SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
Stone Street Bancorp, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
Stone Street Bancorp, Inc.
232 South Main Street
Mocksville, North Carolina 27028
(336) 751-5936
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 20, 1999
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
Stockholders of Stone Street Bancorp, Inc. (the "Company") will be held on April
20, 1999 at 5:00 p.m., Eastern Time, at Davie County Public Library, 371 North
Main Street, Mocksville, NC 27028
The Meeting is for the purpose of considering and voting upon the
following matters:
1. To elect three persons who will serve as directors of the
Company until the 2002 Annual Meeting of Stockholders or until
their successors are duly elected and qualify;
2. To ratify the selection of Weir Smith Jones Miller & Elliott,
CPA PA as the independent auditor for the Bank for the fiscal
year ending December 31, 1999;
3. To transact such other business as may properly come before
the Meeting or any adjournments thereof. The Board of
Directors is not aware of any other business to be considered
at the Meeting.
The Board of Directors has established February 25, 1999 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and at 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 Meeting, the Meeting may be adjourned in order to permit further
solicitation of proxies by the Company.
By Order of the Board of Directors
/s/Sandra M. Hadley
Sandra M. Hadley
Secretary
Mocksville, North Carolina
March 15, 1999
A form of proxy is enclosed to enable you to vote your shares at the 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.
<PAGE>
Stone Street Bancorp, Inc.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 20, 1999
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Stone Street
Bancorp, Inc. (the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors") of proxies to be used at
an annual meeting of stockholders (the "Meeting") to be held on April 20, 1999
at 5:00 p.m., Eastern Time, at Davie County Public Library, 371 North Main
Street, Mocksville, North Carolina 27028, and at any adjournments thereof. This
Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on March 15, 1999. The Company's office is located at 232 South
Main Street, Mocksville, North Carolina 27028, and its telephone number is (336)
751-5936.
Other than the matters listed on the attached Notice of 1999 Annual
Meeting of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholders discretionary authority to vote the
shares represented thereby in accordance with their best judgment on such other
business, if any, that may properly come before the 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 meeting and voting in person. However, if you are a stockholder
whose shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the meeting.
Solicitation
The Company will pay the cost of preparing and mailing this Proxy
Statement and other proxy solicitation expenses, if any. Proxies may be
solicited personally or by telephone by directors, officers, and regular
employees of the Company and its wholly-owned savings bank subsidiary, Stone
Street Bank & Trust (the "Bank"), without additional compensation therefor. The
Company has requested 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, upon request, for their reasonable out-of-pocket
expenses in doing so.
<PAGE>
Voting Securities and Vote Required for Approval
Regardless of the number of shares of the Company's common stock (the
"Common Stock") owned, it is important that stockholders be represented by proxy
or be present in person at the Meeting. Stockholders are requested to vote by
completing the enclosed form of proxy and returning it signed and dated in the
enclosed postage-paid envelope. Any stockholder may vote for, against, or
withhold authority to vote with respect to any matter to come before the
Meeting. If the enclosed proxy is properly completed, 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 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.
2
<PAGE>
The close of business on February 25, 1999, has been fixed by the Board
of Directors as the record date ("Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Meeting and any
adjournments thereof. The total number of shares of Common Stock outstanding on
the Record Date was 1,638,452. Each share of Common Stock entitles its owner to
one vote on each matter calling for a vote of stockholders at the Meeting.
The presence, in person or by proxy, of the holders of at least the
majority of the total number of shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting. Since many of our
stockholders cannot attend the 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 stockholders
present, in person or by proxy, to constitute a quorum or to approve any
proposal at the time of the Meeting, the Meeting may be adjourned in order to
permit the further solicitation of proxies.
In the election of directors, a nominee need only receive a plurality
of the votes cast in the election of directors in order to be elected. As a
result, those persons nominated who receive the largest number of votes in each
class will be elected as directors. Accordingly, shares not voted for any reason
respecting any one or more nominees, including abstentions, 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 proposal to ratify the appointment of the Company's independent
auditor for the fiscal year ending December 31, 1999, will be approved if the
votes cast in favor of the proposal exceed the votes cast opposing the proposal.
Shares not voted for any reason respecting the appointment of Weir Smith Jones
Miller & Elliott, CPA PA will not be counted as a vote against such appointment.
Abstentions will be counted for purposes of determining whether a
quorum is present at the Meeting. Broker non-votes will not be counted either
for determining the existence of a quorum or for tabulating votes cast on any
proposal.
Proxies solicited hereby will be returned to the Board of Directors,
and will be tabulated by one or more inspectors of election designated by the
Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person who acquires the beneficial ownership of more than five
percent of the Common Stock of the Company 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 are known to the Company to own beneficially more than five percent of
the Company's Common Stock.
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<PAGE>
<TABLE>
<CAPTION>
Amount Percentage
Nature of of
Name and Address Beneficial Ownership(1) Class(2)
- - ---------------- ----------------------- --------
<S> <C> <C>
Robert B. Hall 174,085(3) 10.01%
Chairman of Board of Directors of the Bank and Company
Post Office Box 812
Mocksville, NC 27028
Ronald H. Vogler 170,685(3) 9.81%
Director of the Bank and Company
150 Stratford Road
Suite 150
Winston Salem, NC 27104
George W. Martin 171,884() 9.88%
Director of the Bank and Company
10 Court Square
Mocksville, NC 27028
</TABLE>
- - -------------------------------
(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 1,638,452 shares of Common Stock outstanding at
the Record Date and the shares outstanding if each director exercised
his options to purchase shares of Common Stock (to the extent vested).
(3) Messrs. Hall, Vogler and Martin serve as trustees of the ESOP which
holds 146,004 shares of the Company's Common Stock of which 105,975 are
unallocated and 40,029 are allocated at December 31, 1998. The trustees
of such plan share certain voting and investment power of such shares.
The number above includes 6,843 shares subject to options which have
vested or are exercisable within 60 days under the Stone Street
Bancorp, Inc. Stock Option Plan. Includes also 2,738 shares of
restricted stock under the Stone Street Bank & Trust Management
Recognition Plan on May 9, 1997.
Set forth below is certain information as of the Record Date regarding
the beneficial ownership of the Common Stock by each of the members of the Board
of Directors (including nominees for re-election at the 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 executive officers
of the Company and the Bank as a group.
-4-
<PAGE>
<TABLE>
<CAPTION>
Amount and Percentage
Nature of of
Name and Address Beneficial Ownership Class
- - ---------------- -------------------- -----
<S> <C> <C>
Robert B. Hall 174,085(3,4) 10.01%
Chairman of Board of Directors of the Bank and Company
Post Office Box 816
Mocksville, NC 27028
William F. Junker 27,881(4) 1.60%
Vice Chairman of Board of Directors of the Bank and Company
Post Office Box 342
Mocksville, NC 27028
Donald G. Bowles 15,581(4) .90%
Director of the Bank and Company
Post Office Box 645
Mocksville, NC 27028
J. Roy Harris 26,787(4,9) 1.54%
Director of the Bank and Company
673 Salisbury Road
Mocksville, NC 27028
Claude R. Horn, Jr. 27,881(4) 1.60%
Director of the Bank and Company
190 North Main Street
Mocksville, NC 27028
George W. Martin 171,884(3,4) 9.88%
Director of the Bank and Company
10 Court Square
Mocksville, NC 27028
Ronald H. Vogler 170,685(3,4) 9.81%
Director of Bank and Company
150 Stratford Road
Suite 150
Winston Salem, NC 27104
Terry L. Bralley 275 .02%
Director of Bank and Company
Post Office Box 621
Mocksville, NC 27028
J. Charles Dunn 64,163(5) 3.69%
Director of Bank and Company and
President of Bank and Company
P O Box 531
Mocksville, NC 27028
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Amount and Percentage
Nature of of
Name and Address Beneficial Ownership(1) Class(2)
- - ---------------- ----------------------- --------
<S> <C> <C>
Allen W. Carter 31,159(6) 1.79%
Senior Vice President of the
Bank and Company
287 Rollingwood Drive
Mocksville, NC 27028
Marjorie D. Foster 22,048(7) 1.27%
Vice President and Controller
of the Bank and Company
500 Daniel Road
Mocksville, NC 27028
Directors and all executive officers as a group 440,421(8) 25.32%
</TABLE>
1 Unless otherwise noted, all shares are owned directly or indirectly by
the named individuals, their spouses and minor children, or other
entities controlled by the named individuals.
2 Based upon a total of 1,638,452 shares of Common Stock outstanding at
the Record Date and the shares that would be outstanding if the
director or officer exercised his or her options to purchase shares of
common stock of the Corporation (to the extent vested).
3 Messrs. Hall, Vogler and Martin serve as trustees of the ESOP which
holds 146,004 shares of the Company's Common Stock. The trustees of
such plan share certain voting and investment power of such shares.
4 Includes 2,738 shares of restricted stock awarded under the Stone
Street Bank & Trust Management Recognition Plan and 6,843 shares
subject to options which have vested or are exercisable within sixty
days under the Stone Street Bancorp, Inc. Stock Option Plan.
5 Includes 18,250 shares underlying options that have vested or are
exercisable within 60 days under the Stone Street Bancorp, Inc. Stock
Option Plan. Includes 18,249 shares of restricted stock awarded under
the Stone Street Bank & Trust Management Recognition Plan on May 9,
1997. The number stated also includes 9,264 shares allocated under the
Stone Street Bank & Trust Employee Stock Ownership Plan.
6 Includes 10,950 shares underlying options that have vested or are
exercisable within 60 days under the Stone Street Bancorp, Inc. Stock
Option Plan. Includes 10,949 of restricted stock awarded under the
Stone Street Bank & Trust Management Recognition Plan on May 9, 1997.
The number stated also includes 6,557 shares allocated under the Stone
Street Bank & Trust Employee Stock Ownership Plan.
<PAGE>
7 Includes 7,300 shares underlying options that have vested or are
exercisable within 60 days under the Stone Street Bancorp, Inc. Stock
Option Plan. Includes 7,300 of restricted stock awarded under the Stone
Street Bank & Trust Management Recognition Plan on May 9, 1997. The
number stated also includes 4,764 shares allocated under the Stone
Street Bank & Trust Employee Stock Ownership Plan.
8 The 146,004 shares held by the ESOP for which the trustees, Messers.
Hall, Vogler and Martin, 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. Includes 101,224
shares underlying options that have vested or are exercisable within 60
days under the Stock Option Plan.
9 Mr. Harris deceased on November 25, 1998. He was previously a trustee
of the ESOP Plan and was replaced by Mr. Vogler.
-6-
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT OF 1934
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 December 31,
1998, all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
-7-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Bank provide that the number of
directors of the Bank shall not be less than five or more than fifteen, with the
exact number to 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 nine
members.
So long as the total number of directors is nine or more, the directors
will be divided into three classes, as nearly equal in number as possible. Each
director in a class is to be elected for a term of three years or until his or
her earlier death, resignation, retirement, removal or disqualification or until
his or her successors shall be elected and shall qualify.
The Board of Directors has nominated the three persons named below for
election as directors to serve for the term specified or until their earlier
death, resignation, retirement, removal or disqualification or until their
successors shall be elected and shall qualify.
The persons named in the accompanying form of proxy intend to vote any
shares of Common Stock represented by valid proxies received by them to elect
the three nominees listed below as directors for the terms specified, 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. 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. As a result, the three nominees 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 Board of Directors recommends a vote FOR all of the following
nominees for election as directors.
The following table sets forth as to each nominee for the term ending
as of the 2002 Annual Meeting of Stockholders, his or her name, age, principal
occupation during the last five years and the year he or she was first elected
as a director.
<TABLE>
<CAPTION>
Director
of the
Age on Principal Occupation During Company
Name December 31, 1998 Last Five Years Since
- - ---- ----------------- ----------------------------- ----------
<S> <C> <C> <C>
Robert B. Hall, Chairman 72 Retired Pharmacist 1969
Donald G. Bowles 42 Certified Public Accountant 1988
Ronald H. Vogler 52 Financial Consultant with 1988
Paine Webber since 1993,
formerly with Merrill Lynch
</TABLE>
-8-
<PAGE>
Board of Directors of the Bank
The Bank currently has a nine-member board of directors which is
composed of the same persons who are now directors of the Company.
Board Meetings and Committees
The Company's Board of Directors met thirteen times in the fiscal year
ended December 31, 1998. The Bank's board of directors has regular meetings once
each month, and held twelve regular meetings and one special meeting in the
fiscal year ended December 31, 1998. The Company's Board of Directors has also
established one standing committee--an Audit Committee. No director attended
fewer than 75% of the total number of Company or Bank board meetings, and
committee meetings of the Company's Board of Directors on which he served,
during the year ended December 31, 1998.
The Company's Audit Committee is composed of directors Bowles, Horn and
Bralley. This committee is responsible for retaining internal and independent
auditors, overseeing the adequacy of internal control, insuring compliance with
the Company's policies and procedures and with generally accepted accounting
principles. During the fiscal year ended December 31, 1998, the Audit Committee
met one time.
In addition, the full Board of Directors acts as a nominating committee
each year prior to the annual meeting of stockholders to nominate persons for
election to the Board of Directors. 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 no later than the close of business on
the seventh day following the day on which the notice of meeting was mailed.
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 Personnel Committee, the Executive Committee and the
Branching Committee. The Board of Directors and the Bank's board of directors
appoint other committees of its members to perform certain more limited
functions from time to time and have appointed committees to administer the
various employee and director benefit plans which have been established by the
Company and the Bank.
Director Compensation
Board Fees. Members of the Board of Directors receive no fees or
compensation for serving on the Board of Directors of the Company. However, all
members of the Company's Board of Directors are also directors of the Bank.
During fiscal year 1998, each member of the Bank's board of directors received
directors' fees of $1,000 per month for the regular meetings and $500 for the
special meeting, and an additional fee of $75 for each committee meeting
attended.
<PAGE>
Retirement Payment Agreements with Directors. The Bank has entered into
a retirement Payment Agreement with all of its directors. Under the agreement,
the Bank agrees to pay each director $1,000 per month for a period of 10 years
upon the director's attainment of age 65. If a director dies while serving as a
director of the Bank but before receiving all of his or her benefits under the
agreement, payments will be made to his or her designated beneficiary. If 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 agreement, either
in installments over the ten year period or in a lump sum payment. If a director
terminates his or her service to the Bank for reasons other than death or
disability, he or she shall be entitled at the normal retirement date to receive
only the vested portion of the benefits 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. The Bank has purchased life insurance
-9-
<PAGE>
on the lives of its directors to fund its obligation under this agreement. Total
expense related to the agreements was approximately $78,208 in the fiscal year
ended December 31, 1998.
Stock Option Plan. See "Management Compensation--Stock Option Plan" for
a discussion of the stock options granted to members of the Board of Directors
under the Stone Street Bancorp, Inc.. Stock Option Plan (the 'Stock Option
Plan").
Management Recognition Plan. See "Management Compensation--Management
Recognition Plan" for a discussion of the restricted stock awards made to
members of the Board of Directors under the Stone Street Bank & Trust Management
Recognition Plan (the "Management Recognition Plan " or "MRP").
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..
<TABLE>
<CAPTION>
Age on Employed By
December 31, Positions and Occupations the Bank or the
Name 1998 During Last Five Years Company Since
- - ---- -------------- -------------------------- -------------
<S> <C> <C> <C>
J. Charles Dunn 60 President and Chief Executive 1968
Officer of the Company and the
Bank
Allen W. Carter 42 Senior Vice President of the 1984
Company and the Bank
Marjorie D. Foster 35 Vice President and Controller of 1986
the Company and the Bank
</TABLE>
Management Compensation
Summary Compensation Table. The executive officers of the Company are
not paid any cash compensation by the Company. However, the executive officers
of the Company are also executive officers of the Bank and receive cash
compensation from the Bank. The following table shows, for the fiscal years
ended December 31, 1998, 1997 and 1996, the cash compensation paid by the Bank,
as well as certain other compensation paid or accrued for those years, to (i)
the Chief Executive Officer of the Bank and (ii) all other executive officers of
the Bank whose cash compensation exceeded $100,000 in fiscal 1998, for services
in all capacities.
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<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation Awards
-----------------------------------
Annual Compensation Securities Underlying
--------------------------------------------------- Restricted Options/Stock
Name and Other Annual Stock Appreciation Rights All Other
Principal Position Year Salary Bonus Compensation(3) Awards ("SARs") (in shares) Compensation(1)
- - ------------------ ---- ----------- --------- ------------ ------------ -------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chief Executive Officer:
J. Charles Dunn 1998 $ 103,200 $ 93,506(2) $ 29,383(4) $ 280,619(5) 45,626/45,626(6) $ 60,675
1997 $ 99,182 93,506(2) $ 20,327(4) $ 374,125(5) 45,626/45,626(6) 158,575
1996 $ 95,800 $ 0 $ 0 $ 0 0/0 $ 84,506
Senior Vice President:
Allen W. Carter 1998 $ 60,100 $ 56,093(7) $ 17,630(4) $ 168,382(8) 27,376/27,376(6) 16,573
1997 $ 59,500 $ 56,093(7) $ 12,195(4) $ 224,475(8) 27,376/27,376(6) 97,973
1996 $ 56,724 $ 0 $ 0 $ 0 0/0 $ 20,067
</TABLE>
- - ---------------
(1) Includes during 1998 ,1997 and 1996, respectively, (a) directors' fees
of $14,000, $12,900 and $14,625, (b) $0, $0 and $471 contributed to the
Bank's 401(k) profit sharing plan for Mr. Dunn, (c) $25,100, $23,665
and $26,280 paid to Mr. Dunn under the Bank's supplemental retirement
plan, and (d) $21,575, $125,268 and $43,130 contributed to the Bank's
ESOP for Mr. Dunn in 1998, 1997 and 1996, respectively. A total of
9,264 shares of common stock with a market value of $132,012 or $ 14.25
per share as of December 31, 1998 were allocated to Mr. Dunn under the
ESOP through 1998. Includes $16,573, $97,973 and $20,067 contributed to
the Bank's ESOP for Mr. Carter in 1998, 1997 and 1996, respectively. A
total of 6,557 shares of common stock with a market value of $93,437 or
$14.25 per share as of December 31, 1998 were allocated to Mr. Carter
through 1998.
(2) The amount represents a stock award made to Mr. Dunn pursuant to the
Bank's Management Recognition Plan of 18,249 shares of Common Stock of
which 3,649 shares vested in 1998 and 3,649 shares vested in 1997. Such
shares had an aggregate fair market value of $187,012 on the date of
grant. See footnote 5 below for more information on the stock grant
awards made to Mr. Dunn and "Management Recognition Plan" for more
information about the terms of the MRP.
(3) Perquisites on other personal benefits, securities, or property for the
years ended December 31, 1998, 1997 and 1996, did not exceed the lesser
of $50,000 or 10% of total salary and bonus.
(4) Represents cash dividends paid to the executive officer pursuant to the
Bank's Management Recognition Plan and Stock Option Plan.
(5) This amount represents the fair market value on the date of grant of
$280,619 and $374,125 unvested shares awarded to Mr. Dunn pursuant to
the Bank's Management Recognition Plan for 1998 and 1997, respectively.
On May 9, 1997 Mr. Dunn was awarded 18,249 shares of Common Stock which
<PAGE>
had a market value of $25.625 per share on the date of grant (May 9,
1997) and $14.25 and $22.18 per share as of December 31, 1998 and 1997,
or a total value of $260,048 or $404,763 on December 31, 1998 and 1997.
These shares will vest 20% on May 9, 1997 and 20% each year thereafter
until all such shares are vested on May 9, 2001. Twenty percent of the
shares vested immediately (the values of the vested shares $187,012 at
December 31, 1998 and $93,506 at December 31, 1997) is included under
the "Bonus" category herein. Mr. Dunn has all rights of ownership with
respect to such shares, including the right to receive dividends.
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<PAGE>
(6) These options and stock appreciation rights (SARs) granted pursuant to
the Company's Stock Option Plan, entitle the executive officer to
purchase, at any time after vesting and before May 9, 2007, shares of
the Common Stock in exchange for an exercise price of $21.75 per share,
which represents the fair market value of the shares on the date of
grant of $25.625 adjusted to reflect the $4.00 special return of
capital dividend paid to stockholders during 1997. These shares began
vesting at 20% on May 9, 1997 and will continue to vest at 20% each
year thereafter until all such options are vested on May 9, 2001.
Options become 100% vested upon death or disability.
(7) The amount represents a stock award made to Mr. Carter pursuant to the
Bank's Management Recognition Plan of 10,949 shares of common stock of
which shares of 2,189 vested in 1998 and 2,189 shares vested in 1997.
Such shares had an aggregate fair market value of $112,186 on the date
of grant. See footnote 8 below for more information on the stock grant
awards made to Mr. Carter and "Management Recognition Plan" for more
information about terms of the MRP.
(8) This amount represents the fair market value on the date of grant of
6,571 and 8,760 unvested shares awarded to Mr. Carter pursuant to the
Bank's Management Recognition Plan for the years 1998 and 1997. On May
9, 1997 Mr. Carter was awarded 10,949 shares of Common Stock which had
a market value of $25.625 per share on the date of grant (May 9, 1997)
and $14.25 and 22.18 per share as of December 31, 1998 and 1997, or a
total value of $156,023 and $242,849 on December 31, 1998 and 1997.
These shares vested at 20% on May 9, 1997 and will vest 20% each year
thereafter until all such shares are vested on May 9, 2001. Twenty
percent of the shares vested each year (the values of the vested shares
at December 31, 1998 and 1997 was $112,186 and $56,093, respectively)
is included under the "Bonus" category herein. Mr. Carter has all
rights of ownership with respect to such shares, including the right to
receive dividends.
-12-
<PAGE>
Bonus Compensation. For many years, the Bank has paid bonuses to its
employees in amounts determined in the discretion of the Board of Directors. The
Bank anticipates that discretionary bonuses will continue to be paid to its
employees in the future.
Bank Supplemental Income Agreement. The Bank entered into a
Supplemental Income Agreement with Charles Dunn on March 1, 1994. The agreement
provides that the Bank will pay Mr. Dunn $20,000 per year for a continuous
period of 15 years, commencing on the first day of the month following Mr.
Dunn's 65th birthday or if earlier, the first day of the month following Mr.
Dunn's retirement should he retire after reaching his 65th birthday. Such
initial annual income shall be increased 5% annually for each additional full
year of service to the Bank after the execution of the agreement, except there
will be no increase in benefits after age 65. If Mr. Dunn dies 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 Mr. Dunn
becomes disabled prior to his retirement form the Bank, the Bank will pay him
the benefits due under the agreement.
If Mr. Dunn terminates his employment before age 65, he will be
entitled to a portion of benefits due under the agreement according to a vesting
schedule. Mr. Dunn's benefits under the agreement will be fully vested after
December 31, 1998 or after a change in control of the Bank. As a condition of
the agreement, Mr. Dunn must be able to provide consulting services to the Bank
during the period the retirement payments are payable and must not engage in
activities in Davie County, North Carolina in competition with the Bank. The
Bank has purchased life insurance on the life of Mr. Dunn to fund its
obligations under the agreement.
Supplemental Retirement Plan. In 1990, the Bank established a
supplemental retirement plan for Mr. Dunn, under which he is paid an annual
amount to be invested in tax-exempt municipal bonds for his retirement. The
amount of the annual contribution is calculated by subtracting the current value
of the investment from a target amount, as adjusted for inflation, and dividing
the result by the number of years remaining in the 12-year term of the plan.
This amount is then increased to reimburse Mr. Dunn for the additional federal
and state income taxes that result from the payment.
401(k) Profit Sharing Plan. The Bank has established a contributory
savings plan for its employees, which meets the requirements of section 401(k)
of the Code. All employees who have completed one year of service may elect to
contribute a percentage of their compensation to the plan each year, subject to
certain maximums imposed by federal law. The Bank does not currently provide any
matching of employee contributions.
Participants are fully vested in amounts they contribute to the plan.
Participants are fully vested in amounts contributed to the plan on their behalf
by the Bank as employer matching contributions and as profit sharing
contributions after seven years of service as follows: one year, 0%; two years,
20%; three years, 40%; four years, 60%; five years, 80%; six years or more,
100%.
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 plan is 65 years of age.
<PAGE>
Other Benefits. The Bank provides its employees with group medical,
cancer, dental, life and disability insurance benefits. Employees are also
provided with vacation, holiday and sick leave.
Employee Agreements. The Bank has entered into an employment agreement
with J. Charles Dunn in order to establish his duties and compensation and
provide for his continued employment with the Bank. The agreement provides 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, the agreement may be extended for an
additional year so that the remaining term shall be three years unless written
notice of non-renewal is given by
-13-
<PAGE>
the Board of Directors. The agreement also provides that base salary shall be
reviewed by the Board of Directors not less often than annually. Under the terms
of the agreement, Mr. Dunn's annual base salary was $103,200 for 1998 In the
event of a change in control (as defined below), the employees base salary shall
be increased by at least 6% annually. In addition, the employment agreement
provides for profitability and 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 The employment agreement provides that it
may be terminated by the Bank for cause, as defined in the agreement, and that
it may otherwise be terminated by the Bank (subject to vested rights) or by the
employee.
The employment agreement provides that the nature of Mr. Dunn's
compensation, duties or benefits cannot be diminished following a change in
control of the Bank or the Company. For purposes of the employment agreement, 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 or 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.
Severance Plan. In connection with the Conversion, the Bank adopted a
Severance Plan for the benefit of its employees. The Plan provides for severance
pay benefits in the event of a change in control which results in the
termination of such employees or diminished compensation, duties, or benefits
within two years of a change in control. The employees covered would be entitled
to a severance benefit of the greater of (a) the amount equal to two weeks'
salary at the existing salary rate multiplied by the employee's number of
completed years of service or (b) the amount of one month's salary at the
employee's salary rate at the time of termination, subject to a maximum payment
equal to two times the employee's annual salary.
Special Termination Agreements. In order to assure the continued
employment of Allen W. Carter and Marjorie D. Foster, the Bank entered into
special termination agreements with each of them to provide benefits in the
event of a change in control of the Bank or the Company. Such agreements are
intended to ensure that the Bank will be able to maintain a stable and competent
employee base. The continued success of the Bank depends, to a significant
degree, on the skill and competence of its employees.
Each special termination agreement provides for payment to the employee
only (i) in the event of a change in control of the Company or the Bank followed
by termination of the employee's employment within 24 months by the Bank for
other than "cause," as such term is defined in the agreement or (ii) in the
event the nature of the employee's compensation, duties or benefits are
diminished within 24 months following a change in control of the Bank or the
Company and the employee terminates his employment within twelve months
thereafter. In the event of such a termination of employment, the employee is
<PAGE>
entitled to payment in an amount equal to two times his or her average annual
compensation for income tax purposes for the most recent five tax years prior to
the change in control, payable in a lump sum or in equal monthly payments. Based
on Mr. Carter's and Ms. Foster's annual compensation for income tax purposes for
the most recent five tax years, Mr. Carter and Ms. Foster would be paid $
167,390 and $124,632, respectively, under the agreements in the event of their
termination after a change in control. The initial term of each agreement is for
a period commencing March 29,1996, and ending three calendar years later. For
purposes of the special termination agreement, "change in control" has the same
meaning as contained in the employment agreement with Mr. Dunn. See
"--Employment Agreement".
Employee Stock Ownership Plan. The Bank has established an Employee
Stock Ownership Plan (the "ESOP") for its eligible employees. Employees with one
year of service with the Bank are eligible to participate. The
-14-
<PAGE>
ESOP borrowed funds from the Company and used the funds to purchase 8% 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"), or 146,004 shares.
Collateral for the Company's loan to the ESOP is the Common Stock
purchased by the ESOP. It is expected that the loan will be repaid within
fifteen years principally from the Bank's discretionary contributions to the
ESOP. Dividends, if any, paid on shares held by the ESOP may be and have been
used to reduce the loan. Dividends of $67,162 were used to pay down the loan in
the fiscal year ended December 31, 1998. The loan is not guaranteed by the Bank.
Shares purchased by the ESOP and pledged as security for the loan 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 will vest in full upon five years of service with credit
given for years of service prior to the conversion of the Bank from mutual to
stock form of ownership. Benefits immediately vest upon death or disability.
The Bank's contributions to the ESOP are not fixed, so benefits payable
under the ESOP cannot be estimated. Principal and interest payments totaling
$257,162 were made on the loan from the Company to the ESOP in the fiscal year
ended December 31, 1998. During the same period, 9,207 shares, with a market
value of $ 131,200 ($ 14.25 per share) at December 31, 1998, were allocated to
participants in the ESOP during the same period.
The Bank has established a committee of the Board of Directors to
administer the ESOP. The Trustees for the ESOP are Messers Hall, Vogler and
Martin. The ESOP committee may instruct the trustees regarding investment of
funds contributed to the ESOP. Participating employees shall instruct the
trustees as to the voting of all shares allocated to their respective accounts
and held in the ESOP. 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. The Stock Option Plan is administered by a committee
of the Company's Board of Directors (the "Stock Option Plan Committee"). The
Company has reserved 182,050 shares of 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
Stock Option Plan committee, in its sole discretion, determines who will
participate in the Stock Option Plan. Options to purchase 172,244 shares of the
Common Stock were granted during fiscal year 1997 of which 1,287 shares were
forfeited in 1998 leaving 170,957 option shares granted as of December 31, 1998.
No options were granted during fiscal 1998.
Options granted under the Plan were granted in tandem with stock
appreciation rights, pursuant to which optionees 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 surrender options. At the
<PAGE>
discretion of the Stock Option Plan Committee, this payment may be made in cash
or in shares of Common Stock or partly in cash and partly in Common Stock. Stock
appreciation rights terminate upon the exercise of the options to which they are
attached. Stock appreciation rights are subject to the same vesting and
termination provisions as are applicable to the stock options to which they are
attached.
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.
-15-
<PAGE>
The following table provides certain information with respect to the
outstanding stock options to Mr. Dunn and Mr. Carter. No stock options were
granted during the year ended December 31, 1998.
No options were exercised by Mr. Dunn or Mr. Carter during the fiscal
year ended December 31, 1998
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercisable in-the-Money
Options/SARS at Options/SARS at
Shares Acquired Value Fiscal Year End(1) Fiscal Year End(2)
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Charles Dunn 0 0 18,250/18,250 27,376/27,376 $ 0 $ 0
Allen W. Carter 0 0 10,950/10,950 16,426/16,426 $ 0 $ 0
</TABLE>
- - ------------------------
1 All stock options were granted as of May 9, 1997. Twenty percent of
stock options vested in the year ended December 31, 1998 and 1997.
2 Dollar amounts shown represent the value of stock options held by Mr.
Dunn or Mr. Carter as of December 31, 1998. None of Mr. Dunn's or Mr.
Carter's options were "in-the-money" at such date. An option is
considered to be "in-the-money" if the fair market value of the
Company's Common Stock exceeds the exercise or base price of the shares
subject to the options as of the fiscal year end (in this case December
31, 1998). At December 31, 1998, the exercise price of the stock
options was $21.75. On December 31, 1998, the closing market price per
share for the Common Stock as reported on the American Stock Exchange
was $14.25.
Although both incentive and non-qualified options have been granted
under the Stock Option Plan, all of the stock options granted to employees are
intended to be incentive stock options. In the case of an incentive stock
option, an optionee is not deemed to have received taxable income upon the grant
or exercise of the stock option, provided the shares are not disposed of by the
optionee for at least one year after the date of exercise and two years after
the date of grant. No compensation deduction may be taken by the Company at the
time of the grant or exercise of an incentive option, assuming these holding
periods are satisfied. In the case of a non-qualified stock option, an optionee
is deemed to receive ordinary income upon exercise of the stock option in an
amount equal to the amount by which the exercise price is exceeded by the fair
market value of the stock. The amount of any ordinary income deemed to be
received by the optionee upon the exercise of a non-qualified stock option is a
deductible expense of the Company for tax purposes.
<PAGE>
No cash consideration was paid for the options. Options have an option
exercise price of $21.75, the fair market value of the Common Stock on the date
of grant (May 9, 1997). The exercise price may be paid in cash or by delivery of
shares of Common Stock with a market value equal to the exercise price. Based
upon the closing market price per share paid on February 25, 1999, the per share
market value of the Common Stock underlying the options would be $14.75. Options
granted under the Stock Option Plan have a term of ten years, are not
transferable except upon death and continue to be exercisable upon retirement.
-16-
<PAGE>
The Stock Option Plan places certain limitations on termination and
amendment of the Stock Option Plan. It provides that the Stock Option Plan
cannot be terminated upon an acquisition or merger of the Company or the Bank
unless the acquiror provides for an equivalent benefit for all then current
option holders. It provides that the Stock Option Plan may be amended by the
Board of Directors of the Company at any time. It states, however, that
stockholder approval of certain amendments may be necessary in order for the
Stock Option Plan to satisfy the requirements of SEC Rule 16b-3. It provides
that certain Stock Option Plan provisions, including the number of options to be
initially granted, may not be amended more than once every six months, except
under very limited circumstances.
Options granted under the Stock Option Plan have a vesting schedule
which provides that 20% of the options granted vest on the first anniversary of
the date of grant, and 20% will vest on each subsequent anniversary date, so
that the options would be completely vested on the fifth anniversary of the date
of grant. Options become 100% vested upon death or disability, if earlier.
Management Recognition Plan. On April 15, 1997, the stockholders of the
Company approved the Stone Street Bancorp, Inc. Management Recognition Plan.
Effective May 9, 1997, restricted stock awards of 68,896 shares of the Common
Stock were made to 23 directors, officers and employees of the Bank.
The MRP serves as a means of providing the directors, officers, and
employees with an ownership interest in the Company in a manner designed to
encourage such persons to continue their service to the Company and the Bank and
to provide performance incentives. The MRP is administered by a committee of the
Bank's Board of directors (the "MRP Committee"). All directors, officers, and
employees of the Company and the Bank and its wholly owned subsidiary are
eligible for participation in the MRP. Except with regard to the initial awards
made on May 9, 1997, the MRP Committee, in its sole discretion, will determine
who will participate in the MRP. Initially, 68,896 of the shares authorized
under the MRP were allocated pursuant to the Plan leaving 4,106 shares
unallocated at December 31, 1997. Once the remaining 4,106 shares are allocated,
only forfeited shares are subject to allocation later, unless the plan is
amended. During the year ended December 31, 1998 forfeited shares totaled 94
shares leaving 4,200 as unallocated at December 31, 1998.
The shares awarded under the MRP were issued from authorized but
unissued shares of Common Stock. Shares issued under the MRP are issued at no
cost to recipients.
Recipients are entitled to vote MRP shares and receive all dividends
and cash distributions with respect thereto. The shares granted pursuant to the
MRP vest at a rate of 20% on the first anniversary of the effective date of the
award, and 20% on each subsequent anniversary date, so that the shares would be
completely vested at the end of five years after the date of award and in
addition; would immediately vest upon the end of five years after the date of
award. Awards of Common stock under the MRP would immediately vest upon the
disability or death of a recipient. The MRP cannot be terminated upon an
acquisition or merger of the Company or the Bank unless the acquiror provides
for an equivalent benefit for all then current MRP participants. The awards are
not forfeitable upon vesting.
<PAGE>
The MRP may be amended by the Board of Directors at any time. However,
stockholder approval of certain amendments may be necessary in order for the MRP
to satisfy the requirements of Rule 16b-3 promulgated under the Exchange Act.
Certain MRP provisions, including the number of shares of Common Stock to be
awarded initially, may not be amended more than once every six months, except
under very limited circumstances.
Compensation Committee Interlocks and Insider Participation. The
Personnel Committee of the Bank's board of directors serves the role of the
compensation committee. The Personnel committee determines the compensation of
the executive officers and the Bank's other employees. During the fiscal year
ended December 31, 1998, the Personnel Committee consisted of directors Dunn,
Hall, Harris and Martin.
-17-
<PAGE>
Report of Compensation Committee of Executive Compensation. It is the
responsibility of the Bank's Personnel Committee which is comprised of Robert B.
Hall, J. Roy Harris, George W. Martin and J. Charles Dunn to review and evaluate
performance of the Bank's executive officers. The salary of each executive
officer, including Mr. Dunn, the Chief Executive Officer, is 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 based on profit--as are all other employees--declared by
the Bank's board of directors based upon after-tax net income of the Bank. Mr.
Dunn does not participate in any deliberations of the Personnel Committee
concerning his compensation as an executive officer.
Performance Graph
The following graph compares the Company's cumulative shareholder
return on the Common Stock with a AMEX (U.S. companies) index and with a savings
institution peer group whose stock is quoted on AMEX. The graph was prepared
using data through December 31, 1998.
<TABLE>
<CAPTION>
Legend
CRSP Total Returns Index for: 12/1993 12/1994 12/1995 12/1996 12/1997 12/1998
- - ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Stone Street Bancorp, Inc. 119.3 154.9 102.2
AMEX Stock Market (US Companies) 81.0 75.6 97.2 98.8 123.5 131.9
AMEX Stocks (SIC 6030-6039 US Companies) 69.4 53.5 89.6 105.9 179.3 125.9
Savings Institutions
</TABLE>
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 is used.
D. The index level for all series was set to $100.0 on 04/01/1996.
-18-
<PAGE>
Certain Indebtedness and Transactions of Management
The Bank makes loans to executive officers and directors of the Bank in
the ordinary course of its business. These loans are made on the same terms,
including interest rates and collateral, 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 executive officers and
directors of the Bank on 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 complies with such regulations.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Weir Smith Jones Miller & Elliott, CPA PA was the Company's independent
auditor for the year ended December 31, 1998 and has been selected as the
Company's independent auditor for the year ending December 31, 1999. Such
selection is being submitted to the Company's stockholders for ratification.
Representatives of Weir Smith Jones Miller & Elliott, CPA PA are expected to
attend the Meeting and will be afforded an opportunity to make a statement, if
they so desire, and to respond to appropriate questions form stockholders.
The Board of Directors recommends that the stockholders vote FOR
ratification of the selection of Weir Smith Jones Miller & Elliott, CPA PA as
independent auditor for the Company for the 1999 fiscal year.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 2000 Annual Meeting of Stockholders
of the Company will be held on April 18, 2000. In order for stockholder
proposals to be included in the Company's proxy materials for that meeting, such
proposals must be received by the Secretary of the Company at the Company's
principal executive office no later than November 15, 1999, and meet all other
applicable requirements for inclusion in the proxy statement.
In the alternative, a stockholder may commence his own proxy solicitation
and present a proposal from the floor at the 2000 Annual Meeting of Stockholders
of the Company. In order to do so, the stockholder must notify the Secretary of
the Company in writing, at the Company's principal executive office no later
than January 28, 2000, of his proposal. If the stockholder wants to stop the
Bank from voting proxies (under the discretionary authority granted by the form
of proxy to be solicited by the Company for use at the 2000 Annual Meeting) on
his proposal, the notice must also state the stockholder's intent to solicit the
required number of votes for passage of his proposal and the stockholder must
provide evidence to the Company that the solicitation has occurred.
OTHER MATTERS
Management knows of no other matters to be presented for consideration at
the Meeting or any adjournments thereof. If any other matters shall properly
come before the 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.
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended December 31, 1998,
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 deemed a part of this Proxy
Statement or a solicitation of proxies.
-20-
<PAGE>
THE FORM 10-K FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE UPON WRITTEN REQUEST DIRECTED TO: STONE STREET BANCORP,
INC., 232 SOUTH MAIN STREET, MOCKSVILLE, NC 27028, ATTENTION: J. CHARLES DUNN.
By the Order of the Board of Directors
/s/Sandra M. Hadley
-------------------
Sandra M. Hadley
Secretary
Mocksville, North Carolina
March 15, 1999
-21-
<PAGE>
REVOCABLE PROXY
STONE STREET BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 1999
5:00 p.m.
The undersigned hereby appoints the official proxy committee consisting of the
Board of Directors of Stone Street Bancorp, Inc. (the "Company"), to act as
attorney and proxy 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 Davie County Public Library, 371
North Main Street, Mocksville, NC 27028, on April 20, 1999, at 5:00 p.m. and at
any and all adjournments thereof, as follows:
1. The approval of the election of the following named directors:
(a) Robert B. Hall, who will serve as a director of the Company until the 2002
Annual Meeting of Stockholders or until his successor is duly elected and
qualifies;
(b) Donald G. Bowles, who will serve as a director of the Company until the
2002 Annual Meeting of Stockholders or until his successor is duly elected
and qualifies; and
(c) Ronald H. Vogler, who will serve as a director of the Company until the
2002 Annual Meeting of Stockholders or until his successor is duly elected
and qualifies.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- - --------------------------------------------------------------------------------
2. The ratification of Weir Smith Jones Miller &Elliott, Certified Public
Accountants, as the independent auditors of the Company for the year ending
December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<PAGE>
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.
STONE STREET BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
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
other proposal described above. If instructions are given with respect to some
but not all proposals, such instructions as are given will be followed and the
Proxy will be voted for the proposals on which no instructions are given. If any
other business is presented at the Annual Meeting, this Proxy will be voted as
determined, in its discretion, by the Board of Directors of Stone Street
Bancorp, Inc. At the present time, the Board of Directors knows of no other
matters to be presented at the Annual Meeting.
The above signed acknowledges receipt from the Company, prior to the execution
of this Proxy, of a Notice of the Meeting and a Proxy Statement dated March 15,
1999.
Please sign exactly as your name appears on this proxy 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 ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
