[Green Street Financial Corp Letterhead]
December 15, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Green Street
Financial Corp, (the "Company"), I cordially invite you to attend the Annual
Meeting of Stockholders to be held at the offices of the Company, 241 Green
Street, Fayetteville, North Carolina, on January 28, 1998, at 5:15 p.m. The
attached Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the Annual Meeting. During the Annual Meeting, I
will also report on the operations of the Company. Directors and officers of the
Company, as well as a representative of McGladrey & Pullen, LLP, certified
public accountants, will be present to respond to any questions stockholders may
have.
The matters to be considered by stockholders at the Annual Meeting are
described in the accompanying Notice of Annual Meeting and Proxy Statement. The
Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting
in person at the Annual Meeting, but will assure that your vote is counted if
you are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ H.D. Reaves, Jr.
H.D. Reaves, Jr.
President
<PAGE>
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GREEN STREET FINANCIAL CORP
241 GREEN STREET
FAYETTEVILLE, NORTH CAROLINA 28301
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on January 28, 1998
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Green Street Financial Corp ("the Company"), will be held at the offices of
the Company, 241 Green Street, Fayetteville, North Carolina on January 28, 1998,
at 5:15 p.m.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of three directors of the Company;
2. The ratification of the appointment of McGladrey & Pullen, LLP, as
independent auditors of the Company for the fiscal year ending September
30, 1998;
3. The ratification of the amendment to the Green Street Financial Corp 1996
Stock Option Plan (the "1996 Stock Option Plan" or "Option Plan");
4. The ratification of the amendment to the Home Federal Savings and Loan
Association Restricted Stock Plan and Trust Agreement (the "Restricted
Stock Plan" or "RSP"); and
5. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business to come before the
Meeting. Any action may be taken on the foregoing proposals at the Meeting on
the date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on December 10, 1997, are the stockholders entitled to vote at the
Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE
THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED
IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER
TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Allen Lloyd
Allen Lloyd
Secretary
Fayetteville, North Carolina
December 15, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
GREEN STREET FINANCIAL CORP
241 GREEN STREET
FAYETTEVILLE, NORTH CAROLINA 28301
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ANNUAL MEETING OF STOCKHOLDERS
January 28, 1998
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Green Street Financial Corp (the "Company")
to be used at the Annual Meeting of Stockholders of the Company which will be
held at the offices of the Company, 241 Green Street, Fayetteville, North
Carolina, on January 28, 1998, 5:15 p.m. local time (the "Meeting"). The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about December 15, 1997.
At the Meeting, stockholders will consider and vote upon (i) the election
of three directors, (ii) the ratification of the appointment of McGladrey &
Pullen, LLP, as independent auditors of the Company for the fiscal year ending
September 30, 1998, (iii) the ratification of the amendment to the 1996 Stock
Option Plan, (iv) the ratification of the amendment to the Restricted Stock
Plan, and (v) such other matters as may properly come before the Meeting or any
adjournments thereof. The Board of Directors of the Company (the "Board" or the
"Board of Directors") knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers on the
designated proxy holder discretionary authority to vote the shares represented
by such proxy in accordance with their best judgment on such other business, if
any, that may properly come before the Meeting or any adjournment thereof.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given therein. Where no instructions are
indicated, signed proxies will be voted "FOR" the nominees for directors set
forth below and "FOR" the other listed proposals. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve, or
for good cause will not serve, and matters incident to the conduct of the
Meeting.
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Certain terms of the stock options and restricted stock awards previously
awarded to employees, officers, and directors of the Company will be amended
upon stockholder ratification of Proposals III and IV. For a complete
description of the stock plans and the proposed amendments, see "Proposal III
Ratification of the Amendment to the 1996 Stock Option Plan" and "Proposal IV -
Ratification of the Amendment to the Restricted Stock Plan." See "Voting
Securities and Principal Holders Thereof" for information regarding the number
of shares of Common Stock beneficially owned by executive officers and
directors.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on December 10, 1997
(the "Record Date"), are entitled to one vote for each share of common stock of
the Company (the "Common Stock") then held. As of the Record Date, the Company
had 4,298,125 shares of Common Stock issued and outstanding.
The articles of incorporation of the Company ("Articles of Incorporation")
provide that in no event shall any record owner of any outstanding Common Stock
which is beneficially owned, directly or indirectly, by a person who
beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the "Limit") be entitled or permitted to any vote with respect to the
shares held in excess of the Limit. Beneficial ownership is determined pursuant
to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of such trustee (solely by
reason of such capacity of such trustee), shall be deemed, for purposes of the
Articles of Incorporation, to beneficially own any Common Stock held under any
such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non-Votes") will be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors (Proposal I), the proxy being provided by
the Board enables a stockholder to vote for the election of the nominees
proposed by the Board, or to withhold authority to vote for the nominees being
proposed. Directors are elected by a plurality of votes of the shares present in
person or represented by proxy at a meeting and entitled to vote in the election
of directors.
As to the ratification of independent auditors as set forth in Proposal
II, the ratification of the amendment to the 1996 Stock Option Plan as set forth
in Proposal III and the ratification of the amendment to the Restricted Stock
Plan as set forth in Proposal IV, by checking the appropriate box, a stockholder
may: (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) vote to
"ABSTAIN"
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<PAGE>
on such item. Unless otherwise required by law, such Proposal II shall be
determined by a majority of the total votes cast affirmatively or negatively
without regard to (a) broker non-votes or (b) proxies for which the "ABSTAIN"
box is selected as to the matter. With respect to Proposals III and IV, such
votes shall be determined by a majority of the total votes cast affirmatively or
negatively on such matters without regard to broker non-votes. Votes for which
the "ABSTAIN" box is selected for Proposals III and IV shall have the effect of
a vote against such proposals.
Unless otherwise required by law, all other matters shall be determined by
a majority of votes cast affirmatively or negatively without regard to (a)
Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The following table sets
forth, as of the Record Date, persons or groups who own more than 5% of the
Common Stock and the ownership of all executive officers and directors of the
Company as a group. Other than as noted below, management knows of no person or
group that owns more than 5% of the outstanding shares of Common Stock at the
Record Date.
<TABLE>
<CAPTION>
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- --------------------
<S> <C> <C>
Home Federal Savings and Loan Association
Employee Stock Ownership Plan and Trust ("ESOP")
241 Green Street
Fayetteville, North Carolina 28301 260,000(1) 6.0%
The Shelton Companies
3600 One First Union Center
301 S. College Street
Charlotte, NC 28202 292,600(2) 6.8%
All directors and executive officers of the Company
as a group (12 persons) 275,014(3) 6.3%
</TABLE>
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(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are held
in a suspense account and will be allocated among ESOP participants
annually on the basis of compensation as the ESOP debt is repaid. The
Board of Directors has appointed a committee consisting of Robert O.
McCoy, Jr., Henry G. Hutaff, Sr. and Henry W. Holt to serve as the ESOP
administrative committee ("ESOP Committee") and the ESOP trustees ("ESOP
Trustee"). The ESOP Committee or the Board instructs the ESOP Trustee
regarding investment of ESOP plan assets. The ESOP Trustee must vote all
shares allocated to participant accounts under the ESOP as directed by
participants. Unallocated shares and shares for which no timely voting
direction is received, will be voted by the ESOP Trustee as directed by
the Board of the Company or the ESOP Committee. As of the Record Date,
32,500 shares have been allocated under the ESOP to participant accounts.
(2) Based upon a joint Schedule 13D filing made with the Securities and
Exchange Commission on behalf of the Shelton Companies, the Shelton
Foundation, Third Set, Inc., Charles M. Shelton, Jr., Jennifer K. Shelton,
and Jane P. Norward, dated August 1996, showing sole voting and
dispositive power with respect to 292,600 shares.
-3-
<PAGE>
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes options to purchase 85,962 shares of
Common Stock that may be exercised within 60 days of the Record Date to
purchase shares of Common Stock under the 1996 Stock Option Plan (the
"1996 Stock Option Plan"). Excludes 137,540 shares of Common Stock
previously awarded under the restricted stock plan ("RSP") which are
subject to forfeiture and for which the individuals in the group exercise
no voting control. See Director and Executive Officer Compensation.
Excludes 244,601 shares held by the ESOP (260,000 shares minus 15,399
shares allocated to executive officers) over which certain directors, as
trustees to the ESOP, exercise shared voting and investment power. Such
individuals disclaim beneficial ownership with respect to such shares held
by the ESOP.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial owner of more than ten percent of its Common Stock. Based upon a
review of the copies of the forms furnished to the Company, or written
representations from certain reporting persons that no Forms 5 were required,
the Company believes that all Section 16(a) filing requirements applicable to
its officers and directors were complied with during the 1997 fiscal year.
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I - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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Election of Directors
The Articles of Incorporation require that the Board of Directors be
divided into three classes, each of which contains approximately one-third of
the members of the Board. The directors are elected by the stockholders of the
Company for staggered three-year terms, or until their successors are elected
and qualified. The Board of Directors currently consists of nine members. Three
directors will be elected at the Meeting to serve for a three-year term and
until their successors have been elected and qualified.
Henry G. Hutaff, Sr., Robert O. McCoy, Jr. and John C. Pate have been
nominated by the Board of Directors to serve as directors. Messrs. Hutaff, McCoy
and Pate are currently members of the Board and have each been nominated for a
three-year term to expire in 2001. It is intended that the persons named in the
proxies solicited by the Board will vote for the election of the named nominees.
If any of the nominees are unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why the nominees might be
unavailable to serve.
The following table sets forth information with respect to the nominees
and the directors continuing in office, their name, age, the year they first
became a director of the Company or the Association, the expiration date of
their current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned. Each director of the Company is also a member
of the Board of Directors of the Association. Beneficial ownership of executive
officers and directors of the Company, as a group, is shown in the table under
"Voting Securities and Principal Holders Thereof."
-4-
<PAGE>
<TABLE>
<CAPTION>
Shares of
Age at Year First Current Common Stock
September 30, Elected or Term to Beneficially Percent
Name and Title 1997 Appointed(1) Expire Owned (2) (3) Owned
- -------------- ---- ------------ ------- -------------- ------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERM TO EXPIRE IN 2001
Henry G. Hutaff, Sr. 67 1974 1998 36,018(4)(5) --(6)
Vice Chairman of the Board and
Director
Robert O. McCoy, Jr. 69 1971 1998 13,518(4)(5) --(6)
Chairman of the Board and
Director
John C. Pate 71 1970 1998 35,513(7) --(6)
Senior Vice President and Director
DIRECTORS CONTINUING IN OFFICE
Norwood E. Bryan, Jr. 62 1976 2000 46,018(4) 1.1
Director
Joseph H. Hollinshed 62 1993 2000 21,018(4) --(6)
Director
Henry W. Holt 57 1979 2000 27,838(4)(5) --(6)
Director
John M. Grantham 66 1984 1999 22,556(8) --(6)
Senior Vice President and Director
Robert G. Ray 54 1993 1999 10,918(4) --(6)
Director
H. D. Reaves, Jr. 60 1984 1999 37,708(7) --(6)
President, Chief Executive Officer
and Director
</TABLE>
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(1) Refers to the year the individual first became a director of the Company
or the Association. During December 1995, all directors of the Association
became directors of the Company at the time the Company was incorporated.
(2) As of December 10, 1997, the Record Date.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust, and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(4) Includes stock options to purchase 4,298 shares of Common Stock awarded
pursuant to the 1996 Stock Option Plan which are exercisable within 60
days of the Record Date. Excludes 6,876 shares of Common Stock awarded
under the RSP which are subject to forfeiture and for which no voting
control is exercised by the individual as of the Record Date.
(footnotes continued on next page).
-5-
<PAGE>
(5) Excludes 260,000 shares of Common Stock held under the ESOP for which such
individual serves as either a member of the ESOP Committee or as an ESOP
Trustee. Such individual disclaims beneficial ownership with respect to
shares held in a fiduciary capacity. The ESOP purchased such shares for
the exclusive benefit of ESOP participants with funds borrowed from the
Company. These shares are held in a suspense account and will be allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid. The Board of Directors has appointed Messrs. Holt, Hutaff,
and McCoy to serve on the ESOP Committee and to serve as ESOP Trustees.
The ESOP Committee or the Board instructs the ESOP Trustee regarding
investment of ESOP plan assets. The ESOP Trustees must vote all shares
allocated to participant accounts under the ESOP as directed by ESOP
participants. Unallocated shares and shares for which no timely voting
direction is received will be voted by the ESOP Trustees as directed by
the Board or the ESOP Committee. As of the Record Date, 32,500 shares have
been allocated under the ESOP to participant accounts.
(6) Less than 1.0%.
(7) Includes stock options to purchase 19,771 shares of Common Stock which are
exercisable held by Mr. Pate and Mr. Reaves. Excludes 31,634 shares of
Common Stock awarded to each individual (Mr. Pate and Mr. Reaves) under
the RSP which are subject to forfeiture and for which such individuals do
not exercise voting control.
(8) Includes 10,315 stock options to purchase Common Stock which are
exercisable. Excludes 16,505 shares of Common Stock awarded under the RSP
which are subject to forfeiture and for which no voting control is
exercised by the individual.
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers, of the Company. All
directors and executive officers have held their present positions for five
years unless otherwise stated.
Norwood E. Bryan, Jr. has been director of the Association since 1976. Mr.
Bryan is a 50% shareholder and the President of Bryan Pontiac-Cadillac Company,
an automobile dealership, and is also involved in automotive rental and
insurance businesses.
John M. Grantham has been director of the Association since 1984 and has
served as Senior Vice President since 1983. Mr. Grantham has been employed by
the Association since 1961.
Joseph H. Hollinshed has been director of the Association since 1993. He
is a co-owner of Cape Fear Supply Co., Inc., a building supply store, and
Comtech, Inc., a truss fabricating company.
Henry W. Holt has been director of the Association since 1979 and has
served as the Secretary of the Board since 1984. Mr. Holt is President of Holt
Oil Co., Inc., an oil distributorship, a position he has held since 1993. Prior
to that time, he served as Secretary and Treasurer at Holt Oil Co., Inc.
Mr. Holt is also part owner of Holt Properties.
Henry G. Hutaff, Sr. has been director of the Association since 1974 and
has served as Vice Chairman of the Board of Directors since 1993. Mr. Hutaff is
an executive with Coca Cola Bottling Company. Mr. Hutaff is also part owner of
H.T.M. Investment Co. and The Mann Co.
Robert O. McCoy, Jr. has been director of the Association since 1971 and
has served as Chairman of the Board of Directors since 1993. Mr. McCoy is a
realtor with McLean Real Estate Company.
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<PAGE>
John C. Pate has been director of the Association since 1970. Mr. Pate
served as President of the Association from 1976 until 1992. Mr. Pate provided
consulting services for the Association after that date until 1995 when he
became Senior Vice President. Mr. Pate has been employed with the Association
since 1963.
Robert G. Ray has been director of the Association since 1993. Mr. Ray is
President of the law firm Rose, Ray & O'Connor, PA.
H. D. Reaves, Jr. has been director of the Association since 1984 and has
served as its President and Chief Executive Officer since 1992. Prior to that
time he served as Executive Vice President. Mr. Reaves began his employment with
the Association in 1962.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board. The Board of Directors of the Company did not have
committees during the fiscal year ended September 30, 1997, but the committees
of the Association's Board of Directors acted as committees for both the Company
and the Association. During the fiscal year ended September 30, 1997, the Boards
of Directors held 24 regular meetings and no special meetings. No director
attended fewer than 75% of the total meetings of the Boards of Directors and
committees during the time such director served during the fiscal year ended
September 30, 1997.
The Nominating Committee consists of the Board of Directors of the
Company. Nominations to the Board of Directors made by stockholders must be made
in writing to the Secretary of the Company and received by the Company not less
than 60 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders of the Company. Notice to the Company of such
nominations must include certain information required pursuant to the Company's
Bylaws. The Nominating Committee, which is not a standing committee, met one
time during the year ended September 30, 1997.
The Audit Committee consists of non-employee Directors Bryan, Hutaff and
Ray. The Audit Committee, a standing committee, meets at least once a year to
supervise and meet with the auditors of the Association and to ensure the
maintenance of proper internal controls. The Audit Committee met once during the
year ended September 30, 1997.
The Personnel and Compensation Committee consists of non-employee
Directors Hollinshed, Holt and McCoy. The committee, a standing committee,
reviews personnel policies, salaries and performance of officers and employees
and recommends employee salaries to the Board of Directors. The committee met
once during the year ended September 30, 1997.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
During fiscal year 1997, each non-employee director of the Board of
Directors of the Association received a monthly fee of $800, regardless of
attendance. Additionally, each non-employee director of the Association received
a fee of $200 per meeting attended. Each non-employee director of the
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<PAGE>
Company received a fee of $150 for each monthly meeting attended. Each
non-employee director who is a member of the Executive Committee, Personnel and
Compensation Committee, Loan Committee or Audit Committee received $100 per
meeting attended. Total fees paid to directors for the fiscal year ended
September 30, 1997, were $100,200.
During the 1997 fiscal year, non-employee directors each received awards
of 21,490 stock options to purchase the Common Stock and 8,596 shares of Common
Stock under the 1996 Stock Option Plan and the RSP, respectively. Such stock
awards vest at the rate of 20% per year commencing on October 17, 1997.
Executive Compensation
The Company has no full time employees, but relies on the employees of the
Association for the services required by the Company. All compensation paid to
officers and employees is paid by the Association.
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer. No
other executive officer of either the Association or the Company had a salary
and bonus during the years ended September 30, 1997, 1996 and 1995 that exceeded
$100,000 for services rendered in all capacities to the Association or the
Company.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------- --------------------------
Securities
Restricted Underlying All
Name and Fiscal Other Annual Stock Options/SARs Other
Principal Position Year Salary Bonus Compensation(1) Award($) (#) Compensation
- ------------------ ------ ------- ------- --------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. D. Reaves, Jr. 1997 $97,800 $10,379 $588,202(2) 98,857(3) $67,333(4)
President and 1996 $97,800 $9,800 $ -- -- -- $12,194(5)
Chief Executive 1995 $96,000 $9,650 -- -- --
Officer
</TABLE>
- -------------------
(1) Aggregate value does not exceed the lesser of $50,000 or 10% of the named
executive officer's total salary and bonuses for the year; (b) payments of
above-market preferential earnings on deferred compensation; (c) payments
of earnings with respect to long term incentive plans prior to settlement
or maturity; (d) tax payment reimbursements; or (e) preferential discounts
on stock.
(2) Represents the award of 39,543 shares of Common Stock under the RSP as of
October 17, 1996, on which date the last sale price of such stock was
$14.875 per share. Such stock awards become non-forfeitable at the rate of
7,908 shares per year commencing on October 17, 1997. Dividend rights
associated with such stock are accrued and held in arrears to be paid at
the time that such stock becomes non-forfeitable. As of September 30,
1997, based upon a market price of $20.75 per share, such award of 39,543
shares had an aggregate value of $820,517.
(3) Such awards under the 1996 Stock Option Plan are first exercisable at the
rate of 20% per year commencing on October 17, 1997. The exercise price
equals the market value of the Common Stock on the date of grant of
$14.9375.
(4) Represents an allocation of 3,245 shares of Common Stock under the ESOP
based upon a market price of such stock as of September 30, 1997 of
$20.750 per share.
(5) Represents an allocation of 783 shares of Common Stock under the ESOP
based upon a market price of such stock of $15.5625 per share as of
September 30, 1996.
-8-
<PAGE>
Employment Agreements. The Association entered into an employment
agreement with H.D. Reaves, Jr., President of the Association ("Agreement"). The
Agreement has a three year term. Mr. Reaves' base compensation under the
Agreement is $97,800. Under the Agreement, Mr. Reaves' employment may be
terminated by the Association for "just cause" as defined in the Agreement. If
the Association terminates Mr. Reaves without just cause, Mr. Reaves will be
entitled to a continuation of his salary for a period of one year thereafter. In
the event of the termination of employment in connection with any change in
control of the Association during the term of the Agreement, Mr. Reaves will be
paid in a lump sum amount equal to 2.99 times the five year average of his
taxable annual compensation. The Association maintains similar agreements with
three other officers. In the event of a change in control at September 30, 1997,
Mr. Reaves would have been entitled to a severance payment of approximately
$300,000.
Pension Plan. The Association maintains a pension plan for the benefit of
its employees (the "Pension Plan"). Any employee who became an employee before
July 1, 1995 is eligible to participate in the Pension Plan on the first day of
the month coinciding with or next following his or her first year of employment
with the Association. Any employee who became an employee after July 1, 1995 is
eligible to participate on the July 1 or January 1 coinciding with or next
following his or her completion of one year of eligible service. A qualifying
employee becomes fully vested in the Pension Plan upon completion of five years
of qualifying service. The Pension Plan is intended to comply with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
The Pension Plan provides for monthly payments or a lump sum payment to
each participating employee at normal retirement age. Upon termination at or
after age 65 and completion of 30 or more years of service, the annual
retirement benefit would be determined based upon 45% of a participant's Final
Average Compensation. Retirement benefits may be paid after age 55, in which
case such benefits shall be reduced by an early retirement factor. Retirement
benefits at age 65 with less than 30 years of service are also reduced
proportionately. The Pension Plan also provides for payments in the event of
disability or death. At September 30, 1997, Mr. Reaves, President, had 35 years
of credited service under the Pension Plan. Pension expenses for the fiscal
years ended 1997 and 1996 were $65,310 and $84,015, respectively.
The following table shows the estimated annual benefits payable under the
Pension Plan based on the respective employee's years of benefit service and
applicable average annual salary, as calculated on the basis of single life
annuity amounts under the Pension Plan. Benefits under the Pension Plan are not
subject to offset for Social Security benefits.
Average Annual Salary Years of Benefit Service
- --------------------- --------------------------------------
20 25 30 or more
--------- ---------- -------------
$ 20,000............... $ 6,000 $ 7,500 $ 9,000
40,000............... 12,000 15,000 18,000
60,000............... 18,000 22,500 27,000
80,000............... 24,000 30,000 36,000
100,000............... 30,000 37,500 45,000
120,000............... 36,000 45,000 54,000
150,000............... 45,000 56,250 67,500
-9-
<PAGE>
ESOP. The Association maintains an ESOP for the exclusive benefit of
participating employees. Participating employees are full-time employees who
have completed one year of service with the Savings Association and attained age
21. The ESOP is funded by contributions made by the Association in cash or the
Common Stock. The ESOP has borrowed funds from the Company in order to purchase
Common Stock in the Conversion. This loan is secured by the shares purchased and
earnings of ESOP assets. Shares purchased with such loan proceeds are held in a
suspense account for allocation among participants as the loan is repaid. The
Association is contributing $260,000 annually to the ESOP to meet principal
obligations under the ESOP loan. This loan is expected to be fully repaid by the
year 2006.
Contributions to the ESOP and shares released from the suspense account
will be allocated among participants on the basis of total compensation. All
participants must be employed at least 1,000 hours in a plan year or shall have
terminated employment due to disability, death or retirement in order to receive
an allocation for such plan year. Participant benefits become 100% vested after
five years of service. Employment prior to the adoption of the ESOP shall count
toward vesting. Vesting will be accelerated upon retirement, death, disability
or termination of the ESOP. Benefits may be payable in the form of a lump sum
upon retirement, death, disability or separation from service. The Association's
contributions to the ESOP are discretionary; therefore, benefits payable under
the ESOP cannot be estimated.
1996 Stock Option Plan. The Board of Directors adopted the 1996 Stock
Option Plan which was approved by stockholders on October 17, 1996. Pursuant to
the Option Plan, 429,812 shares of the Common Stock are reserved for issuance by
the Company upon exercise of stock options granted to officers, directors and
employees of the Company and Association from time to time under the Option
Plan. See "Proposal III - Ratification of Amendment to the 1996 Stock Option
Plan" for details relating to the amendment of the Option Plan.
The following tables set forth additional information concerning stock
options granted during the 1997 fiscal year.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(2)
- ------------------------------------------------------------------------------- ------------------
% of Total
# of Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------ ---------- ----------- ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
H.D. Reaves, Jr. 98,857 32.9% $14.9375 October 17, 2006 $928,673 $2,353,442
</TABLE>
- -----------------
(1) No Stock Appreciation Rights (SARs) are authorized under the plan.
(2) The amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the common stock and overall stock
market conditions. There can be no assurance that the amount reflected in
the table will be achieved.
-10-
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-The-Money Options
at FY-End (#) at FY-End ($)
-------------------------- -------------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
H.D. Reaves, Jr. 0 $ 0 0 / 98,857 $0 / $574,606 (1)
</TABLE>
- ----------------
(1) Based upon an exercise price of $14.9375 per share and the closing price
for the Common Stock of $20.75 as of September 30, 1997.
RSP. The Association contributed sufficient funds to the RSP to purchase
Common Stock from the Company representing 4% of the aggregate number of shares
issued in the Conversion (i.e., 171,925 shares of Common Stock). See "Proposal
IV - Ratification of Amendment to the Home Federal Savings and Loan Association
Restricted Stock Plan" for details relating to the amendment of the RSP.
Long Term Incentive Plans. The Company does not presently sponsor any
long-term incentive plans nor did it make any payouts to H.D. Reaves, Jr. under
such plans during the fiscal year ended September 30, 1997.
Compensation Committee Interlocks and Insider Participation
The Personnel and Compensation Committee of the Association serves as the
salary review committee for executive officers of the Company and the
Association. The Personnel and Compensation Committee is a standing committee
comprised of non-employee Directors Hollinshed, Holt and McCoy.
Report of the Personnel and Compensation Committee on Executive Compensation
The Compensation Committee meets annually to review compensation paid to
executive officers and to determine the compensation levels for all employees.
The Compensation Committee reviews various published surveys of compensation
paid to employees performing similar duties for depository institutions and
their holding companies, with a particular focus on the level of compensation
paid by comparable institutions in and around the Company's market area,
including institutions with total assets of between $100 million and $300
million. Although the Compensation Committee does not specifically set
compensation levels for executive officers based on whether particular financial
goals have been achieved by the Company the Compensation Committee does consider
the overall profitability of the Company when making these decisions. With
respect to each particular employee, his or her particular contributions to the
Company over the past year are also evaluated.
During the fiscal year ended September 30, 1997, H. D. Reaves, Jr.,
President and Chief Executive Officer received no increase in salary. The
Compensation Committee will consider the annual compensation paid to chief
executive officers of financial institutions in the State of North Carolina and
surrounding states with assets of between $100 million and $300 million and the
individual job performance of such individual in consideration of its specific
salary increase decision with respect to compensation to be paid to the
President in the future.
-11-
<PAGE>
Compensation Committee for the fiscal year ended September 30, 1997.
Joseph H. Hollinshed
Henry W. Holt
Robert O. McCoy, Jr.
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
Set forth below is a stock performance graph comparing the cumulative
total shareholder return on the Common Stock with (a) the cumulative total
stockholder return on stocks included in the Nasdaq Stock Market index and (b)
the cumulative total stockholder return on stocks included in the Nasdaq Bank
index, as prepared for Nasdaq by the Center for Research in Securities Prices
("CRSP") at the University of Chicago. All three investment comparisons assume
the investment of $100 as of April 3, 1996 (the date of initial issuance of the
Common Stock). All of these cumulative total returns are computed assuming the
reinvestment of dividends. In the graph below, the periods compared were April
3, 1996, and the Company's fiscal years ended September 30, 1996 and 1997.
There can be no assurance that the Company's future stock performance will
be the same or similar to the historical stock performance shown in the graph
below. The Company neither makes nor endorses any predictions as to future stock
performance.
-12-
<PAGE>
[GRAPHIC OMITTED]
- -------------------------------------------------------------------------
4/03/96 9/30/96 9/30/97
- -------------------------------------------------------------------------
CRSP Nasdaq U.S. Index $100.00 $110.46 $151.61
- -------------------------------------------------------------------------
CRSP Nasdaq Bank Index $100.00 $112.11 $186.75
- -------------------------------------------------------------------------
Green Street Financial Corp $100.00 $156.83 $216.51
- -------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
Certain Related Transactions
No directors, executive officers, or immediate family members of such
individuals were engaged in transactions with the Company or any subsidiary
involving more than $60,000 during the year ended September 30, 1997.
Furthermore, the Company had no "interlocking" relationships existing during the
year ended September 30, 1997, in which (i) any executive officer is a member of
the Board of Directors/Trustees of another entity, one of whose executive
officers is a member of the Company's Board of Directors, or where (ii) any
executive officer is a member of the compensation committee of another entity,
one of whose executive officers is a member of the Company's Board of Directors.
Robert G. Ray, Esq., is a director of the Company and the Association. He is
also President of the law firm of Rose, Ray, & O'Connor, PA, which firm provides
legal services to the Association.
-13-
<PAGE>
The Association, like many financial institutions, has followed a policy
of granting residential financing of loans to officers, directors, and
employees. Effective August 9, 1989, the Association followed a policy of
granting all loans to executive officers and directors of the Association in the
ordinary course of business and on substantially the same terms and conditions,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the Association's other customers, and such loans
do not involve more than the normal risk of collectibility or present other
unfavorable features.
Since November 8, 1996, the Association has made loans available to all
employees and directors of the Association at interest rates up to 1.00% below
those offered to non-employees. Set forth below is information relating to loans
made by the Association to its executive officers and directors whose total
aggregate loan balances or line of credit exceeded $60,000 at any time during
the fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
Highest Balance
Date Original During 1997 Unpaid Balance as of Interest
Name of Officer or Director Loan Type Originated Loan Amount Fiscal Year September 30, 1997 Rate Paid
- --------------------------- --------- ---------- ----------- ----------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C>
H. D. Reaves, Jr........ Home mortgage, adjustable rate 8-8-88 $40,000 $27,925 $25,576 6.75%(1)
H. D. Reaves, Jr........ Home equity, adjustable rate 7-2-97 50,000 45,397 43,738 8.75%
Henry Hutaff............ Home mortgage, fixed rate 4-15-97 210,000 210,000 209,075 7.00%(2)
Henry Hutaff............ Home equity, adjustable rate 4-9-97 77,000 75,638 71,763 8.75%
</TABLE>
- -----------
(1) Had Mr. Reaves not received a discount, the current rate would be 7.75%.
(2) The prevailing market rate was 1.00% above the rate charged.
-14-
<PAGE>
- --------------------------------------------------------------------------------
II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP, was the Company's independent public accountant
for the 1997 fiscal year. The Board of Directors of the Company presently
intends to renew the Company's arrangement with McGladrey & Pullen, LLP to be
its auditors for the fiscal year ended September 30, 1998. A representative of
McGladrey & Pullen, LLP is expected to be present at the meeting to respond to
stockholders' questions and will have the opportunity to make a statement if the
representative so desires.
Ratification of the appointment of the auditors requires the approval of a
majority of the votes cast by the stockholders of the Company at the Meeting.
The Board of Directors recommends that stockholders vote "FOR" the ratification
of the appointment of McGladrey & Pullen, LLP, as the Company's auditors for the
fiscal year ending September 30, 1998.
- --------------------------------------------------------------------------------
III -- RATIFICATION OF THE AMENDMENTS TO THE 1996 STOCK
OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors adopted the 1996 Stock Option Plan and
the stockholders approved the Plan on October 17, 1996 ("Effective Date").
Pursuant to the Option Plan, up to 429,812 shares of Common Stock equal to up to
10% of the total Common Stock issued in the Conversion are reserved for issuance
by the Company upon exercise of stock options to be granted to officers,
directors, key employees and other persons from time to time. The purpose of the
Option Plan is to attract and retain qualified personnel for positions of
substantial responsibility and to provide additional incentive to certain
officers, directors, key employees and other persons to promote the business
success of the Company and the Association. The Company has recently adopted
amendments to the Option Plan ("Option Plan Amendments") and is submitting such
amendments to the stockholders for ratification. The full text of the Option
Plan Amendments is set forth as Appendix A to this Proxy Statement, and the
summary of the Option Plan Amendments provided below is qualified in its
entirety by such reference.
Pursuant to regulations of the Office of the Thrift Supervision (the
"OTS") applicable to stock benefit plans established or implemented within one
year following the completion of a mutual-to-stock conversion of a federally
chartered savings institution such as the Association, the Option Plan contains
certain restrictions and limitations, including among others, provisions
requiring the vesting of options granted to occur no more rapidly than ratably
over a five year period and the resultant prohibition against accelerated
vesting of option grants upon the occurrence of an event other than the death or
disability of the option holder. In addition, the OTS has sought to limit the
Company's ability to implement provisions contained in the Option Plan that
would apply in the event that an extraordinary dividend, including a dividend
with the effect of being a return of capital distribution, is paid to
stockholders.
Recent OTS interpretive letters permit amendment of stock benefit plans to
eliminate the provisions of the Option Plan which reflect the restrictions and
limitations described above, provided that stockholder ratification of such
amendments is obtained more than one year following the completion of
-15-
<PAGE>
the mutual-to-stock conversion. The Board of Directors has adopted the Option
Plan Amendments, subject to ratification by stockholders of the Company, for the
purpose of eliminating such restrictions and limitations. The Company does not
have any present intention to engage in any transaction that would result in the
accelerated vesting of Options as permitted by the Option Plan Amendments, or to
pay any special dividend that would have the effect of a return of capital
distribution. Nevertheless, the Board has determined that the implementation of
the Option Plan Amendments is in the best interests of the stockholders of the
Company, as well as the officers, directors and employees of the Company.
The Option Plan Amendments do not increase the number of shares reserved
for issuance under the Plan or alter the classes of individuals eligible to
participate in the Plan. In the event that the Option Plan Amendments are not
ratified by stockholders at the Meeting, the Option Plan Amendments will not
take effect, but the Option Plan will remain in effect. The principal provisions
of the Option Plan, as amended by the Option Plan Amendments, are described
below.
The Option Plan is administered by the Board of Directors or a committee
of not less than two non-employee directors appointed by the Company's Board of
Directors and serving at the pleasure of the Board (the "Option Committee").
Members of the Option Committee shall be deemed "Non- Employee Directors" within
the meaning of Rule 16b-3 pursuant to the 1934 Act. Directors McCoy, Hutaff and
Holt serve as members of the Option Committee. The Option Committee may select
the officers and employees to whom options are to be granted and the number of
options to be granted based upon several factors including prior and anticipated
future job duties and responsibilities, job performance, the Association's
financial performance and a comparison of awards given by other institutions. A
majority of the members of the Option Committee shall constitute a quorum and
the action of a majority of the members present at any meeting at which a quorum
is present shall be deemed the action of the Option Committee.
Officers, directors, key employees and other persons who are designated by
the Option Committee are eligible to receive, at no cost to them, options under
the Option Plan (the "Optionees"). Each option granted pursuant to the Option
Plan shall be evidenced by an instrument in such form as the Option Committee
shall from time to time approve. Option shares may be paid for in cash, shares
of Common Stock, or a combination of both. The Company will receive no monetary
consideration for the granting of stock options under the Option Plan. Further,
the Company will receive no consideration other than the option exercise price
per share for Common Stock issued to Optionees upon the exercise of those
Options.
Shares issuable under the Option Plan may be from authorized but unissued
shares or shares purchased in the open market. An Option which expires, becomes
unexercisable, or is forfeited for any reason prior to its exercise will again
be available for issuance under the Option Plan. No Option or any right or
interest therein is assignable or transferable except by will or the laws of
descent and distribution. The Option Plan shall continue in effect for a term of
ten years from the Effective Date.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the Option Committee at the time of the award. In the
event of the disability or death of an Optionee during
-16-
<PAGE>
employment, an exercisable Incentive Stock Option will continue to be
exercisable for one year and two years, respectively, to the extent exercisable
by the Optionee immediately prior to the Optionee's disability or death but only
if, and to the extent that, the Optionee was entitled to exercise such Incentive
Stock Options on the date of termination of employment. The terms and conditions
of Non-Incentive Stock Options relating to the effect of an Optionee's
termination of employment or service, disability, or death shall be such terms
as the Option Committee, in its sole discretion, shall determine at the time of
termination of service, disability or death, unless specifically determined at
the time of grant of such options.
Currently, the Option Plan requires that Options granted to Employees or
Directors become first exercisable no more rapidly than ratably over a five-year
period (with acceleration upon death or disability or a Change in Control (as
such terms are defined in the Option Plan); provided, however, that such
accelerated vesting is not inconsistent with the regulations of the OTS at the
time of such acceleration. As permitted by OTS interpretive letters, the Option
Plan Amendments will specifically authorize the acceleration of vesting of
Options upon a Change in Control and also will permit an equitable adjustment in
the option exercise price in the event of a payment of an extraordinary cash
dividend which shall constitute a return of capital distribution; provided that
such amendments are ratified by the stockholders. Such Option Plan Amendments
will affect previously awarded Options and any Options that may be granted in
the future. Pursuant to the Option Plan, as amended by the Option Plan
Amendments, upon a Change in Control, all Options granted to such Participants
that are outstanding as of the date of a Change in Control will automatically
become exercisable and non-forfeitable.
No shares of Common Stock shall be issued upon the exercise of an Option
until full payment therefor has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an Option by an
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the Fair Market Value of the Common Stock on the date of the
Option exercise and the exercise price per share of the Option. Such cash
payment shall be in exchange for the cancellation of such Option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the Optionee and the Company under Section 16(b) of the 1934 Act,
and regulations promulgated thereunder.
The Option Plan provides that the Board of Directors of the Company may
authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension or renewal of any outstanding option,
provided that no such modification, extension or renewal shall confer on the
Optionee any right or benefit which could not be conferred on the Optionee by
the grant of a new Option at such time, and shall not materially decrease the
Optionee's benefits under the Option without the Optionee's consent, except as
otherwise provided under the Option Plan.
Awards Under the Option Plan
The Board or the Option Committee shall from time to time determine the
officers, Directors, key employees and other persons who shall be granted Awards
under the Plan, the number of Awards to be granted to any Participant under the
Plan, and whether Awards granted to each such Participant under the Plan shall
be Incentive Stock Options and/or Non-Incentive Stock Options. In selecting
Participants and in determining the number of shares of Common Stock subject to
Options to be granted
-17-
<PAGE>
to each such Participant, the Board or the Option Committee may consider the
nature of the past and anticipated future services rendered by each such
Participant, each such Participant's current and potential contribution to the
Company and such other factors as may be deemed relevant. Participants who have
been granted an Award may, if otherwise eligible, be granted additional Awards.
In no event shall Shares subject to Options granted to non-employee Directors in
the aggregate under this Plan exceed more than 30% of the total number of Shares
authorized for delivery under this Plan, and no more than 5% of total Plan
shares may be awarded to any individual non-employee Director. In no event shall
Shares subject to Options granted to any Employee exceed more than 25% of the
total number of Shares authorized for delivery under the Plan.
The table below presents information related to stock option awards
previously made under the Option Plan. Such Option Plan Amendments do not impact
the number of awards previously made. Such Option Plan Amendments confirm the
provisions of the Option Plan previously approved by stockholders with respect
to the accelerated vesting of awards upon a Change in Control and an adjustment
to the option exercise price upon a payment of an extraordinary cash dividend
with the effect of a return of capital distribution. In accordance with the
Option Plan Amendment, all outstanding option awards shall become immediately
exercisable in the event of a Change in Control of the Company or the
Association.
PRIOR AWARDS UNDER STOCK OPTION PLAN
------------------------------------
Name and Position Number of Options(1)(2)
- ----------------- -----------------------
Robert O. McCoy, Jr.
Chairman of the Board(3)................... 21,490(4)
H. D. Reaves
Director, President and CEO................ 98,857(5)
Henry G. Hutaff, Sr.
Director and Vice Chairman of the Board(3) 21,490(4)
Norwood E. Bryan, Jr.
Director................................... 21,490(4)
John M. Grantham
Director and Senior Vice-President......... 51,577(5)
Joseph H. Hollinshed
Director................................... 21,490(4)
Henry W. Holt
Director................................... 21,490(4)
John C. Pate
Director and Senior Vice-President(3)...... 98,857(5)
Robert G. Ray
Director................................... 21,490(4)
Jerry Robertson
Vice President and Treasurer............... 21,490(5)
Executive Officer Group (6 persons).......... 300,872(5)
Non-Executive Director Group
(6 persons)................................ 128,940(4)
(footnotes on next page)
-18-
<PAGE>
- ------------------
(1) The exercise price of such Options is equal to the Fair Market Value of
the Common Stock on the date of grant (i.e., $14.9375 on October 17,
1996).
(2) Awards shall vest during periods of continued service as an employee,
director, or director emeritus. Upon vesting, awards shall remain
exercisable for ten years from the date of grant without regard to
continued service as an employee, director, or director emeritus.
(3) Nominee for Director.
(4) Options awarded to directors are first exercisable at a rate of 20% on the
one year anniversary of the date of grant and 20% annually thereafter,
during such period of service as a director or director emeritus, and
shall remain exercisable for ten years without regard to continued service
as a director or director emeritus. Upon disability or death or a Change
in Control of the Company or the Association, such awards shall be 100%
exercisable.
(5) Options awarded to officers and employees are exercisable as follows:
Options awarded are first exercisable at the rate of 20% on the one year
anniversary from the date of grant and 20% annually thereafter during
periods of continued service as an employee, Director or Director
Emeritus. Such awards shall be 100% exercisable in the event of death or
disability, or upon a Change in Control of the Company or the Association.
Options awarded to employees shall continue to be exercisable during
continued service as an employee, Director or Director Emeritus. Options
not exercised within three months of termination of service as an employee
shall thereafter be deemed non-incentive stock options.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company, within
the sole discretion of the Option Committee, the aggregate number of shares of
Common Stock for which Options may be granted hereunder or the number of shares
of Common Stock represented by each outstanding Option will be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend or any other increase or decrease in the
number of shares of Common Stock effected without the receipt or payment of
consideration by the Company. Subject to any required action by the stockholders
of the Company, in the event of any change in control, recapitalization, merger,
consolidation, exchange of shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Option Committee, in its sole discretion, shall have the power, prior
to or subsequent to such action or events, to (i) appropriately adjust the
number of shares of Common Stock subject to each Option, the exercise price per
share of such Option, and the consideration to be given or received by the
Company upon the exercise of any outstanding Options; (ii) cancel any or all
previously granted Options, provided that appropriate consideration is paid to
the Optionee in connection therewith; and/or (iii) make such other adjustments
in connection with the Option Plan as the Option Committee, in its sole
discretion, deems necessary, desirable, appropriate or advisable. However, no
action may be taken by the Option Committee which would cause Incentive Stock
Options granted pursuant to the Option Plan to fail to meet the requirements of
Section 422 of the Code without the consent of the Optionee. In accordance with
the Option Plan Amendments, upon the payment of a special or non-recurring cash
dividend that constitutes a return of capital distribution to the stockholders,
the Option exercise price per share shall be adjusted proportionately and in an
equitable manner.
In the event of a Change in Control, the Option Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of such Change in Control: (i) provide that such Options shall be
assumed, or equivalent options shall be substituted, ("Substitute Options") by
the acquiring or succeeding corporation (or an affiliate thereof), provided
that: (A) any such Substitute Options exchanged for Incentive Stock Options
shall meet the requirements of Section 424(a) of the Code,
-19-
<PAGE>
and (B) the shares of stock issuable upon the exercise of such Substitute
Options shall constitute securities registered in accordance with the Securities
Act of 1933, as amended, ("1933 Act") or such securities shall be exempt from
such registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933
Act, (collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Optionee will receive upon
consummation of the Change in Control transaction a cash payment for each Option
surrendered equal to the difference between (1) the Fair Market Value of the
consideration to be received for each share of Common Stock in the Change in
Control transaction times the number of shares of Common Stock subject to such
surrendered Options, and (2) the aggregate exercise price of all such
surrendered Options, or (ii) in the event of a transaction under the terms of
which the holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control transaction, to make or to
provide for a cash payment to the Optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
Options held by each Optionee (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
surrendered Options in exchange for such surrendered Options.
The power of the Option Committee to accelerate the exercise of Options
and the immediate exercisability of Options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of Options. The power of the Option
Committee to make adjustments in connection with the Option Plan, including
adjusting the number of shares subject to Options and canceling Options, prior
to or after the occurrence of an extraordinary corporate action, allows the
Option Committee to adapt the Option Plan to operate in changed circumstances,
to adjust the Option Plan to fit a smaller or larger company, and to permit the
issuance of Options to new management following such extraordinary corporate
action. However, this power of the Option Committee may also have an
anti-takeover effect, by allowing the Option Committee to adjust the Option Plan
in a manner to allow the present management of the Company to exercise more
Options and hold more shares of the Company's Common Stock, and to possibly
decrease the number of Options available to new management of the Company.
Although the Option Plan Amendments may have an anti-takeover effect, the
Company's Board of Directors did not adopt the Option Plan Amendments
specifically for anti-takeover purposes. The exercise of such Options could make
it easier for the Board and management to block the approval of certain
transactions requiring the voting approval of 80% of the Common Stock in
accordance with the Articles of Incorporation. In addition, the exercise of such
Options could increase the cost of an acquisition by a potential acquiror.
Amendment and Termination of the Option Plan
The Board of Directors may alter, suspend or discontinue the Option Plan,
except that no action of the Board shall increase the maximum number of shares
of Common Stock issuable under the Option Plan, materially increase the benefits
accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the Option Plan unless such
action of the Board shall be subject to ratification by the stockholders of the
Company.
-20-
<PAGE>
Possible Dilutive Effects of the Option Plan
The Common Stock to be issued upon the exercise of Options awarded under
the Option Plan may either be authorized but unissued shares of Common Stock or
shares purchased in the open market. Because the stockholders of the Company do
not have preemptive rights, to the extent that the Company funds the Option
Plan, in whole or in part, with authorized but unissued shares, the interests of
current stockholders will be diluted. If upon the exercise of all of the
Options, the Company delivers newly issued shares of Common Stock (i.e., 429,812
shares of Common Stock), then the impact to current stockholders would be to
dilute their current ownership percentages by approximately 9.1%. The Option
Plan Amendments do not increase the maximum number of shares issuable under the
Plan.
Federal Income Tax Consequences
Under present federal tax laws, awards under the Option Plan will have the
following consequences:
1. The grant of an Option will not by itself result in the recognition
of taxable income to an Optionee nor entitle the Company to a tax
deduction at the time of such grant.
2. The exercise of an Option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code generally will not, by
itself, result in the recognition of taxable income to an Optionee
nor entitle the Company to a deduction at the time of such exercise.
However, the difference between the Option exercise price and the
Fair Market Value of the Common Stock on the date of Option exercise
is an item of tax preference which may, in certain situations,
trigger the alternative minimum tax for an Optionee. An Optionee
will recognize capital gain or loss upon resale of the shares of
Common Stock received pursuant to the exercise of Incentive Stock
Options, provided that such shares are held for at least one year
after transfer of the shares or two years after the grant of the
Option, whichever is later. Generally, if the shares are not held
for that period, the Optionee will recognize ordinary income upon
disposition in an amount equal to the difference between the Option
exercise price and the Fair Market Value of the Common Stock on the
date of exercise, or, if less, the sales proceeds of the shares
acquired pursuant to the Option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of
exercise in an amount equal to the difference between the exercise
price and the Fair Market Value of the Common Stock acquired
pursuant to the Option.
4. The Company will be allowed a tax deduction for federal tax purposes
equal to the amount of ordinary income recognized by an Optionee at
the time the Optionee recognizes such ordinary income.
5. In accordance with Section 162(m) of the Code, the Company's tax
deductions for compensation paid to the most highly paid executives
named in the Company's Proxy Statement may be limited to no more
than $1 million per year, excluding certain "performance-based"
compensation. The Company intends for the award of Options under the
Option Plan to comply with the requirement for an exception to
Section 162(m)
-21-
<PAGE>
of the Code applicable to stock option plans so that the Company's
deduction for compensation related to the exercise of Options would
not be subject to the deduction limitation set forth in Section
162(m) of the Code.
6. To the extent that the Option exercise price of a previously awarded
Incentive Stock Option is adjusted following the payment of a
dividend which would constitute a return of capital distribution,
such Options will thereafter likely be deemed as not qualifying as
Incentive Stock Options. Thereafter, the exercise of such Options
would have the tax effects to the Option holder and the Company of a
Non-Incentive Stock Option.
Accounting Treatment
Neither the grant nor the exercise of an Option under the Option Plan
currently requires any charge against earnings under generally accepted
accounting principles. In certain circumstances, Common Stock issuable pursuant
to outstanding Options which are exercisable under the Option Plan might be
considered outstanding for purposes of calculating earnings per share on a fully
diluted basis.
Stockholder Ratification
Stockholder ratification of the Option Plan Amendments is being sought in
accordance with the interpretive letters of the OTS. An affirmative vote of a
majority of the votes cast at the Meeting on the matter, in person or by proxy,
is required to constitute stockholder ratification of this Proposal III.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
AMENDMENTS TO THE 1996 STOCK OPTION PLAN.
- --------------------------------------------------------------------------------
IV -- RATIFICATION OF THE AMENDMENTS TO THE RESTRICTED
STOCK PLAN AND TRUST AGREEMENT
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company has implemented the Restricted Stock
Plan as a method of providing directors, officers, and key employees of the
Association with a proprietary interest in the Company in a manner designed to
encourage such persons to remain in the employment or service of the
Association. As previously approved by stockholders of the Company, the
Association will contribute sufficient funds to the RSP to purchase up to
171,925 shares of Common Stock, representing up to 4% of the aggregate number of
shares issued in the Conversion, in the open market. Alternatively, the RSP may
purchase authorized but unissued shares of Common Stock from the Company. All of
the Common Stock to be purchased by the RSP will be purchased at the Fair Market
Value of such stock on the date of purchase. Awards under the RSP were made in
recognition of prior and expected future services to the Association by its
directors, officers and key employees responsible for implementation of the
policies adopted by the Association's Board of Directors and as a means of
providing a further retention incentive.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion, the RSP contains certain
-22-
<PAGE>
restrictions and limitations, including among others, provisions prohibiting the
accelerated vesting of awards other than upon the death or disability of the
award recipient.
OTS interpretative letters permit the amendment of the RSP to eliminate
the provisions of the RSP which reflect the restrictions and limitations
described above, provided that stockholder ratification therefor is obtained
more than one year following the completion of the mutual-to-stock conversion.
The Board of Directors has adopted amendments to the RSP, subject to
ratification by stockholders of the Company, for the purpose of eliminating such
restrictions and limitations (these changes to the RSP are collectively referred
to herein as the "RSP Amendments"). The Company does not have any present
intention to engage in any transaction that would result in the accelerated
vesting of awards under the RSP. Nevertheless, the Board has determined that the
implementation of the RSP Amendments is in the best interest of the stockholders
of the Company, as well as the officers, directors and employees of the Company.
The RSP Amendments do not increase the number of shares available for
distribution under the RSP, change the RSP's eligibility requirements, or alter
the types of restricted stock awards that may be made to participants in the
RSP. In the event that the RSP Amendments are not ratified by stockholders at
the Meeting, the RSP Amendments will not take effect, but the RSP will remain in
effect. The principal provisions of the RSP, as it would be amended by the RSP
Amendments, are described below. The full text of the RSP Amendments is set
forth as Appendix B to this Proxy Statement, to which reference is made, and the
summary of the RSP Amendments provided below is qualified in its entirely by
such reference.
Awards Under the RSP
Currently the RSP provides that the Shares covered by an Award will vest
not more rapidly than at the rate of 20% each year beginning one year from the
date of grant or upon the disability or death of the option holder. The RSP also
provides that awards will accelerate vesting upon a Change in Control, provided
that such accelerated vesting is not inconsistent with regulations of the OTS in
effect at the time of such accelerated vesting. As permitted by OTS interpretive
letters, these restrictions on accelerated vesting upon a Change in Control of
the Company or the Association may be removed through stockholder ratification
of the RSP Amendments. Accordingly, pursuant to the RSP, as amended by the RSP
Amendments, all Shares covered by an outstanding Award will become 100% vested
upon the death, disability or a Change of Control of the Company.
Benefits under the RSP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two directors who are not
employees of the Association or the Company (the "RSP Committee") appointed by
the Association's Board of Directors. The RSP is managed by trustees (the "RSP
Trustees") who are non-employee directors of the Association or the Company and
who have the responsibility to invest all funds contributed by the Association
to the trust created for the RSP (the "RSP Trust"). Directors McCoy, Hutaff and
Holt have been appointed as the RSP Committee and RSP Trustees. Unless the terms
of the RSP or the RSP Committee specify otherwise, awards under the RSP will be
in the form of restricted stock payable as the Plan Share Awards shall be earned
and non-forfeitable. Twenty percent (20%) of such awards shall be earned and
non- forfeitable on the one year anniversary of the date of grant of such
awards, and 20% annually thereafter, provided that the recipient of the award
remains an employee, Director or Director Emeritus during such period. A
recipient of such restricted stock will not be entitled to voting rights
associated with such shares prior to the applicable date such shares are earned.
Dividends paid on Plan Share Awards shall be held in arrears and distributed
upon the date such applicable Plan Share Awards are earned. Any shares held by
the RSP Trust which are not yet earned shall be voted by the RSP Trustees, as
directed
-23-
<PAGE>
by the RSP Committee. If a recipient of such restricted stock terminates
employment or service for reasons other than death, disability, or a Change in
Control of the Company or the Association, the recipient forfeits all rights to
the awards under restriction. If the recipient's termination of employment or
service is caused by death, disability, or a Change in Control of the Company or
the Association, all restrictions expire and all shares allocated shall become
unrestricted. Awards of restricted stock shall be immediately non-forfeitable in
the event of the death or disability of such recipient, or upon a Change in
Control of the Company or the Association, and distributed as soon as
practicable thereafter. The Board of Directors may terminate the RSP at any
time, and if it does so, any shares not allocated will revert to the Company.
The RSP Amendments confirm the provisions of the RSP previously approved by the
stockholders with respect to the acceleration of vesting of awards upon a Change
in Control.
Plan Share Awards under the RSP will be determined by the RSP Committee.
In no event shall any Employee receive Plan Share Awards in excess of 25% of the
aggregate Plan Shares authorized under the Plan. Plan Share Awards may be
granted to newly elected or appointed non-employee Directors of the Association
subsequent to the effective date (as defined in the RSP) provided that the Plan
Share Awards made to non-employee Directors shall not exceed 30% of total Plan
Share Reserve in the aggregate under the Plan or 5% of the total Plan Share
Reserve to any individual non-employee Director.
The aggregate number of Plan Shares available for issuance pursuant to the
Plan Share Awards and the number of shares to which any Plan Share Award relates
shall be proportionately adjusted for any increase or decrease in the total
number of outstanding shares of Common Stock issued subsequent to the effective
date (as defined in the RSP) of the RSP resulting from any split, subdivision or
consolidation of the Common Stock or other capital adjustment, change or
exchange of Common Stock, or other increase or decrease in the number or kind of
shares effected without receipt or payment of consideration by the Company.
-24-
<PAGE>
The following table presents information related to the previously granted
awards of Common Stock under the RSP as authorized pursuant to the terms of the
RSP. Such RSP Amendments do not change the number of shares awarded or other
terms, except to ratify the accelerated vesting of such awards upon a Change in
Control of the Company or the Association.
PRIOR AWARDS UNDER RESTRICTED STOCK PLAN
----------------------------------------
Number of Shares
Name and Position Previously Awarded (1)(2)
- ----------------- -------------------------
Robert O. McCoy, Jr.
Chairman of the Board(3).................. 8,596
H.D. Reaves, Jr.
Director, President and CEO............... 39,543
Henry G. Hutaff, Sr.
Director and Vice Chairman of the Board(3) 8,596
Norwood E. Bryan, Jr.
Director.................................. 8,596
John M. Grantham
Director and Senior Vice-President........ 20,631
Joseph H. Hollinshed
Director.................................. 8,596
Henry W. Holt
Director.................................. 8,596
John C. Pate
Director and Senior Vice-President(3)..... 39,543
Robert G. Ray
Director.................................. 8,596
Jerry Robertson
Vice President and Treasurer.............. 8,596
Executive Officer Group (6 persons)......... 120,349
Non-Executive Director Group (6 persons).... 51,576(4)
- ------------------
(1) All Plan Share Awards presented herein shall be earned at the rate of 20%
on the one year anniversary of the date of grant and 20% annually
thereafter. All awards shall become immediately 100% vested upon death,
disability, or termination of service following a change in control (as
defined in the RSP).
(2) Plan Share Awards shall continue to vest during periods of service as an
employee, director, or director emeritus.
(3) Nominee for director.
(4) Each of six (6) non-employee directors have been awarded 8,596 shares,
subject to applicable vesting.
-25-
<PAGE>
Amendment and Termination of the Plan
The Board may amend or terminate the RSP at any time. However, no action
of the Board may increase the maximum number of Plan Shares permitted to be
awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to Participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.
Federal Income Tax Consequences
Common Stock awarded under the RSP is generally taxable to the recipient
at the time that such awards become 100% vested and non-forfeitable, based upon
the Fair Market Value of such stock at the time of such vesting. Alternatively,
a recipient may make an election pursuant to Section 83(b) of the Code within 30
days of the date of the award to elect to include in gross income for the
current taxable year the Fair Market Value of such stock as of the date of the
award. Such election must be filed with the Internal Revenue Service within 30
days of the date of the granting of the stock award. The Company will be allowed
a tax deduction for federal tax purposes as a compensation expense equal to the
amount of ordinary income recognized by a recipient of Plan Share Awards at the
time the recipient recognizes taxable ordinary income. A recipient of a Plan
Share Award may elect to have a portion of such award withheld by the RSP Trust
in order to meet any necessary tax withholding obligations.
Accounting Treatment
For accounting purposes, the Company will recognize a compensation expense
in the amount of the Fair Market Value of the Common Stock subject to Plan Share
Awards at the date of the award pro rata over the period of years during which
the awards are earned.
Stockholder Ratification
The Company is submitting the RSP Amendments to stockholders for
ratification in accordance with interpretive letters of the OTS. An affirmative
vote of a majority of the votes cast at the Meeting on the matter, in person or
by proxy, is required to constitute stockholder ratification of this Proposal
IV.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
AMENDMENTS TO THE RESTRICTED STOCK PLAN.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of the persons named in the accompanying proxy.
-26-
<PAGE>
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telephone without additional compensation.
The Company's Annual Report to Stockholders for the fiscal year ended
September 30, 1997, including financial statements, will be mailed to all
stockholders of record as of the close of business on December 10, 1997. Any
stockholder who has not received a copy of such Annual Report may obtain a copy
by writing to the Secretary of the Company. Such Annual Report is not to be
treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
241 Green Street, Fayetteville, North Carolina 28301, no later than August 17,
1998. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1997, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, GREEN STREET FINANCIAL CORP,
241 GREEN STREET, FAYETTEVILLE, NORTH CAROLINA 28031.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Allen Lloyd
Allen Lloyd
Secretary
Fayetteville, North Carolina
December 15, 1997
-27-
<PAGE>
Exhibit A
---------
Amendment
to the
GREEN STREET FINANCIAL CORP
1996 Stock Option Plan
----------------------
1. Revision to the Plan by addition of the following Section 24 in its
entirety as follows:
24. Plan Provisions Effective as of January 28, 1998.
------------------------------------------------
(a) Immediate Vesting Upon a Change in Control. Notwithstanding
anything herein to the contrary, upon a Change in Control of the Company or the
Savings Association, all outstanding Awards shall be immediately 100%
exercisable and non-forfeitable.
(b) Non-recurring Dividends. Notwithstanding anything herein to the
contrary, upon the payment of a special or non-recurring dividend that has the
effect of a return of capital distribution to the stockholders, the Company
shall, within the discretion of the Committee, adjust the Option exercise price
per share in a proportionate and equitable manner to reflect the payment of such
capital distribution.
<PAGE>
Exhibit B
---------
Amendment
to the
Home Federal Savings and Loan Association
Restricted Stock Plan and Trust Agreement
-----------------------------------------
1. Revision to the Plan by addition of the following Section 9.10 in its
entirety as follows:
9.10. Plan Provisions Effective as of January 28, 1998.
------------------------------------------------
Notwithstanding anything herein to the contrary, upon a Change in
Control of the Parent or the Savings Association, all outstanding Awards shall
be immediately 100% earned and non-forfeitable.
<PAGE>
Appendix A
- --------------------------------------------------------------------------------
GREEN STREET FINANCIAL CORP
241 GREEN STREET
FAYETTEVILLE, NORTH CAROLINA 28301
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
January 28, 1998
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of Green Street
Financial Corp (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the offices
of the Company, 241 Green Street, Fayetteville, North Carolina, on January 28,
1998, at 5:15 p.m. and at any and all adjournments thereof, in the following
manner:
FOR WITHHELD
--- --------
1. The election as directors of the
nominees listed below (except as
marked to the contrary below): |_| |_|
Henry G. Hutaff, Sr.
Robert O. McCoy, Jr.
John C. Pate
(Instruction: To withhold
authority to vote for any
individual nominee, write that
nominee's name on the space
provided below)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the
appointment of McGladrey
& Pullen, LLP as independent
auditors of Green Street
Financial Corp, for the fiscal year
ending September 30, 1998. |_| |_| |_|
3. The ratification of the amendment
to the Green Street Financial Corp
1996 Stock Option Plan. |_| |_| |_|
4. The ratification of the amendment
to the Home Federal Savings and Loan
Association Restricted Stock Plan
and Trust Agreement |_| |_| |_|
In their discretion, such attorneys and proxies are authorized to vote on any
other business that may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" the above listed
propositions.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, the power
of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this proxy by filing a subsequently
dated proxy or by written notification to the Secretary of the Company of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated December 15, 1997, and the 1997 Annual Report to Stockholders.
Dated: , 1997
----------------------------
- --------------------------------- ---------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- --------------------------------- --------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Appendix B
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 ss. 240.14a-11(c) or ss. 240.14a-12
Green Street Financial Corp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
