<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KS Bancorp, Inc.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
KS Bancorp, Inc.
Post Office Box 219
207 West Second Street
Kenly, North Carolina 27542
(919) 284-4157
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 4, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of KS Bancorp, Inc. (the "Company") will be held on May 4,
1999, at 7:00 p.m., Eastern Time, at the offices of the Company at 207 West
Second Street, Kenly, North Carolina.
The Meeting is for the purpose of considering and voting upon the following
matters:
1. To elect three persons who will serve as directors of the Company until
the 2002 Annual Meeting of Stockholders or until their successors are
duly elected and qualify;
2. To ratify the selection of McGladrey & Pullen, LLP as the independent
auditor for the Company for the 1999 fiscal year; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof. The Board of Directors is not aware
of any other business to be considered at the Annual Meeting.
The Board of Directors has established March 19, 1999, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments thereof. Only record holders of the
Common Stock of the Company as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the
event there are not sufficient shares present in person or by proxy to
constitute a quorum at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Joy B. Watson
Secretary
Kenly, North Carolina
March 29, 1999
A form of proxy is enclosed to enable you to vote your shares at the Annual
Meeting. You are urged, regardless of the number of shares you hold, to
complete, sign, date and return the proxy promptly. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
<PAGE>
KS Bancorp, Inc.
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
SOLICITATION AND VOTING OF PROXIES
General
This Proxy Statement is being furnished to stockholders of KS Bancorp, Inc.
(the "Company") in connection with the solicitation by the board of directors of
the Company (the "Board of Directors") of proxies to be used at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on May 4, 1999, at
7:00 p.m., Eastern Time, at the offices of the Company at 207 West Second
Street, Kenly, North Carolina, and at any adjournments thereof. This Proxy
Statement and the accompanying form of proxy were first mailed to stockholders
on March 29, 1999.
Other than the matters listed on the attached Notice of 1999 Annual Meeting
of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a beneficial owner of
shares of the Company's common stock, no par value (the "Common Stock") that are
not registered in your own name, you will need appropriate documentation from
your recordholder to vote personally at the Annual Meeting.
Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses, if any. In addition to
the use of the mail, proxies may be solicited personally or by telephone or
telegraph by directors, officers and regular employees of the Company and its
wholly-owned savings bank subsidiary, KS Bank, Inc., formerly known as Kenly
<PAGE>
Savings Bank, Inc., SSB (the "Bank"), without additional compensation therefor.
Brokerage houses and nominees have been requested to forward these proxy
materials to the beneficial owners of shares held of record by such persons and,
upon request, the Company will reimburse such persons for their reasonable out-
of-pocket expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of Common Stock owned, it is important
that stockholders be present in person or represented by proxy at the Annual
Meeting. Stockholders are requested to vote by completing, signing, dating and
returning the enclosed proxy card in the provided postage-paid envelope. Any
shareholder may vote for, against, or abstain from voting on any matter to come
before the Annual Meeting. If the enclosed proxy is properly marked, signed,
dated and returned, and not revoked, it will be voted in accordance with the
instructions therein. If no instructions are given, the proxy will be voted FOR
---
the nominees for election to the Board of Directors named in this Proxy
Statement and for the other matters described in this Proxy Statement calling
for a vote of the stockholders. If instructions are given with respect to some
but not all proposals, such instructions as are given will be followed, but the
proxy will be voted FOR the proposals on which no instructions are given.
---
The close of business on March 19, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of the Record Date, the Company had
outstanding 888,633 shares of Common Stock. Each share of Common Stock entitles
its owner to one vote on each matter calling for a vote of stockholders at the
Annual Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of shares of the Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. Since many of our
stockholders cannot attend the Annual Meeting, it is necessary that a large
number be represented by proxy. Accordingly, the Board of Directors has
designated proxies to represent those stockholders who cannot be present in
person and who desire to be so represented. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Annual Meeting, the Annual Meeting may be adjourned in order to permit
the further solicitation of proxies.
In order to be elected, a nominee need only receive a plurality of the
votes cast in the election of directors. As a result, those persons nominated
who receive the largest number of votes will be elected as directors.
Accordingly, shares not voted for any reason respecting any one or more nominees
will not be counted as votes against such nominees.
As to other issues presented for a vote, the affirmative vote of the
holders of a majority of the shares of Common Stock present at the Meeting, in
person or by proxy and entitled to vote, is required to constitute stockholder
approval of such proposals, unless the Company's articles of incorporation or
bylaws or applicable law imposes a different voting requirement.
2
<PAGE>
Abstentions will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Abstentions will not be counted in tabulating
the votes cast on any proposal submitted to the stockholders. Broker non-votes
will not be counted either for determining the existence of a quorum or for
tabulating votes cast on any proposal.
Proxies solicited hereby will be returned to the Board of Directors and
will be tabulated by one or more inspectors of election designated by the Board
of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person or group who acquires the beneficial ownership of more
than 5% of the Common Stock notify the Securities and Exchange Commission (the
"SEC") and the Company. The table below contains certain information, as of the
Record Date, regarding all persons or groups, as defined in the Exchange Act,
who held of record or who are known to the Company to own beneficially, more
than 5% of the Company's Common Stock.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Ownership/1/ Percentage of Class/2/
- -------------------------------------------------------- -------------------------- -----------------------
<S> <C> <C>
Salem Investment Counselors, Inc.
Post Office Box 25427
Winston-Salem, North Carolina
27114-5427 67,917/3/ 7.64%
Harold T. Keen
Director, President and Chief
Executive Officer of the Bank
and the Company
1121 Boyette Road
Four Oaks, North Carolina 27524 86,632/4/ 9.32%
James C. Woodard
308 North Green Street
Selma, North Carolina 27576 68,594/5/ 7.66%
R. Harold Hinnant
200 Pope Avenue
Kenly, North Carolina 27542 94,032/6/ 10.51%
H. Elwin Watson
507 East Second Street
Kenly, North Carolina 27542 78,233/7/ 8.74%
</TABLE>
<TABLE>
<C> <S>
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Based upon a total of 888,633 shares of Common Stock outstanding at the Record Date and the shares underlying options
that have vested or are exercisable within 60 days under the Nonqualified Stock Option Plan for Directors or the Employee
Stock Option Plan in which the named individual participates. Assumes exercise of only those options included with
respect to the designated recipients.
/3/ Based upon a Schedule 13G filed with the Company and dated February 9, 1999.
/4/ Includes 40,448 shares underlying stock options that have vested or are exercisable within 60 days under the Company's
Employee Stock Option Plan. Includes shares owned by Mr. Keen's spouse and minor children and other entities controlled
by Mr. Keen, over which shares Mr. Keen effectively exercises sole or shared voting and investment power. Includes shares
allocated to Mr. Keen under the Kenly Savings Bank, Inc., SSB Employee Stock Ownership Plan (the "ESOP" ).
/5/ Mr. Woodard, Mr. Hinnant and Mr. Watson serve as trustees of the ESOP which holds 52,819 shares of the Company's Common
Stock. The trustees of such plan share certain voting and investment power of such shares, and such shares are included
in this amount. This amount also includes 5,932 shares underlying stock options that have vested or are exercisable
within 60 days under the Nonqualified Stock Option Plan for Directors.
/6/ Mr. Hinnant, Mr. Woodard and Mr. Watson serve as trustees of the ESOP which holds 52,819 shares of the Company's Common
Stock. The trustees of such plan share certain voting and investment power of such shares, and such shares are included
in this amount. This amount also includes 5,832 shares underlying stock options that have vested or are exercisable
within 60 days under the Nonqualified Stock Option Plan for Directors.
/7/ Mr. Watson, Mr. Woodard and Mr. Hinnant serve as trustees of the ESOP which holds 52,819 shares of the Company's Common
Stock. The trustees of such plan share certain voting and investment power of such shares, and such shares are included
in this amount. This amount also includes 6,472 shares underlying stock options that have vested or are exercisable
within 60 days under the Nonqualified Stock Option Plan for Directors.
</TABLE>
4
<PAGE>
Set forth below is certain information as of the Record Date regarding
beneficial ownership of the Common Stock by each of the members of the Board of
Directors (including nominees for re-election at the Annual Meeting), each of
the members of the Board of Directors of the Bank, the nominee for election to
the Board of Directors of the Company and the Bank, the chief executive officer
of the Company and the Bank, and the directors and all executive officers of the
Company and the Bank as a group (all persons listed as directors are directors
of the Company and the Bank).
5
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Ownership/1,2/ Percentage of Class/3/
- --------------------------------------- ---------------------------- -----------------------
<S> <C> <C>
A. Carroll Coleman
7368 Rock Ridge School Road
Kenly, NC 27542 408 .04%
Robert E. Fields
203 Bailey Avenue
Kenly, North Carolina 27542 17,904/4/ 2.00%
R. Harold Hinnant
200 Pope Avenue
Kenly, North Carolina 27542 94,032/5,6/ 10.51%
Harold T. Keen
President and Chief Executive
Officer of the Bank and the Company
1121 Boyette Road
Four Oaks, North Carolina 27524 86,632/7/ 9.32%
James C. Parker
117 Pineridge Lane
Goldsboro, North Carolina 27530 2,198 0.24%
R. Elton Parrish
805 North Webb Street
Selma, North Carolina 27576 24,830/4/ 2.77%
Ralph Edward Scott, Jr.
8934 Lefty Road
Kenly, North Carolina 27542 12,938/4/ 1.44%
H. Elwin Watson
507 East Second Street
Kenly, North Carolina 27542 78,233/6,8/ 8.74%
James C. Woodard,
308 North Green Street
Selma, North Carolina 27576 68,594/4,6/ 7.66%
Gordon C. Woodruff
Post Office Box 708
Smithfield, North Carolina 27577 270 .02%
Directors and executive officers of
the Company
and the Bank as a group (14 persons) 364,395/9/ 36.01%
</TABLE>
6
<PAGE>
<TABLE>
<C> <S>
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise indicated, all shares are owned directly by the named individuals, by their spouses and minor children, or
by other entities controlled by the named individuals.
/3/ Based upon a total of 888,633 shares of Common Stock outstanding at the Record Date and the shares underlying options that
have vested or are exercisable within 60 days under the Nonqualified Stock Option Plan for Directors or the Employee Stock
Option Plan in which the named individual participates. Assumes exercise of only those options included with respect to the
designated recipients.
/4/ Includes 5,932 shares underlying stock options that have vested or are exercisable within 60 days under the Nonqualified
Stock Option Plan for Directors.
/5/ Includes 5,832 shares underlying stock options that have vested or are exercisable within 60 days under the Nonqualified
Stock Option Plan for Directors.
/6/ Includes 52,819 shares held by the Bank's ESOP. Mr. Hinnant, Mr. Woodard and Mr. Watson are trustees of such Plan and share
certain voting and investment power of such shares.
/7/ Includes 40,448 shares underlying stock options that have vested or are exercisable within 60 days under the Employee Stock
Option Plan.
/8/ Includes 6,472 shares underlying stock options that have vested or are exercisable within 60 days under the Nonqualified
Stock Option Plan for Directors.
/9/ Includes 123,184 shares underlying stock options for directors and executive officers that have vested or are exercisable
within 60 days under the Nonqualified Stock Option Plan for Directors and Employee Stock Option Plan. The 52,819 shares held
by the ESOP for which the trustees, Mr. Hinnant, Mr. Woodard and Mr. Watson, share certain voting and investment power have
been included only once in the total number of shares owned beneficially by the directors and executive officers as a group.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership with the SEC. Executive
officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended December 31,
1998, all of its executive officers and directors, other than Ted G. Godwin and
Harold T. Keen, and greater than 10% beneficial owners complied with all
applicable Section 16(a) filing requirements. Ted G. Godwin, who became an
executive officer in June 1998, made a late filing with respect to shares he
owned in the Company at the time. Harold T. Keen made a late filing with
respect to 391 shares of Common Stock he acquired for his children.
7
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's articles of incorporation provide that the number of
directors of the Company may not be less than five nor more than fifteen. The
exact number of directors may be fixed or changed from time to time by the Board
of Directors. The Board of Directors has currently fixed the size of the Board
at nine members.
So long as the total number of directors is nine or more, the directors may
be divided into three classes, as nearly equal as possible in number. Each
class of directors shall be elected for terms of three years each, or until
their earlier death, resignation, retirement, removal or disqualification or
until their successors shall be elected and shall qualify.
The Board of Directors has nominated Harold T. Keen, Ralph Edward Scott and
Gordon C. Woodruff for election as directors to serve until the 2002 Annual
Meeting of Stockholders or until their earlier death, resignation, retirement,
removal or disqualification and until their successors shall be elected and
shall qualify. Mr. Keen and Mr. Scott are currently serving as directors of the
Company; Gordon C. Woodruff has been nominated to replace H. Elwin Watson on the
Board of Directors. Mr. Watson, currently the Chairman of the Board of
Directors, is retiring after 41 years of service as director of the Company or
the Bank and will become a director emeritus of the Bank.
The persons named in the accompanying form of proxy intend to vote any
shares of Common Stock represented by valid proxies received by them to elect
these three nominees, unless authority to vote is withheld or such proxies are
revoked. In the event that any of the nominees should become unavailable to
accept nomination or election, it is intended that the proxyholders will vote to
elect in his stead such other person as the present Board of Directors may
recommend. The present Board of Directors has no reason to believe that any of
the three nominees will be unable to serve if elected to office. In order to be
elected as a director, a nominee need only receive a plurality of the votes
cast. Accordingly, shares not voted for any reason respecting any one or more
nominees will not be counted as votes against such nominees. No stockholder has
the right to cumulatively vote his or her shares in the election of directors.
The Company's bylaws provide that, in order to be eligible for
consideration at the annual meeting of stockholders, all nominations of
directors, other than those made by the Company's Board of Directors, must be
made in writing and must be delivered to the Secretary of the Company not less
than 30 days nor more than 50 days prior to the meeting at which such
nominations will be made; provided, however, if less than 21 days notice of the
meeting is given to stockholders, such nominations must be delivered to the
Secretary of the Company not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed.
8
<PAGE>
Nominees and Continuing Directors
The following table sets forth as to each nominee and each director whose
term is continuing, his name, age, principal occupation during the last five
years, the year he was first elected as a director and the year in which his
existing term of office expires.
The Board of Directors recommends a vote FOR all of the following nominees
---
for election as directors.
<TABLE>
<CAPTION>
Age on Principal Occupation Existing
December 31, During Director Term
Name 1998 Last Five Years Since /1/ Expires
- ----------------- ------------ ----------------------------- --------- --------
NOMINEES
<S> <C> <C> <C> <C>
Harold T. Keen 50 President and Chief 1990 1999
Executive Officer of the
Company and the Bank
Ralph Edward 46 Farmer 1987 1999
Scott, Jr.
Gordon C. 47 Attorney in Smithfield, N/A N/A
Woodruff North Carolina
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
<S> <C> <C> <C> <C>
Robert E. Fields 70 Real estate appraiser; owner of 1977 2000
Fields Appraisal, Inc.
James C. Parker 47 Certified public accountant; 1996 2000
Partner of Parker & Parker,
P.A., CPA
James C. Woodard 83 Real estate appraiser; owner of 1967 2000
F. & J. Appraisal, Inc.
R. Harold Hinnant 68 Retired business owner 1988 2001
R. Elton Parrish 70 Owner of Parrish Funeral 1990 2001
Home, a funeral service
provider
A. Carroll Coleman 61 President and Manager 1998 2001
of P. L. Woodard & Co., Inc.
a farm supply provider
</TABLE>
<TABLE>
<C> <S>
/1/ Includes service on the Board of Directors of the Bank prior to the formation of the Company.
</TABLE>
Mr. Scott is a distant cousin of Mr. Hinnant.
9
<PAGE>
Meetings of the Board and Committees of the Board
The Board of Directors conducts its business through meetings of the Board
of Directors and through activities of its committees. The Board of Directors
meets quarterly and may have additional meetings as needed. During fiscal 1998,
the Board of Directors of the Company held seven meetings. All of the existing
directors of the Company, including the nominees for re-election listed above,
attended at least 75 percent of the aggregate number of meetings of the Board of
Directors and committees of the Board on which they served during 1998.
The Board of Directors of the Company has two standing committees--the
Audit Committee and the Stock Option Committee.
The Audit Committee of the Board consists of H. Elwin Watson, Ralph Edward
Scott, Jr. and James C. Woodard. The Audit Committee meets on an as needed
basis and (i) oversees the independent auditing of the Company; (ii) arranges
for periodic reports from the independent auditors and from management of the
Company and the Bank in order to assess the impact of significant regulatory and
accounting changes and developments; (iii) advises the Board of Directors
regarding significant accounting and regulatory developments; (iv) reviews
corporate policies regarding compliance with laws and regulations, conflicts of
interest and employee misconduct and reviews situations related thereto; (v)
develops and implements the Company's policies regarding internal and external
auditing and appoints, meets with and oversees the performance of those employed
in connection therewith; and (vi) performs such other duties as may be assigned
to it by the Board of Directors. The Audit Committee met two times during
fiscal 1998.
The Stock Option Committee consists of R. Harold Hinnant, James C. Parker,
and H. Elwin Watson. This committee administers the KS Bancorp, Inc. Employee
Stock Option Plan and the KS Bancorp, Inc. Nonqualified Stock Option Plan for
Directors. The Stock Option Committee met one time during fiscal 1998.
In addition, the Board of Directors appoints a nominating committee each
year prior to the annual meeting of stockholders to nominate persons for
election to the Board of Directors. The composition of this committee varies
from year to year.
Board of Directors of the Bank
The Bank also has a nine member board of directors which is composed of the
same persons who are now directors of the Company. If Gordon C. Woodruff is
elected as a director of the Company, it is expected that he will also be
elected as a director of the Bank, to replace Mr. Watson, who is retiring and
will become a director emeritus of the Bank.
10
<PAGE>
Directors' Compensation
Directors' Fees. Members of the Board of Directors receive no fees or
compensation for serving on the Board of Directors of the Company. However, all
members of the Company's Board of Directors are also directors of the Bank.
Each member of the Bank's board of directors receives $800 per month for their
service in that capacity, except for the Chairman of the Bank's board of
directors, who receives $1,000 per month. In addition, members of the Bank's
loan and audit committees receive $100 per meeting attended, and the loan and
audit committees met four and one time during the fiscal year ended December 31,
1998. Board fees are subject to adjustment annually. Except for the loan and
audit committees, members receive no additional compensation for serving on any
committee of the board of directors of the Bank. Directors Robert E. Fields and
James C. Woodard receive additional compensation for services rendered to the
Bank in conducting appraisals. During the fiscal year ended December 31, 1998,
Mr. Fields and Mr. Woodard received $10,400 and $34,550, respectively, for
appraisal services.
The Bank has adopted a deferred compensation plan for its directors to be
paid in the form of death benefits. The plan provides for the payment of death
benefits ranging from $2,000 to $20,000, depending upon each director's years of
service to the Bank. As of December 31, 1998, the Bank had accrued $69,868 in
expense, representing the present value of the death benefits based upon each
director's life expectancy.
Directors Stock Option Plan. The Board of Directors of the Company has
adopted the KS Bancorp, Inc. Nonqualified Stock Option Plan for Directors (the
"Directors Plan"). Members of the Board of Directors and the Bank's board of
directors are eligible recipients under the Directors Plan. Pursuant to the
Directors Plan, 40,446 shares of Common Stock were reserved for issuance upon
the exercise of stock options which have been granted to present and former
nonemployee directors of the Bank. As a result of the Company's 4 for 3 stock
split in June 1997 and previous exercises of options, the number of shares now
reserved for issuance under the Directors Plan is 49,485. Options to purchase
6,472 shares of Common Stock were granted to Mr. Watson, Chairman of the Bank's
board of directors, and options to purchase 5,932 shares of Common Stock were
granted to each of the remaining directors of the Bank who were serving at the
time the Directors Plan was adopted (all existing directors except Mr. Parker
and Mr. Coleman), other than Mr. Keen, who received no options under the
Directors Plan. The options were granted to directors of the Bank in
recognition of their past service to the Bank and as an incentive for their
continued performance. No cash consideration was paid for the options.
Options granted under the Directors Plan had an exercise price of $10.00
per share, which was the fair market value of the Common Stock on the date the
options were granted. As a result of the Company's June 1997 stock split, the
exercise price was adjusted to $7.50 per share in accordance with the Director's
Plan to reflect the adjustment to the per share market value of the Common Stock
that resulted from the stock split. Options granted under the Directors Plan
have a term of ten years, are not transferable except upon death and had a
vesting schedule pursuant to which 20% of the options vested on the date they
were granted and 20% vested each year thereafter.
11
<PAGE>
All the options are now completely vested. In the event of a "change in control"
of the Company or the Bank, options may be exchanged for cash payments equal to
the difference between the market value of the shares subject to option and the
option price. The definition of "change in control" is similar to that described
below under "Management Compensation -- Employment Agreement." The Board of
Directors can amend the Directors Plan at any time; however, the Board of
Directors cannot make any change which would deprive an existing option holder
of any of his rights without his or her consent.
Options granted pursuant to the Directors Plan do not qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and are therefore nonqualified stock options. In general, the
holder of a nonqualified stock option will recognize compensation income equal
to the amount by which the fair market value of the Common Stock received on the
date of exercise exceeds the sum of the exercise price and any amount paid for
the nonqualified stock option. If the optionee elects to pay the exercise price
in whole or in part with Common Stock, the optionee generally will not recognize
any gain or loss on the Common Stock surrendered in payment of the exercise
price. The Company generally will not recognize any income or be entitled to
claim any deduction upon the grant of a nonqualified stock option. At the time
the optionee is required to recognize compensation income upon the exercise of
the nonqualified stock option, the Company generally will be entitled to claim a
deduction in the amount equal to such compensation income.
Holders of options under the Directors Plan are also entitled to receive
bonus compensation under the Bank's Bonus Compensation Plan. See "Management
Compensation--Bonus Compensation Plan."
12
<PAGE>
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of either the Company or the Bank or both.
<TABLE>
<CAPTION>
Employed By
Age on the Bank or
December 31, Positions and Occupations the Company
Name 1998 During Last Five Years Since
- --------------------- ------------ -------------------------------- -----------
<S> <C> <C> <C>
Harold T. Keen 50 President and Chief Executive 1990
Officer of the Company and the
Bank
William C. Clarke 42 Senior Vice President of the 1986
Company and the Bank
Kevin J. Jorgenson 51 Senior Vice President of the 1993
Company and the Bank
Ted G. Godwin 49 Senior Vice President of the 1997
Bank, Vice President and
Smithfield City Executive of
First Union National Bank, Vice
President and Regional
Executive with Raleigh Federal
Savings Bank in New Bern,
North Carolina.
Helen B. Pollock 50 Treasurer and Assistant 1984
Secretary of the Company and
the Bank
</TABLE>
Management Compensation
Summary Compensation Table. The executive officers of the Company are not
paid any cash compensation by the Company. However, the executive officers of
the Company are also executive officers of the Bank and receive cash
compensation from the Bank. The following table shows, for the fiscal years
ending December 31, 1998, 1997 and 1996, the cash compensation paid by the Bank,
as well as certain other compensation paid or accrued for those years, to the
Chief Executive Officer of the Bank. No other executive officer of the Bank
received cash compensation in excess of $100,000 for services rendered in all
capacities to the Bank in fiscal 1998.
13
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
- -------------------------- ----------------------------------------------
Name and Bonus Compensation
Principal Position Year Salary/1/ /2/ ($)/3/
- ----------------------------- ------ ------------ -------- -------------
<S> <C> <C> <C> <C>
Harold T. Keen, 1998 $112,600 $32,358 --
President, Chief Executive 1997 $103,018 $33,369 --
Officer and Director of the 1996 $ 96,446 $36,403 --
Company and the Bank
</TABLE>
<TABLE>
Long Term Compensation
--------------------------------------------------
Awards Payouts
---------------- -----------------
Securities
Underlying
Options/
Stock
Restricted Appreciation
Stock Rights LTIP All other
Awards (in shares) Payout Compensation /4/
---------- ------------- ------- ----------------
<S> <C> <C> <C>
-- -- -- $11,662
-- -- -- $11,084
-- -- -- $10,526
</TABLE>
________________________
/1/ Includes directors' fees from the Bank in the amount of $8,400 for 1996,
$9,600 for 1997 and 9,600 for 1998.
/2/ Represents a cash payment under the Bank's Bonus Compensation Plan.
/3/ Under the "Other Annual Compensation" category, perquisites did not exceed
the lesser of $50,000 or 10% of salary and bonus as reported for Mr. Keen.
/4/ For 1998 the total amount includes $6,180 contributed by the Bank for Mr.
Keen pursuant to the Bank's defined contribution, money purchase pension
plan, $858 contributed by the Bank for Mr. Keen to the Bank's 401(K) plan,
$4,475 accrued pursuant to the retirement agreement entered into with Mr.
Keen and $149 accrued pursuant to the deferred compensation plan adopted
for directors.
14
<PAGE>
Stock Option Plan. The Board of Directors has adopted the KS Bancorp, Inc.
Employee Stock Option Plan (the "Employees Plan"). Pursuant to the Employees
Plan 80,896 shares of Common Stock were reserved for issuance upon the exercise
of options granted under the Employees Plan. During the fiscal year ended
December 31, 1993, seven officers of the Bank were granted options to purchase
such 80,896 shares of Common Stock. As a result of the Company's 4 for 3 stock
split in June 1997, the number of shares reserved for issuance under the
Employees Plan was increased to 107,858.
All of the stock options granted under the Employees Plan are intended to
be incentive stock options under Section 422 of the Code. In the case of an
incentive stock option, an optionee is not deemed to have received taxable
income upon the grant or exercise of the stock option, provided the shares are
not disposed of by the optionee for at least one year after the date of exercise
and two years after the date of grant. No compensation deduction may be taken
by the issuing company as a result of the grant or exercise of an incentive
option, assuming these holding periods are satisfied. In the case of a
nonqualified stock option, an optionee is deemed to receive ordinary income upon
exercise of the stock option in an amount equal to the amount by which the
exercise price is exceeded by the fair market value of the stock plus any amount
paid for the option. The amount of any ordinary income deemed to be received by
the optionee upon the exercise of a nonqualified stock option is a deductible
expense of the issuing company for tax purposes.
The Employees Plan is administered by a committee appointed by the Board of
Directors of the Company. No cash consideration was paid for options granted
pursuant to the Employees Plan. Options granted under the Employees Plan had an
option exercise price of not less than the fair market value of the Common Stock
on the effective date the option is granted. The exercise price of the options
previously granted was $10.00 per share, which was the price at which the Common
Stock of the Company was sold in the conversion of the Bank from mutual to stock
form. As a result of the Company's July 1997 stock split, the exercise price
was decreased to $7.50 per share in accordance with the Employees Plan to
reflect the adjustment to the per share market value of the Common Stock that
resulted from the stock split. Options granted under the Employees Plan have a
term of no more than ten years, and options are not transferable except upon
death. Options granted under the Employees Plan had a vesting schedule pursuant
to which 20% of the options vested on the date the options were granted and 20%
vested each year thereafter. All the options are now completely vested. In the
event of a "change in control" of the Company or the Bank, options may be
exchanged for cash payments equal to the difference between the market value of
the shares subject to option and the option price. The definition of "change in
control" is similar to that described above under "Management Compensation --
Employment Agreement."
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding stock options held by
Harold T. Keen as of December 31, 1998. Also reported are the value for "in-
the-money" options, which represents the positive spread between the exercise
price of any such existing stock options and the last sales price of the Common
Stock as of December 31, 1998 as reported on the OTC Bulletin Board. No options
were exercised by Mr. Keen in fiscal 1998.
15
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Shares Underlying Unexercised in-the-Money
Acquired Value Options/SARs at Options/SARs at
Name on Exercise Realized Fiscal Year End/1/ Fiscal Year End/2/
- ----------------------------- ------------- ----------- -------------------------------- -------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Harold T. Keen 0 0 40,448 0 $404,480 $0
</TABLE>
- -----------------------------
<TABLE>
<C> <S>
/1/ All of the options were vested as of December 31, 1998.
/2/ The exercise price of the options is $7.50. On December 31, 1998, the last sale price for the Common Stock of the Company as
reported on the OTC Bulletin Board was $17.50.
</TABLE>
Bonus Compensation Plan. In 1993, the Bank has adopted a bonus
compensation plan (the "Bonus Compensation Plan") which provided that incentive
compensation would be paid to those directors and employees who hold unexercised
options issued pursuant to the Directors Plan and the Employees Plan. Under the
Bonus Compensation Plan, incentive compensation is paid soon after the close of
each of the Bank's fiscal quarters. The amount of incentive compensation
awarded under the Incentive Compensation Plan has been equal to the number of
shares subject to unexercised options granted under the Directors Plan and the
Employees Plan times the amount of dividends awarded per share of Common Stock
outstanding during such immediately preceding fiscal quarter. Effective January
1, 1999, the Bonus Compensation Plan was amended to provide that incentive
compensation will be payable only to nonemployee directors who hold options
under the Directors Plan and will no longer be payable to employees who hold
unexercised options under the Employees Plan.
Employee Stock Ownership Plan. The Bank has established an Employee Stock
Ownership Plan (the "ESOP") for eligible employees of the Bank. Employees with
1,000 hours of employment with the Bank who have attained age 21 are eligible to
participate. The ESOP has borrowed funds from the Company and used the funds to
purchase 40,448 shares of Common Stock. As a result of the Company's 4 for 3
stock split in June 1997, the number of shares held by the ESOP was increased to
53,930, and the ESOP owned 52,819 shares as of the Record Date. Collateral for
the loan is the Common Stock purchased by the ESOP which has not been allocated
to participants. The loan is being repaid principally from the Bank's
discretionary contributions to the ESOP. Dividends, if any, paid on shares held
by the ESOP may also be used to reduce the loan. The loan has not been
guaranteed by the Bank. Shares purchased by the ESOP are held in a suspense
account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan are allocated among
ESOP participants on the basis of compensation in the year of allocation.
Benefits generally become 20% vested each year and are 100% vested after five
years of credited service. Prior to the completion of five years of credited
16
<PAGE>
service, a participant who terminates employment for reasons other than death,
retirement (or early retirement), or disability will receive only vested
benefits under the ESOP. Forfeitures will be reallocated among remaining
participating employees in the same proportion as contributions. Benefits are
payable upon death, retirement, early retirement, disability or separation from
service. The Bank's contributions to the ESOP are not fixed, so benefits payable
under the ESOP cannot be estimated.
The Bank's ESOP committee may instruct the ESOP trustees regarding
investment of funds contributed to the ESOP. Participating employees shall
instruct the trustees as to the voting of all shares allocated to their
respective accounts held in the ESOP. The unallocated shares held in the
suspense account, and all allocated shares for which voting instructions are not
received, will be voted by the trustees in their discretion subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
The ESOP may be considered an "anti-takeover" device since the ESOP may
control a sufficient percentage of the total outstanding Common Stock of the
Company so that the vote or decision whether to tender shares of the ESOP may be
used as a defense in a contested takeover.
Retirement Plan. The Bank maintains a defined contribution, money purchase
pension plan for the benefit of all of its employees who have completed six
months of service with the institution and who are at least 21 years of age.
Under the plan, the Bank contributes an amount equal to 6% of each participant's
compensation during the plan year, plus an additional 5.4% of each participant's
compensation during the plan year in excess of 80% of the Social Security wage
base. For purposes of the plan, compensation means a participant's basic rate of
annual compensation for the current calendar year, including commissions,
overtime pay, bonuses and other extra compensation.
Participants are fully vested in amounts the Bank contributes to the plan
on their behalf after seven years of service, as follows: 1 year of service,
0%; 2 years, 0%; 3 years, 20%; 4 years, 40%; 5 years, 60%; 6 years, 80%; 7 years
or more, 100%.
Benefits under the plan are payable in the event the participant's
retirement, death, disability or termination of employment. Normal retirement
age under the plan is 65 years of age. The plan also offers early retirement to
participants who are at least 60 years of age.
As of December 31, 1998, Harold T. Keen had eight years of service under
the retirement plan.
401(k) Profit Sharing Plan. The Bank also maintains a contributory savings
plan for substantially all of its employees, which meets the requirements of
section 401(k) of the Code. Employees who have completed six months of service
and who are least 21 years of age may elect to contribute up to 15% of their
compensation to the plan each year, subject to certain maximums imposed by
federal law. The Bank will match 25% of each participant's contribution, up to
a
17
<PAGE>
maximum employer contribution of 1% of the participant's compensation. From
time to time, the Bank may also make discretionary profit sharing contributions
to the plan, which are allocated among participants' accounts on the basis of
compensation. For purposes of the 401(k) plan, compensation means a
participant's total compensation received from the employer.
Participants are fully vested in amounts they contribute to the plan.
Participants are fully vested in amounts the Bank contributes to the plan on
their behalf as employer matching contributions and as profit sharing
contributions after seven years of service as follows: 1 year of service, 0%; 2
years, 0%; 3 years, 20%; 4 years, 40%; 5 years, 60%; 6 years, 80%; 7 or more
years, 100%.
Retirement Agreement For Mr. Keen. The Bank has entered into a Retirement
Agreement with Harold T. Keen, President and Chief Executive Officer, providing
for the payment of $1,250 per month for 10 years upon Mr. Keen's retirement
after age 65. If Mr. Keen should die after his retirement, his beneficiary
would be entitled to receive payments under the agreement. If Mr. Keen should
die before his retirement, his beneficiary would receive a death benefit of
$142,000. If Mr. Keen voluntarily terminates his employment with the Bank or if
he is discharged for cause, benefits under the agreement would be forfeited. If
Mr. Keen should be terminated without cause, he would be entitled to a vested
percentage of the benefits under the agreement which would be computed using a
15-year vesting schedule.
The Bank has purchased a life insurance policy on Mr. Keen's life which
will fund the benefits payable under the agreement. The Bank's deferred
compensation expense with respect to this agreement amounted to $4,475, $4,221
and $3,982 for the fiscal years ended December 31, 1998, 1997 and 1996,
respectively.
Employment Agreement. The Bank has entered into an employment agreement
with Mr. Keen in order to establish his duties and compensation and to provide
for his continued employment with the Bank. The agreement provided for an
initial term of employment of three years. On each anniversary date thereafter,
the agreement is extended for an additional year so that the remaining term will
be three years unless written notice of non-renewal is given by the Bank's board
of directors after conducting an evaluation of Mr. Keen's performance. Mr.
Keen's agreement now provides for an annual base salary of $120,000. The
agreement also provides that the base salary shall be reviewed by the Board of
Directors not less often than annually. In the event of a change in control (as
defined below), Mr. Keen's base salary must be increased by at least 6%
annually. In addition, the employment agreement provides for profitability and
discretionary bonuses and participation in other pension, profit-sharing or
retirement plans maintained by the Bank and the Company, as well as fringe
benefits normally associated with Mr. Keen's office. The employment agreement
provides that it may be terminated by the Bank for cause, as defined in the
agreement, and that it may otherwise be terminated by the Bank (subject to
vested rights) or by Mr. Keen.
The employment agreement provides that if employment is terminated in
connection with, or within 24 months after, a change in control or if the nature
of Mr. Keen's compensation, duties
18
<PAGE>
or benefits are diminished following a change in control of the Bank or the
Company, and Mr. Keen terminates his employment, he will be entitled to receive
compensation equal to 2.99 times his average annual compensation for income tax
purposes for the most recent five tax years prior to the change in control,
payable in a lump sum or in equal monthly payments. For purposes of the
employment agreement, a change in control generally will occur if (i) after the
effective date of the employment agreement, any "person" (as such term is
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) directly or
indirectly, acquires beneficial ownership of voting stock, or acquires
irrevocable proxies or any combination of voting stock and irrevocable proxies,
representing 25% or more of any class of voting securities of either the Company
or the Bank, or acquires in any manner control of the election of a majority of
the directors of either the Company or the Bank, (ii) either the Company or the
Bank consolidates or merges with or into another corporation, association or
entity, or is otherwise reorganized, where neither the Company nor the Bank is
the surviving corporation in such transaction, or (iii) all or substantially all
of the assets of either the Company or the Bank are sold or otherwise
transferred to or are acquired by any other entity or group.
Payments under the employment agreement in the event of a change in control
may constitute an excess parachute payment under Section 280G of the Code
resulting in the imposition of an excise tax on the recipient and denial of a
deduction to the Bank for all amounts in excess of the executive's average
annual compensation for the five tax years preceding the change in control. The
agreement provides that benefits payable to the officer as a result of a change
in control will be modified or reduced to the extent deemed to be necessary by
the Bank's board of directors to avoid the imposition of excise taxes on the
employee or the disallowance of a deduction to the Company.
Report of Compensation Committee. The Board of Directors of the Company
does not have a compensation committee. The board of directors of the Bank has
a compensation committee which is now composed of R. Harold Hinnant, James C.
Parker and H. Elwin Watson. The compensation committee meets on an as needed
basis to review Kenly's salary program and to make recommendations to the Bank's
board of directors regarding compensation of the Bank's executive officers. The
Bank's board of directors ultimately determines such compensation. The salaries
of each of the executive officers is determined based upon the executive
officer's contributions to the Bank's overall profitability, maintenance of
regulatory compliance standards, professional leadership, and management
effectiveness in meeting the needs of day to day operations. The compensation
committee also compares the compensation of the Bank's executive officers with
compensation paid to executives of comparable financial institutions in North
Carolina and executives of other businesses in the Bank's market area. These
factors were considered in establishing the compensation of Harold T. Keen, the
Bank's President and Chief Executive Officer during the 1998 fiscal year. In
addition, all of the executive officers of the Bank, including Mr. Keen, are
eligible to receive discretionary bonuses declared by the Bank's board of
directors. The amount of such bonuses is based upon the net income of the Bank
and the increase in the market value of the Company.
Compensation Committee Interlocks and Insider Participation. No member of
the Bank's compensation committee is now, or formerly was, an officer or
employee of the Company
19
<PAGE>
or the Bank. Harold T. Keen, President and Chief Executive Officer of the Bank
and the Company, makes recommendations to the compensation committee regarding
compensation of the Bank's executive officers. Mr. Keen participates in the
deliberations, but not the decisions, of the compensation committee regarding
compensation of executive officers other than himself. He does not participate
in the committee's discussions or decisions regarding his own compensation.
Performance Graph. The following graph compares the Company's cumulative
stockholder return on its Common Stock with the Nasdaq composite index and with
a thrift institution index maintained by SNL Securities. The graph was prepared
using data as of December 31, 1998.
20
<PAGE>
- --------------------------------------------------------------------------------
KS Bancorp, Inc.
- --------------------------------------------------------------------------------
[CURRENT PERFORMANCE GRAPH TO BE INSERTED HERE.]
Period Ending
------------------------------------------------------------
Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------
KS Bancorp, Inc. 100.00 118.08 150.56 181.88 314.50 237.34
NASDAQ - Total US 100.00 97.75 138.26 170.01 208.58 293.21
SNL Thrift Index 100.00 98.82 153.90 200.53 341.22 300.11
21
<PAGE>
Certain Indebtedness and Transactions of Management
The Bank makes loans to its executive officers and directors in the
ordinary course of its business. These loans are currently made on
substantially the same terms, including interest rates and collateral, as those
then prevailing for comparable transactions with nonaffiliated persons, and do
not involve more than the normal risk of collectibility or present any other
unfavorable features. Applicable regulations prohibit the Bank from making
loans to its executive officers and directors at terms more favorable than could
be obtained by persons not affiliated with the Bank. The Bank's policy
concerning loans to executive officers and directors currently complies with
such regulations.
22
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
McGladrey & Pullen, LLP, the Company's and the Bank's independent auditor
for the year ended December 31, 1998, has been selected as the Company's and the
Bank's independent auditor for the 1999 fiscal year. Such selection is being
submitted to the Company's stockholders for ratification. A representative of
McGladrey & Pullen, LLP is expected to attend the Annual Meeting and will be
afforded an opportunity to make a statement, if he so desires, and to respond to
appropriate questions from stockholders.
The Board of Directors recommends that the stockholders vote FOR this
---
proposal.
DATE FOR RECEIPT OF STOCKHOLDERS' PROPOSALS
It is presently anticipated that the 2000 Annual Meeting of Stockholders
will be held in May of 2000. In order for stockholder proposals to be included
in the proxy materials for that meeting, such proposals must be received by the
Secretary of the Company at the Company's principal executive office not later
than November 30, 1999 and meet all other applicable requirements for inclusion
therein.
In the alternative, a stockholder may commence his own proxy solicitation
and present a proposal from the floor at the 2000 Annual Meeting of
Stockholders. In order to do so, the stockholder must notify the Secretary of
the Company in writing, at the Company's principal executive office no later
than February 12, 2000, of his proposal. If the stockholder wants to stop the
Company from voting proxies (under the discretionary authority granted by the
form of proxy to be solicited by the Company for use at the 2000 Annual Meeting)
on his proposal, the notice must also state the stockholder's intent to solicit
the required number of votes for passage of his proposal and the stockholder
must provide evidence to the Company that the solicitation has occurred.
OTHER MATTERS
Management knows of no other matters to be presented for consideration at
the Meeting or any adjournments thereof. If any other matters shall properly
come before the Meeting, it is intended that the proxyholders named in the
enclosed form of proxy will vote the shares represented thereby in accordance
with their judgment, pursuant to the discretionary authority granted therein.
23
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended December 31, 1998,
which includes financial statements audited and reported upon by the Company's
independent auditor, is being mailed along with this Proxy Statement; however,
it is not intended that the Annual Report be a part of this Proxy Statement or a
solicitation of proxies.
THE FORM 10-K FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE UPON WRITTEN REQUEST DIRECTED TO: KS BANCORP, INC.,
POST OFFICE BOX 219, 207 WEST SECOND STREET, KENLY, NORTH CAROLINA 27542,
ATTENTION: HAROLD T. KEEN.
By Order of the Board of Directors,
/s/ Joy B. Watson
Joy B. Watson
Secretary
Kenly, North Carolina
March 29, 1999
24
<PAGE>
REVOCABLE PROXY
KS BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 4, 1999
The undersigned hereby appoints the Board of Directors of KS Bancorp, Inc.
(the "Company"), with full power of substitution, 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, to be
held at the offices of the Company at 207 West Second Street, Kenly, North
Carolina, on Tuesday, May 4, 1999, at 7:00 p.m., Eastern Time, and at any and
all adjournments thereof, as follows:
FOR VOTE WITHHELD
--- -------------
1. The election as directors of all nominees [ ] [ ]
listed below for the terms stated:
Term ending as of the 2002 Annual Meeting --
Harold T. Keen, Ralph Edward Scott, Jr.,
Gordon C. Woodruff
INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's
name in the space provided below.
-------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the selection of McGladrey & [ ] [ ] [ ]
Pullen, LLP as the independent auditor for the
Company for the 1999 fiscal year.
The Board of Directors recommends a vote "FOR" the above proposals.
- --------------------------------------------------------------------------------
<PAGE>
IF PROPERLY MARKED, DATED, SIGNED AND RETURNED, THIS PROXY WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS STATED. IF INSTRUCTIONS ARE GIVEN WITH RESPECT TO SOME BUT NOT ALL
PROPOSALS, SUCH INSTRUCTIONS AS ARE GIVEN WILL BE FOLLOWED, BUT THE PROXY WILL
BE VOTED "FOR" THE PROPOSALS AS TO WHICH NO INSTRUCTIONS ARE GIVEN. 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.
A PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE BY THE FILING OF A
WRITTEN NOTICE OF REVOCATION WITH THE SECRETARY OF THE COMPANY, BY DELIVERING TO
THE COMPANY A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE
ANNUAL MEETING AND VOTING IN PERSON.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and of a
Proxy Statement dated March 29, 1999.
_____________________________________________
PRINT NAME OF STOCKHOLDER
_____________________________________________
SIGNATURE OF STOCKHOLDER Date
_____________________________________________
PRINT NAME OF STOCKHOLDER
_____________________________________________
SIGNATURE OF STOCKHOLDER Date
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign, but only one signature
is required.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
