===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MNB Bancorp
(Exact name of registrant as specified in its charter)
Massachusetts 6711 04-3405895
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Number) No.)
300 East Main Street
Milford, Massachusetts 01757
(508) 634-4100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ROBERT J. LEWIS, President
MNB Bancorp
300 East Main Street
Milford, Massachusetts 01757
(508) 634-4100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
DAVID F. HANNON, ESQ.
Craig and Macauley Professional Corporation
Federal Reserve Plaza
600 Atlantic Avenue
Boston, Massachusetts 02210
Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after this Registration Statement
becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [x]
-----------------------------
CALCULATION OF REGISTRATION FEE
=======================================================================================================
Proposed Proposed
maximum maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered* per unit** offering price** registration fee
- - -------------------------------------------------------------------------------------------------------
Common Stock, $1 par value 200,035 $58.06 $11,614,032.00 $3,426.14
=======================================================================================================
<FN>
<F*> The number of shares of Common Stock stated above is the maximum number
of such shares which may be issued upon consummation of the Merger
Agreement.
<F**> Calculated in accordance with Rule 457(f)(2) on the basis of the book
value of the Common Stock, $1 par value, of The Milford National Bank
and Trust Company on December 31, 1997.
============================================================================
</FN>
1
MNB BANCORP
Cross Reference Sheet
pursuant to Item 501 of Registration S-K
(Showing the location in the Prospectus of
responses to the Items of Part I of Form S-4)
Item
No. Caption Heading in Prospectus
- - ---- ------- ---------------------
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Facing Page of Registration
Statement, Cross Reference
Sheet, Outside Front Cover
Page of Prospectus.
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover Page of
Prospectus, "TABLE OF
CONTENTS"
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information "SUMMARY"
4. Terms of the Transaction "SUMMARY," "REORGANIZATION
PLAN - MERGER," "DESCRIPTION
OF THE BANK'S COMMON STOCK,"
"DESCRIPTION OF THE HOLDING
COMPANY'S COMMON STOCK"
5. Pro Forma Financial Information N/A
6. Material Contact with the Company Being
Being Acquired "REORGANIZATION PLAN - MERGER"
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters N/A
8. Interests of Named Experts and Counsel N/A
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities "REORGANIZATION PLAN -MERGER -
Other Considerations"
10. Information with Respect to S-3
Registrants N/A
11. Incorporation of Certain Information
by Reference N/A
12. Information with Respect to S-2 or
S-3 Registrants N/A
2
13. Incorporation of Certain Information
by Reference N/A
14. Information with Respect to
Registrants Other than S-3 or S-2
Registrants "HISTORY AND BUSINESS - The
Bank," "REGULATION AND
SUPERVISION," "MARKET PRICE
AND DIVIDENDS - Holding
Company Stock," "FINANCIAL
MATTERS -Selected Financial
Data," "REORGANIZATION PLAN -
MERGER - Description of
Reorganization Plan,"
"LITIGATION"
15. Information with Respect to S-3
Companies N/A
16. Information with Respect to S-2 or
S-3 Companies N/A
17. Information with Respect to Companies
Other than S-3 or S-2 Companies "HISTORY AND BUSINESS - The
Bank," "REGULATION AND
SUPERVISION," "MARKET PRICE
AND DIVIDENDS - Bank Stock,"
"FINANCIAL MATTERS - Selected
Financial Data," "SECURITY
OWNERSHIP - The Bank,"
"LITIGATION"
18. Information if Proxies, Consents or
Authorizations are to be Solicited "THE MEETING," REORGANIZATION
PLAN - MERGER - Rights of
Dissenting Shareholders,"
"MANAGEMENT," "SECURITY
OWNERSHIP," "MISCELLANEOUS
MATTERS"
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer N/A
- - ----------------
"N/A" means omitted because the answer is negative or the item is not
applicable.
3
MNB BANCORP
300 East Main Street
Milford, Massachusetts 01757
(508) 634-4100
200,035 SHARES
COMMON STOCK (PAR VALUE $1.00)
_____________________________
PROXY STATEMENT AND PROSPECTUS
_____________________________
This Proxy Statement and Prospectus is furnished in connection with
the solicitation of proxies by the management of The Milford National Bank
and Trust Company (the "Bank") in connection with the Annual Meeting of
Shareholders of the Bank to be held on April 8, 1998 to consider and act
upon the merger of the Bank into a subsidiary of MNB Bancorp (the "Holding
Company"), pursuant to which all the outstanding shares of common stock of
the Bank would be exchanged for shares of common stock of the Holding
Company on the basis of one share of the common stock of the Holding
Company, par value $1.00, for each share of the common stock of the Bank,
par value $1.00. This Proxy Statement has been mailed to all holders of
record of the common stock of the Bank as of the close of business on
February 27, 1998. The cost of soliciting the proxies will be borne by the
Bank. The Holding Company has filed a Registration Statement with the
Securities and Exchange Commission covering the shares of common stock of
that corporation to be issued in connection with the merger of the Bank into
a subsidiary of the Holding Company. This Proxy Statement also constitutes
a "prospectus" and has been filed with the Securities and Exchange
Commission as part of the Registration Statement. Please see page vi "Risk
Factors" for a description of certain risks in connection with the shares of
the Holding Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE OFFICE
OF THE COMPTROLLER OF THE CURRENCY NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE OFFICE OF THE
COMPTROLLER OF THE CURRENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE
SHARES OF STOCK OF THE HOLDING COMPANY OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR BANK DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR COMPANY.
The date of this proxy statement and prospectus is March 9, 1998.
4
TABLE OF CONTENTS
Page
----
Summary iii
The Meeting 1
Election of Directors 2
Information about Nominees 3
Executive Officers 4
Beneficial Ownership of Bank Stock by Nominees and Officers 5
Committees 6
Remuneration of Officers and Directors 6
Reorganization Plan - Merger 7
Reasons for Reorganization 7
Description of the Reorganization Plan 9
Federal Tax Consequences 11
Rights of Dissenting Shareholders 12
Certain Conditions of Merger 13
Differences in Shareholders' Rights 13
Other Considerations 18
History and Business 19
The Bank 19
The Holding Company 20
Regulation and Supervision 21
Market Price and Dividends 22
Bank Stock 22
Holding Company Stock 22
Financial Matters 23
Selected Financial Data 23
Capitalization 24
Management 25
Transactions with Management of Continuing Bank 25
Description of Bank's Common Stock 25
Dividend Rights 25
Voting Rights - Cumulative Voting 25
Liquidation Rights 25
Preemptive Rights 26
Dissenters' Rights 26
Other Matters 26
Description of the Holding Company's Common Stock 26
Dividend Rights 26
Voting Rights 26
Liquidation Rights 27
Preemptive Rights 27
Dissenters' Rights 27
Other Matters 27
Financial Statements 27
Litigation 27
Miscellaneous Matters 28
Legal Opinions 28
Exhibit A - Merger Agreement
Exhibit B - Certain Provisions of 12 U.S.C. [Section Sign]215a Relating to
Dissenters' Rights
Exhibit C - Certain Provisions of Certificate of Incorporation
of Holding Company
Exhibit D - Certain Provisions of By-Laws of the Holding Company
5
Shareholders of the Holding Company will receive annual reports of the
financial condition and results of operations of the Holding Company, which
reports will be audited and prepared on a consolidated or unconsolidated
basis in the discretion of the Board of Directors from time to time.
UNTIL JUNE 7, 1998 ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT AND PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT AND PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD
BE UNLAWFUL. THE DELIVERY OF THIS PROXY STATEMENT AND PROSPECTUS DOES NOT
IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR THE OFFICE OF THE COMPTROLLER OF THE CURRENCY NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR THE OFFICE OF THE COMPTROLLER OF THE CURRENCY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
6
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement and Prospectus. Certain capitalized terms
in this Summary are defined elsewhere herein. Reference is made to, and
this Summary is qualified in its entirety by, the more detailed information
in this Proxy Statement and Prospectus and the documents referred to herein.
The Companies
The Milford National Bank and Trust Company ("Bank") is a national
banking association that conducts a general commercial banking business
primarily in Milford, Massachusetts. The Bank offers general retail banking
services, commercial and consumer loans, and other banking services. The
principal executive office of the Bank is located at 300 East Main Street,
Milford, Massachusetts, 01757, and its telephone number is (508) 634-4100.
See "HISTORY AND BUSINESS - The Bank."
MNB Bancorp ("Holding Company") has recently been incorporated under
the laws of the Commonwealth of Massachusetts for the purpose of becoming a
bank holding company within the meaning of the Bank Holding Company Act of
1956, as amended. The Holding Company has caused Milford Bank, National
Association ("New Bank"), a wholly-owned subsidiary, to be chartered solely
for the purpose of this transaction. The principal executive office of
Holding Company is located at 300 East Main Street, Milford, Massachusetts
01757, and its telephone number is (508) 634-4100. See "HISTORY AND
BUSINESS - The Holding Company."
The Meeting
Time, Date and Place. The Bank's Annual Meeting of Shareholders will
be held on April 8, 1998 at 10:00 A.M., local time, at 300 East Main Street,
Milford, Massachusetts, 01757. See "THE MEETING."
Record Date, Shares Entitled to Vote. Holders of Bank common stock of
record at the close of business on February 27, 1998 are entitled to notice
of, and to vote at, the Bank's Annual Meeting and any adjournments thereof.
On February 27, 1998, there were 200,035 shares of Bank common stock
outstanding. See "THE MEETING."
Purposes of Meeting. The shareholders of the Bank are being asked to
fix the number of directors to be elected and to elect directors. The
shareholders of the Bank are also being asked to ratify and confirm an
Agreement to Merge involving the Bank, the New Bank, and the Holding
Company, a copy of which is annexed hereto as Exhibit A and which is
incorporated herein by reference (the "Merger Agreement"). Under the Merger
Agreement, the Bank will be merged with and into the New Bank, a newly-
formed national banking association that is a wholly-owned subsidiary of the
Holding Company. See "REORGANIZATION PLAN-MERGER-Description of the
Reorganization Plan." As a result of the merger, the separate existence of
the Bank will cease and the combined entity (the "Continuing Bank") will
operate under the name
7
"The Milford National Bank and Trust Company" as a wholly-owned subsidiary
of the Holding Company.
Vote Required. Consummation of the merger between the New Bank and
the Bank requires the approval of two-thirds of the outstanding shares of
common stock of the Bank and of the New Bank. Approximately 35% of the
outstanding shares of common stock of the Bank are owned by the executive
officers and Directors of the Bank and their affiliates, while 100% of the
outstanding shares of common stock of the New Bank are owned by the Holding
Company. The Bank has been advised that all of its executive officers and
Directors intend to vote their shares of Bank common stock for approval of
the Merger Agreement, and the Holding Company has indicated its intention to
vote its shares of the New Bank in favor of the merger. See "REORGANIZATION
PLAN -MERGER-Description of the Reorganization Plan."
The Merger
Effect of Merger. Upon consummation of the merger, the Bank will be
merged with and into the New Bank, and each outstanding share of Bank common
stock, par value $1.00, (other than dissenting shares) will be converted
into one share of Holding Company common stock, par value $1.00. The merger
will become effective on the date specified in the Merger Agreement,
provided all statutory conditions are satisfied. See "REORGANIZATION PLAN-
MERGER-Description of the Reorganization Plan."
Recommendations of the Board of Directors. The Board of Directors of
the Holding Company and the Bank both unanimously recommend votes for
approval of the Merger Agreement.
Federal Income Tax Consequences
The merger is designed to result in the exchange by the Bank's
shareholders of their Bank common stock for Holding Company common stock on
a tax-free basis. An opinion as to the federal tax consequences of the
transaction has been obtained from Craig and Macauley Professional
Corporation, special counsel to the Bank and the Holding Company. See
"REORGANIZATION PLAN -MERGER-Federal Income Tax Consequences."
Dissenters' Rights
Under the Merger Agreement and federal law, a shareholder of the Bank
who has voted against the merger or has given written notice at or prior to
the Annual Meeting that he dissents from the plan of merger, shall, upon
compliance with certain statutory procedures, be entitled to receive the
fair value in cash of his Bank common stock, as determined in accordance
with Federal law. See "REORGANIZATION PLAN - MERGER - Rights of Dissenting
Shareholders."
8
Selected Financial Data
The following table sets forth selected historical per share data for
the Bank. Data concerning the Holding Company is omitted because the
Holding Company has had no operating history. All figures are calculated on
the basis of 200,035 shares.
The Milford National Bank and Trust Company
Historical Per Share Data
Year Ended December 31
------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Book value per share $58.06 $51.44 $42.36 $38.15 $36.85
Cash dividends paid per share $ 0.64 $ 0.48 $ 0.36 $ 0.27 $ 0.20
Net Income per Share $ 6.25 $10.09 $ 0.98 $ 5.52 $ 4.29
Pro forma financial information regarding the Holding Company after
its acquisition of the Bank is not presented since it would involve no
meaningful change in the data shown above.
Comparative Market Price
Shares of the Bank's stock are held by approximately 121 record
holders, and are infrequently traded. Trading prices during 1996 and 1997
ranged, to the Bank's knowledge, from $53 to $75. To date in 1998, there
have been to the Bank's knowledge no shares traded. See "MARKET PRICE AND
DIVIDENDS - Bank Stock."
Data concerning the market value of Holding Company shares is omitted
because the Holding Company has had no operating history and none of its
shares has been traded. See "MARKET PRICE AND DIVIDENDS - Holding Company
Stock."
Certain Legal Matters
The merger is subject to the requirements of Federal banking statutes,
rules and regulations, which provide that the merger may not be consummated
without the approval of the Comptroller of the Currency and the Federal
Reserve Board, and the review of the Attorney General of the United States.
Preliminary approval both to form the New Bank and to merge the Bank into
the New Bank has already been obtained from the Comptroller of the Currency,
and notice has been given to the Board of Governors of the Federal Reserve.
See "REORGANIZATION PLAN - MERGER - Description of the Reorganization Plan."
9
Comparison of Common Stock
The Bank, as a national banking association, is regulated under
Federal banking laws. The Holding Company, as a Massachusetts corporation,
is governed by the corporate laws of the Commonwealth of Massachusetts.
Because of the difference in the laws, shareholders of the Bank who become
shareholders of the Holding Company as a result of the merger may have
different rights. See "REORGANIZATION PLAN - MERGER - Differences in
Shareholders' Rights."
Risk Factors
The transaction contemplated by the Merger Agreement is principally
designed to reorganize the corporate structure of the Bank in order to
conduct the business of the Bank as a wholly owned subsidiary of a
registered bank holding company. The transaction, if consummated, will not
represent any material change in the nature of the business conducted by the
Bank.
Presented below are certain "risk factors" associated with the
combined business of the Holding Company and the Bank which may be present
as a result of the Bank's reorganizing its business structure, through the
consummation of the transaction contemplated by the Merger Agreement, into a
subsidiary of the Holding Company. These risk factors represent those
identified by the Board of Directors of the Bank and may not represent all
of the risk factors associated with the transaction contemplated by the
Merger Agreement.
Company's Financial Condition. Shareholder's electing to receive
Holding Company stock for Bank stock do so without the ability of analyzing
the historical financial performance of the Holding Company. The Holding
Company is a newly formed Massachusetts corporation and has no history of
financial performance. The Holding Company's financial condition
immediately following the effective date of the consolidation contemplated
by the Merger Agreement will depend on the operation and profitability of
the Bank at the time of and after the effective date of the reorganization.
As the Holding Company continues to operate in the future, additional
factors may affect its profitability including, among others: (i)
businesses started or acquired by the Holding Company other than the Bank;
(ii) the nature of federal or state laws and regulations applicable to the
Holding Company; and (iii) the effect of management.
Banking Institutions. The financial services industry and banking in
particular has undergone a complex deregulation process. Interest rate
limitations on what banks may pay to depositors have been phased out;
"regional" interstate banking pacts and "true interstate" banking, allowing
financial institutions to cross state lines have been and will continue to
be enacted nationally and in many states; and competition has increased
among banks and other companies to provide traditional banking services.
These changes have resulted in increased competition for a market share of
the financial services industry. The Holding Company and the Bank will be
affected by these changes in the future. The conduct of the Bank's business
as a subsidiary of the Holding Company may increase the ability to compete
in this newly deregulated environment.
10
Anti-takeover Provisions. The Holding Company's Articles of
Organization and By-Laws contain provisions intended to be "anti-takeover"
in nature as discussed above, including a supermajority vote provision, fair
price provision, and additional items. The presence of all of these
provisions may have the effect of discouraging outside offers for the shares
of the Holding Company and may also give management more control over the
acceptance or rejection of business combination transactions than otherwise.
Such provisions may have certain negative effects. See "REORGANIZATION PLAN
- - - MERGER - Differences in Shareholders' Rights."
11
THE MEETING
This Proxy Statement and Prospectus is furnished to shareholders in
connection with the solicitation of proxies on behalf of the Board of
Directors of The Milford National Bank and Trust Company (the "Bank") to be
used at the Annual Meeting of Shareholders of the Bank to be held at 300
East Main Street, Milford, Massachusetts 01757, April 8, 1998 at 10:00 A.M.
and at any adjournments thereof.
The close of business on February 27, 1998 has been fixed as the
record date for determining shareholders of the Bank entitled to notice of
and to vote at the Annual Meeting of Shareholders. There is one authorized
class of stock of the Bank, $1.00 par value common stock. As of the record
date, the number of shares of common stock outstanding and entitled to vote
at the Annual Meeting of Shareholders was 200,035.
The following table sets forth certain information as of the record
date with respect to all individuals known to the Bank to be the beneficial
owner of more than 5% of the outstanding common stock of the Bank:
Number of Shares Percent of
Name and Address of Owner Beneficially OWNED(1)(2) Outstanding Shares
- - ------------------------- ------------------------ ------------------
Gilbert Kahn, Jr., Trustee 10,608(3) 5.3%
under Indenture of Trust
dated November 3, 1994
by Shelley D. Vincent III
38 Wood Road
Morristown, NJ 07960
Dorothy R. Horne 25,234(4) 12.6%
P.O. Box 1122
Westboro, MA 01581
Mary G. Vincent 90,554(5) 45.3%
300 East Main Street
Milford, MA 01757
<FN>
<F1> Based upon information provided to the Bank by the indicated persons.
<F2> Under applicable Federal regulations, a person is treated as the
beneficial owner of a security if the person, directly or indirectly
(through contract, arrangement, understanding, relationship or
otherwise) has or shares (a) voting power, including the power to vote
or to direct the voting, of such security, or (b) investment power
with respect to such security, including the power to dispose or
direct the disposition of such security. A person is also deemed to
have beneficial ownership of any security that such person has the
right to acquire within 60 days. Unless indicated in another footnote
to this tabulation, each person listed has sole voting and investment
power with respect to the shares set forth opposite his or her name.
<F3> Mr. Kahn is a Director of the Bank.
<F4> Includes 2,010 shares owned by Mrs. Horne's husband. Mrs. Horne is a
Director of the Bank.
<F5> Consists of shares held in two trusts of which Mrs. Vincent is sole
lifetime beneficiary.
</FN>
12
The affirmative vote of a majority of the shares of common stock of
the Bank represented at the Annual Meeting is required to fix the number of
directors and to elect directors.
Cumulative voting is permitted for the election of directors. Each
shareholder electing to cumulate his or her votes may cast that number of
votes for any one nominee (or may distribute that number of votes among
several nominees) as equals the product of multiplying the number of
nominees for election by the number of shares the shareholder is entitled to
vote at the meeting. A shareholder who desires to exercise cumulative
voting rights is encouraged to attend the meeting in person in order to
direct the allotment of his or her votes. Such rights may also be exercised
by a shareholder submitting a form of proxy on which the desired allotment
of votes is properly indicated.
The affirmative vote of two-thirds of the outstanding shares of common
stock of the Bank is necessary for the ratification and confirmation of the
Merger Agreement hereinafter described.
Execution of the enclosed proxy will not affect the shareholder's
right to attend the meeting and vote in person, since a shareholder giving a
proxy has the power to revoke it by delivering a notice of revocation, or a
duly executed proxy bearing a later date, to the Bank at any time before the
proxy is exercised at the meeting.
The accompanying proxy is solicited by the Board of Directors of the
Bank. The expense of solicitation will be borne by the Bank. To the extent
necessary to assure sufficient representation of the shareholders at the
meeting, officers and employees of the Bank may personally, by telephone or
by other means, contact shareholders to request the return of proxies. Such
officers and employees will receive no additional compensation for such
services. Banks, brokerage houses and other institutions, nominees or
fiduciaries will be requested to forward the proxy material to beneficial
owners in order to solicit authorizations for the execution of proxies. The
Bank may, upon request, reimburse such banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding such
material.
ELECTION OF DIRECTORS
The Articles of Association of the Bank provide that the shareholders
fix by resolution the exact number of directors at the Annual Meeting of
Shareholders. The Bank's Board of Directors presently consists of 13
members. One director, David B. Lowell, has announced that he will retire
at the end of his term and will not stand for re-election.
It is proposed by the Board of Directors that at this meeting the
number of directors who shall constitute the full Board of Directors until
the next annual meeting shall be fixed at 12 and that the individuals named
below will be nominated for election as directors to serve until the 1999
Annual Meeting of Shareholders and for such further time as may be required
for the election and qualification of their successors. Unless
13
returned proxies properly indicate that authority to vote for nominees is
withheld, all proxies received by the Bank in time for the 1998 meeting will
be voted to fix the number of directors at 12 and, in the event the number
of directors is so fixed, in favor of the election of the following
nominees. In the event any of the nominees unexpectedly become unable or
unwilling to accept nomination for election, the persons named in the
accompanying form of proxy and authorized to vote in the election will vote
the shares represented by executed proxies in favor of the nomination and
election of such substitute nominees as the Board of Directors of the Bank
may select.
Board of Directors
Information About Nominees
Opposite the name of each nominee in the following table is shown (1)
his age; (2) Bank offices held; (3) date on which his term of office as a
Director of the Bank began; and (4) his business experience during the past
five years, current occupation and employment. Each Director is elected to
serve for a term of one year or until his successor is elected and
qualified. No Director holds a directorship in any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, or subject to the requirements of Section 15(d) of such
Act or any company registered as an investment company under the Investment
Company Act of 1940, as amended.
Director
of the Business Experience During Past
Bank 5 Years; Current Occupation or
Name Age Bank Offices Held Since Employment; Directorship
- - ---- --- ----------------- -------- -------------------------------
Leonard M. DeLoia 60 Director 1977 President, The Prudential Lenmar Realty
Michael A. Diorio 52 Director 1996 Principal, Diorio, Hudson & Pavento, P.C.,
Certified Public Accountant
William B. Gannett 74 Director 1977 Retired
Dorothy R. Horne 75 Director 1985 Executive Secretary, Retired
Gilbert Kahn, Jr. 58 Director 1997 Director, Corporate Development,
Union Camp Corporation
Roger R. Lavallee 47 Director 1990 President, Custom Alarm Service, Inc.
Robert J. Lewis 51 President, Director 1996 1997 President and Chief Executive Officer,
The Milford National Bank and Trust Company
George R. Marino 65 Director 1988 Retired
Henry C. Papuga 47 Chairman of the 1990 Manager, Milford Water Company
Board Directors
Thomas C. Sawyer, Sr. 53 Director 1987 Publisher, Milford Daily News
Linda L. Varney 54 Director 1993 President and Treasurer, Varney Bros.
Sand and Gravel, Inc.
William J. Vitalini 38 Director 1996 President, B. Vitalini, Inc.; Certified
Public Accountant
During 1997, there were 15 meetings of the Board of Directors, which
meets every month. Directors attended in 1997 at least 92% of all Board
meetings and meetings of committees of which they were members.
14
Bank Directors receive a $200 monthly retainer, $250 for each Board of
Directors meeting attended, and $100 for each committee meeting attended.
The Chairman of the Board also receives another $1,000 per year.
Executive Officers
Henry C. Papuga is Chairman of the Board of the Bank, Robert J. Lewis
is President and Chief Executive Officer of the Bank and Anne M. Dygon is
the Senior Vice President and Chief Financial Officer. The officers of the
Holding Company will initially be Henry C. Papuga, Chairman of the Board,
Robert J. Lewis, President and Chief Executive Officer, Anne M. Dygon,
Treasurer and Kathrine Baldwin, Clerk.
All of the nominees were elected by the shareholders at the 1997
Annual Meeting.
Nominations for election to the Board of Directors of the Bank may
also be made by any shareholder in accordance with the By-Laws of the Bank.
The By-Laws provide that nominations for directors, other than those made on
behalf of the existing Board of Directors of the Bank, must be made in
writing and delivered or mailed to the President of the Bank and to the
Comptroller of the Currency, Washington, D.C., not less than 7 days nor more
than 50 days prior to the annual meeting. Such notification must contain
the following information to the extent known to the shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of
each proposed nominee; (c) the total number of shares of capital stock of
the Bank that will be voted for each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares
of capital stock of the Bank owned by the notifying shareholder.
Nominations not made in accordance with such requirements may, in the
discretion of the Chairman of the meeting, be disregarded, and upon his
instructions, the vote tellers may disregard all votes cast for each such
nominee.
15
Beneficial Ownership of Bank Stock by Nominees and Officers
The following table and related notes set forth information as of the
record date regarding common stock of the Bank beneficially owned by each
nominee for Director of the Bank and by all Directors and executive officers
of the Bank as a group.
Name of Individual Number of Shares Percent of
or Persons in Group Beneficially Owned(1)(2) Outstanding Shares
- - ------------------- ------------------------ ------------------
Leonard M. DeLoia 1,334 .67%
Michael A. Diorio 25 .01%
William B. Gannett 1,534 .77%
Dorothy R. Horne 25,234(3) 12.61%
Gilbert Kahn, Jr. 15,608(4) 7.80%
Roger R. Lavallee 2,001 1.00%
Robert J. Lewis 60 .03%
George R. Marino 1,334 .67%
Henry C. Papuga 1,000 .50%
Thomas C. Sawyer, Sr. 1,000 .50%
Linda L. Varney 9,460(5) 4.73%
William J. Vitalini 2,868(6) 1.43%
All Directors, nominees
and executive officers(7) 68,617 34.31%
Consummation of the merger will not affect the amount and percentage
of present holdings of any of the 5% beneficial shareholders, Directors, or
Directors and executive officers as a group indicated in the tables above.
<FN>
<F1> Based upon information provided to the Bank by the indicated persons.
<F2> Under applicable Federal regulations, a person is treated as the beneficial
owner of a security if the person, directly or indirectly (through contract,
arrangement, understanding, relationship or otherwise) has or shares (a)
voting power, including the power to vote or to direct the voting, of such
security, or (b) investment power with respect to such security, including
the power to dispose or direct the disposition of such security. A person
is also deemed to have beneficial ownership of any security that such person
has the right to acquire within 60 days. Unless indicated in another
footnote to this tabulation, each person listed has sole voting and
investment power with respect to the shares set forth opposite his or her
name.
<F3> Includes 2,010 shares owned by Mrs. Horne's husband.
<F4> Includes 2,500 shares owned by Mr. Kahn's wife and 10,608 shares held by Mr.
Kahn as trustee.
<F5> Includes 6,820 shares owned by Varney Bros. Sand and Gravel, Inc. of which
Ms. Varney is an officer, and 640 shares held in a trust of which Ms. Varney
is a beneficiary.
<F6> Includes 200 shares owned by Mr. Vitalini's minor children.
<F7> The term "executive officer" means the Chairman of the Board, President,
Senior Vice President and Cashier.
</FN>
16
Committees
The Board of Directors each year appoints certain directors to serve
on standing committees of the Board of Directors, consisting of the
Advisory/Long-Term Planning Committee, Asset & Liability Committee, Audit
Committee, Budget Committee, Governance/Compensation Committee, Loan
Committee, and Trust Committee.
The members of the Advisory/Long-Term Planning Committee are Messrs.
DeLoia, Diorio, Gannett and Kahn and Ms. Horne and Varney. During 1997, the
committee met four times.
The members of the Asset & Liability Committee are Messrs. Diorio,
Lowell, Sawyer and Vitalini and Ms. Horne. During 1997, the committee met
twelve times.
The members of the Audit Committee are Messrs. Lowell, Marino, Papuga
and Vitalini. During 1997, the Audit Committee met seven times.
The members of the Budget Committee are Messrs. Diorio, Lowell,
Papuga, Sawyer and Vitalini and Ms. Horne. During 1997, the committee met
four times.
The members of the Governance/Compensation Committee are Messrs.
DeLoia, Diorio, Marino, Papuga and Sawyer and Ms. Horne. During 1997, the
committee met six times.
The members of the Loan Committee are Messrs. Lavallee, Marino and
Sawyer and Ms. Varney. During 1997, the committee met 44 times.
The members of the Trust Committee are Messrs. DeLoia, Gannett and
Kahn and Ms. Horne and Varney. During 1997, the committee met 12 times.
Remuneration of Directors and Officers
The following table provides certain summary information concerning
compensation paid or accrued by the Bank to or on behalf of the Bank's Chief
Executive Officer for the year ended December 31, 1997.
Name and Principal Position 1997 Year Salary ($) Bonus ($) Other Annual Compensation ($)(1)
- - --------------------------- -------------------- --------- --------------------------------
Robert J. Lewis, President and $125,000 $10,000 $30,697
Chief Executive Officer
<FN>
<F1> Included in other annual compensation are various relocation benefits
in the amount of $29,725.
</FN>
17
Employees of the Bank become eligible for participation under the
Bank's 401(K) Savings Plan when they have completed twelve consecutive
months in which they have worked 1000 hours of service and attain the age of
21. Employees are allowed to contribute up to the lesser of 15% of their
compensation or $9,500 annually. The Board votes each year as to the
matching contribution by the Bank in the next year.
REORGANIZATION PLAN-MERGER
The proposed Merger Agreement, if adopted, would result in the
reorganization of the business of the Bank as a wholly-owned subsidiary of
MNB Bancorp, a newly formed holding company which is a Massachusetts
corporation (the "Holding Company"). Shareholders of the Bank would receive
common stock of the Holding Company in exchange for their present holdings
of stock in the Bank at the rate of one share of common stock of the Holding
Company, par value $1.00, for each share of common stock of the Bank, par
value $1.00.
The Board of Directors of the Bank has unanimously approved and
recommends that the Bank's shareholders approve the reorganization of the
Bank as described below by voting for the ratification and confirmation of
the Merger Agreement hereinafter described.
Reasons For the Reorganization
The Board of Directors of the Bank is of the opinion, after careful
consideration of various alternatives, that the reorganization of the Bank
as a wholly-owned subsidiary of a one-bank holding company is in the best
interest of shareholders because it best places the Bank in a position to
meet and solve the needs of its present and potential customers while
maintaining its status as an independent bank. While some increased costs,
consisting primarily of increased administration expenses occasioned by the
operation of the Holding Company, increased reporting requirements of
regulatory agencies, and increased taxes resulting from the taxation of the
Holding Company as a Massachusetts corporation, will result from the
operation of the Holding Company, it is thought that these would be amply
justified for the reasons herein described.
It is believed that the flexibility afforded by the proposed corporate
structure would permit a more efficient utilization of the resources,
facilities and special skills of the Bank. Thus, the Bank directly as well
as the subsidiaries of the Holding Company will be able to compete more
effectively in performing the banking and related services which the Bank
presently offers. At the same time, the Holding Company may, through other
subsidiaries to the extent permitted by law and regulation, enter a broader
range of financial product markets and adopt, and more readily furnish,
newly developed and more diversified financially-related services.
It is further believed that operational options will be enhanced by
the adoption of a one-bank holding company vehicle. Some existing functions
of the Bank could be
18
undertaken by subsidiaries of the Holding Company. Similarly, new services
could be offered by other subsidiaries of the Holding Company.
Under the terms of the Bank Holding Company Act of 1956, as amended,
and the regulations thereunder, the Holding Company is limited in the
services which it may provide. Generally, only such services as are found
by the Board of Governors of the Federal Reserve System to be so closely
related to banking or managing or controlling banks as to be a proper
incident thereto, may be performed by the Holding Company. A bank holding
company may engage in such permitted activities directly or through one or
more subsidiaries. Such activities currently include, among others, (1)
making or acquiring loans that could be made by mortgage, finance, credit
card or factoring companies, (2) performing the functions of a trust
company, (3) acting as an investment or financial advisor, (4) leasing real
or personal property in certain situations, (5) making investments to
promote community welfare, and (6) providing data processing and
transmission services. There is presently pending legislation before
Congress which if passed and signed by the President would expand the number
and scope of activities in which a bank holding company may engage.
There are, however, no present plans under consideration to transfer
any activities of the Bank to subsidiaries of the Holding Company, to
acquire existing companies or to form any new subsidiaries of the Holding
Company. Any activity which other subsidiaries of the Holding Company might
hereafter undertake will, of course, be carefully weighed in light of
prudence, the best interest of shareholders, requirements of present and
future customers and the limitations on activities imposed by applicable
laws.
In addition to the reasons of increased flexibility of operations
described above, the Board of Directors believes that the formation of a
holding company is appropriate at this time because of the protection which
a holding company can afford the Bank and its shareholders against unwanted
or unattractive takeover attempts. There is little doubt that the present
time is a time of unprecedented change in the banking industry.
The regulated character of the banking industry would not preclude a
takeover bidder from acquiring voting control of the Bank and merging it
into another bank or operating it as a subsidiary of another bank holding
company. While such a reorganization of the Bank might be accomplished on
terms favorable to the Bank's shareholders, the acquiring entity's incentive
to negotiate with the Bank's Board of Directors would be diminished to the
extent that the acquiring entity possessed voting control of the Bank, since
in that case the acquiring entity would control both parties to the
transaction. As a result, such a reorganization could be accomplished on
terms unfavorable to the Bank's shareholders or in a manner which would
preclude a proper evaluation of the merits of the proposed transaction in
light of alternatives.
While the Bank is not aware of being the target of any takeover
attempt, it has been a matter of concern to your Board of Directors to
provide a measure of protection to the Bank and its shareholders against a
takeover bid for the Bank which might, in the opinion of the Board of
Directors and shareholders, not represent adequately the value
19
of the Bank. For this reason, as indicated in "Differences in Shareholders'
Rights" below, the corporate structure of the Holding Company has been
designed to make the Bank less vulnerable to an unfriendly takeover attempt.
The Holding Company has been organized with a corporate structure
which would make it more difficult to acquire control of the Holding
Company's Board of Directors over a short period of time by acquiring a
controlling block of the Holding Company's stock, thereby increasing the
time which the shareholders and Directors of the Holding Company would have
to consider the benefits and drawbacks of, and alternatives to, a proposed
acquisition of the Holding Company. Since the Bank would be a wholly-owned
subsidiary of the Holding Company, control of the Bank could be obtained by
obtaining control of the Holding Company.
It is believed that the use of the holding company vehicle in
conjunction with certain corporate governance provisions which serve to
encourage takeover bidders to negotiate a proposed acquisition of the Bank
with the Board of Directors of the Holding Company will enable management to
negotiate from a position of strength in connection with any such proposal
and will permit shareholders to adequately consider the merits of and
alternatives to any such proposal.
The specific provisions of the Holding Company's Articles of
Organization and By-Laws which will result in differences between the rights
of holders of the Bank's stock and the rights of holders of the Holding
Company's stock are discussed below under "Differences in Shareholders'
Rights." Since the reorganization plan will result in the exchange of shares
of the Bank's stock for shares of the Holding Company's stock, shareholders
are urged to study carefully the discussion contained therein.
At present, the Bank's authorized capital is 250,000 shares of common
stock, of which 200,035 shares are outstanding. The Holding Company will
have 1,000,000 shares of authorized common stock, of which 799,965 shares
will remain unissued after 200,035 shares of common stock are issued in
exchange for shares of the Bank's common stock. These shares will be
available for issuance from time to time for any proper corporate purpose
without further action by shareholders of the Holding Company.
Description of the Reorganization Plan
The Holding Company has been organized at the direction of the Bank
and will hold, at the time the merger becomes effective, all the stock of a
newly-organized national bank, temporarily named Milford Bank, National
Association (the "New Bank"). The Holding Company has outstanding one share
of common stock, par value $1.00, which has been issued to the firm of Craig
and Macauley Professional Corporation for consideration of $1.00. This
share will be repurchased by the Holding Company for a cash price equal to
that paid by such firm as soon as the merger is completed.
20
With the exception of certain shareholders of the Bank who may have
elected to receive cash rather than Holding Company stock in exchange for
their shares, the distribution of ownership in the Holding Company after the
merger will be identical to the distribution of ownership in the Bank just
prior to the merger.
The New Bank has been organized solely for purposes of effecting the
proposed reorganization plan and has not engaged in the business of banking.
The reorganization plan is proposed to be accomplished by merging the Bank
with and into the New Bank pursuant to the terms of the Merger Agreement.
Upon consummation of the merger, the Continuing Bank, as defined in the next
paragraph, will assume the name of the Bank, "The Milford National Bank and
Trust Company," and the shareholders of the Bank will automatically become
owners of one share of common stock of the Holding Company for each share of
common stock of the Bank held by them.
Consummation of the merger requires the affirmative vote of two-thirds
of the shares of common stock of the Bank and of the New Bank. The Holding
Company has indicated its intention to vote its shares of the New Bank in
favor of the merger. The reorganization also requires the approval of both
the Comptroller of the Currency and the Board of Governors of the Federal
Reserve System, and is subject to conditions specified in the Merger
Agreement. Preliminary approval both to form the New Bank and to merge the
Bank into the New Bank has already been obtained from the Comptroller of the
Currency. The merger will be consummated on the effective date specified in
the certificate of approval to be issued by the Comptroller of the Currency.
The Comptroller of the Currency is required to notify the Attorney General
of the United States of its preliminary approval and the merger may not be
consummated before the 30th calendar day after the date of the preliminary
approval of the Comptroller of the Currency, provided the Attorney General
does not sue to enjoin the merger. The business of the Bank will then be
carried on as a subsidiary of the Holding Company with the same Directors,
officers and personnel and the same offices and properties as those of the
Bank. Since the corporate identities and businesses of both the Bank and
the New Bank will be merged, and will continue after the merger, in the
combined institution, such combined institution is hereinafter called the
"Continuing Bank" whenever the reference is to the situation existing at and
after consummation of the merger.
Upon consummation of the merger, shareholders of the Bank will become
shareholders of the Holding Company. Outstanding certificates for shares of
common stock of the Bank will represent shares of common stock of the
Holding Company. Shareholders of the Bank will be entitled to exchange
their present share certificates for new certificates evidencing shares of
common stock of the Holding Company. All shareholders will be notified in
writing of the date of the consummation of the merger and will be instructed
at that time as to the procedure for exchanging their present share
certificates for new certificates. Bank personnel will be made available at
that time to assist any shareholder with such exchange. Until so exchanged,
the certificates for shares of common stock of the Bank will represent the
Holding Company shares into which the Bank shares have been converted;
PROVIDED, HOWEVER, THAT THE HOLDING COMPANY AT ANY TIME MAY WITHOLD ANY
DIVIDENDS
21
DECLARED UPON THE HOLDING COMPANY COMMON STOCK WITH RESPECT TO SHARES
REPRESENTED BY UNEXCHANGED CERTIFICATES UNTIL SUCH CERTIFICATES ARE
PRESENTED FOR EXCHANGE, AT WHICH TIME THE DIVIDENDS SO WITHHELD ON SUCH
SHARES SHALL BE PAID WITHOUT INTEREST.
With the exception of shareholders of the Bank who have elected to
receive cash rather than Holding Company stock in exchange for their shares,
the distribution of ownership in the Holding Company after the merger will
be identical to the distribution of ownership in the Bank just prior to the
merger.
In the event the proposed merger is not consummated, the expenses of
the reorganization plan, including the cost of organizing the Holding
Company and the New Bank, will be assumed by the Bank.
Federal Tax Consequences
The Bank and the Holding Company have received a written opinion of
Craig and Macauley Professional Corporation, special counsel, substantially
to the effect that, for federal income tax purposes:
1. The transaction contemplated by the Merger Agreement will
constitute a reorganization under Section 368(a) of the Internal Revenue
Code.
2. No gain or loss will be recognized by a Bank shareholder receiving
solely shares of Holding Company stock in exchange for all of his or her
common stock of the Bank.
In connection with the opinion, representations were made to Craig and
Macauley Professional Corporation by Bank management to the following
effect: that there was no plan or intention by Bank shareholders owning more
than 5% of the shares of the Bank common stock and the management of the
Bank knows of no plan or intent on the part of the remaining holders of Bank
common stock to sell or dispose of shares of Holding Company stock that Bank
shareholders will be entitled to receive in the merger that would reduce the
number of shares of Holding Company stock held after the merger by former
Bank shareholders to a number of shares having the value at the time of the
merger of less than 50% of the total value of all shares of Bank stock
outstanding immediately before the merger. For these purposes cash paid to
dissenting shareholders, if any, will be considered cash received on sale or
disposition of Holding Company stock that such shareholders are entitled to
receive in the merger.
Shareholders of the Bank should be aware of the following: such an
opinion of counsel is subject to satisfaction of representations and
conditions stated in the opinion; such an opinion relies upon the facts set
forth or referred to in the opinion, including facts stated or represented
by responsible officers of the Bank; and an opinion of counsel is not
binding upon the Internal Revenue Service or the courts.
22
No information is provided herein with respect to the tax consequences
of the merger under any applicable state, local or foreign tax laws.
Therefore, tax consequences for any particular Bank shareholder may be
affected by matters not discussed herein.
SHAREHOLDERS MUST CONSULT THEIR OWN TAX ADVISORS IN DETERMINING THEIR
FEDERAL INCOME TAX CONSEQUENCES ARISING FROM THE MERGER WITH RESPECT TO THE
HOLDING COMPANY STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY
STATE, LOCAL OR FOREIGN TAX LAWS.
Those Bank shareholders who properly exercise their dissenters rights
will receive cash in exchange for their Bank stock. Such cash payments will
be treated and received as distributions in redemption of their Bank stock
subject to the provisions and limitations of Internal Revenue Code, Section
302 (concerning distributions and redemptions of stock) and Section 318
(concerning constructive stock ownership rules). Gain, if any, will be
recognized to each dissenting Bank shareholder in the amount of the excess
of the cash received over the adjusted tax basis of the shares of Bank stock
surrendered. Any gain will be recognized as a capital gain, and any loss
will be recognized as a capital loss, provided the Bank stock surrendered is
a capital asset in the hands of such dissenting Bank shareholder on the
effective date of the reorganization.
Rights of Dissenting Shareholders
Section 11 of the Merger Agreement and Federal law (12 U.S.C. [Section
Sign] 215a) provide that any shareholder of the Bank who has voted against
the merger at the Annual Meeting of Shareholders or has given notice in
writing at or prior to such meeting to the President of the Bank or the
presiding officer of the meeting, that he dissents from the plan of merger,
shall be entitled to receive the value of the shares so held by him when the
merger shall be approved by the Comptroller of the Currency upon written
request made to the Continuing Bank at any time before thirty days after the
date of consummation of the merger, accompanied by the surrender of his stock
certificates. The value of the shares of any dissenting shareholder shall
be ascertained, as of the effective date of the merger, by an appraisal made
by a committee of three persons, one selected by the vote of the holders of
the majority of the stock, the owners of which are entitled to payment in
cash by reason of such request; one selected by the Directors of the
Continuing Bank; and one selected by the two persons so selected. The
valuation agreed upon by any two of the three appraisers shall govern. If
the value so fixed shall not be satisfactory to any dissenting shareholder
who has requested payment, that shareholder may, within five days after
being notified of the appraised value of such shares, appeal to the
Comptroller of the Currency who shall cause a reappraisal to be made which
shall be final and binding as to the value of the shares of the appellant.
If, within ninety days from the date of consummation of the merger, for any
reason one or more of the appraisers is not selected as above provided, or
the appraisers fail to determine the value of such shares, the Comptroller
of the Currency shall, upon written request of any interested party, cause
an appraisal to be made which shall be final and binding on all parties.
The expenses of the appraisal or reappraisal shall be paid by the Continuing
Bank.
23
The value of the shares ascertained shall be promptly paid to such
dissenting shareholders by the Continuing Bank. The shares of common stock
of the Holding Company which would have been delivered to such dissenting
shareholders had they not requested payment shall be sold at an advertised
public auction sale and if such shares are sold at a price greater than the
amount paid to such dissenting shareholders, the excess in such sale price
shall be paid to such dissenting shareholders. All shareholders will be
notified in writing of the date of consummation of the merger.
EACH SHAREHOLDER WHO MAY DESIRE TO EXERCISE HIS RIGHTS AS A DISSENTER
MUST COMPLY WITH ALL THE CONDITIONS OF FEDERAL LAW (12 U.S.C. [Section Sign]
215a). A COPY OF PERTINENT PROVISIONS OF 12 U.S.C. [Section Sign] 215a IS
ATTACHED HERETO AS EXHIBIT B, AND EACH SUCH SHAREHOLDER IS ADVISED TO
CONSULT SUCH STATUTE.
The Bank's special counsel has advised the Bank that the receipt of
amounts by dissenting shareholders in payment for their shares as aforesaid
may result in the recognition of gain or loss under the Federal income tax
and other income tax laws.
Provided that the number of dissenting shareholders is not
significant, the merger will be treated for accounting purposes as a pooling
transaction. See "FINANCIAL MATTERS - Capitalization."
Certain Conditions of the Merger
The Merger Agreement provides that it may be terminated by the Board
of Directors of the Bank or the New Bank if, among other things, (i) the
number of shares of common stock of the bank voted against the merger, or in
respect of which written notice is given purporting to dissent from the
merger, shall make consummation of the merger unwise; (ii) any action, suit,
proceeding or claim has been instituted, made or threatened relating to the
proposed merger; (iii) any action, consent or approval which is necessary to
permit the Continuing Bank after the merger to conduct all or any part of
the business and activities of the Bank shall not have been obtained; (iv)
the opinion of counsel relating to federal tax matters shall not have been
obtained as provided above under "Federal Tax Consequences;" or (v) for any
other reason consummation of the merger is inadvisable.
Differences In Shareholders' Rights
One of the results of the proposed reorganization is that the
shareholders of the Bank, whose rights are governed by Federal law and by
the Articles of Association and By-Laws of the Bank, will become
shareholders of the Holding Company, whose rights will be governed by
Massachusetts law and by the Articles of Organization and By-Laws of the
Holding Company. The Holding Company has been incorporated in
Massachusetts. The Holding Company's principal office will continue to be
in Milford, Massachusetts.
24
Various provisions of the Articles of Organization and By-Laws of the
Holding Company have been prepared with the intention of maintaining the
Bank's status as an independent bank by making it more difficult to acquire
voting control of the Board of Directors of the Holding Company, thereby
making it more difficult to acquire control of the Continuing Bank. The
following is a description of the differences in the rights of shareholders
of the Holding Company and the rights of shareholders of the Bank which
result from such provisions, followed in each case by a discussion of the
effect the provisions would have on the rights of shareholders of the
Holding Company. The descriptions contained in this Proxy Statement and
Prospectus of various provisions of the Articles of Organization and By-Laws
of the Holding Company are intended only as summaries of such provisions and
are qualified by reference to the text of such provisions, which are set
forth in their entirety as Exhibits C and D to this Proxy Statement and
Prospectus.
1. Under the Articles of Organization of the Holding Company, the
Board of Directors of the Holding Company will be divided into three
approximately equal classes to be designated, respectively, Class 1, Class
2, and Class 3. Each initial Class 1 director will hold office until the
Annual Meeting of Shareholders to be held in 1999, each initial Class 2
director will hold office until the Annual Meeting of Shareholders to be
held in 2000, and each initial Class 3 Director will hold office until the
Annual Meeting of Shareholders to be held in 2001, and, in each case, until
their successors are duly elected and qualified or until their earlier
resignation, removal from office or death. Upon expiration of the term of
office of each initial Director as aforesaid, each class of Directors will
be elected for a term of three years. Thus, only one class of Directors
will be elected hereafter at each Annual Meeting of Shareholders of the
Holding Company, with the remaining classes continuing their respective
three-year terms. The provision of the Holding Company's Articles of
Organization which sets forth the division of the Board into three classes
may be amended only by the affirmative vote of at least 80% of the shares of
each class of stock of the Holding Company outstanding and entitled to vote.
The advantage of this type of provision from the perspective of
protecting the interests of shareholders of the Holding Company in the event
of a takeover bid is that it extends the time required to make any change in
control of the Board of Directors and thus tends to encourage negotiations
with the Board of Directors in connection with attempted takeovers. A change
in control of the Board of Directors of the Bank can be made by a simple
majority (or less, if cumulative voting rights are exercised) of the Bank's
shareholders at a single annual meeting. With the classification of the
Board of Directors, the holder of a majority of the stock of the Holding
Company could not effect a change in the control of the Board of Directors
at fewer than two shareholders' meetings unless the holder had obtained
sufficient voting strength to amend the provisions of the Holding Company's
Articles of Organization relating to classification of Directors. In
addition, because certain actions by the Holding Company require the
approval of more than a simple majority of the Board of Directors, as more
fully described elsewhere in this Proxy Statement and Prospectus, the holder
of a majority of the stock of the Holding Company could not obtain control
of the Board of Directors
25
sufficient to accomplish certain corporate actions until it had exercised
its voting rights at three consecutive Annual Meetings of Shareholders.
A possible disadvantage of a classified board is that it may be viewed
as tending to perpetuate management of the Holding Company and the members
of the Board of Directors in their positions because of the additional time
required to change control of the Board. The existence of a classified
board will increase the amount of time required for a takeover bidder to
obtain control of the Holding Company without the approval of the Board of
Directors and as a result may discourage certain takeover bids, including
some which might be viewed favorably by shareholders.
The Board believes that any such disadvantage is outweighed by the
consideration that a classified board will assist the Bank in maintaining
its status as an independent bank. The Board believes, in addition, that
the use of a classified board will give the Holding Company's Board
stability and continuity which is not available to the Bank under Federal
banking laws because Directors may serve for one-year terms only under
Federal banking laws.
2. Federal banking statutes governing the Bank require the approval
of two-thirds of the capital stock of the Bank and the approval of the
Comptroller of the Currency in connection with any merger or consolidation
of the Bank with any other bank, and require the approval of two-thirds of
the capital stock of the Bank in connection with any voluntary liquidation
or dissolution of the Bank. Other transactions, including a sale of all,
substantially all or a substantial part of the assets of the Bank, the
issuance of securities by the Bank and a reclassification or
recapitalization of the stock of the Bank can be accomplished by the vote of
a majority of the Board of Directors of the Bank.
Under Article 6, Section 5 of the Holding Company's Articles of
Organization, none of the above-described transactions could be entered into
by the Holding Company unless one of the following conditions shall have
been met: (i) the transaction shall have been approved by at least 80% of
the total number of shares of stock of the Holding Company entitled to vote
on the matter and by at least a majority of the total number of shares of
stock of the Holding Company entitled to vote on the matter not owned by the
entity which is a party to the transaction, or any subsidiary or affiliate
thereof (the "Receiving Entity"); (ii) the transaction shall have been
approved by at least 80% of the members of the Board of Directors of the
Holding Company not affiliated with the Receiving Entity (hereinafter the
"Unaffiliated Directors"); (iii) the transaction shall have been approved by
a majority of the Unaffiliated Directors prior to the date on which the
Receiving Entity first acquired any share of the Holding Company's stock; or
(iv) the transaction shall have been approved by the holders of at least a
majority of the shares of each class of stock of the Holding Company
entitled to vote on the matter and by at least a majority of the shares of
each class of stock of the Holding Company entitled to vote on the matter
not owned by the Receiving Entity or any stockholder of the Receiving
Entity, and the aggregate of the cash and fair market value of all
consideration to be paid to holders of the common stock of the Holding
Company is equal to a Premium Price described in the next paragraph. The
provisions of the
26
Holding Company's Articles of Organization which set forth the requirements
for approval of the above-described transactions may not be amended except
by the affirmative vote of at least 80% of the shares of each class of stock
of the Holding Company outstanding and entitled to vote.
The Premium Price provisions referred to in (iv) above basically
require that the Receiving Entity pay the Holding Company's remaining
shareholders an amount equal to the greater of (a) the highest price paid
per share by the Receiving Entity in acquiring any of the Holding Company's
stock; or (b) an amount which is at least four times the per share book
value of the Holding Company's common stock as of the last day of the most
recent fiscal quarterly period of the Holding Company preceding the date of
the vote of shareholders approving the transaction in question; provided,
however, that the consideration to be paid to the holders of the common
stock of the Holding Company shall be in the same form as that paid by the
Receiving Entity in acquiring the shares of the common stock held by it
except to the extent that any stockholder of the Holding Company shall
otherwise agree.
The advantage of these provisions from the perspective of protecting
the interests of shareholders of the Holding Company is that it provides an
incentive to potential takeover bidders to engage in negotiations with the
Board of Directors before initiating a takeover attempt so that any
acquisition of the Holding Company may be arranged on terms as favorable as
possible to the shareholders.
One possible disadvantage of this provision, from the point of view of
shareholders, is that it would encourage takeover bidders to negotiate with
the Board of Directors. Thus, this provision may be viewed as tending to
assist the Board of Directors, and consequently management as well, to
retain their present positions.
The Board believes that the advantages which will accrue to
shareholders of the Holding Company by virtue of this provision in terms of
additional bargaining strength in the event of a takeover attempt outweigh
any potential which this provision may have for discouraging tender offers
which might be viewed by shareholders as beneficial.
3. There is no provision of the Bank's Articles of Association or By-
Laws which specifies the circumstances under which Directors of the Bank may
be removed from office by shareholders and there is similarly no provision
of the Federal banking statutes which specifies such circumstances.
Under the By-Laws of the Holding Company, shareholders would have the
right to remove Directors of the Holding Company from office only for cause,
which would be limited to (a) an adjudication by a court that a Director has
been negligent or has engaged in deliberate misconduct in carrying out his
duties to the Holding Company; (b) a determination by the remaining
Directors that a Director has acted in derogation of his duties to the
Holding Company; (c) conviction of a Director of a felony; (d) the granting
by a court to a Director of immunity to testify in a criminal proceeding in
which another is convicted of a felony; (e) a determination by the remaining
Directors
27
that a Director is mentally incompetent; or (f) failure of a Director to
fulfill the qualifications for Directors hereinafter described. The
provisions of the Holding Company's By-Laws which set forth the
circumstances under which Directors may be removed by shareholders may be
amended only by the affirmative vote of at least 80% of the shares of each
class of stock of the Holding Company outstanding and entitled to vote, or
by the affirmative vote of at least 80% of the Directors then in office.
The advantage of such a provision from the perspective of protecting
the interests of shareholders of the Holding Company in the event of a
takeover bid is that it precludes the removal of Directors unless removal is
justified for reasons other than a desire to obtain control of the Board of
Directors. In order for a takeover bidder to obtain control of the Holding
Company, it must control a majority of the Board of Directors and, in order
to accomplish certain acts subject to greater voting requirements under the
Holding Company's Articles of Organization, a greater percentage than a
majority. One method of obtaining the necessary voting control to obtain
these latter ends where a takeover bidder has acquired sufficient shares to
elect only a majority of the Board of Directors is for the takeover bidder
to remove Directors without cause and fill the vacancies thus created. The
requirement that a specified cause be shown before a Director may be removed
prevents this from happening, thus encouraging takeover bidders to obtain
the cooperation of the existing Board.
This provision of the Holding Company's By-Laws will make the removal
of Directors more difficult and thus may be thought to perpetuate present
management since the Board of Directors has the power to retain and
discharge management. On balance, the Board of Directors believes that this
provision is warranted because it will ensure that Directors of the Holding
Company will not be removed from office for reasons unrelated to their
performance of their duties.
4. Under Federal banking statutes, each Director of the Bank must be
a citizen of the United States, and at least two-thirds of the Directors
must reside in Massachusetts or within one hundred miles of the location of
the Bank. In addition, each Director must own capital stock of the Bank or
a holding company of the Bank with an aggregate par value of not less than
$1,000. Under the By-Laws of the Holding Company, unless waived by the
affirmative vote of at least two-thirds of the shareholders or two-thirds of
the Directors then in office, each Director: (a) may not be or have been for
a period of at least six months prior to the date of his election, an
officer or Director of any bank (except for a subsidiary of the Holding
Company), any bank holding company or any entity in competition with the
Holding Company or the Bank, and (b) must have been a United States Citizen
for at least six months.
This provision is intended to make it difficult for a takeover bidder
to assemble a slate of Directors on the assumption that a potential takeover
bidder is more likely than not to be a competing bank or bank holding
company. By making the task of assembling a slate of Directors more
difficult, it is thought that takeover bidders will be more inclined to
negotiate with the Board of Directors prior to commencing a tender offer,
thus increasing the bargaining strength of the Board to the ultimate benefit
of the shareholders.
28
The Board feels that the qualifications required of Directors by the
Holding Company's By-Laws will help to maintain the Bank's status as an
independent bank following the formation of the Holding Company, and
consequently are preferable to the qualifications required of Directors of
the Bank under the Federal banking laws, which present no genuine obstacle
to a takeover bidder.
5. Under Federal banking statutes, the Board of Directors of the Bank
must consist of no fewer than five and no more than twenty-five Directors.
There are currently thirteen members of the Bank's Board of Directors, and
shareholders of the Bank may vote at any time to increase the number of
Directors up to the maximum number permitted by law. Under the By-Laws of
the Holding Company, neither the shareholders nor the Directors of the
Holding Company could vote to increase the size of the Board by more than
two Directors in any one year.
The advantage of this provision from the point of view of protecting
the interests of shareholders in the event of a takeover attempt is that
this restriction would prevent a takeover bidder from circumventing the
provisions of the Holding Company's Articles of Organization which classify
the Board of Directors into three classes, with one class being elected in
each year. A takeover bidder which would otherwise have to exercise its
voting control at two Annual Meetings could, by voting for the creation of
additional directorships, obtain control of the Board of Directors in a
shorter period of time than would otherwise be the case under the staggered
system for the election of Directors. The takeover bidder would then be in
a position to exercise voting control of the Board of Directors to the
potential detriment of shareholders in connection with the takeover bid.
Other Considerations
Under the tax laws of Massachusetts (where more than 85% of the Bank's
shareholders reside), the taxation of dividends on capital stock is the same
with respect to stock of national banks as it is with Massachusetts business
corporation. There is no personal property tax on the capital stock of
Massachusetts business corporation or national banks. In other
jurisdictions, however, capital stock of national banks may be exempt from
property taxes, or dividends thereon may be exempt from taxation, whereas
shares of bank holding companies may not be so exempt. Under the laws of
some jurisdictions, shares of common stock of the Holding Company may not be
legal investments for certain categories of investors, whereas shares of
common stock of the Bank are legal investments for such investors.
Each Director, officer, employee or agent or former Director, officer,
employee or agent of the Holding Company, and each person who has served at
the request of the Holding Company ("Requested Capacity") as a Director,
officer, employee or agent of another entity in which the Holding Company
owns shares or of which it is a creditor is indemnified under the By-Laws of
the Holding Company against expenses or loss provided that no
indemnification shall be provided for any person with respect to any matter
as to which such person shall have been adjudicated in any proceeding
29
not to have acted in good faith in the reasonable belief that his action was
in the best interests of the Holding Company. The Holding Company may
purchase and maintain indemnity insurance, to the extent permitted by
Massachusetts law, on behalf of any person who is or was a Director,
officer, employee or agent of the Holding Company or is or was serving in a
Requested Capacity of another entity.
The terms of indemnification of Directors, officers and employees of
the Holding Company contained in Article V of the By-Laws of the Holding
Company are generally similar in legal effect to those contained in Article
X of the Articles of Association of the Continuing Bank (Exhibit A to the
Merger Agreement annexed as Exhibit A hereto). Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended (the
"Act"), may be permitted to Directors, officers and controlling persons of
the Holding Company pursuant to the aforementioned By-Law provision, the
Holding Company has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act, and is therefore unenforceable.
In addition to the indemnification provisions described above, Article
6, Section 8 of the Holding Company's Articles of Organization imposes
certain limitations on the ability of the Holding Company and its
shareholders to recover monetary damages from the Holding Company's
Directors for breach of fiduciary duty by such Directors in their capacity
as Director. Directors of the Holding Company continue to have liability to
the Holding Company and its stockholders for monetary damages for any breach
of fiduciary duty involving (i) breaches of the duty of loyalty to the
Holding Company or its stockholders, (ii) acts or omissions not in good
faith which involve intentional misconduct or a knowing violation of law,
(iii) liability under Sections 61 or 62 of Chapter 156B of the Massachusetts
General Laws (involving certain dividends or stock repurchases) or (iv) any
transaction from which the Director derived an improper personal benefit.
Equitable remedies such as an injunction or rescission also continue to be
available. There is no provision of the Articles of Association of the Bank
or the Continuing Bank which is similar in legal effect to Article 6,
Section 8 of the Holding Company's Articles of Organization.
HISTORY AND BUSINESS
The Bank
The Bank was organized in 1849 under a state charter and was named
Milford Bank. In 1865, the Bank reorganized becoming a national banking
association. The Bank acquired trust powers on November 2, 1926. As of
December 31, 1997, the Bank employed 75 full time employees and 16 part time
employees. In the past five years, the Bank has not consummated any merger,
consolidation or other acquisition of assets.
The banking business in the market area served by the Bank is highly
competitive. The Bank competes actively with other Banks as well as other
financial institutions engaged in the business of accepting deposits or
making loans, such as savings and loans associations and mutual savings
banks and finance companies.
30
The Bank's service area is generally limited to that portion of
Worcester County, Massachusetts in and around the communities of Milford and
Mendon. The Town of Milford is a well-developed financial community. In
addition to the Bank, there are five thrifts and other commercial banks in
Milford. The Bank, with total assets on December 31, 1997 of $138,000,000
has the least assets of such financial institutions.
The Bank's main office (36,200 sq. feet) at 300 East Main Street,
Milford, Massachusetts is owned by the Bank and the Bank also owns its
branch offices at 256 Main Street, Milford, Massachusetts (2,750 sq. feet)
and the building located at 146 South Main Street, Milford, Massachusetts
(3,200 sq. feet). The Bank leases the land on which the 146 South Main
Street branch is located and the branch located at 14 Hastings Street,
Mendon, Massachusetts (2,150 sq. feet).
The Bank conducts the normal operations of an independent commercial
bank offering a full range of banking services including the acceptance of
individual, nonprofit, municipal and business demand and savings deposits,
as well as NOW accounts and individual retirement accounts, the making of
commercial, real estate, installment and other loans, and the offering of
automated teller services.
The Bank's Trust Department furnishes a wide range of trust services
to individuals, corporations, municipalities and charitable organizations.
The Bank acts as executor, administrator and trustee of personal estates and
trusts, provides investment, advisory and custody services, and acts as
fiscal agent and paying agent. The book value of assets under management on
behalf of the Bank's customers was $94,580,000 at December 31, 1997.
The Holding Company
The Holding Company was incorporated on January 28, 1998 as a business
corporation under Chapter 156B of Massachusetts General Laws, pursuant to
the authorization and direction of the Directors of the Bank. The Holding
Company has applied to the Board of Governors of the Federal Reserve System
for prior approval to become a bank holding company upon consummation of the
Merger, and has entered into the Merger Agreement with the Bank. To date,
the Holding Company has engaged in no business other than as necessary and
incidental to effecting the merger with the Bank pursuant to the Merger
Agreement. There is no established public market for the Holding Company
Stock and none is expected to develop as a result of the Merger. The
Holding Company owns no property.
Upon consummation of the Merger, the Holding Company will be a bank
holding company registered with the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act of 1956, as amended, with
the Continuing Bank as its wholly-owned subsidiary. The Holding Company
will have corporate power to engage in such activities as are permitted to
business corporations under Chapter 156B of the Massachusetts General Laws,
subject to the limitations of the Bank Holding Company Act and regulations
thereunder of the Board of Governors of the Federal
31
Reserve System. In general, the Bank Holding Company Act and regulations
restrict the Holding Company with respect to its own activities and
activities of any subsidiaries to the business of banking or such other
activities which are closely related to the business of banking. See
"REORGANIZATION PLAN - MERGER - Reasons for the Reorganization."
REGULATION AND SUPERVISION
The Bank is, and the Continuing Bank will be, subject to regulation by
the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, and the Federal Deposit Insurance Corporation. The business
of the Bank is, and the business of the Continuing Bank will be, subject in
certain cases to state laws applicable to banks.
The Holding Company and its subsidiaries will be affiliates of the
Continuing Bank under federal law and as such will be subject to examination
by the Board of Governors of the Federal Reserve System for the purpose of
determining the effect of the relations between the Continuing Bank and such
affiliates upon the affairs of the Continuing Bank. The Federal Reserve Act
also imposes certain restrictions on loans by the Continuing Bank to the
Holding Company, on investments by the Continuing Bank in stock or
securities of the Holding Company, on the taking by the Continuing Bank of
such stock or securities as collateral security for loans to any borrower,
and on certain other activities. By virtue of such relationship with the
Continuing Bank, the Holding Company and its subsidiaries may under certain
circumstances be subject to restrictions imposed by federal law with respect
to engaging in certain aspects of the securities business. In addition,
affiliates of the Continuing Bank will be subject to examination at the
discretion of the Comptroller of the Currency.
Under the Bank Holding Company Act of 1956, as amended, no corporation
may become a bank holding company as defined therein, without prior approval
of the Board of Governors of the Federal Reserve System. The Holding
Company will also have to secure prior approval of the Board of Governors of
the Federal Reserve System if it wishes to acquire voting shares of any
other bank, if after such acquisition it would own or control more than 5%
of the voting shares of such bank. The Holding Company is also limited
under the Bank Holding Company Act of 1956, as amended, as to the types of
business in which it may engage.
The Holding Company will, in addition, become a bank holding company
subject to Massachusetts law if it acquires control of 25% or more of the
voting stock of another bank in addition to the Bank.
32
MARKET PRICE AND DIVIDENDS
Bank Stock
Shares of the Bank's stock are currently held by approximately 121
record holders. The Bank's common stock is not registered under Section 12
of the Securities Exchange Act of 1934. There is only limited trading
activity in such shares. To the Bank's knowledge, the shares of the Bank's
common stock are traded at infrequent, irregular intervals, with 1,214
shares traded in 5 transactions during 1996 and 1,581 shares traded in 6
transactions during 1997. During that period, to the Bank's knowledge,
shares were traded at prices ranging between $53 and $75. To the Bank's
knowledge, there have been no shares traded in 1998.
The following table sets forth cash dividends paid by the Bank in 1996
and 1997.
Cash Dividends
(per share)
--------------
1996
February $.24
August $.24
1997
February $.32
August $.32
Holding Company Stock
The Holding Company is newly organized and does not have any history
of operations as of the date of this Proxy Statement and Prospectus. There
is currently no established trading market for the Holding Company Stock and
there can be no guarantee that such a market will develop.
It is expected that cash dividends of the Holding Company after
consummation of the merger will be delivered and paid on approximately the
same schedule as that followed with respect to recent cash dividends on the
common stock of the Bank. The Holding Company's future dividends will
depend upon its earnings, financial condition and other factors. At the
outset, it is anticipated that the monetary requirements of the Holding
Company for expenses as well as dividends will be obtained from dividends
paid by the Continuing Bank. The amount of available dividends the
Continuing Bank will be allowed to pay the Holding Company is limited and
subject to laws and strict government regulations, and in some instances may
require prior approval of regulatory agencies.
33
FINANCIAL MATTERS
Selected Financial Data
The following table presents a summary of the major components of the
Bank's financial statements for each of the five years ended December 31,
1997. All information concerning the Bank should be read in conjunction
with other financial statements and related notes previously provided by the
Bank.
Year ended December 31
(In thousands except per share data)
------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Income Statement Data
Interest and Dividend Income $ 10,218 $ 9,835 $ 9,455 $ 8,257 $ 7,131
Interest Expense 3,175 3,021 2,588 2,047 2,239
------------------------------------------------------------
Net Interest and Dividend Income 7,043 6,814 6,867 6,210 4,892
Provision for Loan Losses 137 285 135 272 100
Other Income 924 728 746 470 766
Other Expense 5,800 3,902 7,236 4,594 4,094
Income Tax 780 1,337 45 709 605
------------------------------------------------------------
Net Income $ 1,250 $ 2,018 $ 197 $ 1,105 $ 859
============================================================
Balance Sheet Data (at end of
period):
Total Assets $138,196 $127,519 $116,291 $116,944 $108,424
Net Loans 71,208 64,618 65,792 60,058 50,978
Total Deposits 125,732 116,440 106,937 108,698 100,782
Total Stockholder's Equity 11,615 10,290 8,473 7,630 7,370
Per Common Share Data
Net Income $ 6.25 $ 10.09 $ 0.98 $ 5.52 $ 4.29
Cash dividends 0.64 0.48 0.36 0.27 0.20
Book Value 58.06 51.44 42.36 38.15 36.85
The Holding Company is newly organized and has no history of operations.
34
Capitalization
The capitalization of the Bank at December 31, 1997, and the proposed
capitalization of the Bank, the Continuing Bank and the Holding Company
prior to the consummation of the merger contemplated by the Merger Agreement
and as adjusted to give effect to the merger, are as follows:
December 31, Prior to Upon
1997 Merger(a) Merger(a)
------------ --------- ---------
Bank
Shareholders' Equity:
Common Stock - Par Value $1.00 $ 200,035 $ 200,035
Authorized 250,000 Shs 250,000 Shs
Outstanding 200,035 Shs 200,035 Shs
Surplus $ 3,858,355 $ 3,858,355
Undivided Profits(d) $ 7,556,583 $ 7,556,583
------------------------------
Total Capital Funds $11,614,973 $11,614,973
==============================
New Bank
Shareholders' Equity:
Common Stock - Par Value $1.00 $ 100,000 $ 300,035
Authorized 1,000,000 Shs 1,000,000 Shs
Outstanding 100,000 Shs 300,035 Shs
Surplus $ 20,000 $ 3,878,355
Undivided Profits(d) $ 0 $ 7,436,583
------------------------------
Total Capital Funds $ 120,000 $11,614,973(b)
==============================
Holding Company
Shareholders' Equity:
Common Stock - Par Value $1.00 $ 1.00 $ 200,035
Authorized 1,000,000 Shs 1,000,000 Shs
Issued 1(c) 200,035 Shs
Surplus $ 0 $ 3,878,355
Undivided Profits(d) $ 0 $ 7,536,583
------------------------------
Total Capital Funds $ 1.00 $11,614,973
==============================
<FN>
<Fa> Where applicable, based on December 31, 1997 surplus and undivided
profits of the Bank.
<Fb> It is anticipated that after the merger the Continuing Bank will
declare a special dividend to the Holding Company, the effect of which
would be to reduce undivided profits. Origination expenses shall be
included in such dividend and $120,000 of such funds shall be repaid
to a bank, from which the Holding Company will borrow the funds to
provide initial capitalization of the New Bank.
<Fc> In order to effect the organization of the Holding Company, one share
of its common stock has been issued to the firm of Craig and Macauley
Professional Corporation for consideration of $1.00. Upon
consummation of the merger, such share shall be repurchased by the
Holding Company for a cash price equal to that paid by such firm.
<Fd> Undivided profits include $284,683 which represents the net unrealized
gain on securities available for sale.
</FN>
35
MANAGEMENT
All Directors of the Bank immediately prior to the merger will become,
upon consummation of the merger, Directors of the Continuing Bank, and all
Directors of the Bank will be Directors of the Holding Company. It is not
presently contemplated that the Directors and officers of the Holding
Company will receive any compensation other than that received in their
capacities as Directors and officers of the Continuing Bank.
Transactions With Management of Continuing Bank
The Bank has had, currently has, and expects to continue to have in the
future, banking transactions (including loans and extensions of credit) in
the ordinary course of its business with its Directors and executive
officers and various corporations of which they are officers. Such banking
transactions have been and are on substantially the same terms, including
interest rates, collateral and repayment conditions, as those prevailing at
the same time for comparable transactions with others and do not involve
more than the normal risk of collectibility or present other unfavorable
features. Upon consummation of the merger, the Continuing Bank will hold
all rights of property of the Bank then existing and will succeed to the
rights of the Bank under such banking transactions.
DESCRIPTION OF THE BANK'S COMMON STOCK
Dividend Rights
Holders of common stock of the Bank are entitled to receive such
dividends as are declared by the Bank's Board of Directors out of funds
legally available therefor.
Voting Rights - Cumulative Voting
Each holder of common stock of the Bank is entitled to one vote for
each share of stock held by him. In all elections of Directors, each
shareholder has the right to vote the number of shares of stock owned by him
for as many persons as there are Directors to be elected, or to cumulate
such shares and give one candidate as many votes as will equal the number of
Directors multiplied by the number of shares of his stock, or to distribute
his votes on the same principle among as many candidates as he shall think
fit.
Liquidation Rights
In the event of liquidation, the holders of common stock of the Bank
will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them.
36
Preemptive Rights
In case of an increase in the capital stock of the Bank, each
shareholder has the preemptive right to subscribe for such number of shares
of the proposed increase in the capital stock as he may be entitled to
according to the number of shares owned by him before the stock is
increased.
Dissenters' Rights
Under certain circumstances set forth in the Federal banking laws and
upon compliance with statutory procedures applicable to dissenting
shareholders, holders of the Bank's common stock are entitled to receive the
value of the shares held by them. Such circumstances include the conversion
of the Bank to a state-charted institution, the merger or consolidation of
the Bank with a state bank under a state charter, or the consolidation or
merger of the Bank with another national banking association.
Other Matters
Federal banking laws contain a provision authorizing a pro rata
assessment upon shareholders of the Bank to cover any impairment of capital,
the assessment to be enforced only by sale, to the extent necessary, of the
stock of the shareholder assessed. After the consummation of the merger,
any such assessment would be paid by the Holding Company.
DESCRIPTION OF THE HOLDING COMPANY'S
COMMON STOCK
Dividend Rights
Holders of the Holding Company's common stock will be entitled to
receive such dividends as are declared by its Board of Directors out of
funds legally available therefor.
Voting Rights
The shares of common stock of the Holding Company, unlike the shares
of common stock of the Bank, will not have cumulative voting rights. This
means that the holders of more than 50% of the shares of common stock of the
Holding Company voting for the election of Directors can elect 100% of the
class of Directors standing for election at any meeting if they choose to do
so, and in such event, the holders of the remaining shares voting for the
election of Directors will not be able to elect any person or persons to the
Board of Directors of the Holding Company at the meeting.
37
Liquidation Rights
In the event of dissolution of the Holding Company and the liquidation
thereof, the holders of common stock of the Holding Company will be entitled
to receive pro rata any assets distributable to shareholders in respect of
shares held by them.
Preemptive Rights
Holders of common stock of the Holding Company will not have any right
to subscribe to any additional securities which may be issued by the Holding
Company.
Dissenters' Rights
Holders of the common stock of the Holding Company will, under certain
circumstances set forth in the Massachusetts corporate laws, and upon
compliance with statutory procedures, be entitled to receive the value of
the shares held by them. Among the types of transactions giving rise to a
right of appraisal under Massachusetts law are most mergers and
acquisitions.
Other Matters
The common stock of the Holding Company will not have any redemptive
provisions applicable thereto, and the shares, when issued upon consummation
of the merger, will be fully paid and non-assessable.
FINANCIAL STATEMENTS
The Bank's Annual Report to Shareholders, containing financial
statements for the year ended December 31, 1997 prepared in accordance with
generally accepted accounting principles, has been previously furnished to
shareholders. Additional copies of such Report may be obtained without
charge upon request to: Anne M. Dygon, Senior Vice President and Chief
Financial Officer, The Milford National Bank and Trust Company, 300 East
Main Street, Milford, MA 01757. Pro forma financial data concerning the
Holding Company after its acquisition of the Bank is not presented since it
would involve no meaningful change in the information contained in the
Annual Report.
LITIGATION
There are no material pending legal proceedings to which the Bank is a
party or to which any of its property is subject.
The Holding Company is not involved in any litigation.
38
MISCELLANEOUS MATTERS
Action will be taken on whatever other business may properly come
before the meeting. Neither the Board of Directors nor anyone named in the
solicited proxy is aware of any other matters to be considered at the Annual
Meeting. If any other matters properly come before the meeting, the persons
named in the enclosed form of proxy will vote all proxies with respect to
such matters in accordance with the recommendations of the Board of
Directors.
The Board of Directors urges you to mark, sign, date and return the
enclosed proxy as promptly as possible, whether or not you plan to attend
the meeting in person. If you do attend, you may then withdraw your proxy,
or you may withdraw your proxy by a subsequently dated proxy delivered to
Norman Noorjanian, Senior Vice President and Cashier, The Milford National
Bank and Trust Company, 300 East Main Street, Milford, MA 01757.
Following the merger, the shareholders of the Holding Company will be
furnished with annual financial statements of the Holding Company similar to
those furnished by the Bank in the past.
LEGAL OPINIONS
Legal matters relating to this Proxy Statement and Prospectus have
been passed on by Craig and Macauley Professional Corporation, Boston,
Massachusetts, special counsel to The Milford National Bank and Trust
Company and MNB Bancorp.
By Order of the Board of Directors
/s/ Robert J. Lewis
Robert J. Lewis, President
and Chief Executive Officer
Dated: March 9, 1998
39
EXHIBIT A TO
PROXY STATEMENT AND PROSPECTUS
AGREEMENT TO MERGE
The Milford National Bank and Trust Company
with and into,
and
under the charter of,
Milford Bank, National Association
under the title of
"The Milford National Bank and Trust Company"
This AGREEMENT is made between The Milford National Bank and Trust
Company (hereinafter referred to as "Bank"), a national banking association
located at 300 East Main Street, Milford, County of Worcester, in the
Commonwealth of Massachusetts, and Milford Bank, National Association
(hereinafter referred to as "New Bank"), a national banking association
located at the same address, and is assented to by MNB Bancorp, a
Massachusetts corporation (hereinafter referred to as "Holding Company").
The Bank and New Bank are banks duly organized under the banking laws
of the United States of America. As of December 31, 1997, the Bank had
capital stock issued and outstanding in the amount of 200,035 (divided into
200,035 shares of common stock of the par value of $1.00 per share), surplus
of $3,858,355 and undivided profits (including unrealized gains on
securities available for sale) of $7,756,583.
New Bank was organized on January 26, 1998 and has authorized capital
stock in the amount of $1,000,000 (divided into 1,000,000 shares of common
stock of the par value of $1.00 per share). Immediately prior to the merger
becoming effective, 100,000 shares of New Bank shall be issued and
outstanding and New Bank shall have a surplus in the amount of $20,000. The
merger hereby provided for shall hereinafter be called the "merger."
Holding Company is a corporation duly organized under the laws of the
Commonwealth of Massachusetts and has its principal office in the Town of
Milford, County of Worcester, Commonwealth of Massachusetts. Holding
Company's authorized capital stock consists of 1,000,000 shares of common
stock, of the par value of $1.00 per share.
A majority of the Board of Directors of the Bank and a majority of the
Board of Directors of New Bank have, respectively, approved this Agreement
and authorized its execution. A majority of the Board of Directors of
Holding Company has approved this Agreement, agreed that Holding Company
shall join in and be bound by it, and authorized the undertakings
hereinafter made by the Holding Company.
40
This Agreement is and shall be deemed to be a plan of reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the premises, the Bank and New
Bank, joined in by Holding Company, hereby make this Agreement prescribing
the terms and conditions of merger of the Bank and New Bank as follows:
Section 1
Bank shall be merged into New Bank under the Charter and Articles of
Association of New Bank pursuant to the provisions of, and with the effect
provided in, Section 2 of Chapter 209 of the Act of Congress of November 7,
1918, as amended (12 U.S.C. Section 215a).
Section 2
The name of the surviving association (hereinafter referred to as the
"Association") shall be "The Milford National Bank and Trust Company " and
its charter number shall be 866.
Section 3
The business of the Association shall be that of a national banking
association. This business shall be conducted by the Association at its
main office which shall be located at 300 East Main Street, Milford,
Massachusetts, and its legally established branches.
Section 4
The amount of capital stock of the Association shall be $300,035
divided into 300,035 shares of common stock, each of $1.00 par value, and at
the time the merger shall become effective, the Association shall have a
Surplus of $3,878,355, and Undivided Profits, which when combined with the
capital and surplus will be equal to the combined capital structures of the
merging banks as stated in the preamble of this Agreement, adjusted,
however, for normal earnings and expenses between December 31, 1997 and the
effective time of the merger.
41
Section 5
(a) Upon the merger becoming effective, the corporate existence of
the Bank and New Bank shall, as provided by the aforementioned Act of
Congress, be merged into and continued in the Association, and the
Association shall be deemed to be the same corporation as the Bank and New
Bank. All rights, franchises and interests of the Bank and New Bank,
respectively, in and to every type of property (real, personal and mixed)
and choses in action shall be transferred to and vested in the Association
by virtue of such merger without any deed or other transfer, and the
Association, without any order or action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises, and
interests, including appointments, designations and nominations, and all
other rights and interests as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates and persons, assignee, receiver and in
every other fiduciary capacity, in the same manner and to the same extent as
such rights, franchises, and interests were held or enjoyed by the Bank and
New Bank, respectively, at the time the merger becomes effective.
Thereafter, the Association shall engage in the business of a national
banking association at the main office and the legally established and
approved branches of the Bank.
(b) Upon the merger becoming effective, the Association shall be
liable for all liabilities of the Bank; and all liabilities, obligations and
contracts of the Bank and of New Bank, respectively, matured or unmatured,
whether accrued, absolute, contingent or otherwise, and whether or not
reflected or reserved against on balance sheets, books of account, or
records of the Bank or New Bank, as the case may be, shall be those of the
Association, and shall not be released or impaired by the merger, and all
rights of creditors and other obligees and all liens on property of either
the Bank or New Bank shall be preserved unimpaired.
Section 6
This Agreement shall be submitted to the shareholders of the Bank and
New Bank for ratification and confirmation at meetings to be called and held
in accordance with the applicable provisions of law and their respective
Articles of Association and By-laws. The Bank and New Bank shall proceed
expeditiously and cooperate fully in the procurement of any other consents
and approvals and in the taking of any other action, and the satisfaction of
all other requirements prescribed by law or otherwise, necessary for
consummation of the merger on the terms herein provided including, without
being limited to, the preparation and submission of an application to the
Comptroller of the Currency of the United States for approval of the merger
under the provisions of Section 18(c) of the Federal Deposit Insurance Act,
as amended (12 USC Section 1828(c)) and Section 215a of Title 12 United
States Code.
42
Section 7
Upon the merger becoming effective:
(a) Each share of the common stock of the Bank shall, by virtue of
this Agreement and without any action on the part of the holder thereof, be
converted into and become one (1) share of the common stock of Holding
Company, and outstanding certificates representing shares of common stock,
par value $1.00 per share, of the Bank shall thereafter represent shares of
common stock, par value $1.00 per share, of Holding Company. Each holder of
any such shares of the Bank which shall have been so converted into common
stock of Holding Company, shall, upon surrender in proper form to the
Association for cancellation of one or more stock certificates (hereinafter
called "Old Certificates") which, prior to the merger becoming effective,
represented common stock of the Bank, be entitled to receive as evidence of
the shares so converted one or more stock certificates (hereinafter called
"New Certificates") bearing the name of Holding Company as issuer, for the
number of shares of Holding Company represented by such Old Certificates
when surrendered. Until so surrendered, each Old Certificate shall be
deemed, for all corporate purposes, to evidence the ownership of the number
of shares of common stock of the Holding Company which the holder thereof
would be entitled to receive upon its surrender, except that Holding Company
may withhold, from the holder of shares represented by such Old
Certificates, distribution of any or all dividends declared by Holding
Company on such shares until such time as such Old Certificate shall be
surrendered in exchange for one or more New Certificates, at which time
dividends so withheld by Holding Company with respect to such shares shall
be delivered, without interest thereon, to the shareholder to whom such New
Certificates are issued.
(b) The amount, and the number of shares, of common stock of New Bank
outstanding immediately before the merger becomes effective (specifically
$100,000 divided into 100,000 shares of the par value of $1.00 each) shall
be increased by the amount and the number of shares of the common stock of
the Bank outstanding immediately before the merger becomes effective,
(specifically $200,035 divided into 200,035 shares of the par value of $1.00
each, such figures being adjusted to reflect all increases, if any, in the
capital stock of Bank from this date until immediately before the merger)
with the effect that the amount and the number of shares of the common stock
of the Association outstanding upon the completion of the merger shall be
equal to the aggregate amount and the aggregate number of shares of common
stock of the Bank and New Bank, combined, immediately before the merger
(adjusted to reflect all increases in the common stock of the Bank and in
the common stock of New Bank after this date until immediately before the
merger becomes effective).
43
(c) No cash shall be allocated to shareholders of the Bank (except as
to those shareholders who elect to dissent from the plan of merger as
provided in Section 11 hereof) or to any other person, firm or corporation,
and stock shall be allocated as follows:
(i) To shareholders of the Bank of record at the time the
merger becomes effective there shall be allocated one (1) share of
common stock of Holding Company for each one (1) share of common stock
of the Bank held of record at the time of the merger; and
(ii) To Holding Company there shall be allocated the amount,
and the number of shares, of common stock of the Association of the
par value of $1.00 per share, which shall be equal to the amount, and
the number of shares, of common stock of the Bank outstanding
immediately before the merger.
(d) The shares of the capital stock of New Bank issued and
outstanding at the time of the merger shall continue to be issued and
outstanding shares of the Association.
Section 8
Neither of the banks shall declare or pay any dividend to its
shareholders between the date of this Agreement and the time at which the
merger shall become effective, except in the ordinary course of business,
nor dispose of any of its assets in any other manner except in the normal
course of business and for adequate value.
Section 9
The present Board of Directors of Bank shall continue to serve as the
Board of Directors of the Association until the next annual meeting or until
such time as their successors have been elected and have qualified.
Section 10
Effective as of the time this merger shall become effective as
specified in the "Certificate Approving Merger" to be issued by the
Comptroller of the Currency, the Articles of Association of the Association
shall read in their entirety as provided in Exhibit A hereto. The By-Laws
of the Association shall be the By-Laws of New Bank.
44
Section 11
Any shareholder of the Bank who shall have voted against the merger at
the meeting of the shareholders of the Bank held for the purpose set forth
in Section 6 of this Agreement or who shall have given notice in writing at
or prior to such meeting to the presiding officer that he dissents from the
plan of merger, shall be entitled to receive the value of the shares so held
by him when the merger shall be approved by the Comptroller of the Currency
upon written request made to the Association at any time before thirty days
after the date of consummation of the merger, accompanied by the surrender
of his stock certificates. The value of the shares of any dissenting
shareholder shall be ascertained, as of the effective date of the merger, by
an appraisal made by a committee of three persons, composed of (1) one
selected by the vote of the holders of the majority of the stock, the owners
of which are entitled to payment in cash (by reason of such dissent and
request for appraisal); (2) one selected by the directors of the
Association; and (3) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If the value
so fixed shall not be satisfactory to any dissenting shareholder who has
requested payment, that shareholder may, within five days after being
notified of the appraised value of such shares, appeal to the Comptroller of
the Currency, who shall cause a reappraisal to be made which shall be final
and binding as to the value of the shares of the appellant. If within
ninety days from the date of consummation of the merger, for any reason one
or more of the appraisers is not selected as herein provided, or the
appraisers fail to determine the value of such shares, the Comptroller of
the Currency shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller of the Currency in making the reappraisal or the
appraisal, as the case may be, shall be paid by the Association. The value
of the shares ascertained shall be promptly paid to the dissenting
shareholders by the Association.
Section 12
Effectuation of the merger herein provided for is conditional upon:
(a) Ratification and confirmation of this Agreement by vote of the
shareholders of the Bank and the New Bank as required by law;
(b) The approval of the Comptroller of the Currency of the merger
herein provided for; and
(c) Procurement of all other consents and approvals, and satisfaction
of all other requirements prescribed by law, which are necessary for
consummation of the merger.
45
Section 13
In the event that:
(a) The number of shares of capital stock of the Bank voted against
the merger, or in respect of which written notice is given purporting to
dissent from the merger, shall make consummation of the merger unwise in the
opinion of either the Board of Directors of the Bank or the Board of
Directors of New Bank; or
(b) Any action, suit, proceeding or claim has been instituted, made
or threatened relating to the proposed merger which shall make consummation
of the merger inadvisable in the opinion of either the Board of Directors of
the Bank or the Board of Directors of New Bank; or
(c) Any action, consent or approval, governmental or otherwise, which
is, or in the opinion of counsel for the Bank may be, necessary to permit or
enable the Association, upon and after the merger, to conduct all or any
part of the business and activities of the Bank up to the time of the
merger, in the manner in which such activities and business are then
conducted, shall not have been obtained; or
(d) For any other reason consummation of the merger is inadvisable in
the opinion of the respective Boards of Directors of both the Bank and New
Bank;
then this Agreement may be terminated at any time before the merger becomes
effective by written notice by either the Bank or New Bank to the other of
them, authorized or approved by resolution adopted by the Board of Directors
of the one of them giving such notice. Upon termination by written notice
as provided in this Section 13, this Agreement shall be void and of no
further effect, and there shall be no liability by reason of this Agreement
or the termination thereof on the part of the Bank, New Bank, Holding
Company or the directors, officers, employees, agents or shareholders, or
any of them.
Section 14
Subject to the terms of and upon satisfaction of all requirements of
law and the conditions specified in this Agreement, including, among other
conditions, receipt of the approval of the Comptroller of the Currency
specified in the Act of Congress referred to in Section l of this Agreement,
the merger shall become effective at the time specified in the certificate
to be issued by the Comptroller of the Currency under the seal of his office
approving the merger.
46
WITNESS, the signature and seals of said merging banks this 4th day of
February, 1998, each hereunto set by its Chairman and attested by its
President, pursuant to a resolution of its Board of Directors, acting by a
majority thereof, and witness the signatures hereto of a majority of each of
said Boards of Directors:
ATTEST: THE MILFORD NATIONAL BANK
AND TRUST COMPANY
/s/ Robert J. Lewis By: /s/ Henry C. Papuga
President Chairman
(SEAL)
/s/ Dorothy R. Horne /s/ Linda L. Varney
/s/ Michael A. Diorio /s/ Robert J. Lewis
/s/ Henry C. Papuga /s/ Gilbert Kahn, Jr.
/s/ Thomas C. Sawyer, Sr.
State of New Jersey
County of Passaic, ss.
On the 6th day of February, 1998, before me personally came Gilbert
Kahn, Jr. to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same.
/s/ Joyce A. Venezia
Notary Public
(Seal of Notary) My commission expires on:
Joyce A. Venezia
Notary Public, State of New Jersey
No. 2187917
Qualified in Essex County
Commission Expires April 4, 2001
47
ATTEST: MILFORD BANK, NATIONAL
ASSOCIATION
/s/ Robert J. Lewis By: /s/ Henry C. Papuga
President Chairman
(SEAL)
/s/ Michael A. Diorio /s/ Henry C. Papuga
/s/ Thomas C. Sawyer, Sr. /s/ Robert J. Lewis
/s/ Linda L. Varney
48
MNB Bancorp hereby assents to the foregoing Agreement, undertakes that
it will be bound thereby and that it will do and perform all acts and things
therein referred to or provided to be done by it.
IN WITNESS WHEREOF, MNB Bancorp has caused this undertaking to be
executed by its duly authorized officer and its corporate seal to be
hereunto affixed this 11th day of February, 1998.
ATTEST: MNB BANCORP
/s/ Kathrine Baldwin By: /s/ Robert J. Lewis
Kathrine Baldwin, Clerk Robert J. Lewis, President
(SEAL)
49
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF WORCESTER )
On this 4th day of February, 1998, before me, a Notary Public for the
State and County aforesaid, personally came Henry C. Papuga, as Chairman,
and Robert J. Lewis, as President, of The Milford National Bank and Trust
Company, and each in his capacity acknowledged the foregoing instrument to
be the act and deed of said association and the seal affixed thereto to be
its seal; and came Robert J. Lewis, Henry C. Papuga, Dorothy R. Horne,
Michael A. Diorio, Thomas C. Sawyer, Sr., and Linda L. Varney, and each of
them acknowledged said instrument to be the act and deed of said association
and of himself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
/s/ David F. Hannon
Notary Public
(Seal of Notary) My Commission Expires:
David F. Hannon
A Notary Public of Massachusetts
My Commission Expires Nov. 22, 2002
50
COMMONWEALTH OF MASSACHUSETTS )
) SS. Milford
COUNTY OF WORCESTER )
On this 11th day of February, 1998, before me, a Notary Public for the
State and County aforesaid, personally came Henry C. Papuga, as Chairman,
and Robert J. Lewis, as President, of Milford Bank, National Association,
and each in his capacity acknowledged the foregoing instrument to be the act
and deed of said association and the seal affixed thereto to be its seal;
and came Robert J. Lewis, Henry C. Papuga, Michael A. Diorio, Thomas C.
Sawyer, Sr., and Linda L. Varney, being a majority of the Board of Directors
of said association and each of them acknowledged said instrument to be the
act and deed of said association and of himself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Kathrine Baldwin
Notary Public
(Seal of Notary) My Commission Expires: 06/21/2002
COMMONWEALTH OF MASSACHUSETTS )
) SS. Milford
COUNTY OF WORCESTER )
On this 11th day of February, 1998, before me, a Notary Public for the
State and County aforesaid, personally came Robert J. Lewis, as President of
MNB Bancorp, and in his said capacity acknowledged the foregoing instrument
to be the act and deed of said corporation and the seal affixed thereto to
be its seal.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Kathrine Baldwin
Notary Public
(Seal of Notary) My Commission Expires: 06/21/2002
51
EXHIBIT A TO EXHIBIT A OF
PROXY STATEMENT AND PROSPECTUS
THE MILFORD NATIONAL BANK AND TRUST COMPANY
ARTICLES OF ASSOCIATION
For the purpose of organizing an Association to carry on the business
of banking under the laws of the United States, the undersigned do hereby
enter into the following Articles of Association.
FIRST. The title of this Association shall be The Milford National
Bank and Trust Company.
SECOND. The Main Office of the Association shall be in Milford,
Worcester County, Commonwealth of Massachusetts. The general business of
the Association shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of
not less than five nor more than twenty-five shareholders, the exact number
to be fixed and determined from time to time by resolution of a majority of
the full Board of Directors or by resolution of the shareholders at any
annual or special meeting thereof. Each director shall own $1,000 aggregate
par value in this national bank or in a company which has control of the
bank. Any vacancy in the Board of Directors may be filled by action of the
Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders, the
purpose of which shall be the election of Directors and the transaction of
whatever other business may be brought before said meeting. It shall be
held at the main office or other convenient place as the Board of Directors
may designate, on the day of each year specified therefor in the By-Laws,
but if no election is held on that day, it may be held on any subsequent day
according to such lawful rules as may be prescribed by the Board of
Directors.
Nominations for election to the Board of Directors may be made by the
Board of Directors or by any stockholder of any outstanding class of capital
stock of this Association entitled to vote for election of directors.
Nominations other than those made by, or on behalf of the existing
management of this Association shall be made in writing and shall be
delivered or mailed to the President of this Association and to the
Comptroller of the
52
Currency, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of stockholders called for the
election of directors, provided, however, that if less than 21 days' notice
of the meeting is given to shareholders, such nominations shall be mailed or
delivered to the President of this Association and to the Comptroller of the
Currency not later than the close of business on the seventh day following
the day on which the notice of meeting was mailed. Such notification shall
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of this Association that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of this
Association owned by the notifying shareholder. Nominations not made in
accordance herewith may, in his or her discretion, be disregarded by the
Chairperson of the meeting, and upon his or her instructions, the vote
tellers may disregard all votes cast for such nominees.
FIFTH. The authorized amount of capital stock of this Association
shall be 1,000,000 shares of common stock of the par value of one dollar
($1.00) each; but said capital stock may be increased or deceased from time
to time, in accordance with the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares
thereof, each shareholder shall be entitled to subscribe for such additional
shares in proportion to the number of shares of said capital stock owned by
him on the record date fixed by the Board of Directors in connection with
the issuance of such additional shares, unless another time subsequent to
the date of the shareholders' meeting is specified in a resolution by the
shareholders at the time the increase is authorized. The Board of Directors
shall have the power to prescribe a reasonable period of time within which
the pre-emptive rights to subscribe to the new shares of capital stock must
be exercised.
SIXTH. The Board of Directors shall appoint one of its members
Chairperson of the Board. The Board of Directors shall appoint a President
of the Association and shall have the power to appoint one or more Vice
Presidents; and to appoint a Cashier and such other officers and employees
as may be required to transact the business of this Association.
The Board of Directors shall have the power to define the duties of
the officers and employees of the Association; to fix the salaries to be
paid to them; to dismiss them; to require bonds from them and to fix the
penalty thereof; to regulate the manner in which any increase of the capital
of the Association shall be made; to manage and administer the business and
affairs of the Association; to make all By-laws that it may be lawful for it
to make; and generally to do and perform all acts that it may be legal for a
Board of Directors to do and perform.
53
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of Milford,
Massachusetts, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the
Association to any other location, without the approval of the shareholders
but subject to the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or
more shareholders owning, in the aggregate, not less than twenty-five
percent of the stock of this Association, may call a special meeting of
shareholders at any time. Unless otherwise provided by the laws of the
United States, a notice of the time, place, and purpose of every annual and
special meeting of the shareholders shall be given by first-class mail,
postage prepaid, mailed at least ten days prior to the date of such meeting
to each shareholder of record at his or her address as shown upon the books
of this Association.
TENTH. This Association shall indemnify each person (and his heirs,
executors, administrators, or other legal representatives) who is, or shall
have been, a Director, officer, employee or agent of this Association or any
person who, at the request of this Association, is serving, or shall serve
as a Director, officer, employee or agent of another organization in which
this Association owns shares or of which it is a creditor, against all
liabilities and expenses (including judgments, fines, penalties and
attorneys' fees and all amounts paid, other than to this Association or such
other organization, in compromise or settlement) reasonably incurred by any
such Director, officer, or person in connection with, or arising out of, any
action, suit or proceeding in which any such Director, officer, or person
may be a party defendant or with which he may be threatened or otherwise
involved, directly or indirectly, by reason of his being or having been a
Director, officer, employee or agent of this Association or such other
organization, except in relation to matters as to which any such Director,
officer, or person shall be finally adjudged (other than by consent) in such
action, suit or proceeding not to have acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of this
Association or such other organization, and, with respect to any criminal
action or proceeding he had no reasonable cause to believe his conduct was
unlawful; provided, however, that indemnity shall not be made with respect
to any such amounts paid in compromise or settlement or by consent, unless
the Board of Directors shall have determined in good faith that the
Director, officer or person making such compromise, settlement, or consent
acted, in connection
54
with the matter or matters out of which such
compromise, settlement or consent arose, in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of this
Association or such other organization, and, with respect to any criminal
action or proceeding that he had no reasonable cause to believe his conduct
was unlawful. Such indemnification may include payment by this Association
of expenses in defending a civil or criminal action or proceeding in advance
of the final disposition of such action or proceeding upon receipt of any
undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to indemnification under this Article.
The foregoing right to indemnification shall not be exclusive of any
other rights to which any such Director, officer or person is entitled under
any agreement, vote of stockholders, statute, or as a matter of law, or
otherwise. The provisions of this Article are separable, and if any
provision or portion hereof shall for any reason be held inapplicable,
illegal or ineffective, this shall not affect any right of indemnification
existing otherwise than under this Article.
ELEVENTH. These Articles of Association may be amended at any regular
or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the vote of
the holders of a greater amount of stock is required by law, and in that
case by the vote of the holders of such greater amount.
55
EXHIBIT B TO
PROXY STATEMENT AND PROSPECTUS
DISSENTER'S RIGHTS
12 U.S.C. [Section Sign] 215a
(b) Dissenting shareholders.
If a merger shall be voted for at the called meetings by the necessary
majorities of the shareholders of each association or State bank
participating in the plan of merger, and thereafter the merger shall be
approved by the Comptroller, any shareholder of any association or State
bank to be merged into the receiving association who has voted against such
merger at the meeting of the association or bank of which he is a
stockholder, or has given notice in writing at or prior to such meeting to
the presiding officer that he dissents from the plan of merger, shall be
entitled to receive the value of the shares so held by him when such merger
shall be approved by the Comptroller upon written request made to the
receiving association at any time before thirty days after the date of
consummation of the merger, accompanied by the surrender of his stock
certificates.
(c) Valuation of shares.
The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the merger, by an appraisal made by
a committee of three persons, composed of (1) one selected by the vote of
the holders of the majority of the stock, the owners of which are entitled
to payment in cash; (2) one selected by the directors of the receiving
association; and (3) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If the value so
fixed shall not be satisfactory to any dissenting shareholder who has
requested payment, that shareholder may, within five days after being
notified of the appraised value of his shares, appeal to the Comptroller,
who shall cause a reappraisal to be made which shall be final and binding as
to the value of the shares of the appellant.
56
(d) Application to shareholders of merging associations: Appraisal by
Comptroller; expenses of receiving association; sale and resale of
shares; State appraisal and merger law.
If, within ninety days from the date of consummation of the merger,
for any reason one or more of the appraisers is not selected as herein
provided, or the appraisers fail to determine the value of such shares, the
Comptroller shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as
the case may be, shall be paid by the receiving association. The value of
the shares ascertained shall be promptly paid to the dissenting shareholders
by the receiving association. The shares of stock of the receiving
association which would have been delivered to such dissenting shareholders
had they not requested payment shall be sold by the receiving association at
an advertised public auction, and the receiving association shall have the
right to purchase any of such shares at such public auction, if it is the
highest bidder therefor, for the purpose of reselling such shares within
thirty days thereafter to such person or persons and at such price not less
than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid to
the dissenting shareholders, the excess in such sale price shall be paid to
such dissenting shareholders. The appraisal of such shares of stock in any
State bank shall be determined in the manner prescribed by the law of the
State in such cases, rather than as provided in this section, if such
provision is made in the State law; and no such merger shall be in
contravention of the law of the State under which such bank is incorporated.
The provisions of this subsection shall apply only to shareholders of (and
stock owned by them in) a bank or association being merged into the
receiving association.
57
EXHIBIT C TO
PROXY STATEMENT AND PROSPECTUS
Certain Provisions of the
Articles of Organization of
MNB BANCORP
The provisions of the Articles of Organization of MNB Bancorp (the
"Holding Company") referred to in the foregoing Proxy Statement and
Prospectus are set forth in their entirety below.
1. The provisions of the Articles of Organization (the "Charter")
relating to the classification of the Board of Directors are contained in
Section 3 of Article 6 of the Charter and read in their entirety as follows:
3. The Board of Directors shall be divided into three classes:
Class 1, Class 2, and Class 3, which shall be as nearly equal in
number as possible. Each Director shall serve for a term ending on
the date of the third Annual Meeting of Stockholders following the
Annual Meeting at which such Director was elected; provided, however,
that each initial Director in Class 1 shall hold office until the
Annual Meeting of Stockholders in 1999; each initial Director in Class
2 shall hold office until the Annual Meeting of Stockholders in 2000;
and each initial Director in Class 3 shall hold office until the
Annual Meeting of Stockholders in 2001.
Section 3 of Article 6 of the Charter may not be altered, amended or
repealed except by the affirmative vote of at least eighty percent of the
shares of each class of the stock of the Holding Company outstanding and
entitled to vote.
2. The provisions of the Charter which govern the Holding Company's
ability to enter into mergers, consolidations and certain other business
combinations are contained in Section 5 of Article 6 of the Charter and read
in their entirety as follows:
5. (a) Neither this corporation nor any of its subsidiaries
shall be a party to any of the transactions specified in this Section
5(a) (a "Subject Transaction") or enter into any agreement providing
for any Subject Transaction unless one or more of the conditions
specified in Section 5(b) below shall have been satisfied:
58
(i) any merger or consolidation (whether in a single
transaction or a series of related transactions) other than a
merger or consolidation of this corporation and any of its
subsidiaries or a merger or consolidation of any subsidiaries of
this corporation;
(ii) any sale, lease, exchange, transfer or distribution
of all or substantially all or a substantial portion of the
property or assets of this corporation or any of its
subsidiaries, including its goodwill;
(iii) the issuance of any securities, or of any rights,
warrants, or options to acquire any securities of this
corporation or any of its subsidiaries, to any stockholder other
than by stock dividend declared and paid to all stockholders of
this corporation or pursuant to an employee stock ownership plan
or an employee stock option plan established by this
corporation;
(iv) any reclassification of the stock of this
corporation or any of its subsidiaries or any recapitalization
or other transaction (other than a redemption of stock) which
has the effect, directly or indirectly, of increasing the
proportionate share of stock of this corporation or any of its
subsidiaries held by any person;
(v) the dissolution of this corporation or any
subsidiary thereof or any partial or complete liquidation of
this corporation or any subsidiary thereof.
(b) This corporation or any of its subsidiaries may enter into
any Subject Transaction if one or more of the following conditions
shall have been satisfied and any additional approval or consent
required by law shall have been obtained:
(i) the Subject Transaction shall have been approved by
the holders of at least eighty percent (80%) of the shares of
each class of the stock of this corporation outstanding and
entitled to vote on the matter, and by at least a majority of
the shares of each class of the stock of this corporation
outstanding and entitled to vote on the matter which are not
owned, directly or indirectly, by the entity (a) other than this
corporation, which is a party to the proposed merger or
consolidation, (b) to which the assets of this corporation are
proposed to be sold, leased,
59
exchanged, transferred or distributed, or to which securities of
this corporation or any of its subsidiaries are proposed to be
issued or whose ownership share of this corporation or any of its
subsidiaries is proposed to be increased, (c) or to which the
assets of this corporation are proposed to be distributed on any
dissolution or liquidation (such entity together with any
subsidiary or affiliate being referred to as the "Receiving
Entity");
(ii) the Subject Transaction shall have been approved by
at least eighty percent (80%) of the Directors of this
corporation not affiliated with (or owners, either directly or
indirectly, of shares of) the Receiving Entity (the
"Unaffiliated Directors"); or
(iii) the Subject Transaction shall have been approved by
a majority of Unaffiliated Directors prior to the date on which
the Receiving Entity first acquired any share of stock of this
corporation.
(c) Notwithstanding the foregoing, a Subject Transaction shall
not be subject to the requirements of Section 5(b) if:
(i) the Subject Transaction is approved by the holders
of at least a majority of the shares of each class of the stock
of this corporation outstanding and entitled to vote on the
matter, and by the holders of at least a majority of the shares
of each class of the stock of this corporation outstanding and
entitled to vote on the matter not owned, directly or
indirectly, by the Receiving Entity; and
(ii) the aggregate of the cash and fair market value of
all consideration to be paid per share to the holders of the
Common Stock of this corporation in connection with the Subject
Transaction (when adjusted for stock splits, stock dividends,
reclassification of shares or otherwise) shall be equal to the
greater of: (a) the highest price per share paid by the
Receiving Entity in acquiring any of this corporation's Common
Stock; or (b) an amount which is at least four times the per
share book value of this corporation's Common Stock as of the
last day of the most recent fiscal quarterly period of this
corporation preceding the date of the vote of stockholders
approving the Subject Transaction; provided, however, that the
consideration to be paid to the holders of the
60
Common Stock of this corporation shall be in the same form as
that paid by the Receiving Entity in acquiring the shares of the
Common Stock held by it except to the extent that any stockholder
of this corporation shall otherwise agree.
Section 5 of the Articles may not be amended or repealed except by the
affirmative vote of at least eighty percent of the shares of each class of
stock of the Holding Company outstanding and entitled to vote.
61
EXHIBIT D TO
PROXY STATEMENT AND PROSPECTUS
Certain Provisions of the
By-Laws of
MNB Bancorp
The provisions of the By-Laws of MNB Bancorp (the "Holding Company")
referred to in the foregoing Prospectus and Proxy Statement are set forth in
their entirety below.
1. The provisions of the By-Laws of the Holding Company (the "By-
Laws") defining the causes for which directors may be removed from office
are contained in Article II, Section 6 of the By-Laws and read in their
entirety as follows:
6. Removal. (a) A Director may be removed from office (i) for
cause by vote of a majority of the stockholders entitled to vote in
the election of Directors, provided that the Directors of a class
elected by a particular class of stockholders may be removed only by
the vote of the holders of a majority of the shares of such class or
(ii) for cause by vote of a majority of the Directors then in office.
A Director may be removed for cause only after reasonable notice and
opportunity to be heard before the body proposing to remove him.
(b) For purposes of this Article II, Section 6, the term
"cause" shall be deemed to refer to the following acts or events: (i)
an adjudication, by a court of competent jurisdiction, that a Director
has been negligent or has engaged in deliberate misconduct in carrying
out his duties as an officer or Director of the corporation, or has
breached his fiduciary duty as an officer or Director of the
corporation; (ii) the determination, by a majority of the remaining
Directors of the corporation, that a Director's acts or omissions have
been in derogation of his duties as an officer or Director of the
corporation; (iii) a Director shall have been convicted of a felony by
a court of competent jurisdiction, and such conviction shall remain in
effect beyond the expiration of all applicable appeal periods; (iv) a
Director shall have been granted immunity to testify in any proceeding
in which another individual shall have been convicted of a felony; (v)
a Director shall cease to fulfill the qualifications required of
Directors by Article II, Section
62
2, of these By-Laws; and (vi) a Director shall have been determined by
a majority of the remaining Directors to be mentally incompetent or
otherwise unable to perform his duties as a Director of the corporation.
The provisions of Article II, Section 2 referred to in Article II,
Section 6 are set forth in Number 2 immediately below.
2. The provisions of the By-Laws which define the qualifications
which individuals must satisfy in order to be eligible to become directors
of the Holding Company are contained in Article II, Section 2 of the By-
Laws, and read in their entirety as follows:
2. Election and Eligibility. A Board of Directors of such
number as shall be fixed by the stockholders shall be elected by the
stockholders at the annual meeting. Unless waived by the affirmative
vote of at least two-thirds of the stockholders or two-thirds of the
Directors then in office, no person shall be eligible to be a director
of the corporation unless such person: (1) is not, and has not been
for a period of at least six (6) months prior to the date of his
election, an officer or director of any bank (other than a subsidiary
of the corporation), any bank holding company (as defined in Section 2
of the Bank Holding Company Act of 1956, as amended) or any company in
competition with the corporation or any subsidiary thereof; and (2)
has been a United States citizen for at least six (6) months.
3. The provisions of the By-Laws which limit the number of new
directorships which may be created in any one year are contained in Article
II, Section 4 of the By-Laws and read in their entirety as follows:
4. Enlargement of the Board. The number of the Board of
Directors may be increased and one or more additional Directors
elected at any annual or special meeting of the stockholders or by
vote of a majority of the Directors then in office. The Board of
Directors may not be enlarged by the addition of more than two
Directors in any year, exclusive of increases in the number of the
Board of Directors in connection with the issuance of preferred stock.
63
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20: Indemnification of Directors and Officers
Each Director, officer, employee or agent of the Holding Company, and
each person who serves at the request of the Holding Company ("Requested
Capacity") as a Director, officer, employee or agent of another organization
or who serves at the request of the Holding Company in any capacity with
respect to any employee benefit plan is indemnified under the By-Laws of the
Holding company against expenses or loss provided that no indemnification
shall be provided for any person with respect to any matter as to which such
person shall have been finally adjudicated in any proceeding not to have
acted in good faith in a manner he reasonably believed to be in or not
opposed to the best interests of the Holding Company. The Holding Company
may purchase and maintain indemnity insurance, to the extent permitted by
Massachusetts law, on behalf of any person who is or was a Director,
officer, employee or agent of the Holding Company or is or was serving in a
Requested Capacity of another entity or of any employee benefit plan.
Item 21: Exhibits Filed
Number Exhibit
- - ------ -------
2 Agreement to Merge dated February 11, 1998 between The Milford
National Bank and Trust Company and Milford Bank, National
Association (attached to Proxy Statement and Prospectus as
Exhibit A).
3.1 Articles of Organization of Registrant.
3.2 By-Laws of Registrant.
5 Opinion of counsel regarding legality.
8 Opinion of counsel regarding tax matters.
24.1 Consent of Craig and Macauley Professional Corporation
(contained in its opinion filed as Exhibit 5).
64
99.A Form of President's letter to Shareholders of The
Milford National Bank and Trust Company.
99.B Form of Notice of Annual Meeting of Shareholders
of The Milford National Bank and Trust Company.
99.C Form of Proxy to be delivered to Shareholders
of The Milford National Bank and Trust Company.
Item 22: Undertakings
The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the applicable
form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Securities Act of 1933 and
is used in connection with an offering of securities subject to Rule 415
thereunder, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that,
for purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
65
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Milford, Commonwealth
of Massachusetts on February 4, 1998.
MNB Bancorp
By: /s/ Robert J. Lewis
Robert J. Lewis
Pursuant to the requirements of the Securities Act of 1993, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
- - ---- ----- ----
/s/ Robert J. Lewis President and Chief Executive February 4, 1998
Robert J. Lewis Officer (Principal Executive
Officer)
/s/ Anne M. Dygon Treasurer (Principal Financial February 4, 1998
Anne M. Dygon Officer and Principal Accounting
Officer)
______________________ Director February _, 1998
Leonard M. DeLoia
/s/ Michael A. Diorio Director February 4, 1998
Michael A. Diorio
______________________ Director February _, 1998
William B. Gannett
/s/ Dorothy R. Horne Director February 4, 1998
Dorothy R. Horne
66
/s/ Gilbert Kahn, Jr. Director February 6, 1998
Gilbert Kahn, Jr.
______________________ Director February _, 1998
Roger R. Lavallee
/s/ Robert J. Lewis Director February 4, 1998
Robert J. Lewis
______________________ Director February _, 1998
George R. Marino
/s/ Henry C. Papuga Director February 4, 1998
Henry C. Papuga
/s/ Thomas C. Sawyer, Sr. Director February 4, 1998
Thomas C. Sawyer, Sr.
/s/ Linda L. Varney Director February 4, 1998
Linda L. Varney
______________________ Director February _, 1998
William J. Vitalini
67
EXHIBIT INDEX
Number Exhibit Page
------ ------- ----
2 Agreement to Merge dated February 11, 1998
between The Milford National Bank and Trust
Company and Milford Bank, National Association
attached to Proxy Statement and Prospectus as
Exhibit A 40
3.1 Articles of Organization of Registrant 69
3.2 By-Laws of Registrant 81
5 Opinion of counsel regarding legality 95
8 Opinion of counsel regarding tax matters 96
24.1 Consent of Craig and Macauley Professional
Corporation (contained in its opinion filed
as Exhibit 5) 95
99.A Form of President's letter to Shareholders of
The Milford National Bank and Trust Company 97
99.B Form of Notice of Annual Meeting of Shareholders
of The Milford National Bank and Trust Company 98
99.C Form of Proxy to be delivered to Shareholders
of The Milford National Bank and Trust Company 99
68