EXHIBIT 14
CODE OF ETHICS AND CONFLICTS
OF INTEREST POLICY
[LOGO SALISBURY BANCORP, INC.]
SALISBURY BANCORP, INC.,
SALISBURY BANK AND TRUST COMPANY,
and
SBT MORTGAGE SERVICE CORPORATION
Individual Responsible: John F. Perotti
Chairman and CEO
Board Approved: August 26, 2005
SALISBURY BANCORP, INC.,
SALISBURY BANK AND TRUST COMPANY,
AND
SBT MORTGAGE SERVICE CORPORATION
CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY
for Directors, Officers, and Employees
Salisbury Bank and Trust Company (the "Bank"), Salisbury Bancorp, Inc. (the
"Holding Company") and SBT Mortgage Service Corporation, a subsidiary of the
Bank (herein referred to collectively as "The Corporation") are institutions of
public trust that are dependent upon public confidence. Inherent in that trust
is The Corporation's responsibility not only to preserve and safeguard public
confidence but also to strengthen and renew such confidence. The reputation and
soundness of The Corporation is dependent on its commitment to avoid conflicts
of interest. It is imperative that each member of the Board of Directors,
Officer and Employee of The Corporation act with integrity at all times, conduct
themselves in a professional manner, and comply with all rules, regulations and
policies of The Corporation. In addition, all Directors, Officers and Employees
have an obligation to The Corporation to ensure that their outside activities,
interests and personal affairs are not in conflict with The Corporation's
interests or reflect negatively upon The Corporation's reputation in the
community. It is to this end that this Code of Ethics and Conflicts of Interest
Policy ("Policy") was adopted. This Policy also serves as the Holding Company's
"Code of Ethics" for purposes of Section 406 of the Sarbanes-Oxley Act of 2002
and the regulations of the Securities and Exchange Commission promulgated
pursuant thereto.
STATEMENT OF BOARD POLICY
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No one associated with The Corporation, whether as a director, officer or
employee, should use their position, directly or indirectly, for private gain,
to advance personal interests or to obtain favors or benefits for themselves,
their families or related interests, or any other entity. Each such person must
manage their personal and business affairs so as to avoid situations that might
lead to conflict of interest or the appearance of a conflict of interest
involving The Corporation. Compliance with this Policy is required of all such
persons.
The purpose of this Code of Ethics and Conflicts of Interest Policy is to ensure
that business dealings and transactions between The Corporation and its
officers, directors, principal shareholders and employees are conducted in an
arm's-length fashion.
The nature of the banking industry requires that each employee and officer of
The Corporation meet high standards of integrity and ethical conduct. These
rules are based upon laws and fiduciary duties which are derived from common
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sense principles. However, they are extremely important and should be reviewed
regularly. Please remember that the following should be considered to be
guidelines and as such, cannot address every potential issue. If you should have
a question concerning a specific proposed transaction, discuss it first with the
Chief Executive Officer or a member of Senior Management.
The Policy is applicable to officers, directors and employees of The
Corporation, respectively.
CONFLICTS OF INTEREST
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All officers, directors and employees ("insiders") are responsible for dealing
fairly with The Corporation in business transactions and ensuring that their
personal interests do not bias The Corporation's decisions. Insiders must ensure
that their own business and personal relationships with The Corporation, as well
as their relationships with fellow insiders, are always at arm's-length.
Insiders must also ensure that they do not take any business opportunity that
properly belongs to The Corporation. Even the appearance of abuse in insider
dealings can adversely affect both The Corporation and the individual. The law
does not prohibit an insider from doing business with The Corporation; in fact,
many insiders are very important customers. Insiders must ensure, however, that
neither they nor others abuse their position to benefit personally at The
Corporation's expense, and they should take appropriate precautions in
structuring their business and personal ties to The Corporation to avoid even
the appearance of a conflict of interest.
Insiders must not put their personal or business interests or those of others
above the interests of The Corporation. Thus, insiders must be fair in their
dealings with The Corporation, and personal interests must not be allowed to
bias decisions. Insiders must not take advantage of potential "corporate
opportunities," such as business enterprises, properties, or new products that
they learn of as a result of their position or that are in The Corporation 's
"line of business."
Insiders must disclose fully to the Board any personal interest they may have in
matters affecting The Corporation and ensure that any transactions involving
these interests are determined by disinterested Directors to be fair to The
Corporation.
PERSONAL CONDUCT
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Each officer, director and employee is expected to maintain the highest ethical
standards in their personal and professional dealings.
Employees, officers and directors of The Corporation are expected to accept
certain responsibilities, adhere to acceptable business principles in matters of
personal conduct, and exhibit a high degree of personal integrity at all times.
This not only involves respect for the rights of others, but also demands that
with respect to business and personal matters, such persons refrain from any
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behavior that might be harmful to The Corporation, or that might be viewed
unfavorably by current or potential customers or with respect to the public.
PERSONAL FINANCES
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Each officer, director, and employee should maintain his or her personal
finances in a prudent, businesslike manner. Checking accounts for officers,
directors, principal shareholders and employees are to be handled in a
professional manner. Deposits may not bear a greater rate of interest than that
paid to the general public. In accordance with 12 CFR 215.4(e) of Regulation O,
the Bank may not pay an overdraft of an executive officer or director of the
Bank or of an affiliate of the Bank, on an account at the Bank, unless either:
o The payment of funds is made in accordance with a written,
preauthorized, interest-bearing extension of credit plan that
specifies a method of repayment, or a written, preauthorized
transfer of funds from another account of the account holder at the
Bank.
o The payment is of an inadvertent overdraft on an account in an
aggregate amount of $1,000 or less, provided the account is not
overdrawn for more than five business days, and the Bank charges the
executive officer or director the same fee charged to any other
customer of the Bank in similar circumstances.
The following activities are prohibited:
1. Borrowing from other staff members;
2. Borrowing from The Corporation's customers other than those that are
lending institutions;
3. Borrowing from the Holding Company or borrowing at preferential
rates from the Bank because of your position. Remember that any Bank
loans to executive officers, directors and principal shareholders
must be on the same terms and conditions as those offered to the
general public; and
4. Borrowing from The Corporation or any other institution, on terms or
conditions (or through a process) which would violate any applicable
law, rule or regulation, or which would be contrary to the policies
of The Corporation.
The Policy of The Corporation and banking laws impose various restrictions on
certain "insider" loan transactions. Please refer to the Bank's Insider Lending
Policy & Procedures and Regulation O Compliance Policy.
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BUSINESS DEALINGS
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In addition to lending transactions, any dealings between The Corporation and
directors, executive officers, principal shareholders and related interests of
such persons, including transactions between The Corporation and the spouses,
children, parents, or siblings of The Corporation's insiders, must constitute
arm's-length transactions.
The following insider transactions are prohibited:
- --------------------------------------------------
1. A transaction or business dealing which is not intended for the
benefit of The Corporation but is merely an accommodation for the
insider's benefit;
2. A transaction which is not made on terms and under circumstances
which are substantially the same or as favorable as those prevailing
at the time for comparable business dealings with persons not
covered by the Policy; or
3. A transaction which is an investment in real estate, either directly
or indirectly, whether in the form of an equity interest,
partnership, joint venture, or any other form, if The Corporation,
in substance, has virtually the same risks and potential rewards as
an investor in the borrower's investment in real estate.
With regard to use of The Corporation's property and personnel, the Boards have
taken the position that all supplies, copy services, postage meter and support
personnel are for The Corporation's business and should not be used for personal
needs. Any questions or areas of confusion regarding this Policy should be
addressed to the Chief Executive Officer.
Conflicts of interest between officers, employees, principal shareholders or
directors of The Corporation and customers of The Corporation (or their related
interests) shall be avoided at all times. Conflicts of interest include, but are
not limited to, compensation from or investments in customers of The Corporation
or their related interests. Similarly, the unauthorized use of privileged
information constitutes a conflict of interest. Any officer, employee, principal
shareholder or director contemplating a transaction that may involve a conflict
of interest must obtain the proper approval of the Board of Directors of the
Holding Company or the Bank, respectively. Any such approval shall not be deemed
a waiver of this provision of this Policy.
The following activities are prohibited:
- ----------------------------------------
1. A direct or indirect financial interest including joint ventures or
directorship in or with a supplier, customer or appropriate
prospective customer without prior disclosure to and prior approval
from the appropriate Board of Directors.
2. Receiving preferential treatment from customers of The Corporation
because of your position with The Corporation.
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3. Selling or leasing goods or services to The Corporation without
prior disclosure and approval by a majority of disinterested
directors. In addition, the terms and conditions of transactions
must be not less favorable than those offered to others.
4. Receiving discounts on personal purchases from suppliers or
customers because of business relationships with The Corporation.
5. Giving preferential treatment to a customer, supplier or prospective
customer because of any favor, gratuity or outside business
relationship with such customer, supplier or prospective customer.
Actual conflicts of interest and any known potential conflicts of interest must
be disclosed to the appropriate Board of Directors, including those arising due
to business or personal relationships with customers, suppliers, business
associates, or competitors of The Corporation.
CONFIDENTIALITY
- ---------------
Information obtained in the course of evaluating a loan application, servicing a
loan and other information including financial, personal and other information
on customers, suppliers, prospective customers, employees or applicants is
strictly confidential. Use of such information to further your own business
interests should be scrupulously avoided. In addition, such information may not
be shared or made available to individuals outside The Corporation.
Use of material inside information in your own investments can constitute a
violation of federal securities laws. As long as this material inside
information is not fully disclosed to the investing public, you must abstain
from trading in, recommending, or discussing the securities concerned.
The stock of the Holding Company is registered pursuant to the Securities
Exchange Act of 1934. Therefore, each employee, officer, and director should be
familiar with the basic requirements of both state and federal securities laws
with regard to trading in the Holding Company's stock. The requirements are
summarized in the following policies adopted by the Boards of Directors of the
Holding Company and the Bank: Policies and Procedures on Confidential
Information and the Avoidance of Insider Trading and the Policy Regarding
Pre-clearance of Insider Transactions and Procedures for Officers and Directors
Pursuant to Section 16 of the Securities and Exchange Act of 1934, as Amended.
In general, the securities laws prohibit abuse of special insider knowledge with
regard to trading in the Holding Company's stock. Accordingly, you may not take
advantage of material non-public information, such as current earnings, proposed
major reorganizations or other transactions which could significantly affect the
value of the stock by buying, selling or recommending the stock of the Holding
Company. It is advisable to review The Corporation's Policies and Procedures on
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Confidential Information and the Avoidance of Insider Trading before entering
into a stock transaction.
OUTSIDE EMPLOYMENT
- ------------------
With respect to an employee of The Corporation, employment is a full-time career
unless otherwise provided by the appropriate Board of Directors (or in the case
of a non-officer employee, as provided by executive management). The undivided
interest and loyalty of employees is important to the continued success of The
Corporation. Thus, employment with outside firms is permitted only if it is
approved in advance by the appropriate Board of Directors (or in the case of a
non-officer employee, executive management). In determining whether to approve
such outside employment, the appropriate Board of Directors (or in the case of a
non-officer employee, executive management) shall consider all relevant factors,
including but not limited to the following:
1. Will it interfere with work assignments or performance;
2. Will it involve the possibility of adverse publicity to The
Corporation;
3. Is it with a competitor, supplier or customer;
4. Does it imply sponsorship by The Corporation; and
5. Does it involve serving as a director, officer, manager or
consultant.
Any such approval shall not be deemed a waiver of this provision of this Policy.
In addition, certain affiliations by directors, officers and employees are
specifically prohibited by law. Examples of such prohibitions include serving as
a director, officer, or employee of:
1. A public utility holding company or its affiliates (15 U.S.C.
ss.79q(c)); and
2. An interstate power company (16 U.S.C. ss.825d(b) or having certain
specified affiliations with a registered investment company (15
U.S.C. ss.80a-10(c)).
In addition, the Depository Institutions Management Interlocks Act prohibits a
"management official" (officer, director, advisory director or the nominee of
such persons) of The Corporation from serving as a "management official" of
another depository institution in the same community or one that is contiguous
or adjacent within ten miles (12 U.S.C. ss.3201 et seq.).
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CONTRIBUTIONS - POLITICAL ACTIVITIES
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The Corporation, as a responsible citizen, encourages contributions to worthy
charitable, social and educational causes. However, due to the requirements of
the working environment, employee contributions to political or charitable
organizations may not be solicited on The Corporation's premises or during
working hours without prior management approval. Officers and employees shall
not contribute directly or indirectly on behalf of The Corporation, time, money,
service or favors to political parties, candidates or workers. The Corporation
is prohibited from engaging in politics or making political contributions
including the use of its facilities and/or supplies.
Any officer or employee who wishes to take an active role as a political
candidate for any elective public office or is considered being appointed to any
governmental or civic position, must discuss the details and receive prior
approval from the Chief Executive Officer and appropriate Board of Directors.
CREDIT PRACTICES
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It is important that all loans be made in a prudent manner. In addition, all
loans should be made in an arm's-length transaction or in such a manner as will
not reflect adversely on the integrity of our institution. Thus, you may not
extend credit or participate in any credit extension to a customer in the
following circumstances:
1. The proceeds of a loan are to be given to you or benefit you, your
family, or an entity in which you have a financial or other
interest;
2. The borrower, in turn, loans the proceeds of his loan to you, your
family, or an entity in which you have an interest;
3. The borrower uses the proceeds of the loan to pay your debts or
those of your family or an entity in which you have an interest;
4. The borrower uses the proceeds to purchase assets from you, your
family or an entity in which you have an interest;
5. The loan is made on a preferential rate which has not been
authorized by the Loan Committee or other appropriate authority
within the Bank;
6. The loan is made to an employee of a bank regulatory agency, which
has supervision over the Bank; or
7. The borrower obtains a loan from another bank on a preferential
basis as part of a reciprocal arrangement pursuant to which the Bank
extends credit to such other bank on a preferential basis.
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Additional rules apply to loans to executive officers, directors, and principal
shareholder. Please review the Bank's Insider Lending Policy & Procedures and
Regulation O Compliance Policy.
RECEIPT OF GRATUITIES
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There are certain circumstances in which an officer, director or employee of The
Corporation may be offered or wish to give a gratuity or some other thing of
value to a person who happens to be a customer or supplier of The Corporation or
is in some other way related to The Corporation. Typical examples include
situations in which the other individual is a family member or the proposed gift
or service properly furthers the interest of The Corporation by facilitating
business discussions in a normal and usual fashion, such as a business luncheon.
However, as a general rule, neither you nor your family may solicit or accept
gifts, fees, services or entertainment from customers, suppliers, or prospective
customers. In order to guide your conduct, make sure that you are familiar with
the Bank Bribery Act, 18 U.S.C. ss.215, of the Comprehensive Crime Control Act
of 1984. This statute is intended to prevent payment or receipt of anything of
value in support of a transaction with The Corporation or another financial
institution. As a general rule, you should be mindful that in instances in which
a benefit is given or received relating to a banking transaction, there is a
possibility of violating the law and The Corporation's Policy.
The following are intended to guide your conduct:
- -------------------------------------------------
1. Benefits of a nominal value ($50.00 or less), which are clearly
unconnected with any transaction with The Corporation may be
accepted from customers, suppliers, or prospective customers by The
Corporation's officers, employees or directors.
2. Tangible gifts or services or anything of value from customers,
suppliers, or prospective customers shall not be solicited or
accepted by any of The Corporation's officers, employees or
directors, for themselves or a third party, as a gift or condition
in connection with any transaction of The Corporation.
3. You may receive the normal amenities which facilitate the discussion
of The Corporation's business, such as a business luncheon, from a
customer, supplier or prospective customer, provided the expense
would be paid for by The Corporation as a reasonable business
expense if not paid for by another party. However, even those should
be of a nominal value.
4. You may receive a gift, service, or other thing of value from a
customer, supplier, or prospective customer of The Corporation when
that individual is a close family relative such as parent, child,
spouse, grandparent, or grandchild, and the gift is based on that
relationship.
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5. You may not be named as the recipient of a bequest or legacy under a
customer's will or as a personal representative of a customer's
estate unless the customer is a family member or the transaction has
been disclosed to and approved by appropriate senior management or
the appropriate Board of Directors.
6. You may accept advertising or promotional material of nominal value,
such as pens, pencils, notepads, key chains, calendar and similar
items.
7. You may accept normal and reasonable discounts, rebates, merchandise
or services which do not exceed those available to other customers.
8. You may accept normal and reasonable civic, charitable, educational,
or religious organization awards in recognition of service and
accomplishments.
LITIGATION
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No suits of any kind or for any reason are to be instituted in the name of The
Corporation by any officer without first fully discussing the matter with the
Chief Executive Officer. This rule would not apply to attachments where quick
action is necessary to protect The Corporation's position.
EMBEZZLEMENT
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Employees have a positive duty to report to management or the Audit Committee
any facts relative to a suspected embezzlement or any other suspected illegal
act committed by a fellow employee.
E-MAIL AND OTHER ELECTRONIC OR TELEPHONIC COMMUNICATIONS
- --------------------------------------------------------
All electronic and telephonic communication systems and all communications and
information transmitted by, received from, or stored in these systems are the
property of The Corporation and as such are to be used for job-related purposes.
The unauthorized use of any software and business equipment, including, but not
limited to, facsimiles, telecopiers, computers and copy machines for private
purposes is strictly prohibited.
Employees using this equipment for personal purposes do so at their own risk.
Further, employees are not permitted to use a code, access a file, or retrieve
any stored communication unless authorized to do so or unless they have received
prior clearance from an authorized supervisor. All pass codes are the property
of The Corporation. No employee may use a pass code or voice-mail access code
that has not been issued to that employee or that is unknown to The Corporation.
Moreover, improper use of the e-mail system or the Internet, i.e., spreading
offensive jokes or remarks, will not be tolerated. Employees who violate this
policy are subject to disciplinary action, up to and including discharge.
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To ensure that the use of electronic and telephonic communications systems and
business equipment is consistent with The Corporation's legitimate business
interests, authorized representatives of The Corporation may monitor the use of
such equipment from time to time. This may include a review of electronic
messages including e-mail and voice-mail messages.
OTHER REQUIREMENTS
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This Policy is not intended to be an exhaustive statement of all potential
conflicts of interest and all of the ethical requirements of Directors, Officers
and Employees of The Corporation under applicable state and federal law and
regulations. If any questions arise regarding the application of the
requirements of law and of this Policy to specific situations, such questions
should be promptly addressed to your supervisor, the Chief Executive Officer,
Chief Financial Officer or the Audit Committee.
The Chief Executive Officer and Chief Financial Officer shall be accountable to
the Audit Committee and Board of Directors for assuring adherence to this
Policy.
Compliance with the Policy is a condition of employment and failure to comply
may be a basis for disciplinary action, termination or may result in other legal
consequences.
August 26, 2005 /s/ John F. Perotti
------------------------------------
John F. Perotti
Chairman and Chief Executive Officer
ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 26, 2005.
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