===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-4EF
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------------
GBT Bancorp
(Exact name of registrant as specified in its charter)
Massachusetts 6711 04-3413276
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
2 Harbor Loop
Gloucester, Massachusetts 01930
(978) 281-6270
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
DAVID L. MARSH, President
GBT Bancorp
2 Harbor Loop
Gloucester, Massachusetts 01930
(978) 281-6270
(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
(617) 367-9500
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
maximum Proposed maximum
Title of each class of securities to be Amount to be offering price per aggregate offering Amount of
registered registered* unit** price** registration fee
- --------------------------------------------------------------------------------------------------------------------
Common Stock, no par value............. 827,323 $20.00 $16,546,460.00 $4,881.21
====================================================================================================================
<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)(1) on the basis of the
market value of the Common Stock, $5 par value, of Gloucester Bank &
Trust Company on March 20, 1998.
====================================================================================================================
1
GBT 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 Facing Page of Registration
Outside Front Cover Page of Prospectus Statement, Cross Reference Sheet,
Outside Front Cover Page of
Prospectus.
2. Inside Front and Outside Back Cover Inside Front Cover Page of
Pages of Prospectus 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
OF ACQUISITION," "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 "REORGANIZATION-PLAN OF
Being Acquired ACQUISITION"
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 "REORGANIZATION-PLAN OF
Indemnification for Securities Act Liabilities ACQUISITION - 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 OF ACQUISITION -
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 OF
ACQUISITION - 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
GBT BANCORP
2 Harbor Loop
Gloucester, Massachusetts 01930
(978) 281-6270
827,323 SHARES
COMMON STOCK (NO PAR VALUE)
______________________________
PROXY STATEMENT AND PROSPECTUS
______________________________
This Proxy Statement and Prospectus is furnished in connection with
the solicitation of proxies by the management of Gloucester Bank & Trust
Company (the "Bank") in connection with the Special Meeting in Lieu of the
Regular Annual Meeting of Shareholders of the Bank to be held on May 23,
1998 to consider and act upon the acquisition of the Bank by GBT 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 seven shares of the common stock of the
Holding Company, no par value, for each share of the common stock of the
Bank, par value $5.00. 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
March 31, 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 acquisition of the Bank
by 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
COMMISSIONER OF BANKS FOR THE COMMONWEALTH OF MASSACHUSETTS NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR THE COMMISSIONER OF BANKS FOR THE COMMONWEALTH OF
MASSACHUSETTS 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 April 14, 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 4
Committees 5
Remuneration of Officers and Directors 6
Election of the Secretary of the Bank 7
Ratification of the Selection of Independent Accountants 7
Reorganization- Plan of Acquisition 8
Reasons for Reorganization 8
Description of the Reorganization Plan 10
Federal Tax Consequences 12
Rights of Dissenting Shareholders 13
Certain Conditions of Acquisition 14
Differences in Shareholders' Rights 14
Other Considerations 20
History and Business 21
The Bank 21
The Holding Company 21
Regulation and Supervision 22
Market Price and Dividends 23
Bank Stock 23
Holding Company Stock 23
Financial Matters 24
Selected Financial Data 24
Capitalization 25
Management 26
Transactions with Management of Continuing Bank 26
Description of Bank's Common Stock 26
Dividend Rights 26
Voting Rights - Cumulative Voting 26
Liquidation Rights 26
Preemptive Rights 26
Dissenters' Rights 27
Control Share Acquisitions 27
Other Matters 27
Description of the Holding Company's Common Stock 27
Dividend Rights 27
Voting Rights 27
Liquidation Rights 27
Preemptive Rights 28
Dissenters' Rights 28
Control Share Acquisitions 28
Other Matters 29
Financial Statements 29
Litigation 29
Stockholder Proposals 29
Miscellaneous Matters 29
Legal Opinions 30
Exhibit A - Plan of Acquisition
Exhibit B - Certain Provisions of M.G.L.A. Chapter 156B 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 JULY 13, 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 COMMISSIONER OF BANKS FOR THE COMMONWEALTH OF
MASSACHUSETTS NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR THE COMMISSIONER OF BANKS FOR THE
COMMONWEALTH OF MASSACHUSETTS 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
Gloucester Bank & Trust Company ("Bank") is a Massachusetts trust
company that conducts a general commercial banking business primarily in
Gloucester, 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 2 Harbor Loop, Gloucester,
Massachusetts, 01930, and its telephone number is (978) 281-6270. See
"HISTORY AND BUSINESS - The Bank."
GBT 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 principal executive office of Holding Company is
located at 2 Harbor Loop, Gloucester, Massachusetts 01930, and its
telephone number is (978) 281-6270. See "HISTORY AND BUSINESS-The Holding
Company."
The Meeting
Time, Date and Place. The Bank's Special Meeting in Lieu of the
Regular Annual Meeting of Shareholders will be held on May 23, 1998 at 10:00
A.M., local time, at 72-74 Rogers Street, Gloucester, Massachusetts, 01930
(hereinafter referred to as the "Special Meeting"). See "THE MEETING."
Record Date, Shares Entitled to Vote. Holders of Bank common stock of
record at the close of business on March 31, 1998 are entitled to notice of,
and to vote at, the Bank's Annual Meeting and any adjournments thereof. On
December 31, 1997, there were 118,189 shares of Bank common stock
outstanding. See "THE MEETING."
Purposes of Meeting. The shareholders of the Bank are being asked to
elect directors, to elect the Secretary of the Bank, and to ratify the Board
of Directors' appointment of Shatswell, MacLeod & Co. as the Bank's
independent auditor for 1998. The shareholders of the Bank are also being
asked to approve the Plan of Acquisition whereby all the outstanding shares
of Bank common stock would be acquired by the Holding Company, in exchange
for shares of Holding Company common stock, pursuant to Section 26B of
Chapter 172 of the Massachusetts General Laws. See "REORGANIZATION-PLAN OF
ACQUISITION-Description of the Reorganization Plan."
Vote Required. Consummation of the acquisition requires the approval
of two-thirds of the outstanding shares of common stock of the Bank.
Approximately 21.585% of the outstanding shares of common stock of the Bank
are owned by the executive officers and Directors of the Bank. The Bank has
been advised that all of its executive
7
officers and Directors intend to vote their shares of Bank common stock for
approval of the Plan of Acquisition. See "REORGANIZATION-PLAN OF ACQUISITION-
Description of the Reorganization Plan."
The Acquisition
Effect of Acquisition. Under the Plan of Acquisition, the Holding
Company would become the owner of all of the outstanding shares of Bank
common stock and each outstanding share of Bank common stock (other than
dissenting shares) would be converted into seven shares of Holding Company
common stock, no par value. The acquisition will become effective on the
date specified in the Plan of Acquisition, provided all statutory conditions
are satisfied. See "REORGANIZATION-PLAN OF ACQUISITION-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 Plan of Acquisition.
Federal Income Tax Consequences
The acquisition 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 OF ACQUISITION-Federal Income Tax Consequences."
Dissenters' Rights
Under the Plan of Acquisition and Massachusetts law, a shareholder of
the Bank who has given written notice at or prior to the Special Meeting
that he dissents from the Plan of Acquisition, 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 Massachusetts
law. See "REORGANIZATION-PLAN OF ACQUISITION-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 118,189 shares.
Gloucester Bank & Trust Company
Historical Per Share Data
Year Ended December 31
----------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Book Value per share $72.97 $66.80 $62.37 $57.70 $53.64
Cash Dividends paid per share $ 4.00 $ 4.00 $ 4.00 $ 2.00 $ 0.00
Net Income Per Share $10.17 $ 8.43 $ 8.67 $ 6.06 $ 2.64
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 303 record
holders, and are infrequently traded. Trading prices from July, 1996
through March, 1998 ranged, to the Bank's knowledge, from $60.50 to $142.
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 acquisition is subject to the requirements of Massachusetts and
Federal banking statutes, rules and regulations, which provide that the
acquisition may not be consummated without the approval of the Commissioner
of Banks for the Commonwealth of Massachusetts and the Federal Reserve
Board. See "REORGANIZATION-PLAN OF ACQUISITION-Description of the
Reorganization Plan."
Comparison of Common Stock
The Bank, as a Massachusetts trust company, is regulated under
Massachusetts 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
acquisition may have different rights. See "REORGANIZATION-PLAN OF
ACQUISITION-Differences in Shareholders' Rights."
9
Risk Factors
The transaction contemplated by the Plan of Acquisition 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 reorganization of its business structure, through
the consummation of the transaction contemplated by the Plan of Acquisition,
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
Plan of Acquisition.
Company's Financial Condition. Shareholders 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 acquisition contemplated by
the Plan of Acquisition 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.
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
OF ACQUISITION-Differences in Shareholders' Rights."
10
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 Gloucester Bank & Trust Company (the "Bank") to be used at a
Special Meeting in Lieu of the Regular Annual Meeting of Shareholders of the
Bank to be held at 72-74 Rogers Street, Gloucester, Massachusetts 01930, May
23, 1998 at 10:00 A.M. and at any adjournments thereof (the "Special
Meeting").
The close of business on March 31, 1998 has been fixed as the record
date for determining shareholders of the Bank entitled to notice of and to
vote at the Special Meeting. There is one authorized class of stock of the
Bank, $5.00 par value common stock. As of the record date, the number of
shares of common stock outstanding and entitled to vote at the Special
Meeting was 118,189.
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
Name and Address of Owner Beneficially Owned(a)(b) Percent of Outstanding Shares
- ------------------------- ------------------------ -----------------------------
David L. Marsh 6,079.327(c) 5.144%
Robert J. Ryan, Sr. 8,063.0(d) 6.822%
- --------------------
<Fa> Based upon information provided to the Bank by the indicated persons.
<Fb> 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 has sole voting and investment power
with respect to the shares set forth opposite his or her name.
<Fc> 6,000 shares are held in the name of CABAS; 79.327 shares are held in
the name of Gloucester Bank & Trust Company 401(k) Plan.
<Fd> All shares are held jointly with his spouse.
11
The affirmative vote of a majority of the shares of common stock of
the Bank represented at the Special Meeting is required to elect directors,
to elect a Secretary of the Bank, and to ratify the Board of Directors'
appointment of Shatswell, MacLeod & Co. as the Bank's independent auditor
for 1998.
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
Plan of Acquisition 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 By-Laws of the Bank provide that the Board of Directors shall be
composed of those persons who are elected as Directors from time to time.
The Bank's Board of Directors presently consists of seven members. At the
Special Meeting, seven Directors are to be elected to serve until the next
Annual Meeting and until their successors are elected and qualified.
It is proposed by the Board of Directors that the seven 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
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 in favor of the election of the following seven 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.
12
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
---- --- ----------------- -------- -------------------------------
Charles J. Ciaramitaro 58 Director 1986 Vice President and Treasurer of
Capt. Joe & Sons, Inc.
Francis J. Elliott, Jr. 47 Director 1986 President of Elliott Shipping Co.;
Chairman of the Board of Directors,
Gloucester Seafood Workers' Pension
and Health & Welfare Funds
Kenneth W. Gleason 59 Director 1995; President, Gleason Refrigerated Services
1986-
1993
David L. Marsh 57 President, CEO, 1986 President/CEO and Director, Gloucester
Director Bank & Trust Company; Treasurer,
Gloucester Investment Corp; Organizer,
GB&T Association; President, Bank of
New England - North Shore; President,
DM Seafoods
Nicholas C. Psalidas 69 Director 1986 President, Cape Ann Marketplace and A
& N Liquors, Inc.; President, Monty
Liquors, Inc.
Robert J. Ryan, Sr. 73 Chairman of the 1986 Retired President, Atlantic Seafoods
Board of Directors
Donald E. Sudbay, Jr. 46 Director 1994 General Manager, Sudbay Pontiac
Cadillac Buick GMC, Inc.
During 1997, there were 28 meetings of the Board of Directors,
consisting of 12 regular monthly meetings, four Strategic Planning special
meetings and twelve Watched Assets meetings. Each Director attended in 1997
more than 60% of the total number of Board meetings and meetings of
committees of which he was a member.
Bank Directors receive a monthly retainer of $200, $350 for each Board
of Directors meeting attended, and $200 for each committee meeting attended.
The Chairman of the Board also receives another $12,000 per year.
13
Executive Officers
Robert J. Ryan, Sr. is Chairman of the Board of the Bank, David L.
Marsh is President and Chief Executive Officer of the Bank and Kevin W.
Nunes is the Senior Vice President and Chief Financial Officer. The
officers of the Holding Company will initially be Robert J. Ryan, Sr.,
Chairman of the Board, David L. Marsh, President and Chief Executive
Officer, Kevin W. Nunes, Treasurer and Marianne Smith, Clerk.
All of the nominees were elected by the shareholders at the 1997
Annual Meeting.
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 Outstanding Shares
- ------------------- ------------------ ------------------
Charles J. Ciaramitaro 1,500.0(a) 1.269%
Francis J. Elliott, Jr. 2,000.0(b) 1.692%
Kenneth W. Gleason 5,500.0 4.654%
David L. Marsh 6,079.327(c) 5.144%
Nicholas C. Psalidas 2,000.0(d) 1.692%
Robert J. Ryan, Sr. 8,063.0(e) 6.822%
Donald E. Sudbay, Jr. 100.0 0.085%
All Directors and
Principal Officers as a
Group (8 persons)(f) 25,510.971 21.585%
- --------------------
<Fa> Includes 1,300 shares held jointly with his spouse, 100 shares held
jointly with his son, Frank, and 100 shares held jointly with his
daughter, Felicia.
<Fb> All shares are held jointly with his spouse.
<Fc> 6000 shares are held in the name of CABAS; 79.327 shares are held in
the name of Gloucester Bank & Trust Company 401(k) Plan.
<Fd> All shares are held jointly with his spouse.
<Fe> All shares are held jointly with his spouse.
<Ff> Totals include 268.644 shares owned by Richard J. Edelstein, Sr. Vice
President, Loans, held in the 401(K) plan.
Consummation of the acquisition 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.
14
Committees
- ----------
The Bank does not have a standing nominating committee. Members of
the Board of Directors serve on three of the standing committees of the
Board of Directors, consisting of the Audit Committee, Compensation
Committee and Investment Committee. The Board of Directors also has a Loan
Committee. All members of the Loan Committee are officers of the Bank.
Each of the four committees of the Board of Directors of the Bank is
described below. The Board of Directors, at its monthly meetings, ratifies
the actions taken by these committees.
The members of the Audit Committee during fiscal year 1997 were Donald
E. Sudbay, Jr., Chairman, Charles J. Ciaramitaro, Francis J. Elliott, Jr.,
Kenneth W. Gleason, David L. Marsh, Nicholas C. Psalidas, Robert J. Ryan,
Sr., and Stephen R. Parkhurst, ex-officio. The Audit Committee functions
include reviewing the annual audited financial statements of the Bank and
the scope of the annual audit. The Audit Committee also monitors the Bank's
internal accounting controls and recommends an independent auditor to the
Board of Directors. The Audit Committee met three times during 1997.
The Compensation Committee during fiscal year 1997 consisted of Robert
J. Ryan, Sr., Chairman, Charles J. Ciaramitaro, Francis J. Elliott, Jr.,
Kenneth W. Gleason, David L. Marsh, Nicholas C. Psalidas, and Donald E.
Sudbay, Jr. The Compensation Committee recommends to the Board of Directors
compensation for the Bank's officers and employees. The Compensation
Committee does not have regularly scheduled meetings. The Compensation
Committee has met once during 1998 and met once during 1997.
The members of the Investment Committee during fiscal year 1997 were
Francis J. Elliott, Jr., Chairman, Charles J. Ciaramitaro, Kenneth W.
Gleason, David L. Marsh, Nicholas C. Psalidas, Robert J. Ryan, Sr., Donald
E. Sudbay, Jr., and Kevin W. Nunes, ex-officio. Its responsibilities
include evaluating the maturity structure of the Bank's assets and
liabilities and reviewing the Bank's investment and liquidity position. The
Investment Committee met three times during 1997.
The members of the Loan Committee during fiscal year 1997 were Richard
J. Edelstein, Chairman, Lavina C. Calomo, Madith C. Ferrant, Linda Geyer,
David L. Marsh, George H. Roark, Robert Rosen, and Michael Sanborn. Members
of the Loan Committee are appointed annually. The responsibilities of the
Loan Committee include evaluating and approving or disapproving loans in
excess of an individual officer's lending limit. The lending authority of
the Loan Committee is reviewed annually by the Board of Directors. The Loan
Committee met weekly during 1997.
15
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($) Other Annual Compensation($)
- --------------------------- ------------------- -------- ----------------------------
David L. Marsh, President
and Chief Executive Officer $122,308 $-0- $-0-
The Bank has entered into an Employment Agreement with David L. Marsh,
President and Chief Executive Officer of the Bank which commenced January 1,
1986 and which specifies the employee's duties and minimum compensation
during the period of the Employment Agreement. The Employment Agreement is
for a three year term and is presently extended for one additional year on
each anniversary of the commencement date, unless prior notice is given by
either party. Employment by the Bank shall terminate upon the employee's
resignation, death, disability, or for "cause" as defined. The Bank is
required to make additional payments to the employee if (a) employment is
involuntarily terminated by the Bank for any reason except for "cause", (b)
employment is terminated by the employee following the failure of the Board
of Directors to elect the employee to the offices of President and Chief
Executive Officer of the Bank, (c) the Bank fails to comply with the terms
of the Employment Agreement, or (d) the Bank elects to not extend the term
of the Employment Agreement. During the term of the Employment Agreement
and for one year afterwards, the employee cannot compete with a Bank within
its market area.
The Bank has also entered into a Special Termination Agreement with
Mr. Marsh regarding termination of employment by the Bank subsequent to a
"change in control" of the Bank, as defined in the Special Termination
Agreement. Following the occurrence of a change in control, if (a) the
employee's employment is terminated by the Bank for any reason other than
death, deliberate dishonesty, conviction of a crime involving moral
turpitude or (b) the employee resigns (while not receiving disability or
benefits) subsequent to a significant change in the nature or scope of his
responsibilities, a reasonable determination by the employee that he is
unable to perform his responsibilities, or a decrease in total annual
compensation paid to the employee, then the employee is entitled to a lump
sum payment from the Bank approximately equal to three times his average
annual compensation for the previous five years. If Mr. Marsh is entitled
to receive benefits under both his Employment Agreement and Special
Termination Agreement, he must choose the agreement under which he will
claim benefits. The formation of the Holding Company is not a change in
control under the Special Termination Agreement.
In 1995, the Bank established a defined contribution "401K" plan for
the benefit of its employees. The plan covers substantially all of the
Bank's employees who have
16
completed twelve (12) consecutive months in which they have worked 1000 hours
of service and attained the age of 21. Employees are allowed to contribute
up to the lesser of 15% of their compensation or $10,000 annually. The Board
may make a matching contribution to the plan. The Bank contributed $25,157
to the plan in 1997 and $23,921 to the plan in 1996.
In 1995, the Bank changed its defined benefit pension plan to a multi-
employer defined benefit pension plan. The plan covers employees who have
one year of service and have attained the age of 21. The Bank contributed
to the plan and charged to expense $122,873 and $135,733 in the years ended
December 31, 1997 and 1996, respectively.
The Bank's policy is to make contributions to its pension plan within
the maximum deductible limits of Section 404 of the IRS Code in accordance
with ERISA funding standards.
ELECTION OF THE SECRETARY OF THE BANK
Massachusetts law requires that the Secretary of the Bank be elected
by the stockholders at their annual meeting or at a special meeting called
for that purpose. At the Special Meeting, a Secretary of the Bank will be
elected to serve until the next annual meeting and until his or her
successor is duly elected and qualified. Management of the Bank has
nominated Kevin W. Nunes, for election as Secretary at the Special Meeting.
Unless otherwise specified in the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election of Kevin W. Nunes as Secretary as the
nominee of management. The Board of Directors believes that Mr. Nunes will
stand for election and will serve if elected as Secretary. However, if he
fails to stand for election or is unable to accept election, the proxies
will be voted for the election of such other person as the Board may
recommend.
The affirmative vote of holders of a majority of the shares of Common
Stock represented in person or by proxy at the Special Meeting is necessary
to elect the nominee for Secretary of the Bank.
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Board of Directors proposes that its appointment of Shatswell,
MacLeod & Co. as the Bank's independent auditors for 1998 be ratified by the
stockholders. The firm of Shatswell, MacLeod & Co. has served as the Bank's
independent auditors since 1989, and the Board of Directors has selected
Shatswell, MacLeod & Co. to serve in that capacity for 1998, subject to
ratification by the stockholders, in the belief that they are well
qualified.
The affirmative vote of holders of a majority of the shares of Common
Stock represented in person or by proxy at the Special Meeting is necessary
to ratify the selection of Shatswell, MacLeod & Co. as the Bank's
independent auditors for 1998.
17
REORGANIZATION-PLAN OF ACQUISITION
The proposed Plan of Acquisition, if adopted, would result in the
reorganization of the business of the Bank as a wholly-owned subsidiary of
GBT 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 seven shares of common stock of the
Holding Company, no par value, for each share of common stock of the Bank,
par value $5.00.
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 Plan of Acquisition 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 Holding Company would provide a more flexible
corporate structure. Most notably, for example, the Holding Company can
more readily repurchase stock and issue different classes of stock. It is
further 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 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
18
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 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
19
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 1,000,000 shares of
common stock, of which 118,189 shares are outstanding. The Holding Company
will have 4,000,000 shares of authorized common stock, of which 3,172,677
shares will remain unissued after 827,323 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. There are,
at present, no plans, arrangements or commitments for the issuance of such
shares.
Description of the Reorganization Plan
The Holding Company has been organized at the direction of the Bank
and will acquire, at the time the acquisition becomes effective, all of the
outstanding shares of Bank common stock, and the shareholders of the Bank
will automatically become owners of seven shares of common stock of the
Holding Company for each share of common stock of the Bank held by them.
The Holding Company has outstanding one share of common stock, no par value,
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 acquisition is completed. The reorganization plan is proposed to be
accomplished pursuant to the terms of a Plan of Acquisition, a copy of which
is annexed hereto as Exhibit A (the "Plan of Acquisition") and which is
incorporated herein by reference. The charter, name, Directors, officers,
employees and By-Laws of the Bank will not be affected by consummation of
the Plan of Acquisition. The property, rights, powers and franchises and
the debts, liabilities, obligations and duties of the Bank will not be
affected by consummation of the Plan of Acquisition.
20
Consummation of the acquisition requires the affirmative vote of two-
thirds of the shares of common stock of the Bank and the approval of the
Commissioner of Banks for the Commonwealth of Massachusetts ("Commissioner
of Banks"), the approval of the Board of Governors of the Federal Reserve
System, and is subject to other conditions specified in the Plan of
Acquisition. In accordance with applicable state and federal laws and the
Plan of Acquisition, the acquisition will become effective (the "Effective
Date") at 12:01 a.m. on the first business day following the date on which
the Bank and the Holding Company advise the Commissioner of Banks in writing
that all conditions precedent to the acquisition becoming effective have
been satisfied and that the Plan of Acquisition has not been abandoned by
the Bank or the Holding Company in accordance with the provisions thereof.
The business of the Bank will then be carried on as a subsidiary of the
Holding Company and the Bank shall continue to have the same Directors,
officers and personnel and the same offices and properties.
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
acquisition will be identical to the distribution of ownership in the Bank
just prior to the acquisition.
Upon consummation of the acquisition, 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 acquisition 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 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 acquisition
will be identical to the distribution of ownership in the Bank just prior to
the acquisition.
In the event the proposed acquisition is not consummated, the expenses
of the reorganization plan, including the cost of organizing the Holding
Company, will be assumed by the Bank.
21
Federal Tax Consequences
The Bank and the Holding Company have received a written opinion from
Craig and Macauley Professional Corporation, special counsel, substantially
to the effect that, for federal income tax purposes:
1. The transaction contemplated by the Plan of Acquisition 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 1% 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 acquisition that would
reduce the number of shares of Holding Company stock held after the
acquisition by former Bank shareholders to a number of shares having the
value at the time of the acquisition of less than 50% of the total value of
all shares of Bank stock outstanding immediately before the acquisition.
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 acquisition.
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.
No information is provided herein with respect to the tax consequences
of the acquisition 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 ACQUISITION 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
22
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 7 of the Plan of Acquisition and Massachusetts law provide
that any holder of Bank common stock (1) who files with the Bank, before the
taking of the vote on the approval of the Plan of Acquisition, written
objection to the Plan of Acquisition stating that he intends to demand
payment for his shares if the Plan of Acquisition is consummated and (2)
whose shares are not voted in favor of the Plan of Acquisition, may obtain
such payment from the Bank by complying with the provisions of Sections 85
to 98, inclusive, of Chapter 156B of the General Laws of Massachusetts. A
brief summary of such reference to such sections which are included in this
Proxy Statement and Prospectus as Exhibit B, is as follows: A holder of
Bank common stock intending to enforce his right to receive payment for his
shares must file with the Bank before the vote on the Plan of Acquisition,
written objection to the proposed Plan of Acquisition stating that he
intends to demand payment for his shares if the Plan of Acquisition is
consummated and must not vote in favor of the Plan of Acquisition at the
Special Meeting. Within ten days after the Plan of Acquisition becomes
effective, the Bank will give written notice of such effectiveness by
registered or certified mail to each holder of Bank common stock who files
such written objection, except any holder of Bank common stock who voted for
the Plan of Acquisition. Within 20 days after the mailing of such notice,
any holder of Bank common stock to whom the Bank was required to give such
notice may make written demand for payment for his shares from the Bank and
in such event the Bank will be required to pay to him the fair value of his
shares within 30 days after the expiration of the period during which such
demand may be made. If during such 30-day period the Bank and the
dissenting holder of the Bank common stock fail to agree as to the fair
value of such shares, the Bank or such stockholder may, within four months
after such 30-day period, have the fair value of the stock of all dissenting
stockholders determined by judicial proceedings. Upon making such written
demand for payment, the dissenting stockholder shall not thereafter be
entitled to notices of meetings, to vote, or to dividends unless no suit is
filed within four months to determine the value of the stock, any such suit
is dismissed as to that stockholder, or the stockholder withdraws his
objection in writing with the written approval of the Holding Company.
Absent illegality or fraud, the enforcement by a dissenting stockholder of
his right to receive payment for his Bank common stock in the manner
provided by Sections 85 through 98 of Chapter 156B of the General Laws of
Massachusetts shall be his exclusive remedy.
The foregoing does not purport to be a complete statement of the
procedures to be followed by holders of Bank common stock desiring to
exercise their right to dissent from the Plan of Acquisition and, in view of
the fact that exercise of such right requires strict adherence to the
relevant provisions of the General Laws of Massachusetts, each stockholder
who may desire to exercise such right is advised individually to consult
23
such laws and comply with the provisions thereof. A copy of the relevant
provisions of the General Laws of Massachusetts is attached as Exhibit B.
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 acquisition will be treated for
accounting purposes as a pooling transaction. See "FINANCIAL MATTERS -
Capitalization."
Certain Conditions of the Acquisition
The Plan of Acquisition provides that it shall not become effective
until all of the following first shall have occurred: (i) the Plan of
Acquisition shall have been approved by a vote of the holders of two-thirds
of the outstanding Bank common stock, (ii) the Plan of Acquisition shall
have been approved by the Commissioner of Banks, (iii) the Board of
Governors of the Federal Reserve System shall have approved the formation of
the Holding Company, (iv) the Bank and the Holding Company shall have
received a favorable ruling from the Internal Revenue Service or an opinion
of counsel as provided above under "Federal Income Tax Consequences," and
(v) the Bank and the Holding Company shall have obtained any other necessary
consents or approvals. The Plan of Acquisition may not be amended after
this Special Meeting without the approval of the holders of two-thirds of
the outstanding Bank common stock and the approval of the Commissioner of
Banks.
The Plan of Acquisition provides that it may be terminated by the
Board of Directors of the Bank if, among other things, (i) the number of
shares of common stock of the Bank voted against the acquisition, or in
respect of which written notice is given purporting to dissent from the
acquisition, shall make consummation of the acquisition unwise; (ii) any
action, suit, proceeding or claim has been instituted, made or threatened
relating to the proposed acquisition; (iii) any action, consent or approval
which is necessary to permit the Bank after the acquisition 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 acquisition 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 Massachusetts banking
law and by the Articles of Organization 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 statutes and court decisions with respect to rights of
shareholders of organizations incorporated under these two laws present
certain points of difference. The Holding Company has been incorporated in
Massachusetts. The Holding Company's principal office will continue to be
in Gloucester, Massachusetts.
24
Holding Company stock will be non-assessable whereas Bank common stock
is subject to assessment under Massachusetts laws governing trust companies.
After consummation of the Plan of Acquisition, any such assessment would be
paid by the Holding Company as holder of all of the outstanding shares of
Bank common stock. The issuance of additional shares of Bank common stock
is subject to the approval of the Commissioner of Banks, whereas additional
shares of Holding Company stock can be issued without such approval. In
addition, other types of actions which, if taken by the Bank would require
the approval of the Commissioner of Banks, may upon consummation of the Plan
of Acquisition be taken by the Holding Company without such approval.
Additionally, the right of a shareholder to transfer his shares of
Holding Company stock is different than the right of a holder of Bank common
stock. Acquisitions of Holding Company stock are subject to the provisions
of Chapter 110D of the Massachusetts General Laws, which govern control
share acquisitions. However, the voting rights, dividend rights,
liquidation rights, and preemptive rights of holders of Bank common stock
and Holding Company common stock are substantially the same. See
"DESCRIPTION OF THE BANK'S COMMON STOCK" and "DESCRIPTION OF THE HOLDING
COMPANY'S COMMON STOCK."
In addition to the foregoing summary of differences in shareholders'
rights under the different Massachusetts law, 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 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
25
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 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.
2. With certain limited exceptions, Massachusetts banking statutes
governing the Bank require the approval of two-thirds of the capital stock
of the Bank and the approval of the Commissioner of Banks in connection with
(i) any merger or consolidation of the Bank with any other bank, other than
a national banking association, located in New England, (ii) the sale or
exchange of all or substantially all of the Bank's assets to or with
another trust company; and (iii) the voluntary liquidation or dissolution of
the Bank. Other transactions, including a merger or consolidation of the
Bank with a national banking association, may be accomplished without the
approval of the Commissioner of Banks, upon the vote of the holders of two-
thirds of the Bank's capital stock, while the Bank may generally issue
common stock if both the Commissioner of Banks and the holders of at least a
majority of the Bank's common stock have approved.
26
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 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 a minority of stockholders could prevent the Holding
Company from entering any of the described transactions by refusing to
approve the transaction in question. Because this provision would tend to
discourage certain takeover bids and would encourage other takeover bidders
to negotiate with the Board of Directors, it may
27
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 Massachusetts 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 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
28
ensure that Directors of the Holding Company will not be removed from office
for reasons unrelated to their performance of their duties.
4. Under Massachusetts banking statutes, at least three-quarters of
the Directors of the Bank must be citizens of and reside in Massachusetts.
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.
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 Massachusetts banking laws, which present no genuine
obstacle to a takeover bidder.
5. Under Massachusetts banking statutes, the Board of Directors of
the Bank must consist of no fewer than seven and no more than twenty-five
Directors. There are currently seven 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.
29
Other Considerations
Under the tax laws of Massachusetts (where more than 89% of the Bank's
shareholders reside), the taxation of dividends on capital stock is the same
with respect to stock of Massachusetts trust companies as it is with
Massachusetts business corporations. There is no Massachusetts personal
property tax on the capital stock of Massachusetts business corporations or
trust companies. In other jurisdictions, however, capital stock of
Massachusetts trust companies 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 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 bank has no similar provision in its Articles and By-Laws as to
indemnification of officers, Directors or employees of the Bank.
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
30
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 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 1986 as a Massachusetts trust company. 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.
As of December 31, 1997, the Bank employed 34 full-time and 7 part-
time employees. During 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.
The Bank's service area is generally limited to the community of
Gloucester. The City of Gloucester is a well-developed financial community.
In addition to the Bank, there are six thrifts and other commercial banks in
Gloucester. The Bank's total assets on December 31, 1997 were $112,875,000.
The Bank does not derive a material portion of its deposits from a
single depositor or a few depositors, nor is a material portion of the
Bank's loan portfolio concentrated within a single industry or group of
related industries so as to have a possibly materially adverse effect on the
business of the Bank. The Bank's business is not seasonal. As of December
31, 1997, commitments under standby letters of credit aggregated
approximately $436,000.
The Bank's main office (8,800 sq. feet) at 2 Harbor Loop, Gloucester,
Massachusetts is owned by the Bank and the Bank leases the land and building
for the computer facility located at 72-74 Rogers Street, Gloucester,
Massachusetts (11,800 sq. feet).
The Holding Company
The Holding Company was incorporated on March 24, 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
31
become a bank holding company upon consummation of the Acquisition, and has
entered into the Plan of Acquisition with the Bank. To date, the Holding
Company has engaged in no business other than as necessary and incidental to
effecting the acquisition with the Bank pursuant to the Plan of Acquisition.
There is no established public market for the Holding Company Stock and none
is expected to develop as a result of the Acquisition. The Holding Company
owns no property.
Upon consummation of the Acquisition, 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 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 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 OF
ACQUISITION - Reasons for the Reorganization."
REGULATION AND SUPERVISION
The Bank is, and will be, subject to regulation by the Massachusetts
Commissioner of Banks, the Board of Governors of the Federal Reserve System,
and the Federal Deposit Insurance Corporation. The business of the Bank is,
and will continue to be, subject in certain cases to state laws applicable
to banks.
The Holding Company and its subsidiaries will be affiliates of the
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 Bank and such affiliates
upon the affairs of the Bank. The Federal Reserve Act also imposes certain
restrictions on loans by the Bank to the Holding Company, on investments by
the Bank in stock or securities of the Holding Company, on the taking by the
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 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 Bank will be subject to examination at the discretion of
the Commissioner of Banks for the Commonwealth of Massachusetts.
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.
32
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.
MARKET PRICE AND DIVIDENDS
Bank Stock
Shares of the Bank's stock are currently held by approximately 303
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 27,981
shares traded in 42 transactions during 1996 and 19,611 shares traded in 52
transactions during 1997. During that period, to the Bank's knowledge,
shares were traded at prices ranging between $60.50 and $122.00. To the
Bank's knowledge, there have been 5,610 shares traded in 14 transactions in
1998 at prices ranging between $135.125, and $142.00.
The following table sets forth cash dividends paid by the Bank in
1996, 1997 and 1998.
Cash Dividends
Date (per share)
---- --------------
03/15/96 $ .50
06/15/96 .50
09/15/96 .50
12/16/96 .50
12/16/96 2.00 EXTRA
03/14/97 .75
06/16/97 .75
09/15/97 .75
12/15/97 .75
12/15/97 1.00 EXTRA
03/16/98 .75
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 acquisition 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
33
paid by the Bank. The amount of available dividends the 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.
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 $ 8,404 $ 7,529 $ 6,985 $ 5,532 $ 5,079
Interest Expense 3,671 3,268 2,782 1,958 1,813
-----------------------------------------------------
Net Interest and Dividend Income 4,733 4,261 4,203 3,574 3,266
Provision for Loan Losses 0 0 0 (190) 525
Other Income 808 803 670 542 706
Other Expense 3,479 3,353 3,115 3,080 2,962
Income Tax 860 714 733 510 193
-----------------------------------------------------
Net Income $ 1,202 $ 997 $ 1,025 $ 716 $ 312
=====================================================
Balance Sheet Data (at end of period):
Total Assets $112,875 $111,079 $99,242 $87,338 $82,023
Net Loans 70,316 61,654 55,033 50,702 49,442
Total Deposits 94,317 92,048 85,163 74,201 69,343
Total Stockholder's Equity 8,740 7,878 7,501 6,701 6,339
Per Common Share Data
Net Income $ 10.17 $ 8.43 $ 8.67 $ 6.06 $ 2.64
Cash dividends 4.00 4.00 4.00 2.00 0.00
Book Value 72.97 66.80 62.37 57.70 53.64
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 and the Holding Company prior to the consummation
of the acquisition contemplated by the Plan of Acquisition and as adjusted
to give effect to the acquisition, are as follows:
December 31, Prior to Upon
1997 Acquisition(a) Acquisition(a)
------------ -------------- --------------
Bank
Shareholders' Equity:
Common Stock - Par Value $5.00....... $ 590,945 $ 590,945
Authorized......................... 1,000,000 Shs 1,000,000 Shs
Outstanding........................ 118,189 Shs 118,189 Shs
Surplus................................ $5,426,058 $5,426,058
Undivided Profits.................... $2,607,781 $2,607,781
----------------------------
Total Capital Funds.............. $8,624,784 $8,624,784
============================
Holding Company
Shareholders' Equity:
Common Stock - No Par Value.......... $ 0.00 $ 0.00
Authorized........................... 1,000,000 Shs 4,000,000 Shs
Issued............................... 1(b) 827,323 Shs
Surplus................................ $ 1.00 $6,017,003
Undivided Profits.................... $ 0.00 $2,607,781
----------------------------
Total Capital Funds.............. $ 1.00 $8,624,784
============================
- --------------------
<Fa> Where applicable, based on December 31, 1997 surplus and undivided
profits of the Bank.
<Fb> 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 acquisition, such share shall be repurchased by
the Holding Company for a cash price equal to that paid by such firm.
The foregoing pro forma information does not give effect to expenses
incurred in connection with the Plan of Acquisition.
35
MANAGEMENT
All Directors of the Bank immediately prior to the acquisition will,
upon the consummation of the acquisition, be Directors of the Holding
Company and will continue to be Directors of the Bank. 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 Bank.
Transactions With Management of 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.
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. The common stock of the Bank does not have
cumulative voting rights in the selection of Directors. This means that the
holders of more than 50% of the shares of common stock of the Bank voting
for the election of Directors can elect 100% of the entire Board 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 Bank at the meeting.
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.
Preemptive Rights
Holders of common stock of the Bank do not have any right to subscribe
to any additional securities which may be issued by the Bank.
36
Dissenters' Rights
Under certain circumstances set forth in the Massachusetts 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.
Control Share Acquisitions
The provisions of Chapter 110D of the General Laws of Massachusetts
are not applicable to the Bank.
Other Matters
Massachusetts 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
acquisition, 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 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.
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.
37
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. Such circumstances may include, among other
events, (i) the sale, lease, or exchange of all or substantially all of the
Holding Company's property and assets, (ii) consolidation or merger of the
Holding Company with another corporation or corporations, or (iii) the
adoption of any amendment to the Holding Company's Articles of Organization
which adversely affects the rights of a shareholder.
Control Share Acquisitions
Sections 1 to 8, inclusive, of Chapter 110D of the General Laws of
Massachusetts ("Chapter 110D") apply to most Massachusetts business
corporations with more than 200 shareholders. Since the Holding Company
will have more than 200 shareholders, Chapter 110D will apply to the Holding
Company.
Chapter 110D governs control share acquisitions. With certain
exceptions, Chapter 110D defines a control share acquisition as an
acquisition by a beneficial owner of shares, which, when combined with
shares owned by the beneficial owner before the acquisition, gives the
beneficial owner voting power of (i) one-fifth or more but less than one-
third of all voting power; (ii) one-third or more but less than a majority
of all voting power; or (iii) a majority or more of all voting power.
Shares acquired in a control share acquisition are not entitled to vote
unless authorized to do so by a majority of disinterested shareholders.
Under certain circumstances, the Holding Company may have the right to
buy shares to be acquired in a control share acquisition at the fair market
value by including such a provision in its Articles of Organization or By-
Laws. The Holding Company's Articles of Organization and By-Laws do not
currently include such a provision. In addition, under certain
circumstances, if shares acquired in a control share acquisition are
authorized to vote, shareholders may be entitled to demand payment for their
stock and an appraisal in accordance with the provisions of Sections 85 to
98, inclusive, of Chapter 156B of the General Laws of Massachusetts.
The foregoing does not purport to be a complete statement of the
procedures to be followed in a control share acquisition.
38
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 acquisition, 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: Kevin W. Nunes, Senior Vice President and Chief
Financial Officer, Gloucester Bank & Trust Company, 2 Harbor Loop,
Gloucester, MA 01930. 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.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Bank intended to be presented at the
1999 Annual Meeting of the Bank must be received by the Bank not later than
January 31, 1999 to be included in the Bank's proxy statement and form of
proxy relating to that meeting.
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
Special 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
Kevin W. Nunes, Senior Vice President and Treasurer, Gloucester Bank & Trust
Company, 2 Harbor Loop, Gloucester, MA 01930.
39
Following the acquisition, 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 Gloucester Bank & Trust Company and GBT
Bancorp.
By Order of the Board of Directors
David L. Marsh, President
and Chief Executive Officer
Dated: April 14, 1998
40
EXHIBIT A TO
PROXY STATEMENT AND PROSPECTUS
PLAN OF ACQUISITION
Pursuant to Section 26B of Chapter 172 of the General Laws of
Massachusetts.
This Plan of Acquisition (the "Plan") is dated as of March 20, 1998,
and made between Gloucester Bank & Trust Company, a Massachusetts trust
company (the "Bank") and GBT Bancorp, a Massachusetts corporation (the
"Holding Company").
The Bank is duly organized and validly existing under the laws of the
Commonwealth of Massachusetts, with its principal office at 2 Harbor Loop,
Gloucester, Massachusetts. The authorized capital stock of the Bank
consists of 1,000,000 shares of Common Stock, par value $5.00 per share (the
"Bank Stock"), of which 118,189 shares are issued and outstanding as of the
date hereof.
The Holding Company is a corporation, duly organized and validly
existing under the laws of the Commonwealth of Massachusetts, with its
principal office at 2 Harbor Loop, Gloucester, Massachusetts. The
authorized capital stock of the Holding Company consists of 4,000,000 shares
of Common Stock, no par value (the "Holding Company Common Stock"), none of
which shares are issued and outstanding as of the date hereof.
The Bank and the Holding Company have agreed that the Holding Company
will acquire all of the issued and outstanding shares of Bank Stock in
exchange for shares of Holding Company Common Stock pursuant to the
provisions of Section 26B of Chapter 172 of the General Laws of
Massachusetts and of this Plan. The Plan has been adopted and approved by a
vote of a majority of all of the members of the board of directors of the
Bank and by a vote of a majority of all of the members of the board of
directors of the Holding Company. The officers of the Bank and of the
Holding Company whose respective signatures appear below have been duly
authorized to execute and deliver this Plan.
41
NOW, THEREFORE, in consideration of the premises, the Bank and the
Holding Company agree as follows:
Section 1. Approval and Filing of Plan
---------------------------------------
1.1 The Plan shall be submitted for approval by the holders of
Bank Stock at a meeting to be called and held in accordance with the
applicable provisions of law. Notice of such meeting shall be published at
least once a week for two successive weeks in a newspaper in Essex County,
Commonwealth of Massachusetts. Both of said publications shall be at least
fifteen days prior to the date of the meeting.
1.2 Upon approval of the Plan by vote of the holders of two-
thirds of the outstanding shares of Bank Stock as required by law, the Bank
and the Holding Company shall complete the submission of the Plan to the
Commissioner of Banks of the Commonwealth of Massachusetts (the "Bank
Commissioner") for his approval and filing in accordance with the provisions
of Section 26B of Chapter 172 of the General Laws of Massachusetts. The
Plan shall be accompanied by such certificates of the respective officers of
the Bank and the Holding Company as may be required by law and a written
request from the Bank that the Plan not be filed in the office of the Bank
Commissioner until such future time as the Bank Commissioner shall have
received from the Bank and the Holding Company the written notice described
in Subsection 2.1.
1.3 If the requisite approval of the Plan is obtained at the
meeting of holders of the Bank Stock referred to in Subsection 1.1,
thereafter and until the Effective Time, as hereafter defined, the Bank
shall issue certificates for Bank Stock, whether upon transfer or otherwise,
only if such certificates bear a legend, the form of which shall be approved
by the board of directors of the Holding Company, indicating that the Plan
has been approved and that shares of Bank Stock evidenced by such
certificates are subject to the acquisition of the Holding Company pursuant
to the Plan.
Section 2. Definition of Effective Time
----------------------------------------
2.1 The Plan shall become effective at 12:01 A.M. on the first
business day following the date on which the Bank and the Holding Company
advise the Bank Commissioner in writing (i) that all the conditions
precedent to the Plan becoming effective specified in Section 5 have been
satisfied and (ii) that the Plan has not been abandoned by the Bank or the
Holding Company in accordance with the provisions of Section 6. Such time
is hereafter called the "Effective Time."
42
Section 3. Actions at the Effective Time
-----------------------------------------
3.1 At the Effective Time, the Holding Company shall, without
any further action on its part or on the part of the holders of the Bank
Stock, automatically and by operation of law acquire and become the owner
for all purposes of all the then issued and outstanding shares of the Bank
Stock and shall be entitled to have issued to it by the Bank a certificate
or certificates representing such shares. Thereafter, the Holding Company
shall have full and exclusive power to vote such shares of the Bank Stock,
to receive dividends thereon and to exercise all rights of an owner thereof.
3.2 At the Effective Time, the holders of the then issued and
outstanding shares of the Bank Stock shall, without any further action on
their part or on the part of the Holding Company, automatically and by
operation of law cease to own such shares and shall instead become owners of
seven shares of Holding Company Common Stock for each share of Bank Stock
theretofore held by them. Thereafter, such persons shall have full and
exclusive power to vote such shares of the Holding Company Common Stock, to
receive dividends thereon and to exercise all rights of an owner thereof.
Notwithstanding any of the foregoing, any dissenting stockholder, as defined
in Subsection 7.1, shall have such rights as are provided by Subsection 7.2
and by the laws of the Commonwealth of Massachusetts.
3.3 At the Effective Time, all previously issued and
outstanding certificates representing shares of Bank Stock (the "Old
Certificates") shall automatically and by operation of law cease to
represent shares of Bank Stock or any interest therein and each Old
Certificate shall instead represent the ownership by the holder thereof of
seven shares of Holding Company Common Stock for each share of Bank Stock
theretofore held by them. No holder of an Old Certificate shall be entitled
to vote the shares of Bank Stock formerly represented by such certificate,
or to receive dividends thereon, or to exercise any other rights of
ownership in respect thereof.
Section 4. Actions After the Effective Time
--------------------------------------------
As soon as practicable and in any event not more than 30 days
after the Effective Time:
4.1 The Holding Company shall deliver to the Bank as agent for
the then holders of Old Certificates (other than Old Certificates
representing shares of Bank Stock as to which appraisal rights shall have
been effected), a certificate or certificates for the aggregate number of
shares of Holding Company Stock ("New Certificate"), to which said holders
shall be entitled. Each such
43
holder shall surrender his Old Certificate at the principal office of the
Bank and receive in exchange therefor a New Certificate for seven shares of
Holding Company Stock for each share of Bank Stock theretofore held by them.
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 the Holding Company may withhold, from the
holder of shares represented by such Old Certificate, distribution of any or
all dividends declared by the 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 the Holding Company with
respect to such shares shall be delivered, without interest thereon, to the
shareholder to whom such New Certificates are issued.
4.2 The Holding Company shall publish, in a newspaper or
newspapers of general circulation in the Town of Gloucester, Essex County,
Commonwealth of Massachusetts, a notice to the holders of all Old
Certificates, specifying the Effective Time of the Plan and notifying such
holders to present their Old Certificates to the Bank for exchange. Such
notice shall likewise be given by mail to such holders at their addresses on
the Bank's records.
Section 5. Conditions Precedent
--------------------------------
This Plan and the acquisition provided for herein shall not
become effective unless all of the following first shall have occurred:
5.1 The Plan shall have been approved by a vote at a meeting of
the holders of two-thirds of the outstanding Bank Stock.
5.2 The Plan shall have been approved by the Bank Commissioner
and a copy of the Plan with his approval endorsed thereon shall have been
filed in his office, all as provided in Section 26B of Chapter 172 of the
General Laws of Massachusetts.
5.3 The Board of Governors of the Federal Reserve System shall
have approved the Notice of the formation of the Holding Company.
5.4 The Bank shall have received favorable rulings from the
Internal Revenue Service or a favorable opinion from its counsel, in either
case satisfactory in form and substance to the Bank, with respect to the
federal income tax consequences of the Plan and the acquisition contemplated
thereby.
44
5.5 The Bank and the Holding Company shall have obtained all
other consents, permissions, agreements and approvals and taken all actions
required by law or agreement, or deemed necessary, by the Bank or the
Holding Company, prior to the consummation of the acquisition provided for
by the Plan and to the Holding Company's having and exercising all rights of
ownership with respect to all of the outstanding shares of Bank Stock
acquired by it thereunder.
Section 6. Abandonment of Plan
-------------------------------
6.1 The Plan may be abandoned by either the Bank or the Holding
Company at any time before the Effective Time in the event that:
(a) The number of shares of Bank Stock owned by
Dissenting Stockholders as hereinafter defined, shall make consummation of
the acquisition contemplated by the Plan unwise in the opinion of the Bank
or the Holding Company,
(b) Any action, suit, proceeding or claim has been
instituted, made or threatened relating to the Plan which shall make
consummation of the acquisition inadvisable in the opinion of the Bank or
the Holding Company; or
(c) For any other reason consummation of the acquisition
contemplated by the Plan is inadvisable in the opinion of the Bank or the
Holding Company.
Such abandonment shall be effected by written notice by either the
Bank or the Holding Company to the other of them, authorized or approved by
the Board of Directors of the party giving such notice. Upon the giving of
such notice, this Plan shall be terminated and there shall be no liability
hereunder or on account of such termination on the part of the Bank or the
Holding Company or the directors, officers, employees, agents or
stockholders of either of them. In the event of abandonment of the Plan,
the Bank shall pay the fees and expenses incurred by itself and the Holding
Company in connection with the Plan and the proposed acquisition. If either
party hereto gives written notice of termination to the other party pursuant
to this section, the party giving such written notice shall simultaneously
furnish a copy thereof to the Bank Commissioner.
45
Section 7. Rights of Dissenting Stockholders
---------------------------------------------
7.1 "Dissenting Stockholders" shall mean those holders of the
Bank Stock who file with the Bank before the taking of the vote on the Plan
written objection to the Plan stating that they intend to demand payment for
their shares of the Bank Stock if the Plan is consummated and whose shares
are not voted in favor of the Plan.
7.2 Each Dissenting Stockholder who complies with the
provisions of Sections 85 to 98, inclusive, of Chapter 156B of the General
Laws of Massachusetts and all other applicable provisions of law shall be
entitled to receive from the Bank payment of the fair value of his shares of
Bank Stock upon surrender by such holder of the certificates which
previously represented shares of Bank Stock. Certificates so obtained by
the Bank, upon payment of the fair value of such shares as provided by law,
shall be canceled. Shares of Holding Company Stock to which Dissenting
Stockholders would have been entitled had they not dissented shall be deemed
to constitute authorized but unissued shares of Holding Company Stock and
may be sold or otherwise disposed of by the Holding Company at the
discretion of, and on such terms as may be fixed by, its board of directors.
Section 8. Governing Law
-------------------------
The Plan shall take effect as a sealed instrument and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
Section 9. Counterparts
------------------------
The Plan may be executed in several identical counterparts, each
of which when executed by the parties hereto and delivered shall be an
original, but all of which together shall constitute a single instrument.
In making proof of the Plan, it shall not be necessary to produce or account
for more than one such counterpart.
46
IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Acquisition to be duly executed this 20th day of March, 1998, and their
corporate seals to be hereunto affixed.
GBT BANCORP
Corporate Seal By: /s/ David L. Marsh
---------------------------------
David L. Marsh, President
Attest:
/s/ Marianne Smith
- ------------------------------
Marianne Smith, Clerk
GLOUCESTER BANK & TRUST COMPANY
Corporate Seal By: /s/ David L. Marsh
---------------------------------
David L. Marsh, President
Attest:
/s/ Kevin W. Nunes
- ------------------------------
Kevin W. Nunes, Secretary
47
EXHIBIT B TO
PROXY STATEMENT AND PROSPECTUS
Sections 85-98 of Chapter 156B
Massachusetts General Laws Annotated
[SECTION] 85. Dissenting stockholder; right to demand payment for stock;
exception.
A stockholder in any corporation organized under the laws of
Massachusetts which shall have duly voted to consolidate or merge with
another corporation or corporations under the provisions of sections
seventy-eight or seventy-nine who objects to such consolidation or merger
may demand payment for his stock from the resulting or surviving corporation
and an appraisal in accordance with the provisions of sections eighty-six to
ninety-eight, inclusive, and such stockholder and the resulting or surviving
corporation shall have the rights and duties and follow the procedure set
forth in those sections. This section shall not apply to the holders of any
shares of stock of a constituent corporation surviving a merger if, as
permitted by subsection (c) of section seventy-eight, the merger did not
require for its approval a vote of the stockholders of the surviving
corporation.
[SECTION] 86. Selections applicable to appraisal; prerequisites.
If a corporation proposes to take a corporate action as to which any
section of this chapter provides that a stockholder who objects to such
action shall have the right to demand payment for his shares and an
appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall
apply except as otherwise specifically provided in any section of this
chapter. Except as provided in sections eighty-two and eighty-three, no
stockholder shall have such right unless (1) he files with the corporation
before the taking of the vote of the shareholders on such corporate action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) his shares are not
voted in favor of the proposed action.
[SECTION] 87. Statement of rights of objecting stockholders in notice of
meeting; form.
The notice of the meeting of stockholders at which the approval of
such proposed action is to be considered shall contain a statement of the
rights of objecting stockholders. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock, and the directors may authorize the inclusion in any
such notice of a statement of opinion by the management as to the existence
or non-existence of the right of the stockholders to demand payment for
their stock on account of the proposed corporate action. The notice may be
in such form as the directors or officers calling the meeting deem
advisable, but the following form of notice shall be sufficient to comply
with this section:
48
"If the action proposed is approved by the stockholders at the meeting
and effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in writing
from the corporation (or, in the case of a consolidation or merger, the name
of the resulting or surviving corporation shall be inserted), within twenty
days after the date of mailing to him of notice in writing that the
corporate action has become effective, payment for his shares and an
appraisal of the value thereof. Such corporation and any such stockholder
shall in such cases have the rights and duties and shall follow the
procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
[SECTION] 88. Notice of effectiveness of action objected to.
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of
section eighty-six and whose shares were not voted in favor of the approval
of such action, that the action approved at the meeting of the corporation
of which he is a stockholder has become effective. The giving of such notice
shall not be deemed to create any rights in any stockholder receiving the
same to demand payment for his stock. The notice shall be sent by registered
or certified mail, addressed to the stockholder at his last known address as
it appears in the records of the corporation.
[SECTION] 89. Demand for payment; time for payment.
If within twenty days after the date of mailing of a notice under
subsection (e) of section eighty-two, subsection (f) of section eighty-
three, or section eighty-eight, any stockholder to whom the corporation was
required to give such notice shall demand in writing from the corporation
taking such action, or in the case of a consolidation or merger from the
resulting or surviving corporation, payment for his stock, the corporation
upon which such demand is made shall pay to him the fair value of his stock
within thirty days after the expiration of the period during which such
demand may be made.
[SECTION] 90. Demand for determination of value; bill in equity; venue.
If during the period of thirty days provided for in section eighty-
nine the corporation upon which such demand is made and any such objecting
stockholder fail to agree as to the value of such stock, such corporation or
any such stockholder may within four months after the expiration of such
thirty-day period demand a determination of the value of the stock of all
such objecting stockholders by a bill in equity filed in the superior court
in the county where the corporation in which such objecting stockholder held
stock had or has its principal office in the commonwealth.
49
[SECTION] 91. Parties to suit to determine value; service.
If the bill is filed by the corporation, it shall name as parties
respondent all stockholders who have demanded payment for their shares and
with whom the corporation has not reached agreement as to the value thereof.
If the bill is filed by a stockholder, he shall bring the bill in his own
behalf and in behalf of all other stockholders who have demanded payment for
their shares and with whom the corporation has not reached agreement as to
the value thereof, and service of the bill shall be made upon the
corporation by subpoena with a copy of the bill annexed. The corporation
shall file with its answer a duly verified list of all such other
stockholders, and such stockholders shall thereupon be deemed to have been
added as parties to the bill. The corporation shall give notice in such form
and returnable on such date as the court shall order to each stockholder
party to the bill by registered or certified mail, addressed to the last
known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication
or otherwise as it deems advisable. Each stockholder who makes demand as
provided in section eighty-nine shall be deemed to have consented to the
provisions of this section relating to notice, and the giving of notice by
the corporation to any such stockholder in compliance with the order of the
court shall be a sufficient service of process on him. Failure to give
notice to any stockholder making demand shall not invalidate the proceedings
as to other stockholders to whom notice was properly given, and the court
may at any time before the entry of a final decree make supplementary orders
of notice.
[SECTION] 92. Decree determining value and ordering payment; valuation date.
After hearing the court shall enter a decree determining the fair
value of the stock of those stockholders who have become entitled to the
valuation of and payment for their shares, and shall order the corporation
to make payment of such value, together with interest, if any, as
hereinafter provided, to the stockholders entitled thereto upon the transfer
by them to the corporation of the certificates representing such stock if
certificated or, if uncertificated, upon receipt of an instruction
transferring such stock to the corporation. For this purpose, the value of
the shares shall be determined as of the day preceding the date of the vote
approving the proposed corporate action and shall be exclusive of any
element of value arising from the expectation or accomplishment of the
proposed corporate action.
[SECTION] 93. Reference to special master.
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report
the same to the court, all in accordance with the usual practice in suits in
equity in the superior court.
[SECTION] 94. Notation on stock certificates of pendency of bill.
On motion the court may order stockholder parties to the bill to
submit their certificates of stock to the corporation for the notation
thereon of the pendency of the bill and may order the corporation to note
such pendency in its records with respect to any uncertificated shares held
by such stockholder parties, and may on motion dismiss the bill as to any
stockholder who fails to comply with such order.
50
[SECTION] 95. Costs; interest.
The costs of the bill, including the reasonable compensation and
expenses of any master appointed by the court, but exclusive of fees of
counsel or of experts retained by any party, shall be determined by the
court and taxed upon the parties to the bill, or any of them, in such manner
as appears to be equitable, except that all costs of giving notice to
stockholders as provided in this chapter shall be paid by the corporation.
Interest shall be paid upon any award from the date of the vote approving
the proposed corporate action, and the court may on application of any
interested party determine the amount of interest to be paid in the case of
any stockholder.
[SECTION] 96. Dividends and voting rights after demand for payment.
Any stockholder who has demanded payment for his stock as provided in
this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled
to the payment of dividends or other distribution on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the date of the vote approving the proposed corporate
action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the
corporation, or in the case of a consolidation or merger, the resulting or
surviving corporation, deliver to it a written withdrawal of his objections
to and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so
demand payment for his stock as provided in this chapter.
[SECTION] 97. Status of shares paid for.
The shares of the corporation paid for by the corporation pursuant to
the provisions of this chapter shall have the status of treasury stock, or
in the case of a consolidation or merger the shares or the securities of the
resulting or surviving corporation into which the shares of such objecting
stockholder would have been converted had he not objected to such
consolidation or merger shall have the status of treasury stock or
securities.
[SECTION] 98. Exclusive remedy; exception.
The enforcement by a stockholder of his right to receive payment for
his shares in the manner provided in this chapter shall be an exclusive
remedy except that this chapter shall not exclude the right of such
stockholder to bring or maintain an appropriate proceeding to obtain relief
on the ground that such corporate action will be or is illegal or fraudulent
as to him.
51
EXHIBIT C TO
PROXY STATEMENT AND PROSPECTUS
Certain Provisions of the
Articles of Organization of
GBT BANCORP
The provisions of the Articles of Organization of GBT 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:
52
(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; or
(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, 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
53
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 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.
54
EXHIBIT D TO
PROXY STATEMENT AND PROSPECTUS
Certain Provisions of the
By-Laws of
GBT Bancorp
The provisions of the By-Laws of GBT 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
55
fulfill the qualifications required of Directors by Article II, Section
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.
56
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 Plan of Acquisition dated March 20, 1998 between Gloucester Bank
& Trust Company and Registrant (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.
10.1 Employment Agreement dated January 1, 1993 between Gloucester
Bank & Trust Company and David L. Marsh, President of Registrant
and Gloucester Bank & Trust Company
10.2 Special Termination Agreement dated December 30, 1986 between
Gloucester Bank & Trust Company and David L. Marsh, President of
Gloucester Bank & Trust Company and the Registrant
57
24.1 Consent of Craig and Macauley Professional Corporation (contained
in its opinion filed as Exhibit 5).
99.1 Form of President's letter to Shareholders of Gloucester Bank &
Trust Company.
99.2 Form of Notice of Special Meeting in Lieu of the Regular Annual
Meeting of Shareholders of Gloucester Bank & Trust Company.
99.3 Form of Proxy to be delivered to Shareholders of Gloucester Bank
& 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.
58
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 Gloucester,
Commonwealth of Massachusetts on March 20, 1998.
GBT BANCORP
By: /s/ David L. Marsh
---------------------------------
David L. Marsh
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/ David L. Marsh, President and Chief Executive Officer March 20, 1998
- --------------------------- (Principal Executive Officer)
David L. Marsh
/s/ Kevin W. Nunes, Treasurer (Principal Financial Officer March 20, 1998
- --------------------------- and Principal Accounting Officer)
Kevin W. Nunes
, Director
- ---------------------------
Charles J. Ciaramitaro
/s/ , Director
- ---------------------------
Francis J. Elliott, Jr.
/s/ Kenneth W. Gleason, Director March 20, 1998
- ---------------------------
Kenneth W. Gleason
/s/ David L. Marsh, Director March 20, 1998
- ---------------------------
David L. Marsh
59
, Director
- ---------------------------
Nicholas C. Psalidas
/s/ Robert J. Ryan, Sr., Director March 20, 1998
- ---------------------------
Robert J. Ryan, Sr.
/s/ Donald E. Sudbay, Jr., Director March 20, 1998
- ---------------------------
Donald E. Sudbay, Jr.
60
EXHIBIT INDEX
Number Exhibit Page
------ ------------------------------------------------------- ------
2 Plan of Acquisition dated March 20, 1998 between
Gloucester Bank & Trust Company and Registrant 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
10.1 Employment Agreement dated January 1, 1993 between
Gloucester Bank & Trust Company and David L. Marsh,
President of Registrant and Gloucester Bank & Trust
Company
10.2 Special Termination Agreement dated December 30, 1986
between Gloucester Bank & Trust Company and David L.
Marsh, President of Registrant and Gloucester Bank &
Trust Company
24.1 Consent of Craig and Macauley Professional Corporation
(contained in its opinion filed as Exhibit 5)
99.1 Form of President's letter to Shareholders of Gloucester
Bank & Trust Company
99.2 Form of Notice of Special Meeting In Lieu of the Regular
Annual Meeting of Shareholders of Gloucester Bank &
Trust Company
99.3 Form of Proxy to be delivered to Shareholders of
Gloucester Bank & Trust Company
61