<PAGE>
As filed with the Securities and Exchange Commission on March 1, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
CORNERSTONE BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Connecticut 06-1524044
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
-----------------
550 Summer Street
Stamford, CT 06901
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------
James P. Jakubek
Executive Vice President and Chief Operating Officer
Cornerstone Bancorp, Inc.
550 Summer Street
Stamford, CT 06901
(203) 356-0111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------
Copy to:
Leslie L. Davenport, Esq.
Shipman & Goodwin LLP
One American Row
Hartford, Connecticut 06103-2819
(860) 251-5918
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[X]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
------------------------
please check the following box.[_]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01....................... 310,291 $18.81 $5,836,573.71 $1,622.57
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based on the
average of the high and low prices reported on the American Stock Exchange
on February 23, 1999.
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<PAGE>
PROSPECTUS
CORNERSTONE BANCORP, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
310,291 SHARES
OF
Common Stock
_______________
We are providing you with a plan that makes it convenient for you to purchase
our common stock generally without brokerage commissions. You may have cash
dividends paid by us reinvested in shares of our common stock. You may also
make additional voluntary cash payments to the plan agent for the purchase of
additional shares. The plan agent will purchase shares of our common stock
generally from us on your behalf with the cash dividends and voluntary cash
payments quarterly at the current market price (the mean between the high and
low sales price) on the dividend payment date.
Our Common Stock is traded on the American Stock Exchange under the symbol
"CBN."
Our principal executive offices are located at 550 Summer Street, Stamford,
Connecticut 06901, and our telephone number is (203) 356-0111.
_____________
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS ON PAGE 3 IN THIS PROSPECTUS
BEFORE PURCHASING ANY OF THESE SHARES.
_____________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATIONS TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_____________
Prospectus dated March 1, 1999.
<PAGE>
RISK FACTORS
This prospectus, including the information incorporated by reference,
includes "forward looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act including, in
particular, the statements about our plans, strategies, and prospects. Although
we believe that our plans, intentions and expectations reflected in or suggested
by such forward-looking statements are reasonable, we can give no assurance that
such plans, intentions or expectations will be achieved. Important factors that
could cause actual results to differ materially from the forward looking
statements we make in this prospectus are set forth below and elsewhere in this
prospectus.
. Consolidation of the Banking Industry - We operate in a highly competitive
market and could be involved in the continued consolidation of the banking
industry which could adversely affect the value of our stock.
. Regulation of Financial Service Companies - We and our subsidiary are
subject to various federal and state regulations that apply to bank holding
companies and banks. The federal government, in particular, is considering
an overhaul of the regulations that apply to banks and other financial
service companies. We are unable to predict the impact of any change in the
regulatory environment, but changes could adversely affect the value of our
stock.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549,
7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the
SEC at 1-800-SEC-0330 for further information on public reference rooms. Our
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934. This prospectus is part of a registration statement we filed with
the SEC. The documents we incorporate by reference are:
(1) Annual Report on Form 10-KSB for the year ended December 31, 1997 for
our predecessor, Cornerstone Bank (which includes basic and diluted
earnings per share amounts that have not been adjusted to reflect the
10% stock dividend distributed in 1998);
(2) Quarterly Reports on Form 10-QSB for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998 for our predecessor,
Cornerstone Bank; and
(3) Current Report on Form 8-K dated March 18, 1998 for our predecessor,
Cornerstone Bank, and our Current Report on Form 8-K12G3 dated March
1, 1999; and
(4) The description of the common stock of our predecessor, Cornerstone
Bank, contained in its Form F-1 filed on September 14, 1994 and of our
common stock contained in our Current Report on Form 8-K12G3 filed on
March 1, 1999, and any amendment or report filed to update this
description.
Note: The filings for our predecessor are available at the Federal Deposit
Insurance Corporation at 550 17th Street, N.W., Washington, D.C. 20420.
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<PAGE>
You may request a copy of these filings, at no cost, by writing or
telephoning:
Leigh A. Hardisty, CFO
Cornerstone Bancorp, Inc.
550 Summer Street
Stamford, CT 06901
(203) 356-0111
You should rely only on the information incorporated by reference or contained
in this prospectus. We have not authorized anyone else to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
prospectus.
THE COMPANY
Cornerstone Bancorp, Inc. ("we" or the "Company") is a Connecticut
corporation, incorporated in 1998 to serve as a bank holding company to provide
executive, financial and administrative functions for its subsidiaries. We are
a successor registrant to Cornerstone Bank (the "Bank"). We became the owner of
all common stock of the Bank on March 1, 1999. The Bank is a Connecticut
corporation, incorporated in 1985, and is our sole subsidiary.
The Bank's business consists primarily of attracting deposits from the general
public and local businesses and investing or loaning these deposits. The Bank
originates loans collateralized by liens on commercial and residential
properties and engages in making secured and unsecured consumer installment and
commercial loans. The Bank engages in a full service commercial and consumer
banking business. The Bank offers retail banking services including demand,
savings and time deposits and commercial mortgage and consumer/installment
loans. Since its inception, the Bank's primary mission has been to serve the
banking needs of its community, the businesses in Fairfield County, Connecticut
(including minority-owned and businesses in low and moderate income areas) and
its citizens (including low and moderate income areas) while focusing on its
surrounding community towns and cities of Stamford, Greenwich, Darien and New
Canaan. The Bank conducts its operations through its main office located on 550
Summer Street in Stamford, Connecticut, its branch offices located on Hope
Street, West Broad Street and High Ridge Road in Stamford, Connecticut, and a
fourth branch located in Cos Cob, Connecticut.
THE PLAN
PURPOSE
The Dividend Reinvestment and Stock Purchase Plan (the "Plan") is designed
for all holders of at least 50 shares of common stock of the Company (the
"Common Stock") to provide you with a convenient way to:
. Increase your holdings of Common Stock automatically generally without
brokerage commissions or service charges.
. Make additional voluntary cash investments in any amount from $50 to $5,000
per quarter generally without brokerage commissions or service charges.
. Reduce record keeping. Detailed statements are mailed after each investment.
. Deposit all or part of your holdings of Common Stock with American Stock
Transfer & Trust Company ("AST"), the Plan Agent for safekeeping.
Because the shares of Common Stock will generally be purchased from the
Company, the Plan results in the Company's receipt of proceeds for working
capital and other general corporate purposes.
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<PAGE>
HOW THE PLAN WORKS
The Company's Plan is set forth below in a question and answer format.
1. WHO ADMINISTERS THE PLAN?
American Stock Transfer & Trust Company - not the Company - administers the
Plan. You should address all communications regarding the operation of the Plan
as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
1-800-278-4353
2. WHO IS ELIGIBLE TO PARTICIPATE?
Any registered owner of at least 50 shares of Common Stock is eligible to
participate. If your shares are registered in the name of a broker or other
nominee, and you want to participate, you must either make appropriate
arrangements with your broker or nominee to do so, or you must become a
shareholder of record by having a part or all of your shares transferred to your
own name. Shareholders who reside in a jurisdiction outside of the United
States in which it is unlawful for the Company to allow such holders to
participate are not eligible for the Plan.
If you cease to have record ownership (including any shares held for you by
AST) of at least 50 shares, AST will cease to reinvest all dividends and will
not accept any voluntary cash payment.
If you dispose of all shares represented by certificates registered in your
name on the books of the Company (other than the deposit of such shares with
AST), AST will continue to invest the dividends on the shares held by AST in
your account until otherwise notified in writing by you.
3. HOW DO I ENROLL IN THE PLAN?
You should complete an authorization form available at the Company and mail
it to AST at 40 Wall Street, New York, NY 10005. Your participation will begin
with the next dividend payment date fixed by the Board of Directors of the
Company (the "Dividend Investment Date") following receipt of your properly
completed and signed authorization form. If your authorization arrives after
the record date for that Dividend Investment Date, your participation will begin
with the next Dividend Investment Date. You should promptly notify AST of any
change in your address.
4. WHEN MUST MY VOLUNTARY CASH PAYMENT BE RECEIVED AND WHEN WILL MY
REINVESTMENT OF CASH DIVIDENDS AND VOLUNTARY CASH INVESTMENT BE MADE?
The reinvestment of cash dividends is automatically completed on the
Dividend Investment Date at a price determined in accordance with the provisions
of the Plan. Voluntary cash payments will also be invested on the Dividend
Investment Date or, if no dividend is declared for any quarter, on the last day
of such quarter which is a business day in Stamford, Connecticut (the "Cash
Investment Date").
Your participation will begin with the next Dividend Investment Date
following receipt of your properly completed and signed authorization form. If
you would like to make a voluntary cash payment, you should send AST a check or
money order in any amount from $50 to $5,000 per quarter with the tear off stub
that is attached to your statement of account. Cash dividends on the Common
Stock when and if declared by the Board of Directors are generally paid by the
Company on the 15th day (or next business day if the 15th day is not a business
day) of April, July, October and January and such dates, if a dividend is
declared, would be the Dividend Investment Dates. Since you will not receive
interest on any funds held by AST on your behalf, it is suggested that you make
any voluntary cash payments shortly (at least 10 days) before a Dividend
Investment Date. Voluntary cash payments
-5-
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must be received a minimum of two (2) days before a Dividend Investment or Cash
Investment Date. Any voluntary cash payment which cannot be invested will be
returned within 30 days following receipt.
In the case of a shareholder subject to backup withholding tax on dividends
to be reinvested under the Plan, the appropriate amount will be withheld and the
balance of the dividend otherwise payable will be invested in Common Stock.
5. HOW ARE MY DIVIDENDS AND VOLUNTARY CASH PAYMENT USED TO PURCHASE STOCK?
When your dividends and voluntary cash payment are given to AST, it will
purchase authorized but unissued shares of Common Stock directly from the
Company. However, the Company reserves the right to direct AST to make
purchases of the Common Stock on the open market at the then current market
price or in negotiated transactions. Common Stock will be purchased under the
Plan from the Company at the current market price per share which will be the
mean between the high and low sales prices on the American Stock Exchange on the
relevant Dividend Investment Date as reported by such exchange. If the relevant
Dividend Investment Date is not a trading day, or if the Common Stock does not
trade on such date, then the price will be determined as of the next preceding
day on which a trade is reported. If there is no trading in the shares of
Common Stock for at least one day during a five day trading period immediately
preceding the relevant Dividend Investment Date, the purchase price of the
Common Stock per share shall be determined by the Company on the basis of such
market quotations as it shall deem appropriate. AST credits you with both full
and fractional shares computed to three decimal points. Fractional shares start
earning dividends with the next dividend payment, just the way full shares do.
In making purchases for your account, AST may commingle your dividends and
voluntary cash payments with those of other participants. In the case of each
purchase, the price at which AST shall be deemed to have acquired Common Stock
for your account shall be the average price of all Common Stock purchased by AST
for participants in the Plan with their aggregate funds used for such purchase.
When the Common Stock purchased for you under the Plan is purchased
directly from the Company, as will generally be the case, no brokerage fees or
commissions will be charged. When the Common Stock purchased for you under the
Plan is purchased on the open market or in negotiated transactions, you will be
responsible for any brokerage fees or commissions charged. In addition, there
are no underwriting discounts or commissions payable by the Company since the
offering is not underwritten.
6. CAN I RECEIVE A REFUND ON VOLUNTARY CASH PAYMENTS?
You can receive a refund of cash payments provided AST receives a written
request within at least forty-eight hours before the money is invested.
7. HOW DO I KEEP TRACK OF MY INVESTMENT?
As soon as practicable after each reinvestment of dividends and any
voluntary cash payment, you will receive a detailed statement showing pertinent
data, including total funds received, total shares purchased, and the purchase
price per share. Please save these records. You will need these records when
you sell your stock to establish the cost basis of shares in order to determine
the taxable gain or loss on such sale for income tax purposes.
8. ARE REINVESTED DIVIDENDS TAXABLE?
Even though your dividends will be reinvested, they are subject to income
taxes as if they were paid to you in cash. The Internal Revenue Service takes
the position that any brokerage commissions paid by the Company on your behalf
are also taxable to you, but may be added to the price actually paid for shares
in determining taxable basis. The information return sent to you and to the
Internal Revenue Service by AST at year-end will contain applicable tax
information. PLEASE CONSULT YOUR TAX ADVISOR FOR SPECIFIC ADVICE AS TO THE
PROPER TAX TREATMENT OF THESE ITEMS.
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<PAGE>
9. WILL AST HOLD MY SHARES?
For your convenience and to guard against loss, theft or damage, AST will
hold the Common Stock purchased under the Plan in its name or in the name of its
nominee, and no certificates will be issued to you for the Common Stock
purchased unless so requested or until the account is terminated. Such requests
must be made in writing after the Common Stock has been purchased. No
certificates for fractional shares of Common Stock will be issued.
At your option, you may also deposit with AST certificates for shares of
Common Stock held in your own name. Certificates so deposited must be
accompanied by a letter from you requesting that the Common Stock be deposited
for safekeeping. AST shall hold such Common Stock in its name or in the name of
its nominee.
10. HOW WILL MY SHARES BE VOTED AT A MEETING OF SHAREHOLDERS?
AST will send you a form of proxy representing all shares of Common Stock
held by you in the Plan and in your own name. If you do not direct AST as to
how the shares are to be voted, AST will not vote such shares.
11. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND, DECLARES A STOCK SPLIT
OR HAS A RIGHTS OFFERING?
Any stock dividends or stock splits distributed by the Company on Common
Stock held by AST for you will be credited to your account. In the event that
the Company makes available to its shareholders rights to purchase additional
shares, or any other securities, AST will sell such rights accruing to Common
Stock held by AST for your account and invest the resulting funds in Common
Stock prior to or with the next regular Company cash dividend payment date. If
you wish to receive directly any such rights, you may do so by sending to AST,
at least two weeks prior to the rights offering record date, a written request
that certificates for Common Stock in your account be sent to you.
12. AM I FREE TO TERMINATE ENROLLMENT IN THE PLAN?
You may terminate enrollment at any time by completing the tear-off form of
your statement and submitting it to AST for processing. Any such notice
received by AST from you less than three business days prior to a dividend
record date shall not be effective until the dividends paid for such record date
have been invested and the additional shares credited to your account. As soon
as practicable after termination, AST will issue certificates to you, for the
full shares, held in your Plan account. All dividends of record will be sent to
you directly after receipt of your letter of termination. Fractional shares at
the time of termination will be converted to cash at the then-current market
price of Common Stock, and a check for the proceeds will be sent to you. If you
prefer, the full and fractional shares in your Plan account can be sold for you,
and you will receive the proceeds less brokerage commissions. In the event you
elect to have AST sell all of your shares, AST will use its best efforts to make
the sale on the American Stock Exchange, as soon as practicable, but no later
than ten trading days after receipt of the request. If you elect to have AST
sell your shares, you should be aware of the risk that the price of the Common
Stock may decrease between the time the request to sell is made and the time the
sale is completed. This risk is borne solely by you.
13. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Plan may be amended, supplemented or terminated by the Company or AST
at any time or times by mailing appropriate notice at least 30 days prior to the
effective date thereof to you at your last address of record. The amendment or
supplement shall conclusively be deemed to be accepted by you unless prior to
the effective date thereof AST receives written notice of the termination of
your account. AST may terminate your account at any time at its discretion.
14. MAY I DRAW CHECKS ON MY PLAN ACCOUNT?
No.
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<PAGE>
15. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND AST UNDER THE PLAN?
Neither the Company nor AST nor its nominees shall have any responsibility
beyond the exercise of ordinary care for any action taken or omitted pursuant to
the Plan, nor shall they have any duties, responsibilities or liabilities except
as expressly set forth in the Plan. Neither shall they be liable for any act
done in good faith or for any good faith omission to act, including, without
limitation, failure to terminate your account prior to receipt of written notice
of your death or with respect to the timing or the price of any purchase or
sale.
AST shall have no responsibility as to the market value of the Common Stock
acquired for your account except to the accurate calculation of such value
pursuant to the Plan.
USE OF PROCEEDS
The Company has no basis for estimating either the number of shares of Common
Stock that will ultimately be sold as part of the Plan or the prices at which
such shares will be sold. However, the Company proposes to use the net proceeds
from the sale of such shares for working capital purposes and for other general
corporate purposes.
LEGAL MATTERS
Shipman & Goodwin LLP, of Hartford, Connecticut, will issue an opinion as to
the legality of the shares.
EXPERTS
The financial statements of Cornerstone Bank, incorporated herein by
reference from Cornerstone Bank's Annual Report on Form 10-KSB for the year
ended December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
INDEMNIFICATION
The Company's Certificate of Incorporation provides that the personal
liability of any director to the Company or its shareholders for monetary
damages for breach of duty as a director in certain circumstances shall be
limited to an amount equal to the compensation received by the director for
serving the Company as a director during the year of the violation. The
limitations, however, do not affect the ability of the Company or its
shareholders to seek nonmonetary remedies, such as an injunction or rescission,
against a director for breach of his or her fiduciary duty.
The Company's Certificate of Incorporation also provides that directors,
officers and employees of the Company may be indemnified or reimbursed by the
Company for reasonable expenses actually incurred in connection with any action,
suit or proceeding, civil or criminal, to which they are made a party by reason
of being or having been a director, officer, or employee of the Company or of
any firm, corporation, or organization which they served in any such capacity at
the request of the Company; provided, however, that no person shall be so
indemnified or reimbursed relative to any matter in such action, suit, or
proceeding as to which he or she shall finally be adjudged to have been guilty
of or liable for gross negligence, willful misconduct or criminal acts in the
performance of his or her duties to the Company; and provided, further, that no
person shall be so indemnified or reimbursed relative to any matter in such
action, suit, or proceeding which has been made the subject of a compromise
settlement except with the approval of a court of competent jurisdiction, or the
holders of record of a majority of the outstanding shares of the Company, or the
Board of Directors, acting by vote of directors not parties to the action,
constituting a majority of the whole number of directors. The foregoing right
of indemnification or reimbursement shall not be exclusive of other rights of
which such persons may be entitled as a matter of law.
The Company maintains insurance for officers and directors against
certain liabilities, including liabilities under the Securities Act. The effect
of this insurance is to indemnify any officer or director of the Company against
expenses, including, without limitation, attorneys' fees, judgments, fines and
amounts paid in settlement, incurred by an officer or director upon a
determination that such person acted in good faith.
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<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant 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.
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<TABLE>
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Table of Contents Page
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Risk Factors.................................... 3
Where You Can Find More Information............. 3
The Company..................................... 4
The Plan........................................ 4
Purpose....................................... 4
How The Plan Works............................ 5
Use of Proceeds................................. 8
Legal Matters................................... 8
Experts......................................... 8
Indemnification................................. 8
</TABLE>
CORNERSTONE BANCORP, INC.
DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
PROSPECTUS
March 1, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses payable by the
registrant in connection with the distribution of the shares of Common Stock
registered hereby.
<TABLE>
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<S> <C>
SEC registration fee...................... $ 1,623
Legal fees and expenses................... 10,000
Accounting fees and expenses.............. 21,500
Printing expenses......................... 1,000
Miscellaneous............................. 1,000
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Total expenses....................... $35,123
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that the personal
liability of any director to the Company or its shareholders for monetary
damages for breach of duty as a director shall be limited to an amount equal to
the compensation received by the director for serving the Company as a director
during the year of the violation if such breach did not (1) involve a knowing
and culpable violation of law by the director; (2) enable the director or an
associate, as defined in subdivision (3) of Section 33-843 of the Connecticut
General Statutes, to receive an improper personal economic gain; (3) show a lack
of good faith and a conscious disregard for the duty of the director to the
Company under circumstances in which the director was aware that his conduct or
omission created an unjustifiable risk of serious injury to the Company; (4)
constitute a sustained and unexcused pattern of inattention that amounted to an
abdication of the director's duty to the Company; or (5) create liability under
Section 36a-58 or Section 33-757 of the Connecticut General Statutes. The
limitations summarized above, however, do not affect the ability of the Company
or its shareholders to seek nonmonetary remedies, such as an injunction or
rescission, against a director for breach of his or her fiduciary duty.
In addition, the Company's Certificate of Incorporation provides that any
person, his or her heirs, executors, or administrators may be indemnified or
reimbursed by the Company for reasonable expenses actually incurred in
connection with any action, suit or proceeding, civil or criminal, to which he
or she or they shall be made a party by reason of his or her being or having
been a director, officer, or employee of the Company or of any firm,
corporation, or organization which he or she served in any such capacity at the
request of the Company; provided, however, that no person shall be so
indemnified or reimbursed relative to any matter in such action, suit, or
proceeding as to which he or she shall finally be adjudged to have been guilty
of or liable for gross negligence, willful misconduct or criminal acts in the
performance of his or her duties to the Company; and, provided, further, that no
person shall be so indemnified or reimbursed relative to any matter in such
action, suit, or proceeding which has been made the subject of a compromise
settlement except with the approval of a court of competent jurisdiction, or the
holders of record of a majority of the outstanding shares of the Company, or the
Board of Directors, acting by vote of directors not parties to the same or
substantially the same action, suit, or proceeding, constituting a majority of
the whole number of directors. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights of which such persons, his
or her heirs, executors, or administrators, may be entitled as a matter of law.
The Company may, upon the affirmative vote of a majority of its Board of
Directors, purchase insurance to indemnify its directors, officers and other
employees to the extent that such indemnification is allowed in the preceding
paragraph. Such insurance may, but need not, be for the benefit of all
directors, officers or employees.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
II-1
<PAGE>
The Company maintains insurance for officers and directors against certain
liabilities, including liabilities under the Securities Act. The effect of this
insurance is to indemnify any officer or director of the Company against
expenses, including, without limitation, attorneys' fees, judgments, fines and
amounts paid in settlement, incurred by an officer or director upon a
determination that such person acted in good faith.
ITEM 16. EXHIBITS
The following is a list of exhibits filed as a part of this registration
statement or incorporated by reference herein:
Exhibit No. Description
- ----------- -----------
4.1 Certificate of Incorporation (Exhibit 4.1 to Cornerstone Bancorp,
Inc. Current Report on Form 8-K12G3 dated March 1, 1999). (1)
4.2 Bylaws (Exhibit 4.2 to Cornerstone Bancorp, Inc. Current Report on
Form 8-K12G3 dated March 1, 1999). (1)
5.1 Opinion and Consent of Shipman & Goodwin LLP as to the legality of
the securities to be registered. (2)
23.1 Consent of Shipman & Goodwin LLP (included in Exhibit 5.1). (2)
23.2 Consent of Deloitte & Touche LLP. (2)
24.1 Power of Attorney (included in signature page of this Registration
Statement). (2)
27.1 Financial Data Schedule. (2)
___________
(1) Incorporated by reference.
(2) Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose 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 the securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
II-2
<PAGE>
SIGNATURES
Pursuant to requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford, State of Connecticut, on this 17th day of
February, 1999.
By: /s/ Norman H. Reader
--------------------
Norman H. Reader
President and Chief Executive Officer
POWER OF ATTORNEY
Know All Persons by These Presents, that each person whose signature appears
below constitutes and appoints Norman H. Reader and James P. Jakubek, and each
of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him or her and in his or her name,
place and stead, in any and all capacities to sign any and all amendments
(including, without limitation, post-effective amendments) to this registration
statement, to sign any and all additional registration statements relating to
the same offering of securities as this registration statement that are filed
pursuant to Rule 462(b) of the Securities Act and to file the same, with all
exhibits thereto, and other documents in connection therewith, with full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, of their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
_________________
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Norman H. Reader Director, President and Chief Executive February 17, 1999
- ------------------------------------------ Officer
(Norman H. Reader) (Chief Executive Officer)
/s/ James P. Jakubek Director, Executive Vice President and February 17, 1999
- ------------------------------------------ Chief Operating Officer
(James P. Jakubek)
/s/ Leigh A. Hardisty Vice President, Chief Financial Officer February 17, 1999
- ------------------------------------------ and Secretary
(Leigh A. Hardisty) (Chief Financial Officer and Chief
Accounting Officer)
/s/ Joseph S. Field Jr. Director February 17, 1999
- ------------------------------------------
(Joseph S. Field Jr.)
Director February 17, 1999
- ------------------------------------------
(J. James Gordon)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Stanley A. Levine Director February 17, 1999
------------------------------------------
(Stanley A. Levine)
/s/ Joseph A. Maida Director February 17, 1999
------------------------------------------
(Joseph A. Maida)
/s/ Melvin L. Maisel Director February 17, 1999
------------------------------------------
(Melvin L. Maisel)
/s/ Ronald C. Miller Director February 17, 1999
- ------------------------------------------
(Ronald C. Miller)
/s/ Courtney A. Nelthropp Director February 17, 1999
------------------------------------------
(Courtney A. Nelthropp)
/s/ Martin Prince Director February 17, 1999
- ------------------------------------------
(Martin Prince)
Director February 17, 1999
- ------------------------------------------
(Richard M. Sontag)
Director February 17, 1999
- ------------------------------------------
(Patrick Tisano)
/s/ Dr. Joseph D. Waxberg Director February 17, 1999
------------------------------------------
(Dr. Joseph D. Waxberg)
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
4.1 Certificate of Incorporation (Exhibit 4.1 to Cornerstone Bancorp, Inc.
Current Report on Form 8-K12G3 dated March 1, 1999). (1)
4.2 Bylaws (Exhibit 4.2 to Cornerstone Bancorp, Inc. Current Report on Form 8-K12G3
dated March 1, 1999). (1)
5.1 Opinion and Consent of Shipman & Goodwin LLP as to the legality of the
securities to be registered. (2)
23.1 Consent of Shipman & Goodwin LLP (included in Exhibit 5.1). (2)
23.2 Consent of Deloitte & Touche LLP. (2)
24.1 Power of Attorney (included in signature page of this
Registration Statement). (2)
27.1 Financial Data Schedule. (2)
</TABLE>
____________
(1) Incorporated by reference.
(2) Filed herewith.
E-1
<PAGE>
Exhibit 5.1
Shipman & Goodwin LLP
Counselors at Law
One American Row
Hartford, CT 06103-2819
Tel: 860.251.5000
___________________
March 1, 1999
Board of Directors
Cornerstone Bancorp, Inc.
550 Summer Street
Stamford, CT 06901
Re: Registration Statement on Form S-3 ("Registration Statement")
-------------------------------------------------------------
Relating to Shares of Common Stock of Cornerstone Bancorp, Inc.
---------------------------------------------------------------
Issuable under its Dividend Reinvestment and Stock Purchase Plan (the
---------------------------------------------------------------------
"Plan")
-------
Ladies and Gentlemen:
We have served as counsel to Cornerstone Bancorp, Inc., a Connecticut
corporation (the "Company"), in connection with the proposed sale by the Company
of a maximum of 310,291 shares of Common Stock of the Company (the "Shares")
pursuant to the Plan to which the Registration Statement relates.
As counsel to the Company, we have examined the Registration
Statement, including the Prospectus contained therein, and such other documents
as we have deemed necessary or appropriate in order to express the opinion set
forth below. In connection with our opinion hereinafter given, we have examined
and relied upon originals, or copies, certified or otherwise, identified to our
satisfaction, of such agreements, documents, certificates and other statements
of government officials, corporate officers and representatives, and such other
documents as we have deemed relevant and necessary as a basis for such opinion.
In such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of documents submitted to us as copies.
Based upon the foregoing, we are of the opinion that the Shares, when
issued as contemplated by the Plan and the Registration Statement, will be duly
authorized and legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus included in the Registration Statement. In giving
this consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ SHIPMAN & GOODWIN LLP
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cornerstone Bancorp, Inc. on Form S-3 of our report dated February 9, 1998,
appearing in the Annual Report on Form 10-KSB for the year ended December 31,
1997 of Cornerstone Bank, predecessor to Cornerstone Bancorp, Inc., and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Stamford, Connecticut
March 1, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 DEC-31-1997
<CASH> 4,272 4,927
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 21,595 10,515
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 24,934 22,754
<INVESTMENTS-CARRYING> 8,596 4,549
<INVESTMENTS-MARKET> 8,741 4,585
<LOANS> 70,364 78,958
<ALLOWANCE> 1,733 1,529
<TOTAL-ASSETS> 133,281 125,408
<DEPOSITS> 116,126 108,904
<SHORT-TERM> 1,576 2,510
<LIABILITIES-OTHER> 843 684
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 11 10
<OTHER-SE> 14,725 13,300
<TOTAL-LIABILITIES-AND-EQUITY> 133,281 125,408
<INTEREST-LOAN> 5,934 7,082
<INTEREST-INVEST> 1,534 1,658
<INTEREST-OTHER> 556 557
<INTEREST-TOTAL> 8,024 9,297
<INTEREST-DEPOSIT> 2,656 3,402
<INTEREST-EXPENSE> 2,705 3,460
<INTEREST-INCOME-NET> 5,319 5,837
<LOAN-LOSSES> 246 116
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 3,117 3,874
<INCOME-PRETAX> 2,492 2,471
<INCOME-PRE-EXTRAORDINARY> 1,465 1,425
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,465 1,425
<EPS-PRIMARY> 1.31 1.42<F1>
<EPS-DILUTED> 1.25 1.38<F1>
<YIELD-ACTUAL> 5.90 5.25
<LOANS-NON> 410 3,017
<LOANS-PAST> 1,188 313
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 1,529 1,660
<CHARGE-OFFS> 111 294
<RECOVERIES> 69 47
<ALLOWANCE-CLOSE> 1,733 1,529
<ALLOWANCE-DOMESTIC> 1,733 1,529
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
<FN>
<F1> Basic and diluted earnings per share for the year ended December 31, 1997
have not been adjusted for a 10% stock dividend distributed August 31,
1998. Basic and diluted earnings per share as adjusted for the 10% stock
dividend are $1.29 and $1.24 for the year ended December 31, 1997,
respectively.
</FN>
</TABLE>
