UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
Salisbury Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SALISBURY BANCORP, INC.
5 BISSELL STREET
P.O. BOX 1868
LAKEVILLE, CONNECTICUT 06039
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON March 10, 2009
To the Shareholders of Salisbury Bancorp, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Salisbury
Bancorp, Inc. (the "Company") will be held at 4:00 p.m., local time, on Tuesday,
March 10, 2009 at the Interlaken Inn, Lakeville, Connecticut for the following
purposes:
1. To approve an amendment to the Company's Certificate of
Incorporation to authorize a class of 25,000 shares of preferred
stock, par value $0.01 per share; and
2. To transact such other business as may properly be brought before
the Special Meeting or any adjournment(s) thereof.
Only those shareholders of record at the close of business on February 4,
2009 are entitled to notice of, and to vote at, this Special Meeting or any
adjournment thereof.
In order that you may be represented at the Special Meeting, please
complete, date, sign and mail promptly the enclosed proxy for which a
postage-prepaid return envelope is provided.
BY ORDER OF THE BOARD OF DIRECTORS
OF SALISBURY BANCORP, INC.
/s/ John F. Foley
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February 9, 2009 John F. Foley
Lakeville, Connecticut Secretary
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE REGARDLESS OF WHETHER THEY PLAN TO ATTEND THE MEETING. ANY
PROXY GIVEN BY A SHAREHOLDER WHO EXECUTES AND RETURNS A PROXY AND WHO ATTENDS
THE SPECIAL MEETING MAY WITHDRAW THE PROXY AT TIME BEFORE IT IS VOTED AND VOTE
HIS OR HER SHARES IN PERSON. A PROXY MAY ALSO BE REVOKED BY GIVING NOTICE TO
JOHN F. FOLEY, SECRETARY OF THE COMPANY, 5 BISSELL STREET, P.O. BOX 1868,
LAKEVILLE, CT 06039, IN WRITING PRIOR TO THE TAKING OF A VOTE.
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SALISBURY BANCORP, INC.
5 BISSELL STREET
LAKEVILLE, CT 06039
860-435-9801
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PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
March 10, 2009
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INTRODUCTION
The enclosed proxy card (the "Proxy") is solicited by the Board of
Directors (the "Board of Directors") of Salisbury Bancorp, Inc. (the "Company"),
for use at the Special Meeting of Shareholders (the "Special Meeting") to be
held on Tuesday, March 10, 2009, at 4:00 p.m., at the Interlaken Inn, Lakeville,
Connecticut 06039, and at any and all adjournments thereof. Any Proxy given may
be revoked at any time before it is actually voted on any matter in accordance
with the procedures set forth on the Notice of Special Meeting. This Proxy
Statement and the enclosed form of Proxy are being mailed to shareholders (the
"Shareholders") on or about February 9, 2009. The cost of preparing, assembling
and mailing this Proxy Statement and the material enclosed herewith is being
borne by the Company. In addition, proxies may be solicited by Directors,
officers and employees of the Company and Salisbury Bank and Trust Company (the
"Bank") personally by telephone or other means. The Company will reimburse
banks, brokers, and other custodians, nominees, and fiduciaries for their
reasonable and actual costs in sending the proxy materials to the beneficial
owners of the Company's common stock (the "Common Stock"). The Company has
engaged Morrow & Co., LLC to assist in the solicitation of proxies at a fee of
$7,500 plus expenses.
If your shares are in a brokerage or fiduciary account, your broker or
bank will send you a voting instruction form instead of a Proxy. Please follow
the instructions on such form to instruct your broker or bank how to vote your
shares. If you wish to attend the Special Meeting and vote your shares in
person, you must follow the instructions on the voting instructions form to
obtain a legal proxy from your broker or bank.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on February 4, 2009
as the record date (the "Record Date") for the determination of Shareholders
entitled to notice of and to vote at the Special Meeting. As of the Record Date,
__________ shares of the Company's Common Stock (par value $.10 per share) were
outstanding and entitled to vote and held of record by approximately 1,500
shareholders of Record. Each share of Common Stock is entitled to one vote on
all matters to be presented at the Special Meeting. Votes withheld, abstentions
and broker non-votes are counted only for purposes of determining whether a
quorum is present at the Special Meeting but will the effect of a vote against
Proposal 1.
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A Proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage-prepaid if mailed in the United States.
If the enclosed form of Proxy is properly executed and received by the
Company in time to be voted at the Special Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed, but unmarked proxies will be voted "FOR" Proposal 1 discussed in this
Proxy Statement.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Proxy Statement may include forward-looking statements relating to
such matters as:
(a) assumptions concerning future economic and business conditions
and their effect on the economy in general and on the markets
in which the Company and Salisbury Bank and Trust Company (the
"Bank") do business; and
(b) expectations for revenues and earnings for the Company and
Bank.
Such forward-looking statements are based on assumptions rather than
historical or current facts and, therefore, are inherently uncertain and subject
to risk. For those statements, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Act of 1995.
The Company notes that a variety of factors could cause the actual results
or experience to differ materially from the anticipated results or other
expectations described or implied by such forward-looking statements. The risks
and uncertainties that may affect the operation, performance, development and
results of the Company's and Bank's business include the following:
(a) the risk of adverse changes in business conditions in the
banking industry generally and in the specific markets in
which the Bank operates;
(b) changes in the legislative and regulatory environment that
negatively impacts the Company and Bank through increased
operating expenses;
(c) increased competition from other financial and non-financial
institutions;
(d) the impact of technological advances; and
(e) other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
Such developments could have an adverse impact on the Company's and the Bank's
financial position and results of operations.
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PROPOSAL 1
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
DESCRIPTION OF THE PROPOSAL
The Board of Directors has adopted an amendment to the Company's
Certificate of Incorporation to authorize a class of 25,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"). The full text of the
proposed amendment to the Company's Certificate of Incorporation is set forth in
Exhibit A to this proxy statement. The Company's Certificate of Incorporation
currently authorizes only the issuance of Common Stock. The proposed amendment
will vest in the Board of Directors the authority to determine by resolution the
terms of one or more series of Preferred Stock, including the preferences,
rights and limitations of each series. Provisions in a company's certificate of
incorporation authorizing preferred stock in this manner are often referred to
as "blank check" provisions, as they give a board of directors the flexibility,
at any time or from time to time, without further shareholder approval (except
as may be required by applicable laws, regulatory authorities or the rules of
any stock exchange on which a company's securities are then listed), to create
one or more series of preferred stock and to determine by resolution the terms
of each such series. The Board of Directors believes that authorization of the
Preferred Stock in the manner proposed will provide the Company with greater
flexibility in meeting future capital requirements by creating series of
Preferred Stock customized to meet the needs of particular transactions and then
prevailing market conditions. Series of Preferred Stock would also be available
for issuance from time to time for any other proper corporate purposes,
including in connection with the redemption of the Preferred Stock described
below, strategic alliances, joint ventures, or acquisitions.
The Board of Directors does not have any plans calling for the issuance of
shares of Preferred Stock at the present time, other than the possible issuance
of Preferred Stock to the U.S. Department of the Treasury (the "Treasury") in
connection with the Treasury's recently announced Troubled Asset Relief Program
("TARP") Capital Purchase Program described below.
TERMS OF THE CAPITAL PURCHASE PROGRAM
On October 14, 2008, the Treasury announced the TARP Capital Purchase
Program. This program encourages U.S. financial institutions to build capital to
increase the flow of financing to U.S. businesses and consumers and to support
the U.S. economy. Under the program, the Treasury will purchase senior preferred
shares from banks, bank holding companies, and other financial institutions. The
senior preferred shares will qualify as Tier 1 capital for regulatory purposes
and will rank senior to common stock and at an equal level in the capital
structure with any existing preferred shares other than preferred shares which
by their terms rank junior to any other existing preferred shares. The senior
preferred shares purchased by the Treasury will pay a cumulative dividend rate
of 5 percent per annum for the first five years they are outstanding and
thereafter at a rate of 9 percent per annum. The senior preferred shares will be
non-voting, other than voting rights on matters that could adversely affect the
shares. The shares will be callable at one hundred percent of their issue price
plus any accrued and unpaid dividends after three years.
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Prior to the end of three years, the senior preferred shares may be redeemed
with the proceeds from a qualifying equity offering of any Tier 1 perpetual
preferred or common stock.
If dividends on the senior preferred shares are not paid in full for six
dividend periods, whether or not consecutive, the senior preferred shares will
have the right to elect two directors. The right to elect directors will end
when full dividends have been paid for four consecutive dividend periods.
The Treasury will receive warrants to purchase a number of shares of
common stock having an aggregate market price equal to 15% of the senior
preferred shares on the date of investment, subject to reduction as set forth
below. The initial exercise price for the warrants, and the market price for
determining the number of shares of common stock subject to the warrants, will
be the market price for the common stock on the date of the preliminary approval
of the application (calculated on a 20-trading day trailing average), subject to
customary anti-dilution adjustments. The warrants will have a term of ten years.
The warrants will be immediately exercisable, in whole or in part. The warrants
will not be subject to any contractual restrictions on transfer, provided that
the Treasury may only transfer or exercise an aggregate of one-half of the
warrants prior to the earlier of (i) the date on which the issuer has received
aggregate gross proceeds of not less than 100% of the issue price of the senior
preferred shares from one or more Qualified Equity Offerings (the sale by the
issuer after the date of the sale of the senior preferred shares of Tier 1
qualifying perpetual preferred stock or common stock for cash) and (ii) December
31, 2009. In the event that the issuer receives aggregate gross proceeds of not
less than 100% of the issue price of the senior preferred shares from one or
more Qualified Equity Offerings on or prior to December 31, 2009, the number of
shares of common stock underlying the warrants then held by the Treasury will be
reduced by a number of shares equal to the product of (i) the number of shares
originally underlying the warrants (taking into account all adjustments) and
(ii) 0.5.
An issuer participating in the Capital Purchase Program will be required
to file a shelf registration statement with the Securities and Exchange
Commission for the purpose of registering the senior preferred shares, the
warrants and the common stock underlying the warrants as promptly as practicable
after the date of the sale of the senior preferred shares and will take all
action required to cause the shelf registration statement to be declared
effective as soon as possible and maintain the effectiveness of the registration
statement. The issuer will be required to apply for the listing on the national
exchange on which the issuer's common stock is traded of the common stock
underlying the warrants and will take such other steps as may be reasonably
requested to facilitate the transfer of the warrants or the common stock.
The Treasury will agree not to exercise voting power with respect to any
shares of common stock of the issuer issued to it upon exercise of the warrants.
The Treasury's consent also will be required for any increase in common
stock dividends per share or certain repurchases of common stock until the third
anniversary of the date of the investment unless prior to the third anniversary
that the senior preferred shares are issued are redeemed in whole or the
Treasury has transferred all of the senior preferred shares to third parties.
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Banks and bank holding companies participating in the Capital Purchase Program
also must modify or terminate all benefit plans, arrangements and agreements
(including golden parachute agreements) to the extent necessary to be in
compliance with the executive compensation and corporate governance requirements
of Section 111 of the Emergency Economic Stabilization Act of 2008 and any
guidance or regulations issued by the Secretary of the Treasury for the period
during which the Treasury holds equity issued under the Capital Purchase
Program. These standards include: (i) ensuring that incentive compensation for
specified senior executive officers does not encourage unnecessary and excessive
risks that threaten the value of the Company; (ii) requiring a clawback of any
bonus or incentive compensation paid to a specified senior executive officer
based on statements of earnings, gains or other criteria that are later proven
to be materially inaccurate; (iii) prohibiting the Company from making any
golden parachute payment to a specified senior executive officer based on
applicable Internal Revenue Code provisions; and (iv) agreeing not to deduct for
tax purposes executive compensation in excess of $500,000 for each specified
senior officer executive.
The Company has reviewed its executive compensation arrangements and does
not anticipate that it will be necessary to modify any existing employee plans
or contracts to comply with the applicable limits on executive compensation
described above.
See Exhibit B for the Summary of Senior Preferred Terms and Summary of
Warrant Terms as published by the Treasury.
COMPANY PARTICIPATION IN THE CAPITAL PURCHASE PROGRAM
The Company received preliminary approval on January 7, 2009 from the
Treasury to issue and sell up to 8,816 shares of the Preferred Stock and a
warrant to purchase approximately 57,671 shares of Common Stock (the "Warrant")
at an estimated exercise price of $22.93 per share for aggregate consideration
of $8,816,000. Each share of Preferred Stock issued to the Treasury will have a
liquidation preference of $1,000. If the Company sells the maximum amount of
Preferred Stock authorized under the Capital Purchase Program, the Company
estimates that the ownership percentage of the current shareholders would be
diluted by approximately 3.3% if the Warrant were fully exercised.
At September 30, 2008, the Company had capital ratios in excess of those
required to be considered well-capitalized under banking regulations. The Board
of Directors believes it is prudent for the Company to apply for capital
available under the Capital Purchase Program because (i) the Company believes
that the cost of capital under the Capital Purchase Program may be significantly
lower than the cost of capital otherwise available to the Company at this time,
and (ii) despite being well-capitalized, additional capital obtained under the
capital Purchase Program would provide the Company additional flexibility to
meet future capital needs that may arise.
The Board of Directors believes that the flexibility to issue shares of
Preferred Stock other than under the Capital Purchase Program can enhance the
Board of Director's arm's-length bargaining capability on behalf of the
Company's shareholders in a takeover situation. However, under some
circumstances, the ability to designate the rights of, and issue, Preferred
Stock could be used by the Board of Directors to make a change in control of the
Company more difficult.
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The rights of the holders of the Company's Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future, including that issued under the Capital
Purchase Program. To the extent that dividends will be payable on any issued
shares of Preferred Stock, the result would be to reduce the amount otherwise
available for payment of dividends on outstanding shares of the Company's Common
Stock and there might be restrictions placed on the Company's ability to declare
dividends on the Common Stock or to repurchase shares of Common Stock. The
issuance of Preferred Stock having voting rights would dilute the voting power
of the holders of Common Stock. To the extent that Preferred Stock is made
convertible into shares of Common Stock, the effect, upon such conversion, would
also be to dilute the voting power and ownership percentage of the holders of
Common Stock. In addition, holders of Preferred Stock would normally receive
superior rights in the event of any dissolution, liquidation, or winding up of
the Company, thereby diminishing the rights of the holders of Common Stock to
distribution of the Company's assets. Shares of Preferred Stock of any series
would not entitle the holder to any pre-emptive right to purchase or subscribe
for any shares of that or any other class.
PRO FORMA EFFECT ON THE CORPORATION'S FINANCIAL STATEMENTS
The following discusses the pro forma effect of participation in the
Capital Purchase Program on the Company's financial statements. As indicated
above, the Company was notified on January 7, 2009 that the Treasury had
preliminarily approved the Company's application to participate in the Capital
Purchase Program in the amount of $8,816,000.
Pro Forma Effects - Balance Sheet
If the Company participates in the Capital Purchase Program, shareholders'
equity would increase by the amount of the capital proceeds received from the
Treasury, net of transaction issuance costs. Costs associated with the
transaction are not expected to be material. Upon initial receipt of the
capital, the Company intends to support prudent lending, strengthen the balance
sheet and pursue strategic growth opportunities. If $8,816,000 in proceeds had
been received from the Treasury on September 30, 2008, shareholders' equity
would have increased from the reported amount of $38,720,000 to $47,536,000 and
total assets would have increased from the reported amount of $485,650,000 to
$494,466,000 on a pro forma basis.
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The following table shows the pro forma impact of the Company's receipt of
$8,816,000 proceeds from the Treasury on the Bank's capital ratios as of
September 30, 2008:
As Reported Pro Forma Regulatory Standard for
9/30/08 9/30/08 Well-Capitalized
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Leverage Ratio 7.54% 9.25% 5.00%
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Tier 1 Risk Based 12.08% 14.65% 6.00%
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Total Risk Based 13.15% 15.69% 10.00%
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Pro Forma Effects - Income Statement
If the Company participates in the Capital Purchase Program, the Company
intends to use the capital to support prudent loan growth, strengthen the
balance sheet and pursue strategic growth opportunities. The capital received,
over time, is expected to generate income to service required dividend payments
on the Preferred Stock and generate additional income for common shareholders.
Until the time it fully deploys this capital over a larger asset base, the
Company anticipates that earnings on the original capital received will not
fully cover required dividend payments and other costs relating to the Preferred
Stock, which would reduce the amount of earnings available to common
shareholders.
The following pro forma income statement effects assume the capital
proceeds received are invested in earning assets at a blended rate of 5.92%. An
assumed tax rate of 34% was used for all periods. The pro forma income statement
impacts do not include the benefit of leveraging the capital received into a
larger asset base, but simply include the additional income earned on investment
of the original capital proceeds.
If proceeds of $8,816,000 had been received under the Capital Purchase
Program on January 1, 2007, net income for the year ended December 31, 2007
would have increased from the reported amount of $3,800,000 to $4,145,000 on a
pro forma basis and the net interest margin for the year ended December 31, 2007
would have increased from the reported amount of 3.54% to 3.62% on a pro forma
basis. However, because $440,800 of the Company's net earnings would be required
for the payment of dividends to the holder(s) of the Preferred Stock and
amortization/accretion associated with the Preferred Stock, and therefore would
not be available to the Company's common shareholders, net income per share
available to common shareholders would have decreased from the reported amount
of $2.26 per share to $2.20 per share on a pro forma basis.
If proceeds of $8,816,000 had been received under the Capital Purchase
Program on January 1, 2008, the net income reported for the nine months ended
September 30, 2008 (which includes a one-time other-than-temporary impairment
charge of $2,856,000 incurred in the third quarter of 2008) would have increased
from the reported net income of $152,000 to a net income of $411,000 on a pro
forma basis.
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However, because $330,600 of the Company's net earnings would be required
for the payment of dividends to the holder(s) of the Preferred Stock and
amortization/accretion associated with the Preferred Stock, and therefore would
not be available to the Company's common shareholders, the net income per share
attributable to common shareholders would have decreased from the reported
amount of $0.09 per share to a $0.05 per share on a pro forma basis. Excluding
the one-time other-than-temporary impairment charge of $2,856,000 incurred in
the third quarter of 2008, adjusted net income for the nine months ended
September 30, 2008 was $3,008,000 and basic and adjusted earnings per share was
$1.78 per share. Receiving $8,816,000 in proceeds under the Capital Purchase
Program on January 1, 2008 as described above would have increased the Company's
adjusted net income to $3,267,000 on a pro forma basis and decreased adjusted
earnings per share to $1.74 on a pro forma basis.
APPROVAL REQUIREMENT AND BOARD OF DIRECTORS RECOMMENDATION
Approval of the proposed amendment to the Company's Certificate of
Incorporation requires the approval of at least a majority of the votes entitled
to be cast at the meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Special
Meeting other than that which is discussed in this Proxy Statement. In the event
that any other business requiring a vote of the Shareholders is properly
presented at the Special Meeting, the holders of the Proxies will vote your
shares in accordance with their best judgment and the recommendations of a
majority of the Board of Directors.
You are encouraged to exercise your right to vote by marking the
appropriate boxes and dating and signing the enclosed Proxy card. The Proxy card
may be returned in the enclosed envelope, postage-prepaid if mailed in the
United States. In the event that you are later able to attend the Special
Meeting, you may revoke your Proxy and vote your shares in person. A prompt
response will be helpful and your cooperation is appreciated.
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SECURITY OWNERSHIP OF MANAGEMENT AND SHAREHOLDERS
The following table sets forth certain information as of December 31, 2008
regarding the number of shares of Common Stock beneficially owned by each
Director and Executive Officer of the Company and by all Directors and Executive
Officers of the Company as a group. Management is not aware of any person
(including any "group" as defined in Rule 13(d)(3) of the SEC) who owns
beneficially more than 5% of the Common Stock as of December 31, 2008.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
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Louis E. Allyn, II 1,481 .09%
John R. H. Blum 16,365(3) .97%
Louise F. Brown 2,928 .17%
Richard J. Cantele, Jr. 3,006(4) .18%
Robert S. Drucker 8,468(5) .50%
John F. Foley 7,443(6) .44%
Nancy F. Humphreys 1,840(7) .11%
Holly J. Nelson 1,888(8) .11%
John F. Perotti 11,454(9) .68%
Michael A. Varet 66,486(10) 3.94%
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(All Directors and Executive Officers of 121,359 7.20%
the Company as a group of ten (10)
persons)
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(1) The shareholdings also include, in certain cases, shares owned by or in
trust for a director's spouse and/or children or grandchildren, and in
which all beneficial interest has been disclaimed by the Director or has
the right to acquire such security within sixty (60) days of December 31,
2008.
(2) Percentages are based upon the 1,685,861 shares of the Company's Common
Stock outstanding and entitled to vote on December 31, 2008. The
definition of beneficial owner includes any person who, directly or
indirectly, through any contract, agreement or understanding, relationship
or otherwise, has or shares voting power or investment power with respect
to such security.
(3) Includes 2,100 shares owned by John R. H. Blum's spouse.
(4) Includes 1,320 shares owned jointly by Richard J. Cantele, Jr. and his
spouse and 6 shares owned by Richard J. Cantele, Jr. as custodian for his
daughter.
(5) Includes 1,500 shares owned by Robert S. Drucker's spouse.
(6) Includes 3,322 shares owned jointly by John F. Foley and his spouse, 1,543
owned by his spouse and 100 shares owned by John F. Foley as custodian for
his children.
(7) Includes 1,000 shares owned jointly by Nancy F. Humphreys and her spouse.
(8) Includes 6 shares owned by Holly J. Nelson as guardian for a minor child.
(9) Includes 9,514 shares owned jointly by John F. Perotti and his spouse,
1,100 shares owned by his spouse and 564 shares owned by his son, of which
shares owned by his spouse and son, John F. Perotti has disclaimed
beneficial ownership.
(10) Includes 18,540 shares which are owned by Michael A. Varet's spouse and
18,546 shares which are owned by his children, of which shares Michael A.
Varet has disclaimed beneficial ownership.
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DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal that a Company shareholder wishes to have included in the
Company's Proxy Statement and form of Proxy relating to the Company's 2009
Annual Meeting of Shareholders under Rule 14a-8 of the SEC must have been
received by the Company's Secretary by December 8, 2008.
In addition, under the Company's Bylaws, shareholders who wish to nominate
a director or bring other business before an annual meeting must comply with the
following:
o You must be a shareholder of record and must have given notice in writing
to the Secretary of the Company (a) not less than twenty (20) days nor
more than one hundred thirty (130) days prior to the meeting with respect
to matters other than the nomination of directors and (b) not less than
thirty (30) days nor more than fifty (50) days prior to the meeting with
respect to the nomination of directors.
o Your notice must contain specific information required in the Company's
Bylaws.
Nominations and proposals should be addressed to John F. Foley, Secretary,
Salisbury Bank and Trust Company, 5 Bissell Street, PO Box 1868, Lakeville, CT
06039-1868.
By order of the Board of Directors
/s/ John F. Foley
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John F. Foley
Secretary
Lakeville, Connecticut
February 9, 2009
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Exhibit A
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PROPOSED AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF
SALISBURY BANCORP, INC.
Article THIRD shall be amended and restated in its entirety as follows:
THIRD: Capital Stock. The amount of the capital stock of the Corporation
hereby authorized is three million (3,000,000) shares of Common Stock, par
value $0.10 per share and twenty-five thousand (25,000) shares of
Preferred Stock, par value $0.01 per share.
A. Common Stock.
Each holder of shares of Common Stock shall be entitled to one vote
for each share held by such holder. There shall be no cumulative
voting rights in the election of directors. Each share of Common
Stock shall have the same relative rights as and be identical in all
respects with all other shares of Common Stock. The voting, dividend
and liquidation rights of the Common stock are subject to and
qualified by the rights of the holders of the Preferred Stock of any
series as may be determined by the Board of Directors before the
issuance of any series of Preferred Stock.
B. Preferred Stock.
(1) General. Preferred Stock may be issued from time to time in one
or more series, each to have such terms as are set forth herein and
in the resolutions of the Board of Directors authorizing the issue
of such series. Any shares of Preferred Stock which may be redeemed,
purchased or otherwise acquired by the Bank may be reissued.
Different series of Preferred Stock shall not be construed to
constitute different classes of shares for the purposes of voting by
classes unless expressly so provided.
(2) Authority of Board of Directors. The Board of Directors may from
time to time issue the Preferred Stock in one or more series. The
Board of Directors may, in connection with the creation of any such
series, determine the preferences, limitations and relative rights
of each such series before the issuance of such series. Without
limiting the foregoing, the Board of Directors may fix the voting
powers, dividend rights, conversion rights, redemption privileges
and liquidation preferences, all as the Board of Directors deems
appropriate, to the full extent now or hereafter permitted by the
Connecticut Business Corporation Act. The resolutions providing for
A-1
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issuance of any series of Preferred Stock may provide that such
series shall be superior or rank equally or be junior to the
Preferred Stock of any other series to the extent permitted by law.
Except as otherwise provided in this Certificate of Incorporation,
no vote of the holders of the Preferred Stock or Common Stock shall
be a prerequisite to the designation or issuance of shares of any
series of the Preferred Stock authorized by and complying with the
conditions of this Certificate of Incorporation and the Connecticut
Business Corporation Act.
C. No shareholder of the Corporation shall by reason of his holding
shares of capital stock of the Corporation have any preemptive or
preferential rights to purchase or subscribe to any share of any
class of stock of the Corporation, now or hereafter to be
authorized, or to any notes, debentures, bonds or other securities
(whether or not convertible into or carrying options or warrants to
purchase shares of any class of capital stock) now or hereafter to
be authorized, excepting only such preemptive or preferential
rights, warrants or options as the Board of Directors in its
discretion may grant from time to time; and the Board of Directors
may issue shares of any class of stock of the Corporation, or any
notes, debentures, bonds or other securities (whether or not
convertible into or carrying rights, options or warrants to purchase
shares of any class of capital stock) without offering any such
shares to the existing Shareholders of the Corporation.
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Exhibit B
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TARP CAPITAL PURCHASE PROGRAM
SENIOR PREFERRED STOCK AND WARRANTS
SUMMARY OF SENIOR PREFERRED TERMS
Issuer: Qualifying Financial Institution ("QFI") means (i) any U.S. bank or U.S.
savings association not controlled by a Bank Holding Company ("BHC")or Savings
and Loan Holding Company ("SLHC"); (ii) any U.S. BHC, or any U.S. SLHC which
engages only in activities permitted for financial holdings companies under
Section 4(k) of the Bank Holding Company Act, and any U.S. bank or U.S. savings
association controlled by such a qualifying U.S. BHC or U.S. SLHC; and (iii) any
U.S. BHC or U.S. SLHC whose U.S. depository institution subsidiaries are the
subject of an application under Section 4(c)(8) of the Bank Holding Company Act;
except that QFI shall not mean any BHC, SLHC, bank or savings association that
is controlled by a foreign bank or company. For purposes of this program, "U.S.
bank", "U.S. savings association", "U.S. BHC" and "U.S. SLHC" means a bank,
savings association, BHC or SLHC organized under the laws of the United States
or any State of the United States, the District of Columbia, any territory or
possession of the United States, Puerto Rico, Northern Mariana Islands, Guam,
American Samoa, or the Virgin Islands. The United States Department of the
Treasury will determine eligibility and allocation for QFIs after consultation
with the appropriate Federal banking agency.
Initial Holder: United States Department of the Treasury (the "UST").
Size: QFIs may sell preferred to the UST subject to the limits and terms
described below.
Each QFI may issue an amount of Senior Preferred equal to not less than 1% of
its risk-weighted assets and not more than the lesser of (i) $25 billion and
(ii) 3% of its risk-weighted assets.
Security: Senior Preferred, liquidation preference $1,000 per share. (Depending
upon the QFI's available authorized preferred shares, the UST may agree to
purchase Senior Preferred with a higher liquidation preference per share, in
which case the UST may require the QFI to appoint a depositary to hold the
Senior Preferred and issue depositary receipts.)
Ranking: Senior to common stock and pari passu with existing preferred shares
other than preferred shares which by their terms rank junior to any existing
preferred shares.
Regulatory Capital Status: Tier 1.
Term: Perpetual life.
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Dividend: The Senior Preferred will pay cumulative dividends at a rate of 5% per
annum until the fifth anniversary of the date of this investment and thereafter
at a rate of 9% per annum. For Senior Preferred issued by banks which are not
subsidiaries of holding companies, the Senior Preferred will pay non-cumulative
dividends at a rate of 5% per annum until the fifth anniversary of the date of
this investment and thereafter at a rate of 9% per annum. Dividends will be
payable quarterly in arrears on February 15, May 15, August 15 and November 15
of each year.
Redemption: Senior Preferred may not be redeemed for a period of three years
from the date of this investment, except with the proceeds from a Qualified
Equity Offering (as defined below) which results in aggregate gross proceeds to
the QFI of not less than 25% of the issue price of the Senior Preferred. After
the third anniversary of the date of this investment, the Senior Preferred may
be redeemed, in whole or in part, at any time and from time to time, at the
option of the QFI. All redemptions of the Senior Preferred shall be at 100% of
its issue price, plus (i) in the case of cumulative Senior Preferred, any
accrued and unpaid dividends and (ii) in the case of noncumulative Senior
Preferred, accrued and unpaid dividends for the then current dividend period
(regardless of whether any dividends are actually declared for such dividend
period), and shall be subject to the approval of the QFI's primary federal bank
regulator.
"Qualified Equity Offering" shall mean the sale by the QFI after the date of
this investment of Tier 1 qualifying perpetual preferred stock or common stock
for cash.
Following the redemption in whole of the Senior Preferred held by the UST, the
QFI shall have the right to repurchase any other equity security of the QFI held
by the UST at fair market value.
Restrictions on Dividends: For as long as any Senior Preferred is outstanding,
no dividends may be declared or paid on junior preferred shares, preferred
shares ranking pari passu with the Senior Preferred, or common shares (other
than in the case of pari passu preferred shares, dividends on a pro rata basis
with the Senior Preferred), nor may the QFI repurchase or redeem any junior
preferred shares, preferred shares ranking pari passu with the Senior Preferred
or common shares, unless (i) in the case of cumulative Senior Preferred all
accrued and unpaid dividends for all past dividend periods on the Senior
Preferred are fully paid or (ii) in the case of non-cumulative Senior Preferred
the full dividend for the latest completed dividend period has been declared and
paid in full.
Common dividends: The UST's consent shall be required for any increase in common
dividends per share until the third anniversary of the date of this investment
unless prior to such third anniversary the Senior Preferred is redeemed in whole
or the UST has transferred all of the Senior Preferred to third parties.
Repurchases: The UST's consent shall be required for any share repurchases
(other than (i) repurchases of the Senior Preferred and (ii) repurchases of
junior preferred shares or common shares in connection with any benefit plan in
the ordinary course of business consistent with past practice) until the third
anniversary of the date of this investment unless prior to such third
anniversary the Senior Preferred is redeemed in whole or the UST has transferred
all of the Senior Preferred to third parties.
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In addition, there shall be no share repurchases of junior preferred shares,
preferred shares ranking pari passu with the Senior Preferred, or common shares
if prohibited as described above under "Restrictions on Dividends".
Voting rights: The Senior Preferred shall be non-voting, other than class voting
rights on (i) any authorization or issuance of shares ranking senior to the
Senior Preferred, (ii) any amendment to the rights of Senior Preferred, or (iii)
any merger, exchange or similar transaction which would adversely affect the
rights of the Senior Preferred. If dividends on the Senior Preferred are not
paid in full for six dividend periods, whether or not consecutive, the Senior
Preferred will have the right to elect 2 directors. The right to elect directors
will end when full dividends have been paid for four consecutive dividend
periods.
Transferability: The Senior Preferred will not be subject to any contractual
restrictions on transfer. The QFI will file a shelf registration statement
covering the Senior Preferred as promptly as practicable after the date of this
investment and, if necessary, shall take all action required to cause such shelf
registration statement to be declared effective as soon as possible. The QFI
will also grant to the UST piggyback registration rights for the Senior
Preferred and will take such other steps as may be reasonably requested to
facilitate the transfer of the Senior Preferred including, if requested by the
UST, using reasonable efforts to list the Senior Preferred on a national
securities exchange. If requested by the UST, the QFI will appoint a depositary
to hold the Senior Preferred and issue depositary receipts.
Executive Compensation: As a condition to the closing of this investment, the
QFI and its senior executive officers covered by the EESA shall modify or
terminate all benefit plans, arrangements and agreements (including golden
parachute agreements) to the extent necessary to be in compliance with, and
following the closing and for so long as UST holds any equity or debt securities
of the QFI, the QFI shall agree to be bound by, the executive compensation and
corporate governance requirements of Section 111 of the EESA and any guidance or
regulations issued by the Secretary of the Treasury on or prior to the date of
this investment to carry out the provisions of such subsection. As an additional
condition to closing, the QFI and its senior executive officers covered by the
EESA shall grant to the UST a waiver releasing the UST from any claims that the
QFI and such senior executive officers may otherwise have as a result of the
issuance of any regulations which modify the terms of benefits plans,
arrangements and agreements to eliminate any provisions that would not be in
compliance with the executive compensation and corporate governance requirements
of Section 111 of the EESA and any guidance or regulations issued by the
Secretary of the Treasury on or prior to the date of this investment to carry
out the provisions of such subsection.
SUMMARY OF WARRANT TERMS
Warrant: The UST will receive warrants to purchase a number of shares of common
stock of the QFI having an aggregate market price equal to 15% of the Senior
Preferred amount on the date of investment, subject to reduction as set forth
below under "Reduction". The initial exercise price for the warrants, and the
market price for determining the number of shares of common stock subject to the
warrants, shall be the market price for the common stock on the date of the
Senior Preferred investment (calculated on a 20-trading day trailing average),
subject to customary anti-dilution adjustments.
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The exercise price shall be reduced by 15% of the original price on each
six-month anniversary of the issue date of the warrants if the consent of the
QFI stockholders described below has not been received, subject to a maximum
reduction of 45% of the original exercise price.
Term: 10 years.
Exercisability: Immediately exercisable, in whole or in part.
Transferability: The warrants will not be subject to any contractual
restrictions on transfer; provided that the UST may only transfer or exercise an
aggregate of one-half of the warrants prior to the earlier of (i) the date on
which the QFI has received aggregate gross proceeds of not less than 100% of the
issue price of the Senior Preferred from one or more Qualified Equity Offerings
and (ii) December 31, 2009. The QFI will file a shelf registration statement
covering the warrants and the common stock underlying the warrants as promptly
as practicable after the date of this investment and, if necessary, shall take
all action required to cause such shelf registration statement to be declared
effective as soon as possible. The QFI will also grant to the UST piggyback
registration rights for the warrants and the common stock underlying the
warrants and will take such other steps as may be reasonably requested to
facilitate the transfer of the warrants and the common stock underlying the
warrants. The QFI will apply for the listing on the national exchange on which
the QFI's common stock is traded of the common stock underlying the warrants and
will take such other steps as may be reasonably requested to facilitate the
transfer of the warrants or the common stock.
Voting: The UST will agree not to exercise voting power with respect to any
shares of common stock of the QFI issued to it upon exercise of the warrants.
Reduction: In the event that the QFI has received aggregate gross proceeds of
not less than 100% of the issue price of the Senior Preferred from one or more
Qualified Equity Offerings on or prior to December 31, 2009, the number of
shares of common stock underlying the warrants then held by the UST shall be
reduced by a number of shares equal to the product of (i) the number of shares
originally underlying the warrants (taking into account all adjustments) and
(ii) 0.5.
Consent: In the event that the QFI does not have sufficient available authorized
shares of common stock to reserve for issuance upon exercise of the warrants
and/or stockholder approval is required for such issuance under applicable stock
exchange rules, the QFI will call a meeting of its stockholders as soon as
practicable after the date of this investment to increase the number of
authorized shares of common stock and/or comply with such exchange rules, and to
take any other measures deemed by the UST to be necessary to allow the exercise
of warrants into common stock.
Substitution: In the event the QFI is no longer listed or traded on a national
securities exchange or securities association, or the consent of the QFI
stockholders described above has not been received within 18 months after the
issuance date of the warrants, the warrants will be exchangeable, at the option
of the UST, for senior term debt or another economic instrument or security of
the QFI such that the UST is appropriately compensated for the value of the
warrant, as determined by the UST.
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[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
REVOCABLE PROXY
SALISBURY BANCORP, INC.
THIS PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SALISBURY BANCORP, INC.
The undersigned holder(s) of the Common Stock of Salisbury Bancorp, Inc.
(the "Company") do hereby nominate, constitute and appoint ____________________
and ______________________ jointly and severally, proxies with full power of
substitution, for us and in our name, place and stead to vote all the Common
Stock of the Company, standing in our name on February 4, 2009 at the Special
Meeting of its Shareholders to be held at the Interlaken Inn, Lakeville,
Connecticut on Tuesday, March 10, 2009 at 4:00 p.m. or any adjournment thereof
with all the powers the undersigned would possess if personally present, as
follows:
(1) APPROVAL of an amendment to the Company's Certificate of Incorporation to
authorize 25,000 shares of preferred stock, par value $0.01 per share.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(2) OTHER BUSINESS: To conduct whatever other business may properly be brought
before the Special Meeting or any adjournment thereof. Management at
present knows of no other business to be presented by or on behalf of the
Company or its Management at the Special Meeting. In the event that any
other business requiring a vote of the Shareholders is properly presented
at the Special Meeting, the holders of the proxies will vote your shares
in accordance with their best judgment and the recommendations of a
majority of the Board of Directors.
PLEASE CHECK THE BOX IF YOU PLAN TO ATTEND THE MEETING [ ]
Please be sure to sign and date Date ____________, 2009
this Proxy in the box below.
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Shareholder sign above Co-holder (if any) sign above
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Detach above card, date, sign and mail in postage-prepaid envelope provided.
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SALISBURY BANCORP, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL (1).
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION INDICATED.
IF NO SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" PROPOSAL (1)
AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS
AS TO OTHER MATTERS.
All joint owners must sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If more than one
trustee, all must sign.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY PROVIDING
WRITTEN NOTICE TO THE COMPANY SECRETARY OR MAY BE WITHDRAWN AND YOU MAY VOTE IN
PERSON SHOULD YOU ATTEND THE SPECIAL MEETING.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.