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 Section 240.14a-11(c) or Section 240.14a-12
South Street Financial Corp.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
SOUTH STREET FINANCIAL CORP.
Post Office Box 489
155 West South Street
Albemarle, North Carolina 28001
(704) 982-9184
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 9, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of South Street Financial Corp. (the "Company") will be held
on February 9, 1998, at 7:00 p.m., Eastern Time, at the main office of the
Company at 155 West South Street, Albemarle, North Carolina.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To elect six persons who will serve as directors of the Company for
one-year terms or until their successors are duly elected and
qualified;
2. To ratify the selection of McGladrey & Pullen, LLP as the independent
auditor for the Company for the fiscal year ending September 30, 1998;
and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to be considered at the Annual Meeting.
The Board of Directors has established December 22, 1997, as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and any adjournments thereof. In the event there are not
sufficient shares present in person or by proxy to constitute a quorum at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ R. Ronald Swanner
R. Ronald Swanner
Secretary
Albemarle, North Carolina
January 2, 1998
A form of proxy is enclosed to enable you to vote your shares at the Annual
Meeting. You are urged, regardless of the number of shares you hold, to
complete, sign, date and return the proxy promptly. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
SOUTH STREET FINANCIAL CORP.
Proxy Statement
1998 Annual Meeting of Stockholders
February 9, 1998
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of South Street
Financial Corp. (the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors" or "Board") of proxies to
be used at the 1998 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on February 9, 1998, at 7:00 p.m., Eastern Time, at the office of the
Company at 155 West South Street, Albemarle, North Carolina, and at any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
were first mailed to stockholders on or about January 5, 1998. The Company's
office is located at 155 West South Street, Albemarle, North Carolina 28001, and
its telephone number is (704) 982-9184.
Other than the matters listed on the attached Notice of 1998 Annual Meeting
of Stockholders, the Board of Directors knows of no 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 judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a beneficial owner of
shares of the Company's common stock (the "Common Stock") that are not
registered in your own name, you will need appropriate documentation from the
holder of record to vote personally at the Annual Meeting.
Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses, if any. In addition to
the use of the mail, proxies may be solicited personally or by telephone or
telegraph by directors, officers and regular employees of the Company and its
wholly-owned savings bank subsidiary, Home Savings Bank of Albemarle, Inc.,
S.S.B. (the "Bank"), without additional compensation therefor. Brokerage houses
and nominees have been requested to forward these
proxy materials to the beneficial owners of shares held of record by such
persons and, upon request, the Company will reimburse such persons for their
reasonable out-of-pocket expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of Common Stock owned, it is important
that stockholders be present in person or represented by proxy at the Annual
Meeting. Stockholders are requested to vote by completing, signing, dating and
returning the enclosed proxy card in the enclosed postage-paid envelope. Any
shareholder may vote for, against, or abstain from voting on any matter to come
before the Annual Meeting. If the enclosed proxy is properly marked, signed,
dated and returned, and not revoked, it will be voted in accordance with the
instructions therein. If no instructions are given, the proxy will be voted FOR
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the nominees for election to the Board of Directors named in this Proxy
Statement and for the other matters described in this Proxy Statement calling
for a vote of the stockholders. If instructions are given with respect to some
but not all proposals, such instructions as are given will be followed, but the
proxy will be voted FOR the proposals on which no instructions are given.
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The close of business on December 22, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of the Record Date, the Company had
outstanding 4,676,360 shares of Common Stock. Each share of Common Stock
entitles its owner to one vote on each matter calling for a vote of stockholders
at the Annual Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of shares of the Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. Since many of our
stockholders cannot attend the Annual Meeting, it is necessary that a large
number be represented by proxy. Accordingly, the Board of Directors has
designated proxies to represent those stockholders who cannot be present in
person and who desire to be so represented. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Annual Meeting, the Annual Meeting may be adjourned in order to permit
the further solicitation of proxies.
In order to be elected, a nominee need only receive a plurality of the
votes cast in the election of directors. As a result, those persons nominated
who receive the largest number of votes will be elected as directors.
Accordingly, shares not voted for any reason respecting any one or more nominees
will not be counted as votes against such nominees.
The proposal to ratify the appointment of the Company's independent auditor
for the 1998 fiscal year will be approved if the votes cast in favor of the
proposal exceed the votes cast opposing the proposal.
Abstentions will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Abstentions will not be counted in tabulating
the votes cast on any proposal submitted to the stockholders. Shares held by a
broker, as nominee, and not voted on any matter will not be counted for
determining the existence of a quorum.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person or group who acquires the beneficial ownership of more
than 5% of the Common Stock notify the Securities and Exchange Commission (the
"SEC") and the Company. Following is certain information, as of the Record
Date, regarding all persons or groups, as defined in the Exchange Act, who held
of record or who are known to the Company to own beneficially, more than 5% of
the Company's Common Stock.
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/(1)/ Class/(2)/
- ---------------- ---------------- -----------
Caldwell A. Holbrook, Jr. 371,047/(3),(4)/ 7.93%
1700 Bellamy Circle
Albemarle, NC 28001
Joel A. Huneycutt 383,713/(5),(4)/ 8.21%
P. O. Box 167 Renee Ford Road
Locust, NC 28097
Douglas Dwight Stokes 389,770/(6),(4)/ 8.33%
1009 Ridge Street
Albemarle, NC 28001
Greg E. Underwood 378,713/(7),(4)/ 8.10%
500 North Fourth Street
Albemarle, NC 28001
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/(1)/ Unless otherwise noted, all shares are owned directly or indirectly by
the named individuals, by their spouses and minor children, or by other
entities controlled by the named individuals.
/(2)/ Based upon a total of 4,676,360 shares of Common Stock outstanding at the
Record Date.
/(3)/ Mr. Holbrook serves as a trustee of the Home Savings Bank of Albemarle,
Inc., S.S.B. Employee Stock Ownership Plan (the "ESOP") which holds
359,720 shares of the Company's Common Stock. The trustees of such plan
share certain voting and investment power of such shares. This number
also includes 2,000 shares for which Mr. Holbrook shares voting and
investment power with his spouse.
/(4)/ Includes 8,993 shares of restricted stock awarded under the Management
Recognition Plan on October 29, 1997.
/(5)/ Mr. Huneycutt serves as a trustee of the ESOP which holds 359,720 shares
of the Company's Common Stock. The trustees of such plan share certain
voting and investment power of such shares. This number also includes
11,526 shares for which Mr. Huneycutt shares voting and investment power
with his spouse. This number also includes 1,737 shares held by Mr.
Huneycutt's wife. Mr. Huneycutt disclaims beneficial ownership of such
shares.
/(6)/ Mr. Stokes serves as a trustee of the ESOP which holds 359,720 shares of
the Company's Common Stock. The trustees of such plan share certain
voting and investment power of such shares. This number also includes
6,845 shares for which Mr. Stokes shares voting and investment power with
his spouse.
/(7)/ Mr. Underwood serves as a trustee of the ESOP which holds 359,720 shares
of the Company's Common Stock. The trustees of such plan share certain
voting and investment power of such shares.
3
Set forth below is certain information as of the Record Date regarding
beneficial ownership of the Common Stock by each of the members of the Board of
Directors (including nominees for re-election at the Annual Meeting), each of
the members of the Board of Directors of the Bank, each of the named executive
officers of the Company and the Bank, and the directors and all executive
officers of the Company and the Bank as a group (all persons listed are
directors of the Company and the Bank).
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/(1),(2)/ Class/(3)/
- ---------------- ------------------ -----------
Caldwell A. Holbrook, Jr. 371,047/(4),(5)/ 7.93%
1700 Bellamy Circle
Albemarle, NC 28001
Joel A. Huneycutt 383,713/(6),(5)/ 8.21%
P. O. Box 167 Renee Ford Road
Locust, NC 28097
Douglas Dwight Stokes 389,770/(7),(5)/ 8.33%
1009 Ridge Street
Albemarle, NC 28001
Greg E. Underwood 378,713/(8),(5)/ 8.10%
500 North Fourth Street
Albemarle, NC 28001
Carl M. Hill, President and 89,582/(9)/ 1.92%
Chief Executive Officer of the Company
and the Bank
1415 Melchor Road
Albemarle, NC 28001
R. Ronald Swanner, Executive Vice President 46,658/(10)/ 1.00%
of the Company and the Bank and Secretary of
the Company
1415 Northridge Drive
Albemarle, NC 28001
Directors and all executive officers as a
group (7 persons) 607,743/(11)/ 13.00%
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/(1)/ Voting and investment power is not shared unless otherwise indicated.
/(2)/ Unless otherwise noted all shares are owned directly or indirectly by the
named individuals, by their spouses or minor children, or by other
entities controlled by the named individuals.
/(3)/ Based upon a total of 4,676,360 shares of the Common Stock outstanding at
the Record Date.
4
/(4)/ Mr. Holbrook serves as a trustee of the ESOP which holds 359,720 shares
of the Company's Common Stock. The trustees of such plan share certain
voting and investment power of such shares. This number also includes
2,000 shares for which Mr. Holbrook shares voting and investment power
with his spouse.
/(5)/ Includes 8,993 shares of restricted stock awarded under the Management
Recognition Plan on October 29, 1997.
/(6)/ Mr. Huneycutt serves as a trustee of the ESOP which holds 359,720 shares
of the Company's Common Stock. This number also includes 11,526 shares
for which Mr. Huneycutt shares voting and investment power with his
spouse. This number also includes 1,737 shares held by Mr. Huneycutt's
wife. Mr. Huneycutt disclaims beneficial ownership of such shares.
/(7)/ Mr. Stokes serves as a trustee of the ESOP which holds 359,720 shares of
the Company's Common Stock. This number also includes 6,845 shares for
which Mr. Stokes shares voting and investment power with his spouse.
/(8)/ Mr. Underwood serves as a trustee of the ESOP which holds 359,720 shares
of the Company's Common Stock.
/(9)/ This number includes 3,200 shares held by Mr. Hill's wife. Mr. Hill
disclaims beneficial ownership of such shares. Includes 44,965 shares of
restricted stock awarded under the Management Recognition Plan on October
29, 1997.
/(10)/ Includes 35,972 shares of restricted stock awarded under the Management
Recognition Plan on October 29, 1997. This number also includes 10,000
shares for which Mr. Swanner shares voting and investment power with his
spouse.
/(11)/ The 359,720 shares held by the ESOP for which the trustees, Messrs.
Holbrook, Huneycutt, Stokes and Underwood, share voting and investment
power have been included only once in the total number of shares owned
beneficially by the Directors and Executive Officers as a group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership with the SEC. Executive
officers, directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended September 30,
1997, all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
5
PROPOSAL 1
ELECTION OF DIRECTORS
General
The Articles of Incorporation of the Company provide that the number of
directors of the Company shall not be less than five nor more than fifteen. The
exact number of directors shall be fixed or changed from time to time by the
Board of Directors. The Board of Directors has currently fixed the size of the
Board at six members.
The Board of Directors has nominated the six persons named below for
election as directors for terms of one year or until their earlier death,
resignation, retirement, removal or disqualification or until their successors
are elected and qualified.
The persons named in the accompanying form of proxy intend to vote any
shares of the Common Stock represented by valid proxies received by them to
elect the six nominees listed below as directors, unless authority to vote is
withheld or such proxies are revoked. Each of the nominees for election is
currently a member of the Board of Directors. In the event that any of the
nominees should become unavailable to accept nomination or election, it is
intended that the proxyholders will vote to elect in his stead such other person
as the present Board of Directors may recommend or to reduce the number of
directors to be elected at the Annual Meeting by the number of such persons
unable or unwilling to serve (subject to the requirements of the Company's
Articles of Incorporation). The present Board of Directors has no reason to
believe that any of the nominees named herein will be unable to serve if elected
to office. In order to be elected as a director, a nominee need only receive a
plurality of the votes cast. Accordingly, shares not voted for any reason
respecting any one or more nominees will not be counted as votes against such
nominees. No shareholder has the right to cumulatively vote his or her shares
in the election of directors.
The Board of Directors recommends a vote FOR all of the following nominees
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for election as directors.
The following table sets forth as to each nominee, his name, age, principal
occupation during the last five years and the year he was first elected as a
director of the Bank. All nominees have previously served as directors of the
Bank and Company.
Age on
September Principal Occupation
30, During Last Five Term Director
Name 1997 Years Expires Since
- ----- --------- --------------------- ------- --------
Carl M. Hill 65 President and CEO, 1999 1961
the Company and the
Bank
Caldwell A. Holbrook, Jr. 50 Partner, D.A. 1999 1985
Holbrook & Sons,
General Contractors
Joel A. Huneycutt 55 President, Locust 1999 1984
Lumber Company, Inc.
Douglas Dwight Stokes 51 Owner and President, 1999 1988
Stokes Construction
Company
6
Age on
September Principal Occupation
30, During Last Five Term Director
Name 1997 Years Expires Since
- ----- --------- --------------------- ------- --------
R. Ronald Swanner 49 Executive Vice 1999 1981
President, the
Company and the
Bank; Secretary of
the Company
Greg E. Underwood 34 CPA in private 1999 1995
practice; Owner,
Carolina Oil Co. of
Albemarle, Inc. and
Barefoot Oil Co. of
Albemarle, Inc.;
Secretary/Treasurer
of Southeastern
Floral Corp.
Board of Directors of the Bank
The Bank also has a six member board of directors which is comprised of the
same persons who are currently directors of the Company.
Meetings of the Board and Committees of the Board
The Board of Directors is scheduled to meet quarterly and may have
additional meetings as needed. During fiscal 1997, the Board of Directors held 6
meetings. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and committees of the Board on which they
served during the year ended September 30, 1997.
The Board of Directors has one standing committee -- the Audit Committee.
The Audit Committee of the Board consists of Messrs. Stokes, Underwood and
Huneycutt. This Committee is responsible for reviewing and obtaining the annual
audit report from the Company's and the Bank's independent auditor. During the
fiscal year ended September 30, 1997, the Audit Committee met one time.
The Bank's board of directors has appointed five standing committees to
which certain responsibilities have been delegated -- the Loan Committee, the
Audit Committee, the Nominating Committee, the Proxy Committee and the
Compensation Committee. The members of the Company's Audit Committee also serve
on the Bank's Audit Committee. The Bank's Audit Committee met one time during
the fiscal year ended September 30, 1997.
The Bank's Nominating Committee, composed of Messrs. Holbrook, Huneycutt
and Stokes, serves in that capacity for the Company's Board of Directors. The
Bank's Nominating Committee generally meets on an annual basis and met one time
during the fiscal year ended September 30, 1997.
The Bank's Compensation Committee, composed of Messrs. Huneycutt, Holbrook
and Stokes, also serves as the Company's compensation committee. The Bank's
Compensation Committee meets on an annual basis and met one time during the
fiscal year ended September 30, 1997. In addition, the Bank's board of
directors appoints other committees of its members to perform certain more
limited functions from time to time.
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Directors' Compensation
Directors' Fees. Members of the Board of Directors receive no fees or
compensation for their service. However, all members of the Board of Directors
also are directors of the Bank, and are compensated for that service. For their
service on the Bank's board of directors, members of the board, including Mr.
Hilland Mr. Swanner, receive a retainer of $2,500 per year and an additional
$600 per regular monthly board meeting attended. Mr. Stokes receives an
additional $300 per month for his service on the Loan Committee.
Bank Deferred Compensation Agreements with Directors. 1985 Retirement
Payment Agreements. Mr. Hill and Mr. Swanner, as well as two non-employee
directors and two retired directors of the Bank, participate in a deferred
compensation plan established in 1985 under which such directors, or their
designated beneficiaries, would be paid specified amounts over a ten-year period
beginning at age 65 (or in one case, age 70) in return for the deferral of
certain amounts of the director's fees over a five-year period. If a director
dies while serving as a director but before receiving all of his benefits under
the agreement, payments will be made to his designated beneficiary, or if none,
to his estate.
As a condition of the agreement, each director has agreed not to engage in
activities in competition with the Bank and to provide consulting services to
the Bank during the period the retirement benefits are payable.
1995 Retirement Payment Agreements. In 1995, the Bank entered into
additional deferred compensation arrangements with all of its directors. Under
the agreements, the Bank will pay each director a specified amount per month for
a period of ten years upon the director's attainment of age 65 (or in Mr. Hill's
case, beginning in 2000), in return for the deferral of certain amounts of the
director's fees over a five-year period.
If a director dies while serving as a director but before receiving all of
his benefits under the agreement, payments will be made to his designated
beneficiary, or if none, to his estate, unless the death is by suicide within
two years of the execution of the agreement (in which case the deferred fees
will be returned, with interest). If a director becomes disabled while serving
as a director, but prior to attaining age 65 (October 1, 2000 for Mr. Hill), the
Bank will pay the same benefits that would be payable in the event of the
director's death. If a director terminates his service to the Bank for reasons
other than death or disability, he or his beneficiary shall be entitled to
receive at age 65 (or October 1, 2000 for Mr. Hill) or his prior death only the
vested portion of the benefit due under the agreement. Vesting occurs according
to a schedule contained in the agreement. If any director's termination of
service shall occur after a change in control of the Bank, the director shall be
100% vested in the retirement benefits.
As a condition of the agreement, each director has agreed not to engage in
activities in competition with the Bank and to provide consulting services to
the Bank during the period that the retirement benefits are payable.
Bank Directors Retirement Plan. In 1995, the Bank adopted a retirement
plan for directors after determining that such a plan would help it attract and
retain qualified directors. Under the plan all directors will be paid $1,000
per month over a ten-year period beginning after the director attains 70 years
of age (the "Normal Retirement Date"). If a director dies while serving as a
director but before receiving all of his benefits under the plan, payments will
be made to his designated beneficiary in lump sum or installments at the Bank's
option, unless the death is by suicide within two years of the execution of the
agreement. If
8
a director becomes disabled while serving as a director, but prior to his Normal
Retirement Date, the Bank will pay the benefits due under the plan, either in
installments over the ten-year period or in a lump sum payment. If a director
terminates his service to the Bank before his Normal Retirement Date for reasons
other than death or disability, he or his beneficiary shall be entitled at the
Normal Retirement Date or his prior death to receive only the vested portion of
the benefits due under the plan. Vesting occurs according to a schedule
contained in the agreement. If any director's termination of service shall occur
after a change in control of the Bank, the director shall be 100% vested in the
retirement benefits.
As a condition of the agreement, each director has agreed not to engage in
activities in competition with the Bank and to provide consulting services to
the Bank during the period the retirement benefits are payable.
The Bank has purchased life insurance on the lives of its directors to fund
its obligations under the deferred compensation and directors' retirement plan
agreements described above. Total expense related to the above-described
agreements was approximately $214,500 for the fiscal year ended September 30,
1997. The Bank's accrued liability for obligations under the plans amounted to
$872,000 at September 30, 1997.
Stock Option Plan. On October 15, 1997, the stockholders of the Company
approved the South Street Financial Corp. Stock Option Plan (the "Stock Option
Plan"). To date, no options to purchase shares of the Common Stock have been
granted under the Stock Option Plan. The Company anticipates that some of the
available options to purchase shares of the Common Stock will be granted under
the Stock Option Plan sometime during the fiscal year ending September 30, 1998.
The Stock Option Plan will be administered by a committee of the Company's
Board of Directors (the "Committee"). The Company has reserved 449,650 shares
of the Common Stock for issuance upon the exercise of options which have been
granted under the Stock Option Plan. All directors, officers and employees of
the Company, the Bank, and any of the Bank's subsidiaries are eligible for
participation in the Stock Option Plan. The Board of Directors or the
Committee, in its sole discretion, will determine who will participate after
taking into consideration the nature of services rendered, the contribution to
the success of the Company and the Bank made and to be made by the employee or
director, and such other factors as the Committee deems relevant. At this time,
approximately 41 persons would be eligible to participate in the Stock Option
Plan.
No cash consideration will be paid for the options. The Stock Option Plan
provides that all options will have an option exercise price of not less than
the fair market value of a share of Common Stock on the date of grant. The fair
market value will be equal to the average high and low selling prices of the
Common Stock on the Nasdaq National Market ("Nasdaq"). The exercise price may
be paid in cash or cash equivalent or, if permitted by the Committee, by
delivery of shares of Common Stock with a market value equal to the exercise
price.
All options granted to participants under the Stock Option Plan shall
become vested and exercisable at the rate determined by the Committee when
making an award. Unless the Committee shall specifically state otherwise at the
time an option is granted, all options granted to participants shall become
vested and exercisable in full on the date an optionee terminates his employment
with or service to the Company, the Bank or any subsidiary because of his
death, disability or retirement; if a participant's employment with the Company,
the Bank or any subsidiary is terminated for any reason other than the
participant's death,
9
disability or retirement, unvested options will not vest. In addition, all stock
options will become vested and exercisable in full in the event that the
optionee ceases to be an employee or director of the Company or the Bank after a
change in control of the Company, as defined in the Stock Option Plan. Options
granted under the Stock Option Plan will have a term of ten years. Stock Options
are non-transferable except by will or the laws of descent and distribution.
It is expected that options granted under the Stock Option Plan will be
granted in tandem with stock appreciation rights, pursuant to which optionees
will have the right to surrender exercisable options in exchange for payment by
the Company of an amount equal to the excess of the market value of shares of
Common Stock subject to the surrendered options over the exercise price of the
surrendered options. In the discretion of the Committee, this payment may be
made in cash or in shares of Common Stock or in some combination of cash and
Common Stock. Stock appreciation rights shall terminate upon the exercise of
the options to which they are attached. Stock appreciation rights will be
subject to the same vesting and termination provisions as are applicable to the
stock options to which they are attached.
The Stock Option Plan provides that the Company's Board of Directors shall
have the discretionary authority to authorize cash payments to the holders of
unexercised options, both vested and unvested, equal to the amount of dividends
which would have been paid on shares subject to options if the options had been
exercised. No such payment may be made in connection with dividends or other
distributions which result in a reduction in the option exercise price as
described below. If an optionee receives such a cash payment with respect to
any unvested option, and if such option is later forfeited, the optionee must
repay any cash payment made with respect to the forfeited option.
In the event of a stock split, reverse stock split or stock dividend, the
number of shares of Common Stock under the Stock Option Plan, the number of
shares to which any option relates and the exercise price per share under any
option shall be adjusted to reflect such increase or decrease in the total
number of shares of Common Stock outstanding. In addition, in the event the
Company declares a special cash dividend or return of capital, the per share
exercise price of all previously granted options which remain unexercised as of
the date of such declaration may be adjusted to give effect to such special cash
dividend or return of capital.
Management Recognition Plan. On October 15, 1997, the stockholders of the
Company approved the Home Savings Bank of Albemarle, Inc., S.S.B. Management
Recognition Plan and Trust (the "MRP"). Effective October 29, 1997, restricted
stock awards of 179,860 shares of the Common Stock were made to 41 directors,
officers and employees of the Bank. On October 29, 1997, after South Street's
fiscal year, a stock award was made to Mr. Hill pursuant to the MRP of 44,965
shares of the Common Stock. Twenty-five percent, 11,241 of the shares, vested
immediately upon grant; the remaining 75% will vest over the next three years.
The vested shares had an aggregate fair market value of $199,528 on the date of
grant. At this time, a stock award was also made to Mr. Swanner pursuant to the
MRP of 35,972 shares of the Common Stock, 8,993 of which vested immediately upon
grant; the remaining 75% will vest over the next three years. The vested shares
had an aggregate fair market value of $159,626 on the date of grant. The shares
awarded under the MRP were issued from authorized but unissued shares of Common
Stock. Shares issued under the MRP were issued at no cost to recipients.
The Board of Directors has appointed trustees of the MRP Trust who have the
responsibility to invest all funds contributed by the Bank to the Trust.
Recipients are entitled to direct the trustees as to the voting of MRP shares
which are not yet vested and distributed to the recipient. All dividends and
other cash and
10
noncash distributions declared with respect to each unvested MRP share will be
held by the trustees for the benefit of each recipient, and such dividends,
including any interest earned, will be paid out proportionately by the trustees
to each recipient as soon as practicable after each recipient's MRP shares vest.
The shares granted vest at a rate of 25% on the effective date of the award of
shares under the MRP, and 25% on each of the subsequent three anniversary dates.
Awards of Common Stock under the MRP would immediately vest upon the disability
or death of a recipient or if the participant ceases to be employed by the
Company or the Bank after a change in control of the Company, as defined in the
MRP. The awards are not forfeitable upon vesting.
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of either the Company or the Bank or both.
Employed by
Age on Positions and the Bank or
September Occupations During the Company
Name 30, 1997 Last Five Years Since
- ----- ------------- ------------------ ------------
Carl M. Hill 65 President and 1957
Chief Executive
Officer of the
Company and the
Bank
R. Ronald Swanner 49 Executive Vice 1974
President of the
Company and the
Bank and Secretary
of the Company
Christopher F. Cranford 42 Treasurer and 1987
Controller of the
Bank and the
Company
Executive Compensation
The executive officers of the Company are not paid any cash compensation by
the Company. However, the executive officers of the Company also are executive
officers of the Bank and receive cash compensation from the Bank.
The following table sets forth for the fiscal year ended September 30, 1997
certain information as to the cash compensation received by and the amounts
accrued for the benefit of (i) the President and (ii) the Executive Vice
President of the Bank. No other executive officer of the Bank had cash
compensation during the year ended September 30, 1997 that exceeded $100,000 for
services rendered in all capacities to the Bank.
11
Other Annual All
Name and Compensation Other
Principal Position Year Salary Bonus ($)/(1)/ Compensation
- ------------------- ---- ------ ----- ------------ ------------
Carl M. Hill 1997 $ 173,725/(2)/ $11,012 - - - $ 25,000/(3)/
President and CEO
1996 $ 164,790/(4)/ $10,388 - - - $ 27,000/(5)/
1995 $ 147,661/(6)/ $ 7,591 - - - $223,000/(7)/
R. Ronald Swanner 1997 $ 115,180/(8)/ $ 7,081 - - - $ 9,000/(9)/
Executive Vice
President
1996 $109,420/(10)/ $ 6,678 - - - $11,300/(11)/
1995 $101,137/(12)/ $ 5,694 - - - $ 8,000/(13)/
/(1)/ Under the "Other Annual Compensation" category, perquisites for the
fiscal years ended September 30, 1997 and 1996 did not exceed the lesser
of $50,000 or 10% of salary and bonus as reported for either Mr. Hill or
Mr. Swanner.
/(2)/ Includes directors' fees of $9,700 received by Mr. Hill.
/(3)/ Includes $25,000 accrued under supplemental income agreements established
for the benefit of Mr. Hill. Such amounts accrued under the supplemental
income agreements have not been paid to Mr. Hill. See "-- Bank
Supplemental Income Agreements".
/(4)/ Includes directors' fees of $9,700 received by Mr. Hill.
/(5)/ Includes $2,000 contributed to the Bank's 401(k) profit sharing plan for
Mr. Hill for fiscal year 1996 and $25,000 of accrued expense under
supplemental income agreements established for the benefit of Mr. Hill.
Such amounts accrued under the supplemental income agreements have not
been paid to Mr. Hill. See "--Supplemental Income Agreements".
/(6)/ Includes directors' fees of $9,250 received by Mr. Hill.
/(7)/ Includes $223,000 accrued under supplemental income agreements
established for the benefit of Mr. Hill. Such amounts accrued under the
supplemental income agreements have not been paid to Mr. Hill. See "--
Bank Supplemental Income Agreements".
/(8)/ Includes directors' fees of $9,700 received by Mr. Swanner.
/(9)/ Includes $9,000 accrued under supplemental income agreements established
for the benefit of Mr. Swanner. Such amounts accrued under the
supplemental income agreements have not been paid to Mr. Swanner. See "--
Bank Supplemental Income Agreements".
/(10)/ Includes directors fees of $9,700 received by Mr. Swanner.
/(11)/ Includes $1,300 contributed to the 401(k) profit sharing plan for Mr.
Swanner for fiscal year 1996 and $10,000 of accrued expense under
supplemental income agreements established for the benefit of Mr.
Swanner. Such
12
amounts accrued under the supplemental income agreements have not been
paid to Mr. Swanner. See "--Supplemental Income Agreements".
/(12)/ Includes directors fees of $9,250 received by Mr. Swanner.
/(13)/ Includes $8,000 accrued under supplemental income agreements established
for the benefit of Mr. Swanner. Such amounts accrued under the
supplemental income agreements have not been paid to Mr. Swanner. See "--
Bank Supplemental Income Agreements".
Bank Supplemental Income Agreements. 1985 Agreements. The Bank entered
into Supplemental Income Agreements with Mr. Hill and Mr. Swanner on October 1,
1985. The agreements provide that the Bank will pay Mr. Hill $1,200 per month
for a continuous period of 216 months, and Mr. Swanner $861 per month for a
continuous period of 180 months. Mr. Hill's benefits will commence on the later
of his 62nd birthday or his actual retirement. Mr. Swanner's benefits will
commence on the first day of the month following his 65th birthday. If the
executive dies while employed by the Bank but before receiving any or all of the
payments due under the agreement, the remaining payments will be made to his
designated beneficiary, or, if none, to his estate. If the executive becomes
disabled prior to his retirement from the Bank, the Bank will pay him the
benefits due under the agreement. The plan also provides for an early
retirement benefit upon retirement with 30 years of service with the Bank.
As a condition of the agreements, Mr. Hill and Mr. Swanner must be
available to provide consulting services to the Bank during the period the
retirement payments are payable and must not engage in activities in Stanly
County, North Carolina in competition with the Bank.
1995 Agreements. In September 1995, the Bank also entered into
Supplemental Income Agreements with Mr. Hill and Mr. Swanner. Under the
agreements, the Bank will pay Mr. Hill $25,000 annually and Mr. Swanner $15,000
annually for a period of fifteen years upon the executive's attainment of age
65 or actual retirement, if later.
If the executive dies while employed by the Bank but before receiving all
of his benefits under the agreement, payments will be made to his designated
beneficiary, or if none, to his estate, unless the death is by suicide within
two years of the execution of the agreement. If the executive becomes disabled
while employed by the Bank, but prior to attaining age 65, the Bank will pay the
same benefits that would be payable in the event of the executive's death,
either in installments over the fifteen-year period or in a lump sum payment.
If the executive terminates his service to the Bank for reasons other than death
or disability, he or his beneficiary shall be entitled to receive at age 65 or
his prior death only the vested portion of the benefits due under the agreement.
Vesting occurs according to a schedule contained in the agreement. If the
executive's termination of service shall occur after a change in control of the
Bank, the executive shall be 100% vested in the retirement benefits.
As a condition of the agreement, each executive has agreed not to engage
in activities in competition with the Bank in Albemarle, North Carolina, and to
provide consulting services to the Bank during the period that the retirement
benefits are payable.
The Bank has purchased life insurance on the lives of Mr. Hill and Mr.
Swanner to fund its obligations under the agreements described above. Total
expense related to those agreements was $34,000 for the fiscal year ended
September 30, 1997, and the Bank's accrued liability for plan obligations
amounted to $470,000 at September 30, 1997.
13
Retirement Plan. The Bank maintains a non-contributory defined benefit
pension plan ("Pension Plan") for the benefit of all of its employees who have
completed one year of service and who are at least 21 years of age. Under the
Pension Plan, the Bank annually contributes an actuarially determined amount to
provide a benefit for each participant at retirement.
Participants are fully vested in amounts contributed to the Pension Plan on
their behalf by the Bank after completing five years of service. Benefits under
the plan are payable in the event of the participant's retirement, death,
disability or termination of employment.
Normal retirement age under the Pension Plan is the later of (a) age 65 or
(b) the fifth anniversary of the date an employee first became a participant in
the Pension Plan ("Normal Retirement Age"). Subject to certain restrictions on
maximum benefits required by federal law, upon reaching Normal Retirement Age,
each participant will receive a retirement benefit in the form of a straight
life annuity, determined pursuant to a formula which takes into consideration a
participant's "final average compensation," years of service with the Bank and
the participant's expected benefits from Social Security. In general, for
purposes of the Pension Plan, a participant's "Final Average Compensation" is
defined as his average annual compensation for those five consecutive years in
the last ten calendar years immediately preceding Normal Retirement Age that
produce the highest average. The plan also offers early retirement to
participants who have completed fifteen years of service and who are at least
fifty-five years of age.
The following table shows the retirement benefit payable for a range of
compensation and years of service for a person who retires at Normal Retirement
Age. These are hypothetical benefits based upon the plan's normal benefit
formula.
Earnings Credited for Years of Service at Normal Retirement
Retirement Benefits
15 20 25 30 35
-- -- -- -- --
$ 25,000............. $ 4,688 $ 6,250 $ 7,813 $ 9,375 $10,938
$ 50,000............. $11,400 $15,200 $19,000 $22,800 $26,600
$ 75,000............. $18,525 $24,700 $30,875 $37,050 $43,225
$100,000............. $25,650 $34,200 $42,750 $51,300 $59,850
$125,000............. $32,775 $43,700 $54,625 $65,550 $76,475
$150,000............. $39,900 $53,200 $66,500 $79,800 $93,100
The benefits listed above are annual amounts and are based on the assumption
that the participant is age 65. As of September 30, 1997, the Final Average
Compensation and years of service for Mr. Hill and Mr. Swanner would have been:
Mr. Hill -- $132,576 and 40 years; Mr. Swanner -- $93,556 and 23 years.
Employee Stock Ownership Plan. The Bank has established the ESOP for
eligible employees of the Bank. Employees with 1,000 hours of employment in a
plan year and who have attained age 21 are eligible to participate. The ESOP
borrowed funds from the Company and used the funds to purchase 359,720
14
of the shares of Common Stock issued in connection with the Bank's conversion
from a North Carolina-chartered mutual savings bank to a North Carolina-
chartered stock savings bank (the "Conversion.").
Collateral for the Company's loan to the ESOP is the Common Stock purchased
by the ESOP. The loan will be repaid principally from the Bank's discretionary
contributions to the ESOP over a period of 10 years or less. Dividends, if any,
paid on shares held by the ESOP may also be used to reduce the loan. The loan
has not been guaranteed by the Bank.
Shares purchased by the ESOP are held in a suspense account for allocation
among participants as the loan is repaid. Contributions to the ESOP and shares
released from the suspense account in an amount proportional to the repayment of
the ESOP loan are allocated among ESOP participants on the basis of relative
compensation in the year of allocation. Benefits vest in annual increments with
full vesting upon attaining five years of service (with credit given for years
of service prior to the Conversion). Prior to the completion of five years of
credited service, a participant who terminates employment for reasons other than
death, retirement (or early retirement), or disability will receive only vested
benefits under the ESOP. Forfeitures are reallocated among remaining
participating employees in the same proportion as contributions. Benefits
immediately vest and are payable upon death or disability. The Bank's
contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.
The Bank has established a committee of the board of directors to
administer the ESOP. Trustees for the ESOP were appointed prior to the
Conversion. The ESOP committee may instruct the trustees regarding investment
of funds contributed to the ESOP. Participating employees may instruct the
trustees as to the voting of all shares allocated to their respective ESOP
accounts. The unallocated shares held in the suspense account, and all
allocated shares for which voting instructions are not received, will be voted
by the trustees in their discretion subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
Stock Option Plan and Management Recognition Plan. See "Director
Compensation -- Stock Option Plan" and "--Management Recognition Plan" for a
discussion of the executive officers' benefits under those plans.
Employment Agreements. The Bank has entered into employment agreements
with Carl M. Hill and R. Ronald Swanner in order to establish their duties and
compensation and to provide for their continued employment with the Bank. The
agreements provide for an initial term of employment of three years. Commencing
on the first anniversary date and continuing on each anniversary date
thereafter, following a performance evaluation of the employee, each agreement
may be extended for an additional year. Each agreement provides that base
salary shall be reviewed by the board of directors of the Bank not less often
than annually. Under the terms of the agreements, Mr. Hill's annual base salary
was $164,025 for the 1997 fiscal year and Mr. Swanner's annual base salary was
$105,480 for the 1997 fiscal year. In addition, the employment agreements
provide for discretionary bonuses and participation in all other pension,
profit-sharing or retirement plans maintained by the Bank or by the Company for
employees of the Bank, as well as fringe benefits normally associated with such
employee's office, including the use of a company car. The employment
agreements provide that they may be terminated by the Bank for cause, as defined
in the agreement, and that they may otherwise be terminated by the Bank (subject
to vested rights) or by the employee. In the event of a change in control (as
defined below), the terms of each agreement shall be automatically extended for
three years from the date of the change of control, and the employee's base
salary shall be increased at least 6% annually.
15
The employment agreements provide that the nature of the employee's
compensation, duties or benefits may not be diminished following a change in
control of the Bank or the Company. For purposes of the employment agreements,
a change in control generally will occur if (i) after the effective date of the
employment agreement, any "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act) directly or indirectly, acquires beneficial
ownership of voting stock, or acquires irrevocable proxies or any combination of
voting stock and irrevocable proxies, representing 25% or more of any class of
voting securities of either the Company or the Bank, or acquires in any manner
control of the election of a majority of the directors of either the Company or
the Bank, (ii) either the Company or the Bank consolidates or merges with or
into another corporation, association or entity, or is otherwise reorganized,
where neither the Company nor the Bank is the surviving corporation in such
transaction, or (iii) all or substantially all of the assets of either the
Company or the Bank are sold or otherwise transferred to, or are acquired by,
any other entity or group.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Bank's board of directors serves the role
of the Compensation Committee for the Company. The Compensation Committee
determines the compensation of the executive officers and the Bank's other
employees. During the fiscal years ended September 30, 1997, the Compensation
Committee consisted of Caldwell A. Holbrook, Jr., Joel A. Huneycutt and Douglas
D. Stokes. None of the members of the Compensation Committee were officers or
employees of the Bank or the Company during 1997 or in prior years.
Report of Compensation Committee on Executive Compensation
It is the responsibility of the Bank's Compensation Committee to review and
evaluate the performance of the Bank's executive officers. As part of a
compensation review process completed within the last two years, the board of
directors engaged a consultant to analyze and review the Bank's compensation
practices as compared with practices at comparable institutions, compensation
surveys and comparative data available from trade associations. The Bank's
board of directors determined that it could best attract and retain the level of
management expertise and talent needed to efficiently and profitably operate the
Bank and the Company by offering competitive base salaries. As a result of the
consultant's report, base salaries for each the executive officers, including
Mr. Hill, the President and Chief Executive Officer, and Mr. Swanner, the
Executive Vice President, were largely determined by market factors, including
salaries and benefits offered for similar positions by financial institution
competitors of similar size and characteristics. Increases in the base salary
of each executive officer are determined based upon the executive officer's
contributions to the Bank's overall profitability, maintenance of regulatory
compliance standards, professional leadership, and management effectiveness in
meeting the needs of day-to-day operations. In addition, the executive officers
of the Bank are eligible to receive discretionary bonuses--as are all other
employees -- declared by the Bank's board of directors.
Compensation Committee
Caldwell A. Holbrook, Jr.
Joel A. Huneycutt
Douglas Dwight Stokes
16
Performance Graph
The Company is required to provide its stockholders with a line graph
comparing the Company's cumulative total shareholder return with a performance
indicator of the overall stock market and either a published industry index or a
Company-determined peer comparison. The purpose of the chart is to help
stockholders determine the reasonableness of the Compensation Committee's
decisions with respect to the setting of various levels of executive officer
compensation. Shareholder return (measured through increases in stock price and
payment of dividends) is often a benchmark used in assessing corporate
performance and the reasonableness of compensation paid executive officers.
However, the stockholders should recognize that corporations often use a
number of other performance benchmarks (in addition to shareholder return) to
set various levels of executive officer compensation. Stockholders should thus
consider other relevant performance indicators in assessing shareholder return,
such as growth in earnings per share, book value per share, and cash dividends
per share, along with other performance measures such as return on equity and
return on assets.
The following graph compares the Company's cumulative shareholder return on
the Common Stock with a Nasdaq (U.S. companies) index and with a savings
institution peer group whose stock is quoted on Nasdaq. The graph was prepared
using data through September 30, 1997.
17
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
South Street Financial Corp.
Prepared by the Center for Research in Security Prices
Produced on 12/01/97 including data to 09/30/97
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Legend
Nasdaq Stock NASDAQ Stocks
South Street Market (SIC 6030-6039
Financial Corp. (US Companies) US Companies)
-------------- ------------- ------------
CRSP Total Returns Index for: 10/03/96 03/31/97 09/30/97
- ---------------------------- -------- -------- --------
South Street Financial Corp. 100.0 128.0 156.5
Nasdaq Stock Market (US Companies) 100.0 98.8 136.6
NASDAQ Stocks (SIC 6030-6039 US Companies) 100.0 123.3 171.1
Savings Institutions
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 10/03/96.
- --------------------------------------------------------------------------------
18
Certain Indebtedness and Transactions of Management
The Bank makes loans to its executive officers and directors in the
ordinary course of its business. These loans are currently made on substantially
the same terms, including interest rates, collateral and repayment terms, as
those then prevailing for comparable transactions with nonaffiliated persons,
and do not involve more than the normal risk of collectibility or present any
other unfavorable features. Applicable regulations prohibit the Bank from
making loans to its executive officers and directors at terms more favorable
than could be obtained by persons not affiliated with the Bank. The Bank's
policy concerning loans to executive officers and directors currently complies
with such regulations.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
McGladrey & Pullen, LLP, the Company's and the Bank's independent auditor
for the year ended September 30, 1997, has been selected as the Company's and
the Bank's independent auditor for 1998 fiscal year. Such selection is being
submitted to the Company's stockholders for ratification. A representative of
McGladrey & Pullen, L.L.P. is expected to attend the Annual Meeting and will be
afforded an opportunity to make a statement, if he so desires, and to respond to
appropriate questions from stockholders.
The Board of Directors recommends that the stockholders vote FOR this
---
proposal.
PROPOSALS FOR 1999 ANNUAL STOCKHOLDERS' MEETING
It is presently anticipated that the 1999 Annual Meeting of Stockholders
will be held in February of 1999. In order for shareholder proposals to be
included in the proxy materials for that meeting, such proposals must be
received by the Secretary of the Company at the Company's executive office not
later than September 4, 1999, and meet all other applicable requirements for
inclusion therein.
The Company's bylaws provide that, in order to be eligible for
consideration at the annual meeting of stockholders, all nominations of
directors, other than those made by the Company's Board of Directors, must be
made in writing and must be delivered to the Secretary of the Company not less
than 30 days nor more than 50 days prior to the meeting at which such
nominations will be made; provided, however, if less than 21 days notice of the
meeting is given to stockholders, such nominations must be delivered to the
Secretary of the Company not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed.
OTHER MATTERS
Management knows of no other matters to be presented for consideration at
the Annual Meeting or any adjournments thereof. If any other matters shall
properly come before the Annual Meeting, it is intended that the proxyholders
named in the enclosed form of proxy will vote the shares represented thereby in
accordance with their judgment, pursuant to the discretionary authority granted
therein.
19
MISCELLANEOUS
The Annual Report of the Company for the year ended September 30, 1997,
which includes financial statements audited and reported upon by the Company's
independent auditor, is being mailed along with this Proxy Statement; however,
it is not intended that the Annual Report be a part of this Proxy Statement or a
solicitation of proxies.
THE FORM 10-K FILED BY THE COMPANY WITH THE SEC, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, WILL BE PROVIDED FREE OF CHARGE TO THE
COMPANY'S STOCKHOLDERS UPON WRITTEN REQUEST DIRECTED TO: SOUTH STREET FINANCIAL
CORP., POST OFFICE BOX 489, 155 WEST SOUTH STREET, ALBEMARLE, NORTH CAROLINA
28001, ATTENTION: CARL M. HILL.
By Order of the Board of Directors,
/s/ R. Ronald Swanner
R. Ronald Swanner
Secretary
Albemarle, North Carolina
January 2, 1998
20
REVOCABLE PROXY
SOUTH STREET FINANCIAL CORP.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 9, 1998
7:00 p.m.
The undersigned herby appoints the official proxy committee of South Street
Financial Corp. (the "Company") comprised of Douglas D. Stokes Joel A. Huneycutt
and Greg E. Underwood, each with full power of substitution, to act as attorneys
ad proxies for the undersigned, and to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote only at the Annual Meeting of
Stockholders, to be held at the office of the Company, 155 West South Street,
Albemarle, North Carolina, on February 9, 1988, at 7:)0 p.m. and at any and all
adjournments thereof, as follows:
With- For All
For hold Except
1. The approval of the election of [_] [_] [_]
the following named directors:
Carl M. Hill, Caldwell A. Holbrook, Jr., Joel A. Huneycutt, Douglas Dwight
Stokes, R. Ronald Swanner and Greg E. Underwood who will serve as directors
of the Company until the 1999 Annual Meeting of Stockholders or until their
successors are duly elected and qualify.
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.
- --------------------------------------------------------------------------------
For Against Abstain
2. The ratification of McGladrey & [_] [_] [_]
Pullen, LLP as the independent audi-
tor of the Company for the year end-
ing September 30, 1998.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING: [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
If no instructions are given, the proxy will be voted FOR the nominees for
election to the Board of Directors named in this Revocable Proxy and for the
ratification of the selection of McGladrey & Pullen, LLP as the independent au-
ditor for the Company for the 1998 fiscal year. If instructions are given with
respect to one but not both proposals, such instructions as are given will be
followed and the proxy will be voted for the proposal on which no instructions
are given.
Please be sure to sign and date -----------------------------
this Proxy in the box below Date
- ----------------------------------------------------------------
- ---Stockholder sign above----Co-Holder (if any) sign above------
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
SOUTH STREET FINANCIAL CORP.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The above signed acknowledges receipt from the Company, prior to the
execution of this Proxy, of a Notice of Annual Meeting and a Proxy
Statement dated January 2, 1998.
Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder may sign, but
only one signature is required.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
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