<PAGE> 1
PROSPECTUS
BEVERLY NATIONAL CORPORATION
46,500 shares of Common Stock, $2.50 par value, offered pursuant
to Beverly National Corporation's 1987 Incentive Stock Option
Plan for Key Employees, as Adjusted, ("ISO Plan"), and 54,000
shares of Common Stock, $2.50 par value, offered pursuant to
Beverly National Corporation's 1987 Directors' Plan, as Amended
and Adjusted, ("Directors' Plan"), collectively referred to
herein as the Plans.
Beverly National Corporation ("Corporation") is offering or
may offer a maximum of 46,500 shares (subject to adjustment in
certain circumstances) of its Common Stock, $2.50 par value,
("Common Stock") to officers and employees of the Corporation
and its subsidiaries ("Subsidiaries"), as defined in the ISO
Plan, and a maximum of 54,000 shares (subject to adjustment in
certain circumstances) of its Common Stock to directors of the
Corporation and its subsidiaries, as defined in the Directors'
Plan, who have been or may in the future be granted options to
purchase such shares pursuant to the Plans. Such offers are or
will be made at the prices and on the terms and conditions
contained in the respective stock option agreements entered into
or to be entered into with each optionee.
Employees who purchase shares under the Plans will be free
to reoffer or resell those shares without restriction, except
for those employees who are Affiliates of the Corporation.
Affiliates may not resell such shares under this Prospectus;
they may resell only under a prospectus that is part of an
appropriate effective registration statement under the
Securities Act of 1933, as amended ("1933 Act"), or in
compliance with Rule 144 of the Rules and Regulations of the
Securities and Exchange Commission promulgated under the 1933
Act, or otherwise pursuant to an available exemption from
registration. In general, Affiliates are persons with power to
manage and direct the policies of the Corporation, such as its
executive officers and directors, and certain relatives of such
persons. Each employee who may be an Affiliate should, prior to
reselling or reoffering any option shares, consult counsel to
determine whether he or she may be subject to any of the
foregoing restrictions.
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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933
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The date of this Prospectus is January 22, 1996
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No person has been authorized to give any information or to
make any representations not contained in this Prospectus in
connection with the offering made by this Prospectus; and any
information or representations not contained herein must not be
relied upon as having been authorized by the Corporation. This
Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the securities to which this
Prospectus relates in any jurisdiction to any person to whom it
is unlawful to make such an offer or solicitation in such
jurisdiction.
Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Corporation
since the date hereof.
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TABLE OF CONTENTS
-----------------
Page
Additional Information 2
Incorporation by Reference 3
The Corporation 4
The ISO Plan 4
The Directors' Plan 8
Description of the Corporation's Common Stock 12
Legal Opinion 15
Miscellaneous 15
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ADDITIONAL INFORMATION
The Corporation has filed with the Securities and Exchange
Commission, Washington, D.C., a Registration Statement on Form
S-8 under the 1933 Act relating to the shares of Common Stock
offered hereby. For further information, reference is made to
the Registration Statement, including the Exhibits filed as a
part thereof. Statements contained in this Prospectus as to the
provisions of the Plan and the stock option agreements are not
complete and in each instance reference is made to the Plan and
agreements.
The Corporation is subject to informational requirements
under Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and in accordance therewith files
reports and other information with the Securities and Exchange
Commission ("Commission"). Reports and other information
concerning the Corporation can be inspected and copied at the
public reference facilities maintained by the Commission at its
offices at 450 Fifth Street, N.W., Washington, D.C. 20549; as
<PAGE> 3
well as at the Regional offices of the Commission at 500 W.
Madison, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
INCORPORATION BY REFERENCE
The following documents filed by the Corporation with the
Commission are incorporated by reference in this Prospectus:
(a) The Corporation's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994; and (b) the Corporation's
Quarterly Reports on Form 10-QSB for the quarters ended March
31, 1995, June 30, 1995 and September 30, 1995. Documents filed
by the Corporation with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the 1934 Act, subsequent to the
date of this Prospectus and prior to the filing of
post-effective amendments which indicate that all the securities
offered by this Prospectus have been sold or which deregister
all the securities remaining unsold, shall be deemed to be
incorporated by reference into this Prospectus to be part hereof
from the date of filing of such documents. These documents are
or will be available for inspection and copying at the locations
identified above. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified
or superseded for all purposes to the extent that a statement
contained in this Prospectus or in any other document which also
is incorporated herein by reference modifies or replaces such
statement. Any such statement as modified or superseded shall
not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The financial statements and schedules of the Corporation
incorporated by reference in the Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 1994 have been
examined by Shatswell, MacLeod & Company, P.C., certified public
accountants, as set forth in their report included therein and
incorporated herein by reference. The financial statements and
schedules referred to above are incorporated herein by reference
in reliance upon such report and upon the authority of such firm
as experts in auditing and accounting.
The Corporation shall deliver or cause to be delivered to
each employee to whom this Prospectus is sent or given a copy of
the Corporation's annual report to shareholders for its last
fiscal year. If such employee shall otherwise receive a copy of
such report, the Corporation will promptly furnish without
charge a copy of such report on written request of the employee.
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The Corporation undertakes to provide without charge to
each person to whom a Prospectus is delivered, upon written or
oral request of such person, a copy of any and all information
that has been incorporated by reference in this Prospectus (not
including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by
reference into the information that the Prospectus
incorporates). Such request should be directed to Peter E.
Simonsen, Treasurer, Beverly National Corporation, 240 Cabot
Street, Beverly, Massachusetts 01915.
THE COMPANY
The Corporation, a Massachusetts corporation, is a bank
holding company registered under the Bank Holding Company Act of
1956, as amended. The Corporation was incorporated in 1984 and
became a one-bank holding company through the acquisition of all
of the common stock of Beverly National Bank ("Bank"). The
Corporation's principal executive office is located at 240 Cabot
Street, Beverly, Massachusetts 01915 (508) 922-2100.
THE ISO PLAN
Adoption and Adjustment
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On November 11, 1987, the Board of Directors of the
Corporation ("Board") adopted the ISO Plan, subject to the
approval of the shareholders of the Corporation, which approval
was obtained at the Annual Meeting of Shareholders in March of
1988.
The ISO Plan originally covers 18,700 shares. Pursuant to
the terms of the ISO Plan, an increase in the number of shares
covered by the ISO Plan was made to reflect a 3-for-1 stock
split effected in the form of a stock dividend on August 15,
1994, so that, as of the date hereof, the total number of shares
covered by the ISO Plan was 56,100. Appropriate adjustments
were also made to the number of shares subject to outstanding
options under the ISO Plan and the purchase price of each share
subject to an option under the ISO Plan.
As of the date hereof, options to purchase up to 46,500
shares of the Corporation's Common Stock were outstanding under
the ISO Plan. As of that date, no options to purchase shares
had been exercised under the ISO Plan.
Nature and Purpose of the ISO Plan
- ----------------------------------
Subject to certain limitations, the ISO Plan authorizes the
grant of incentive stock options ("Options") to purchase shares
of Common Stock to officers and employees of the Corporation and
its Subsidiaries. As of the date hereof, ten employees of the
Corporation and its subsidiaries have been granted Options.
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The purpose of the ISO Plan is to provide an incentive to
certain employees of the Corporation and its Subsidiaries to
perform exceptional services and to devote their full abilities
and industry to improve the operations of the Corporation and
its Subsidiaries and to offer inducements to such employees to
accept and continue employment with the Corporation and its
Subsidiaries, by offering employees options to purchase shares
of the Corporation's Common Stock which may qualify for
treatment as incentive stock options under the Internal Revenue
Code of 1986, as amended.
Administration
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The ISO Plan provides that it is to be administered by the
Board of Directors. Under the ISO Plan, the members of the
Board who are not employees of the Corporation and its
Subsidiaries are not eligible to receive Options. The present
members of the Board of Directors are:
Name Relationship with the Company
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Lawrence M. Smith President & Director
Richard H. Booth Director
Neiland J. Douglas, Jr. Director
John N. Fisher Director
John L. Good, III Director
Alice B. Griffin Director
Clark R. Smith Director
Barry A. Sullivan Director
James D. Wiltshire Director
Within the limits set by the ISO Plan, the Board has
discretion to determine the individuals to whom Options will be
granted, the number of shares subject to each Option, the date
or dates at which Options will be granted, and the manner in
which such Options may be exercised. In selecting the officers
and employees of the Corporation and its Subsidiaries to whom
Options are granted, the Board may take into account the nature
of the services rendered or to be rendered by such persons,
their potential contributions to the success of the Corporation
and its Subsidiaries and such other factors as the Board shall
deem relevant.
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Eligibility and Extent of Participation
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Options may be granted under the ISO Plan for such number
of shares of Common Stock and to such officers and employees as
the Board may from time to time determine. An optionee may be
granted more than one Option.
The aggregate fair market value, determined at the date of
grant, of shares with respect to which any individual's Options
are exercisable for the first time during any calendar year may
not exceed $100,000.
Shares Subject to the Plan
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The ISO Plan, as amended and adjusted, authorizes the grant
of Options covering 56,100 shares of Common Stock (subject to
adjustment in certain circumstances). If Options granted under
the ISO Plan expire or terminate without having been exercised
in full, new Options may be granted in their place. The number
of shares that may be made subject to Options under the ISO
Plan, as well as the number of shares subject to Options that
have already been granted, and the price per share, are subject
to adjustment in certain circumstances such as stock dividends,
stock splits, recapitalizations and other similar events.
Outstanding Options
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There were outstanding as of the date hereof the following
Options at the per share exercise price indicated:
Number of Shares Per Share
Subject to Option Exercise Price
----------------- --------------
25,950 (1) $14
2,850 (2) $14
17,700 (3) $14
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(1) These Options are exercisable in full immediately.
(2) These Options are exercisable in four equal annual
installments commencing August 1, 1993.
(3) These Options are exercisable in ten (10) equal annual
installments commencing August 1, 1993.
Option Price
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The purchase price of the shares subject to Options under
the ISO Plan is the fair market value of the Common Stock on
<PAGE> 7
the date the Option is granted. Fair market value is determined
by the Board in good faith.
The full purchase price for each share purchased on the
exercise of an Option under the ISO Plan is payable in cash at
the time of exercise.
Option Periods
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Options granted under the ISO Plan will expire ten years
after they are granted, or on such date prior thereto as may be
fixed by the Board of Directors, unless earlier terminated in
the event of death of the optionee or termination of his
employment, as described below.
Termination of Employment, Death and Non-Assignability
- ------------------------------------------------------
Options are not assignable but may be transferred by will
or by the laws of descent and distribution, and during the
optionee's lifetime are exercisable only by the optionee.
Options terminate not later than three (3) months after
termination of the optionee's employment with the Corporation
and its Subsidiaries. However, if an optionee's employment
terminates by reason of death or total and permanent disability,
the optionee, or his legal representative, may exercise
outstanding Options within a period of 12 months after such
termination. If an optionee's employment terminates for
voluntary retirement or temporary or partial disability, the
optionee may generally exercise outstanding Options within three
months of such termination.
Taxation
- --------
Options are intended to qualify for treatment under Section
422 of the Internal Revenue Code ("Code"). The following
discussion of the Federal income tax consequences of the
granting and exercise of Options, and the sale of Common Stock
acquired on the exercise of Options, is based on an analysis of
the Code as in effect on the date of this Prospectus and the
rulings and regulations published thereunder before such date.
The rules contained in the applicable provisions of the Code and
the regulations and rulings thereunder are quite technical, so
that the description of Federal tax consequences set forth
herein is necessarily general in nature and does not purport to
be complete. Optionees may also be subject to state or local
income tax consequences in the jurisdictions in which they work
or reside. Optionees cannot rely upon this discussion for
advice regarding their individual situations and are advised to
seek professional individual counsel.
<PAGE> 8
Optionees do not realize income for regular tax purposes at
the time of grant or exercise of an Option. Recognition of such
income is postponed until the optionee disposes of the shares of
Common Stock. The amount of income recognized will generally be
equal to the difference between the fair market value of the
shares on the date of disposition and the exercise price.
The Corporation is entitled to a deduction for Federal
income tax purposes only to the extent that ordinary income is
realized by the optionee as a result of a disposition prior to
termination of any requisite holding period.
The excess of the fair market value of the shares on the
date of exercise over the option price is an item of tax
preference under the alternative minimum tax. Under certain
circumstances, the exercise of an Option may result in the
imposition of the alternative minimum tax. If payable, the
alternative minimum tax will reduce the favorable tax
consequences for the employee on acquiring shares pursuant to
the exercise of an Option. Because the application of the
alternative minimum tax depends on the employee's overall tax
situation (reflecting, in part, the amount of his taxable
income, the amount and character of his itemized deductions and
his tax preference items), an employee should consult his own
tax advisor to determine the course of action which would be
most appropriate in his or her situation before Options are
exercised.
THE DIRECTORS' PLAN
Adoption and Adjustment
- -----------------------
On November 11, 1987, the Board of the Corporation adopted
the Directors' Plan.
The Directors' Plan originally covered 12,000 shares. In
August of 1993, Board approved an amendment to the Directors'
Plan increasing the number of shares for which options could be
granted thereunder to 24,000. In April of 1994, the Board
approved a second amendment increasing the number of shares to
36,000. Pursuant to the terms of the Directors' Plan, an
additional increase in the number of shares covered by the
Directors' Plan was made to reflect a 3-for-1 stock split
effected in the form of a stock dividend on August 15, 1994, so
that, as of the date hereof, the total number of shares covered
by the Directors' Plan was 108,000. Appropriate adjustments was
also made to a number of shares subject to outstanding options
under the Directors' Plan subject to the purchase price of each
share to an option thereunder.
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As of the date hereof, options to purchase up to 54,000
shares of the Corporation's Common Stock were outstanding under
the Directors' Plan. As of the date hereof, no options to
purchase shares had been exercised under the Directors' Plan.
Nature and Purpose of the Directors' Plan
- -----------------------------------------
Subject to certain limitations, the Directors' Plan
authorizes the grant of incentive stock options ("Options") to
purchase shares of Common Stock to Directors of the Corporation
and its Subsidiaries. As of the date hereof, nine (9) Directors
and one (1) former Director of the Corporation and its
Subsidiaries have been granted options.
The purpose of the Directors' Plan is to provide an
incentive to certain Directors of the Corporation and its
Subsidiaries to perform exceptional services and to devote their
full abilities in industry to improve the operations of the
Corporation and its Subsidiaries and to offer inducements to
such Directors to accept and continue their directorships with
the Corporation and its Subsidiaries.
Administration
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The Directors' Plan provides that it is to be administered
by the Board. Present members of the Board are listed above
under the description of the ISO Plan.
Subject to the terms and conditions of the Directors' Plan,
the Board may from time to time grant Options thereunder upon
such terms and conditions as they may deem appropriate. The
Board may rely upon the advice of a Compensation Committee or
such other person or persons as they determine appropriate in
making determinations to award Options under the Directors' Plan.
Eligibility and Extent of Participation
- ---------------------------------------
Options may be granted under the Directors' Plan for such
number of shares of Common Stock and to such Directors as the
Board may from time to time determine. An optionee may be
granted more than one Option.
Shares Subject to the Plan
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The Directors' Plan, as amended and adjusted, authorizes
the grant of Options covering 108,000 shares of Common Stock
(subject to adjustment in certain circumstances). Options
granted under the Directors' Plan expire or terminate without
having been exercised in full, new Options may be granted in
their place. The number of shares that may be made subject to
Options under the Plan, as well as the number of shares subject
to Options that have already been granted, and the price per
share, are subject
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to adjustment in certain circumstances such stock dividends,
stock splits, recapitalizations and other similar events.
Outstanding Options
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There were outstanding as of the date hereof, the following
Options at the per share exercise price indicated:
Number of Shares Per Share
Subject to Option Exercise Price
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17,400 (1) $11.90
35,100 (2) $11.90
1,500 (3) $11.90
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(1) These Options are exercisable in full immediately.
(2) These Options are exercisable in ten (10) equal annual
installments commencing August 1, 1993.
(3) These Options are exercisable in ten (10) equal annual
installments commencing August 1, 1995.
Option Price
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The purchase price of the shares subject to Options under
the Directors' Plan is the fair market value of the Common Stock
on the date the Option is granted. The full purchase price for
each share purchased on the exercise of an Option under the
Directors' Plan is payable in cash at the time of exercise.
Options
- -------
Options granted under the Directors' Plan will expire ten
(10) years after they are granted, or on such date prior thereto
as may be fixed by the Board unless earlier terminated in the
event of death of the optionee or termination of his employment,
as described below.
Termination of Employment, Death and Non-Assignability
- ------------------------------------------------------
Options are not assignable but may be transferred by will
or by the laws of descent and distribution, and during the
optionee's lifetime are exercisable only by the optionee.
Options terminate not later than three (3) months after
termination of the optionee's employment with the Corporation
and its Subsidiaries. However, if an optionee's employment
<PAGE> 11
terminates by reason of death, retirement, or total and
permanent disability, the optionee, or his legal representative,
may exercise outstanding Options within a period of 12 months
after such termination. If an optionee's employment terminates
due to temporary or partial disability, the optionee may
generally exercise outstanding Options within three months of
such termination.
Taxation
- --------
Options are not intended to qualify for treatment under
Section 422 of the Internal Revenue Code ("Code"), and
therefore, the Options will be subject to the general provisions
of Code Section 83 entitled "Property Transferred In Connection
With Performance of Services". The following discussion of the
Federal income tax consequences of the granting and exercise of
Options, and the sale of Common Stock acquired on the exercise
of Options, is based on an analysis of the Code as in effect on
the date of this Prospectus and the rulings and regulations
published thereunder before such date. The rules contained in
the applicable provisions of the Code and the regulations and
rulings thereunder are quite technical, so that the description
of Federal tax consequences set forth herein is necessarily
general in nature and does not purport to be complete.
Optionees may also be subject to state or local income tax
consequences in the jurisdictions in which they work or reside.
Optionees cannot rely upon this discussion for advice regarding
their individual situations and are advised to seek professional
individual counsel.
Optionees do not realize income for tax purposes at the
time of grant of an Option. Ordinary income is recognized when
the option is exercised. The amount of income recognized will
generally be equal to the difference between the fair market
value of the shares on the date the Options are exercised and
the exercise price. The subsequent sale of Common Stock results
in capital gains or loss.
The Corporation is entitled to a deduction for Federal
income tax purposes for wages paid to the optionee to the extent
that ordinary income is recognized by the optionee as a result
of a exercise of Options. Normal payroll tax withholdings are
required.
General (ISO Plan and Directors' Plan)
- -------
The Board is authorized to interpret the Plans, prescribe
rules and regulations related to the Plans, and make all other
determinations necessary or advisable for its administration.
The Board may at any time terminate the Plans or amend them as
the Board deems advisable. However, except as described under
the section entitled "Stock Subject to the Plan" in each of the
<PAGE> 12
Plans, the Board may not without further approval by the
stockholders amend the Plans so as to increase the number of
shares of the Common Stock as to which Options may be granted,
increase the total number of shares which may be acquired
pursuant to Options, or extend the period during which an Option
may be granted or exercised. In addition, the Board may not
amend the Plans so as to adversely affect the rights of an
optionee, without the consent of the individual involved.
The Plans will terminate in accordance with their terms not
later than November 11, 1997; Options granted before termination
will continue in effect thereafter in accordance with the terms
of the respective Plan pursuant to which it was granted.
The Plans are not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended and adjusted.
DESCRIPTION OF THE COMPANY'S COMMON STOCK
The Corporation is authorized to issue up to 2,500,000
shares of Common Stock, $2.50 par value. As of the date hereof,
there are 751,172 shares of Common Stock outstanding.
Dividend Rights
- ---------------
Holders of the Corporation's Common Stock are entitled to
receive such dividends as are declared by its Board of Directors
out of funds legally available therefor.
The Corporation's ability to pay dividends to its
shareholders is dependent, among other things, on the
Corporation's financial performance and on the Bank's ability to
pay dividends to the Corporation.
Voting Rights - Noncumulative Voting
- ------------------------------------
Holders of shares of the Corporation's Common Stock are
entitled to one vote for each share of stock held by them. The
shares of Common Stock of the Corporation do not have cumulative
voting rights. This means that the holders of more than 50% of
the shares of Common Stock of the Corporation 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 Corporation
at the meeting.
Holder's of the Corporation's Common Stock have preemptive
rights entitling them to participate in new issues of Common
<PAGE> 13
Stock in proportion to their stockholding at the time of issue
under such terms as the Board of Directors may determine to be
fair and reasonable. However, such rights are not available
where, among other things, the Corporation issues its Common
Stock (1) in consideration for services rendered, (2) to
discharge indebtedness, (3) as dividends, (4) in exchange for
other securities of the Corporation, (5) pursuant to any prior
or subsequent option or right granted by the Corporation, (6)
pursuant to the exercise, issuance or grant of any option to
purchase such shares to a Director or employee of the
Corporation, or (7) in consideration for any property other than
cash.
Liquidation Rights
- ------------------
In the event of dissolution of the Corporation and the
liquidation thereof, the holders of Corporation Common Stock
will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them.
Election of Directors
- ---------------------
Under both the Articles of Organization and the By-Laws of
the Corporation, the Board of Directors is divided into three
(3) approximately equal classes. One-third of the Corporation's
Directors is elected each year at the Annual Meeting of
Shareholders. Directors, in each case, serve until their
successors are duly elected and qualified or until their earlier
resignation, removal from office or death.
The provision of the Corporation'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 the Corporation's stock outstanding
and entitled to vote.
Extraordinary Corporate Transactions and Changes in Control
- -----------------------------------------------------------
Under the Corporation's Articles of Organization, neither
the Corporation nor any of its Subsidiaries, including Beverly
National Bank, may be a party to any merger or consolidation,
liquidation or dissolution, sale of all, substantially all or a
substantial part of its assets, or any reclassification or
recapitalization of its stock unless one of the following
conditions shall have been met: (i) the transaction has been
approved by at least 80% of the total number of shares of stock
of the Corporation entitled to vote on the matter not owned by
the entity other than the Corporation which is a party to the
transaction (the "Receiving Entity"); (ii) the transaction has
been approved by at least 80% of the members of the
Corporation's Board of Directors not affiliated with the
Receiving Entity or any affiliate or subsidiary thereof (the
"Unaffiliated Directors"); (iii) the transaction has been
approved by the
<PAGE> 14
holders of at least a majority of the share of each class of
stock of the Corporation entitled to vote on the matter not
owned by the Receiving Entity, and the aggregate of the cash and
fair market value of all consideration to be paid to holders of
the Corporation's stock is equal to the amounts determined under
a formula set forth in the Corporation's Articles of
Organization.
Certain acquisitions of the Corporation's Common Stock are
subject to the provisions of Chapter 110D of the Massachusetts
General Laws ("Chapter 110D"). Under Chapter 110D, a vote of
shareholders will be necessary to determine whether shares of
Common Stock acquired in a "control share acquisition" will have
voting rights. Subject to various exceptions set forth in
Chapter 110D, a control share acquisition generally means an
acquisition of Common Stock in which any person, including his
associates, acquires beneficial ownership of stock which, when
aggregated with all other stock of the Corporation owned by such
person, increases his voting power to one of the following
ranges of voting power: (i) one fifth or more but less than one
third, (ii) one third or more less than a majority, or (iii) a
majority or more. All shares acquired within ninety days before
or after a control share acquisition or pursuant to a plan to
make a control share acquisition are deemed to be part of the
control share acquisition.
Under Chapter 110F, the Corporation may not engage in a
"business combination" with an "interested stockholder" for a
period of three years following the date that such stockholder
became an interested stockholder, unless (1) prior to such date
the Board of Directors approves either the business combination
or the transaction which results in the stockholder becoming an
interested stockholder, (2) upon consummation of the transaction
which results in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 90% of the
voting stock of the Corporation, or (3) on or subsequent to the
date the stockholder becomes an interested stockholder, the
business combination is approved by the Board of Directors and
authorized by at least 2/3 of the outstanding voting stock of
the Corporation not owned by the interested stockholder. The
term "interested stockholder" is generally defined to mean any
person other than the Corporation or a majority-owned subsidiary
who, together with associates and affiliates, is the owner of 5%
or more of the outstanding voting stock of the Corporation. In
certain instances involving acquisitions by brokers or dealers,
banks, or other entities, the 5% threshold is increased to 15%.
The term "business combination" includes any merger or
consolidation of the Corporation or any majority-owned
subsidiary of the Corporation with the interested stockholder;
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, except proportionately as a stockholder of the
Corporation, to or with the interested stockholder, of assets of
the Corporation or
<PAGE> 15
a subsidiary having a market value equal to 10% or more of
either the market value of the Corporation's assets or the
market value of the Corporation's outstanding stock; and certain
other transactions.
LEGAL OPINION
Craig and Macauley Professional Corporation, counsel for
the Corporation, will give its opinion as to the legality of the
Common Stock being offered hereby, indicating that when sold,
the Common Stock will be legally issued, fully paid and
non-assessable.
MISCELLANEOUS
In general, Article V, Section 9 of the Corporation's
By-Laws provides for indemnification of each director, officer,
employee or agent of the Corporation, any former director,
officer, employee or agent of the Corporation and any person
who, at the request of the Corporation, is or shall have been a
director, officer, employee or agent of another organization or
is serving or shall have served in any capacity with respect to
any employee benefit plan, against all liabilities and expenses
reasonably incurred by such person in connection with, or
arising out of, any action, suit or proceeding in which such
person may be a party defendant or with which he may be
threatened or otherwise involved, directly or indirectly, by
reason of his being or having been a director, officer, employee
or agent of the Corporation or such other organization or by
reason of his having served with respect to such employee
benefit plan, except in relation to matters as to which such
person shall be finally adjudged (other than by consent) in such
action, suit or proceeding not to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation or the participants or
beneficiaries of such employee benefit plan, as the case may be,
and, with respect to any criminal action or proceeding, only to
the extent that he had no reasonable cause to believe his
conduct was unlawful.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the Corporation pursuant to the
foregoing provisions, the Corporation has been informed that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable.
6438O
