a holder of the number of shares
of stock subject to such Stock Option or Stock Awards would have
been entitled immediately following such reorganization, merger
or consolidation, with a corresponding proportionate adjustment
of the Stock Option purchase price per share so that the
aggregate Stock Option purchase price thereafter shall be the
same as the aggregate Stock Option purchase price of the shares
remaining subject to the Stock Option immediately prior to such
reorganization, merger, or consolidation.
Adjustments under this Section 6 related to shares of Stock or securities of the
Company shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. No fractional shares or other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share. The granting of awards pursuant to the Plan shall
not affect or limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or liquidate, or to sell
or transfer all or any part of its business or assets.
7. AWARDS. The Committee shall determine the type or types of award(s)
to be made to each participant under the Plan and shall approve the terms and
conditions governing these awards in accordance with Section 11. Awards may be
granted singly, in combination or in tandem so that the settlement or payment of
one automatically reduces or cancels the other. Awards may also be made in
combination or in tandem with, in replacement of, as alternatives to, or as the
payment form for, grants or rights under any other employee or compensation plan
of the Company, including the plan of any acquired entity.
(a) Stock Option - is a grant of a right to purchase a specified
number of shares of Common Stock during a specified period. The
purchase price of each option shall be the Fair Market Value of a
share on the date such other award was granted. However, if a key
employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
its affiliates (or under Section 424(d) of the Internal Revenue
Code of 1986, as amended (the "Code") is deemed to own stock
representing more than 10% of the total combined voting power of
all classes of stock of the Company or its affiliates by reason
of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such key employee, or by or for any
corporation, partnership, estate or trust of which such key
employee is a shareholder, partner or beneficiary), the purchase
price per share of Common
A-3
Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of
the Company's Common Stock on the date the Incentive Stock Option
is granted. A stock option may be exercised in whole or in
installments, which may be cumulative. A stock option may be in
the form of an Incentive Stock Option, which complies with
Section 422 of the Code, as amended, and the regulations
thereunder at the time of grant, or a Non-Statutory Stock Option.
A Non-Statutory Stock Option means an option granted by the
Committee to (i) an outside director or (ii) to any other
participant, and such option is either (A) not designated by the
Committee as an Incentive Stock Option, or (B) fails to satisfy
the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder. The price
at which shares of Common Stock may be purchased under a stock
option shall be paid in full at the time of the exercise, in
either cash or such other methods as provided by the Committee at
the time of grant or as provided in the form of agreement
approved in accordance herewith, including tendering (either
actually or by attestation) Common Stock at Fair Market Value on
the date of surrender, or any combination thereof. Subject to
vesting requirements, if applicable, a participant may also
engage in a "cashless exercise" of the option. Upon a cashless
exercise, the participant shall give the Company written notice
of the exercise of the option together with an order to a
registered broker-dealer or equivalent third party, to sell part
or all of the Common Stock subject to the option and to deliver
enough of the proceeds to the Company to pay the option exercise
price and any applicable withholding taxes. If the participant
does not sell the Common Stock subject to the option through a
registered broker-dealer or equivalent third party, the optionee
can give the Company written notice of the exercise of the option
and the third party purchaser of the Common Stock subject to the
option shall pay the option exercise price plus applicable
withholding taxes to the Company. Notwithstanding anything herein
to the contrary, and subject to any adjustment that may be made
pursuant to Section 6 hereof, once a Stock Option has been
awarded at Fair Market Value, the Committee shall not have the
authority to reprice such Stock Option so that the exercise price
of the Stock Option shall be less than the exercise price on the
date of grant.
(b) Stock Appreciation Right - is a right to receive a payment, in
cash and/or Common Stock, as determined by the Committee, equal
to the excess of the Fair Market Value of a specified number of
shares of Common Stock on the date the SAR is exercised over the
Fair Market Value on the date of grant of the SAR as set forth in
the applicable award agreement, except that, in the case of an
SAR granted retroactively in tandem with or as a substitution for
another award, the exercise or designated price may be no lower
than the Fair Market Value of a share on the date such other
award was granted.
(c) Accelerated Ownership Option Rights, as defined in Section 12.
(d) Stock Award - is an award made in stock or denominated in units
of stock. All or part of any stock award may be subject to
conditions established by the Committee, and set forth in the
award agreement, which may include, but are not
A-4
limited to, continuous service with the Company, achievement of
specific business objectives, and other measurements of
individual, business unit or Company performance.
8. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
cash, stock, other awards, or in combinations thereof as the Committee shall
determine at the time of grant, and with such restrictions as it may impose. The
Committee may also require or permit participants to elect to defer the issuance
of shares or the settlement of awards in cash under such rules and procedures as
it may establish under the Plan. It may also provide that deferred settlements
include the payment or crediting of interest on the deferral amounts or the
payment or crediting of dividend equivalents on deferred settlements denominated
in shares.
9. FAIR MARKET VALUE. Fair Market Value for all purposes under the Plan
shall mean the reported closing price of Common Stock as reported by the Nasdaq
stock market on such date, or if the Common Stock was not traded on such date,
on the next preceding day on which Common Stock was traded thereon. Under no
circumstances shall Fair Market Value be less than the par value of the Common
Stock.
10. TRANSFERABILITY AND EXERCISABILITY. All awards other than
Non-Statutory Stock Options under the Plan will be nontransferable and shall not
be assignable, alienable, saleable or otherwise transferable by the participant
other than by will or the laws of descent and distribution, except pursuant to a
domestic relations order entered by a court of competent jurisdiction or as
otherwise determined by the Committee. In the event that a participant
terminates employment with the Company to assume a position with a governmental,
charitable, educational or similar non-profit institution, the Committee may
authorize a third party, including but not limited to a "blind" trust, to act on
behalf of and for the benefit of the representative participant with respect to
any outstanding awards.
If so permitted by the Committee, a participant may designate a
beneficiary or beneficiaries to exercise the rights of the participant and
receive any distributions under the Plan upon the death of the Participant.
However, in the case of participants covered by Section 16 of the 1934 Act, any
contrary requirements of Rule 16b-3 under the 1934 Act, or any successor rule,
shall prevail over the provisions of this Section.
Awards granted pursuant to the Plan may be exercisable pursuant to a
vesting schedule as determined by the Committee. The Committee may, in its sole
discretion, accelerate or extend the time at which any Stock Option may be
exercised, or any Stock Award may vest, in whole or in part, provided, however,
that with respect to an Incentive Stock Option, it must be consistent with the
terms of Section 422 of the Code in order to continue to qualify as an Incentive
Stock Option. Notwithstanding the above, in the event of Retirement (as herein
defined), death or Disability, all awards shall immediately vest. "Retirement"
means retirement at the normal retirement date as set forth in the pension plan
of Sentry Bank and Trust or in accordance with any written agreement entered
into with a participant, or in the absence of the foregoing, as determined by
the Board of Directors in the event there is no such plan. "Disability" means
the permanent and total inability by reason of mental or physical infirmity, or
both, of an employee to perform the work customarily assigned to him, or of a
director to serve as such. Additionally, in the case of an employee, a medical
doctor selected or approved by the Board must advise the
A-5
Committee that it is either not possible to determine when such Disability will
terminate or that it appears probable that such Disability will be permanent
during the remainder of paid employee's lifetime.
11. AWARD AGREEMENTS. Awards under the Plan shall be evidenced by an
agreement as shall be approved by the Committee that sets forth the terms,
conditions and limitations to an award and the provisions applicable in the
event the participant's employment terminates, provided however, in no event
shall the term of any Incentive Stock Option exceed a period of ten years from
the date of its grant. However, if any key employee, at the time an Incentive
Stock Option is granted to him, owns stock representing more than 10% of the
total combined voting power of all classes of stock of the Company or its
affiliate (or, under Section 424(d) of the Code, is deemed to own stock
representing more than 10% of the total combined voting power of all classes of
stock, by reason of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent
of such key employee, or by or for any corporation, partnership, estate or trust
of which such key employee is a shareholder, partner or beneficiary), the
Incentive Stock Option granted to him shall not be exercisable after the
expiration of five years from the date of grant.
In addition, to the extent required by Section 422 of the Code, the
aggregate Fair Market Value (determined at the time the option is granted) of
the Common Stock for which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under all plans of the Company
and its affiliates) shall not exceed $100,000. In the event the amount
exercisable shall exceed $100,000, the first $100,000 of Incentive Stock Options
(determined as of the date of grant) shall be exercisable as Incentive Stock
Options and any excess shall be exercisable as Non-Statutory Stock Options.
12. ACCELERATED OWNERSHIP STOCK OPTION RIGHTS. The Committee may grant
the right to receive an Accelerated Ownership Option simultaneously with, or
subsequent to, the grant of any stock option, with respect to all or some of the
shares covered by such stock option, provided, however, that with respect to an
Incentive Stock Option, such grant must be consistent with the terms of Section
422 of the Code in order to continue to qualify as an Incentive Stock Option. In
the event an Accelerated Ownership Option Right has been granted, upon the
exercise of the related Stock Option, the participant will be granted an
Accelerated Ownership Option (which may be an Incentive or Non-Incentive Stock
Option) to purchase a number of shares of Common Stock equal to the sum of the
number of whole shares of Common Stock used by the participant in payment of the
purchase price of the Stock Option. Accelerated Ownership Stock Option Rights
may also be granted to replace Common Stock withheld by the Company for payment
of a participant's withholding tax under Section 14. The exercise price of the
Accelerated Ownership Option shall be the Fair Market Value of the Common Stock
on the date of grant of the Accelerated Ownership Option. The term during which
the Accelerated Ownership Option may be exercised (and the other terms and
conditions) shall be determined by the Committee, but in no event shall an
Accelerated Ownership Option be exercisable in whole or in part before the
expiration of six months from the date of the grant of the Accelerated Ownership
Option.
13. PLAN AMENDMENT. The Board or the Committee may modify or amend the
Plan as it deems necessary or appropriate or modify or amend an award received
by key
A-6
employees and/or outside directors. No such amendment shall adversely affect any
outstanding awards under the Plan without the consent of the holders thereof.
14. TAX WITHHOLDING. The Company may deduct from any settlement of an
award made under the Plan, including the delivery or vesting of shares, an
amount sufficient to cover the minimum withholding required by law for any
federal, state or local taxes or to take such other action as may be necessary
to satisfy any such withholding obligations. The Committee may permit shares to
be used to satisfy required tax withholding and such shares shall be valued at
the Fair Market Value as of the settlement date of the applicable award.
15. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Unless otherwise
determined by the Committee, settlements of awards received by participants
under the Plan shall not be deemed a part of a participant's regular, recurring
compensation for purposes of calculating payments or benefits from any Company
benefit plan, severance program or severance pay law of any country.
16. UNFUNDED PLAN. Unless otherwise determined by the Committee, the
Plan shall be unfunded and shall not create (or be construed to create) a trust
or a separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any participant or other person. To the
extent any person holds any rights by virtue of a grant awarded under the Plan,
such right (unless otherwise determined by the Committee) shall be no greater
than the right of an unsecured general creditor of the Company.
17. FUTURE RIGHTS. No person shall have any claim or rights to be
granted an award under the Plan, and no participant shall have any rights by
reason of the grant of any award under the Plan to continued employment by the
Company or any subsidiary of the Company.
18. GENERAL RESTRICTION. Each award shall be subject to the requirement
that, if at any time the Committee shall determine, in its sole discretion, that
the listing, registration or qualification of any award under the Plan upon any
securities exchange or under any sate or federal law, or the consent or approval
of any government regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such award or the grant or settlement
thereof, such award may not be exercised or settled in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
19. GOVERNING LAW. The validity, construction and effect of the Plan
and any actions taken or relating to the Plan shall be determined in accordance
with the laws of the State of Delaware.
20. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and permitted assigns of a participant, including, without limitation, the
guardian or estate of such participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the participant's creditors.
A-7
21. RIGHTS AS A SHAREHOLDER. A participant shall have no rights as a
shareholder with respect to awards under the Plan until he or she becomes the
holder of record of shares granted under the Plan.
22. CHANGE IN CONTROL. Notwithstanding anything to the contrary in the
Plan, the following shall apply to all outstanding awards granted under the
Plan:
(a) Definitions. The following definitions shall apply to this
Section:
"Change in Control" of the Company means a Change in Control of a
nature that: (i) would be required to be reported in response to Item
1(a) of the current report on Form 8-K, as in effect on the date
hereof pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"); or (ii) results in a Change in Control
of the Company within the meaning of the Change in Bank Control Act,
as administered by the Office of Thrift Supervision, as in effect on
the effective date of this Plan. In addition to the above, a Change in
Control shall be deemed to have occurred at such time and payments and
benefits under this Section shall be made as (iii) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act), is
or becomes the "beneficial owner" (as defined in Rule d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the Company's outstanding securities
ordinarily having the right to vote at the election of directors
(except for any securities of the Company purchased by the Company's
employee stock ownership plan and trust; or (iv) individuals who
constituted the Board on the Effective Date (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's shareholders was
approved by the same nominating board serving under an Incumbent
Board, shall be, for purposes of this clause (iv), considered as
though he were a member of the Incumbent Board; or (v) a merger,
consolidation or sale of all or substantially all the assets of the
Company in which the Company is not the surviving institution occurs;
or (vi) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the then current Board of Directors of
the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or similar transaction with one
or more corporations as a result of which the outstanding shares of
the common stock of the Company are to be exchanged for or converted
into cash or property or securities not issued by the Company; or
(vii) a tender offer is made for 25% or more of the voting securities
of the Company.
(b) Acceleration of Vesting and Payment of SARs.
(1) Upon the occurrence of an event constituting a Change in
Control, all SARs, stock options, stock awards or any other
award granted pursuant to this Plan outstanding on such date
shall become 100% vested.
(2) Upon the occurrence of an event constituting a Change in
Control involving an exchange of stock, all stock options
shall become options to
A-8
purchase the exchanged stock at the applicable exchange
ratio (with no change in the aggregate exercise price).
23. COMPLIANCE WITH SECTION 16. With respect to persons subject to
Section 16 of the 1934 Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provisions of the Plan or actions of the Committee fail
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee administrators.
24. TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of an
employee's employment for any reason other than Disability, Retirement, Change
in Control, death or Termination for Cause, the employee's Stock Options shall
be exercisable, and Stock Awards shall vest, but only as to those shares that
were immediately exercisable by, or vested in, such employee at the date of
termination, and options may be exercised only for a period of three months
following termination. In the event of termination of employment for Cause (as
defined herein) all rights and awards granted to an employee under the Plan not
exercised or vested shall expire upon termination of employee.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probably that such Disability will
be permanent during the remainder of said employee's lifetime.
"Retirement" means for a key employee, retirement at the normal or
early retirement date set forth in the Company's Employee Stock Ownership Plan,
or any successor plan. Retirement for an outside director means a cessation of
service on the Board for any reason other than Termination for Cause, after
reaching 60 years of age and maintaining at least 10 continuous years of
service.
"Termination for Cause" means the termination upon personal dishonesty,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, or the willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or a
final cease-and-desist order, any of which results in a material loss to the
Company or an Affiliate.
No option shall be eligible for treatment as an Incentive Stock Option
in the event such option is exercised more than three months following the date
of his Retirement or termination of employment following a Change in Control;
and provided further, that no option shall be eligible for treatment as an
Incentive Stock Option in the event such option is exercised more than one year
following termination of employment due to death or Disability and provided
further, in order to obtain Incentive Stock Option treatment for options
exercised by heirs or devisees of an optionee, the optionee's death must have
occurred while employed or within three (3) months of termination of employment.
Upon the termination of an employee's service for reason of Disability, Change
in Control or death, the employee's Stock Options shall be exercisable as to all
shares whether or not then exercisable, and the employee's Stock Awards shall
vest as to all
A-9
shares subject to an outstanding award, whether or not otherwise immediately
vested in, such employee at the date of termination, and options may be
exercised for a period of one year following termination. Upon the termination
of an employee's service for reason of Retirement, the employee's Stock Options
shall be exercisable as to all shares whether or not then exercisable, and the
employee's Stock Awards shall vest as to all shares subject to an outstanding
award, whether or not otherwise immediately vested in, such employee at the date
of termination, and options may be exercised for a period of five years
following such termination. In no event shall the exercise period extend beyond
the expiration of the Stock Option term.
Upon the termination of a director's service for any reason other than
Disability, Retirement, Change in Control, death or Termination for Cause, the
director's Stock Options shall be exercisable, but only as to those shares that
were immediately purchasable by, or vested in, such director at the date of
termination, and options may be exercised for a period of one year following
termination of service, and all of the director's unvested Stock Awards shall be
forfeited. In the event of termination of service for cause (as defined above)
all rights granted to the director under the Plan not exercised by or vested in
such director shall expire upon termination of service. Upon the termination of
a director's service for reason of Disability, Change in Control or death, the
director's Stock Options shall be exercisable as to all shares whether or not
then exercisable, and the director's Stock Awards shall vest as to all shares
subject to an outstanding award, whether or not otherwise immediately vested in,
such director at the date of termination, and options may be exercised for a
period of one year following such termination. Upon the termination of a
director's service for reason of Retirement, the director's Stock Options shall
be exercisable as to all shares whether or not then exercisable, and the
director's Stock Awards shall vest as to all shares subject to an outstanding
award, whether or not otherwise immediately vested in, such director at the date
of termination, and options may be exercised for a period of five years
following such termination. In no event shall the exercise period extend beyond
the expiration of the Stock Option term.
A-10
REVOCABLE PROXY
GREAT PEE DEE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
October 15, 2003
The undersigned hereby appoints the proxy committee of the Board of
Directors of Great Pee Dee Bancorp, Inc. (the "Company"), with full powers of
substitution to act as attorneys and proxies for the undersigned to vote all
shares of Common Stock of the Company that the undersigned is entitled to vote
at the 2003 Annual Meeting of Stockholders ("Meeting") to be held at the
Matheson Memorial Library, 227 Huger Street, Cheraw, South Carolina, at 2:00
p.m., (South Carolina time) on Wednesday, October 15, 2003. The proxy committee
is authorized to cast all votes to which the undersigned is entitled as follows:
FOR VOTE WITHHELD
--- -------------
1. The election as directors of the nominees
listed below (except as marked to the
contrary below) for a three-year term: /_/ /_/
William R. Butler
H. Malloy Evans, Jr.
INSTRUCTION: To withhold your vote for any
individual nominee, mark "Withheld" and
write that nominee's name on space provided.
- -------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The approval of the Great Pee Dee
Bancorp, Inc. 2003 Long-Term Incentive /_/ /_/ /_/
Stock Benefit Plan.
FOR AGAINST ABSTAIN
--- ------- -------
3. The ratification of the appointment of
Dixon Odom PLLC as auditors for the /_/ /_/ /_/
fiscal year ending June 30, 2004.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE
MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or
at any adjournment thereof and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later dated proxy
statement prior to a vote being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated
September 16, 2003, and audited financial statements.
Dated: __________, 2003 /_/ Check Box if You Plan to Attend Meeting
- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------