<PAGE>
As filed with the Securities and Exchange Commission on October 5, 1999
Registration Statement No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under the Securities Act of 1933
---------------
CAMDEN NATIONAL CORPORATION
(Exact name of Registrant as specified in its Charter)
MAINE 6022 01-0413282
(State or other
Jurisdiction of
Organization)
(Primary Standard Industrial Classification Code)
(I.R.S. Employer
Identification No.)
2 Elm Street
Camden, Maine 04843
(207) 236-9131
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
ROBERT W. DAIGLE
President
CAMDEN NATIONAL CORPORATION
2 Elm Street
Camden, Maine 04843
(207) 236-9131
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
---------------
Copies to:
William P. Mayer, Esq. John J. Gorman, Esq.
Goodwin, Procter & Hoar LLP Luse, Lehman, Gorman, Pomerenk &
Exchange Place Schick, P.C.
Boston, MA 02109 5335 Wisconsin Avenue, NW, Suite 400
Washington, DC 20015
---------------
Approximate date of commencement of proposed sale to the public: Upon the
consummation of the merger (the "Merger") of Camden Acquisition Subsidiary,
Inc., a wholly owned subsidiary of Camden National Corporation ("Camden"), with
and into KSB Bancorp, Inc. ("KSB"), pursuant to an Agreement and Plan of
Merger, dated as of July 27, 1999, which is described in the enclosed Joint
Proxy Statement/Prospectus.
<TABLE>
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Title of Each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered(1) Per Unit Offering Price Fee
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par
value................. 1,800,000(2) (3) $22,419,392(4) $776(5)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement also relates to such additional number of
shares of the Registrant's common stock as may be issuable as a result of a
stock dividend, stock split, split-up, recapitalization or other similar
event.
(2) Represents the estimated maximum number of shares of Camden common stock,
no par value, to be issued to stockholders of KSB in connection with the
Merger.
(3) Not applicable.
(4) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(1) and based on the average of the high and low
sales price per share of KSB common stock, par value $.01 per share, on
September 27, 1999 on the NASDAQ National Market, multiplied by an
aggregate of 1,304,401 shares of KSB common stock to be acquired by Camden.
(5) In accordance with Rule 457(b), the registration fee of $6,232 has been
reduced by $5,456, which was previously paid by the Registrant with respect
to the transaction described herein pursuant to Section 14(g) of the
Securities Exchange Act of 1934, as amended.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[Logo of Camden National Bank] [Logo of Kingfield Bank]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The boards of directors of Camden National Corporation and KSB Bancorp, Inc.
have approved an agreement and plan of merger that would result in the merger
of KSB with and into Camden. Following the merger, Camden will be the surviving
corporation.
The board of directors of each company believes that the merger is in the
best interests of its stockholders and unanimously recommends that its
stockholders vote to approve the merger agreement.
If you are a KSB stockholder, you will receive 1.136 shares of Camden common
stock for each share of KSB common stock you own. KSB stockholders typically
will not recognize federal income tax gain or loss for the Camden common stock
they receive. Camden common stock is listed on the American Stock Exchange
under the symbol "CAC." At your stockholders meeting, you will be asked to vote
on the merger agreement, the merger and other matters and transactions
contemplated by the merger agreement.
If you are a Camden stockholder, after the merger you will continue to own
your existing shares of Camden common stock. At your stockholders meeting, you
will be asked to vote on the merger agreement, the merger and the other matters
and transactions contemplated by the merger agreement, as well as the election
of two directors.
We cannot complete the merger unless it is approved by the affirmative vote
of the holders of at least (1) a majority of the outstanding shares of Camden
common stock entitled to vote and (2) a majority of the outstanding shares of
KSB common stock entitled to vote.
Robert W. Daigle
President and Chief Executive Officer of
Camden National Corporation
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend your
stockholders meeting, please take the time to vote on the proposal(s) submitted
at your meeting by completing and mailing the enclosed proxy card to us. If you
sign, date and mail your proxy card without indicating how you wish to vote,
your proxy will be counted as a vote in favor of the proposal(s) submitted at
your meeting. If you fail to return your proxy card, or if you fail to sign
your proxy card, the effect will be a vote against the merger unless you attend
your stockholders meeting and vote in person for the merger!
The dates, times and places of the stockholders meetings are as follows:
For Camden National Corporation stockholders:
November 16, 1999 at 3:30 p.m. local time
The Samoset Resort
Knox County Ballroom
220 Warrenton Street
Rockport, Maine 04856
For KSB Bancorp, Inc. stockholders:
November 16, 1999 at 5:00 p.m. local time
The Sugarloaf Inn
Carrabassett Valley, Maine 04947
This Joint Proxy Statement/Prospectus provides you with detailed information
about the merger and the other matters that will be submitted for stockholder
approval at Camden's and KSB's stockholders meetings. We encourage you to read
this entire document carefully. In addition, you may obtain information about
our companies from documents that we have previously filed with the Securities
and Exchange Commission.
John C. Witherspoon
President and Chief Executive Officer of
KSB Bancorp, Inc.
We urge our stockholders to consider those matters set forth in "Risk
Factors" beginning on page 9 of this Joint Proxy Statement/Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the shares to be issued under
this Joint Proxy Statement/Prospectus or passed upon the adequacy or
accuracy of this Joint Proxy Statement/Prospectus. Any representation to
the contrary is a criminal offense. The shares of Camden common stock
offered hereby are not savings accounts, deposits or other obligations of
any bank or non-bank subsidiary of any of the parties, and they are not
insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
Joint Proxy Statement/Prospectus dated October 6, 1999, and first mailed to
stockholders on or about October 7, 1999.
<PAGE>
IMPORTANT INFORMATION NOT INCLUDED IN THIS
JOINT PROXY STATEMENT/PROSPECTUS
This Joint Proxy Statement/Prospectus incorporates important business and
financial information about Camden and KSB that is not included in or delivered
with this document. We have listed the documents containing this information on
page 104. These documents are available to you without charge upon written or
oral request. In order to obtain these documents, please contact the following:
For Camden Stockholders:
Camden National Corporation
Two Elm Street
Camden, Maine 04843
Attention: Susan M. Westfall, Chief Financial Officer
Phone Number: (207) 236-9131, ext. 2165
For KSB Stockholders:
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Attention: John E. Thien, Chief Financial Officer
Phone Number: (207) 265-2090, ext. 1232
We must receive your request for documents no later than November 1, 1999 to
ensure that you receive the documents in time for your stockholders meeting.
<PAGE>
CAMDEN NATIONAL CORPORATION
Two Elm Street
Camden, Maine 04843
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Camden National Corporation, a Maine corporation, will hold a special
meeting of stockholders at The Samoset Resort, Knox County Ballroom, 220
Warrenton Street, Rockport, Maine 04856 on November 16, 1999 at 3:30 p.m. local
time for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of July 27, 1999, by and among Camden, Camden
Acquisition Subsidiary, Inc., a Delaware corporation and wholly-owned
subsidiary of Camden, KSB and Kingfield Savings Bank, a wholly-owned
subsidiary of KSB, and all of the matters and transactions contemplated by
the merger agreement or necessary to effectuate the merger, including the
issuance of shares of Camden common stock to the holders of KSB common
stock.
2. To elect two directors. The Board of Directors has nominated Theodore
C. Johanson and Winfield F. Robinson to serve as directors for terms to
expire at Camden's Annual Meeting of Stockholders in 2001 and 2002,
respectively.
3. To consider and act upon such other business and matters or proposals
as may properly come before the Camden meeting.
The merger and related matters and transactions are described more fully in
the attached Joint Proxy Statement/Prospectus, which includes as Annex A a copy
of the merger agreement.
The board of directors of Camden has fixed the close of business on October
4, 1999 as the record date for determining the stockholders of Camden entitled
to receive notice of and to vote at the Camden meeting. Only holders of record
of Camden common stock at the close of business on that date are entitled to
receive notice of and to vote at the Camden meeting. Camden will make available
for inspection by any stockholder a list of stockholders entitled to receive
notice of and to vote at the Camden meeting during ordinary business hours at
Camden's principal office, Two Elm Street, Camden, Maine 04843, for ten days
prior to the Camden meeting. Only business within the purposes described in
this notice may be conducted at the Camden meeting.
The board of directors of Camden unanimously recommends that you vote "FOR"
the approval of the merger agreement, the merger and the other matters and
transactions contemplated by the merger agreement, and "FOR" the election of
the two nominees for directors.
The board of directors of Camden requests that you fill in and sign the
enclosed proxy card and mail it promptly in the enclosed postage-prepaid
envelope. Any proxy that you deliver may be revoked prior to the Camden meeting
by a writing delivered to Camden stating that your proxy is revoked or by
delivery of a later dated proxy. Stockholders of record of Camden common stock
who attend the Camden meeting may vote in person, even if they have previously
delivered a signed proxy.
By Order of the Board of Directors of
Camden National Corporation
Arthur E. Strout
Secretary
Camden, Maine
October 6, 1999
<PAGE>
KSB BANCORP, INC.
Main Street
Kingfield, Maine 04947
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
KSB Bancorp, Inc., a Delaware corporation, will hold a special meeting of
stockholders at The Sugarloaf Inn, Carrabassett Valley, Maine 04947 on November
16, 1999 at 5:00 p.m. local time for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of July 27, 1999, by and among KSB, Kingfield
Savings Bank, Camden and Camden Acquisition Subsidiary, Inc., a Delaware
corporation and wholly owned subsidiary of Camden, and all of the matters
and transactions contemplated by the merger agreement or necessary to
effectuate the merger.
2. To consider and act upon such other business and matters or proposals
as may properly come before the KSB meeting.
The merger and related matters and transactions are described more fully in
the attached Joint Proxy Statement/Prospectus, which includes as Annex A a copy
of the merger agreement.
The board of directors of KSB has fixed the close of business on October 1,
1999 as the record date for determining the stockholders of KSB entitled to
receive notice of and to vote at the KSB meeting. Only holders of record of KSB
common stock at the close of business on that date are entitled to receive
notice of and to vote at the KSB meeting. KSB will make available for
inspection by any stockholder a list of stockholders entitled to receive notice
of and to vote at the KSB meeting during ordinary business hours at KSB's
principal office, Main Street, Kingfield, Maine 04947, for ten days prior to
the KSB meeting for purposes related to the KSB meeting. Only business within
the purposes described in this notice may be conducted at the KSB meeting.
The board of directors of KSB unanimously recommends that you vote "FOR" the
approval of the merger agreement, the merger and the other matters and
transactions contemplated by the merger agreement.
The board of directors of KSB requests that you fill in and sign the
enclosed proxy card and mail it promptly in the enclosed postage-prepaid
envelope. Any proxy that you deliver may be revoked prior to the KSB meeting by
a writing delivered to KSB stating that the proxy is revoked or by delivery of
a later dated proxy. Stockholders of record of KSB common stock who attend the
KSB meeting may vote in person, even if they have previously delivered a signed
proxy.
By Order of the Board of Directors
of
KSB Bancorp, Inc.
John C. Witherspoon
Secretary
Kingfield, Maine
October 6, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY................................................................... 1
RISK FACTORS.............................................................. 9
Failure to integrate operations following the merger could reduce our
future earnings per share............................................... 9
Failure to achieve expected cost savings and unanticipated costs relating
to the merger could reduce our future earnings per share ............... 9
Year 2000 computer issues may disrupt our business operations ........... 9
If the merger is not completed, we will have incurred substantial
expenses without realizing the expected benefits........................ 10
Our performance may decline if key individuals leave the surviving
corporation ............................................................ 10
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA...................... 11
CAMDEN SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION................ 12
KSB SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION................... 13
COMPARATIVE PER COMMON SHARE DATA ........................................ 14
THE MEETINGS ............................................................. 15
The Camden Meeting....................................................... 15
Purpose of the Meeting.................................................. 15
Record Date; Voting Rights; Proxies..................................... 15
Independent Public Accountants.......................................... 16
Solicitation of Proxies................................................. 16
Quorum.................................................................. 16
Required Vote........................................................... 17
The KSB Meeting.......................................................... 17
Purpose of the Meeting.................................................. 17
Record Date; Voting Rights; Proxies..................................... 17
Independent Public Accountants.......................................... 18
Solicitation of Proxies................................................. 18
Quorum.................................................................. 18
Required Vote........................................................... 18
PROPOSAL 1................................................................ 19
The Merger Proposal...................................................... 19
Required Vote and Recommendation......................................... 19
THE MERGER................................................................ 19
Background of the Merger................................................. 19
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recommendation of the Camden Board; Camden's Reasons for the Merger...... 22
Recommendation of the KSB Board; KSB's Reasons for the Merger............ 24
Opinion of Camden's Financial Advisor.................................... 25
Opinion of KSB's Financial Advisor....................................... 32
Other Interests of Officers and Directors in the Merger.................. 35
Stock Option Agreement................................................... 37
Accounting Treatment..................................................... 40
No Dissenters' or Appraisal Rights....................................... 40
Stock Exchange Listing of Surviving Corporation's Common Stock; Delisting
and Deregistration of KSB Stock......................................... 41
Dividends................................................................ 41
THE MERGER AGREEMENT...................................................... 42
General.................................................................. 42
Merger Consideration..................................................... 42
Exchange of KSB Certificates............................................. 43
KSB Stock Options........................................................ 43
Representations and Warranties........................................... 44
Material Covenants....................................................... 45
Conditions to Complete the Merger........................................ 49
Termination; Expenses.................................................... 49
Hypothetical Exchange Ratio Adjustments.................................. 52
Amendment; Waiver........................................................ 54
Survival of Certain Provisions........................................... 54
Restrictions on Resales by Affiliates.................................... 55
THE COMPANIES............................................................. 56
Camden National Corporation.............................................. 56
KSB Bancorp, Inc......................................................... 57
Surviving Corporation.................................................... 57
CERTAIN REGULATORY CONSIDERATIONS......................................... 59
Certain Restrictions on Activities of Banking Holding Companies.......... 59
Limitations on Control of Camden......................................... 61
Certain Transactions by Banking Holding Companies and Their Affiliates... 61
Support of Subsidiary Institutions and Liability of Commonly Controlled
Depository Institutions................................................. 62
Payment of Dividends..................................................... 62
Regulation of the Banks.................................................. 62
FDIC Insurance Assessments............................................... 64
Minimum Capital Requirements and Prompt Corrective Action................ 65
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Other Aspects of Federal and State Law.................................. 66
Government Policies and Legislative and Regulatory Proposals............ 66
Status of Regulatory Approvals and Other Information.................... 66
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................ 67
Tax Consequences of the Merger.......................................... 68
Backup Withholding...................................................... 68
Other Tax Consequences.................................................. 68
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION.............. 69
UNAUDITED PRO FORMA COMBINING BALANCE SHEETS............................. 70
UNAUDITED PRO FORMA COMBINING STATEMENTS OF INCOME....................... 73
NOTES TO THE UNAUDITED PRO FORMA COMBINING FINANCIAL STATEMENTS.......... 79
DESCRIPTION OF CAPITAL STOCK OF CAMDEN................................... 81
Authorized Capital Stock................................................ 81
Common Stock............................................................ 81
Registrar and Transfer Agent............................................ 81
COMPARISON OF RIGHTS OF HOLDERS OF KSB COMMON STOCK AND CAMDEN COMMON
STOCK................................................................... 82
Special Meetings of Stockholders........................................ 84
Written Consent of Stockholders......................................... 84
Inspection of List of Stockholders...................................... 85
Cumulative Voting....................................................... 85
Preemptive Rights....................................................... 85
Classification of the Board of Directors................................ 85
Number of Directors on the Board........................................ 85
Election of the Board of Directors...................................... 85
Removal of Directors.................................................... 86
Additional Directors and Vacancies on the Board of Directors............ 86
Liability of Directors.................................................. 86
Indemnification of Directors, Officers and Others....................... 86
Restrictions upon Certain Business Combinations; Fair Price Provisions.. 87
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Mergers, Share Exchanges or Asset Sales.................................. 87
Amendments to Charter.................................................... 87
Amendments to Bylaws..................................................... 88
Appraisal/Dissenters' Rights............................................. 88
PROPOSAL 2................................................................ 90
Required Vote and Recommendation......................................... 90
Information Regarding Nominees, Continuing Directors and Executive
Officers................................................................ 90
Nominees for Election as Directors....................................... 92
Continuing Directors..................................................... 92
Executive Officers of Camden............................................. 93
Board of Directors and its Committees.................................... 93
Executive Compensation................................................... 95
Option and Exercises and Year-end Holdings............................... 95
Retirement Plans......................................................... 96
Change of Control Agreements............................................. 97
Director Compensation.................................................... 97
Employment Agreement with Mr. Daigle..................................... 97
Compensation Committee Interlocks and Insider Participation.............. 98
Personnel and Compensation Committee Report.............................. 98
Stock Performance Graph.................................................. 100
Principal Stockholders................................................... 101
Section 16(a) Beneficial Ownership Reporting Compliance.................. 102
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 102
Certain Business Relationships........................................... 102
Indebtedness of Management............................................... 102
OTHER MATTERS ............................................................ 102
Stockholder Proposals for Annual Meetings................................ 102
Other Matters............................................................ 103
LEGAL MATTERS............................................................. 103
EXPERTS................................................................... 103
WHERE YOU CAN FIND MORE INFORMATION....................................... 104
Camden National Corporation SEC Filings (File No. 0-28190)............... 104
KSB Bancorp, Inc. SEC Filings (File No.
0-21500)................................................................ 104
</TABLE>
Annex A--Agreement and Plan of Merger
Annex B--Opinion of Ryan, Beck & Company, Inc.
Annex C--Opinion of Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc.
ii
<PAGE>
SUMMARY
This summary highlights selected information from this Joint Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To better understand the merger and for a more complete
description of the terms of the merger, you should carefully read this entire
document and the documents to which we have referred you. See "Where You Can
Find More Information" on page 104.
This Joint Proxy Statement/Prospectus contains certain forward-looking
statements concerning, among other things, the benefits expected to result from
the merger and the future financial performance of Camden, as the surviving
corporation, after the merger. Actual results may differ significantly from the
forward-looking statements. See "Risk Factors" beginning on page 9.
The Companies
Camden National Corporation
Two Elm Street
Camden, Maine 04843
(207) 236-8821
Camden National Corporation, a registered bank holding company incorporated
in the State of Maine, owns three financial services companies: Camden National
Bank, a full-service community bank with ten banking offices in Belfast,
Bucksport, Camden, Damariscotta, Rockland, Thomaston, Union, Vinalhaven, and
Waldoboro, and accessible online @ www.camdennational.com; United Bank, a full-
service community bank with nine offices in Bangor, Corinth, Dover-Foxcroft,
Greenville, Hampden, Hermon, Jackman, Milo and Winterport; and Trust Company of
Maine, Inc., headquartered in Bangor offering traditional trust and investment
services throughout Central and Eastern Maine. As of June 30, 1999, Camden's
total assets were $717.7 million, total deposits were $514.5 million and
stockholders' equity was $62.2 million.
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
(207) 265-2090
KSB Bancorp, Inc., a registered bank holding company incorporated in the
State of Delaware, owns Kingfield Savings Bank, a community-oriented financial
institution that conducts its business under the name Kingfield Bank in nine
full service retail banking offices located in Franklin, Somerset and
Androscoggin counties in Maine. As of June 30, 1999, KSB's total assets were
$179.3 million, total deposits were $130.9 million and stockholders' equity was
$14.2 million.
The Camden Board Unanimously
Recommends that its Stockholders
Approve the Merger
The Camden Board believes that the merger is advisable and unanimously
recommends that you vote for the proposal to approve the merger agreement, the
merger and the other matters and transactions contemplated by the merger
agreement.
We recommend the merger because:
. the merger will strengthen Camden by improving its ability to provide a
full range of financial services to a broader market area which will
include five counties in the central and western parts of Maine;
. the merger will strengthen United Bank by combining it with Kingfield
Bank to create a new, larger community bank offering services to
customers in these markets more efficiently and with greater
technological support than either United or Kingfield could offer on a
stand alone basis if the merger were not to occur; and
. the merger is expected to result in improved long-term earnings growth
and value enhancing opportunities, significant operating efficiencies
and greater market capitalization and increased liquidity for
stockholders.
To review the Camden Board's reasons for the merger in greater detail, as
well as related uncertainties, see pages 22 through 24.
<PAGE>
The KSB Board Unanimously Recommends
that its Stockholders Approve the Merger
The KSB Board believes that the merger is advisable and unanimously
recommends that you vote for the proposal to approve the merger agreement, the
merger and the other matters and transactions contemplated by the merger
agreement.
We recommend the merger because:
. of the amount of Camden common stock offered as consideration by Camden,
the anticipated tax-free treatment of such consideration and the
anticipated increased liquidity of the trading market for Camden common
stock after the merger compared to that of the KSB common stock;
. the merger will strengthen Kingfield Bank by combining it with United
Bank to create a new, larger community bank offering services to
customers in these markets more efficiently and with greater
technological support than either Kingfield or United could on a stand
alone basis if the merger were not to occur; and
. the merger is expected to result in improved long-term earnings growth
and value enhancing opportunities, significant operating efficiencies
and greater market capitalization and increased liquidity for
stockholders.
To review the KSB Board's reasons for the merger in greater detail, as well
as related uncertainties, see pages 24 through 25.
The Camden Board Unanimously
Recommends that its Stockholders
Elect the Nominees for Directors
The Camden Board also unanimously recommends that you vote for the proposal
to elect the two nominees for directors of Camden.
The Camden Meeting
Camden will hold a special meeting of stockholders at The Samoset Resort,
Knox County Ballroom, 220 Warrenton Street, Rockport, Maine 04856 on November
16, 1999 at 3:30 p.m. local time.
At the Camden meeting, Camden stockholders will consider and vote upon (1) a
proposal to approve the merger agreement, the merger and the other matters and
transactions contemplated by the merger agreement and (2) the election of two
directors.
The merger cannot be completed unless, among other things, it is approved by
the holders of at least (1) a majority of the outstanding shares of Camden
common stock entitled to vote and (2) a majority of the outstanding shares of
KSB common stock entitled to vote.
A majority of the votes cast for the election of a nominee for director of
Camden is required to elect such nominee.
Only holders of record of Camden common stock at the close of business on
October 4, 1999, which is the record date for the Camden meeting, will be
entitled to notice of and to vote at the Camden meeting.
If your shares are held in "street name" by your broker, your broker will
not vote your shares with respect to the merger unless you provide instructions
on how to vote. Please tell your broker how you would like him or her to vote
your shares. If you do not tell your broker how to vote, you will be in effect
voting against the merger!
With respect to the election of directors of Camden, the failure to tell
your broker how to vote will have no effect on the election of the directors.
If you have granted discretionary voting authority to your broker, your broker
may be able to vote your shares with respect to the election of directors.
Camden requests that you complete your proxy card to ensure that you are
represented with respect to all matters submitted to the Camden stockholders.
As of August 31, 1999:
. directors and executive officers of Camden were the beneficial owners of
approximately 10.27% of the outstanding shares of Camden common stock;
and
. a total of 6,557,650 shares of Camden common stock were eligible to be
voted at the Camden meeting.
2
<PAGE>
The KSB Meeting
KSB will hold a special meeting of stockholders at The Sugarloaf Inn,
Carrabassett Valley, Maine 04947 on November 16, 1999 at 5:00 p.m. local time.
At the KSB meeting, KSB stockholders will vote upon a proposal to approve
the merger agreement, the merger and the other matters and transactions
contemplated by the merger agreement.
The merger cannot be completed unless, among other things, it is approved by
the holders of at least (1) a majority of the outstanding shares of KSB common
stock entitled to vote and (2) a majority of the outstanding shares of Camden
common stock entitled to vote.
Only holders of record of KSB common stock at the close of business on
October 1, 1999, which is the record date for the KSB meeting, will be entitled
to notice of and to vote at the KSB meeting.
If your shares are held in "street name" by your broker, your broker will
not vote your shares with respect to the merger unless you provide instructions
on how to vote. Please tell your broker how you would like him or her to vote
your shares. If you do not tell your broker how to vote, you will be in effect
voting against the merger!
KSB requests that you complete your proxy card to ensure that you are
represented with respect to all matters submitted to the KSB stockholders.
As of August 31, 1999:
. directors and executive officers of KSB were the beneficial owners of
approximately 18.4% of the outstanding shares of KSB common stock; and
. a total of 1,304,401 shares of KSB common stock were eligible to be
voted at the KSB meeting.
The Merger
The merger agreement is attached as Annex A to this Joint Proxy
Statement/Prospectus. We encourage you to read the entire merger agreement
because it is the document that governs the merger.
What KSB Stockholders Will Receive in the Merger (see pages 42 and 43)
In the merger, KSB stockholders will receive 1.136 shares of Camden common
stock for each share of KSB common stock that they own. The exchange ratio of
1.136 may be adjusted:
. either upwards or downwards if a stock split, reverse stock split or
similar transaction with respect to either Camden common stock or KSB
common stock occurs; or
. upwards but not downwards if the value of Camden common stock declines
significantly prior to the closing date both in absolute terms and
relative to a weighted average stock price of an index group of the
common stocks of selected bank holding companies. More specifically, the
exchange ratio of 1.136 will be adjusted upwards if all of the following
criteria are satisfied:
(1) the average closing price of Camden common stock on the date of
receipt of the last requisite regulatory approval required for consummation
of the merger is less than $15.75 per share, and
(2) the decline in the price of Camden common stock from $19.75 on July
27, 1999 to the average closing price during the fifteen day trading period
ending on the day on which the final regulatory approval necessary to
complete the merger is received, expressed as a percentage, is more than 15
percentage points greater than the price decline, if any, also expressed as
a percentage, of a weighted average stock price of an index group of common
stocks using the same measurement dates, and
(3) KSB exercises its right to cancel the merger as a result of such
price decline, subject to Camden's right to require KSB to complete the
merger if Camden increases the exchange ratio of 1.136 as provided in the
merger agreement, and
(4) Camden so elects to increase the exchange ratio.
We have included a table on page 52 of this Joint Proxy Statement/Prospectus
to assist you in
3
<PAGE>
understanding how the exchange ratio could be adjusted if Camden's stock price
declines substantially.
Camden and KSB stockholders may call the following telephone numbers during
normal business hours in order to find out the number of shares of Camden
common stock that KSB stockholders will receive in the merger for each share of
KSB common stock that they own, subject to any possible future exchange ratio
adjustments. Camden stockholders may call (207) 236-9131, ext. 2165. KSB
stockholders may call (207) 265-2090, ext. 1232.
No fractional shares of Camden common stock will be issued in the merger.
Any holder of KSB common stock who would otherwise be entitled to receive a
fractional share of Camden common stock will instead receive cash for such
fractional share.
KSB stockholders should not send in their stock certificates for exchange
until instructed to do so after we complete the merger.
What Current Stockholders of Camden Will Own After the Merger
Camden stockholders will continue to own their existing shares after the
merger, which will represent an ownership interest in the larger combined
organization.
Effective Time of the Merger
We expect that the merger will be completed as soon as practicable following
receipt of all necessary governmental approvals and the approval by the
stockholders of Camden and KSB at their stockholders meetings, if all other
conditions have been satisfied.
Board of Directors and Management of the Surviving Corporation Following the
Merger (see page 57)
In connection with the merger, the Camden stockholders are being asked to
elect two members of KSB's Board as directors of Camden. With the exception of
Robert W. Daigle, none of the directors of Camden will be employees of Camden.
After the merger, the current executive officers of Camden will continue to
hold the same offices.
Other Interests of KSB Officers and Directors in the Merger (see page 35)
Officers and directors, who are also stockholders, of KSB will receive
benefits as a result of the merger that are different from the benefits you
will receive. These benefits include the following:
. in the case of the Chief Executive Officer of KSB, John C. Witherspoon,
an employment agreement with Camden, which becomes effective only upon
the completion of the merger;
. in the case of certain KSB officers, severance benefits following the
completion of the merger if their employment is terminated; and
. in the case of KSB officers, the preservation of retirement benefits if
specified KSB benefit plans are terminated following the completion of
the merger.
. in the case of KSB officers and directors, the conversion of all
employee and director stock options into options to acquire Camden
common stock, with appropriate adjustments to the number of shares
exercisable and the exercise price of each option to reflect the
exchange ratio.
You may want to consider these benefits in deciding whether to vote in favor
of the merger.
Conditions to the Merger (see page 49)
A number of conditions must be satisfied before the merger is completed,
including:
. the stockholders of Camden and KSB must approve the merger agreement;
. the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), the Federal Deposit Insurance Corporation ("FDIC") and
the Superintendent of Banking of the State of Maine (the "Maine
Superintendent") must approve the merger or waive their respective
approval requirements with respect to the merger;
4
<PAGE>
. the American Stock Exchange ("AMEX") must authorize the listing of the
Camden common stock to be issued to KSB stockholders;
. the Securities and Exchange Commission ("SEC") must declare effective
the registration statement relating to the issuance of Camden common
stock to holders of KSB common stock;
. Camden and KSB must receive opinions regarding treatment of the merger
as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986 (the "Code");
. Camden must receive an opinion from its independent public accountants
stating that the merger will qualify for "pooling of interests"
accounting treatment; and
. KSB must receive an opinion from its independent public accountants
stating that it is a "poolable entity."
Each of Camden and KSB may waive some of the conditions to the merger if it
deems such a waiver to be in the best interests of its stockholders.
Termination of the Merger Agreement
(see page 49)
Camden and KSB may agree to terminate the merger agreement before the merger
has been completed, and either Camden or KSB may terminate the merger agreement
if any of the following occurs:
. the merger has not been completed by July 1, 2000 (or such later date as
provided in the merger agreement);
. the board of directors of either company withdraws or adversely changes
its recommendation to stockholders that they vote in favor of the
merger;
. the required stockholder approvals are not obtained;
. a court or other governmental authority permanently prohibits the
merger;
. the other party breaches any of its representations, warranties or
covenants contained in the merger agreement, and such breach has a
material consequence and is not cured within the specified time period;
or
. a decline in the price of Camden common stock absolutely and relative to
the weighted average price of an index group of the common stock of
other selected bank holding companies exceeds limits specified in the
merger agreement and KSB exercises its right to cancel the merger,
subject to Camden's right to increase the exchange ratio of 1.136 as
provided in the merger agreement, and Camden elects not to increase the
exchange ratio.
If Camden terminates the merger agreement after the occurrence of certain
events, or if either KSB or Kingfield breaches its agreement with Camden to
refrain from soliciting competing offers, then Kingfield will be required to
make a cash payment to Camden in the amount of $1,000,000 as liquidated
damages.
Stock Option Agreement (see page 37)
As a condition to Camden's willingness to enter into the merger agreement,
and to discourage other companies from attempting to acquire KSB, KSB granted
Camden an option to purchase up to 19.9% of the KSB common stock outstanding
immediately before the exercise of such option at an exercise price of $13.50
per share. The option is only exercisable upon the occurrence of specified
events that would be ordinarily associated with an acquisition or potential
acquisition of KSB by a third party. In the event that Camden becomes entitled
to both a payment of liquidated damages and the benefit of the option (whether
through exercise or waiver), the aggregate amount recoverable by Camden as
liquidated damages and as a result of the exercise or waiver of its rights
pursuant to the option will be limited to a maximum of $1,400,000.
Regulatory Approvals are Required (see page 59)
Prior to the completion of the merger, Camden and KSB are required to obtain
regulatory approvals in connection with the merger, including the
5
<PAGE>
approvals of the FDIC and the Maine Superintendent and the approval or waiver
of the Federal Reserve Board.
The merger is also subject to review by the U.S. Department of Justice (the
"DOJ") and the Attorney General of the State of Maine. Federal law requires us
to wait for no less than 15 days and up to 30 days before completing the merger
after it has been approved by the FDIC or the Federal Reserve Board, as
applicable, during which time the DOJ could object to, and seek to enjoin, the
merger. We have filed the applications with the Federal Reserve Board, the FDIC
and the Maine Superintendent.
Camden to use "Pooling of Interests" Accounting Treatment (see page 40)
The merger is expected to be accounted for as a "pooling of interests,"
which means that, for accounting and financial reporting purposes, we will
treat our companies as if they had always been one company. In connection with
the merger, Camden expects to reissue approximately 125,000 shares. Either
Camden or KSB may elect not to complete the merger if it is determined that the
merger can not be accounted for as a "pooling of interests."
Ryan, Beck & Co., Inc. Says the Exchange Ratio of 1.136 is Fair to Camden (see
page 25)
Ryan, Beck & Co., Inc. ("Ryan, Beck") has acted as financial advisor to
Camden in connection with the merger. Ryan, Beck delivered to the Camden Board
an oral opinion on July 27, 1999, which was confirmed and updated by a written
opinion dated as of the date of this Joint Proxy Statement/Prospectus, to the
effect that, as of the date of such opinion and based upon and subject to
certain matters stated in the opinion, the exchange ratio was fair, from a
financial point of view, to Camden. The full text of the written opinion of
Ryan, Beck, which sets forth the assumptions made, matters considered and
limitations on the review undertaken, is attached as Annex B to this Joint
Proxy Statement/Prospectus and should be read carefully in its entirety. Ryan,
Beck provided its opinion for the information and assistance of the Camden
Board and it addresses only the fairness, from a financial point of view, of
the exchange ratio to Camden and neither addresses the merits of the underlying
decision by Camden to engage in the transaction nor constitutes a
recommendation to any stockholder as to how a stockholder should vote on the
merger agreement.
Keefe, Bruyette Says the Exchange Ratio of 1.136 is Fair to KSB's Stockholders
(see page 32)
Charles, Webb & Company, a division of Keefe, Bruyette & Woods, Inc.
("Keefe, Bruyette") has acted as financial advisor to KSB in connection with
the merger. Keefe, Bruyette delivered to the KSB Board an oral opinion on July
27, 1999, which was confirmed and updated by a written opinion dated as of the
date of this Joint Proxy Statement/Prospectus, to the effect that, as of the
date of such opinion and based upon and subject to certain assumptions made,
matters considered and limitations stated therein, the exchange ratio was fair
to the stockholders of KSB from a financial point of view. The full text of the
written opinion of Keefe, Bruyette, which sets forth the assumptions made,
matters considered and limitations on the review undertaken, is attached as
Annex C to this Joint Proxy Statement/Prospectus and should be read carefully
in its entirety. Keefe, Bruyette provided its opinion for the information and
assistance of the KSB Board and it addresses only the fairness of the exchange
ratio to the KSB stockholders from a financial point of view and neither
addresses the merits of the underlying decision by KSB to engage in the
transaction nor constitutes a recommendation to any stockholder as to how a
stockholder should vote on the merger agreement.
No Federal Income Tax on Shares Received in the Merger (see page 67)
. KSB Stockholders. The merger is expected to be tax-free for federal
income tax purposes to KSB stockholders who receive shares of Camden
common stock. Cash received by KSB stockholders in lieu of fractional
shares in the merger generally will be taxable.
. Camden Stockholders. No gain or loss will be recognized for federal
income tax purposes by Camden or its stockholders as a result of the
merger.
6
<PAGE>
No Dissenters' or Appraisal Rights (see page 40)
Under Maine and Delaware law, neither the Camden stockholders nor the KSB
stockholders have dissenters' rights or rights to an appraisal of the value of
their shares of common stock in connection with the merger.
Camden Shares to be Listed on the AMEX
(see page 41)
Camden will list the shares of common stock to be issued to holders of KSB
common stock in connection with the merger on the AMEX. After the completion of
the merger, KSB will delist its common stock from the Nasdaq National Market
and deregister it for purposes of the Securities Exchange Act of 1934.
Camden Dividend Policy Following the Merger (see page 41)
The current annualized cash dividend on shares of Camden common stock is
$0.60 per share. It is expected that, upon completion of the merger, Camden
will continue to pay quarterly cash dividends in a manner that is consistent
with its past practices, subject to approval and declaration by its board. The
payment of cash dividends by Camden in the future will depend on its financial
condition and earnings, business conditions and other factors.
Comparison of KSB Stockholders' Rights Before and After the Merger (see page
82)
We have summarized below the material differences in the rights of the
stockholders of KSB and Camden. If the merger is completed, former KSB
stockholders who hold shares of Camden common stock will have the same rights
as Camden stockholders.
. KSB is a Delaware corporation and the rights of its stockholders are
generally governed by the corporate law of Delaware. Camden is a Maine
corporation and the rights of its stockholders are generally governed by
the corporate law of Maine.
. KSB stockholders elect directors by plurality vote. Camden's
stockholders elect directors by a majority vote of stockholders present
at the meeting.
. KSB's directors may be removed only for cause and only by an affirmative
vote of at least 80% of the outstanding shares of KSB common stock.
Camden's directors may be removed with or without cause by the
affirmative vote of at least two-thirds of the stockholders present at a
special meeting called for that purpose.
. KSB's charter provides that the affirmative vote of 80% or more of the
outstanding shares of its stock is required to authorize or approve any
agreement with an interested stockholder providing for a merger,
consolidation, sale of substantially all of its assets or an acquisition
in which a majority of its shares are issued to such person.
Risk Factors (see page 9)
This Joint Proxy Statement/Prospectus includes, or incorporates by
reference, additional factors related to the operations and strategies of
Camden and KSB generally, the merger and the merger's effect on Camden as the
surviving corporation. Stockholders should carefully read the section entitled
"Risk Factors."
Forward-Looking Statements May Prove Inaccurate (see page 10)
Camden and KSB have each made forward-looking statements in this document
(and in documents that are incorporated by reference) that are subject to risks
and uncertainties. Forward-looking statements include information concerning
possible or assumed future results of operations of Camden or KSB, including
the anticipated benefits from the merger. Also, when we use words such as
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements. Stockholders of Camden and KSB should note that
many factors could affect the future financial results of Camden, as the
surviving corporation, and could cause these results to differ materially from
those expressed in our forward-looking statements.
7
<PAGE>
Comparative Per Share Market
Price Information
Shares of Camden common stock are listed on the AMEX and shares of KSB
common stock are quoted on the Nasdaq National Market. On July 27, 1999, the
last full trading day prior to the public announcement of the signing of the
merger agreement, the closing price of Camden common stock was $19.75. The
closing price for KSB common stock on July 27, 1999, the last full trading day
prior to the public announcement of the merger was $14.00. This data is shown
in the following table:
<TABLE>
<CAPTION>
Closing Price on Pro Forma
July 27, 1999 Equivalent
---------------- ----------
<S> <C> <C>
Camden.............................................. $19.75 N/A
KSB................................................. $14.00 $22.44
</TABLE>
The pro forma equivalent closing price for KSB common stock gives effect to
the merger by multiplying the closing price of Camden common stock on July 27,
1999 by the exchange ratio of 1.136.
On October 1, 1999, Camden common stock closed at $21.06 per share and KSB
common stock closed at $19.00 per share.
How to Change Your Vote
You may change your vote at any time before your proxy is voted at the
stockholders meeting. You can do so in one or more of the following ways:
. You can send a written notice dated after your proxy stating that you
would like to revoke your proxy. If you are a Camden stockholder, you
should send your written notice to the Secretary of Camden at the
address below. If you are a KSB stockholder, you should send your
written notice to the Secretary of KSB at the address below;
. You can complete a new proxy card and send it to the Secretary of Camden
or KSB, as the case may be, and the new proxy card will automatically
replace any earlier dated proxy card that you returned; or
. You can attend your stockholders meeting and vote in person. However, if
you are a stockholder whose shares are not registered in your own name,
you will need appropriate documentation from your record holder to vote
personally at the meeting.
You should send any written notice of revocation, request for a new proxy
card or completed new proxy card to the Secretary of Camden or KSB, as the case
may be, at the following addresses: Camden National Corporation, Two Elm
Street, Camden, Maine 04843, Attention: Secretary; KSB Bancorp, Inc., Main
Street, Kingfield, Maine 04947, Attention: Secretary.
Additional Information
If you have questions about the merger, or if you would like additional
copies of this Joint Proxy Statement/Prospectus, you should contact:
For Camden Stockholders:
Camden National Corporation
Two Elm Street
Camden, Maine 04843
Attention: Susan M. Westfall, Chief Financial Officer
Phone Number: (207) 236-9131, ext. 2165
For KSB Stockholders:
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Attention: John E. Thien, Chief Financial Officer
Phone Number: (207) 265-2090, ext. 1232
8
<PAGE>
RISK FACTORS
Unless the context otherwise requires, all references in this Joint Proxy
Statement/Prospectus to the "surviving corporation" refer to Camden National
Corporation and its subsidiaries on a consolidated basis following the
completion of the merger and all references to the "surviving bank" refer to
the combined bank that results from the merger of United Bank with and into
Kingfield Bank.
Failure to integrate operations following the merger could reduce our future
earnings per share
The integration of certain departments, systems, business units, operating
procedures and information technologies of Camden and KSB will present a
significant challenge to management. There can be no assurance that we will be
able to integrate and manage these operations effectively or maintain or
improve the historical financial performances of Camden and KSB. The failure to
successfully integrate these systems and procedures could have a material
adverse effect on the results of operations and financial condition of Camden
as the surviving corporation.
Failure to achieve expected cost savings and unanticipated costs relating to
the merger could reduce our future earnings per share
We believe that we have reasonably estimated our likely cost savings, the
likely costs of integrating the operations of Camden and KSB, and the
incremental costs of operating as a combined company. However, it is possible
that unexpected transaction costs such as taxes, fees or professional expenses
or unexpected future operating expenses such as increased personnel costs or
increased taxes, as well as other types of unanticipated adverse developments,
could have a material adverse effect on the results of operations and financial
condition of the surviving corporation. If the expected savings are not
realized or unexpected costs are incurred, the merger could have a significant
dilutive effect on the surviving corporation's earnings per share. In other
words, if the merger is completed, the earnings per share of Camden common
stock could be less than they would have been if the merger had not been
completed. See "The Merger--Recommendation of the Camden Board; Camden's
Reasons for the Merger."
Year 2000 computer issues may disrupt our business operations
Year 2000 compliance issues concern the inability of computer systems to
accurately calculate, store or use data after 1999. These may cause our
computer systems, or those of our significant vendors and customers, to process
critical financial and operational information incorrectly. Each of Camden and
KSB has taken action over the past year to correct this problem in accordance
with guidelines issued by the Federal Financial Institutions Examination
Council, and we expect to continue such efforts until all of our important
business computer systems, and those of our significant vendors and customers,
are Year 2000 compliant.
We currently expect all of Camden's and KSB's important business computer
systems to be Year 2000 compliant prior to September 30, 1999. However,
following the merger, we will face additional risks associated with addressing
any Year 2000 compliance issues for the surviving corporation while
simultaneously attempting to integrate the information technologies and
operating systems of Camden and KSB. There can be no assurance that our
hardware and software can be integrated as currently anticipated or that we
will not experience significant expenses or delays in addressing any Year 2000
compliance issues as a result of that integration process. For a more detailed
discussion of the Year 2000 compliance programs of each of Camden and KSB, see
each company's "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are incorporated herein by reference to Camden's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and KSB's
Quarterly Report on Form 10-QSB for the same period. See "Where You Can Find
More Information."
9
<PAGE>
If the merger is not completed, we will have incurred substantial expenses
without realizing the expected benefits
Camden and KSB have each incurred substantial expenses in connection with
the transactions described in this Joint Proxy Statement/Prospectus. If the
merger is not completed, Camden expects to incur approximately $1.0 million to
$1.5 million and KSB expects to incur approximately $300,000 to $500,000 in
merger related expenses. These expenses would likely have a material adverse
impact on the financial results of Camden and/or KSB because we would not have
realized the expected benefits of the merger. There can be no assurance that
the merger will be completed.
Our performance may decline if key individuals leave the surviving corporation
After the merger, the surviving corporation will depend on the services of
certain key personnel, including Robert W. Daigle, President, Chief Executive
Officer and Director of Camden; and John C. Witherspoon, President and Chief
Executive Officer of KSB, and if the merger is consummated, President and Chief
Executive Officer of the surviving bank. The loss of the services either of
these key persons could have a material adverse effect on the successful
integration of Camden and KSB and the results of operations of the surviving
corporation. See "The Companies--The Surviving Corporation" and "The Merger--
Other Interests of Officers and Directors in the Merger."
This Joint Proxy Statement/Prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, and Section
21E of the Securities Exchange Act. The surviving corporation's actual results
could differ materially from those set forth in the forward-looking statements
because of many reasons, including the risk factors listed above. This list may
not be exhaustive.
10
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following tables set forth the selected unaudited pro forma combined
financial information of Camden giving effect to the merger, and should be read
in conjunction with, and are qualified in their entirety by, the historical
financial statements and notes of Camden and KSB and the accompanying unaudited
pro forma condensed consolidated financial statements and notes for the
surviving corporation presented on pages 70 through 80. The Camden and KSB
combined results of operations give effect to Camden's proposed acquisition of
KSB as a pooling of interests, as if such transaction had been completed as of
the beginning of each of the periods presented. The pro forma amounts are not
necessarily indicative of results that will be obtained on a combined basis.
The pro forma amounts have not been adjusted to reflect any of the improvements
in operating efficiencies that the surviving corporation anticipates will occur
as a result of the merger.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
(in thousands, except share and per share
amounts)
<S> <C> <C> <C> <C> <C>
Statements of Income:
Interest Income........ $ 33,628 $ 29,800 $ 62,033 $ 58,055 $ 51,719
Interest Expense....... 14,725 13,333 26,720 26,981 24,270
--------- --------- --------- --------- ---------
Net Interest Income.... 18,903 16,467 35,313 31,074 27,449
Provision for Loan
Losses................ 1,240 888 2,056 2,207 1,228
--------- --------- --------- --------- ---------
Net Interest Income
After Provision for
Loan Losses........... 17,663 15,579 33,257 28,867 26,221
Non-interest Income.... 3,700 2,885 5,826 4,936 4,550
Non-interest Expense... 12,232 10,534 22,202 17,897 16,799
--------- --------- --------- --------- ---------
Income before Provision
for Income Tax........ 9,131 7,930 16,881 15,906 13,972
Income Tax Expense..... 2,958 2,602 5,430 5,209 4,613
--------- --------- --------- --------- ---------
Net Income............. $ 6,173 $ 5,328 $ 11,451 $ 10,697 $ 9,359
========= ========= ========= ========= =========
Statement of Condition:
Assets................. $ 899,675 $ 741,061 $ 839,280 $ 726,644 $ 644,435
Loans.................. 610,753 517,893 569,705 483,348 411,336
Allowance for Loan
Losses................ 8,865 7,512 8,092 6,982 5,365
Investments............ 232,000 169,096 218,693 204,260 190,669
Deposits............... 646,965 570,986 641,554 485,132 463,522
Borrowings............. 165,815 84,760 113,682 160,697 106,946
Stockholders' Equity... 76,869 76,527 77,789 74,111 67,614
Per share (1):
Basic earnings per
share................. $ 0.77 $ 0.65 $ 1.40 $ 1.31 $ 1.13
Diluted earnings per
share................. 0.76 0.63 1.38 1.27 1.10
Book value per share... 9.54 9.35 9.61 9.01 8.15
Dividends per share.... 0.26 0.23 0.47 0.38 0.28
Weighted average shares
outstanding........... 8,031,986 8,189,338 8,156,968 8,169,924 8,314,964
Selected financial
percentages:
Return on average
stockholders' equity.. 16.02% 14.15% 15.09% 15.11% 13.70%
Return on average total
assets................ 1.43 1.46 1.52 1.52 1.50
Net interest rate
spread................ 4.17 4.20 4.38 4.03 4.02
Net interest margin.... 4.72 4.87 5.04 4.71 4.71
Net charge-offs to
average loans......... 0.08 0.07 0.18 0.13 0.21
Non-performing loans to
total loans........... 0.62 0.51 0.41 0.46 0.55
Allowance for loan
losses to total
loans................. 1.45 1.45 1.42 1.44 1.30
Total capital to risk
weighted assets....... 12.36 15.92 13.61 17.44 18.34
Tier 1 capital to risk
weighted assets....... 11.10 14.67 12.36 16.19 17.09
Tier 1 capital to
average assets........ 8.82 10.51 10.30 10.54 10.85
Stock dividend payout
ratio................. 33.84 35.36 33.74 29.31 24.70
</TABLE>
- --------
(1) The Selected Unaudited Pro Forma Combined Financial Data has not been
restated to reflect the anticipated reissuance of approximately 125,000
shares of Camden common stock. See Note 7 to the Unaudited Pro Forma
Combining Financial Statements.
11
<PAGE>
CAMDEN SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
Set forth below are summary selected consolidated financial and operating
data for Camden as of and for the periods indicated on a historical basis. This
financial information has been derived from Camden's Annual Reports on Form 10-
K for the years ended December 31, 1994 through December 31, 1998 and from the
Camden's Quarterly Reports on Form 10-Q for the six months ended June 30, 1999
and 1998. This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited consolidated financial statements, including the notes thereto, of
Camden which are incorporated by reference herein. See "Where You Can Find More
Information."
<TABLE>
<CAPTION>
Six Months Ended June
30, Years Ended December 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Income:
Interest Income........ $ 26,719 $ 23,363 $ 48,815 $ 46,051 $ 41,015 $ 38,661 $ 33,958
Interest Expense....... 11,648 10,395 20,750 21,229 19,105 18,853 13,766
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Interest Income.... 15,071 12,968 28,065 24,822 21,910 19,808 20,192
Provision for Loan
Losses................ 940 648 1,376 1,677 838 899 216
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Interest Income
after Provision for
Loan Losses........... 14,131 12,320 26,689 23,145 21,072 18,909 19,976
Non-Interest Income.... 3,062 2,212 4,498 3,750 3,411 3,544 3,057
Non-interest Expense... 9,488 7,921 17,073 13,294 12,338 11,707 10,581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before Provision
for Income Tax........ 7,705 6,611 14,114 13,601 12,145 10,746 12,452
Income Tax Expense..... 2,476 2,136 4,469 4,453 4,030 3,343 3,964
Accounting Charge for
Postretirement
Benefits.............. -- -- -- -- -- -- 230
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income............. $ 5,229 $ 4,475 $ 9,645 $ 9,148 $ 8,115 $ 7,403 $ 8,258
========== ========== ========== ========== ========== ========== ==========
Statement of Condition:
Assets................. $ 717,733 $ 583,316 $ 667,951 $ 573,892 $ 510,078 $ 480,685 $ 455,615
Loans.................. 467,052 390,281 438,947 363,149 311,246 285,102 265,476
Allowance for Loan
Losses................ 7,062 6,059 6,512 5,640 4,472 4,080 3,751
Investments............ 204,898 147,854 186,813 179,290 163,379 161,332 158,434
Deposits............... 514,475 447,023 508,573 373,409 353,240 369,880 340,244
Borrowings............. 134,176 64,578 90,158 132,478 93,760 51,980 62,444
Stockholders' Equity... 62,215 63,978 64,102 62,556 57,822 53,680 48,258
Per share (1):
Basic earnings per
share................. $ 0.79 $ 0.66 $ 1.43 $ 1.34 $ 1.16 $ 1.05 $ 1.17
Diluted earnings per
share................. 0.79 0.64 1.41 1.31 1.14 1.02 1.14
Book value per share... 9.49 9.48 9.63 9.19 8.39 7.63 6.86
Dividends per share.... 0.30 0.27 0.55 0.45 0.32 0.20 0.15
Weighted average shares
outstanding........... 6,624,978 6,801,198 6,763,086 6,820,752 6,989,967 7,037,322 7,038,318
Selected financial
percentages:
Return on average
stockholders' equity.. 16.56% 14.15% 15.23% 15.20% 13.71% 14.66% 18.65%
Return on average total
assets................ 1.51 1.56 1.62 1.65 1.65 1.59 1.90
Net interest rate
spread................ 4.19 4.18 4.43 4.05 4.05 3.91 4.49
Net interest margin.... 4.75 4.90 5.13 4.77 4.79 4.63 5.05
Net charge-offs to
average loans......... 0.09 0.06 0.13 0.15 0.15 0.20 0.20
Non-performing loans to
total loans........... 0.81 0.67 0.53 0.61 0.73 1.05 1.08
Allowance for loan
losses to total
loans................. 1.51 1.55 1.48 1.55 1.44 1.43 1.42
Total capital to risk
weighted assets....... 12.40 17.20 14.00 19.50 20.40 20.60 20.00
Tier 1 capital to risk
weighted assets....... 11.20 15.90 12.80 18.20 19.20 19.40 18.80
Tier 1 capital to
average assets........ 8.00 10.40 9.50 10.60 11.70 11.40 11.10
Stock dividend payout
ratio................. 38.25 41.09 38.88 33.34 27.59 18.56 12.64
</TABLE>
- --------
(1) All per share and average share information has been adjusted to reflect
Camden's three-for-one stock split, which was effective December 4, 1998.
12
<PAGE>
KSB SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
Set forth below are summary selected consolidated financial and operating
data for KSB as of and for the periods indicated on a historical basis. This
financial information has been derived from KSB's Annual Reports on Form 10-KSB
for the fiscal years ended December 31, 1994 through December 31, 1998 and from
KSB's Quarterly Reports on Form 10-QSB for the six months ended June 30, 1999
and 1998. This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited consolidated financial statements, including the notes thereto, of
KSB which are incorporated by reference herein. See "Where You Can Find More
Information."
<TABLE>
<CAPTION>
Six Months Ended June
30, Years Ended December 31,
---------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- -----------
(in thousands, except share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Income:
Interest Income........ $ 6,909 $ 6,437 $ 13,218 $ 12,004 $ 10,704 $ 9,955 $ 6,942
Interest Expense....... 3,077 2,938 5,970 5,752 5,165 5,025 3,267
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net Interest Income.... 3,832 3,499 7,248 6,252 5,539 4,930 3,675
Provision for Loan
Losses................ 300 240 680 530 390 315 140
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net Interest Income
after Provision for
Loan Losses........... 3,532 3,259 6,568 5,722 5,149 4,615 3,535
Non-interest Income.... 638 673 1,328 1,186 1,139 1,122 957
Non-interest Expense... 2,744 2,613 5,129 4,603 4,461 4,578 4,248
---------- ---------- ---------- ---------- ---------- ---------- -----------
Income before Provision
for Income Tax........ 1,426 1,319 2,767 2,305 1,827 1,159 244
Income Tax Expense..... 482 466 961 756 583 336 22
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net Income............. $ 944 $ 853 $ 1,806 $ 1,549 $ 1,244 $ 823 $ 222
========== ========== ========== ========== ========== ========== ===========
Statement of Condition:
Assets................. $ 179,333 $ 157,745 $ 171,329 $ 152,752 $ 134,357 $ 125,233 $ 113,003
Loans.................. 143,701 127,612 130,758 120,199 100,090 86,756 69,247
Allowance for Loan
Losses................ 1,803 1,453 1,580 1,342 893 867 613
Investments............ 27,102 21,242 31,880 24,970 27,290 28,800 38,076
Deposits............... 132,489 123,963 132,981 111,723 110,282 104,702 81,040
Borrowings............. 31,639 20,182 23,524 28,219 13,186 10,952 23,367
Stockholders' Equity... 14,175 12,549 13,687 11,555 9,792 8,498 7,621
Per share (1):
Basic earnings per
share................. $ 0.76 $ 0.70 $ 1.47 $ 1.30 $ 1.07 $ 0.72 $ 0.20
Diluted earnings per
share................. 0.74 0.67 1.41 1.23 1.01 0.69 0.19
Book value per share... 11.13 9.91 10.78 9.27 7.94 6.89 6.18
Dividends per share.... 0.08 0.05 0.11 0.07 0.06 0.06 0.06
Weighted average shares
outstanding........... 1,238,563 1,221,954 1,227,009 1,187,651 1,166,371 1,147,994 1,128, 960
Selected financial
percentages:
Return on average
stockholders' equity.. 13.55% 14.16% 14.37% 14.60% 13.62% 10.34% 2.95%
Return on average total
assets................ 1.08 1.10 1.13 1.07 0.95 0.67 0.24
Net interest rate
spread................ 4.12 4.26 4.18 3.95 3.91 3.70 3.54
Net interest margin.... 4.60 4.77 4.71 4.46 4.38 4.14 3.99
Net charge-offs to
average loans......... 0.06 0.11 0.34 0.07 0.39 0.08 0.06
Non-performing loans to
total loans........... 1.31 1.93 1.81 1.74 1.89 1.90 1.99
Allowance for loan
losses to total
loans................. 1.25 1.14 1.21 1.12 0.89 1.00 0.89
Total capital to risk
weighted assets....... 12.00 11.60 12.00 11.40 11.50 11.20 10.00
Tier 1 capital to risk
weighted assets....... 10.80 10.30 10.70 10.10 10.40 10.10 9.00
Tier 1 capital to
average assets........ 7.40 7.10 7.30 7.20 6.80 6.10 5.20
Stock dividend payout
ratio................. 9.44 5.27 6.28 5.53 5.83 7.83 33.67
</TABLE>
- --------
(1) All per share and average share information has been adjusted to reflect
KSB's three-for-one stock split effected in the form of a 200% stock
dividend in 1997.
13
<PAGE>
COMPARATIVE PER COMMON SHARE DATA
(Unaudited)
We have summarized below the per common share combined information for
Camden and KSB on a historical and pro forma combined and pro forma equivalent
basis. The pro forma information gives effect to the merger accounted for as a
pooling of interests. You should read this information in conjunction with our
historical financial statements (and related notes) contained in the reports
and other information that we have filed with the SEC. See "Where You Can Find
More Information." You should also read this information in conjunction with
the pro forma combined financial information set forth under the heading
"Unaudited Pro Forma Financial Statements." You should not rely on the pro
forma information as being indicative of the historical results that we would
have had or the future results that we will achieve after the merger.
<TABLE>
<CAPTION>
As of and for
the quarter As of and for the
ended June Years Ended
30, December 31,
------------- -----------------
1999 1998 1998 1997 1996
------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net income per share:
Basic:
Camden
Historical................................... $ 0.79 $ 0.66 $1.43 $1.34 $1.16
Pro forma combined for the merger(1)......... 0.77 0.65 1.40 1.31 1.13
KSB
Historical................................... 0.76 0.70 1.47 1.30 1.07
Pro forma equivalent for the merger(2)....... 0.87 0.74 1.59 1.49 1.28
Net income per share:
Diluted:
Camden
Historical................................... 0.79 0.64 1.41 1.31 1.14
Pro forma combined for the merger(1)......... 0.76 0.63 1.38 1.27 1.10
KSB
Historical................................... 0.74 0.67 1.41 1.23 1.01
Pro forma equivalent for the merger(2)....... 0.86 0.72 1.57 1.44 1.25
Cash dividends per common share:
Camden
Historical................................... 0.30 0.27 0.55 0.45 0.32
Pro forma combined for the merger(1)......... 0.30 0.27 0.55 0.45 0.32
KSB
Historical................................... 0.08 0.05 0.11 0.07 0.06
Pro forma equivalent for the merger(2)....... 0.34 0.31 0.62 0.51 0.36
</TABLE>
<TABLE>
<CAPTION>
As of As of
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Book value per common share:
Camden
Historical............................................. $ 9.49 $ 9.63
Pro forma combined for the merger(1)................... 9.54 9.61
KSB
Historical............................................. 11.13 10.78
Pro forma equivalent for the merger(2)................. 10.84 10.92
</TABLE>
- --------
(1) Pro forma combined amounts reflect the proposed merger as if the merger had
occurred at the beginning of such period.
(2) Pro forma equivalent amounts for KSB are calculated by multiplying the pro
forma combined amounts by the exchange ratio of 1.136
14
<PAGE>
THE MEETINGS
This Joint Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies from the holders of (1) Camden common stock by the
Camden Board for use at the Camden meeting and (2) KSB common stock by the KSB
Board for use at the KSB meeting. This Joint Proxy Statement/Prospectus and
accompanying form of proxy are first being mailed to the respective
stockholders of Camden and KSB on or about October 7, 1999.
The Camden Meeting
Purpose of the Meeting
Camden will hold a special meeting of stockholders at The Samoset Resort,
Knox County Ballroom, 220 Warrenton Street Rockport, Maine 04856, on November
16, 1999 at 3:30 p.m. local time for the following purposes:
. To approve the merger agreement, the merger and other matters and
transactions contemplated by the merger agreement and the issuance of
shares of Camden common stock to the holders of KSB common stock. See
"Proposal 1--Approval of the Agreement and Plan of Merger."
. To elect two directors. The Board of Directors has nominated Theodore C.
Johanson and Winfield F. Robinson to serve as directors for terms
expiring at Camden's Annual Meeting of Stockholders in 2001 and 2002,
respectively. See "Proposal 2--Election of Directors."
. To consider and act upon such other business and matters or proposals as
may properly come before the Camden meeting.
Only business within the purposes described in the Camden Notice of Special
Meeting of Stockholders may be conducted at the Camden meeting. Any action may
be taken on the foregoing matters at the Camden meeting on the date specified
above, or on any date or dates to which it may be postponed or to which, by
original or later adjournment, the Camden meeting may be adjourned.
Record Date; Voting Rights; Proxies
Camden has fixed the close of business on October 4, 1999 as the record date
for determining the holders of Camden common stock entitled to receive notice
of and to vote at the Camden meeting. Only holders of Camden common stock at
the close of business on the Camden record date will be entitled to receive
notice of and to vote at the Camden meeting. Camden will make available for
inspection by any stockholder a list of stockholders entitled to receive notice
of and to vote at the Camden meeting during ordinary business hours at Camden's
principal office, Two Elm Street, Camden, Maine 04843, for ten days prior to
the Camden meeting. As of October 1, 1999, there were 6,557,650 issued and
outstanding shares of Camden common stock. Each holder of record of Camden
common stock on the Camden record date is entitled to one vote per share, which
may be cast either in person or by properly executed proxy.
All shares of Camden common stock which are entitled to vote and are
represented at the Camden meeting by properly executed proxies received prior
to or at the Camden meeting, and not revoked, will be voted at such meeting as
they are marked in the boxes on the proxy cards. If no boxes are marked on a
proxy card that has otherwise been properly executed, it will be voted "FOR"
approval of the merger agreement and the other matters and transactions
contemplated thereby and "FOR" the election of the two nominees for directors.
Votes cast by proxy or in person at the Camden meeting will be tabulated by
the inspector of elections appointed for the meeting who will determine whether
or not a quorum is present. The inspector of elections will treat abstentions
as shares that are present and entitled to vote for purposes of determining the
presence of
15
<PAGE>
a quorum, but as not voting for purposes of determining the approval of any
matter submitted to the stockholders for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will be considered as present for
purposes of determining a quorum but not for purposes of voting with respect
to that matter.
If any other matters are properly presented at the Camden meeting for
consideration, including consideration of a motion to adjourn such meeting to
another time and/or place for such purposes as soliciting additional proxies
or allowing additional time for the satisfaction of conditions to the merger,
the persons named in the proxies will have discretion to vote on such matters
in accordance with their best judgment. However, proxies voted against a
proposal will not be voted in favor of adjournment in order to continue to
solicit proxies with respect to that proposal.
Any proxy given by a Camden stockholder pursuant to this solicitation may be
revoked by the person giving it at any time before it is voted in one or more
of the following ways:
. filing with the Secretary of Camden, at or before the taking of the vote at
the Camden meeting, a written notice of revocation bearing a later date than
the proxy;
. Duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of Camden before the taking of the vote at
the Camden meeting; or
. Giving notice, in person at the meeting, to the corporate officer
responsible for maintaining the list of stockholders or by giving notice in
the open meeting of the stockholders. However, if you are a stockholder
whose shares are not registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the meeting.
Any written notice of revocation or subsequent proxy should be sent, in the
case of Camden, to Camden National Corporation, Two Elm Street, Camden, Maine
04843, Attention: Secretary, or hand delivered to the Secretary at or before
the taking of the vote at the Camden meeting.
Independent Public Accountants
Camden has selected Berry, Dunn, McNeil & Parker, LLC, as its principal
independent public accountants for the current fiscal year. Representatives of
Berry, Dunn, McNeil & Parker, LLC, are expected to be present at the Camden
meeting and will have the opportunity to make a statement if they desire to do
so. They are also expected to be available to respond to appropriate
questions.
Solicitation of Proxies
Camden will bear its own costs of solicitation of proxies. Brokerage houses,
fiduciaries, nominees and others will be reimbursed for their out-of-pocket
expenses in forwarding proxy materials to owners of shares of Camden common
stock held in their names. In addition to the solicitation of proxies by use
of the mails, proxies may be solicited from Camden stockholders by directors,
officers and employees acting on behalf of Camden in person or by telephone,
telegraph, facsimile or other appropriate means of communications. No
additional compensation, except for reimbursement of reasonable out-of-pocket
expenses, will be paid to these directors, officers and employees of Camden in
connection with the solicitation. In addition, Regan & Associates, Inc., a
proxy solicitation firm, has been engaged by Camden to act as proxy solicitor
and will receive fees estimated at $4,000, plus reimbursement of reasonable
out-of-pocket expenses, not to exceed $2,000. Any questions or requests for
assistance regarding this Joint Proxy Statement/Prospectus and related proxy
materials may be directed to the Chief Financial Officer of Camden by
telephone at (207) 236-9131, ext. 2165.
Quorum
The holders of a majority of all of the votes entitled to be cast, who are
present in person or represented by proxy, shall constitute a quorum at the
Camden meeting. Shares which abstain from voting as to a particular matter and
broker non-votes will be treated as shares that are present and entitled to
vote at the Camden meeting for purposes of determining whether a quorum
exists.
16
<PAGE>
Required Vote
The vote required for approval of each of the two proposals presented in
this Joint Proxy Statement/Prospectus, and the treatment of abstentions and
broker non-votes, are specified in the discussion of each proposal.
Regardless of the number of shares you own, your vote is important to
Camden. Please complete, sign, date and promptly return the enclosed proxy card
today!
The KSB Meeting
Purpose of the Meeting
KSB will hold a special meeting of stockholders at The Sugarloaf Inn,
Carrabassett Valley, Maine 04947 on November 16, 1999 at 5:00 p.m. local time
for the following purpose:
. To approve the merger agreement, the merger and other matters and
transactions contemplated by the merger agreement. See "Proposal 1--
Approval of the Agreement and Plan of Merger."
Only business within the purposes described in the KSB Notice of Special
Meeting of Stockholders may be conducted at the KSB meeting. Any action may be
taken on the foregoing matters at the KSB meeting on the date specified above,
or on any date or dates to which it may be postponed or to which, by original
or later adjournment, the KSB meeting may be adjourned.
Record Date; Voting Rights; Proxies
KSB has fixed the close of business on October 1, 1999 as the record date
for determining the stockholders entitled to receive notice of and to vote at
the KSB meeting. Only holders of record of KSB common stock at the close of
business on the KSB record date will be entitled to receive notice of and to
vote at the KSB meeting. KSB will make available for inspection by any
stockholder a list of stockholders entitled to receive notice of and to vote at
the KSB meeting during ordinary business hours at KSB's principal office, Main
Street, Kingfield, Maine 04947, for ten days prior to the KSB meeting. As of
October 1, 1999, there were 1,304,401 issued and outstanding shares of KSB
common stock. Each holder of record of KSB common stock on the KSB record date
is entitled to one vote per share, which may be cast either in person or by
properly executed proxy.
All shares of KSB common stock which are entitled to vote and are
represented at the KSB meeting by properly executed proxies received prior to
or at such meeting, and not revoked, will be voted at the KSB meeting as they
are marked in the boxes on the proxy cards. If no boxes are marked on a proxy
card that has otherwise been properly executed, it will be voted "FOR" approval
of the merger agreement, the merger and other matters and transactions
contemplated thereby.
Votes cast by proxy or in person at the KSB meeting will be tabulated by the
inspector of elections appointed for the meeting who will determine whether or
not a quorum is present. The inspector of elections will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum, but as not voting for purposes of determining the
approval of any matter submitted to the stockholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will be considered
as present for purposes of determining a quorum but not for purposes of voting
with respect to that matter.
If any other matters are properly presented at the KSB meeting for
consideration, including consideration of a motion to adjourn such meeting to
another time and/or place for such purposes as soliciting additional proxies or
allowing additional time for the satisfaction of conditions to the merger, the
persons named in the proxies will have discretion to vote on such matters in
accordance with their best judgment. However, proxies voted against a proposal
will not be voted in favor of adjournment in order to continue to solicit
proxies with respect to that proposal.
17
<PAGE>
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted in one or more of the following ways:
. filing with the Secretary of KSB, at or before the taking of the vote at
the KSB meeting, a written notice of revocation bearing a later date
than the proxy;
. duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary before the taking of the vote at the KSB
meeting; or
. voting in person at the meeting, although attendance at the KSB meeting
will not by itself constitute a revocation of a proxy. However, if you
are a stockholder whose shares are not registered in your own name, you
will need appropriate documentation from your record holder to vote
personally at the meeting.
Any written notice of revocation or subsequent proxy should be sent to KSB
Bancorp, Inc., Main Street, Kingfield, Maine 04947, Attention: Secretary, or
hand delivered to the Secretary of KSB at or before the taking of the vote at
the KSB meeting.
Independent Public Accountants
The firm of Berry, Dunn, McNeil & Parker, LLC, acts as KSB's principal
independent public accountant. Representatives of Berry, Dunn, McNeil & Parker,
LLC, are expected to be present at the KSB meeting and will have the
opportunity to make a statement if they desire to do so. They are also expected
to be available to respond to appropriate questions.
Solicitation of Proxies
KSB will bear its own costs of solicitation of proxies. Arrangements also
will be made with brokerage houses, custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such brokerage houses, custodians, nominees and fiduciaries, and
KSB will reimburse such brokerage houses, custodians, nominees and fiduciaries
for their reasonable expenses incurred in forwarding such materials. In
addition to solicitation by use of the mails, proxies may be solicited from the
KSB stockholders by directors, officers and employees acting on behalf of KSB
in person or by telephone, telegraph, facsimile or other means of
communications. Such directors, officers and employees will not be additionally
compensated, but may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation. In addition, Regan & Associates, Inc., a
proxy solicitation firm, has been engaged by KSB to act as proxy solicitor and
will receive fees estimated at $3,000, plus reimbursement of reasonable out-of-
pocket expenses, not to exceed $1,500. Any questions or requests for assistance
regarding this Joint Proxy Statement/Prospectus and related proxy materials may
be directed to John E. Thien, the Chief Financial Officer of KSB, by telephone
at (207) 265-2090, ext. 1232.
Quorum
The holders of a majority of all of the votes entitled to be cast, who are
present in person or represented by proxy, shall constitute a quorum at the KSB
meeting. Shares which abstain from voting as to a particular matter and broker
non-votes will be treated as shares that are present and entitled to vote at
the KSB meeting for purposes of determining whether a quorum exists.
Required Vote
The approval of the merger agreement, the merger and the other matters and
transactions contemplated by the merger agreement requires the affirmative vote
of a majority of the KSB common stock outstanding and eligible to vote on the
KSB record date. Accordingly, abstentions and broker non-votes will have the
same effect as a vote against the merger agreement, the merger and the other
matters and transactions contemplated by the merger agreement.
18
<PAGE>
Regardless of the number of shares you own, your vote is important to KSB.
Please complete, sign, date and promptly return the enclosed proxy card today!
PROPOSAL 1
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER
The Merger Proposal
On July 27, 1999, the Camden Board and the KSB Board each deemed advisable
and unanimously approved the merger agreement, the merger and the other matters
and transactions contemplated by the merger agreement. The effects of approving
the merger agreement and the merger include the issuance by Camden of 1.136
shares of Camden common stock in exchange for each share of KSB common stock,
subject to adjustment in certain circumstances. See "The Merger Agreement--
Merger Consideration."
Required Vote and Recommendation
Proxies will be voted for Proposal 1 unless contrary instructions are set
forth in the proxy. Only stockholders of record of Camden common stock and KSB
common stock are entitled to vote on this proposal. This proposal requires the
affirmative vote of the holders of at least (1) a majority of all the
outstanding shares of Camden common stock entitled to vote (2) a majority of
all the outstanding shares of KSB common stock entitled to vote. As a result,
any abstentions and broker non-votes will have the effect of votes against this
proposal.
The Camden Board and the KSB Board each unanimously recommends that you vote
"FOR" the approval of the merger agreement, the merger and the other matters
and transactions contemplated by the merger agreement.
THE MERGER
This section of the Joint Proxy Statement/Prospectus, as well as the section
entitled "The Merger Agreement," describes the material aspects of the merger.
A copy of the merger agreement is attached to this Joint Proxy
Statement/Prospectus as Annex A and is incorporated herein by reference. All
stockholders are urged to read the merger agreement carefully in its entirety.
Background of the Merger
As part of its effort to expand its community banking franchise and enhance
shareholder value, the management of KSB and the KSB Board have regularly
considered a variety of business strategies, ranging from remaining independent
to acquiring other community banking institutions to entering into strategic
mergers or affiliations with similarly-sized or larger banking organizations.
As part of this process, KSB and another banking institution jointly approached
Camden during the summer of 1998 with the suggestion that the three entities
enter into some type of business combination. Because Camden had no interest in
the proposal, no further conversations with KSB or the other bank about a
three-party combination followed.
During the fall of 1998 the KSB Board met with representatives from Keefe,
Bruyette to discuss recent trends in the banking industry. It was decided that
an affiliation with another company through merger or acquisition could be in
the best interests of KSB's constituents, including shareholders, employees,
customers, and communities. The primary goal of any affiliation would be to
continue providing services to the customers and communities presently in KSB's
market area, while achieving the size and financial strength necessary to keep
pace with the technological and service demands of the future. John C.
Witherspoon, President and Chief Executive Officer of KSB and Kingfield, was
directed to engage in informal discussions with CEO's of other community
banking organizations sharing this same vision. During the fall of 1998 at the
Maine-New Hampshire-Vermont Bankers Associations' Tri-State CEO Conference in
North Conway, New Hampshire, Mr. Witherspoon approached Mr. Daigle, then
President of Camden National Bank, to express KSB's interest in discussing some
type of business combination between Camden and KSB. Mr. Daigle acknowledged
KSB's interest, indicating that Camden would take this into consideration when
it focused more formally on strategic planning during the first quarter of
1999.
19
<PAGE>
Camden's management, as part of its efforts to expand its community banking
franchises and enhance shareholder value, had also from time to time during the
past several years engaged in various informal meetings with managements of
other community banks seeking some type of strategic business combination
and/or acquisition. Having a desire to formalize its strategic direction,
Camden's Board and executive management engaged in a formal strategic planning
session during the first quarter of 1999 that outlined Camden's strategic
objectives for the ensuing three years. As part of that process, Camden adopted
a strategy of balanced growth and profitability while positioning itself to
pursue more aggressive growth through a transaction if and when the opportunity
presented itself. Following the strategic planning session, Camden's management
began to evaluate several community banks as potential acquisition targets.
During the second quarter of 1999, Mr. Witherspoon and Winfield F. Robinson,
KSBs Chairman of the Board, attended a conference sponsored by Keefe, Bruyette.
One of the topics discussed at the conference, was the impending changes in the
accounting treatment for acquisitions, which could negatively impact KSBs
ability to affiliate or merge with another bank under terms favorable to its
stockholders. At a meeting of the KSB Board during May 1999, this development
was cited as a reason to become more focused on seeking a merger partner.
On May 12, 1999, Mr. Witherspoon contacted Mr. Daigle, who had become
President and CEO of Camden, concerning the possible acquisition of KSB by
Camden. Mr. Daigle and Mr. Witherspoon met on May 14, 1999 to discuss the
reasons the acquisition of KSB would be beneficial to both parties,
particularly if Kingfield Bank was eventually merged with United Bank, one of
Camden's bank subsidiaries. At a regularly scheduled meeting of Camden's Board
held on May 25, 1999, Mr. Daigle reported that he had been contacted by Mr.
Witherspoon regarding whether Camden would have any interest in acquiring KSB.
The Camden Board concurred that Mr. Daigle should continue the discussions with
Mr. Witherspoon.
On June 9, 1999, Mr. Daigle and Mr. Witherspoon met again to discuss the
potential economic benefits, including cost savings, that could result from the
acquisition of KSB by Camden and the merger of Kingfield and United.
Organizational and operational issues were also discussed. Among the
organizational issues was the surviving bank's leadership and the possibility
of Mr. Witherspoon's being named its president. Mr. Witherspoon proposed that
several members of the KSB Board become members of the surviving bank's board
of directors. He also proposed that several members of KSB's Board be asked to
join Camden's Board. The official name of the surviving bank was also
discussed, as well as the location of its headquarters. Operational issues
discussed included which KSB back-office functions could be transferred to
Camden's Service Center in Rockport, Maine after the acquisition. During this
meeting Mr. Witherspoon informed Mr. Daigle that the KSB Board was in favor of
moving forward with the acquisition discussions.
At a specially scheduled meeting of Camden's Board held on June 15, 1999,
Mr. Daigle reported on his June 9, 1999 meeting with Mr. Witherspoon. Mr.
Daigle recommended to the Camden Board that James C. Ebbert, Assistant to the
President, schedule meetings with investment banking firms to discuss current
trends in the bank merger and acquisition marketplace. Mr. Daigle indicated
that management was interested in obtaining pricing information on recent
transactions as well as fully understanding what effect the payment of a fair
price for KSB and other potential acquisition candidates would have on Camden's
future financial condition.
At a regularly scheduled meeting of Camden's Board on June 29, 1999, Mr.
Ebbert informed the Camden Board of his findings regarding bank valuations and
recent trends in the bank merger and acquisition marketplace. After some
discussion, the Board authorized Mr. Daigle to contact Mr. Witherspoon to
continue the negotiations. The Board also authorized management to retain Ryan,
Beck to represent Camden in the upcoming negotiations. On June 29 and June 30,
1999, Mr. Daigle spoke with Mr. Witherspoon by telephone to discuss pricing
issues. Subsequently, Mr. Daigle invited Mr. Witherspoon to meet with him, Mr.
Ebbert and representatives from Ryan, Beck in Rockport, Maine on July 1, 1999.
On July 1, 1999, Mr. Daigle and Mr. Witherspoon executed a Confidentiality
Agreement and an Exclusive Negotiation and Confidentiality Agreement. On that
same day, Mr. Witherspoon, Mr. Ebbert and Mr. Daigle met with representatives
of Ryan, Beck to continue negotiations. The negotiations focused primarily on
price and representation of KSB's board members on the boards of the surviving
bank and Camden. After lengthy
20
<PAGE>
discussion, the parties tentatively agreed upon an exchange ratio of 1.115
shares of Camden common stock for each share of KSB common stock. Mr.
Witherspoon proposed that the directors of KSB hold five of the eleven seats on
surviving bank's board of directors. The remaining six directors would be
comprised of directors from the boards of Camden and United Bank. Mr.
Witherspoon also proposed that two of KSB's directors be named to the Camden
Board. Mr. Witherspoon's present employment contract was discussed, as well as
the terms and conditions Camden might offer him. Mr. Daigle reminded everyone
that all of the issues discussed, including those involving board
representation and Mr. Witherspoon's contract, would have to be reviewed by
Camden's Board. Mr. Daigle further stated that Camden was only interested in
the transaction if Mr. Witherspoon intended to remain with the Camden
organization for an extended period of time, and that any contract would have
to reflect that intention.
On July 2, 1999, Mr. Witherspoon called Mr. Daigle to report that the KSB
Board had tentatively agreed to the transaction that had been negotiated on
July 1, 1999, except for the exchange ratio of 1.115. The KSB Board indicated
their desire to increase the exchange ratio to 1.136 to incorporate the July 1,
1999 closing price of Camden's stock. Mr. Daigle agreed to present the change
in the exchange ratio and other outstanding matters to the Camden Board.
At a specially scheduled meeting of the Camden Board held on July 6, 1999,
Mr. Daigle reported on the tentative transaction approved by the KSB Board. He
indicated that KSB had proposed an exchange ratio of 1.136. A presentation was
made showing the effect of the transaction on Camden's future earnings and
other financial performance parameters. Mr. Daigle indicated that management,
with the assistance of several outside parties, was ready to commence the due
diligence process. Mr. Daigle stated that all of the due diligence would be
completed prior to the Camden Board's being asked to authorize the execution of
a definitive agreement. Also recommended to the Camden Board by Mr. Daigle was
the retention of Goodwin, Procter & Hoar LLP ("Goodwin, Procter") as Camden's
counsel. Camden's Board concurred with management's plan to commence due
diligence and also approved the retention of Goodwin, Procter.
On July 9, 1999 the parties commenced due diligence. Camden retained CEIS
Review, Inc. to conduct a review of KSB's loan portfolio. Goodwin, Procter
conducted legal due diligence concurrently with the drafting of the merger
agreement and related documents. Ryan, Beck conducted financial due diligence
and advised Camden on the valuation of KSB. Berry, Dunn, McNeil & Parker, LLC
("Berry, Dunn"), the independent auditors for both Camden and KSB, advised both
entities on pooling of interest accounting matters.
On July 15, 1999, representatives of Luse, Lehman, Gorman, Pomerenk &
Schick, P.C. ("Luse, Lehman"), KSB's legal counsel, and Keefe, Bruyette
continued their legal and financial due diligence at the offices of Berry, Dunn
in Portland, Maine. On July 16, 1999 the KSB Board met in a special meeting at
the offices of Berry, Dunn in Portland to discuss the transaction. In addition
to the members of the KSB Board, representatives of Luse, Lehman were present.
A representative of Keefe, Bruyette also participated in the meeting via
telephone.
Negotiations on various aspects of the transaction continued during the due
diligence period, including KSB's representation on the boards of Camden and
the surviving bank, Mr. Witherspoon's employment agreement and the amount and
composition of payments to Camden under certain circumstances in the event the
transaction did not close.
On July 23, 1999, KSB conducted a special meeting to review the status of
the transaction. The KSB Board approved the transaction subject to the further
negotiation of the termination fee clause and the walk-away price for Camden
common stock as well as the resolution of the issues surrounding John
Witherspoon's employment agreement.
At a regularly scheduled meeting of the Camden Board held on July 27, 1999,
presentations regarding the financial and legal aspects of the transaction were
made by representatives of Ryan, Beck and Goodwin, Procter. A telephonic
conference call was also conducted with Berry, Dunn to discuss the pooling of
interests accounting treatment of the transaction. Questions were asked and
answered after each of the presentations and during the conference call with a
representative of Berry, Dunn. The Camden Board voted unanimously to approve
the transaction.
21
<PAGE>
Following the adjournment of the meeting, Mr. Daigle telephoned Mr.
Witherspoon to inform him of the Camden Board's approval of the transaction.
After speaking with Mr. Daigle, Mr. Witherspoon informed Mr. Robinson that
Camden's Board had approved the transaction. At a special meeting of the KSB
Board also held on July 27, 1999, the KSB Board unanimously voted to approve
the merger.
Following the close of trading on the AMEX on July 27, 1999, authorized
officers of Camden and KSB executed and delivered the merger agreement and the
stock option agreement.
Recommendation of the Camden Board; Camden's Reasons for the Merger
The Camden Board has unanimously approved the merger agreement and
determined that the merger and the other matters and transactions contemplated
thereby are in the best interests of Camden's stockholders and are otherwise
advisable. The Camden Board recommended unanimously that Camden's stockholders
vote "FOR" approval and adoption of the merger agreement and the matters and
transactions contemplated thereby, including the merger and the issuance of
shares of Camden common stock to the holders of KSB common stock.
In reaching its determination and recommendation, the Camden Board consulted
with Camden's management, as well as its financial advisors, legal counsel and
accountants, and considered a number of factors. The material factors
considered by the Camden Board in reaching the foregoing determination and
recommendation, all of which the Camden Board deemed favorable, are described
below.
(A) The Surviving Corporation: Business, Conditions and Prospects. The
Camden Board reviewed certain information relating to the financial
performance, business operations and prospects of Camden, KSB, United and
Kingfield and pro forma information for the surviving corporation, as well
as current industry, economic and market conditions. The Camden Board
believes that the merger should enable Camden to complement United's
business lines in commercial and community banking, including consumer,
commercial and mortgage lending. Because the markets served by United and
Kingfield are contiguous and their respective customers desire similar
products and services, the merger of United and Kingfield should allow the
surviving bank to serve a much larger geographic area more efficiently than
if United and Kingfield were to remain separate entities. These factors
should also enable Camden and United to achieve many of their long-range
goals easier and with less risk than they could achieve without the merger.
(B) Greater Financial Flexibility. The Camden Board believes that
greater size and enhanced financial flexibility resulting from the merger
should allow the surviving bank and the surviving corporation to pursue a
more aggressive and flexible business plan than could be pursued by Camden
and United if the merger did not occur. The Camden Board believes that this
should enable the surviving bank to retain and attract banking business
that United could not attract currently. In addition, the Camden Board
believes that the more favorable access to capital markets generally
enjoyed by larger financial institutions would place the surviving
corporation in a stronger position to satisfy the financial needs of all of
its subsidiary banks' customers, respond to changes affecting the banking
and financial services industries and compete effectively with larger
financial institutions in Maine.
(C) Greater Total Market Capitalization. The total market capitalization
of the surviving corporation as a result of the merger will represent a
significant increase over Camden's total market capitalization prior to the
merger. The Camden Board believes that the increased total market
capitalization of the surviving corporation should provide enhanced
liquidity for stockholders and should enhance its appeal as an investment
among both retail and institutional investors. The Camden Board also
believes that the surviving corporation's size will increase its
recognition and credibility within the banking and financial services
industries.
22
<PAGE>
(D) Anticipated Synergies and Cost Savings. The Camden Board believes
that Camden and its stockholders should realize the benefits of significant
synergies and ongoing operational cost savings, including general and
administrative cost savings in areas such as information and accounting
systems, telecommunications and professional fees, and operating
efficiencies due to critical mass in areas such as bulk purchasing and
insurance.
(E) Improved Combined Business Capabilities. Because the surviving
corporation and surviving bank will be positioned to implement the best
management practices of each of Camden and KSB, the Camden Board expects
that the merger will enhance its expertise in providing banking and
financial services.
(F) Structure of Transaction. It is expected that the merger will be
tax-free for federal income tax purposes to Camden and its stockholders and
will qualify as a "pooling of interests" under GAAP for accounting and
financial reporting purposes (see "Material Federal Income Tax
Consequences" and "The Merger--Accounting Treatment"). The Camden Board
believes that the use of Camden common stock as consideration in the merger
is preferable to the use of cash because there will not be a resulting
reduction in Camden's capital in connection with the merger.
(G) Terms of the Merger Agreement. The Camden Board believes that the
terms and conditions of the merger agreement, including the representations
and warranties and covenants of the parties, the conditions to the parties'
respective obligations thereunder and the termination provisions set forth
therein, are favorable to Camden. In addition to such general terms and
conditions, the Camden Board views as favorable the following:
. ten of the twelve members of the board of directors of the surviving
corporation will be members of the Camden Board immediately prior to
the merger;
. the headquarters of the surviving corporation will be located in
Camden, Maine and the headquarters of the surviving bank will be
located in Bangor, Maine with regional offices in Lewiston, and
Kingfield, Maine;
. Camden will enter into an employment agreement with John C.
Witherspoon, KSB's President and Chief Executive Officer; and
. the surviving corporation's name will remain "Camden National
Corporation."
(H) Opinion of Ryan, Beck. The Camden Board also relied on the opinion,
analyses and presentations of Ryan, Beck described below under "The
Merger--Opinion of Camden's Financial Advisor," to the effect that, as of
the date of such opinion and based upon and subject to certain matters
stated therein, the exchange ratio of 1.136 is fair, from a financial point
of view, to Camden. The Camden Board viewed Ryan, Beck's opinion as
favorable to its determination because Ryan, Beck is a nationally
recognized investment banking firm with experience in the valuation of
businesses and their securities in connection with mergers and acquisitions
and in providing advisory services for banks and bank holding companies.
The Camden Board also considered certain potentially negative factors which
could arise from the merger. These factors included, among others, the
significant transaction costs involved in connection with consummating the
merger, the substantial management time and effort required to effectuate the
merger and integrate the businesses of KSB and United and the related
disruption to the operating activities of Camden and United. The Camden Board
also considered the risk that the surviving corporation may be unable to
successfully integrate the operating practices of United and KSB and the
possibility that the anticipated benefits of the merger might not be fully
realized. In addition, the Camden Board considered the regulatory and
stockholder approvals required for the completion of the merger. For a more
detailed discussion of the risk factors considered by the Camden Board, see
"Risk Factors" beginning on page 9. The Camden Board also evaluated the
benefits of the transaction to be received by certain officers and directors of
KSB. See "The Merger--Other Interests of Officers and Directors in the Merger."
The Camden Board did not believe that the negative factors were sufficient,
either individually or collectively, to outweigh the advantages of the merger.
23
<PAGE>
The foregoing discussion of the information and factors considered by the
Camden Board is not intended to be exhaustive, but includes the material
factors considered by the Camden Board. The Camden Board did not assign
relative weights to the above factors or determine that any factor was of
greater importance than another. A determination of various weights would, in
the view of the Camden Board, be impractical. Rather, the Camden Board viewed
its position and recommendations as being based on the totality of the
information presented to and considered by it. In addition, individual members
of the Camden Board may have given different weights to different factors.
The Camden Board has unanimously approved and adopted the merger agreement
and the matters and transactions contemplated thereby, including the merger and
the issuance of Camden common stock, and recommends that Camden stockholders
vote "FOR" approval of the merger agreement, the merger and the other matters
and transactions contemplated by the merger agreement.
Recommendation of the KSB Board; KSB's Reasons for the Merger
In reaching its determination that the merger is in the best interests of
KSB and its stockholders and in recommending that KSB stockholders vote for the
approval and adoption of the merger agreement and the matters and transactions
contemplated thereby, including the merger, the KSB Board consulted with KSB's
management, as well as its financial advisors, legal counsel and accountants,
and considered a number of factors. The material factors considered by the KSB
Board in reaching the foregoing determination and recommendation, all of which
the KSB Board deemed favorable or otherwise viewed as supporting a decision to
approve the merger, are as follows:
. The financial advice rendered by Keefe, Bruyette that the exchange ratio
is fair, from a financial point of view, to KSB stockholders. In
particular, the KSB Board considered the per share merger consideration
based on Camden's market price, and the fixed exchange ratio, which
fixed KSB's percentage ownership of the combined companies and which
could provide even greater per share value to KSB stockholders. Also,
the KSB Board considered the substantial increase in cash dividends
(adjusted for exchange ratio) of Camden versus the current dividend of
KSB. The KSB Board also considered KSB's right to terminate the merger
agreement, or have the exchange ratio increased in the event of a
decline in Camden's stock price that exceeded the decline in the stock
prices of similarly situated bank holding companies.
. The increased liquidity in the trading market of Camden common stock
after completion of the merger compared to that of the KSB common stock.
. The terms of the merger agreement, the stock option agreement and the
other documents executed in connection with the merger.
. The anticipated cost savings and efficiencies available to the combined
company as a result of the merger. KSB anticipated that annual cost
savings of up to $1.25 million could be realized through the merger.
. The current and prospective economic, competitive and regulatory
environment facing KSB in particular and financial institutions in
general.
. The fact that the five members of the board of directors of Kingfield
Bank would become directors of the combined Kingfield Bank and United
Bank, and that two members of the KSB Board would become members of the
Camden Board.
. The results of the due diligence investigations of Camden, including
assessments of credit policies, asset quality, interest rate risk,
litigation and adequacy of loan loss reserves.
. The expectation that the merger would be tax free for federal income tax
purposes to KSB stockholders.
. The compatibility of the management and business philosophies of KSB and
Camden.
. The prospects for growth and expanded products and services, and other
anticipated impacts on depositors, employees, customers and communities
served by KSB.
. The pro forma ownership of the surviving corporation by KSB
stockholders.
24
<PAGE>
The foregoing discussion of the information and factors considered by the
KSB Board is not intended to be exhaustive, but includes the material factors
considered by the KSB Board. The KSB Board did not assign relative weights to
the above factors or determine that any factor was of greater importance than
another. A determination of various weights would, in the view of the KSB
Board, be impractical. Rather, the KSB Board viewed its position and
recommendations as being based on the totality of the information presented to
and considered by it. In addition, individual members of the KSB Board may have
given different weights to different factors.
The KSB Board has unanimously approved and adopted the merger agreement and
the matters and transactions contemplated thereby, including the merger, and
unanimously recommends that KSB stockholders vote "FOR" approval of the merger
agreement, the merger and the other matters and transactions contemplated by
the merger agreement.
Opinion of Camden's Financial Advisor
Camden retained Ryan, Beck to act as its exclusive financial advisor in
connection with the merger. Ryan, Beck agreed to assist Camden in analyzing,
structuring, negotiating and effecting a transaction with KSB. Camden selected
Ryan, Beck because it is a nationally recognized investment-banking firm with
substantial experience in transactions similar to the merger and is familiar
with Camden and its business. As part of its investment banking business, Ryan,
Beck is continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions.
Ryan, Beck participated in the negotiations with respect to the pricing and
other terms and conditions of the merger. However, the decision as to the final
pricing of the merger was ultimately made by the Camden Board. Ryan, Beck
rendered an oral opinion to the Camden Board on July 27, 1999 (subsequently
confirmed in writing) and rendered a subsequent updated opinion dated as of the
date of this Joint Proxy Statement/Prospectus (a copy of which is attached),
that based on and subject to the assumptions, factors, and limitations as set
forth in the attached opinion and as described below, the exchange ratio is
fair to Camden's stockholders from a financial point of view. No limitations
were imposed by the Camden Board upon Ryan, Beck with respect to the
investigations made or procedures followed by it in arriving at its opinion.
The full text of Ryan, Beck's opinion, which sets forth assumptions made and
matters considered, is attached as Annex B to this Joint Proxy
Statement/Prospectus. Stockholders of Camden are urged to read the attached
Ryan, Beck opinion in its entirety. The Ryan, Beck opinion is directed only to
the financial fairness of the exchange ratio and does not constitute a
recommendation to any stockholder as to how such stockholder should vote at the
Camden meeting. The summary of the Ryan, Beck opinion set forth in this Joint
Proxy Statement/Prospectus is qualified in its entirety by reference to the
full text of the Ryan, Beck opinion. In rendering its opinions, Ryan, Beck does
not admit that it is an expert within the meaning of the term "expert" as used
within the Securities Act and the rules and regulations promulgated thereunder,
or that its opinions constitute a report or valuation within the meaning of
Section 11 of the Securities Act and the rules and regulations promulgated
thereunder.
In connection with its opinion, Ryan, Beck reviewed the following documents:
. the merger agreement and related documents;
. this Joint Proxy Statement/Prospectus;
. Camden's Annual Reports to Stockholders and Annual Reports on Form 10-K
for the years ended December 31, 1998, 1997 and 1996 and Camden's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1999,
September 30, 1998, June 30, 1998 and March 31, 1998;
25
<PAGE>
. KSB's Annual Reports to Stockholders and Annual Reports on Form 10-KSB
for the years ended December 31, 1998, 1997 and 1996, and KSB's
Quarterly Reports on Form 10-QSB for the periods ended March 31, 1999,
September 30, 1998, June 30, 1998, and March 31, 1998;
. certain operating and financial information provided to Ryan, Beck by
the managements of Camden and KSB relating to their business and
prospects;
. the historical stock prices and trading volume of the Camden common
stock;
. the publicly available financial data of commercial banking
organizations which Ryan, Beck deemed generally comparable to Camden;
. the historical stock prices and trading volume of the KSB common stock;
. the publicly available financial data of thrift organizations which
Ryan, Beck deemed generally comparable to KSB;
. the terms of recent acquisitions of thrift organizations which Ryan,
Beck deemed generally comparable in whole or in part to KSB; and
. the potential pro forma impact of the merger on Camden's financial
condition, operating results and per share figures.
Additionally, Ryan, Beck:
. conducted or reviewed such other studies, analyses, inquiries and
examinations as it deemed appropriate; and
. met with certain members of Camden's and KSB's senior management to
discuss Camden's and KSB's past and current business operations,
regulatory standing, financial condition, strategic plan and future
prospects, including any potential operating efficiencies and synergies
which may arise from the merger.
In connection with its review, Ryan, Beck relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information regarding Camden, KSB, and their subsidiaries provided to
Ryan, Beck by Camden and KSB and their representatives. Ryan, Beck is not an
expert in evaluating loan and lease portfolios for purposes of assessing the
adequacy of the allowances for losses. Therefore, Ryan, Beck has not assumed
any responsibility for making an independent evaluation of the adequacy of the
allowance for loan losses set forth in the balance sheets of Camden and KSB at
June 30, 1999, and Ryan, Beck assumed such allowances were adequate and
complied fully with applicable law, regulatory policy, sound banking practice,
and the policies of the SEC as of the date of such financial statements. Ryan,
Beck reviewed certain operating forecasts and financial projections (and the
assumptions and bases therefore) provided by Camden and KSB. Ryan, Beck assumed
that such forecasts and projections reflected the best currently available
estimates and judgments of the respective managements. In certain instances,
for the purposes of its analyses, Ryan, Beck made adjustments to such forecasts
and projections which in Ryan, Beck's judgment were appropriate under the
circumstances. Ryan, Beck was not retained to, nor did it make any independent
evaluation or appraisal of, the assets or liabilities of Camden, KSB or their
respective subsidiaries nor did Ryan, Beck review any loan files of Camden, KSB
or their respective subsidiaries. Ryan, Beck also assumed that the merger in
all respects is, and will be, undertaken and consummated in compliance with all
laws and regulations that are applicable to Camden and KSB.
The preparation of a fairness opinion on a transaction such as the merger
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances. Therefore, Ryan, Beck's opinion is not readily susceptible to
summary description. In arriving at its opinion, Ryan, Beck performed a variety
of financial analyses. Ryan, Beck believes that its analyses must be considered
as a whole and the consideration of portions of such analyses and the factors
considered therein, or any one method of analysis, without considering all
factors and analyses, could create an incomplete view of the analyses and the
process underlying Ryan, Beck's opinion. No one method of analysis was assigned
a greater significance than any other.
26
<PAGE>
The forecasts and projections furnished to Ryan, Beck were prepared by the
respective managements of Camden and KSB without input or guidance by Ryan,
Beck. Camden and KSB do not publicly disclose internal management projections
of the type provided to Ryan, Beck in connection with the review of the merger.
Such projections were not prepared with a view towards public disclosure. The
public disclosure of such projections could be misleading since the projections
were based on numerous variables and assumptions which are inherently
uncertain, including, without limitation, factors related to general economic
and competitive conditions. Accordingly, actual results could vary
significantly from those set forth in such projections.
In its analyses, Ryan, Beck made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond the control of Camden or KSB. Any estimates
contained in Ryan, Beck's analyses are not necessarily indicative of future
results or values, which may be significantly more or less favorable than such
estimates. Estimates of values of companies do not purport to be appraisals nor
do they necessarily reflect the prices at which companies or their securities
may actually be sold.
Ryan, Beck's opinion was based solely upon the information available to it
and the economic, market and other circumstances as they existed as of the date
of the opinion. Ryan, Beck did not and does not express any opinion as to the
price or range of prices at which the Camden common stock might trade
subsequent to the merger. Events occurring after such date could materially
affect the assumptions and conclusions contained in Ryan, Beck's opinion. Ryan,
Beck has not undertaken to reaffirm or revise its opinion or otherwise comment
upon any events occurring after the date of its opinion.
The following is a brief summary of the analyses and procedures performed by
Ryan, Beck in the course of arriving at its opinion. The summary does not
purport to be a complete description, but is a brief summary of the material
analyses and procedures performed by Ryan, Beck in the course of arriving at
its opinion.
Analysis of Selected Publicly Traded Companies. Ryan, Beck compared the
financial data for KSB as of or for the latest twelve months ended March 31,
1999 to a peer group of seventeen selected thrifts located in the New England
region of the United States with assets between $100 million and $500 million
for which public trading and pricing information was available. Ryan, Beck
deemed this group to be generally comparable to KSB.
27
<PAGE>
The following table compares selected statistics of KSB with the median
ratios and average ratios for the seventeen selected thrifts comprising the
peer group:
<TABLE>
<CAPTION>
KSB Peer Average Peer Median
------ ------------ -----------
<S> <C> <C> <C>
Total Equity / Assets................... 8.11% 10.74% 8.82%
Tangible Equity / Tangible Assets....... 7.38 10.61 8.82
Non-Performing Loans / Loans............ 1.58 0.41 0.40
Loan Loss Reserves / Non-Performing
Loans.................................. 87.82 359.90 209.26
Loan Loss Reserves / Loans.............. 1.39 1.28 1.04
Total Loans / Total Assets.............. 70.63 70.27 71.17
1-4 Family Loans / Total Loans.......... 53.87 65.82 67.26
Multi-Family Loans / Total Loans........ 3.57 4.41 2.42
Construction & Developmental Loans /
Loans.................................. 2.12 2.60 2.37
Other Real Estate Loans / Loans......... 30.03 21.34 19.88
Real Estate Loans / Total Loans......... 89.58 91.17 94.12
Transaction Accounts / Deposits......... 28.37 19.46 16.84
Time Deposits > $100,000 / Deposits..... 5.37 11.57 8.83
Return on Average Assets................ 1.12 1.06 0.99
Return on Average Equity................ 14.09 11.19 11.79
Net Interest Margin..................... 4.68 3.84 3.78
Non-Interest Income / Average Assets.... 0.81 0.56 0.49
Non-Interest Expense / Average Assets... 3.18 2.69 2.61
Yield on Interest Earning Assets........ 8.47 7.48 7.53
Cost of Interest Bearing Liabilities.... 4.02 4.09 4.12
Efficiency Ratio........................ 57.28 63.13 65.12
Stock Price as of July 23, 1999......... $14.00 -- --
Price / LTM EPS......................... 9.86x 12.93x 11.75x
Price / Book Value...................... 126.35% 120.38% 117.19%
Price / Tangible Book Value............. 139.86 122.46 121.86
Market Capitalization ($M).............. $17.78 $34.02 $31.43
Dividend Yield.......................... 1.14% 2.33% 2.23%
</TABLE>
Ryan, Beck noted that the performance of KSB as measured by return on
average assets and return on average equity was superior to that of the peer
group. It was further noted that KSB's net interest margin and non-interest
income to average assets was greater than the peer group; moreover, KSB's non-
interest expense to average assets was also greater than the peer group, giving
Camden the opportunity to achieve significant cost savings. Additionally
however, Ryan, Beck noted that KSB had a higher level of non-performing loans
and a lower loan loss reserve as measured by loan loss reserves as a percent of
non-performing loans than that of its peers. KSB has a significantly higher
level of other real estate loans, including commercial real estate loans and
has a lower level of 1-4 family loans than its peers. Lastly, Ryan, Beck noted
that KSB was trading at a lower multiple to earnings, but at a higher
percentage of book value and tangible book value, when compared to its peers.
KSB's dividend yield was less than that of the peer group.
28
<PAGE>
Ryan, Beck also compared Camden's financial data as of or for the latest
twelve months ended March 31, 1999 with that of a group of seventeen selected
commercial banking organizations located in the New England region of the
United States with assets between $200 million and $900 million for which
public trading and pricing information was available. Ryan, Beck deemed this
group to be generally comparable to Camden. The following table compares
selected statistics of Camden with the median ratios and average ratios for the
seventeen selected commercial banking organizations comprising the peer group:
<TABLE>
<CAPTION>
Camden Peer Average Peer Median
------- ------------ -----------
<S> <C> <C> <C>
Total Equity/Assets.................... 9.49% 8.94% 8.95%
Non-Performing Loans/Loans............. 0.80 0.94 0.71
Loan Loss Reserves/NPLs................ 199.62 238.14 214.12
Loan Loss Reserves/Loans............... 1.59 1.52 1.53
Total Loans/Total Assets............... 62.08 65.50 65.08
1-4 Family Loans/Total Loans........... 38.86 47.82 53.12
Multi-Family Loans/Total Loans......... 0.36 3.58 0.92
Construction & Developmental
Loans/Loans........................... 0.85 3.19 2.82
Other Real Estate Loans/Loans.......... 19.99 28.07 26.12
Real Estate Loans/Total Loans.......... 60.07 82.66 82.66
Consumer Loans/Total Loans............. 7.01 4.86 3.62
Commercial Loans/Total Loans........... 28.78 10.99 9.30
Transaction Accounts/Deposits.......... 18.14 23.09 22.62
Time Deposits > $100,000/Deposits...... 9.84 10.42 8.42
Return on Average Assets............... 1.62 1.13 1.07
Return on Average Equity............... 15.52 12.61 12.10
Net Interest Margin.................... 5.68 4.46 4.32
Non-Interest Income/Average Assets..... 0.78 0.94 0.68
Non-Interest Expense/Average Assets.... 2.92 3.33 3.17
Yield on Interest Earning Assets....... 9.71 7.98 7.73
Cost of Interest Bearing Liabilities... 4.26 4.19 4.21
Efficiency Ratio....................... 52.12 64.24 64.00
Stock Price as of July 23, 1999........ $ 20.00 -- --
Price/LTM EPS.......................... 13.61x 12.78x 12.28x
Price/Book Value....................... 203.46% 152.17% 147.05%
Market Capitalization ($M)............. $132.81 $ 55.62 $ 42.79
Dividend Yield......................... 3.00% 2.43% 2.42%
</TABLE>
Ryan, Beck noted that the performance of Camden as measured by return on
average assets and return on average equity was superior to that of the peer
group. It was further noted that Camden's net interest margin and non-interest
expense to average assets was superior to the peer group; however Camden's non-
interest income to average assets was lower than the peer group. Additionally,
Ryan, Beck noted that Camden had a similar level of non-performing loans as the
peer group and a loan loss reserve comparable to its peers. Camden has a
significantly lower level of real estate loans compared to its peers, however
Camden's loan portfolio included a larger proportion of higher yielding
commercial and consumer loans than its peers. Lastly, Ryan, Beck noted that
Camden was trading at a slightly higher multiple to earnings and book value,
when compared to its peers. Camden's dividend yield was also greater than that
of the peer group.
Analysis of Selected Transactions. Ryan, Beck compared KSB's financial data
as of March 31, 1999 with that of a group of eleven selected transactions
announced since July 1, 1998 and for which pricing data pertaining to the
transactions was publicly available. Ryan, Beck deemed these companies to be
generally comparable to KSB. The criterion for this group was thrifts acquired
with announced deal values less than $50 million and with tangible equity to
tangible assets less than 10%. The following table compares selected
29
<PAGE>
statistics of KSB with the median ratios and average ratios for the eleven
acquired companies in these transactions:
<TABLE>
<CAPTION>
Peer Group Peer Group
KSB Median Average
-------- ---------- ----------
<S> <C> <C> <C>
Total Assets (000)......................... $173,423 $127,409 $130,449
Tangible Equity/Tangible Assets............ 7.38% 7.15% 7.20%
YTD Return on Average Assets............... 1.06 0.70 0.69
YTD Return on Average Equity............... 13.17 9.86 9.58
Non-Performing Assets/Assets............... 1.15 0.93 1.32
LTM Operating Expenses/Assets.............. 2.29 2.20 2.48
YTD Efficiency Ratio....................... 59.26 70.48 73.00
</TABLE>
Using Camden's July 23, 1999 stock price of $20.00 and the 1.136 exchange
ratio, Ryan, Beck assumed a transaction value of $22.72 per share. Ryan, Beck
calculated the transaction value as a multiple of KSB's March 31, 1999 stated
book value, tangible book value, latest twelve months diluted earnings, core
deposit premium over tangible equity and stock price as follows:
<TABLE>
<S> <C>
Percentage of Stated Book Value................................... 205.05%
Percentage of Tangible Book Value................................. 226.97%
Multiple of Latest Twelve Months Diluted Earnings................. 16.00x
Core Deposit Premium over Tangible Equity......................... 12.97%
</TABLE>
The average and median pricing ratios for the comparable transactions are
illustrated in the chart below:
<TABLE>
<CAPTION>
Price/ Price/Tangible Price/ Core Deposit
Book Value Book Value LTM Earnings Premium
---------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Average............... 207.46% 208.53% 23.57x 13.27x
Median................ 206.29 206.29 23.63 11.45
</TABLE>
Ryan, Beck then adjusted the peer group statistics to reflect the change in
the Nasdaq Bank Stock Index from the date of announcement of each stock
transaction to the closing value of the index on July 23, 1999. The adjusted
average and median pricing ratios for the comparable transactions are
illustrated in the chart below:
<TABLE>
<CAPTION>
Price/ Price/Tangible Price/ Core Deposit
Book Value Book Value LTM Earnings Premium
---------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Average............... 207.58% 208.67% 23.26x 13.26x
Median................ 207.05 207.05 23.03 11.53
</TABLE>
The imputed value of KSB, based upon the average and median ratios of the
comparable transactions, as adjusted, can be seen in the chart below:
<TABLE>
<CAPTION>
Price/ Price/Tangible Price/ Core Deposit
Book Value Book Value LTM Earnings Premium
---------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Average............... $23.00 $20.89 $33.17 $23.01
Median................ $22.94 $20.73 $32.69 $21.31
</TABLE>
No company or transaction used in the Analysis of Selected Publicly Traded
Companies and Analysis of Selected Transactions sections is identical to
Camden, KSB or the merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies involved, market areas in which the companies operate and other
factors that could affect the trading values of the securities of the company
or companies to which they are being compared.
30
<PAGE>
Impact Analysis. Ryan, Beck analyzed the merger in terms of its effect on
Camden's 2000 and 2001 earnings per share, stated book value and tangible book
value, based on KSB's projected 2000 and 2001 earnings. The projected earnings
for Camden and KSB were derived from information provided by the managements of
Camden and KSB, using certain assumed growth rates. Based upon certain
assumptions, including those with respect to cost savings and other synergies
from the merger, the stand-alone earnings projections provided by Camden and
KSB and one-time transaction costs, the analysis showed that the merger would
be accretive to Camden's projected 2000 fiscal year earnings per share by
approximately 2.60%, accretive to projected 2001 fiscal year earnings per share
by approximately 3.24%, dilutive to Camden's stated book value per share by
approximately 0.79% and dilutive to Camden's tangible book value per share by
approximately 0.50% based upon stated and tangible book value as of June 30,
1999. These forward-looking projections may be affected by many factors beyond
the control of Camden and/or KSB, including the future direction of interest
rates, economic conditions in the companies' market places, the actual amount
and timing of cost savings achieved through the merger, the actual level of
revenue enhancements brought about through the merger, future regulatory
changes and various other factors. The actual results achieved may vary from
the projected results and the variations may be material.
Discounted Dividend Analysis. Using a discounted dividend analysis, Ryan,
Beck estimated the present value of the future dividend stream that KSB could
produce in perpetuity. Projection ranges for KSB's five-year balance sheet and
income statement were provided by KSB's management. Management's projections
were based upon various factors and assumptions, many of which are beyond the
control of KSB. These projections are, by their nature, forward-looking and may
differ materially from the actual future values or actual future results for
the reasons discussed above. The actual future values or results may be
significantly more or less favorable than suggested by such projections. In
producing a range of per share KSB values, Ryan, Beck utilized the following
assumptions: discount rates range from 12% to 14%, terminal price/earnings
multiples range from 11x to 13x (which, when applied to terminal year estimated
earnings, produces a value which approximates the net present value of the
dividends in perpetuity, given certain assumptions regarding growth rates and
discount rates) and earnings that include estimated savings in KSB's non-
interest expense equal to 22.3% in the first year following the merger, and
27.8% in the second year following the merger, with 5.00% growth thereafter.
The discounted dividend analysis produced the range of net present values per
share of the KSB common stock illustrated in the chart below:
<TABLE>
<CAPTION>
Discount Rates
--------------------
12% 13% 14%
------ ------ ------
<S> <C> <C> <C> <C>
Terminal Year................................. 11x $26.24 $25.18 $24.18
Multiple...................................... 12x $27.96 $26.82 $25.74
Of Earnings................................... 13x $29.67 $28.45 $27.29
</TABLE>
These analyses do not purport to be indicative of actual values or expected
values or an appraisal range of the shares of the KSB common stock. The
discounted dividend analysis is a widely used valuation methodology, but Ryan,
Beck noted that it relies on numerous assumptions, including expense savings
levels, dividend payout rates, terminal values and discount rates, the future
values of which may be significantly more or less than such assumptions. Any
variation from these assumptions would likely produce different results.
In connection with Ryan, Beck's updated opinion dated as of the date of this
Joint Proxy Statement/Prospectus and contained as Annex B, Ryan, Beck confirmed
the appropriateness of its reliance on the analyses used to render its July 27,
1999 opinion by performing procedures to update certain of such analyses and by
reviewing the assumptions and conclusions contained in the July 27, 1999
opinion.
With regard to Ryan, Beck's services in connection with the merger, Camden
will pay Ryan, Beck a transaction fee in connection with the merger, a
substantial part of which is contingent upon the consummation of the merger.
Camden will pay a transaction fee of approximately $300,000, of which $75,000
has been paid
31
<PAGE>
and the remainder of which will be paid when the merger is consummated. In
addition, Camden has agreed to reimburse Ryan, Beck for its reasonable out-of-
pocket expenses, which shall not exceed $10,000 without the prior consent of
Camden. Camden has also agreed to indemnify Ryan, Beck and certain related
persons against certain liabilities, including liabilities under federal
securities laws, incurred in connection with its services. The amounts of Ryan,
Beck's fees were determined by negotiation between Camden and Ryan, Beck.
Prior to this engagement, Ryan, Beck has not had an investment banking
relationship with Camden. Ryan, Beck's research department does not provide
published investment analysis of Camden, and Ryan, Beck does not make a market
in the Camden common stock.
Ryan, Beck has not had an investment banking relationship with KSB. Ryan,
Beck's research department does not provide published investment analysis of
KSB, and Ryan, Beck does not make a market in the KSB common stock.
Opinion of KSB's Financial Advisor
In July 1999, KSB retained Keefe, Bruyette to offer financial advisory and
investment banking services in connection with strategic planning and merger
and acquisition transactions.
Keefe, Bruyette is a nationally recognized investment banking firm, and as
part of its investment banking business, is regularly engaged in the valuation
of bank, bank holding company, and thrift institution securities in connection
with mergers and acquisitions, negotiated underwritings, distributions of
listed and unlisted securities, private placements, and valuations for various
other purposes. Keefe, Bruyette is familiar with the market for common stocks
of publicly traded banks, thrifts, and bank and thrift holding companies. The
KSB Board selected Keefe, Bruyette based on Keefe, Bruyette's qualifications,
reputation, and its experience and expertise in transactions similar to the
merger. Keefe, Bruyette has acted exclusively for the KSB Board in rendering
its fairness opinion and will receive a fee for its services.
Pursuant to its engagement, Keefe, Bruyette was asked to render an opinion
as to the fairness, from a financial point of view, of the exchange ratio to
stockholders of KSB. Keefe, Bruyette delivered its opinion to the KSB Board
that, as of July 27, 1999, the exchange ratio is fair, from a financial point
of view, to the stockholders of KSB. No limitations were imposed by the KSB
Board upon Keefe, Bruyette with respect to the investigations made or
procedures followed by it in rendering its opinion. Keefe, Bruyette has
consented to the inclusion herein of the summary of its opinion to the KSB
Board and to the reference to the entire opinion attached hereto as Annex C.
The full text of the opinion of Keefe, Bruyette, which is attached as Annex
C to this Joint Proxy Statement/Prospectus, sets forth certain assumptions
made, matters considered, and limitations on the review undertaken by Keefe,
Bruyette, and should be read in its entirety. The summary of the opinion of
Keefe, Bruyette set forth in this Joint Proxy Statement/Prospectus is qualified
in its entirety by reference to the opinion.
In rendering its opinion, Keefe, Bruyette reviewed certain financial and
other business data supplied to it by KSB and Camden, including: (i) the merger
agreement; (ii) KSB's audited financial statements and proxy statements for the
years ended December 31, 1996, 1997 and 1998; (iii) KSB's Form 10-QSB as of
March 31, 1999 and internally prepared financial statements for the quarter
ended June 30, 1999; (iv) Camden's audited financial statements and proxy
statements for the years ended December 31, 1996, 1997 and 1998; (v) Camden's
Form 10-Q as of March 31, 1999 and internally prepared financial statements for
the quarter ended June 30, 1999; and (vi) other information Keefe, Bruyette
deemed relevant. Keefe, Bruyette also discussed the current position and
prospective outlook for KSB with the company's senior management and board of
directors. In addition, Keefe, Bruyette reviewed financial and stock market
data of other savings institutions, particularly in the Northeastern region of
the United States, and the financial and structural terms of several other
recent transactions involving mergers and acquisitions of savings institutions
or proposed changes of control of comparably situated companies.
32
<PAGE>
In rendering its opinion, Keefe, Bruyette relied, without independent
verification, on the accuracy and completeness of the material furnished to it
by KSB and Camden and the material otherwise made available to it, including
information from published sources. With respect to the financial information,
including asset valuations Keefe, Bruyette received from KSB, Keefe, Bruyette
assumed (with KSB's consent) that they had been reasonably prepared reflecting
the best currently available estimates and judgement of KSB's management. In
addition, Keefe, Bruyette did not make or obtain any independent appraisals or
evaluations of the assets or liabilities, and potential and/or contingent
liabilities of KSB or Camden. Keefe, Bruyette further relied on the assurances
of KSB and Camden management that they are not aware of any facts that would
make such information inaccurate or misleading. Keefe, Bruyette's opinion is
necessarily based on the market, economic, and other relevant considerations as
they existed and could be evaluated on the date thereof.
Analysis of Recent Comparable Acquisition Transactions. In rendering its
opinion, Keefe, Bruyette analyzed certain comparable merger and acquisition
transactions of pending thrift deals, comparing the acquisition price relative
to five industry-accepted ratios: transaction price to tangible book value,
transaction price to last twelve months' earnings, transaction price to total
assets, transaction price to total deposits, and premium to core deposits. The
analysis included a comparison of the average and median of the above ratios
for pending and completed acquisitions, based on the following five comparable
groups: (i) all pending and completed deals since July 1, 1998; (ii) pending
and completed thrift acquisitions with the selling thrift having a return on
average equity between 10% and 14%; (iii) pending and completed thrift
acquisitions where the target has tangible equity to assets of between 6% and
8%; (iv) pending and completed thrift acquisitions where the target thrift has
a return on average assets between 85 and 110 basis points; and (v) pending and
completed thrift acquisitions where the target is located in the New England
region. Keefe, Bruyette primarily relied on pending comparable transactions as
opposed to completed comparable transactions as the merger and acquisition
premiums received by selling institutions have changed since the stock market
correction in prices for financial institution equities which occurred in
August and September of 1998.
The information that appears in the table on the following page summarizes
the material information analyzed by Keefe, Bruyette with respect to the
merger. The summary does not purport to be a complete description of the
analysis performed by Keefe, Bruyette and should not be construed independently
of the other information considered by Keefe, Bruyette in rendering its
opinion. Selecting portions of Keefe, Bruyette's analysis or isolating certain
aspects of the comparable transactions without considering all analysis and
factors, could create an incomplete or potentially misleading view of the
evaluation process.
33
<PAGE>
Summary of Selected M&A Transactions Where the Target is a Thrift Institution
<TABLE>
<CAPTION>
Transaction Price to
------------------------------
Tangible LTM Core Dep
Book EPS Assets Deposits Premium
-------- ----- ------ -------- --------
<S> <C> <C> <C> <C> <C>
All transactions pending and completed since July 1, 1998
Pending (n-/35/)
Average............................... 183.9% 22.8x 21.5% 31.8% 18.1%
Median................................ 171.7% 23.4x 19.3% 25.8% 11.4%
Completed (n=/91/)
Average............................... 190.4% 25.5x 19.4% 25.7% 12.9%
Median................................ 184.6% 21.7x 18.7% 23.9% 12.5%
Target ROAE between 10 and 14%
Pending (n-/9/)
Average............................... 211.5% 21.5x 19.4% 24.7% 16.2%
Median................................ 227.0% 20.2x 16.5% 20.4% 12.3%
Completed (n=/18/)
Average............................... 214.0% 20.5x 19.5% 25.7% 15.2%
Median................................ 204.9% 20.2x 19.8% 27.1% 15.8%
Target tangible equity to assets is between 6% and 8%
Pending (n-/10/)
Average............................... 218.3% 21.0x 15.7% 22.5% 14.8%
Median................................ 194.7% 21.7x 14.4% 18.0% 11.3%
Completed (n=/32/)
Average............................... 212.7% 22.0x 16.3% 20.9% 12.8%
Median................................ 204.3% 21.0x 16.2% 19.5% 12.0%
Target thrift ROAA between 85 and 110 basis points
Pending (n-/12/)
Average............................... 176.5% 22.8x 21.1% 32.3% 14.3%
Median................................ 173.8% 23.0x 21.4% 31.8% 15.1%
Completed (n=/26/)
Average............................... 205.6% 20.6x 20.1% 27.6% 15.6%
Median................................ 204.6% 20.2x 19.8% 28.2% 17.0%
Target located in the New England Region
Pending (n-/4/)
Average............................... 151.2% 21.6x 16.4% 22.6% 9.1%
Median................................ 151.2% 21.6x 16.4% 22.6% 9.1%
Completed (n=/31/)
Average............................... 192.8% 24.3x 19.1% 26.9% 13.1%
Median................................ 192.6% 22.7x 19.1% 26.4% 13.0%
Average and Median for all five groups combined
Pending
Average............................... 188.3% 21.9x 18.8% 26.8% 14.5%
Median................................ 173.8% 21.7x 16.5% 22.6% 11.4%
Completed
Average............................... 203.1% 22.6x 18.9% 25.4% 13.9%
Median................................ 204.3% 21.0x 19.1% 26.4% 13.0%
Camden Proposal
$23.00 stock............................ 229.9% 16.0x 16.8% 22.2% 12.9%
</TABLE>
34
<PAGE>
No company or transaction used as a comparison in the above analysis is
identical to KSB, Camden, or the merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
The summary contained herein provides a summary description of the material
analyses prepared by Keefe, Bruyette in connection with the rendering of its
opinion. The preparation of a fairness opinion is not necessarily susceptible
to partial analysis or summary description. Keefe, Bruyette believes that its
analysis and the summary set forth above must be considered as a whole and that
selecting portions of its analysis without considering all analyses, or
selecting part of the above summary, without considering all factors and
analyses, would create an incomplete view of the process underlying the
analysis set forth in Keefe, Bruyette's presentation and opinion. The ranges of
valuations resulting from any particular analysis described above should not be
taken to be Keefe, Bruyette's view of the actual value of KSB or Camden. The
fact that any specific analysis has been referred to in the summary above is
not meant to indicate that such analysis was given greater weight than any
other analysis.
In preparing its analysis, Keefe, Bruyette made numerous assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which are beyond the control of Keefe, Bruyette and KSB. The
analyses performed by Keefe, Bruyette are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable
than suggested by such analyses and do not purport to be appraisals or reflect
the prices at which a business may be sold or the prices at which any
securities may trade at the present time or at any time in the future. In
addition, as described above, Keefe, Bruyette's opinion, together with its
presentation to the KSB Board, was just one of the many factors taken into
consideration by the KSB Board in approving the merger agreement.
Pursuant to the engagement letter with KSB, Keefe, Bruyette will receive a
fee equal to 0.50% of the consideration paid to KSB stockholders. As of the
date of the Joint Proxy Statement/Prospectus, Keefe, Bruyette has received
$50,000 of such fee. The remainder is due upon closing of the merger. KSB has
also agreed to indemnify Keefe, Bruyette against certain liabilities, including
liabilities under the federal securities laws, and to reimburse Keefe, Bruyette
for certain out-of-pocket expenses.
Other Interests of Officers and Directors in the Merger
In considering the recommendations of the Camden Board and KSB Board with
respect to the merger, holders of Camden and KSB common stock should be aware
that officers and directors of Camden and KSB have interests in the merger that
are different from, or in addition to, the interests of the stockholders of
Camden and KSB generally. The Camden Board and KSB Board were aware of such
interests and considered them, among other matters, in approving the merger
agreement and the matters and transactions contemplated thereby, including the
merger.
As of August 31, 1999, the directors and executive officers of KSB owned an
aggregate of approximately 244,386 shares of KSB common stock and held options
to purchase an aggregate of approximately 77,998 shares of KSB common stock at
a weighted average exercise price of approximately $16.19. Pursuant to the
terms of the merger agreement, KSB's directors and executive officers will
receive the same consideration for their shares of KSB common stock as the
other KSB stockholders. Upon completion of the merger, all outstanding options
to purchase KSB common stock will be converted into options to purchase common
stock of the surviving corporation as described under "The Merger Agreement--
KSB Stock Options."
Witherspoon Employment Agreement. Camden, as the surviving corporation, will
enter into an employment agreement with John C. Witherspoon, the President and
Chief Executive Officer of KSB, pursuant to which Camden will cause the
surviving bank, which will be a wholly-owned subsidiary of Camden following the
merger, to employ Mr. Witherspoon as President and Chief Executive Officer. In
carrying out his
35
<PAGE>
duties thereunder, Mr. Witherspoon will report to the President and Chief
Executive Officer of Camden and oversee and direct the operations of the
surviving bank. The employment agreement with Mr. Witherspoon will be
substantially similar to the existing employment agreement between Mr. Daigle
and Camden. See "Proposal 2--Election of Directors--Mr. Daigle's Employment
Agreement." In addition, Mr. Witherspoon has waived certain benefits under his
employment agreement with KSB.
Termination Benefits and Severance Obligations.
Camden has agreed to honor and will cause its subsidiaries to honor all
individual employment agreements in existence prior to the execution of the
merger agreement and all provisions for benefits or other amounts earned or
accrued through the Effective Time under any of KSB's compensation and benefit
plans.
Each of John E. Thien, the Chief Financial Officer of KSB, and Gordon A.
Flint, a Vice President of KSB, is party to a special termination agreement
with KSB that provides, upon his termination of employment after a change in
control for any reason other than for cause or voluntary resignation not for
good reason, a lump sum payment equal to two times his annual salary in effect
immediately prior to his date of termination. In addition, Mr. Thien and Mr.
Flint will each be entitled to continuation of life, health and disability
benefits for a period of 24 months following his date of termination or until
he becomes employed by another employer, whichever is earlier.
Camden has agreed that any non-exempt employees of United, KSB or Kingfield
who are not offered employment with the surviving corporation or any of its
affiliated companies, or whose employment with the surviving corporation or any
of its affiliated companies is terminated within three months following the
Effective Time, as a result of the merger for any reason other than for cause
will be entitled to receive, after the date of termination, one week of salary
continuation at the level of salary in effect immediately prior to such
termination for each full year of prior service with United, KSB or Kingfield
prior to the Effective Time. Such salary continuation payments will be made on
the same days that the surviving bank makes its normal payroll, and will
continue for a minimum of four weeks and a maximum of 26 weeks.
Camden has agreed that any exempt employees of United, KSB or Kingfield
having an annual base salary of up to $60,000 and who are not offered
employment with the surviving corporation or any of its affiliated companies,
or whose employment with the surviving corporation or any of its affiliated
companies is terminated within three months following the Effective Time, as a
result of the merger for any reason other than for cause will be entitled to
receive, after the date of termination, two weeks of salary continuation at the
level of salary in effect immediately prior to such termination for each full
year of prior service with United, KSB or Kingfield prior to the Effective
Time. Such salary continuation payments will be made on the same days that the
surviving bank makes its normal payroll, and will continue for a minimum of
four weeks and a maximum of 26 weeks. Employees covered by the terms of this
paragraph will also be eligible for outplacement services costing up to $500.
Camden has agreed that any exempt employees of United, KSB or Kingfield
having an annual base salary of $60,000 or more and who are not offered
employment with the surviving corporation or any of its affiliated companies,
or whose employment with the surviving corporation or any of its affiliated
companies is terminated within three months following the Effective Time, as a
result of the merger for any reason other than for cause will be entitled to
receive, after the date of termination, two weeks of salary continuation at the
level of salary in effect immediately prior to such termination for each full
year of prior service with United, KSB or Kingfield prior to the Effective
Time. Such salary continuation payments will be made on the same days that the
surviving bank makes its normal payroll, and will continue for a minimum of
eight weeks and a maximum of 52 weeks. Employees covered by the terms of this
paragraph will also be eligible for outplacement services costing up to $1,000.
In the event an employee covered by the terms of this paragraph becomes
employed by an employer other than the surviving corporation or any of its
affiliated companies, the salary continuation payments shall cease as of his
new employment date.
Camden will continue to provide health and dental benefits, if any, to any
terminated employee receiving salary continuation payments until such time as
those payments cease.
36
<PAGE>
Stock Options and Restricted Stock. In general, holders of options to
purchase KSB common stock will automatically have their options converted into
options to purchase shares of Camden common stock and Camden will assume each
such option subject to the terms of KSB's stock option plans; provided,
however, that from and after the completion of the merger, (1) the number of
shares of Camden common stock purchasable upon exercise of each KSB option will
be equal to the number of shares of KSB common stock that were purchasable
under such KSB option immediately prior to the completion of the merger
multiplied by the exchange ratio, rounded to the nearest whole share (with .5
being rounded up), and (2) the per share exercise price under each such KSB
option shall be adjusted by dividing the per share exercise price of each such
KSB stock option by the exchange ratio, rounding to the nearest cent. Each KSB
option shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization, or
other similar transaction with respect to the surviving corporation's common
stock on or subsequent to the completion of the merger.
At the Effective Time, all stock options held by officers and employees will
become fully exercisable, in accordance with the terms of the respective grants
under KSB's stock option plans. These options include the options held by
Messrs. Witherspoon, Flint, Thien, Stone and Belanger as follows:
. Mr. Witherspoon--13,600 shares subject to option;
. Mr. Flint--4,000 shares subject to option;
. Mr. Thien--4,000 shares subject to option;
. Mr. Stone--6,400 shares subject to option;
. Mr. Belanger--6,400 shares subject to option.
In addition, John C. Witherspoon has agreed in connection with the merger to
waive certain of his change in control benefits, including acceleration of
vesting of stock grants. Mr. Witherspoon's options will be converted into
options to purchase common stock of the surviving corporation in accordance
with the provisions discussed above. The treatment of options is more fully
described under "The Merger Agreement--KSB Stock Options."
Composition of the Surviving Corporation Board. Camden, as the surviving
corporation, will be governed by a twelve member board of directors upon
completion of the merger, including the two KSB directors nominated by Camden
pursuant to Proposal 2 and ten current members of the Camden Board. For
information regarding the two nominees and the ten continuing directors, see
"Proposal 2--Information Regarding Nominees, Continuing Directors and Executive
Officers." With the exception of Robert W. Daigle, none of the directors of the
surviving corporation will be employees of the surviving corporation.
Directors and Officers Indemnification and Insurance. As described in "The
Merger Agreement--Material Covenants--Indemnification," the merger agreement
provides that all rights to indemnification and limitations on liabilities
existing in favor of the current or former directors or officers of KSB or
Kingfield as provided in their respective charters or bylaws or comparable
organizational documents, as they existed on the date the merger agreement was
signed, will continue from and after the completion of the merger with respect
to claims based upon actions or omissions occurring prior to the consummation
of the merger. In addition, Camden will use its reasonable best efforts to
cause the persons serving as officers and directors of KSB immediately prior to
the completion of the merger to be insured for three years from the completion
of the merger by directors' and officers' liability insurance on terms and
conditions that are no less favorable, as to coverage and amounts, than those
of KSB's existing policy. Such insurance coverage would apply to claims based
upon acts or omissions occurring prior to the completion of the merger.
Stock Option Agreement
The following is a description of the material terms of the stock option
agreement. All stockholders of Camden and KSB are urged to read the stock
option agreement, a copy of which has been previously filed with the SEC by
Camden, in its entirety for a complete description of its terms.
37
<PAGE>
As a condition to Camden's willingness to enter into the merger agreement,
KSB entered into the Stock Option Agreement, dated as of July 27, 1999, with
Camden. Pursuant to the stock option agreement, KSB granted Camden an option
(the "Camden Option") to purchase up to 262,932 shares of KSB common stock
(subject to adjustments), which was approximately 19.9% of the number of shares
of KSB common stock outstanding as of July 27, 1999. The exercise price of the
Camden Option is $13.50 per share, subject to adjustment under specified
circumstances.
Arrangements such as the stock option agreement are often entered into in
connection with corporate mergers and acquisitions in an effort to increase the
likelihood that the transactions will be completed in accordance with their
terms, and to compensate the recipient of the option for its efforts and
expenses, losses and opportunity costs in connection with the transactions if
they are not completed due to circumstances involving an acquisition or
potential acquisition of the option issuer by a third party. The stock option
agreement may have the effect of discouraging offers by third parties to
acquire KSB prior to the merger even if such persons are prepared to pay more
than the consideration to be received by the KSB stockholders pursuant to the
merger agreement.
The Camden Option will become exercisable in whole or in part only if both
an initial triggering event and a subsequent triggering event occur with
respect to KSB before the Camden Option terminates. In the event that Camden
becomes entitled to receive both the benefit of the Camden Option (whether
through exercise or waiver) and a payment of liquidated damages, the aggregate
amount recoverable by Camden as a result of the exercise or waiver of its
rights under the Camden Option and as liquidated damages will be limited to a
maximum of $1,400,000.
For purposes of the stock option agreement:
(A) An initial triggering event will occur if one of the following
events occurs:
(1) KSB, without Camden's prior written consent, enters into an
agreement to engage in an "acquisition transaction" of a type specified
in the stock option agreement as described below with a third party, or
the KSB Board recommends that its stockholders approve or accept any
acquisition transaction;
(2) KSB, without Camden's prior written consent, authorizes,
recommends, proposes or publicly announces its intention to authorize,
recommend or propose an acquisition transaction with a third party or
if the KSB Board publicly withdraws or modifies or publicly announces
its intention to withdraw or modify, in any manner adverse to Camden,
its recommendation that the KSB stockholders approve the transactions
contemplated by the merger agreement in anticipation of engaging in an
acquisition transaction with a third party, or if the KSB Board
publicly announces its intention not to recommend that its stockholders
approve the transactions contemplated by the merger agreement because
of or in connection with an actual or proposed acquisition transaction
with a third party;
(3) A third party acquires beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares
of the KSB common stock;
(4) A third party makes a bona fide proposal to KSB or its
stockholders to engage in an acquisition transaction and such proposal
has been publicly announced or disclosed;
(5) KSB breaches and does not cure within a specified time period
any covenant or obligation contained in the merger agreement after an
overture is made by a third party to engage in an acquisition
transaction, and following such breach Camden would be entitled to
terminate the merger agreement; or
(6) Any person other than Camden or any subsidiary of Camden, other
than in connection with a transaction to which Camden has given its
prior written consent, files an application or notice with
38
<PAGE>
the Federal Reserve Board, or other federal or state bank regulatory
authority, which application or notice has been accepted for
processing, for approval to engage in an acquisition transaction.
(B) As used above in (A), "acquisition transaction" means:
(1) a merger or consolidation or any similar transaction involving
KSB;
(2) a purchase, lease or other acquisition of all or a substantial
portion of the consolidated assets or consolidated deposits of KSB;
(3) a purchase or other acquisition (including by merger,
consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of KSB; or
(4) any substantially similar transaction; provided, however, that
in no event will a transaction contemplated by the merger agreement or
any merger, consolidation, purchase or similar transaction involving
only KSB be deemed to be an acquisition transaction, provided such
transaction is not entered into in violation of the merger agreement.
(C) A subsequent triggering event will occur if one of the following
events occurs:
(1) any person acquires beneficial ownership of 20% or more of the
then outstanding shares of KSB common stock; or
(2) the initial triggering event described above in clause (A)(1)
occurs, except that the percentage referred to in clause (B)(3) of the
definition of "acquisition transaction" set forth above is 20%.
The Camden Option will terminate upon the earliest to occur of:
. the completion of the merger;
. the termination of the merger agreement in accordance with its terms if
such termination occurs prior to the occurrence of an initial triggering
event, except a termination by Camden due to a volitional breach by KSB
of a representation, warranty or covenant; or
. the passage of twelve months after termination of the merger agreement
if such termination follows the occurrence of an initial triggering
event or is a termination by Camden due to a volitional breach by KSB of
a representation, warranty or covenant.
Upon the occurrence of a subsequent triggering event that occurs prior to
the termination of the Camden Option, Camden will have registration rights with
respect to the shares of KSB common stock issued under or issuable pursuant to
the Camden Option.
The stock option agreement also provides that within 90 days after the
occurrence of a subsequent triggering event and immediately prior to the
occurrence of a Repurchase Event (as defined below), upon request, KSB will
repurchase the Camden Option and all or any part of the shares received upon
the full or partial exercise of the Camden Option from the holder thereof. Such
repurchase of the Camden Option shall be made at an aggregate price equal to
the amount by which the Market/Offer Price exceeds the Camden Option price
multiplied by the number of shares then subject to the Camden Option. To the
extent Camden previously acquired shares of KSB common stock upon the exercise
of part of the Camden Option, such shares shall be repurchased by KSB at the
Market/Offer Price. The term "Market/Offer Price" means the highest of the
following:
. the price per share at which a tender or exchange offer has been made
for KSB common stock in connection with the Repurchase Event;
. the price per share of KSB common stock that any third party is to pay
pursuant to an agreement with KSB in connection with the Repurchase
Event;
39
<PAGE>
. the highest closing price per share of KSB common stock within the six-
month period immediately preceding the date that notice to repurchase is
given; and
. if there is a sale of all or a substantial portion of KSB's assets, the
sum of the price paid for such assets and the current market value of
the remaining assets (as determined by a nationally recognized
investment banking firm), divided by the number of shares of KSB common
stock outstanding at the time of such sale.
The term "Repurchase Event" is defined in the stock option agreement to mean
(1) the acquisition by any third party of beneficial ownership of 50% or more
of the outstanding shares of the KSB common stock or (2) the consummation of a
merger, consolidation or similar transaction involving KSB or any purchase,
lease or other acquisition of all or a substantial portion of the assets of KSB
unless such transaction would not constitute an "acquisition transaction," in
either case provided that a subsequent triggering event shall have occurred
before the termination of the Camden Option.
Pursuant to the terms of the stock option agreement, if, prior to the
termination of the Camden Option, KSB enters into an extraordinary transaction
in which KSB is effectively not the surviving corporation, the Camden Option
may be converted into, or exchanged for, an option with terms similar to those
of the Camden Option being converted or exchanged, as the case may be, to
purchase stock of the entity that is the effective successor to KSB.
The stock option agreement generally provides that neither Camden nor KSB
may assign any of its respective rights or obligations thereunder without the
written consent of the other party. However, if a subsequent triggering event
occurs before the termination of the Camden Option, Camden may, subject to
limitations, assign its rights and obligations thereunder in whole or in part
within 90 days following the subsequent triggering event (subject to extension
in certain cases); provided, however, that until fifteen days after the Federal
Reserve Board approves an application by Camden under the Bank Holding Company
Act of 1956, as amended, to acquire the option shares, Camden may not assign
its rights under the Camden Option except in one of the following ways:
. a widely dispersed public distribution;
. a private placement in which one party does not acquire the right to
purchase in excess of 2% of the voting shares of KSB;
. an assignment to a single party (e.g., a broker or investment banker)
for the purpose of conducting a widely dispersed public distribution on
Camden's behalf; or
. any other manner approved by the Federal Reserve Board.
To the best knowledge of KSB and Camden, no event giving rise to any rights
to exercise the Camden Option has occurred as of the date of this Joint Proxy
Statement/Prospectus.
Accounting Treatment
The merger is expected to be accounted for as a pooling of interests in
accordance with GAAP. In connection with the merger, Camden expects to reissue
approximately 125,000 shares of treasury stock. The proceeds received from the
reissued shares could vary materially from those assumed in our estimates.
No Dissenters' or Appraisal Rights
Holders of Camden common stock and KSB common stock are not entitled to
dissenters' or appraisal rights under Maine or Delaware law in connection with
the merger. See "Comparison of Rights of Holders of KSB Common Stock and Camden
Common Stock--Appraisal/Dissenters' Rights."
40
<PAGE>
Stock Exchange Listing of Surviving Corporation's Common Stock; Delisting and
Deregistration of KSB Stock
It is a condition to the merger that the AMEX approve for listing the shares
of Camden common stock to be issued in the merger. Camden common stock is
listed on the AMEX under the symbol "CAC." Upon completion of the merger, KSB
common stock will be delisted from the Nasdaq National Market and deregistered
under the Securities Exchange Act. See "Comparative Per Share Market Price and
Dividend Information."
Dividends
Camden, as the surviving corporation, expects that after the completion of
the merger, subject to approval and declaration by its board of directors, it
will declare regularly scheduled cash dividends on the shares of its common
stock consistent with past practices. The current annualized rate of cash
dividends on the shares of Camden common stock is $0.60 per share.
KSB expects to continue to declare regularly scheduled dividends on the KSB
common stock until the merger is completed, subject to the terms of the merger
agreement. The right of holders of KSB common stock to receive dividends will
end upon the completion of the merger when the separate corporate existence of
KSB will cease. See "Comparative Per Share Market Price and Dividend
Information."
41
<PAGE>
THE MERGER AGREEMENT
The following is a description of the material terms of the merger
agreement. A copy of the merger agreement is incorporated by reference into
this Joint Proxy Statement/Prospectus and attached as Annex A. All stockholders
of Camden and KSB are urged to read the entire merger agreement for a complete
description of the terms and conditions of the merger.
General
The merger agreement provides for a series of transactions pursuant to which
KSB will merge with and into Camden. Specifically, under the terms and subject
to the conditions of the merger agreement, Camden Acquisition Subsidiary, Inc.,
a Delaware corporation and wholly-owned subsidiary of Camden ("CASI"), will
merge with and into KSB, the separate corporate existence of CASI will cease
and KSB will survive and continue its corporate existence under the laws of the
State of Delaware as a wholly-owned subsidiary of Camden. As soon as
practicable thereafter, KSB will merge with and into Camden, the separate
corporate existence of KSB will cease and Camden will be the surviving
corporation. Subject to the satisfaction or waiver of conditions set forth in
the merger agreement and described in "Conditions to Complete the Merger," the
merger of CASI with and into KSB will become effective upon the filing of the
certificate of merger with the Secretary of State of the State of Delaware or
at such later time specified therein (the "Effective Time"). The date on which
the Effective Time occurs is the "Effective Date."
Immediately subsequent to the merger of KSB with and into Camden becoming
effective, Camden will cause its subsidiary, United Bank, to merge with and
into Kingfield Bank, KSB's former subsidiary, the separate corporate existence
of United will cease and Kingfield will be the surviving bank. Immediately
following this merger, Camden will cause the name of Kingfield to be changed.
Merger Consideration
In the merger, holders of KSB common stock will receive shares of Camden
common stock as described below.
Outstanding KSB Common Stock. With the exception of treasury shares and
shares held by KSB or Kingfield or by Camden or any of it subsidiaries (other
than in a fiduciary capacity), each share of KSB common stock issued and
outstanding immediately prior to the Effective Time will be converted into and
become the right to receive 1.136 shares of Camden common stock.
Possible Adjustments to Exchange Ratio. The exchange ratio of 1.136 may be
adjusted:
. either upwards or downwards if Camden or KSB changes the number, or
provides for the exchange, of their respective shares of common stock
outstanding as a result of a stock split, stock dividend,
recapitalization, reclassification, reorganization or similar
transaction, and the record date for such a change is prior to the
Effective Date;
. upwards but not downwards if all of the following occur:
. the average closing price of Camden common stock for the fifteen
trading days prior to receipt of the final regulatory approval
necessary to complete the merger is less than $15.75 per share;
. the decline in the price of Camden common stock from $19.75 on July
27, 1999 to the average closing price during the fifteen trading
days prior to receipt of the final regulatory approval necessary to
complete the merger, expressed as a percentage, is more than 15
percentage points greater than the price decline, if any, also
expressed as a percentage, of a weighted average index of common
stock prices of selected bank holding companies using the same
measurement dates;
42
<PAGE>
. KSB exercises its right to cancel the merger as a result of such
price decline, subject to Camden's right to require KSB to complete
the merger if Camden increases the exchange ratio of 1.136 as
provided in the merger agreement; and
. Camden so elects to increase the exchange ratio.
See "The Merger Agreement--Termination; Expenses."
Rights of Holders of KSB Common Stock at the Effective Time; KSB Stock
Transfers After the Effective Time. At the Effective Time, holders of KSB
common stock will cease to be, and will have no rights as, stockholders of KSB,
other than the right to receive any dividend or other distribution with respect
to KSB common stock with a record date occurring prior to the Effective Time
and to receive the applicable consideration in the merger. After the Effective
Time, there will be no transfers on KSB's stock transfer books of any shares of
KSB common stock.
Exchange of KSB Certificates
Prior to the Effective Time, Camden will deposit with the exchange agent,
American Stock Transfer Company, certificates representing the shares of Camden
common stock that are issuable in connection with the merger for shares of KSB
common stock. Camden will also deposit with the exchange agent an estimated
amount of the cash payable in lieu of fractional shares. As promptly as
practicable after the Effective Time, and in any event within seven business
days thereafter, Camden will cause the exchange agent to send to each holder of
record of shares of KSB common stock on the Effective Date transmittal
materials for use in the exchange of the merger consideration for certificates
representing KSB common stock. Camden will deliver to holders of KSB common
stock who surrender their certificates to the exchange agent, together with
properly executed transmittal materials and any other required documentation,
certificates representing the number of shares of Camden common stock to which
such holders are entitled. No fractional shares will be issued. Instead, Camden
will pay each holder of KSB common stock who would otherwise be entitled to a
fractional share of Camden common stock an amount in cash, without interest,
determined by multiplying such fraction by the average of the last reported
sale prices of Camden common stock on the AMEX for the five trading days
immediately before the Effective Date.
Until their certificates are properly surrendered, holders of unexchanged
shares of KSB common stock will not be entitled to receive any dividends or
distributions with respect to Camden common stock. After surrender of the
certificates representing KSB common stock, the record holder thereof will be
entitled to receive any such dividends or other distributions, without
interest, which had previously become payable with respect to shares of Camden
common stock represented by such certificate. KSB stockholders may surrender
certificates to the exchange agent until twelve months after the Effective
Time, and to Camden thereafter.
Holders of KSB common stock should not send in certificates representing KSB
common stock until they receive transmittal materials from the exchange agent.
KSB Stock Options
At the Effective Time, all outstanding and unexercised employee and director
KSB options will no longer represent a right to acquire shares of KSB common
stock and will be converted automatically into options to purchase shares of
Camden common stock. Camden will assume such KSB options subject to the terms
and conditions of KSB's stock option or similar plans and related option
agreements as in effect immediately prior to the Effective Time under which the
assumed KSB options were issued. After the Effective Time (1) the number of
shares of Camden common stock purchasable upon exercise of any such KSB option
shall be equal to the number of shares of KSB common stock that were
purchasable under such KSB option immediately prior to the Effective Time
multiplied by the exchange ratio of 1.136, rounding to the nearest whole share
(with .5 being rounded up), and (2) the per share exercise price under each
such KSB option shall be adjusted by
43
<PAGE>
dividing the per share exercise price of each such KSB option by the exchange
ratio of 1.136, rounding to the nearest cent. The terms of each KSB option will
be subject to further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction with respect to
Camden common stock on or after the Effective Date.
Camden has agreed, as soon as practicable following the Effective Time, and
in any event within fifteen business days thereafter, to file with the SEC a
registration statement on Form S-8 or other appropriate form with respect to
the shares of Camden common stock subject to options to acquire Camden common
stock resulting from the conversion of the KSB options in the merger. Camden
will use its best efforts to maintain the current status of the prospectus
contained therein for so long as such options remain outstanding.
In addition, Camden has agreed to specific employee benefit matters and
arrangements as described below under "Material Covenants--Employee Benefit
Matters" and above under "The Merger--Other Interests of Officers and Directors
in the Merger."
Representations and Warranties
The merger agreement contains representations and warranties made by KSB and
Kingfield, relating to the following matters:
. due organization, corporate power, good standing and due registration of
KSB as a bank holding company and Kingfield as a state chartered savings
bank;
. corporate power and authority to conduct business, own property and
enter into the merger agreement, the stock option agreement and related
transactions;
. interests in subsidiaries or any equity or similar interest in any
corporation, joint venture or other business association or entity;
. non-contravention of organizational documents, agreements or
governmental orders;
. capitalization;
. required consents and regulatory approvals;
. compliance with laws;
. reports and other documents filed with the SEC and certain bank holding
company and bank regulatory authorities, and the accuracy of the
information contained in such documents;
. accuracy of financial statements and compliance with applicable
accounting requirements;
. undisclosed liabilities;
. absence of certain material changes and events;
. litigation and regulatory action;
. employee benefit plans;
. labor matters;
. ownership of property and leases;
. tax matters;
. certain contracts;
. loans and nonperforming and classified assets;
. investment securities;
. derivative transactions;
44
<PAGE>
. insurance;
. environmental matters;
. intellectual property;
. administration of fiduciary accounts;
. agreements with bank regulators;
. material interests of certain persons;
. brokers fees; fairness opinion;
. preparation of this Joint Proxy Statement/Prospectus;
. state takeover laws;
. Year 2000 readiness; and
. no omission or misstatement of a material fact.
In addition, the merger agreement contains representations and warranties
made by Camden relating to the following matters:
. due organization, corporate power, good standing and due registration of
Camden as a bank holding company and United Bank as a state charted
bank;
. corporate power and authority to conduct business, own property and
enter into the merger agreement, the stock option agreement and related
transactions;
. noncontravention of certain organizational documents, agreements or
governmental orders;
. capitalization;
. preparation of this Joint Proxy Statement/Prospectus;
. reports and other documents filed with the SEC and certain bank holding
company and bank regulatory authorities, and the accuracy of the
information contained in such documents;
. compliance with laws;
. absence of certain material changes and events;
. employee benefit matters;
. environmental matters;
. agreements with bank regulators;
. Year 2000 readiness;
. broker's fees; and
. no omission or misstatement of a material fact.
Material Covenants
The merger agreement contains various covenants and agreements that govern
KSB's and Kingfield's actions prior to the Effective Time. In particular, KSB
and Kingfield have agreed to refrain from taking any of the following actions,
without first obtaining Camden's prior written consent:
Conduct of Business. KSB and Kingfield have agreed to conduct their
respective businesses in the ordinary and usual course and to use reasonable
best efforts to preserve intact their business organizations and
45
<PAGE>
assets, and to maintain their respective rights, franchises and existing
relations with customers, suppliers, employees and business associates.
Amendments to Organizational Documents. KSB and Kingfield have agreed not to
amend any of their organizational documents.
Capital Stock. KSB and Kingfield have agreed to restrictions on their
ability to:
. issue shares of capital stock or any rights to acquire capital stock;
. split, combine or reclassify any shares of its capital stock or issue or
authorize any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except upon the exercise
or fulfillment of rights or options issued or existing pursuant to
existing employee benefit plans; or
. repurchase, redeem or otherwise acquire any shares of the capital stock
of KSB or Kingfield, or any securities convertible into or exercisable
for any shares of the capital stock of KSB or Kingfield.
Dividends. KSB has agreed not to declare any dividend or other distribution,
except for the declaration by KSB of a regular quarterly cash dividend, in a
per share amount not to exceed $0.04, and Kingfield has agreed not to declare
any dividend or other distribution, except for the declaration of a regular
quarterly cash dividend by Kingfield to KSB provided that after the payment of
such dividend, Kingfield will remain "well capitalized" under the applicable
capital adequacy regulations of the FDIC.
Dispositions, Acquisitions and Capital Expenditures. KSB and Kingfield have
agreed not to:
. enter into any new line of business, materially expand the business that
they currently conduct or file any application to relocate or terminate
the operations of any banking office;
. acquire any business or any business organization or any material amount
of assets;
. sell or otherwise dispose of any of its material assets, properties or
other rights or agreements or purchase or sell any loans in bulk; or
. authorize any single capital expenditure which is in excess of $25,000
or capital expenditures which are, in the aggregate, in excess of
$50,000.
Indebtedness. KSB and Kingfield have agreed not to incur any indebtedness
for borrowed money or issue any debt securities or assume or guarantee the
obligations of any person, or make any loan or advance, other than in the
ordinary course of business consistent with past practice.
Contracts. KSB and Kingfield have agreed not to enter into any contract
other than in the ordinary course of business consistent with past practice
and, in any event not to enter into:
. any contract (other than loans) involving an aggregate payment by or to
KSB or Kingfield in excess of $50,000 or having a term of one year or
more;
. any contract for loans having an original principal amount in excess of
$400,000; or
. any contract for office space, operations space or branch space.
Employee Benefit Matters. KSB and Kingfield have agreed not to, except as
may be required by law or the merger agreement:
. enter into, modify or renew any employment, severance or other agreement
with any director, officer or employee;
. establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation,
46
<PAGE>
employment, termination, severance or arrangement providing for any
benefit to any director, officer or employee; or
. increase the compensation or fringe benefits of any director, officer or
employee provided, however, that KSB and Kingfield may, in consultation
with Camden, grant salary increases to its employees (other than those
employees who are officers) at the regular review date of such employees
in an aggregate amount for all employees not to exceed 4% of the
aggregate current base salaries of such employees and in no individual
case to exceed more than a 10% increase with respect to any particular
employee.
Accounting Methods. KSB and Kingfield have agreed not to implement changes
in accounting methods, principles or practices, other than changes required by
law, GAAP or regulatory accounting as concurred in by KSB's independent
accountants.
Tax Matters. KSB and Kingfield have agreed not to make any tax election or
settle or compromise any Federal, state, local or foreign tax liability.
Settlement of Claims. KSB and Kingfield have agreed not to pay, discharge
or satisfy any claim, liability or obligation, other than those payments made
in the ordinary course of business and consistent with past practices.
Investments in Real Estate. KSB and Kingfield have agreed not to:
. enter into any investment in real estate or in any real estate
development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt
restructurings that meet certain criteria; or
. foreclose upon or take title to any commercial real estate without first
conducting an environmental assessment of the property or foreclose upon
any commercial real estate if the environmental assessment indicates the
presence of a significant amount of hazardous material.
Changes to Portfolio. KSB and Kingfield have agreed not to:
. sell any securities in its investment portfolio, except in the ordinary
course of business;
. engage in transactions in or involving derivative instruments; or
. change in any material respect its loan policies or procedures, except
as required by regulatory authorities.
Adverse Actions. KSB and Kingfield have agreed that neither will knowingly
take any action that would, nor that would be reasonably likely to result in,
. any of its representations and warranties in the merger agreement
becoming untrue in any material respect;
. any of the conditions to the merger not being satisfied in any material
respect;
. any material violation of any provision of the merger agreement or the
stock option agreement; or
. a material breach or default under any agreement or understanding with
bank regulators or under any material contract or material license.
Acquisition Proposals. KSB has agreed that it will not solicit or encourage
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any
discussions with, any person relating to any tender offer or exchange offer
for, or any proposal for the acquisition of a substantial equity interest in,
or a substantial portion of the assets of, or any merger or consolidation
with, it or any of its significant subsidiaries. KSB, however, may participate
in discussions or
47
<PAGE>
negotiations with, or furnish confidential information to, any person if, after
consultation with and consideration of the advice of outside counsel, its board
of directors has determined that the failure to do so could cause the members
of such board of directors to breach their duties under applicable laws. Such
discussions, negotiations or other actions would be without prejudice to
Camden's rights under the stock option agreement. Further, KSB has agreed to
advise Camden of its receipt of any such proposal or inquiry and the identity
of the person making such proposal or inquiry within 24 hours of its receipt of
such proposal or inquiry.
Regulatory Applications and Filings. Camden and KSB have agreed that they
and their respective subsidiaries will cooperate and use their reasonable best
efforts to effect all filings, and obtain all permits, consents, approvals and
authorizations of all third parties and regulatory authorities necessary to
complete the transactions contemplated by the merger agreement, including,
without limitation, any such approvals required by the Federal Reserve Board,
the FDIC and the Maine Superintendent.
Indemnification. The merger agreement provides that from and after the
Effective Time:
. all rights to indemnification and all limitations of liability existing
in favor of the indemnified parties as provided in KSB's charter or
bylaws or comparable organizational documents as in effect on the date
of the merger agreement will continue in full force and effect; and
. Camden will use its reasonable best efforts to cause the persons serving
as officers and directors of KSB immediately prior to the Effective Time
to be covered for a period of three years from the Effective Time by the
directors' and officers' liability insurance policy maintained by KSB,
provided that Camden may substitute policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous to such directors and officers of KSB than the existing
policy.
Post-Closing Governance. Camden has agreed to take all necessary actions to
cause two members of the KSB Board to be elected to the Camden Board, effective
as of the Effective Time. The Camden Board has nominated Theodore C. Johanson
and Winfield R. Robinson to serve as directors for terms of office to expire at
Camden's Annual Meeting of Stockholders in 2001 and 2002, respectively. See
"The Companies--Surviving Corporation--Directors."
Headquarters. Camden and KSB have agreed that the surviving bank's executive
headquarters will be located in Bangor, Maine. It is also anticipated that the
surviving bank will maintain a substantial presence in Lewiston and Kingfield,
Maine following the merger.
Certain Other Covenants. The merger agreement contains other covenants of
the parties relating to:
. the introduction of new products and services;
. systems conversions;
. Kingfield's loan, litigation and real estate valuation policies and
practices;
. Kingfield's interest sensitive assets and liabilities;
. state takeover laws;
. listing the Camden common stock to be issued to holders of shares of KSB
common stock on the AMEX;
. the preparation and distribution of this Joint Proxy
Statement/Prospectus;
. the respective Camden and KSB stockholder meetings and the
recommendations of the respective boards of directors;
. access to information;
. confidentiality; and
. the delivery of financial statements of KSB to Camden.
48
<PAGE>
Conditions to Complete the Merger
The obligations of each of Camden and KSB to complete the merger are subject
to the satisfaction or waiver of conditions, including:
. obtaining the requisite votes of the respective stockholders of KSB and
Camden;
. obtaining all governmental approvals required to complete the merger and
the bank merger, and no such approval or approvals shall materially and
adversely affect the business, financial condition, property or assets
of the surviving corporation or the surviving bank;
. obtaining all other necessary third party consents and approvals;
. the absence of injunctions, decrees, orders, laws, statutes or
regulations enjoining, preventing or making illegal the completion of
the merger or the bank merger;
. the effectiveness of the registration statement on Form S-4 and the
absence of any stop order or proceedings seeking a stop order;
. the delivery of opinions to Camden and KSB to the effect that the merger
will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code;
. the approval for listing on the AMEX of the Camden common stock issuable
to KSB's stockholders pursuant to the merger agreement;
. the receipt by Camden of an opinion from Berry, Dunn, McNeil & Parker,
LLC, stating that the merger qualifies for "pooling of interests"
accounting treatment; and
. the receipt by KSB of an opinion from Berry, Dunn, McNeil & Parker, LLC,
that KSB is a "poolable entity."
The obligations of each of Camden and KSB to complete the merger are further
subject to satisfaction or waiver of the following conditions:
. the representations and warranties of the other party in the merger
agreement are to be true and correct as of the Effective Date, except
for representations and warranties made as of a specified date which
will be true and correct as of such specified date and, in most cases,
for such breaches of representations and warranties which, together with
all such breaches, would not have a material adverse effect on the other
party and its subsidiaries taken as a whole; and
. all of the agreements and covenants of the other party to be performed
and complied with on or prior to the Effective Date are to have been
performed and complied with in all material respects.
Termination; Expenses
General Termination Rights. The merger agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the KSB
stockholders or Camden stockholders:
. by mutual written consent of Camden and KSB if approved by a majority of
the board of directors of each party;
. by either Camden or KSB if any of the following occurs:
(1) the merger has not been completed by July 1, 2000 except to the
extent that the failure of the merger to be completed arises out of or
results from the failure of the party seeking termination to perform or
observe the agreements and covenants of such party in the merger
agreement;
(2) the approval of the KSB stockholders is not obtained at the KSB
meeting;
(3) the approval of the Camden stockholders is not obtained at the
Camden meeting;
49
<PAGE>
(4) any governmental entity has issued a final, nonappealable order,
enjoining or otherwise prohibiting the completion of the transactions
contemplated by the merger agreement; or
(5) forty-five days has elapsed after the date on which any required
regulatory approval was denied or withdrawn.
. by either Camden or KSB if the board of directors of the other company
has withdrawn, modified or changed in a manner adverse to the
terminating party its approval or recommendation of the merger agreement
or the transactions contemplated thereby;
. by KSB if either of the following occurs:
(1) a material breach by Camden of its covenants under the merger
agreement; or
(2) a breach of any of Camden's representations and warranties which
breach, either individually or taken together with all other breaches,
has or is reasonably expected to have a material adverse effect on
Camden and its subsidiaries taken as a whole; and
in either case if the breach cannot be or has not been cured within 30 days
after the giving of written notice to Camden of such breach, provided that
KSB is not then in material breach of any representation, warranty,
covenant or other agreement contained in the merger agreement;
. by Camden if either of the following occurs:
(1) a material breach by KSB of its covenants under the merger
agreement; or
(2) a breach of any of KSB's representations and warranties which
breach, either individually or taken together with all other breaches,
has or is reasonably expected to have a material adverse effect on KSB
and Kingfield taken as a whole; and
in either case if the breach cannot be or has not been cured within 30 days
after the giving of written notice to KSB of such breach; provided that
Camden is not then in material breach of any representation, warranty,
covenant or other agreement contained in the merger agreement.
Termination Upon a Decline in the Value of Camden Common Stock. The parties
may decide to cancel the merger if the value of the Camden common stock
declines significantly prior to the closing date. The decline in Camden common
stock must be both in absolute terms and relative to the weighted average stock
price of an index group of the common stocks of other selected bank holding
companies. Even if these declines occur, however, and KSB elects to cancel the
merger, Camden can require KSB to complete the merger by increasing the number
of shares of Camden common stock to be issued to KSB's stockholders in the
merger, so that the number of shares issued will provide to KSB's stockholders
the minimum value in shares of Camden common stock required to be provided
without triggering the termination right.
In order to determine whether an absolute and relative decline in the value
of the Camden common stock has occurred prior to the closing date, the market
price of the Camden common stock will be measured during the period of the 15
consecutive trading days ending on the close of business on the date on which
the parties receive the last regulatory approval required to complete the
merger, and the weighted average market price of the stocks of the index group
companies (which we refer to simply as the index price) will be measured as of
the close of business on the date on which the parties receive the last
regulatory approval.
In terms of the absolute decline in the value of the Camden common stock
that must occur before the merger may be cancelled, the average of the daily
last sale prices of Camden common stock as reported on the AMEX for the
measurement period must be less than $15.75. The price of $15.75 represents a
20.25% decline in the value of the Camden common stock when compared to the
price of $19.75, which was the closing price for the Camden common stock on
July 27, 1999, the date on which the parties signed the merger agreement.
In terms of the relative decline in the value of the Camden common stock
that must occur before the merger may be cancelled, the decline in the price of
the Camden common stock, when expressed as a
50
<PAGE>
percentage decline, must be more than 15 percentage points greater than any
change, when also expressed as a percentage change, that may have occurred in
the index price. Whether there is any change in the index price will be
determined by comparing the index price on the date the last regulatory
approval is received to the initial index price of $20.18, which was the index
price as of the close of business on the date on which the parties signed the
merger agreement.
Neither party may cancel the merger on the basis of a decline in Camden's
stock price unless the average price of the Camden common stock for the
measurement period is below $15.75 and the decline in the Camden stock price
represents a percentage decline in the price of the Camden common stock, when
compared to $19.75, that is more than 15 percentage points greater than any
percentage change in the index price, when comparing the initial index price of
$20.18 to the index price on the date the last regulatory approval is received.
The premise of this agreement is that a decline in the value of the Camden
common stock which is in accordance with an index of selected publicly-traded
stocks is indicative of a broad-based change in market and economic conditions
affecting Camden (as well as KSB) rather than factors which are specifically
attributable to the value of the Camden common stock.
If both conditions pertaining to the decline in Camden's stock price are
satisfied (i.e., the price is below $15.75 and the percentage decline in price
is more than 15 percentage points greater than any percentage change in the
index price), then KSB can elect to terminate the merger agreement. If KSB
exercises this termination right, however, Camden can still require KSB to
complete the merger if Camden elects to increase the exchange ratio, which
means that Camden would issue more shares in the merger and KSB's stockholders
would receive additional shares of Camden common stock.
Under circumstances in which KSB has the right to cancel the merger because
of a decline in Camden's stock price, and Camden increases the exchange ratio
to require KSB to complete the merger, the highest value that KSB's
stockholders can possibly receive in the form of Camden common stock, based on
the average price for the measurement period, as a result of an increase in the
exchange ratio, is $17.89 (i.e., the product of the threshold price of $15.75
and the unadjusted exchange ratio of 1.136). This is because there can be no
right to cancel the merger, on the basis of a decline in Camden stock price,
unless and until the price, based on the average price for the measurement
period, declines below $15.75. Camden, however, is not obligated to increase
the exchange ratio if KSB exercises its right to cancel the merger.
The operation and effect of the provisions of the merger agreement dealing
with a decline in the market price of the Camden common stock may be
illustrated further by the following three hypothetical scenarios, which should
be read consecutively:
(1) The average price of the Camden common stock during the measurement
period is below $19.75 but is not less than $15.75. Under these
circumstances, there would be no adjustment to the exchange ratio. Assuming
satisfaction or waiver of all other conditions to both parties'
obligations, both parties would be obligated to complete the merger
regardless of any change that may occur with respect to the index price.
(2) The average price of the Camden common stock during the measurement
period is $13.83; below the threshold price of $15.75. This represents a
30% decline when compared to $19.75. In addition, the index price on the
date the last regulatory approval is received is $16.14, which represents a
20% decline when compared to $20.18. Because the 30% decline in the price
of the Camden common stock is not more than 15 percentage points greater
than the 20% decline in the index price (i.e., it is only 10 percentage
points greater), there would be no adjustment to the exchange ratio.
Assuming the satisfaction or waiver of all other conditions to both
parties' obligations, both parties would be obligated to complete the
merger.
(3) The average price of the Camden common stock during the measurement
period is $13.83. In addition, the index price on the date the last
regulatory approval is received is $18.14, which represents a 10% decline
when compared to $20.18. Since the 30% decline in the price of the Camden
common stock
51
<PAGE>
is more than 15 percentage points greater than the 10% decline in the index
price (i.e., it is 20 percentage points greater), KSB would have the right,
but not the obligation, to terminate the merger agreement.
Under the third scenario above, if KSB provides Camden with the notice
required under the merger agreement that it elects to terminate the merger
agreement, then Camden could either accept KSB's decision to terminate the
merger agreement, in which case the merger would be cancelled, or elect to
increase the exchange ratio as described below, in which case, assuming the
satisfaction or waiver of all other conditions to both parties' obligations,
both parties would be obligated to complete the merger at the increased
exchange ratio.
If Camden elects to increase the exchange ratio under the circumstances
described in the third scenario above, then the exchange ratio would be
increased pursuant to the merger agreement from 1.136 to 1.217. This increased
exchange ratio would be determined in accordance with the merger agreement,
which requires that certain mathematical calculations be performed in
determining the correct adjustment to be made to the exchange ratio. The
increased exchange ratio under the third scenario above represents, in
accordance with the calculations required under the merger agreement, the
lesser of (1)1.294, which is the quotient obtained by dividing (A) $17.89
(which is the product of the threshold price of $15.75 and the unadjusted
exchange ratio of 1.136) by (B) $13.83 (which is the average price of the
Camden common stock during the measurement period, in the example of the third
scenario above), and (2) 1.217, which is the quotient obtained by dividing (A)
0.852, which is the product of 0.75 (which is calculated by subtracting .15
from .90, where .90 represents that the index price on the date the last
regulatory approval is received, which is $18.14, in the example of the third
scenario above, is 90% of $20.18) and 1.136 (which is the unadjusted exchange
ratio) by (B) 0.7 (which represents that the average price of the Camden common
stock for the measurement period, which is $13.83, in the example of the third
scenario above, is 70% of $19.75).
Hypothetical Exchange Ratio Adjustments
The following table sets forth a hypothetical range for the average closing
price of Camden common stock and demonstrates how the exchange ratio may be
increased if the average closing price per share of Camden common stock during
the 15 day measurement period is less than $15.75. The exchange ratio will be
increased (if all other required criteria are satisfied) only if the average
closing price is less than $15.75 and the percentage decline in the price of
Camden common stock, when comparing the average closing price to $19.75 (which
was the closing price of Camden common stock on July 27, 1999), is more than 15
percentage points greater than any percentage change that may have occurred in
the index price, when comparing the index price on the date the last regulatory
approval is received to $20.18 (which was the index price at the close of
business on July 27, 1999):
<TABLE>
<CAPTION>
Percentage Change Percentage Change in
Camden in Camden's Weighted Average
Average Average Closing Weighted Index Price Difference in Value in
Closing Price Compared to Average Compared to Percentage Exchange Camden
Price $19.75 Index Price $20.18(1)(2) Changes(3) Ratio(4) Shares(5)
------- ----------------- ----------- -------------------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
$17.00 -13.9% (6) (6) (6) 1.136x $19.31
$15.75 -20.3% $19.17 -5.0% 15.2% 1.136x $17.89
$14.75 -25.3% $19.17 -5.0% 20.3% 1.213x $17.89
$14.75 -25.3% $18.16 -10.0% 15.3% 1.141x $16.82
$14.25 -27.8% $18.16 -10.0% 17.8% 1.181x $16.82
$13.75 -30.4% $17.15 -15.0% 15.4% 1.142x $15.70
$13.75 -30.4% $16.14 -20.0% 10.4% 1.136x $15.62
$12.50 -36.7% $19.17 -5.0% 31.7% 1.431x $17.89
$12.50 -36.7% $16.14 -20.0% 16.7% 1.166x $14.58
$11.75 -40.5% $19.17 -5.0% 35.5% 1.523x $17.89
$11.75 -40.5% $15.14 -25.0% 15.5% 1.146x $13.47
</TABLE>
52
<PAGE>
- --------
(1) Where the Camden average closing price is less than $15.75 and the
difference in percentage changes is greater than 15.0, KSB may terminate
the merger, but only if Camden does not exercise its right to increase the
exchange ratio.
(2) Where the Camden average closing price is less than $15.75, but the
difference in percentage changes is less than or equal to 15.0, neither
party has a termination right and the exchange ratio will remain 1.136.
(3) Calculated as the sum of (a) the absolute value of the percentage change in
Camden's average closing price and (b) the percentage change in the index
price.
(4) The exchange ratios have rounded to three decimal places. The amount of the
increase in the exchange ratio, if all of the conditions that must be
satisfied before there is any such increase are in fact satisfied, will
vary depending upon the amount of the decline in the average closing price
of Camden common stock and the amount of the change in the weighted average
index price.
(5) Each per share value of Camden common stock in the table is the product of
Camden's average closing price and the unrounded exchange ratio, which has
been used in this calculation to avoid misleading results. These values are
included in the table for illustrative purposes only. There can be no
assurance as to what the average closing price of Camden common stock will
be or what the actual trading price of Camden common stock will be on the
closing date or at any time after Camden and KSB complete the merger.
(6) The weighted average index price, the percentage change, if any, in the
weighted average index price and the difference in percentage changes are
not given where the average closing price is $15.75 or more, because
whether or not the weighted average index price has declined is irrelevant
as long as the average closing price is at least $15.75. In these cases,
neither party has a termination right and the exchange ratio will remain at
1.136.
In the event KSB terminates the merger agreement, pursuant to the foregoing
provisions relating to a decline in the price of Camden common stock,
stockholder action would not be required. The KSB Board has not made a decision
as to whether it would exercise its right to terminate the merger agreement
under such circumstances. Any such decision would be made by the KSB Board in
light of the circumstances existing at the time that the board has the occasion
to make such an election, if any. Prior to making any determination to
terminate the merger agreement, the KSB Board would consult its financial and
other advisors and would consider all financial and other information deemed
relevant to its decision. For instance, the KSB Board would consider many of
the same factors that it considered in determining whether to approve and adopt
the merger agreement, including the principal factors discussed under "The
Merger--Recommendation of the KSB Board; KSB's Reasons for the Merger." There
can be no assurance that the KSB Board would exercise its right to terminate
the merger agreement if each of the conditions set forth above were applicable.
If the KSB Board does not elect to exercise its right to terminate the merger
agreement and Camden does not increase the exchange ratio, the exchange ratio
would remain at 1.136 and the dollar value of the consideration which the
stockholders of KSB would receive for each share of KSB common stock would be
the value of 1.136 shares of Camden common stock at the Effective Time.
Fees and Expenses. As an inducement to enter into the merger agreement and
to provide reimbursement for incurring the costs and expenses necessary to
consummate the merger, Kingfield has agreed to make a cash payment to Camden of
$1,000,000 as liquidated damages if and only if:
. Camden terminates the merger agreement because the KSB Board has failed
to publicly recommend the merger to KSB stockholders or has withdrawn,
modified or amended such recommendation in a manner adverse to Camden;
. Camden terminates the merger agreement as a result of a breach of a
representation, warranty, covenant or other agreement that is caused by
the gross negligence or willful breach of KSB or Kingfield; or
. KSB or Kingfield has breached its agreement not to solicit any offer or
proposal from any person relating to the purchase of all or any material
portion of, or any equity interest in, KSB or Kingfield, except as may
be required by its fiduciary obligations.
53
<PAGE>
The merger agreement limits the aggregate amount that Camden may receive as
liquidated damages and as a result of the exercise or waiver of its rights
pursuant to the stock option agreement to $1,400,000. In the event that Camden
is entitled to both receive a payment of liquidated damages and realize the
benefits of the stock option agreement (through exercise or waiver), Camden may
elect to reduce the amount of the cash payment to which it is entitled (in lieu
of reducing the benefits that it may receive pursuant to the stock option
agreement) to comply with the foregoing limitation.
If the merger agreement is terminated by either party as a result of a
breach of a representation, warranty, covenant or other agreement which is
caused by the gross negligence or willful breach of the other party, the
breaching party will be liable to the terminating party for all out-of-pocket
costs and expenses, incurred by the terminating party in connection with the
entering into of the merger agreement and the carrying out of any and all acts
contemplated by the merger agreement. Otherwise, all costs and expenses
incurred in connection with the merger agreement and the transactions
contemplated thereby will be paid by the party incurring such expenses, whether
or not any of the transactions contemplated by the merger agreement are
consummated.
Amendment; Waiver
Subject to compliance with applicable law, prior to the Effective Time, any
provision of the merger agreement may be (1) waived by the party benefited by
the provision, or (2) amended or modified at any time by an agreement in
writing between the parties, if approved by their respective boards of
directors and executed in the same manner as the merger agreement, provided,
however, that after the approval of the merger by the KSB and Camden
stockholders, no amendment or waiver may be made that would reduce the amount
or change the type of consideration payable to the KSB stockholders.
Survival of Certain Provisions
If the Merger Agreement Becomes Effective. After the Effective Time,
provisions of the merger agreement regarding the following matters will survive
and remain effective:
. procedures for the issuance of Camden common stock in exchange for KSB
common stock;
. the treatment of KSB options;
. publication of results of the combined operations of the surviving
corporation;
. indemnification and directors' and officers' insurance;
. compensation and benefit plans;
. location of the surviving corporation's headquarters;
. provisions applicable to the bank subsidiary merger;
. post-closing corporate governance;
. survival of provisions;
. governing law; and
. third party beneficiaries.
If the Merger Agreement is Terminated Before the Effective Time. If the
merger agreement is terminated before the Effective Time, provisions of the
merger agreement regarding the following matters will survive and remain
effective:
. confidentiality of information obtained in connection with the merger
agreement;
. liability of the companies to each other as a result of the termination
of the merger agreement;
. survival of provisions;
. waiver and amendment;
54
<PAGE>
. governing law;
. expenses;
. confidentiality;
. notices; and
. third party beneficiaries.
Restrictions on Resales by Affiliates
Camden has registered the shares of common stock issuable to KSB
stockholders in the merger under the Securities Act. Such securities may be
traded freely without restriction by those stockholders who are not deemed to
be "affiliates," as defined in the rules promulgated under the Securities Act,
of Camden and KSB.
Shares of Camden common stock received by those KSB stockholders who are
deemed to be "affiliates" of KSB at the time of the KSB meeting may be resold
without registration under the Securities Act only as permitted by Rule 145
under the Securities Act or as otherwise permitted under the Securities Act.
Shares of Camden common stock held by persons who are deemed to be "affiliates"
of Camden may be sold by them only in transactions permitted under the
provisions of Rule 144 under the Securities Act or as otherwise permitted under
the Securities Act.
SEC guidelines regarding qualifying for the "pooling of interests" method of
accounting limit sales of shares of Camden and KSB by "affiliates" of either
company in a business combination. SEC guidelines also indicate that the
"pooling of interests" method of accounting generally will not be challenged on
the basis of sales by affiliates of Camden and KSB if such "affiliates" do not
dispose of any of the shares of the corporation they own, or shares of a
corporation they receive in connection with a merger, during the period
beginning thirty (30) days before the merger is completed and ending when
financial results covering at least thirty (30) days of post-merger operations
of the surviving corporation have been published. Camden has agreed, within
thirty (30) days after the end of the first complete calendar month ending at
least thirty (30) days after the Effective Date, to publish results including
at least thirty (30) days of combined operations of Camden and KSB as
contemplated by and in accordance with SEC Accounting Release No. 135.
For purposes of Rule 145 under the Securities Act and for purposes of
qualifying the merger for "pooling of interests" accounting treatment, each of
Camden and KSB has agreed to use its reasonable best efforts to cause each of
its respective "affiliates" to deliver to the other party a written agreement
intended to ensure compliance with Rule 145 under the Securities Act, in the
case of KSB affiliates, and to preserve the ability of the merger to be
accounted for as a "pooling of interests" in accordance with GAAP.
55
<PAGE>
THE COMPANIES
Camden National Corporation
Camden is a multi-bank financial services holding company headquartered in
Camden, Maine. Camden was founded on January 2, 1985 as a result of a corporate
reorganization, in which the shareholders of Camden National Bank, which was
founded in 1875, exchanged their stock for shares of Camden, and Camden
National Bank became a wholly-owned subsidiary of Camden. As of December 29,
1995, Camden acquired 100% of the outstanding stock of United Bank and 51% of
the outstanding stock of Trust Company of Maine, Inc. by merging with their
then parent company, UNITEDCORP, Bangor, Maine. As of October 1, 1999, Camden's
securities consisted of one class of common stock, no par value, of which there
were 6,558,530 shares outstanding held of record by approximately 818
shareholders.
Camden's wholly-owned bank subsidiaries operate as separate commercial banks
with branches serving both mid-coast and central Maine. The banks are full-
service financial institutions that focus primarily on attracting deposits from
the general public through their branches and using such deposits to originate
residential mortgage loans, commercial business loans, commercial real estate
loans, and a variety of consumer loans.
Camden National Bank is a national banking organization organized under the
laws of the United States. Camden National Bank is subject to regulation,
supervision and regular examination by the Office of the Comptroller of the
Currency. Camden National Bank is based in Camden, Maine, and offers services
in the communities of Camden, Union, Rockland, Thomaston, Belfast, Bucksport,
Vinalhaven, Damariscotta, and Waldoboro. Customers also have access to services
offered by Camden National Bank through the internet @ www.camdennational.com.
United Bank is a banking organization chartered under the laws of the State
of Maine. United Bank is subject to regulation, supervision and regular
examination by the FDIC and the Maine Superintendent. United Bank is based in
Bangor, Maine, and offers services through branches in the communities of
Bangor, Corinth, Hampden, Hermon, Jackman, Greeville, Dover-Foxcroft, Milo and
Winterport, Maine.
Camden's majority-owned trust company subsidiary, Trust Company of Maine,
Inc., offers a broad range of trust and trust investment services, in addition
to retirement and pension plan management services. The financial services
provided by the Trust Company of Maine, Inc., complement the services provided
by Camden's bank subsidiaries by offering customers investment management
services.
Camden competes principally in mid-coast Maine through its largest
subsidiary, Camden National Bank. Camden National Bank considers its primary
market areas to be in two counties, Knox and Waldo counties. These two counties
have a combined population of approximately 76,000 people. The economy of these
counties is based primarily on tourism, and is also supported by a substantial
population of retirees. Major competitors in these markets include local
branches of large regional bank affiliates, as well as local independent banks,
thrift institutions and credit unions. Other competitors for deposits and loans
within Camden National Bank's market include insurance companies, money market
funds, consumer finance companies and financing affiliates of consumer durable
goods manufacturers.
Camden, through United Bank, also competes in the central Maine area. United
Bank has approximately a 5% share of the market in its service area and
competes principally on the basis of service. The greater Bangor area has a
population of approximately 100,000 people. Major competitors in these markets
include local branches of large regional bank affiliates, as well as local
independent banks, thrift institutions and credit unions. Other competitors for
deposits and loans within United Bank's market include insurance companies,
money market funds, consumer finance companies and financing affiliates of
consumer durable goods manufacturers.
At June 30, 1999, Camden had total assets of $717.7 million, total deposits
of $514.5 million and shareholders' equity of $62.6 million.
Camden's principal executive offices are located at Two Elm Street, Camden,
Maine, and its telephone number is (207) 236-8821.
56
<PAGE>
KSB Bancorp, Inc.
KSB, a Delaware corporation, was organized in 1993 to act as the holding
company for Kingfield upon completion of Kingfield's conversion from a mutual
to a stock form of ownership. KSB received approval from the Federal Reserve
Board to acquire all outstanding stock of Kingfield upon completion of the
conversion. The conversion was completed on June 24, 1993. Kingfield is a
Maine-chartered savings bank headquartered in Kingfield, Maine. Originally
chartered in 1895, Kingfield is a community-oriented financial institution that
conducts its business through eight full-service retail banking offices located
in Franklin, Androscoggin and Somerset counties in Maine.
Kingfield is subject to regulation, examination and supervision by the Maine
Superintendent and the FDIC. KSB is subject to regulation by the Federal
Reserve Board and to a limited extent by the Maine Superintendent.
At June 30, 1999, Kingfield had total assets of $179.3 million, deposits of
$132.5 million and tangible stockholders' equity of $14.2 million. Kingfield's
principal business consists of attracting deposits from the general public and
investing those deposits, together with borrowings and funds generated from
operations, in mortgage loans secured by one-to-two family residential real
estate, commercial business loans, the majority of which are secured by real
estate, and mortgage-backed securities. At June 30, 1999, Kingfield had $66.2
million of loans (including loans held for sale), or 46.0% of total net loans
receivable (including loans held for sale), secured by one-to-two family,
residential real property. An additional $49.8 million of loans, or 34.6% of
total net loans receivable (there were no commercial loans held for sale), were
commercial business loans secured by real estate. At June 30, 1999, Kingfield's
mortgage-backed securities portfolio totaled $25.5 million, or 14.2% of total
assets at such date.
Since 1988, Kingfield has expanded its market area within Franklin County
and into Androscoggin and Somerset counties in Maine. In 1988, Kingfield opened
a branch office in Stratton, Maine. In 1990, a loan production office located
in Waterville, Maine was expanded to a full service branch and later closed in
1995 when loan production decreased. In April 1991, Kingfield purchased two
branches located in Phillips and Rangeley, Maine from Maine National Bank. In
June 1993, Kingfield opened its Farmington, Maine office. In March 1994
Kingfield purchased one branch located in Lewiston, Maine from the Resolution
Trust Corporation. In March 1995 Kingfield purchased four branches located in
Kingfield, Stratton, Bingham and Strong, Maine from Fleet Bank of Maine. In
March 1998 Kingfield purchased the Madison, Maine branch from KeyBank of Maine.
All of Kingfield's offices are located in communities that can generally be
characterized as rural areas, with the exception of Lewiston.
Kingfield faces significant competition both in lending and in attracting
deposits. Kingfield's competition for loans comes principally from commercial
banks, savings banks, credit unions and mortgage banking companies. The most
direct competition for deposits has historically come from savings banks,
commercial banks and credit unions; however, additional competition from short-
term money market funds and other non-deposit investments offered by brokerage
firms and insurance companies is significant.
KSB's principal executive offices are located on Main Street in Kingfield,
Maine, and its phone number is (207) 265-2181.
Surviving Corporation
Directors. An effect of approving the merger agreement and the merger will
be that Camden, as the surviving corporation, will be governed by a twelve-
member board of directors. Two members of the surviving corporation Board will
consist of directors elected by Camden stockholders pursuant to Proposal 2 and
the remaining ten will consist of continuing directors of the Camden Board
whose terms expire in 2000, 2001 and 2002. The beneficial ownership of Camden
common stock of the two nominees for director of Camden under Proposal 2 and
the ten continuing directors and the biographical information for each of such
persons is discussed under "Proposal 2--Information Regarding Nominees,
Continuing Directors and Executive Officers."
57
<PAGE>
Executive Officers. The executive officers of the surviving corporation
following the merger will be as follows:
<TABLE>
<CAPTION>
Executive Position
--------- --------
<C> <S>
Rendle A. Jones................ Chairman of the Board
Robert W. Daigle............... President & Chief Executive Officer
Laurel J. Bouchard............. Vice President Corporate Sales &
Marketing
James C. Ebbert................ Assistant to the President
June B. Parent................. Vice President of Human Resources
Jeffrey D. Smith............... Vice President & Chief Operations Officer
Susan M. Westfall.............. Vice President, Treasurer and Chief
Financial Officer
</TABLE>
For a summary of the business experience and biographical information for
Messrs. Jones, Daigle, Ebbert and Smith and Mesdames Bouchard, Parent and
Westfall. See "Proposal 2--Information Regarding Nominees, Continuing Directors
and Executive Officers."
58
<PAGE>
CERTAIN REGULATORY CONSIDERATIONS
Camden is a bank holding company registered with the Federal Reserve Board
under the BHCA. As such, Camden's non-bank subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHCA and the
regulations of the Federal Reserve Board. Camden is also considered a Maine
financial institution holding company for purposes of the laws of the State of
Maine, and, as such, is subject to the jurisdiction of the Maine
Superintendent. In addition, Camden's bank subsidiaries (which will include the
bank subsidiary of KSB following the merger) (collectively, the "Banks") are
subject to the regulation and supervision of various federal and state
authorities, including the FDIC, the Office of the Comptroller of the Currency
(the "Comptroller") and the Maine Superintendent.
Set forth below is a brief description of certain laws and regulations that
relate to the regulation of Camden and/or its subsidiaries. The description of
certain laws and regulations below and elsewhere in this Joint Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to applicable laws and regulations.
Certain Restrictions on Activities of Bank Holding Companies
The BHCA imposes significant restrictions on the activities of bank holding
companies. Bank holding companies are required to obtain the prior approval of
the Federal Reserve Board before they may: (1) acquire direct or indirect
ownership or control of more than 5% of any class of the voting securities of
any bank; (2) acquire all or substantially all of the assets of any bank; or
(3) merge or consolidate with any other bank holding company.
The Federal Reserve Board generally may not approve any transaction that
would result in a monopoly or that would further a combination or conspiracy to
monopolize banking in the United States. The Federal Reserve Board also may not
approve a transaction that could substantially lessen competition in any
section of the country, that would tend to create a monopoly in any section of
the country, or that would be in restraint of trade. However, the Federal
Reserve Board may approve any such transaction if it determines that the public
interest in meeting the convenience and needs of the community served clearly
outweigh the anticompetitive effects of the proposed transaction. The Federal
Reserve Board is also required to consider the financial and managerial
resources and future prospects of the bank holding companies and banks
concerned, as well as the convenience and needs of the community to be served.
Consideration of financial resources generally focuses on capital adequacy,
which is discussed below. The consideration of convenience and needs includes
the parties' performance under the Community Reinvestment Act of 1977.
Another factor that is scrutinized in the application process is the Year
2000 readiness of the parties involved in acquisition transactions. Banking
organizations whose Year 2000 readiness is in less than satisfactory condition
receive special scrutiny in connection with acquisition transactions requiring
regulatory approval, and may not be eligible to use expedited application
procedures for acquisition transactions.
The BHCA, as amended by the Interstate Banking and Branching Efficiency Act
of 1994, permits interstate bank acquisitions subject to certain significant
limitations, including limitations that preserve state laws that require a bank
to have been in existence for a minimum number of years prior to acquisition
and limitations relating to the amount of deposits that a bank holding company
may control in any state.
In addition to the restrictions imposed by the BHCA, as a financial
institution holding company for purposes of the laws of the State of Maine,
Camden must obtain the prior approval of the Maine Superintendent before
acquiring control of more than 5% of the voting shares of (i) a Maine financial
institution or any financial institution or financial institution holding
company which controls, directly or indirectly, a Maine financial institution
or financial institution holding company, or (ii) an out of state financial
institution. The term "financial institution" includes, but is not limited to,
trust companies, nondepository trust companies, savings banks, industrial banks
and savings and loan associations. In determining whether to grant
59
<PAGE>
such an approval, the Maine Superintendent must consider whether a proposed
transaction will contribute to the financial strength and success of the
relevant financial institution and promote the convenience and advantage of the
public. When determining whether the standard of public convenience and
advantage has been met, the Maine Superintendent will consider the following
factors:
. the character, ability and overall sufficiency of the management;
. the adequacy of capital and financial resources of the relevant
institutions; the competitive effect of the proposed transaction; the
convenience and needs of the market area(s) to be served;
. the effect of the proposed transaction on the price, availability and
quality of services in the market area(s) to be served;
. the impact of the proposed transaction on other financial institutions
in the relevant market area(s); and
. the fairness and equities involved.
The BHCA also prohibits Camden from: (1) engaging in activities other than
banking, managing, or controlling banks or other permissible subsidiaries; and
(2) acquiring or retaining direct or indirect control of any company engaged in
any activities other than those activities determined by the Federal Reserve
Board to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto.
In determining whether a particular activity is permissible, the Federal
Reserve Board must consider whether the performance of such an activity
reasonably can be expected to produce benefits to the public that outweigh
possible adverse effects. Possible benefits the Federal Reserve Board considers
include greater convenience, increased competition, or gains in efficiency.
Possible adverse effects include undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices.
The Federal Reserve Board has by regulation determined that certain
activities are so closely related to banking, within the meaning of the BHCA,
that such activities are permissible by bank holding companies. These
activities include:
. making or servicing loans such as would be made by a mortgage, consumer
finance, credit card, or factoring company;
. performing trust company functions;
. performing certain data processing operations;
. providing limited securities brokerage services;
. acting as an investment or financial advisor;
. acting as an insurance agent for certain types of credit-related
insurance;
. leasing personal property on a full-payout, non-operating basis;
. providing tax planning and preparation services;
. operating a collection agency; and
. providing certain courier services.
The Federal Reserve Board also has determined that certain other activities,
including real estate brokerage and syndication, land development, property
management and underwriting of life insurance not related to credit
transactions, are not so closely related to banking as to be a proper incident
thereto, and that bank holding companies are prohibited from engaging in such
activities.
There are no territorial limitations on permissible non-banking activities
of bank holding companies. Despite prior approval, the Federal Reserve Board
has the power to order a bank holding company or its
60
<PAGE>
subsidiaries to terminate any activity or to terminate its ownership or control
of any subsidiary when it has reasonable cause to believe that a serious risk
to the financial safety, soundness, or stability of any bank subsidiary of that
bank holding company may result from such activity.
The Maine Superintendent has by regulation determined that, unless otherwise
prohibited by applicable state law, Maine financial institution holding
companies and/or their subsidiaries may engage in those activities which are
authorized for bank holding companies under federal law, including the BHCA,
and the regulations promulgated pursuant thereto. Any Maine financial
institution holding company (or subsidiary thereof) proposing to engage in such
an authorized activity must first apply for and obtain the prior approval of
the Maine Superintendent.
Limitations on Control of Camden
Federal law limits who may control Camden. Specifically, the Federal Change
in Bank Control Act prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the Federal Reserve Board has been
given 60 days prior written notice of such proposed acquisition and within that
time period the Federal Reserve Board has not issued a notice disapproving the
proposed acquisition or extending for up to another 30 days the period during
which such a disapproval may be issued. An acquisition may be made prior to
expiration of the disapproval period if the Federal Reserve Board issues
written notice of its intent not to disapprove the action. Under a rebuttable
presumption established by the Federal Reserve Board, the acquisition of 10% or
more of a class of voting stock of a bank holding company with a class of
securities registered under Section 12 of the Exchange Act would, under the
circumstances set forth in the presumption, constitute the acquisition of
control.
Notwithstanding the foregoing, any "company" would be required to obtain the
approval of the Federal Reserve Board under the BHCA before acquiring 25% (5%
in the case of an acquirer that is a bank holding company) or more of the
outstanding common stock of, or such lesser number of shares as constitute
control over, Camden. Such approval would be contingent upon, among other
things, the acquirer registering as a bank holding company if not already so
registered, divesting all impermissible holdings, and ceasing any activities
not permissible for a bank holding company.
In addition to federal law limitations, Maine law prohibits any person or
company from acquiring control of a Maine financial institution or financial
institution holding company which controls, directly or indirectly, a Maine
financial institution, unless such person or company has obtained the prior
approval of the Maine Superintendent.
Certain Transactions by Bank Holding Companies and Their Affiliates
There are various legal restrictions on the extent to which a bank holding
company, such as Camden, and its non-bank subsidiaries may borrow, obtain
credit from or otherwise engage in "covered transactions" with its FDIC insured
depository institution subsidiaries. Such borrowings and other covered
transactions by an insured depository institution subsidiary (and its
subsidiaries) with its non-depository institution affiliates are limited to the
following amounts: (1) in the case of any affiliate, the aggregate amount of
covered transactions of the insured depository institution and its subsidiaries
cannot exceed 10% of the capital stock and surplus of the insured depository
institution; and (2) in the case of all affiliates, the aggregate amount of
covered transactions of the insured depository institution and its subsidiaries
cannot exceed 20% of the capital stock and surplus of the insured depository
institution. "Covered transactions Covered transactions" are defined by statute
for these purposes to include a loan or extension of credit to an affiliate, a
purchase of, or investment in, securities issued by an affiliate, a purchase of
assets from an affiliate unless exempted by the Federal Reserve Board, the
acceptance of securities issued by an affiliate as collateral for a loan or
extension of credit to any person or company, or the issuance of a guarantee,
acceptance, or letter of credit on behalf of an affiliate. Covered transactions
are also subject to certain collateral security requirements. Further, a bank
holding company and its subsidiaries are prohibited from engaging in certain
tying arrangements in connection with any extension of credit, lease or sale of
property of any kind, or furnishing of any service.
61
<PAGE>
Support of Subsidiary Institutions and Liability of Commonly Controlled
Depository Institutions
Under Federal Reserve Board policy, Camden is expected to act as a source of
financial strength for, and commit its resources to support its bank
subsidiaries. This support may be required at times when Camden may not be
inclined to provide it. In addition, any capital loans by a bank holding
company to any of its bank subsidiaries are subordinate to the payment of
deposits and to certain other indebtedness. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a bank subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
A depository institution insured by the FDIC can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with the default of a commonly controlled FDIC-insured depository institution
or any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally
as the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of stockholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. Camden's
bank subsidiaries are subject to these cross-guarantee provisions. As a result,
any loss suffered by the FDIC in respect of any of the Banks would likely
result in assertion of the cross-guarantee provisions, the assessment of
estimated losses against the other Banks, and a potential loss of Camden's
investments in the Banks.
Payment of Dividends
Camden is a legal entity separate and distinct from its bank and other
subsidiaries. A principal source of cash flow of Camden, including cash flow to
pay dividends to its stockholders, are dividends from its bank subsidiaries.
There are statutory and regulatory limitations on the payment of dividends by
these subsidiary depository institutions to Camden, as well as by Camden to its
stockholders.
As to the payment of dividends, each of Camden's bank subsidiaries is
subject to the laws and regulations of its chartering jurisdiction and to the
regulations of its primary federal regulator. If the federal banking regulator
determines that a depository institution under its jurisdiction is engaged in
or is about to engage in an unsafe or unsound practice, the regulator may
require, after notice and hearing, that the institution cease and desist from
such practice. Depending on the financial condition of the depository
institution, an unsafe or unsound practice could include the payment of
dividends. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. The federal agencies
have also issued policy statements that provide that bank holding companies and
insured banks should generally only pay dividends out of current operating
earnings.
The payment of dividends by Camden and its bank subsidiaries may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
Regulation of the Banks
Each of Camden's subsidiaries is subject to numerous state and/or federal
statutes and regulations that affect its business, activities, and operations,
and each is supervised and examined by one or more federal or state bank
regulatory agencies. Camden is a national banking association that is subject
to regulation by the Comptroller. United Bank, Trust Company of Maine, Inc. and
Kingfield Bank, as Maine-chartered entities, are subject to regulation and
supervision by the Maine Superintendent. Thus, if as is expected, United Bank
and Kingfield Bank merge with Kingfield Bank as the surviving entity, the
resultant institution will continue to be
62
<PAGE>
subject to regulation and supervision by the Maine Superintendent. As FDIC-
insured institutions, each of Camden, United Bank and Kingfield Bank is also
subject to certain requirements applicable to insured depository institutions.
Each of the Banks is also required to file reports with and obtain approvals
from various regulatory agencies prior to entering into certain transactions,
including mergers with, or acquisitions of, other financial institutions.
Virtually every aspect of the Banks' day-to-day operations is subject to
numerous requirements and restrictions. These requirements and restrictions
apply with respect to such matters as, for example and without limitation, the
nature and amount of loans and investments that may be made, the nature and
amount of collateral for certain loans, the maximum amount of deposits each of
the Banks may hold as a percentage of the aggregate deposits in a particular
geographic area, the issuance of securities, the taking of reserves against
deposits, the establishment and closure of branches, non-banking activities and
other operations. Numerous laws and regulations also set forth special
restrictions and procedural requirements with respect to the extension of
credit, credit practices, the disclosure of credit terms and discrimination in
credit transactions. These legal requirements differ for each of the Banks to a
greater or lesser extent because these entities are chartered under different
legal authorities. Furthermore, the laws and regulations that govern the Banks
have generally been promulgated to protect depositors and the deposit insurance
funds of the FDIC and not for the protection of Camden and its stockholders.
As a national bank, Camden must comply with the National Bank Act and the
regulations promulgated thereunder by the Comptroller which limit its
activities to those that are deemed to be part of or incidental to the
"business of banking." Activities that are part of or incidental to the
business of banking include taking deposits, borrowing and lending money,
discounting or negotiating paper, acting as fiduciary, and investing in certain
bank-eligible securities. Examples of activities that are not permissible for
national banks include, without limitation, operation of a travel agency,
engaging in a general real estate brokerage business, and investing in most
types of equity securities. Subsidiaries of national banks, in general, may
only engage in activities permissible for the parent national bank.
FDIC insured, state-chartered banks, such as United Bank and Kingfield Bank,
are subject to similar restrictions on their business and activities. In
particular, Section 24 of the Federal Deposit Insurance Act ("FDIA"), as added
by FDICIA, provides that an insured state bank may not engage as a principal in
any activity that is not permissible for a national bank, unless the FDIC has
determined that the activity would pose no significant risk to the appropriate
deposit insurance fund and the state bank is in compliance with applicable
capital standards. Activities of subsidiaries of insured state banks are
similarly restricted to those activities permissible for subsidiaries of
national banks, unless the FDIC has determined that the activity would pose no
significant risk to the appropriate deposit insurance fund and the state bank
is in compliance with applicable capital standards. Section 24 also provides
that an insured state bank generally may not, directly or indirectly, acquire
or retain any equity investment of a type that is not permissible for a
national bank, which would include most equity security investments. In
addition, state-chartered banks are subject to numerous restrictions on their
activities and investments under the laws of their chartering jurisdiction.
With the passage of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), the Crime Control Act of 1990 (the "Crime
Control Act") and FDICIA, federal bank regulatory agencies, including the
Comptroller and the FDIC, have been granted substantially broad enforcement
powers to restrict activities of financial institutions and to impose or seek
the imposition of increased civil and criminal penalties upon financial
institutions and the individuals who manage and control such institutions. In
general, any bank that does not operate in accordance with applicable
regulations, policies, and directives may be sanctioned for noncompliance by
the appropriate bank regulatory agency. Proceedings may be instituted against
any FDIC-insured bank or any director, officer, or employee of such bank and
certain other "institution-affiliated parties" (a term that includes
stockholders who participate in the conduct of the bank's affairs and, under
certain circumstances, accountants, appraisers, and attorneys) who engage in
unsafe and unsound practices, breaches of fiduciary duties, or violations of
applicable laws, regulations, regulatory orders, and agreements. In general,
the FDIC has the authority to terminate insurance of deposit accounts, to issue
orders to
63
<PAGE>
cease and desist, to remove officers, directors, and other institution-
affiliated parties, to impose substantial civil money penalties against a bank
and any director, officer, employee, agent, or other institution-affiliated
party of a bank and to place the bank into receivership. With respect to
national banks, the Comptroller has the authority, among other powers, to
promulgate cease and desist orders, remove or suspend officers and directors,
and impose civil money penalties.
FIRREA's provisions enhanced the supervisory and enforcement powers of the
federal banking agencies with respect to banks generally, expanded the FDIC's
receivership powers with respect to failed banks, and protected insured banks
from abusive or imprudent transactions. In addition, provisions of FIRREA
simplified and shortened the procedures for the FDIC to terminate insurance of
a bank's deposit accounts, authorized the FDIC, as receiver, to repudiate
certain contracts entered into by the insured bank and significantly increased
the amount of civil money penalties which may be assessed by federal bank
regulatory agencies against a bank, its officers and directors or other
institution-affiliated parties. FIRREA also broadened the circumstances under
which such penalties may be assessed. FIRREA imposed additional restrictions on
banks that do not meet applicable minimum capital requirements, have
experienced a change of control within the preceding two years, or are deemed
to be in a "troubled" condition. These restrictions include requiring written
notice to federal regulatory authorities prior to certain proposed changes in
the institution's senior management or board of directors and prohibiting
acceptance, renewal, or rollover of brokered deposits (which prohibition was
extended by FDICIA).
The third of these acts, FDICIA, was intended, among other things, to
strengthen federal supervision and examination of insured depository
institutions, to require that federal banking regulators intervene promptly
when a depository institution experiences financial difficulties, to mandate
the establishment of a risk-based deposit insurance assessment system, and to
require imposition of numerous additional safety and soundness operational
standards and restrictions. FDICIA also expanded the conservatorship and
receivership powers of the FDIC.
FDICIA included a variety of provisions that affect the internal operations
and activities of banks. For example, pursuant to FDICIA, the federal banking
agencies promulgated safety and soundness standards relating to operations and
management, compensation, asset quality, earnings, and stock valuation. FDICIA
further required that certain insured depository institutions have periodic on-
site regulatory examinations and annual audits by an independent public
accountant. The audit process must be overseen by an independent audit
committee composed of outside directors.
FDICIA also implemented certain changes in deposit insurance coverage,
including, among other things, the elimination of insurance on foreign deposits
and a significant reduction in "pass-through" deposit insurance coverage for
certain employee benefit plan deposits under certain circumstances. FDICIA
generally prohibits the FDIC from insuring deposits over $100,000.
FDIC Insurance Assessments
The deposit accounts of each of the Banks are insured by the Bank Insurance
Fund (the "BIF") of the FDIC generally up to a maximum of $100,000 per
separately insured depositor, and each of the Banks is subject to FDIC deposit
insurance assessments. In addition, certain deposits obligations of Kingfield
Bank are insured by the Savings Association Insurance Fund (the "SAIF") of the
FDIC. Thus, if, as is expected, United Bank and Kingfield Bank merge with
Kingfield Bank as the surviving entity, certain deposit obligations of the
surviving entity will be insured by the BIF and certain deposit obligations of
such entity will be insured by the SAIF.
Pursuant to FDICIA, the FDIC adopted a risk-based system for determining
deposit insurance assessments under which all insured institutions were placed
into one of nine categories and assessed insurance premiums, ranging from
$2,000 to 0.27% of insured deposits, based upon their level of capital and
supervisory evaluation. Because the FDIC sets the assessment rates based upon
the level of assets in the insurance fund, premium rates
64
<PAGE>
rise and fall as the number and size of bank failures increase and decrease,
respectively. Under the system, institutions are assigned to one of three
capital groups based solely on the level of an institution's capital--"well
capitalized," "adequately capitalized" and "undercapitalized"--that are defined
in the same manner as the regulations establishing the prompt corrective action
system under Section 38 of FDIA, as discussed below. These three groups are
then divided into three subgroups that reflect varying levels of supervisory
concern, from those that are considered to be healthy to those that are
considered to be of substantial supervisory concern. BIF and SAIF deposits may
be assessed at different rates. Furthermore, the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 requires BIF-insured banks to participate in
the payment of interest due on Financing Corporation bonds used to finance the
thrift bailout. As BIF-insured institutions, the Banks are subject to a special
Financing Corporation assessment in addition to assessments applicable to BIF-
insured deposits.
Minimum Capital Requirements and Prompt Corrective Action
Each of the Banks must satisfy certain minimum capital requirements, and
Camden is expected to satisfy similar requirements established by the Federal
Reserve Board. Under both the Comptroller and the FDIC's regulations, a bank is
deemed to be (1) "well capitalized" if it has total risk-based capital of 10%
or more, a Tier 1 risk-based capital ratio of 6% or more, and a Tier 1 leverage
capital ratio of 5% or more and is not subject to any written agreement, order,
capital directive, or corrective action directive, (2) "adequately capitalized"
if it has a total risk-based capital ratio of 8% or more, a Tier 1 risk-based
capital ratio of 4% or more and a Tier 1 leverage capital ratio of 4% or more
(3% under certain circumstances) and does not meet the definition of "well
capitalized," (3) "undercapitalized" if it has a total risk-based capital ratio
that is less than 8%, a Tier 1 risk-based capital ratio that is less than 4% or
a Tier 1 leverage capital ratio that is less than 4% (3% under certain
circumstances), (4) "significantly undercapitalized" if it has a total risk-
based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio
that is less than 3% or a Tier 1 leverage capital ratio that is less than 3%,
and (5) "critically undercapitalized" if it has a ratio of tangible equity to
total assets that is equal to or less than 2%. Section 38 of the FDIA and the
regulations promulgated thereunder by the federal banking agencies also specify
circumstances under which a federal banking agency may reclassify a well
capitalized institution as adequately capitalized and may require an adequately
capitalized institution or an undercapitalized institution to comply with
supervisory actions as if it were in the next lower category (except that
neither the FDIC or the Comptroller may reclassify a significantly
undercapitalized institution as critically undercapitalized).
A number of sanctions may be imposed on banks that are not in compliance
with applicable capital requirements, including, without limitation,
restrictions on asset growth and imposition of a capital directive that may
require, among other things, an increase in regulatory capital, reduction of
rates paid on savings accounts, cessation of or limitations on deposit-
gathering, lending, purchasing loans, making specified investments, or issuing
new accounts, limits on operational expenditures, an increase in liquidity, and
such other restrictions or corrective actions as the appropriate federal
banking agency may deem necessary or appropriate. Federal law also restricts
the use of brokered deposits by certain depository institutions in certain
capitalization categories.
Under the system of prompt corrective action mandated by FDICIA, immediately
upon becoming undercapitalized, an institution will become subject to the
provisions of Section 38 of the FDIA, which include (1) restricting payment of
capital distributions and management fees, (2) requiring that the appropriate
federal banking agency monitor the condition of the institution and its efforts
to restore its capital, (3) requiring submission of a capital restoration plan,
(4) restricting the growth of the institution's assets, and (5) requiring prior
approval of certain expansion proposals. The appropriate federal banking agency
for an undercapitalized institution also may take any number of discretionary
supervisory actions if the agency determines that any of these actions is
necessary to resolve the problems of the institution at the least possible
long-term cost to the deposit insurance fund, subject in certain cases to
specified procedures. These discretionary supervisory actions include the
following: requiring the institution to raise additional capital; restricting
transactions with affiliates;
65
<PAGE>
restricting interest rates paid by the institution on deposits; requiring
replacement of senior executive officers and directors; restricting the
activities of the institution and its affiliates; requiring divestiture of the
institution or the sale of the institution to a willing purchaser; and any
other supervisory action that the agency deems appropriate.
FDICIA provides for the appointment of a conservator or receiver for any
insured depository institution that is "critically undercapitalized," or that
is "undercapitalized" and (1) has no reasonable prospect of becoming
"adequately capitalized," (2) fails to become "adequately capitalized" when
required to do so under the prompt corrective action provisions, (3) fails to
submit an acceptable capital restoration plan within the prescribed time
limits, or (4) materially fails to implement an accepted capital restoration
plan. In addition, the appropriate federal regulatory agency will be required
to appoint a receiver (or a conservator) for a "critically undercapitalized"
depository institution within 90 days after the institution becomes "critically
undercapitalized" or to take such other action that would better achieve the
purpose of Section 38 of FDIA. Such alternative action can be renewed for
successive 90 day periods. With limited exceptions, however, if the institution
continues to be "critically undercapitalized" on average during the quarter
that begins 270 days after the institution first became "critically
undercapitalized," a receiver must be appointed.
Other Aspects of Federal and State Law
Regulation D promulgated by the Federal Reserve Board requires all
depository institutions to maintain reserves against their transaction accounts
or non-personal time deposits, subject to certain exemptions. "Transaction
accounts" include demand deposits, NOW accounts, and certain other types of
accounts that permit payments or transfers to third parties. "Non-personal time
deposits" include money market deposit accounts or other savings deposits held
by corporations or other depositors and certain other types of time deposits.
Because required reserves must be maintained in the form of vault cash or non-
interest bearing deposits with a regional Federal Reserve Bank, the effect of
this reserve requirement is to reduce the amount of the institution's interest-
bearing assets.
The Banks are also subject to federal and state statutory and regulatory
provisions covering security procedures, currency and foreign transactions
reporting, insider and affiliated party transactions, management interlocks,
loan interest rate limitations, lending policies, truth-in-lending, electronic
funds transfers, funds availability, truth-in-savings, home mortgage
disclosure, and equal credit opportunity.
Government Policies and Legislative and Regulatory Proposals
The Banks' operations are generally affected by the economic, fiscal, and
monetary policies of the United States and its agencies and regulatory
authorities, particularly the Federal Reserve Board (which regulates the money
supply of the United States, reserve requirements against deposits, the
discount rate on Federal Reserve Board borrowings and related matters, and
which conducts open-market operations in U.S. government securities). The
fiscal and economic policies of various governmental entities and the monetary
policies of the Federal Reserve Board have a direct effect on the availability,
growth, and distribution of bank loans, investments, and deposits.
In addition, various proposals to change the laws and regulations governing
the operations and taxation of, and deposit insurance premiums paid by,
federally and state-chartered banks and other financial institutions are from
time to time pending in Congress and in state legislatures as well as before
the Federal Reserve Board, the FDIC, the Comptroller and other federal and
state bank regulatory authorities. The likelihood of any major changes in the
future, and the impact any such changes might have on the Banks, are not
possible to determine.
Status of Regulatory Approvals and Other Information
Camden and KSB have filed (or will promptly file) all applications and
notices and have taken (or will promptly take) other appropriate action with
respect to any requisite approvals or other action of any
66
<PAGE>
governmental authority. The merger agreement provides that the obligation of
each of Camden and KSB to complete the merger is conditioned upon the receipt
of all requisite regulatory approvals, including the approvals of the Federal
Reserve Board and the Maine Superintendent. There can be no assurance that any
governmental agency will approve or take any required action with respect to
the merger, and, if such approvals are received or action is taken, there can
be no assurance as to the date of such approvals or action, that such approvals
or action will not be conditioned upon matters that would cause the parties to
mutually consent to abandon the merger or that no action will be brought
challenging such approvals or action, including a challenge by the DOJ or, if
such a challenge is made, the result thereof. In determining whether or not to
approve the merger, the Federal Reserve Board and the Maine Superintendent will
apply the standards described more fully under "Certain Regulatory
Considerations--Certain Restrictions on Activities of Bank Holding Companies."
Camden and KSB have also agreed to take all actions necessary and
appropriate to complete the merger of United Bank and Kingfield Bank as soon as
is practicable after the merger. The bank merger may not be completed without
certain regulatory approvals, including the approval of the FDIC and the Maine
Superintendent.
Camden and KSB are not aware of any governmental approvals or actions that
may be required for completion of the Merger other than as described above.
Should any other approval or action be required, Camden and KSB currently
contemplate that such approval or action would be sought.
The merger cannot proceed in the absence of the requisite regulatory
approvals. There can be no assurance that the regulatory approvals will be
obtained or as to the dates of any such approvals. See "The Merger Agreement--
Conditions to Complete the Merger." There can likewise be no assurance that the
DOJ or other governmental authorities will not challenge the merger or if such
a challenge is made, as to the result thereof.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material United States federal income
tax consequences of the merger to Camden and KSB and their respective
stockholders. The following discussion is based upon current provisions of the
Code, existing temporary and final regulations thereunder and current
administrative rulings and court decisions, all of which are subject to change,
possibly on a retroactive basis. No attempt has been made to comment on all
United States federal income tax consequences of the merger that may be
relevant to stockholders of Camden and KSB. The tax discussion set forth below
is included for general information only. It is not intended to be, nor should
it be construed to be, legal or tax advice to a particular stockholder of
Camden or KSB.
The following discussion may not apply to particular categories of holders
of shares of Camden common stock or KSB common stock subject to special
treatment under the Code, such as insurance companies, financial institutions,
broker-dealers, tax-exempt organizations, individual retirement and other tax-
deferred accounts, banks, persons subject to the alternative minimum tax,
persons who hold Camden common stock or KSB common stock as part of a straddle,
hedging or conversion transaction, persons whose functional currency is other
than the United States dollar, persons eligible for tax treaty benefits,
foreign corporations, foreign partnerships and other foreign entities,
individuals who are not citizens or residents of the United States and holders
whose shares were acquired pursuant to the exercise of an employee stock option
or otherwise as compensation. Stockholders of Camden and KSB are urged to
consult their tax advisors to determine the specific tax consequences of the
merger, including any state, local or other tax consequences of the merger.
67
<PAGE>
Tax Consequences of the Merger
Tax opinions of Berry, Dunn, McNeil & Parker, LLC, and Luse, Lehman, Gorman,
Pomerenk & Schick, P.C. have been filed as Exhibits 8.1 and 8.2, respectively,
to the Registration Statement of which this Joint Proxy Statement/Prospectus is
a part. However, it is a condition to complete the merger that Berry, Dunn,
McNeil & Parker, LLC, tax advisor to Camden, will deliver an opinion to Camden,
and Luse, Lehman, Gorman, Pomerenk & Schick, P.C. counsel to KSB, will deliver
an opinion to KSB, each to the effect that, based on representations of Camden
and KSB and on assumptions and conditions at the Effective Time, the merger
will be treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. The tax
opinions in Exhibits 8.1 and 8.2 are not intended to satisfy this closing
condition, but taken together these two tax opinions opine that the merger will
constitute a Code Section 368(a) reorganization and will have the following
consequences.
As a consequence of reorganization treatment, neither Camden nor KSB will
recognize gain or loss as a result of the merger. Stockholders of KSB who
exchange all of their KSB common stock solely for Camden common stock pursuant
to the merger will not recognize gain or loss (except with respect to cash
received in lieu of a fractional share interest in Camden common stock). The
aggregate tax basis of the Camden common stock received by stockholders who
exchange all of their KSB common stock solely for Camden common stock in the
merger will be the same as the aggregate tax basis of the KSB common stock
surrendered (reduced by any amount allocable to a fractional share interest for
which cash is received). Finally, provided the shares of KSB common stock were
held as a capital asset at the Effective Time, the holding period for shares of
Camden common stock received by a stockholder in exchange will include the
period that such shares of KSB common stock were held. The stockholders of
Camden will not recognize gain or loss as a result of the merger.
Cash received in lieu of fractional shares of Camden common stock will be
treated as received in redemption for such fractional interests, and gain or
loss will be recognized, measured by the difference between the amount of cash
received and the portion of the basis of the shares of Camden common stock
allocable to such fractional shares. Such gain or loss will constitute capital
gain or loss from the sale of stock if the stockholder holds its KSB common
stock as a capital asset at the Effective Time.
Backup Withholding
Under the backup withholding rules, a KSB stockholder may be subject to
backup withholding at the rate of 31% with respect to certain payments received
pursuant to the merger unless such holder (1) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(2) provides a taxpayer identification number, certifies that the holder is not
subject to backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A stockholder that does not
provide its correct taxpayer identification number may also be subject to
penalties imposed by the Internal Revenue Service. Any amount paid as backup
withholding will be creditable against the stockholder's income tax liability
provided that applicable filings are made with the Internal Revenue Service.
Other Tax Consequences
The state and local tax treatment of the merger may not conform to the
federal income tax consequences discussed above. Consequently, prospective
stockholders should consult their own tax advisors regarding the treatment of
the merger under state and local tax laws.
68
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
On October 7, 1997, Camden common stock began trading on the AMEX under the
ticker symbol "CAC." Prior to that date, Camden common stock was not publicly
traded on an organized exchange or on the Nasdaq National Market. Following the
merger, the shares of Camden common stock will continue to be listed on the
AMEX under the symbol "CAC." KSB common stock is quoted on the Nasdaq National
Market under the ticker symbol "KSBK." Following the merger, KSB common stock
will be delisted from the Nasdaq National Market.
The following table sets forth, for the fiscal quarters indicated, (1) the
range of high and low sale prices of Camden common stock and KSB common stock
(rounded to two decimal places), and (2) the amount of cash dividends declared
per share:
<TABLE>
<CAPTION>
Camden Common Stock (1) KSB Common Stock (2)
----------------------- ----------------------
Market Price Cash Market Price Cash
------------- Dividends ------------ Dividends
High Low Declared High Low Declared
------ ------ --------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
1st Quarter............. -- -- -- $11.33 $8.77 $.033
2nd Quarter............. -- -- -- 14.67 9.00 --
3rd Quarter............. -- -- -- 16.00 12.50 .040
4th Quarter............. $20.25 $14.75 $0.117 22.50 12.68 --
1998
1st Quarter............. 20.00 18.42 0.133 22.00 18.00 .050
2nd Quarter............. 20.00 19.00 0.137 19.38 17.00 --
3rd Quarter............. 19.42 17.08 0.140 18.38 15.50 .060
4th Quarter............. 27.00 16.33 0.143 18.38 12.00 --
1999
1st Quarter............. 20.56 17.63 0.150 17.00 13.25 .080
2nd Quarter............. 22.75 17.38 0.150 14.75 8.00 --
3rd Quarter (through
August 31, 1999)....... 20.50 17.75 0.150 18.88 11.50 .080
</TABLE>
- --------
(1) On July 27, 1999, the last full trading day prior to the public
announcement of the proposed merger, the highest, lowest and last reported
sale price of Camden common stock was $19.75 per share. On October 1, 1999,
the most recent practicable date prior to the printing of this Joint Proxy
Statement/Prospectus, the last reported sale price of Camden common stock
was $19.00 per share. Figures have been adjusted to reflect a 3-for-1 stock
split on December 7, 1998. Stockholders are urged to obtain current market
quotations prior to making any decisions with respect to the merger.
(2) On July 27, 1999, the last full trading day prior to the public
announcement of the proposed merger, the range of the bid and asked prices
for the KSB common stock was $13.50 to $15.375 per share. On October 5,
1999, the most recent practicable date prior to the printing of this Joint
Proxy Statement/Prospectus, the last reported sale price of KSB common
stock was $ per share. Stockholders are urged to obtain current market
quotations prior to making any decisions with respect to the merger.
As of October 1, 1999, there were 818 holders of record of Camden common
stock and as of August 31, 1999 there were 323 holders of record of KSB common
stock.
69
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING BALANCE SHEETS
The following Unaudited Pro Forma Combining Balance Sheets present the
combined financial position of Camden and KSB as of June 30, 1999 and as of
December 31, 1998, respectively, assuming the merger had occurred as of each
such date. The accompanying pro forma information is based on historical
balance sheet data of Camden and KSB as of December 31, 1998, respectively,
giving effect to the transaction as a pooling of interests.
The Unaudited Pro Forma Combining Balance Sheets should be read in
conjunction with the Unaudited Pro Forma Combining Statements of Income
appearing elsewhere in this Joint Proxy Statement/Prospectus and the Notes to
Unaudited Pro Forma Financial Information and the historical financial
statements (and accompanying notes) of Camden and KSB, which are incorporated
by reference in this Joint Proxy Statement/Prospectus, including but not
limited to, the financial information of Camden and KSB contained in their
respective Annual Reports on Form 10-K and 10-KSB for the year ended December
31, 1998. The Unaudited Pro Forma Combining Balance Sheets are presented for
informational purposes only and are not necessarily indicative of the combined
financial position that would have occurred if the proposed merger of Camden
and KSB had been consummated on June 30, 1999 or December 31, 1998,
respectively, or which may be obtained in the future. In addition, the
Unaudited Pro Forma Combining Balance Sheets have not been restated to reflect
the reissuance of 125,000 shares of Camden common stock, except on the June 30,
1999 statement. For information regarding the uncertainty of assumptions,
estimates and expectations reflected herein, see "Risk Factors."
70
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING BALANCE SHEETS
June 30, 1999
<TABLE>
<CAPTION>
Pro Forma
Camden and
Pro Forma KSB
Camden KSB Adjustments Combined
-------- -------- ----------- ----------
(in thousands)
<S> <C> <C> <C> <C>
ASSETS:
Cash, due from banks........ $ 16,207 $ 3,457 $2,609 (/7/) $ 22,273
Federal funds sold.......... 1,243 -- -- 1,243
Securities.................. 204,898 27,102 -- 232,000
Loans....................... 467,052 143,501 -- 610,553
Reserve for loan losses..... (7,062) (1,803) -- (8,865)
Mortgages held for resale... -- 200 -- 200
Intangible assets........... 7,071 1,306 -- 8,377
Other assets................ 28,324 5,570 -- 33,894
-------- -------- ------ --------
Total assets............ $717,733 $179,333 $2,609 $899,675
======== ======== ====== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Deposits:
Noninterest-bearing....... $ 63,176 $ 10,765 -- $ 73,941
Interest-bearing.......... 451,300 121,724 -- 573,024
-------- -------- ------ --------
Total deposits.............. 514,476 132,489 -- 646,965
Borrowings from Federal Home
Loan Bank.................. 101,969 29,652 -- 131,621
Other borrowed funds........ 32,207 1,987 -- 34,194
Accrued interest and other
liabilities................ 6,866 1,030 2,130 (/4/) 10,026
-------- -------- ------ --------
Total liabilities....... $655,518 $165,158 $2,130 $822,806
======== ======== ====== ========
Stockholders' Equity:
Common stock................ $ 2,436 $ 13 $1,469 (/6/) $ 3,918
Surplus..................... 1,142 4,938 (1,347)(/6/)(/7/) 4,733
Retained earnings........... 71,039 9,639 (2,130)(/4/) 78,548
Accumulated other
comprehensive income....... (2,206) (99) -- (2,305)
Employee Stock Ownership
Plan....................... -- (44) -- (44)
Bank Recognition and
Retention Plan............. -- (23) -- (23)
Treasury stock, at cost..... (10,196) (249) 2,487 (/6/)(/7/) (7,958)
-------- -------- ------ --------
Total stockholders'
equity................. 62,215 14,175 479 76,869
-------- -------- ------ --------
Total liabilities and
stockholders' equity... $717,733 $179,333 $2,609 $899,675
======== ======== ====== ========
</TABLE>
See Notes to The Unaudited Pro Forma Combining Financial Statements
71
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Camden and
Pro Forma KSB
Camden KSB Adjustments Combined
-------- -------- ----------- ----------
(in thousands)
<S> <C> <C> <C> <C>
ASSETS:
Cash, due from banks................ $ 14,938 $ 3,237 $-- $ 18,175
Federal funds sold.................. -- -- -- --
Securities.......................... 186,813 31,880 -- 218,693
Loans............................... 414,310 122,530 -- 536,840
Reserve for loan losses............. (6,512) (1,580) -- (8,092)
Mortgages held for resale........... 24,637 8,228 -- 32,865
Intangible assets................... 7,219 1,411 -- 8,630
Other assets........................ 26,546 5,623 -- 32,169
-------- -------- ---- ---------
Total assets.................... $667,951 $171,329 $-- $ 839,280
======== ======== ==== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Noninterest-bearing............... $ 64,303 $ 12,766 $-- $ 77,069
Interest-bearing.................. 444,270 120,215 -- 564,485
-------- -------- ---- ---------
Total deposits...................... 508,573 132,981 -- 641,554
Borrowings from Federal Home Loan
Bank............................... 60,265 22,647 -- 82,912
Other borrowed funds................ 29,893 877 -- 30,770
Accrued interest and other
liabilities........................ 5,118 1,137 -- 6,255
-------- -------- ---- ---------
Total liabilities............... $603,849 $157,642 $-- $ 761,491
-------- -------- ---- ---------
Stockholders' Equity:
Common stock........................ $ 2,436 $ 13 $-- $ 2,449
Surplus............................. 1,142 4,842 -- 5,984
Retained earnings................... 68,785 8,796 -- 77,581
Accumulated other comprehensive
income............................. (129) 211 -- 82
Employee Stock Ownership Plan....... -- (68) -- (68)
Bank Recognition and Retention
Plan............................... -- (30) -- (30)
Treasury stock, at cost............. (8,132) (77) -- (8,209)
-------- -------- ---- ---------
Total stockholders' equity...... 64,102 13,687 -- 77,789
-------- -------- ---- ---------
Total liabilities and
stockholders' equity........... $667,951 $171,329 $-- $ 839,280
======== ======== ==== =========
</TABLE>
See Notes To The Unaudited Pro Forma Combining Financial Statements
72
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENTS OF INCOME
The following Unaudited Pro Forma Combining Statements of Income give effect
to Camden's proposed acquisition of KSB by combining the results of operations
of Camden and KSB for each of the periods presented on a pooling of interests
basis, assuming the acquisition had occurred as of the beginning of each
period. Basic and diluted earnings per share and weighted average shares
outstanding are based on the exchange ratio of 1.136 shares of Camden common
stock for each share of KSB common stock as specified in the merger agreement.
The Unaudited Pro Forma Combining Statements of Income should be read in
conjunction with the Unaudited Pro Forma Combining Balance Sheets and Notes to
Unaudited Pro Forma Financial Information appearing elsewhere in this Joint
Proxy Statement/Prospectus and the Notes to Unaudited Pro Forma Financial
Information and the historical financial statements (and accompanying notes) of
Camden and KSB, which are incorporated by reference in this Joint Proxy
Statement/Prospectus, including but not limited to, the financial information
of Camden and KSB contained in their respective Annual Reports on Form 10-K and
10-KSB for the year ended December 31, 1998 and Quarterly Reports on Forms 10-Q
and 10-QSB for the three month period ended June 30, 1999. In addition, the
Unaudited Pro Forma Combining Statements of Income have not been restated to
reflect the reissuance of 125,000 shares of Camden common stock. The pro forma
amounts are not necessarily indicative of results that will be obtained on a
combined basis. The pro forma amounts have not been adjusted to reflect any of
the improvements in operating efficiencies that the surviving corporation
anticipates will occur as a result of the merger.
73
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For six months ended June 30, 1999
<TABLE>
<CAPTION>
Pro Forma
Camden and
Camden KSB Pro Forma KSB
Historical Historical Adjustments Combined
---------- ---------- ----------- ----------
(In thousands, except share and per share
amounts)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans........ $ 20,101 $ 5,882 $-- $ 25,983
Interest on securities............ 5,775 1,027 -- 6,802
Other............................. 843 -- -- 843
---------- ---------- ---- ----------
Total interest income........... 26,719 6,909 -- 33,628
Interest Expense
Interest on deposits.............. 8,962 2,403 -- 11,365
Interest on other borrowings...... 2,686 674 -- 3,360
---------- ---------- ---- ----------
Total interest expense.......... 11,648 3,077 -- 14,725
---------- ---------- ---- ----------
Net interest income............. 15,071 3,832 -- 18,903
Provision for Loan Losses......... 940 300 -- 1,240
---------- ---------- ---- ----------
Net interest income after
provision for loan losses...... 14,131 3,532 -- 17,663
---------- ---------- ---- ----------
Other Income
Service charges on deposit
accounts......................... 1,123 421 -- 1,544
Other service charges and fees.... -- 1,014 -- 1,014
Mortgage servicing fees........... 25 141 -- 166
Merchant assessments.............. 525 -- -- 525
Other income...................... 375 76 -- 451
---------- ---------- ---- ----------
Total other income.............. 3,062 638 -- 3,700
---------- ---------- ---- ----------
Total income.................... 17,193 4,170 -- 21,363
---------- ---------- ---- ----------
Operating Expenses
Salaries and employee benefits.... 4,877 1,403 -- 6,280
Net occupancy..................... 649 175 -- 824
Furniture, equipment and data
processing....................... 686 408 -- 1,094
Other............................. 3,276 758 -- 4,034
---------- ---------- ---- ----------
Total operating expenses........ 9,488 2,744 -- 12,232
Income before income taxes...... 7,705 1,426 -- 9,131
Income Taxes...................... 2,476 482 -- 2,958
---------- ---------- ---- ----------
Net Income........................ $ 5,229 $ 944 $-- $ 6,173
========== ========== ==== ==========
Per Share Data
Basic earnings per share.......... $ 0.79 $ 0.76 $-- $ 0.77
Diluted earnings per share........ 0.79 0.74 -- 0.76
Weighted average number of shares
outstanding...................... 6,624,978 1,238,563 -- 8,031,986
</TABLE>
74
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For six months ended June 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Camden
Camden KSB Pro Forma and KSB
Historical Historical Adjustments Combined
-------------- -------------- ------------- --------------
(In thousands, except share and per share amounts)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on
loans.................. $ 17,842 $ 5,635 $ -- $ 23,477
Interest on securities.. 4,999 802 -- 5,801
Other................... 522 -- -- 522
-------------- -------------- -------- --------------
Total interest
income............... 23,363 6,437 -- 29,800
Interest Expense
Interest on deposits.... 7,978 2,311 -- 10,289
Interest on other
borrowings............. 2,385 627 -- 3,012
Other................... 32 -- -- 32
-------------- -------------- -------- --------------
Total interest
expense.............. 10,395 2,938 -- 13,333
-------------- -------------- -------- --------------
Net interest income... 12,968 3,499 -- 16,467
Provision for Loan
Losses................. 648 240 -- 888
-------------- -------------- -------- --------------
Net interest income
after provision for
loan losses.......... 12,320 3,259 -- 15,579
-------------- -------------- -------- --------------
Other Income
Service charges on
deposit accounts....... 783 418 -- 1,201
Other service charges
and fees............... 733 -- -- 733
Mortgage servicing
fees................... -- 196 -- 196
Merchant assessments.... 452 -- -- 452
Other income............ 244 59 -- 303
-------------- -------------- -------- --------------
Total other income.... 2,212 673 -- 2,885
-------------- -------------- -------- --------------
Total income.......... 14,532 3,932 -- 18,464
-------------- -------------- -------- --------------
Operating Expenses
Salaries and employee
benefits............... 4,036 1,292 -- 5,328
Net occupancy........... 569 165 -- 734
Furniture, equipment and
data processing........ 696 374 -- 1,070
Other................... 2,620 782 -- 3,402
-------------- -------------- -------- --------------
Total operating
expenses............. 7,921 2,613 -- 10,534
Income before income
taxes................ 6,611 1,319 -- 7,930
Income Taxes............ 2,136 466 -- 2,602
-------------- -------------- -------- --------------
Net Income.............. $ 4,475 $ 853 -- $ 5,328
============== ============== ======== ==============
Per Share Data
Basic earnings per
share.................. $ 0.66 $ 0.70 $ -- $ 0.65
Diluted earnings per
share.................. 0.64 0.67 -- 0.63
Weighted average number
of shares outstanding.. 6,801,198 1,221,954 -- 8,189,338
</TABLE>
75
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For year ended December 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Camden
Camden KSB Pro Forma and KSB
Historical Historical Adjustments Combined
---------- ---------- ----------- ----------
(In thousands, except share and per share
amounts)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans........ $ 37,845 $ 11,622 $ -- $ 49,467
Interest on securities............ 9,875 1,551 -- 11,426
Other............................. 1,095 45 -- 1,140
---------- ---------- ----- ----------
Total interest income........... 48,815 13,218 -- 62,033
Interest Expense
Interest on deposits.............. 17,017 4,798 -- 21,815
Interest on other borrowings...... 3,701 1,172 -- 4,873
Other............................. 32 -- -- 32
---------- ---------- ----- ----------
Total interest expense.......... 20,750 5,970 -- 26,720
---------- ---------- ----- ----------
Net interest income 28,065 7,248 -- 35,313
Provision for Loan Losses......... 1,376 680 -- 2,056
---------- ---------- ----- ----------
Net interest income after
provision for loan losses...... 26,689 6,568 -- 33,257
---------- ---------- ----- ----------
Other Income
Service charges on deposit
accounts......................... 996 841 -- 1,837
Other service charges and fees.... 2,004 2,004
Mortgage servicing fees........... 268 268
Merchant assessments.............. 1,303 1,303
Other income...................... 195 219 -- 414
---------- ---------- ----- ----------
Total other income.............. 4,498 1,328 -- 5,826
---------- ---------- ----- ----------
Total income.................... 31,187 7,896 -- 39,083
---------- ---------- ----- ----------
Operating Expenses
Salaries and employee benefits.... 8,638 2,540 -- 11,178
Net occupancy..................... 1,011 316 -- 1,327
Furniture, equipment and data
processing....................... 1,384 775 -- 2,159
Other............................. 6,040 1,498 -- 7,538
---------- ---------- ----- ----------
Total operating expenses........ 17,073 5,129 -- 22,202
Income before income taxes...... 14,114 2,767 -- 16,881
Income Taxes...................... 4,469 961 -- 5,430
---------- ---------- ----- ----------
Net Income........................ $ 9,645 $ 1,806 $ -- $ 11,451
========== ========== ===== ==========
Per Share Data
Basic earnings per share.......... $ 1.43 $ 1.47 $ -- $ 1.40
Diluted earnings per share........ 1.41 1.41 -- 1.38
Weighted average number of shares
outstanding...................... 6,763,086 1,227,009 -- 8,156,968
</TABLE>
76
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP, INC.
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For year ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Camden and
Camden KSB Pro Forma KSB
Historical Historical Adjustments Combined
---------- ---------- ----------- ----------
(In thousands, except share and per share
amounts)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans........ $ 32,845 $ 10,105 -- $ 42,950
Interest on securities............ 11,955 1,871 -- 13,826
Other............................. 1,251 28 -- 1,279
---------- ---------- ---- ----------
Total interest income........... 46,051 12,004 -- 58,055
Interest Expense
Interest on deposits.............. 13,484 4,378 -- 17,862
Interest on other borrowings...... 7,324 1,374 -- 8,698
Other............................. 421 -- -- 421
---------- ---------- ---- ----------
Total interest expense.......... 21,229 5,752 -- 26,981
---------- ---------- ---- ----------
Net interest income............. 24,822 6,252 -- 31,074
Provision for Loan Losses......... 1,677 530 -- 2,207
---------- ---------- ---- ----------
Net interest income after
provision for loan losses...... 23,145 5,722 -- 28,867
---------- ---------- ---- ----------
Other Income
Service charges on deposit
accounts......................... 901 705 -- 1,606
Other service charges and fees.... 1,614 -- -- 1,614
Mortgage servicing fees........... -- 297 -- 297
Merchant assessments.............. 1,113 -- -- 1,113
Other income...................... 122 184 -- 306
---------- ---------- ---- ----------
Total other income.............. 3,750 1,186 -- 4,936
---------- ---------- ---- ----------
Total income.................... 26,895 6,908 -- 33,803
---------- ---------- ---- ----------
Operating Expenses
Salaries and employee benefits.... 6,992 2,206 -- 9,198
Net occupancy..................... 856 281 -- 1,137
Furniture, equipment and data
processing....................... 1,294 730 -- 2,024
Other............................. 4,152 1,386 -- 5,538
---------- ---------- ---- ----------
Total operating expenses........ 13,294 4,603 -- 17,897
Income before income taxes...... 13,601 2,305 -- 15,906
Income Taxes...................... 4,453 756 -- 5,209
---------- ---------- ---- ----------
Net Income........................ $ 9,148 $ 1,549 $-- $ 10,697
========== ========== ==== ==========
Per Share Data
Basic earnings per share.......... $ 1.34 $ 1.30 $-- $ 1.31
Diluted earnings per share........ 1.31 1.23 -- 1.27
Weighted average number of shares
outstanding....................... 6,820,752 1,187,651 -- 8,169,924
</TABLE>
77
<PAGE>
CAMDEN NATIONAL CORPORATION
KSB BANCORP
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For year ended December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Camden
Camden KSB Pro Forma and KSB
Historical Historical Adjustments Combined
---------- ---------- ----------- ----------
(In thousands, except
share and per share amounts)
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans....... $ 29,483 $ 8,737 $ -- $ 38,220
Interest on securities........... 9,659 1,948 -- 11,607
Other............................ 1,873 19 -- 1,892
---------- ---------- ------ ----------
Total interest income.......... 41,015 10,704 -- 51,719
Interest Expense
Interest on deposits............. 13,982 4,483 -- 18,465
Interest on other borrowings..... 3,983 682 -- 4,665
Other............................ 1,140 0 -- 1,140
---------- ---------- ------ ----------
Total interest expense......... 19,105 5,165 -- 24,270
---------- ---------- ------ ----------
Net interest income............ 21,910 5,539 -- 27,449
Provision for Loan Losses........ 838 390 -- 1,228
---------- ---------- ------ ----------
Net interest income after
provision for loan losses....... 21,072 5,149 -- 26,221
---------- ---------- ------ ----------
Other Income
Service charges on deposit
accounts........................ 865 700 -- 1,565
Other service charges and fees... 1,392 -- -- 1,392
Mortgage servicing fees.......... -- 321 -- 321
Merchant assessments............. 871 -- -- 871
Other income..................... 283 118 -- 401
---------- ---------- ------ ----------
Total other income............. 3,411 1,139 -- 4,550
---------- ---------- ------ ----------
Total income................... 24,483 6,288 -- 30,771
---------- ---------- ------ ----------
Operating Expenses
Salaries and employee benefits... 6,303 2,050 -- 8,353
Net occupancy.................... 736 299 -- 1,035
Furniture, equipment and data
processing...................... 1,254 629 -- 1,883
Other............................ 4,045 1,483 -- 5,528
---------- ---------- ------ ----------
Total operating expenses....... 12,338 4,461 -- 16,799
Income before income taxes..... 12,145 1,827 -- 13,972
Income Taxes .................... 4,030 583 -- 4,613
---------- ---------- ------ ----------
Net Income....................... $ 8,115 $ 1,244 $ -- $ 9,359
========== ========== ====== ==========
Per Share Data
Basic earnings per share......... $ 1.16 $ 1.07 $ -- $ 1.13
Diluted earnings per share....... 1.14 1.01 -- 1.10
Weighted average number of shares
outstanding...................... 6,989,967 1,166,371 -- 8,314,964
</TABLE>
78
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
COMBINING FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The pro forma information presented is not necessarily indicative of the
results of operations or the combined financial position that would have
resulted had the merger been consummated at the beginning of the periods
indicated, nor is it necessarily indicative of the results of operations in
future periods or the future financial position of the combined company. It is
anticipated that the merger will be completed during the first quarter of 2000.
Under generally accepted accounting principles, the transaction will be
accounted for as a pooling of interests and, as such, the assets and
liabilities of KSB will be combined with those of Camden at book value. In
addition, the statements of income of KSB will be combined with the statements
of income of Camden as of the earliest period presented. The unaudited pro
forma combining statements of income give effect to the merger as if the merger
occurred at the beginning of the earliest period presented. The unaudited pro
forma combining balance sheet assumes the merger was consummated on June 30,
1999.
Note 2. Accounting Policies and Financial Statement Classifications
The accounting policies of both companies are in the process of being
reviewed for consistency. As a result of this review, certain conforming
accounting adjustments may be necessary. The nature and extent of these
adjustments have not been determined but are not expected to be significant.
Note 3. Merger--and Restructuring-Related Charges.
The following table provides detail of the estimated charges by type, post-
tax:
<TABLE>
<CAPTION>
Estimated
Type of Cost Costs
------------ --------------
(in thousands)
<S> <C>
Personnel.................................................. $ 165
Technology and operations.................................. 300
Facilities................................................. 65
Transaction cost and other................................. 1,600
------
Total.................................................... $2,130
</TABLE>
Personnel-related costs consist primarily of charges related to employee
severance, termination of certain employee benefit plans and employee
assistance costs for separated employees. Technology and operations costs
include accelerated depreciation in excess of normal scheduled depreciation and
certain liabilities that will be incurred as a result of the elimination of
duplicate systems. Facilities charges consist of lease termination costs and
other facilities-related exit costs, as well as accelerated depreciation in
excess of normal depreciation, resulting from consolidation of duplicate
headquarters and operational facilities.
These charges have not been reflected in the Unaudited Pro Forma Combining
Statement of Income since they are nonrecurring. The unaudited pro forma
financial information does not give effect to any cost savings in connection
with the pending acquisition.
The unaudited pro forma financial information presented herein does not
reflect the impact of any divestitures that may be required as part of the
combination.
79
<PAGE>
Note 4. Pro Forma Adjustments
Pro forma adjustments to accrued expenses and other liabilities and retained
earnings reflect the $2.4 million merger and restructuring-related charge and a
$270,000 reduction in the deferred tax liability for the anticipated tax
benefit of such charge. For additional information on the merger-and
restructuring-related charges see Note 3.
Note 5. Stock Repurchase Plan
Camden has had a stock repurchase plan seeking to repurchase stock since
September 1996. The original plan was to seek to repurchase up to five percent
of its outstanding shares. On October 13, 1998, the Camden Board modified the
plan to increase to $6 million the maximum amount of outstanding shares to be
repurchased during the subsequent twelve month period. During the period since
May 1, 1997, a date two years prior to the Company's discussions with KSB, the
Company repurchased 274,682 shares. (See Note 7).
Note 6. Stock Exchange
The pro forma stockholders' equity accounts of Camden have been adjusted to
reflect the issuance of shares of Camden common stock in exchange for all of
the outstanding shares of KSB common stock, and the retirement of KSB's
treasury stock.
The 1,481,800 shares of Camden common stock expected to be issued pursuant
to the acquisition of KSB are based upon 1,304,401 net KSB shares outstanding
as of August 31, 1999 and the exchange ratio of 1.136 shares of Camden common
stock for each share of KSB common stock.
Note 7. Stock Reissuance
In connection with the merger, Camden expects to reissue approximately
125,000 shares of common stock pursuant to a registration statement on Form S-3
under the Securities Act of 1933, as amended. This share reissuance is required
for the proposed transaction to be accounted for as pooling of interests in
accordance with GAAP. There can be no assurances that the estimated share
reissuance will be more than or less than this estimate. The unaudited Pro
Forma Combining Balance Sheets have been adjusted to reflect this transaction.
All issuances are assumed to occur on June 30, 1999, at Camden's closing
price of $20.875 per share and are assumed to be issued from treasury shares
with an average book value of $17.90 per share as of June 30, 1999.
80
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF CAMDEN
Authorized Capital Stock
Camden's current authorized stock consists of 10,000,000 shares of common
stock, no par value.
The Camden common stock is traded on the AMEX under the ticker symbol "CAC."
As of October 1, 1999, 6,557,650 shares of Camden common stock were issued and
outstanding.
Common Stock
Under Maine law, stockholders generally are not personally liable for a
corporation's acts or debts. Subject to the preferential rights of any other
shares or series of capital stock, holders of shares of Camden common stock are
entitled to receive dividends on shares of common stock if, as and when
authorized and declared by the Camden Board out of assets legally available for
distribution and to share ratably in the assets of Camden legally available for
distribution to its stockholders in the event of its liquidation, dissolution
or winding-up after payment of, or adequate provision for, all known debts and
liabilities of Camden.
Each outstanding share of Camden common stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of directors. Unless a larger vote is required by law, when a quorum is present
at a meeting of stockholders, a majority of the votes properly cast upon any
question shall decide the question. In addition, a majority of the votes
properly cast for the election of a person to serve as a director shall elect
such person. Except as otherwise required by law, the holders of Camden common
stock possess the exclusive voting power. There is no cumulative voting in the
election of directors. The Camden Board is classified into three categories
with each category as nearly equal in number as possible. This means that
approximately one-third of the members of the Camden Board are subject to
reelection at each annual meeting of stockholders.
Holders of Camden common stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any of Camden's
securities.
Subject to the provisions of Camden's charter, all shares of Camden common
stock have equal dividend, distribution, liquidation and other rights, and have
no preference, appraisal or exchange rights.
Registrar and Transfer Agent
Camden's registrar and transfer agent is American Stock Transfer Company.
Copies of the governing corporate instruments of Camden and KSB are available,
without charge, by following the instructions listed under "Where You Can Find
More Information."
81
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF KSB COMMON STOCK
AND CAMDEN COMMON STOCK
Upon completion of the merger, the stockholders of KSB will become
stockholders of Camden. The rights of KSB stockholders are presently governed
by Delaware law, the KSB charter and the KSB bylaws. As stockholders of Camden
following the merger, the rights of former KSB stockholders will be governed by
Maine law, the Camden charter and the Camden bylaws. The following chart
summarizes the material differences between the rights of holders of KSB common
stock prior to and after the merger. A more detailed discussion of the rights
of KSB stockholders prior to and after the merger can be found in the
discussion following this chart.
KSB Stockholders' Rights KSB Stockholders' Rights
Pre-Merger Post-Merger
------------------------ ------------------------
Special Meetings of Unable to call a special Except as provided by
Stockholders meeting of stockholders. the MBCA, stockholders
are unable to call a
special meeting of
stockholders.
Consent in Writing by Any action by the Stockholders may take
Stockholders stockholders must be any action permitted
effected at an annual or without a special
special meeting. meeting if a written
consent of all
stockholders is filed
with Camden's Secretary.
Inspection of List of In addition to the In addition to the
Stockholders ability to inspect the ability to inspect the
list of stockholders list of stockholders
beginning ten days prior beginning ten days prior
to a meeting and to a meeting, the MBCA
continuing through the law also provides that
meeting, the DGCL also any stockholder who has
provides rights of held the stock for six
inspection to any months or who owns 10%
stockholder who makes a of the stock may inspect
written request for any the list of stockholders
a proper purpose. for any proper purpose.
Number of Directors on The KSB Board currently The Camden Board
the Board consists of six consists of 13
directors. directors, with a
minimum of 7 and a
maximum of 16.
Election of the Board of Directors are elected by Directors are elected by
Directors a plurality of the votes a majority of the votes
cast. cast.
Removal of Directors A director or the entire A director or the entire
KSB Board may be removed Camden Board may be
only for cause and only removed with or without
by the affirmative vote cause by the affirmative
of at least 80% of the vote of at least two-
outstanding shares of thirds of the
the KSB common stock. stockholders entitled to
vote on the election of
directors, or by court
action.
Effect of a Vote One vote per share, and One vote per share.
no person may vote in
excess of 10%.
82
<PAGE>
KSB Stockholders' Rights KSB Stockholders' Rights
Pre-Merger Post-Merger
------------------------ ------------------------
Liability of Directors Directors are not Directors are generally
personally liable to KSB not personally liable to
or its stockholders for Camden or its
breaches of fiduciary stockholders for any
duty, except (1) for action, unless the
breach of the director's action involves improper
duty of loyalty, (2) for dividend payments, share
acts and omissions not redemptions or asset
in good faith or which distributions where the
involve intentional director did not act in
misconduct or a knowing good faith after
violation of law, (3) reviewing certified
for unlawful payments of financial statements or
dividends or unlawful consider reasonably and
stock purchases or in good faith the value
redemptions or (4) for of the assets.
any transaction where
the director received an
improper personal
benefit.
Indemnification of Directors, officers, Directors, officers,
Directors, Officers and employees and agents are employees and agents are
Others entitled to entitled to
indemnification, indemnification if they
including for expenses act in the belief that
incurred by them to the their conduct in their
fullest extent official capacity was in
authorized by the DGCL. the best interest of
Camden or was at least
not opposed to the best
interest of Camden.
These parties are also
entitled to
indemnification in a
governmental proceeding
if they have no
reasonable cause to
believe their conduct
was unlawful, or if a
court determines that
indemnification for such
person is reasonable, if
the matter is asserted
in the right of Camden.
Restrictions upon The affirmative vote of The MBCA provides
Certain Business 80% or more of the general restrictions
Combinations; Fair Price outstanding shares is regarding interested
Provisions required to authorize or stockholder transactions
approve any agreement which require Camden
providing for a merger, Board and stockholder
consolidation, sale of approval.
substantially all assets
or an acquisition in
which a majority of its
shares is issued to
another corporation or
entity with an
interested stockholder
or an affiliate, unless
certain fair price
provisions are satisfied
or prior approval was
obtained by the board of
directors.
Mergers, Share Exchange Mergers and Mergers and
or Asset Sales consolidations require consolidations require
the vote of a majority the vote of a majority
of the outstanding of the outstanding
stockholders entitled to stockholders entitled to
vote. vote on such a matter.
83
<PAGE>
KSB Stockholders' Rights KSB Stockholders' Rights
Pre-Merger Post-Merger
------------------------ ------------------------
Amendments to Charter Amendments require the Amendments generally
approval of the board of require approval of a
directors along with the majority of the votes
affirmative vote of the cast upon the amendment.
holders of a majority of Any amendment relating
the outstanding stock. to business combinations
Amendments for a few requires the affirmative
specified articles vote of at least two-
require the approval of thirds of the
not less than 80% of the outstanding stock
total votes entitled to entitled to vote on the
vote on the matter. matter.
Amendments to Bylaws Amendments require the Bylaws may be amended,
approval of a majority altered, or appealed at
of the directors at any any regular meeting of
regular meeting or the the Camden Board by the
affirmative vote of at approval of a majority
least 80% of the of the directors or the
stockholders entitled to affirmative vote of two-
vote. thirds of the
stockholders after
notice has been given as
required by law.
Appraisal/Dissenters' Under the DGCL, Stockholders are
Rights appraisal rights are entitled to dissenters'
available in connection rights in a merger,
with a statutory merger share exchange or sale
or consolidation, except or exchange of all or
in specified situations. substantially all of
Camden's assets if the
transaction meets
specified parameters.
The following discussion summarizes in further detail the material
differences between the rights of holders of KSB common stock and holders of
Camden common stock. This summary does not purport to be complete and is
qualified in its entirety by reference to the KSB charter, the KSB bylaws, the
Camden charter and the Camden bylaws and the relevant provisions of Delaware
and Maine law.
Special Meetings of Stockholders
KSB stockholders are not entitled to call special meetings of stockholders.
Under the DGCL, special meetings of the stockholders may be called by the board
of directors or such other person or persons as may be authorized by the
charter or by the bylaws. The KSB bylaws provide that special meetings may be
called by one-third of the directors then in office.
Special meetings of stockholders of Camden may be called by the Chairperson,
the Vice Chairperson, the President or two or more directors; provided,
however, that special meetings of stockholders of Camden also may be called by
the Superior Court of the State of Maine upon the petition of the holders of
not less than 10% of the stock entitled to vote at the meeting.
Written Consent of Stockholders
Subject to the rights of any holders of preferred stock, any action required
or permitted to be taken by stockholders of KSB must be effected at an annual
or special meeting of stockholders and may not be effected by any consent in
writing by such stockholders.
Camden's bylaws allow Camden stockholders to take any action which is
required or permitted to be taken without a special meeting if written
consents, setting forth the actions to be taken, are executed by all
stockholders entitled to vote on such action and such consents are filed with
Camden's Secretary.
84
<PAGE>
Inspection of List of Stockholders
The KSB bylaws provide that stockholders may, during ordinary business hours
in the period beginning at least 10 days prior to a meeting of stockholders and
through such meeting, inspect the list of stockholders entitled to vote at the
meeting for any purpose germane to the meeting. The DGCL provides that any
stockholder shall, upon written demand under oath stating the purpose thereof,
have the right during usual business hours to inspect for any proper purpose
the corporation's stock ledger, a list of stockholders, and its other books and
records, and to make copies or extracts therefrom.
The MBCA provides that stockholders may, during ordinary business hours in
the period beginning at least 10 days prior to a meeting of stockholders and
through such meeting, inspect the list of stockholders entitled to vote at such
meeting. The MBCA also provides that a stockholder of a Maine corporation, such
as Camden, who has been a stockholder for at least six months or who owns 10%
or more of the corporation's outstanding stock may, for any proper purpose,
subject to the provision, if requested, of specified affidavits, inspect the
corporation's books and records of account, minutes of meetings and list or
record of stockholders. The MBCA authorizes a stockholder of a Maine
corporation who refuses to permit an authorized inspection to bring a legal
action for an order directing the corporation to permit such inspection and, if
successful, to be awarded costs and in certain circumstances specified punitive
damages.
Cumulative Voting
Neither the KSB bylaws nor the Camden charter permit stockholders to
cumulate their votes for the election of directors.
Preemptive Rights
Neither KSB stockholders nor Camden stockholders have preemptive rights to
acquire or subscribe to any additional issues of the corporation's stock.
Classification of the Board of Directors
Both the KSB bylaws and the Camden charter provide that their respective
boards of directors are to be classified and divided into three classes, as
nearly equal in number as possible, with the directors in each class being
elected for staggered three year terms.
Number of Directors on the Board
The KSB bylaws provide that the number of directors who shall constitute the
KSB Board shall be as designated by the KSB Board from time to time, and in the
absence of such designation the number of directors shall be seven.
The Camden bylaws provide that the Camden Board shall consist of not less
than seven nor more than sixteen stockholders, with the exact number to be
fixed by resolution of a majority of the Camden Board or by a resolution of the
stockholders at any meeting thereof. The Camden charter initially provided for
thirteen directors.
Election of the Board of Directors
The KSB bylaws provide that a nominee for director is elected by a plurality
vote of stockholders entitled to vote on the election of directors present in
person or represented by proxy at a stockholders meeting.
The Camden bylaws provide that a nominee for director is elected by a
majority of the votes cast, whether in person or by proxy, at a stockholders
meeting at which a quorum is present.
85
<PAGE>
Removal of Directors
The KSB charter provides that any director or the entire KSB Board may be
removed from office only for cause and only by the affirmative vote of at least
80% of the outstanding shares of KSB common stock.
The MBCA provides that at any special meeting of stockholders called
expressly for that purpose, the entire Camden Board or any director may be
removed, with or without cause, by the affirmative vote of two-thirds of the
stockholders entitled to vote. In addition, two-thirds of the directors then in
office may resolve to remove any individual director and bring an action in
court to remove such director from office.
Additional Directors and Vacancies on the Board of Directors
The KSB bylaws provide that (1) the number of directors shall be determined
from time to time by a majority vote of the KSB Board, (2) vacancies shall be
filled by a majority vote of the directors then in office and (3) the director
chosen to fill a vacancy shall hold office for the unexpired term of such
director's predecessor.
The Camden bylaws provide that the number of directors shall be determined
from time to time by a majority vote of the directors present at a regular or
special meeting at which a quorum is present. Any vacancy occurring in the
Camden Board by reason of an increase in the number of directors may be filled
by the Camden Board, and any directors so chosen shall hold office until the
next election of directors by the stockholders of Camden. Any other vacancy in
the Camden Board, whether by reason of death, resignation, removal or
otherwise, may be filled by the remaining directors of Camden, or by a sole
remaining director, and any directors so chosen shall hold office until the
next election of the class for which such directors shall have been chosen and
until their successors are elected and qualified.
Liability of Directors
The KSB charter provides that no director shall be personally liable to KSB
or its stockholders for monetary damages for breaches of fiduciary duty except
where such exculpation is expressly prohibited. The KSB charter provides that
this limitation does not apply to liability of a director in the following
instances:
. breach of the director's duty of loyalty to KSB or its stockholders;
. acts and omissions not in good faith or which involve intentional
misconduct or knowing violation of law;
. unlawful payments of dividends and unlawful stock purchases or
redemptions for any transaction from which the director derived an
improper personal benefit; or
. any transaction from which the director derived an improper personal
benefit.
Neither the Camden charter nor the Camden bylaws contain any specific
limitations on director liability. However, the MBCA provides that a director
of a Maine corporation may be liable for certain improper dividend payments,
share redemptions and asset distributions, provided that the director did not
rely reasonably and in good faith upon certified financial statements or did
not consider reasonably and in good faith the value of the assets.
Indemnification of Directors, Officers and Others
The KSB bylaws provide indemnification to the fullest extent permitted by
the DGCL to directors, officers, employees and agents designated by the KSB
Board and any person serving, at the request of the KSB Board, as a director,
officer, employee or agent of another corporation or enterprise affiliated with
KSB; provided, however, that except with respect to actions to enforce
indemnification rights, KSB shall indemnify any person for actions initiated by
that person only if the action was authorized or ratified by a majority of a
quorum of the KSB directors who were not parties to such action, suit or
proceeding, and in certain
86
<PAGE>
circumstances, by independent legal counsel or by the stockholders. The DGCL
generally permits indemnification of directors, officers, employees and agents
for expenses incurred by them by reason of their position with the corporation,
if the person has acted in good faith and with the reasonable belief that his
conduct was in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, with no reasonable cause to
believe his or her conduct was unlawful. The DGCL does not permit a corporation
to indemnify persons in actions brought by or in the right of the corporation
if the person is adjudged to be liable to the corporation.
The Camden bylaws provide that Camden shall indemnify directors against
liability incurred by reason of their position; provided, however, that such
indemnification shall not be provided if the director is finally adjudicated
(1) not to have acted honestly or in the reasonable belief that the actions
were not opposed to the best interests of Camden or its stockholders, (2) with
respect to any criminal action or proceeding, to have had reasonable cause to
believe that the conduct was unlawful and (3) to be liable to Camden with
respect to any claim or matter asserted by or in the right of Camden, unless a
court determines that the person is fairly and reasonably entitled to
indemnification.
Restrictions upon Certain Business Combinations; Fair Price Provisions
The KSB charter provides that the affirmative vote of 80% or more of the
outstanding stock is required to authorize or approve any agreement providing
for a merger, consolidation, sale or an acquisition in which a majority of its
stock is issued to an interested stockholder or an affiliate, unless certain
fair price provisions are satisfied.
Neither the Camden charter nor the Camden bylaws provide for any enhanced
vote requirement or other limitations or restrictions regarding business
combinations.
The MBCA provides that Camden may not engage in any business combination for
a period of five years following an interested stockholder's acquisition of
shares of Camden common stock unless the business combination is approved by
the Camden Board prior to the interested stockholder's acquisition or the
acquisition is subsequently approved by the Camden Board and by the affirmative
vote of at least a majority of the outstanding voting stock not owned by the
interested stockholder or owned by directors or officers.
Mergers, Share Exchanges or Asset Sales
The DGCL requires the approval of the directors and the affirmative vote of
the holders of a majority of the outstanding stock entitled to vote thereon for
the merger of a corporation into any other corporation, unless a higher
stockholder vote is required in the charter.
The Camden charter provides certain standards for the Camden Board to
evaluate when considering mergers, share exchanges or asset sales and certain
actions allowed once such evaluation has occurred, but does not directly
specify the vote standing for stockholder approval. The MBCA requires the
approval of the Camden Board and the holders of at least a majority of the
outstanding Camden common stock for mergers and consolidations in which Camden
is a participating corporation and for sales of all or substantially all of
Camden's property and assets.
Amendments to Charter
The KSB charter reserves the right to amend or repeal any provision in the
KSB charter in the manner prescribed by the DGCL; provided, however, that the
affirmative vote of at least 80% of the stockholders is required to amend or
repeal Section C of Article 4 (relating to the 10% beneficial ownership limit),
Section C or D of Article 5 (prohibiting stockholder action by written consent
and prohibiting stockholders from calling special meetings), Article 6
(pertaining to the constitution and classification of the KSB Board), Article 7
(pertaining to amendment to bylaws), Article 8 (providing for greater than
majority stockholder votes to
87
<PAGE>
approve mergers, sales of substantially all of the corporation's assets and
other transactions with interested stockholders), Article 10 (pertaining to
indemnification for directors and officers) or Article 12 (requiring the vote
of 80% of the outstanding voting stock to amend any of the Articles previously
specified and Article 12).
The Camden bylaws provide that a majority of the votes properly cast upon
any question other than an election to an office shall decide the question,
except when a larger vote is required by law or by Camden's charter or bylaws.
The Camden charter provides that any amendment, alteration or repeal of
paragraph 6 (relating to the evaluation of business combinations), paragraph 7
(action permitted to be taken by the Board in rejecting a business combination)
and paragraph 8 (requiring the vote of two-thirds of the outstanding voting
stock to amend the foregoing paragraphs and paragraph 8) of the Camden charter
shall not be made unless approved by the stockholders of not less than two-
thirds of the total votes entitled to vote thereon.
Amendments to Bylaws
The KSB charter provides that the KSB bylaws may be amended by the
affirmative vote of a majority of the KSB Board at any regular or special
meeting. In addition, the KSB charter provides the stockholders the power to
adopt, amend or repeal the bylaws by the affirmative vote of at least 80% of
the then outstanding stock of KSB entitled to vote generally in the election of
directors.
The Camden bylaws provide that the Camden bylaws may be amended or repealed
by the affirmative vote of a majority of directors then in office. The Camden
bylaws may also be amended or repealed at any meeting of the stockholders
called for that purpose, by the affirmative vote of two-thirds of the shares
present in person or by proxy and entitled to vote on such amendment or repeal,
voting together as a single class.
Appraisal/Dissenters' Rights
Under the DGCL, appraisal rights are available in connection with a
statutory merger or consolidation except in certain specified situations.
Appraisal rights are not available for shares of stock of a corporation which
is to be the surviving corporation if no vote of its stockholders is required
to approve the merger, unless such stockholders are required by the terms of
the merger to accept anything other than: (A) shares of stock of the surviving
corporation; (B) shares of stock of another corporation which are or will be so
listed on a national securities exchange or designated as a national market
system security on an inter-dealer quotation system by the NASD or held of
record by more than 2,000 stockholders; (C) cash in lieu of fractional shares
of such stock; or (D) any combination of the foregoing. In addition, unless
otherwise provided in the charter, no appraisal rights are available to holders
of shares of any class of stock which is either: (1) listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the NASD or (2) held of record by more than
2,000 stockholders, unless such stockholders are required by the terms of the
merger to accept anything other than: (A) shares of stock of the surviving
corporation; (B) shares of stock of another corporation which are or will be so
listed on a national securities exchange or designated as a national market
system security on an inter-dealer quotation system by the NASD or held of
record by more than 2,000 stockholders; (C) cash in lieu of fractional shares
of such stock; or (D) any combination of the foregoing. In this case, KSB
stockholders will not be entitled to appraisal rights because the KSB common
stock is traded on the Nasdaq National Market and the KSB stockholders will
receive Camden common stock as consideration for their shares.
Under the MBCA, a stockholder of a Maine corporation generally has the right
to dissent from a merger or consolidation in which the corporation is
participating or sale of all or substantially all of the assets of the
corporation, subject to specified procedural requirements. The MBCA generally
does not confer appraisal rights, however, if the corporation's stock is either
(i) registered or traded on a national securities exchange or (ii) registered
with the SEC pursuant to Section 12(g) of the Exchange Act. Even if a
corporation's stock meets the foregoing requirements, however, the MBCA
provides that appraisal rights generally will be permitted if stockholders of
the corporation are required to accept for their stock in any merger,
consolidation or similar transaction anything other than (i) shares of the
surviving or new corporation resulting from the transaction, or
88
<PAGE>
such shares plus cash in lieu of fractional shares, or (ii) shares, or shares
plus cash in lieu of fractional shares, of any other corporation unless such
shares are registered or traded on a national securities exchange or held of
record by not less than 2,000 shareholders, or any combination of the
foregoing. In this case, Camden stockholders will not be entitled to appraisal
rights as they will retain their shares of Camden common stock in the merger.
Since the merger will be effected through a series of transactions involving
CASI, a wholly owned subsidiary of Camden, Camden stockholders will not be
entitled to dissenters' rights under the MBCA. As the sole stockholder of CASI,
Camden has waived its dissenters' rights in connection with the merger.
89
<PAGE>
PROPOSAL 2
(Camden Meeting Only)
ELECTION OF DIRECTORS
The number of directors that serve on the Camden Board is established
periodically by the Camden Board. The directors are classified into three
categories with each category as nearly equal in number as possible. Only one
category of directors is elected at each annual meeting of stockholders and all
directors are elected for three year terms. During 1998, the Camden Board
consisted of thirteen seats of which two were vacant. During May 1999 a third
seat became vacant. As of the date of filing this Joint Proxy
Statement/Prospectus, none of the vacancies has been filled.
The Camden Board has nominated Winfield F. Robinson and Theodore C. Johanson
to serve as directors. Mr. Johanson has agreed to tender his resignation as a
director in the event that Camden or any of its affiliates consummates a
subsequent bank or non-bank merger, acquisition or similar transaction.
The Camden Board anticipates that each of the nominees, if elected, will
serve as a director. However, if any person nominated by the Camden Board is
unable to accept election, the proxies will be voted for the election of such
other person or persons as the Camden Board may recommend. The Camden Board
will consider a nominee for election to the Camden Board recommended by a
stockholder of record if the stockholder submits the nomination in compliance
with the requirements of Camden's bylaws. See "Other MattersStockholder
Proposals for Annual Meetings" for a summary of these requirements.
After the Camden meeting, one seat will remain vacant on the Camden Board.
As of the date of this Joint Proxy Statement/Prospectus, the Camden Board has
not selected any candidates for nomination to this position. As a result,
proxies can only be voted for two of the three vacancies.
Required Vote and Recommendation
Proxies will be voted for Proposal 2 unless contrary instructions are set
forth on the proxy. Only stockholders of record of Camden common stock on
October 4, 1999 are entitled to vote on this proposal. A majority of the votes
cast for the election of a nominee for director of Camden shall elect such
nominee. Accordingly, abstentions will have no effect on this proposal.
The Camden Board unanimously recommends that
Camden stockholders vote "FOR" each of the nominees.
Information Regarding Nominees, Continuing Directors and Executive Officers
Following is a list of the nominees for the Camden Board, including age (as
of August 31, 1999) and the proposed term for which such person is standing for
election.
<TABLE>
<CAPTION>
Proposed
Name of Nominee Age Term
--------------- --- --------
<S> <C> <C>
Winfield F. Robinson......................................... 61 2002
Theodore C. Johanson......................................... 61 2001
</TABLE>
90
<PAGE>
Following is a list of directors not currently standing for election to the
Camden Board and the executive officers of Camden, including their age, as of
August 31, 1999 and their current positions with Camden and/or its
subsidiaries: Camden National Bank, United Bank and Trust Company of Maine.
<TABLE>
<CAPTION>
Other Directors Position Term of Position(s) with
and Officers Age with Camden Directorship Subsidiaries
- --------------- --- ------------------------ ------------ ------------------------
<S> <C> <C> <C> <C>
Peter T. Allen.......... 64 Director 2001 Director, Camden
National Bank
Ann W. Bresnahan........ 48 Director 2000 Director, Camden
National Bank
Royce M. Cross.......... 48 Director 2002 Director & Chairman,
United Bank
Robert W. Daigle........ 50 Director, President & 2000 President & Chief
Chief Executive Officer Executive Officer,
Camden National Bank
Director, United Bank
Director, Camden
National Bank
Director, Trust Company
of Maine
Robert J. Gagnon........ 51 Director 2000 Director, Camden
National Bank
John W. Holmes.......... 53 Director 2002 Director, Camden
National Bank
Rendle A. Jones......... 57 Director & Chairman 2000 Director & Chairman,
Camden National Bank,
Director, United Bank
John S. McCormick, Jr... 68 Director 2001 Director, Camden
National Bank
Richard N. Simoneau..... 63 Director 2001 Director, Camden
National Bank
Director, Trust Company
of Maine
Arthur E. Strout........ 63 Director & Secretary 2000 Director, Camden
National Bank
Laurel J. Bouchard...... 43 Vice President Corporate -- --
Sales and Marketing
James C. Ebbert......... 51 -- -- Assistant to the
President, Camden
National Bank
June B. Parent.......... 36 Vice President Human -- --
Resources
Jeffrey D. Smith........ 36 Vice President & Chief -- --
Operating Officer
Susan M. Westfall....... 42 -- Vice President, Cashier,
Vice President, Clerk, Investment & Trust
Treasurer & Chief Officer, Camden National
Financial Officer Bank
</TABLE>
All the executive officers listed above will hold office as elected by the
Camden Board. There are no arrangements or understandings between any of the
directors, or officers or any other persons pursuant to which any of the above
directors have been selected as directors, or any of the above officers have
been selected as officers, other than as described above. There are no "family
relationships" among the above directors and officers, as that term is defined
by the SEC.
91
<PAGE>
During the past five years, the business experience of each executive
officer, key employee, director, and nominee for director is set forth below.
None of the organizations in the descriptions below except Camden National
Bank, United Bank, and Trust Company of Maine are affiliated with Camden.
Nominees for Election as Directors
Winfield F. Robinson. Mr. Robinson has served as Chairman of the Board of
KSB since its formation in 1993. He has also served as a Director of Kingfield
since 1976 and was elected Chairman of the Board in 1986. Mr. Robinson has been
the President of Timber Resource Group LLC, a Maine-based forest products firm,
since 1998.
Theodore C. Johanson. Mr. Johanson was appointed a Director of KSB and
Kingfield in October 1996. Mr. Johanson has been the President of Falcon Shoe
Company in Lewiston, Maine since 1963.
Continuing Directors
Peter T. Allen. Mr. Allen has been a Director of Camden and Camden National
Bank since 1991. Mr. Allen is currently a private investor. From 1968 to 1998,
he was also the President and General Manager of Cutting-Allen, Inc., a
wholesale Christmas tree company.
Ann W. Bresnahan. Ms. Bresnahan has been a Director of Camden and Camden
National Bank since 1990. She has been a full-time volunteer and civic leader
since 1970.
Royce M. Cross. Mr. Cross has been a Director of Camden since 1998, and has
been a Director of United Bank since 1991, serving as its Chairman since 1995.
For the past 16 years, Mr. Cross has been the President of Cross Insurance and
its affiliated offices located throughout Maine.
Robert W. Daigle. Mr. Daigle is President and Chief Executive Officer of
Camden. He has been a Director of Camden and Camden National Bank since 1996,
after being named President and Chief Executive Officer of Camden National Bank
effective January 8, 1996. Mr. Daigle has also been a Director of Trust Company
of Maine, Inc. since 1996. From 1991 until 1996, he served Fleet Bank of Maine
as Regional President and Senior Bank Official overseeing Maine's northern and
eastern markets.
Robert J. Gagnon. Mr. Gagnon has been a Director of Camden and Camden
National Bank since 1996. Mr. Gagnon is also Manager of the Rockland Super
Shop-n-Save, a position he has held for sixteen years.
John W. Holmes. Mr. Holmes has been a Director of Camden and Camden National
Bank since 1989. Mr. Holmes is also the President and majority owner of
Consumers Fuel Company, a position he has held for 22 years.
Rendle A. Jones. Mr. Jones has been a Director of Camden and Camden National
Bank since 1988, and became Chairman of Camden in 1998 and Chairman of Camden
National Bank in 1999. Mr. Jones has also been a director of United Bank since
1996. Mr. Jones is also a partner in the law firm of Harmon, Jones & Sanford,
where he has worked since 1968. He is also a partner in the following entities:
Fuller, Jones & Stivers, financial advisors; Professional Services Center, real
estate rentals; Washington Street Associates, real estate rentals; and
Lincolnville Village Apartments, real estate rentals. Mr. Jones is also general
counsel to Camden.
John S. McCormick, Jr. Mr. McCormick has been a Director of Camden and
Camden National Bank since 1984 and 1975, respectively. Mr. McCormick has also
been a principal of Consolidated Real Estate and Engineering, a professional
engineering/consulting firm, since 1969.
Richard N. Simoneau. Mr. Simoneau has been a Director of Camden and Camden
National Bank since 1984 and 1978, respectively. Mr. Simoneau has also been a
Director of Trust Company of Maine, Inc. since January 1998. Mr. Simoneau has
also been a partner of Simoneau, Norton, Masters & Alex, CPA, PA since
92
<PAGE>
1999 and was previously a partner in Simoneau & Norton, CPAs, P.A., from 1993
to 1998. From 1990 to 1993, Mr. Simoneau was a Director of Associated Grocers
of Maine.
Arthur E. Strout. Mr. Strout has been a Director of Camden and Camden
National Bank since 1984 and 1979, respectively. He is also an attorney in the
law firm of Strout & Payson, P.A., where he has worked since 1971.
Executive Officers of Camden
Laurel J. Bouchard. Mrs. Bouchard has been Vice President Corporate Sales
and Marketing for Camden since May, 1999. From 1993 to 1999, she held several
positions with Fleet Bank, the most recent one being Senior Vice President and
District Manager.
James C. Ebbert. Mr. Ebbert joined Camden National Bank in October 1998 as
Assistant to the President. From 1990 to September 1998 he consulted in
corporate workouts, restructurings, crisis management and interim management.
Prior to joining Camden National Bank, he practiced with the firms of Allomet
Partners, Ltd. and Nachman, Hays & Associates, Inc. from January 1997 to
September 1998 and January 1995 to December 1996, respectively. Mr. Ebbert has
over 25 years of business and management experience.
June B. Parent. Mrs. Parent has been Vice President of Human Resources for
Camden since January 1999. Prior to that, she had been Personnel Manager for
Camden since July 1995 and prior to that Executive Assistant to the President &
Chief Executive Officer of United Bank from September 1992 to June 1995.
Jeffrey D. Smith. Mr. Smith has been Vice President and Chief Operations
Officer for Camden since February 1997. From January 1986 until joining Camden,
he held various positions with Key Bank, most recently as Vice President and
District Service Manager.
Susan M. Westfall. Mrs. Westfall has been Treasurer and Chief Financial
Officer of Camden since 1996. During 1997 her responsibilities were expanded to
include those of Clerk. She also has been with Camden National Bank since 1979,
and was promoted to Vice President in 1991. During 1997 her responsibilities
were expanded to include those of Cashier, Investment, and Trust Officer.
For a summary of the business experience and biographical information for
Mr. Daigle, see "--Continuing Directors" above.
Board of Directors and its Committees
Board of Directors. During 1998, Camden was managed by an eleven-member
board, a majority of whom were independent of Camden's management. During 1998
the Camden Board held twelve regular meetings, one special meeting, and one
annual meeting. Each of the directors attended at least 75% of the total number
of meetings of the Camden Board and meetings of the committees of the Camden
Board that he or she was eligible to attend.
All of the directors of Camden also serve as directors of Camden National
Bank, with the exception of Mr. Cross, who serves as a director of United Bank.
Camden's Board of Directors has standing audit, executive, capital, growth
development, retirement plan administration, personnel and compensation, and
nominating committees.
Audit Committee. The members of the Audit Committee are Peter T. Allen,
Chairman, Ann W. Bresnahan, Robert J. Gagnon, John W. Holmes and Richard N.
Simoneau. The committee met four (4) times during 1998. The Audit Committee
receives and reviews reports on examinations and accounting audits of Camden,
and works to ensure the adequacy of operating practices, procedures and
controls.
93
<PAGE>
Executive Committee. The Camden Board has a standing executive committee
consisting of Rendle A. Jones, Chairman, Royce M. Cross, John W. Holmes, Arthur
E. Strout and Robert W. Daigle. The executive committee is responsible for
strategic planning and in-depth review of all matters to be brought before the
board of directors.
Capital Committee. The Camden Board has a standing capital committee
consisting of Arthur E. Strout, Chairman, Peter T. Allen, Royce M. Cross,
Robert W. Daigle and Rendle A. Jones. The committee oversees matters involving
capital adequacy, asset/liability management, dividend policy, liquidity of the
stock and shareholder relations.
Retirement Plan Administration Committee. The Camden Board has a standing
retirement plan administration committee consisting of John W. Holmes,
Chairman, Robert W. Daigle, John S. McCormick, Jr., Ann W. Bresnahan, Susan M.
Westfall, and June B. Parent. The committee reviews all matters relating to the
retirement plans offered to the employees of Camden and its banking and non-
banking subsidiaries.
Personnel and Compensation Committee. Camden's Personnel and Compensation
Committee met once during 1998 and consisted of Richard N. Simoneau, Chairman,
Robert J. Gagnon, Rendle A. Jones, and nonvoting members Keith C. Patten and
June B. Parent. None of the members of the committee serves on a similar
committee for any other company besides subsidiaries of Camden. The function of
the committee is to oversee personnel relations, salary administration,
training programs, officer selection, management succession and fringe
benefits.
Nominating Committee. The Nominating Committee, which met once in 1998,
consisted of Richard N. Simoneau, Chairman, Peter T. Allen, John S. McCormick
Jr. and Arthur E. Strout. The function of the Nominating Committee is to
nominate individuals for election to the Board of Directors, to nominate
individuals for the positions of Chairman and Vice Chairman of Camden, and to
nominate individuals to serve as executive officers of Camden and its
subsidiaries.
Nominations for election to the Camden Board may be made by any shareholder
of Camden. Such nominations must be made in writing and delivered or mailed to
the President of Camden within seven (7) days after the proxy statement for the
Annual Meeting of Stockholders is mailed to stockholders. Nominations must
contain the following information, to the extent known to the person making the
nomination: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of shares
of Camden common stock that will be voted for each proposed nominee; (d) the
name and residence address of the nominating stockholder; and (e) the number of
shares of Camden common stock owned by the nominating stockholder. The
Chairperson presiding at the Annual Meeting of Stockholders may disregard any
nominations not made in accordance with these provisions, and may instruct vote
tellers to disregard all votes cast for each such nominee.
94
<PAGE>
Executive Compensation
The following table sets forth, for each of Camden's last three fiscal
years, the annual compensation awarded to Camden's chief executive officer and
the four most highly compensated executive officers who earned in excess of
$100,000 during the year-ended December 31, 1998 (the "named executive
officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------- ------------ All Other
Name Year Salary(1) Bonus(2) Options Compensation(3)
- ---- ---- ---------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Keith C. Patten......... 1998 $ 325,183 $ 35,186 -- $ 623
President and Chief 1997 286,718 30,593 -- 595
Executive Officer of 1996 239,640 47,884 -- 600
Camden (retired May,
1999)
Robert W. Daigle........ 1998 $ 178,185 $ 20,113 -- 1,595
President and Chief 1997 158,400 16,980 -- 1,125
Executive Officer of 1996 142,000 42,981 30,000 --
Camden National Bank...
</TABLE>
- --------
(1) Includes salaries deferred by contributions to Camden's 401(k) Plan. The
401(k) Plan is available to all regular employees of Camden who are at
least 21 years old and have completed at least one year of eligible
service. The named executive officers were allowed to contribute up to 15%
of their respective salaries to the 401(k) Plan not exceeding the IRS
limitation ($10,000 each in 1998). The amounts in this column also include
fees paid for service as directors.
(2) Bonuses are listed in the year earned and normally accrued, although such
bonuses may be paid in the following year. Also includes deferred bonuses.
(3) Amounts shown for 1998 consist of the following: (i) Mr. Patten: $623
contribution to 401(k) Plan by Camden; and (ii) Mr. Daigle: $1,595
contribution to 401(k) Plan by Camden National Bank. Camden and Camden
National Bank contribute a matching amount equal to 25% of the first 4% of
salary deferred by named executive officers, up to the limit specified in
Code Section 401(a)(17) during 1998. The amounts accumulating in the
accounts under the 401(k) Plan are immediately vested in the employer
contributions to their accounts in the 401(k) Plan.
Option Exercises and Year-End Holdings
For each named executive officer, the value of an option is the current fair
market value per share of Camden common stock, minus the applicable exercise
price, times the number of shares that may be purchased under the option. There
were no options granted during the year-ended December 31, 1998.
Aggregated Option Exercises in Fiscal Year 1998 and
Fiscal Year-End 1998 Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-The-
Shares Underlying Unexercised Money Options At Fiscal
Acquired On Value Option at Fiscal Year-End Year-End
Name Exercise (#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ---- ----------- -------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Keith C. Patten......... 0(3) $1,695,000 90,000/0(4) $1,320,300/$0
Robert W. Daigle........ 0 0 30,000/0 245,100/$0
</TABLE>
- --------
(1) The "value realized" represents the difference between the base (or
exercise) price of the option shares for the market price of the option
shares on the date the option was exercised. The value realized was
determined without considering any taxes which may have been owed.
95
<PAGE>
(2) Assumes market price of $20.50 per share, which was the closing price of a
share of Camden common stock reported or the American Stock Exchange on
December 31, 1998.
(3) On December 3, 1998, Mr. Patten exercised options to acquire 90,000 shares
of Camden common stock for cash.
(4) On May 14, 1999, Mr. Patten exercised his remaining 90,000 options for
cash. As of the date of this Joint Proxy Statement/Prospectus, Mr. Patten
no longer holds any options to acquire shares of Camden common stock.
Retirement Plans
Camden maintains a qualified noncontributory defined benefit pension plan
(the "Pension Plan"), which is available to all regular employees who are at
least 21 years of age and have completed at least one year of eligible service.
Mr. Patten, who retired in May, 1999, and Mr. Daigle are both beneficiaries of
the Pension Plan. Camden also maintains a nonqualified noncontributory defined
benefit supplemental executive retirement program (the "SERP") for certain
highly compensated employees, including Mr. Daigle.
Participants in the Pension Plan receive payment(s) upon retirement based on
years of service (up to 25 years) times a percentage of the participant's
covered annual compensation during the five consecutive years out of the last
ten years before retirement in which the participant's compensation was the
highest. Participants in the SERP receive upon retirement a 15 year certain
life annuity based on years of service (up to 25 years) times a percentage of
the participant's average salary and bonus for the 36 months of employment by
Camden during which the participant's compensation was highest, reduced by the
following amounts: 50% of the participant's projected primary Social Security
benefits; the participant's benefits under the Pension Plan; the portion of the
participant's benefits under the 401(k) Plan arising from employer
contributions; and the Participant's benefits under any other incentive or
retirement plan that may be instituted by Camden or its subsidiaries, excluding
stock options and the incentive bonus plan.
The following table illustrates annual retirement benefits payable from the
Pension Plan for life, assuming retirement in 1999 at age 65, for various
levels of Final Average Compensation and Years of Service with Camden. The
Pension Plan benefits in the table are not subject to deduction for Social
Security or other offset amounts.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
-----------------------------------------
Years of Service
-----------------------------------------
Final Average
Compensation
(1) 10 15 20 25 30 35
------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
125,000........................ 21,600 32,401 43,201 54,001 54,001 54,001
150,000........................ 26,350 39,526 52,701 65,876 65,876 65,876
160,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
200,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
300,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
400,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
500,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
600,000........................ 28,250 42,376 56,501 70,626 70,626 70,626
1,000,000...................... 28,250 42,376 56,501 70,626 70,626 70,626
</TABLE>
- --------
(1) As a result of limitation, effective January 1, 1997, under the Internal
Revenue Code of 1986, as amended (the "Code"), annual compensation in
excess of $160,000 is not taken into account when calculating benefits
under the Pension Plan.
96
<PAGE>
The following table illustrates annual retirement benefits payable from the
SERP for 15 years, assuming retirement in 1999 at age 65, for various levels of
Final Average Compensation and Years of Service with Camden.
<TABLE>
<CAPTION>
SERP TABLE
-----------------------------------------------
Years of Service
-----------------------------------------------
Final Average
Compensation 10 15 20 25 30 35
------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
125,000.................. 19,940 23,429 22,599 17,449 17,449 17,449
150,000.................. 24,540 28,904 27,999 21,822 21,822 21,822
160,000.................. 26,380 31,094 30,159 23,574 23,574 23,574
200,000.................. 36,780 46,694 50,959 49,574 49,574 49,574
300,000.................. 62,780 85,694 102,959 114,574 114,574 114,574
400,000.................. 88,780 124,694 154,959 149,574 149,574 149,574
500,000.................. 114,780 163,694 206,958 244,574 244,574 244,574
600,000.................. 140,780 202,694 258,959 309,574 309,574 309,574
1,000,000................ 244,780 358,694 466,959 569,574 569,574 569,574
</TABLE>
The following table sets forth the number of years of credited service of
each named executive officer listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
Credited
Years of
Name Service
---- --------
<S> <C>
Keith C. Patten................................................. 22
Robert W. Daigle................................................ 2
</TABLE>
Change of Control Agreements
The SERP provides that in the event Camden is merged with another company
and the other company survives the merger, and Mr. Patten and Mr. Daigle are
not made officers of the surviving company and the surviving company does not
assume Camden's obligations under the SERP, the Camden Board may authorize a
payment to named executive officers in an amount to be determined in the
discretion of the Camden Board.
Director Compensation
Directors of Camden received $400 for attendance at each regular meeting of
the Camden Board, and $150 for attendance at each meeting of a committee of the
Camden Board during 1998. In addition, the Chairman of the Camden Board
received a retainer of $200 per month, and the Secretary to the Camden Board
received a retainer of $100 per meeting. No additional fees are paid for
membership on or attendance at meetings of the Camden Board or any committees
of the Camden Board.
Director compensation is paid monthly to those directors who do not defer
their compensation. Any director of Camden may defer up to 100% of their fees
and retainer in any calendar year. If a director elects to defer their
compensation, Camden automatically credits the amounts deferred to interest-
earning accounts for each of the respective directors. Quarterly shares of
Camden common stock are purchased by the plan for those directors electing this
option. Deferred director's fees and/or stock are paid to participants in a
deferral plan, or their designated beneficiaries, upon their termination as
directors.
Employment Agreement with Mr. Daigle
Camden and Camden National Bank have entered into an employment agreement
with Mr. Daigle (the "executive") for an initial term of five years. At the
expiration thereof, including any renewals, the employment agreement is
extended automatically for additional five-year periods unless, within a
specified time, any party to the employment agreement gives written notice to
the other of such party's election not to so extend the term of the employment
agreement.
97
<PAGE>
The employment agreement provides, among other things, for (i) an annual
base salary of $235,000, (ii) insurance and other benefits, and (iii) in the
event of (A) termination by the executive for any reason after a change in
control of Camden or Camden National Bank, or (B) termination of the executive
by Camden or Camden National Bank without cause, aggregate payments (made
according to Camden's and Camden National Bank's regular payroll schedule)
equal to two times the executive's annual salary then in effect, as well as
continued insurance and benefits (except profit sharing) during such two year
period.
The employment agreement includes a provision for termination of the
executive for cause, whereupon payments and benefits cease. The employment
agreement also includes certain non-solicitation and non-competition provisions
which extend for four years following the executive's termination of
employment.
Compensation Committee Interlocks and Insider Participation
The Personnel and Compensation Committee consisted of Richard N. Simoneau,
Chairman, Robert J. Gagnon, Rendle A. Jones, and nonvoting members Robert W.
Daigle and June B. Parent. Many members of the Personnel and Compensation
Committee and their affiliates and families are borrowers from Camden's
subsidiaries. All loans and credit commitments to such persons were made in the
ordinary course of business and were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features to Camden's
subsidiaries.
Personnel and Compensation Committee Report
The performance of Camden has a direct bearing on executive compensation for
any given year. When the performance of Camden meets or exceeds its budgetary
expectations, compensation is expected to be more generous than in years when
the budgetary expectations have not been met. The Personnel and Compensation
Committee remains aware that compensation must not be set at a level that will
inhibit Camden's competitiveness in its market areas. Nevertheless, level of
compensation is also guided in large part by Camden's need to attract and
retain capable executives who can make a major contribution to Camden's
success. The Personnel and Compensation Committee has regularly reviewed
compensation surveys comparing Camden's subsidiary banks with other banks in
the State of Maine and with other banks nationally in the Camden's subsidiary
banks' size grouping.
Compensation Program Components
Compensation is based on two primary components: base salary and a
performance-based incentive compensation program. Base salary is intended to
adequately reward officers and employees for capable performance within their
respective job descriptions, consistent with keeping Camden competitive within
its industry and market areas. The performance-based compensation program is
designed to create an environment where employees take a more personal interest
in the performance of Camden and are rewarded for balancing profit with growth
and quality with productivity. The following executive officers also
participate in a deferred compensation plan: Mr. Daigle, Mr. Smith and Mrs.
Westfall. The Personnel and Compensation Committee considers that the levels of
executive pay are both reasonable and necessary to remain competitive in the
market.
Performance Measures
There are several performance measures used in evaluating the compensation
of executive officers. In addition to the use of state and national banking
surveys, the specific performance of the executive officer is considered. There
is for each executive officer, an annual performance evaluation conducted by an
individual in the next level of management, and the Personnel and Compensation
Committee reviews the performance of Camden's Chief Executive Officer. The
performance of Camden as a whole and the financial plan for the ensuing year in
particular are guiding factors in establishing the levels of compensation.
However, the general factors of the business climate, the performance of Camden
and the evaluation of the executive officer being considered are all factors
being reviewed in determining executive compensation. It is a central aim of
the
98
<PAGE>
Personnel and Compensation Committee to ensure that each executive officer is
justly compensated for his or her contribution, knowing that the contribution
directly affects Camden and its stockholders.
Stock Option Plan
An additional component of compensation for key employees is the award of
options to purchase shares of Camden common stock at fixed prices. The 1993
Stock Option Plan is based on performance in that the options only have value
if the market value of Camden common stock increases. Pursuant to the 1993
Stock Option Plan, as amended, Camden has awarded options to the following
executive officers: Mr. Daigle, Ms. Bouchard, Mr. Smith and Mrs. Westfall,
although no awards were made for 1998.
Compensation of the Chief Executive Officer
The Personnel and Compensation Committee annually reviews the Chief
Executive Officer's existing compensation arrangements, the performance of
Camden and the Chief Executive Officer, and the compensation of chief executive
officers in similar companies of comparable size.
The Chief Executive Officer's compensation is divided into three basic
categories: salary and deferred compensation, performance-based incentive
compensation, and director's fees.
In past years the salary of the Chief Executive Officer has been increased
based upon performance of Camden in the previous year. The salary level
selected must be within the salary range for chief executive officers in other
similar companies of comparable size. Thus, the personnel department conducts a
study of the salary ranges of chief executive officers in other similar
companies of comparable size as shown by published compensation surveys, and
provides its results to the Personnel and Compensation Committee along with
supporting data and a suggested salary range for the year. The salary for the
Chief Executive Officer for 1998 was increased 15.6% over 1997, based on
Camden's net profits for the 1997 fiscal year.
The second part of the Chief Executive Officer's compensation program is
based upon the performance-based incentive compensation program which applies
to all officers and employees. The 1998 performance-based incentive
compensation program resulted in additional compensation for the Chief
Executive Officer of 11.2%.
The third portion of the Chief Executive Officer's compensation program is
director's fees, which are the same for all directors.
The total compensation package for the Chief Executive Officer is
competitive with the compensation programs provided by other similar companies
of comparable size. Moreover, the Personnel and Compensation Committee believes
that it has set compensation at levels that reflect the Chief Executive
Officer's contribution towards Camden's success and achievement of objectives.
Submitted by:
Richard N. Simoneau
Robert J. Gagnon
Rendle A. Jones
June B. Parent (non-voting)
Keith C. Patten (non-voting)
99
<PAGE>
Stock Performance Graph
The following graph illustrates the estimated annual percentage change in
Camden's cumulative total shareholder return on its common stock for the period
October 7, 1997 through December 31, 1998. For purposes of comparison, the
graph also illustrates comparable shareholder return of Nasdaq banks as a group
as measured by the Nasdaq Banks Stock Index and of companies of similar
capitalization value as measured by the Russell 2000 Stock Index. The graph
assumes a $100 investment on October 7, 1997 in the Camden stock, the Nasdaq
banks as a group, and the Russell 2000 companies as a group and measures the
amount by which the market value of each, assuming reinvestment of dividends,
has increased as of December 31, 1998.
10/7/97 12/31/97 12/31/98
Camden $100.00 $132.31 $138.98
Russell $100.00 $107.61 $ 94.95
Nasdaq $100.00 $ 94.23 $ 90.98
100
<PAGE>
Principal Stockholders
The following table sets forth information with respect to the beneficial
ownership of Camden stock as of August 31, 1999, by (i) each person known by
Camden to own beneficially more than five (5) percent of Camden's outstanding
stock, (ii) each current director of Camden and nominees for positions on the
Camden Board, (iii) the named executive officers (defined below), and (iv) all
executive officers and directors of Camden as a group. Except as otherwise
indicated below, each of the directors, executive officers and shareholders
owning more than five (5) percent of Camden common stock has sole voting and
investment power with respect to all shares of stock beneficially owned by him
as set forth opposite his name.
<TABLE>
<CAPTION>
Number of Shares Percent
Beneficially Owned of Class
------------------ --------
<S> <C> <C>
5% or Greater Shareholders:
Kenneth C. & Prudence G. Dickey.................. 779,112 11.88%
13 Curtis Avenue
Camden, ME 04843
Rendle A. Jones.................................. 425,324(1) 6.49%
P.O. Box 190
76 Beloin Road
Camden, Maine 04843
Directors, Nominees and named executive officers:
Peter T. Allen................................... 10,000(2) *
Ann W. Bresnahan................................. 23,940(3) *
Royce M. Cross................................... 10,227 *
Robert W. Daigle................................. 32,274(4) *
Robert J. Gagnon................................. 2,028 *
John W. Holmes................................... 4,910 *
Theodore C. Johanson............................. 0 *
John S. McCormick, Jr............................ 19,700(5) *
Keith C. Patten.................................. 132,105(6) 2.01%
Winfield F. Robinson............................. 0 *
Richard N. Simoneau.............................. 21,240 *
Arthur E. Strout................................. 107,569 1.64%
All nominees, continuing directors and executive
officers as a group (17 persons)................ 678,437(7)(8) 10.27%
</TABLE>
- --------
* Less than one (1) percent.
(1) Includes 371,160 shares owned by various trusts of which Mr. Jones acts as
trustee, and to which shares he disclaims any beneficial interest.
(2) Includes 1,000 shares over which voting and dispositive power are shared
with spouse.
(3) Includes 5,940 shares over which voting and dispositive power are shared
with spouse.
(4) Includes 30,000 shares underlying stock options exercisable within 60 days
and an additional 300 shares owned by spouse, as to which he disclaims any
beneficial interest.
(5) Includes 2,700 shares owned by spouse, as to which shares he disclaims any
beneficial interest.
(6) Includes 57,000 shares owned by spouse, as to which shares he disclaims
any beneficial interest.
(7) Shared voting and/or dispositive power over some or all shares; includes
shares underlying stock options exercisable within 60 days.
(8) Does not include 132,105 shares beneficially owned by Mr. Patten since he
was not an executive officer on August 31, 1999.
101
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires Camden's executive
officers and directors, and persons who own more than 10% of a registered class
of Camden's equity securities to file reports of ownership and changes in
ownership with the SEC and the AMEX. These persons are required by SEC
regulations to furnish Camden with copies of all Section 16(a) forms they file.
To Camden's knowledge, based solely on a review of copies of such reports and
written representations that no other reports were required during the fiscal
year ended December 31, 1998, all transactions in Camden's securities that were
engaged in by Camden's executive officers and directors, and therefore required
to be disclosed pursuant to Section 16(a) of the Securities Exchange Act, were
timely reported.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Business Relationships
Rendle A. Jones is a partner in the law firm of Harmon, Jones, Sanford &
Elliot, LLP, which performed legal services for Camden during 1998. The fees
paid by Camden to the law firm totaled less than 5% of the law firm's gross
revenues during 1998. Also, Arthur E. Strout is a partner in the law firm of
Strout & Payson, P.A., which performed legal services for the Camden during
1998. The fees paid by Camden to the law firm totaled less that 5% of the law
firm's gross revenues during 1998.
Except as described above, no nominee for director, other continuing
director or executive officer of Camden engaged in any transaction with Camden
or any of its subsidiaries during fiscal year 1998, or is involved with Camden
or any of its subsidiaries in any currently proposed transaction, in which the
amount involved exceeded or exceeds $60,000, other than the financial
transactions described below "--Indebtedness of Management".
Indebtedness of Management
Camden's nominees for directors, continuing directors and executive officers
have had, and are expected to have in the future, financial transactions with
one or more of Camden's subsidiary banks. As of June 30, 1999, the outstanding
loans by Camden's subsidiary banks to Camden's nominees, continuing directors
and executive officers amounted to an aggregate of approximately $1.8 million.
These loans were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unaffiliated persons.
OTHER MATTERS
Stockholder Proposals for Annual Meetings
Stockholder proposals (including director nominations) submitted pursuant to
Rule 14a-8 of the Exchange Act for inclusion in Camden's proxy statement and
form of proxy for the 2000 Annual Meeting of Stockholders must be received by
Camden by December 3, 1999. Such a proposal must also comply with the
requirements as to form and substance established by the SEC for such a
proposal to be included in the proxy statement and form of proxy.
For a proposal of a stockholder (including director nominations) to be
presented at Camden's 2000 Annual Meeting of Stockholders, other than a
stockholder proposal submitted pursuant to Rule 14a-8 of the Exchange Act, a
stockholder's notice must be delivered to, or mailed to and received by, Camden
at its principal executive offices, together with all supporting documentation
required by Camden's bylaws, (A) not prior to March 13, 2000 nor later than
April 18, 2000, or (B) if Camden's 2000 Annual Meeting of Stockholders is
102
<PAGE>
called for a date prior to May 2, 2000 or later than May 2, 2000, then not
later than the close of business on the later of (i) fourteen calendar day
prior to the scheduled date of such meeting. Any such proposals should be
mailed to: Camden National Corporation, Two Elm Street, Camden, Maine 04843,
Attention: Secretary.
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act
for inclusion in KSB's proxy material for the 2000 Annual Meeting of
Stockholders must be received by KSB by December 14, 1999. Any proposal must
also comply with the requirements as to form and substance established by the
SEC to be included in the proxy material. If the merger is completed, there
will be no 2000 Annual Meeting of KSB stockholders.
For a proposal of a stockholder (including director nominations) to be
presented at KSB's 2000 Annual Meeting of Stockholders, other than a
stockholder proposal submitted pursuant to Rule 14a-8 of the Exchange Act,
notice must be received by KSB at its principal executive offices, together
with all supporting documentation required by KSB's bylaws, prior to February
10, 2000. If the merger is completed, there will be no 2000 Annual meeting of
KSB stockholders.
Other Matters
As of the date of this Joint Proxy Statement/Prospectus, the Camden Board
knows of no matters that will be presented for consideration at the Camden
meeting other than as described in this Joint Proxy Statement/Prospectus. If
any other matters shall properly come before the Camden meeting and be voted
upon, the enclosed proxies will be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the management of Camden.
As of the date of this Joint Proxy Statement/Prospectus, the KSB Board knows
of no matters that will be presented for consideration at the KSB meeting other
than as described in this Joint Proxy Statement/Prospectus. If any other
matters shall properly come before the KSB meeting and be voted upon, the
enclosed proxies will be deemed to confer discretionary authority on the
individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the management of KSB.
LEGAL MATTERS
The validity of the Camden common stock to be issued in connection with the
merger will be passed upon by Rendel A. Jones, Esq., general counsel for
Camden, and Luse, Lehman, Gorman, Pomerenk & Schick, P.C., counsel for KSB,
will pass on certain federal income tax consequences of the merger for KSB and
its stockholders.
EXPERTS
The consolidated financial statements of Camden as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
incorporated by reference in this Joint Proxy Statement/Prospectus and
Registration Statement have been audited by Berry, Dunn, McNeil & Parker, LLC,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The consolidated financial statements of KSB as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998 have
been incorporated by reference in this Joint Proxy Statement/Prospectus and
Registration Statement in reliance upon the report of Berry, Dunn, McNeil &
Parker, LLC, independent certified public accountants, incorporated by
reference in this Joint Proxy Statement/Prospectus and Registration Statement
and upon authority of said firm as experts in accounting and auditing in giving
said reports.
103
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Camden and KSB file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov." In
addition, Camden's SEC filings may be read and copied at the AMEX, 86 Trinity
Place, New York, New York 10006, and KSB's SEC filings may also be read and
copied at the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006-1506.
Camden has filed a Registration Statement on Form S-4 to register with the
SEC the Camden common stock to be issued to the holders of KSB common stock in
the merger. This Joint Proxy Statement/Prospectus is a part of that
Registration Statement and constitutes a prospectus of Camden in addition to
being a proxy statement of Camden and KSB for the Camden meeting and the KSB
meeting. As allowed by SEC rules, this Joint Proxy Statement/Prospectus does
not contain all the information you can find in the Registration Statement or
the exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information into this Joint
Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Joint Proxy Statement/Prospectus, except for any information superseded by
information in this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about the companies, their finances and Camden common stock.
Camden National Corporation SEC Filings (File No. 0-28190)
Annual Report on Form 10-K for the year ended December 31, 1998.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999.
Current Report on Form 8-K, filed with the SEC on August 9, 1999, relating
to the merger.
Registration Statement on Form 8-A, filed with the SEC on July 30, 1997.
KSB Bancorp, Inc. SEC Filings (File No. 0-21500)
Annual Report on Form 10-KSB for the year ended December 31, 1998.
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 1999 and
June 30, 1999.
Current Report on Form 8-K, filed with the SEC on August 11, 1999, relating
to the merger.
A copy of KSB's Annual Report to stockholders for the year ended December
31, 1999, and its Quarterly Report on Form 10-QSB for the quarter ended June
30, 1999, accompanies this Joint Proxy Statement/ Prospectus. We are also
incorporating by reference additional documents that we file with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the
date of this Joint Proxy Statement/Prospectus and the dates of the meetings of
our stockholders.
Camden has supplied all information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus relating to Camden, and KSB has
supplied all such information relating to KSB.
104
<PAGE>
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
SEC. Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this Joint Proxy Statement/Prospectus. Stockholders may obtain
documents incorporated by reference in this Joint Proxy Statement/Prospectus by
requesting them in writing or by telephone from the appropriate party at the
following address:
Camden National Corporation KSB Bancorp, Inc.
Two Elm Street Main Street
Camden, Maine 04843 Kingfield, Maine 04947
Attention: Secretary Attention: Secretary
Tel: (207) 236-9131, ext. 2165 Tel: (207) 265-2090, ext. 1232
If you would like to request documents from us, please do so by November 1,
1999 to receive them prior to the Camden and KSB stockholder meetings.
You should rely only on the information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus to vote on the Camden
proposals and the KSB proposal. We have not authorized anyone to provide you
with information that is different from what is contained in this Joint Proxy
Statement/Prospectus. This Joint Proxy Statement/Prospectus is dated . You
should not assume that the information contained in this Joint Proxy
Statement/Prospectus is accurate as of any date other than such date, and
neither the mailing of this Joint Proxy Statement/Prospectus to stockholders
nor the issuance of shares of Camden common stock in the merger shall create
any implication to the contrary.
105
<PAGE>
ANNEX A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
CAMDEN NATIONAL CORPORATION,
CAMDEN ACQUISITION SUBSIDIARY, INC.,
KSB BANCORP, INC.,
and
KINGFIELD SAVINGS BANK
Dated as of July 27, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - CERTAIN DEFINITIONS..............................................1
1.1 Certain Definitions..............................................1
-------------------
ARTICLE II- THE MERGER; EFFECTS OF THE MERGER ...............................8
2.1 The Merger ......................................................8
----------
2.2 Charter and Bylaws ..............................................8
------------------
2.3 Closing .........................................................9
-------
2.4 Effectiveness and Effects of the Merger .........................9
---------------------------------------
2.5 Tax Consequences ................................................9
----------------
2.6 Accounting Treatment ............................................9
--------------------
2.7 Board of Directors ..............................................9
------------------
ARTICLE III - MERGER CONSIDERATION; EXCHANGE PROCEDURES ....................10
3.1 Merger Consideration ...........................................10
--------------------
3.2 Rights as Stockholders; Stock Transfers ........................10
---------------------------------------
3.3 Fractional Shares ..............................................10
-----------------
3.4 Exchange Procedures ............................................11
-------------------
3.5 Anti-Dilution Provisions .......................................12
------------------------
3.6 Treasury Shares ................................................12
---------------
3.7 Options ........................................................12
-------
ARTICLE IV - THE SUBSEQUENT MERGER; EFFECTS OF THE
SUBSEQUENT MERGER .....................................................13
4.1 Subsequent Merger ..............................................13
-----------------
4.2 Charter ........................................................13
-------
4.3 Bylaws .........................................................14
------
4.4 Board of Directors .............................................14
------------------
4.5 Cancellation of Shares .........................................14
----------------------
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF KSB AND THE BANK ...................................................14
5.1 Organization and Qualification; Subsidiaries ...................14
--------------------------------------------
5.2 Certificate of Incorporation; By-Laws; Corporate Records .......15
--------------------------------------------------------
5.3 Capitalization .................................................15
--------------
5.4 Authority ......................................................16
---------
5.5 No Conflict ....................................................17
-----------
5.6 Consents and Approvals .........................................17
----------------------
5.7 Compliance .....................................................18
----------
(i)
<PAGE>
Page
5.8 SEC Reports and Bank Reports ..................................18
----------------------------
5.9 Financial Statements ..........................................19
--------------------
5.10 Absence of Certain Changes or Events ..........................20
------------------------------------
5.11 Absence of Litigation .........................................22
---------------------
5.12 Employee Benefit Plans ........................................22
----------------------
5.13 Labor Matters .................................................23
-------------
5.14 Property and Leases ...........................................24
-------------------
5.15 Taxes .........................................................24
-----
5.16 Certain Contracts .............................................26
-----------------
5.17 Loan Portfolio ................................................27
--------------
5.18 Investment Securities .........................................27
---------------------
5.19 Derivative Transactions .......................................28
-----------------------
5.20 Insurance .....................................................28
---------
5.21 Environmental Matters .........................................29
---------------------
5.22 Intellectual Property .........................................30
---------------------
5.23 Administration of Fiduciary Accounts ..........................30
------------------------------------
5.24 Agreements with Bank Regulators ...............................31
-------------------------------
5.25 Material Interests of Certain Persons .........................31
-------------------------------------
5.26 Brokers' Fees; Opinions .......................................31
-----------------------
5.27 Joint Proxy Statement .........................................31
---------------------
5.28 State Takeover Laws ...........................................32
-------------------
5.29 Year 2000 .....................................................32
---------
5.30 Disclosure ....................................................33
----------
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF CAMDEN AND CASI ..............33
6.1 Corporate Organization.........................................33
----------------------
6.2 Authority .....................................................33
---------
6.3 No Conflict ...................................................34
-----------
6.4 Capitalization ................................................34
--------------
6.5 Consents and Approvals ........................................35
----------------------
6.6 Joint Proxy Statement .........................................35
---------------------
6.7 SEC Reports and Bank Reports ..................................35
----------------------------
6.8 Financial Statements ..........................................36
--------------------
6.9 Compliance ....................................................36
----------
6.10 Absence of Certain Changes or Events ..........................37
------------------------------------
6.11 Employee Benefit Plans ........................................37
----------------------
6.12 Environmental .................................................38
-------------
6.13 Agreements with Bank Regulators ...............................39
-------------------------------
6.14 Year 2000 .....................................................40
---------
6.15 Brokers' Fees .................................................40
-------------
(ii)
<PAGE>
Page
6.16 Disclosure ...................................................40
---------
ARTICLE VII - CONDUCT OF BUSINESS PENDING
THE MERGER .........................................................40
7.1 Covenants of KSB and the Bank ................................41
-----------------------------
7.2 Camden Products and Services .................................45
----------------------------
7.3 System Conversions ...........................................45
------------------
7.4 Certain Changes and Adjustments ..............................46
-------------------------------
7.5 ALCO Management ..............................................46
---------------
7.6 Covenants of Camden ..........................................46
-------------------
7.7 Affiliate Agreements .........................................46
--------------------
7.8 Takeover Laws ................................................47
-------------
7.9 No Rights Triggered ..........................................47
-------------------
7.10 Shares Listed ................................................47
-------------
ARTICLE VIII - ADDITIONAL AGREEMENTS
...................................................................47
8.1 Stockholder Approvals ........................................47
---------------------
8.2 Registration Statement .......................................47
----------------------
8.3 Regulatory Matters ...........................................49
------------------
8.4 Access to Information ........................................50
---------------------
8.5 No Solicitation ..............................................51
---------------
8.6 Employee Benefits Matters ....................................52
-------------------------
8.7 Directors' and Officers' Insurance ...........................53
----------------------------------
8.8 Financial and Other Statements ...............................53
------------------------------
8.9 Further Action ...............................................54
--------------
8.10 Public Announcements .........................................54
--------------------
8.11 Additional Agreements ........................................54
---------------------
8.12 Update of Disclosure Schedules ...............................55
------------------------------
8.13 Current Information ..........................................55
-------------------
8.14 Bank Merger ..................................................56
-----------
8.15 Post-Closing Governance ......................................56
-----------------------
ARTICLE IX - CONDITIONS TO THE MERGER
9.1 Conditions to Each Party's Obligations to Effect the Merger ...57
-----------------------------------------------------------
9.2 Conditions to Obligations of Camden and CASI ..................58
--------------------------------------------
ARTICLE X - TERMINATION, AMENDMENT AND WAIVER ..............................60
10.1 Termination ....................................................60
-----------
10.2 Effect of Termination ..........................................63
---------------------
(iii)
<PAGE>
<TABLE>
<S> <C>
Page
10.3 Amendment......................................................................................65
---------
10.4 Waiver.........................................................................................65
------
ARTICLE XI - GENERAL PROVISIONS..............................................................................65
11.1 Alternative Structure..........................................................................65
---------------------
11.2 Non-Survival of Representations, Warranties and Agreements.....................................66
----------------------------------------------------------
11.3 Notices........................................................................................66
-------
11.4 Severability...................................................................................67
------------
11.5 Entire Agreement...............................................................................67
----------------
11.6 Assignment.....................................................................................67
----------
11.7 Parties in Interest............................................................................67
-------------------
11.8 Specific Performance...........................................................................67
--------------------
11.9 Governing Law..................................................................................68
-------------
11.10 Headings.......................................................................................68
--------
11.11 Interpretation.................................................................................68
--------------
11.12 Counterparts...................................................................................68
------------
</TABLE>
EXHIBIT A-1 Form of Affiliate Letter to Camden
EXHIBIT A-2 Form of Affiliate Letter to KSB
EXHIBIT B Bank Holding Companies Index Group
EXHIBIT C Form of Bank Merger Agreement
EXHIBIT D Form of Voting Agreement
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of July 27, 1999 (this "Agreement"),
---------
by and between CAMDEN NATIONAL CORPORATION, a Maine corporation ("Camden"),
------
CAMDEN ACQUISITION SUBSIDIARY, INC., a Delaware corporation and wholly owned
subsidiary of Camden ("CASI"), which has been formed for the specific and sole
----
purpose of consummating the Merger (as such term is defined below), KSB BANCORP,
INC., a Delaware corporation ("KSB"), and KINGFIELD SAVINGS BANK, a Maine-
---
chartered savings bank and wholly owned subsidiary of KSB (the "Bank").
----
WITNESSETH:
WHEREAS, the Boards of Directors of Camden, CASI and KSB have determined
that it is in the best interests of their respective corporations and their
stockholders to consummate the strategic business merger transactions provided
for herein, in which (i) CASI will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into KSB such that KSB is the
------
surviving corporation in the Merger and continues its corporate existence under
the laws of the State of Delaware as a wholly owned subsidiary of Camden, and
(ii) KSB (as the surviving corporation from the Merger) will, subject to the
terms and conditions set forth herein, merge (the "Subsequent Merger," and
-----------------
together with the Merger, the "Mergers") with and into Camden such that Camden
-------
is the surviving corporation in the Subsequent Merger and continues its
corporate existence under the laws of the State of Maine;
WHEREAS, in connection with the execution of this Agreement, KSB and Camden
are entering into a stock option agreement, with KSB as issuer and Camden as
grantee (the "KSB Option Agreement"); and
--------------------
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Mergers and also to prescribe certain
conditions to the Mergers;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1- CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 7.7(a).
---------
"Agreement" shall have the meaning set forth in the preamble to this
---------
Agreement.
<PAGE>
"AMEX" shall mean The American Stock Exchange.
----
"Bank Board" shall have the meaning set forth in Section 5.4(b).
----------
"Bank Common Stock" shall have the meaning set forth in Section 5.3(b).
-----------------
"Bank Examinations" shall have the meaning set forth in Section 5.8(b).
-----------------
"Bank Meeting" shall have the meaning set forth in Section 8.1.
------------
"Bank Merger" shall have the meaning set forth in Section 8.14.
-----------
"Bank Merger Agreements" shall have the same meaning set forth in Section
----------------------
8.14.
"Bank Regulators" shall have the meaning set forth in Section 5.8(b).
---------------
"Bank Shares" shall have the meaning set forth in Section 5.3(b).
-----------
"BHCA" shall have the meaning set forth in Section 5.1(a).
----
"Burdensome Condition" shall have the meaning set forth in Section 9.2(d).
--------------------
"Business Day" shall mean any day on which the principal offices of the SEC
------------
in Washington, D.C. is open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in the City of Augusta, Maine.
"Camden" shall have the meaning set forth in the preamble to this
------
Agreement.
"Camden Common Stock" shall have the meaning set forth in Section 3.1(a).
-------------------
"Camden ERISA Affiliate" shall have the meaning set forth in Section 6.11.
----------------------
"Camden Floor Price" shall have the meaning set forth in Section 10.1(i).
------------------
"Camden Index Ratio" shall have the meaning set forth in Section 10.1(i).
------------------
"Camden Meeting" shall have the meaning set forth in Section 8.1.
--------------
"Camden National Bank" shall mean Camden National Bank, a wholly-owned
--------------------
subsidiary of Camden and a bank organized under the laws of the United States.
2
<PAGE>
"Camden Plans" shall have the meaning set forth in Section 6.11(a).
------------
"Camden Ratio" shall have the meaning set forth in Section 10.1(i).
------------
"Camden SEC Reports" shall have the meaning set forth in Section 6.7.
------------------
"CASI" shall have the meaning set forth in the preamble to this Agreement.
----
"CASI Common Stock" shall have the meaning set forth in Section 3.1(b).
-----------------
"CASI Meeting" shall have the meaning set forth in the Section 8.1.
------------
"Certificate of Merger" shall have the meaning set forth in Section 2.1.
---------------------
"Closing" shall have the meaning set forth in Section 2.3.
-------
"Closing Date" shall have the meaning set forth in Section 2.3.
------------
"COBRA" shall have the meaning set forth in Section 5.12(d).
-----
"Code" shall have the meaning set forth in Section 5.15(b).
----
"Confidentiality Agreement" shall have the meaning set forth in Section
-------------------------
8.4(a).
"Control" (including the terms "controlled by" and "under common control
------- ------------- --------------------
with") shall mean the possession, directly or indirectly or as trustee or
- ----
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
"CRA" shall have the meaning set forth in Section 5.7.
---
"DGCL" shall mean the Delaware General Corporation Law.
----
"Disclosure Schedule" shall mean a schedule prepared by KSB and the Bank or
-------------------
Camden and CASI, as applicable, setting forth, among other things, items the
disclosure of which is necessary or appropriate in relation to any or all of
their respective representations and warranties.
"Effective Date" shall have the meaning set forth in Section 2.4.
--------------
"Effective Time" shall have the meaning set forth in Section 2.4.
--------------
3
<PAGE>
"Environment" shall have the meaning set forth in Section 5.21(f).
-----------
"EPA" shall have the meaning set forth in Section 5.21(a).
---
"ERISA" shall have the meaning set forth in Section 5.12(a).
-----
"ESOP" shall have the meaning set forth in Section 5.12(c).
----
"Exchange Act" shall have the meaning set forth in Section 5.6(a).
------------
"Exchange Agent" shall have the meaning set forth in Section 3.4(a).
--------------
"Exchange Fund" shall have the meaning set forth in Section 3.4(a).
-------------
"Exchange Ratio" shall have the meaning set forth in Section 3.1(a).
--------------
"Expense Fee" shall have the meaning set forth in Section 10.2(c).
-----------
"Expenses" shall have the meaning set forth in Section 10.2(b).
--------
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
----
"FDIC" shall have the meaning set forth in Section 5.1(a).
----
"FRB" shall have the meaning set forth in Section 5.1(a).
---
"GAAP" shall have the meaning set forth in Section 2.6.
----
"Governmental Entity" shall have the meaning set forth in Section 5.6(a).
-------------------
"Hazardous Material" shall have the meaning set forth in Section 5.21(f).
------------------
"HSR Act" shall have the meaning set forth in Section 5.6(a).
-------
"Information Technology" means all computer software, computer hardware
----------------------
(whether general or specific purpose) and other similar or related items of
automated, computerized, or software systems that are used or relied on by KSB
or the Bank in the conduct of their respective businesses.
"Injunction" shall have the meaning set forth in Section 9.1(c).
----------
"IRS" shall have the meaning set forth in Section 5.15(a).
---
4
<PAGE>
"Joint Proxy Statement" shall have the meaning set forth in Section 8.2(a).
---------------------
"knowledge" shall mean actual knowledge of all of the directors, executive
---------
officers of KSB or the Bank who knew or should know as to the matters referenced
herein, and includes any facts, matters or circumstances set forth in any
written notice from any Governmental Entity or any other material written notice
received by KSB or the Bank, and also includes any matter of which Camden
informs KSB or the Bank in writing prior to the date hereof or to which KSB or
the Bank acknowledges or agrees.
"KSB" shall have the meaning set forth in the preamble to this Agreement.
---
"KSB Board" shall have the meaning set forth in Section 5.4(a).
---------
"KSB Common Stock" shall have the meaning set forth in Section 3.1(a).
----------------
"KSB Compensation and Benefit Plans" shall mean the Compensation and
----------------------------------
Benefit Plans of KSB.
"KSB Contract" shall have the meaning set forth in Section 5.16(a).
------------
"KSB Employees" shall have the meaning set forth in Section 8.6(a).
-------------
"KSB ERISA Affiliate" shall have the meaning set forth in Section 5.12(a).
-------------------
"KSB Meeting" shall have the meaning set forth in Section 8.1.
-----------
"KSB Option Agreement" shall have the meaning set forth in the preamble to
--------------------
this Agreement.
"KSB Preferred Stock" shall have the meaning set forth in Section 5.3(a).
-------------------
"KSB SEC Reports" shall have the meaning set forth in Section 5.8(a).
---------------
"KSB Stock Option" shall have the meaning set forth in Section 3.7(a).
----------------
"KSB Stock Option Plans" shall have the meaning set forth in Section
----------------------
3.7(a).
"Liaison Committee" shall have the meaning set forth in Section 8.13(a).
-----------------
"Liens" shall have the meaning set forth in Section 5.14(a).
-----
"Loan Property" shall have the meaning set forth in Section 5.21(f).
-------------
5
<PAGE>
"Loans" shall have the meaning set forth in Section 5.17.
-----
"Maine Superintendent" shall have the meaning set forth in Section 5.6(a).
--------------------
"Material Adverse Effect" shall mean with respect to Camden or KSB,
-----------------------
respectively, any effect that (i) is material and adverse to the financial
position, results of operations, assets or business of Camden and its
Subsidiaries taken as a whole, or KSB and its Subsidiaries taken as a whole,
respectively, or (ii) would materially impair the ability of Camden or KSB,
respectively, to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Mergers, the
Bank Merger and the other transactions contemplated by this Agreement; provided,
--------
however, that Material Adverse Effect shall not be deemed to include the impact
- -------
of (a) changes in banking, corporate and similar laws of general applicability
or interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (c) actions or omissions of Camden or its Subsidiaries or KSB or its
Subsidiaries taken with the prior written consent of Camden or KSB, as
applicable, in contemplation of the transactions contemplated hereby, and (d)
the effects of the Mergers and compliance by either party with the provisions of
this Agreement on the financial position, results of operations, assets or
business of such party and its Subsidiaries, or the other party and its
Subsidiaries, as the case may be.
"MBCA" shall have the meaning set forth in Section 4.1.
----
"Meeting" shall have the meaning set forth in Section 8.1.
-------
"Merger" shall have the meaning set forth in the recitals to this
------
Agreement.
"Merger Consideration" shall have the meaning set forth in Section 2.1.
--------------------
"Mergers" shall have the meaning set forth in the recitals to this
-------
Agreement.
"New Certificates" shall have the meaning set forth in Section 3.4(a).
----------------
"OCC" shall mean the Office of the Comptroller of the Currency.
---
"Oil" shall have the meaning set forth in Section 5.21(f).
---
"Old Certificates" shall have the meaning set forth in Section 3.4(a).
----------------
"OREO" shall have the meaning set forth in Section 5.9(a).
----
6
<PAGE>
"Participation Facility" shall have the meaning set forth in Section
----------------------
5.21(a).
"Permitted Liens" shall have the meaning set forth in Section 5.14(a).
---------------
"Person" or "person" shall mean any individual, bank, corporation,
------ ------
partnership, limited liability company, association, joint-stock company,
business trust or unincorporated organization.
"Plans" shall have the meaning set forth in Section 5.12(a).
-----
"Registration Statement" shall have the meaning set forth in Section
----------------------
8.2(a).
"Requisite Regulatory Approvals" shall have the meaning set forth in
------------------------------
Section 9.1(b).
"Rights" shall mean, with respect to any person, securities or obligations
------
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, or any options, calls or commitments relating to,
shares of stock of such person.
"SEC" shall have the meaning set forth in Section 5.8(a).
---
"Securities Act" shall have the meaning set forth in Section 5.8(a).
--------------
"Starting Date" shall have the meaning set forth in Section 10.1(i).
-------------
"Subsequent Effective Time" shall have the meaning set forth in Section
-------------------------
4.1.
"Subsequent Merger" shall have the meaning set forth in the recitals to
-----------------
this Agreement.
"Subsidiary" and "Significant Subsidiary" shall have the respective
---------- ----------------------
meanings set forth in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiaries" shall mean all of a party's Subsidiaries and Significant
------------
Subsidiaries.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
---------------------
"Takeover Laws" shall have the meaning set forth in Section 5.28.
-------------
"Taxes" shall have the meaning set forth in Section 5.15(c)
-----
"Treasury Shares" shall have the meaning set forth in Section 3.1(a).
---------------
7
<PAGE>
"United Bank" shall mean United Bank, a banking organization chartered
-----------
under the laws at the State of Maine and a wholly-owned Subsidiary of Camden.
"Year 2000 Compliant" means that the Information Technology is designed to
-------------------
be used prior to, during and after the calendar year 2000 A.D., and the
Information Technology used during each such time period will accurately
receive, provide and process date/time data (including calculating, comparing
and sequencing) from, into and between the 20th and 21st centuries, including
the years 1999 and 2000 and leap-year calculations, and will not malfunction,
cease to function, or provide invalid or incorrect results as a result of
date/time data, to the extent that any other information technology, used in
combination with the Information Technology, properly exchanges date/time data
with it.
"Year 2000 Plan" shall have the meaning set forth in Section 5.29.
--------------
"Year 2000 Regulatory Requirements" shall have the meaning set forth in
---------------------------------
Section 5.29.
ARTICLE II- THE MERGER; EFFECTS OF THE MERGER
2.1 The Merger. At the Effective Time, upon the terms and subject to the
----------
conditions of this Agreement, CASI shall merge with and into KSB, the separate
corporate existence of CASI shall cease and KSB shall survive and continue its
corporate existence under the laws of the State of Delaware as a wholly owned
subsidiary of Camden (KSB, as the surviving corporation in the Merger, being
sometimes referred to herein as the "Surviving Corporation"). The parties shall
---------------------
prepare and execute a certificate of merger (the "Certificate of Merger") in
---------------------
order to comply in all respects with the requirements of the DGCL and with the
provisions of this Agreement. Camden may at any time change the method of
effecting the strategic business merger transactions with KSB and CASI provided
for herein (including without limitation the provisions of this Article II) if
and to the extent it deems such change to be desirable, including without
limitation to provide for a merger of KSB into Camden or a wholly owned
subsidiary of Camden; provided, however, that no such change shall (A) alter or
-------- -------
change the amount or kind of consideration to be issued to holders of KSB Common
Stock as provided for in this Agreement (the "Merger Consideration"), (B)
--------------------
adversely affect the tax treatment of KSB's stockholders as a result of
receiving the Merger Consideration or (C) materially impede or delay
consummation of the Merger. KSB and CASI agree to, and to cause their
Subsidiaries to, appropriately amend this Agreement and any related documents in
order to reflect such revised method of effecting the strategic business merger
transactions with KSB and CASI provided for herein to the extent deemed
necessary or desirable by Camden in its reasonable judgment.
2.2 Charter and Bylaws. The Certificate of Merger shall provide that, at
------------------
the Effective Time, the charter of the Surviving Corporation shall be the
charter of CASI, as such
8
<PAGE>
charter may be amended, and set forth in the Certificate of Merger or any
certificate of amendment filed prior to the Effective Time. The bylaws of the
Surviving Corporation shall be the bylaws of CASI at the Effective Time.
2.3 Closing. The closing of the Merger (the "Closing") will occur at
------- -------
10:00 a.m., Boston time, on the date to be specified by the parties in
accordance with the terms of this Agreement (the "Closing Date"), at the offices
------------
of Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109,
unless another date or place is agreed to in writing by the parties.
2.4 Effectiveness and Effects of the Merger. On the Closing Date, or at
---------------------------------------
such time as may otherwise be agreed by the parties, CASI and KSB shall execute
and file with the Secretary of State of the State of Delaware the Certificate of
Merger in accordance with the DGCL. Subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the Merger shall become effective (the
"Effective Time") upon the occurrence of the filing of the Certificate of Merger
- ---------------
with the Secretary of State of the State of Delaware pursuant to Section 252 of
the DGCL, or such other time, if any, as may be specified in the Certificate of
Merger. The Merger shall have the effects prescribed in Sections 259 and 261 of
the DGCL. The date on which the Effective Time occurs is referred to herein as
the "Effective Date."
--------------
2.5 Tax Consequences. It is intended that both the Merger and the
----------------
Subsequent Merger be consummated pursuant to one integrated plan which qualifies
as a reorganization under Section 368(a)(1)(A) of the Code. This Agreement
shall constitute a "plan of reorganization" for purposes of Section 368 of the
Code.
2.6 Accounting Treatment. It is intended that the Merger be accounted for
--------------------
as a "pooling of interests" under generally accepted accounting principles
("GAAP"). The parties acknowledge and agree that (i) Camden intends to take all
- ------
measures it deems necessary to cause the transaction to be accounted for as a
"pooling of interests" transaction and (ii) neither such measures nor any
consequence or result thereof shall be deemed to have a Material Adverse Effect
for the purposes of this Agreement. It is further understood that in the event
that Camden determines in its sole discretion not to take such measures as to
achieve "pooling of interests" accounting treatment, accounting for the
transaction on a "purchase accounting" basis shall not be deemed to have a
Material Adverse Effect.
2.7 Board of Directors. At the Effective Time, the Board of Directors of
------------------
the Surviving Corporation shall be those persons serving as directors of CASI
immediately prior to the Effective Time, such persons to serve until the earlier
of their resignation or removal or until their respective successors are duly
appointed or elected and qualified, as the case may be.
9
<PAGE>
ARTICLE III- MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.1 Merger Consideration. Subject to the provisions of this Agreement, at
--------------------
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any party or stockholder:
(a) Outstanding KSB Common Stock. Each share (excluding shares held
----------------------------
by KSB or by Camden, other than in a fiduciary capacity ("Treasury Shares")) of
---------------
the common stock, par value $.01 per share, of KSB (the "KSB Common Stock")
----------------
issued and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive 1.136 shares (subject to
adjustment as set forth herein, the "Exchange Ratio") of common stock, no par
--------------
value, of Camden (the "Camden Common Stock").
-------------------
(b) Outstanding CASI Common Stock. Each share of the common stock,
-----------------------------
par value $.01 per share, of CASI ("CASI Common Stock") issued and outstanding
-----------------
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of the KSB Common Stock.
(c) Outstanding Camden Common Stock. Each share of Camden Common
-------------------------------
Stock issued and outstanding immediately prior to the Effective Time shall
remain outstanding following the Effective Time.
3.2 Rights as Stockholders; Stock Transfers. At the Effective Time,
---------------------------------------
holders of KSB Common Stock shall cease to be, and shall have no rights as,
stockholders of KSB, other than to receive any dividend or other distribution
with respect to such KSB Common Stock with a record date occurring prior to the
Effective Time and to receive the Merger Consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of KSB of shares of KSB Common Stock, other than transfers of KSB
Common Stock that have occurred prior to the Effective Time.
3.3 Fractional Shares. Notwithstanding any other provision hereof, no
-----------------
fractional shares of Camden Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Camden shall pay to each holder of KSB Common Stock who would otherwise be
entitled to a fractional share of Camden Common Stock (after aggregating all Old
Certificates delivered by such holder) an amount in cash to be paid in lieu of
fractional shares (without interest) determined by multiplying such fraction by
the average of the last sale prices of Camden Common Stock, as reported by the
AMEX Composite Transactions reporting system (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source), for the
five AMEX trading days immediately preceding the Effective Date.
10
<PAGE>
3.4 Exchange Procedures.
-------------------
(a) Prior to the Effective Time, Camden shall deposit, or shall cause
to be deposited, with a bank or trust company selected by Camden and reasonably
acceptable to KSB (the "Exchange Agent"), for the benefit of the holders of
--------------
certificates representing shares of KSB Common Stock immediately prior to the
Effective Time ("Old Certificates"), for exchange in accordance with this
----------------
Article III, certificates representing the shares of Camden Common Stock ("New
---
Certificates") and an estimated amount of cash to be paid in lieu of fractional
- ------------
shares (such cash and New Certificates, together with any dividends or
distributions with respect thereto (without any interest thereon), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
-------------
Article III in exchange for outstanding shares of KSB Common Stock.
(b) As promptly as practicable after the Effective Time, and in any
event within seven business days thereafter, Camden shall send or cause to be
sent to each holder of record of shares (other than Treasury Shares) of KSB
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Camden shall cause the New Certificates, into which
shares of a stockholder's KSB Common Stock are convertible from and after the
Effective Time, and/or any check in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to receive, to be
delivered to such stockholder upon delivery to the Exchange Agent of Old
Certificates representing such shares of KSB Common Stock (or indemnity
reasonably satisfactory to Camden and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid pursuant to this Article III
upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto or any affiliate thereof shall be liable to any former holder of
KSB Common Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to Camden Common
Stock with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of KSB Common
Stock converted in the Merger into the right to receive shares of such Camden
Common Stock until the holder thereof shall surrender such Old Certificate,
together with the necessary transmittal materials, in accordance with this
Article III. Subject to applicable law, after the surrender of an Old
Certificate in accordance with this Article III, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Camden Common Stock for which such Old Certificate was exchangeable.
11
<PAGE>
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of KSB for twelve (12) months after the Effective Time shall be
paid to Camden, subject to the rights of such stockholders to receive payments
from any such portion of the Exchange Fund in accordance with the terms of this
Article III. Any stockholders of KSB who have not theretofore complied with
this Article III shall thereafter look only to Camden for payment of the shares
of Camden Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Camden Common Stock deliverable in respect of
each share of KSB Common Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
3.5 Anti-Dilution Provisions. In the event Camden or KSB changes (or
------------------------
establishes a record date for changing) the number of, or provides for the
exchange of, shares of Camden Common Stock or KSB Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Camden Common Stock or KSB Common
Stock and the record date therefor shall be prior to the Effective Date, the
Exchange Ratio shall be proportionately and appropriately adjusted.
By way of illustration, if Camden shall declare a stock dividend of 10%
payable with respect to a record date on or prior to the Effective Date, the
Exchange Ratio shall be adjusted upward by 10% and shall be equal to 1.250.
3.6 Treasury Shares. Each of the shares of KSB Common Stock constituting
---------------
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.7 Options.
-------
(a) At the Effective Time, all employee and director stock options to
purchase shares of KSB Common Stock (each, a "KSB Stock Option"), which are then
----------------
outstanding and unexercised, shall cease to represent a right to acquire shares
of KSB Common Stock, and shall be converted automatically into options to
purchase shares of Camden Common Stock, and Camden shall assume each such KSB
Stock Option subject to the terms of any of the stock option plans listed under
"Stock Plans" in Section 3.7 of KSB's Disclosure Schedule (collectively, the
"KSB Stock Option Plans"), and the agreements evidencing grants thereunder;
- -----------------------
provided, however, that from and after the Effective Time, (i) the number of
- -------- -------
shares of Camden Common Stock purchasable upon exercise of any such KSB Stock
Option shall be equal to the number of shares of KSB Common Stock that were
purchasable under such KSB Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding to the nearest whole share (with .5
being rounded up), and (ii) the per share exercise price under each such KSB
Stock Option shall be adjusted by dividing the per share exercise price of each
such KSB Stock Option by the Exchange Ratio, rounding to the nearest
12
<PAGE>
cent. The terms of each KSB Stock Option shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, stock
dividend, recapitalization or other similar transaction with respect to Camden
Common Stock on or subsequent to the Effective Date. Notwithstanding the
foregoing, the number of shares and the per share exercise price of each KSB
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424(a) of the Code. Accordingly, with respect to any incentive stock
options, fractional shares shall be rounded down to the nearest whole number of
shares and where necessary the per share exercise price shall be rounded up to
the nearest cent.
(b) At or prior to the Effective Time, Camden shall reserve for
issuance the number of shares of Camden Common Stock necessary to satisfy
Camden's obligations under Section 3.7(a). At the Effective Time, or as soon as
practicable thereafter, and in any event within fifteen business days
thereafter, Camden shall file with the SEC a registration statement on Form S-8
or other appropriate form under the Securities Act with respect to the shares of
Camden Common Stock subject to options to acquire Camden Common Stock issued
pursuant to Section 3.7(a) hereof, and shall use its best efforts to maintain
the current status of the prospectus contained therein, as well as comply with
any applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
ARTICLE IV - THE SUBSEQUENT MERGER; EFFECTS OF THE
SUBSEQUENT MERGER
4.1 Subsequent Merger. As soon as practicable following the Effective
-----------------
Time, Camden shall, and it shall cause KSB (as the Surviving Corporation in the
Merger) to, effect the Subsequent Merger by executing and filing (i) articles of
merger with the Secretary of State of the State of Maine pursuant to the Maine
Business Corporation Act (Title 13-A) (the "MBCA") and (ii) a certificate of
----
merger with the Secretary of State of the State of Delaware pursuant to the
DGCL. The Subsequent Merger shall become effective at the time (the "Subsequent
----------
Effective Time") specified in both (i) the articles of merger filed with the
- --------------
Secretary of State of the State of Maine pursuant to Section 904 of the MBCA and
(ii) the certificate of merger filed with the Secretary of State of the State of
Delaware pursuant to Section 252 of the DGCL. As a result of the Subsequent
Merger, the separate corporate existence of KSB shall cease and Camden shall be
the surviving corporation and continue its corporate existence under the laws of
the State of Maine. The Subsequent Merger shall have the effects prescribed in
Section 905 of the MBCA and Sections 259 and 261 of the DGCL.
4.2 Charter. The charter of the surviving corporation from the Subsequent
-------
Merger shall be the charter of Camden immediately prior to the Subsequent
Effective Time.
13
<PAGE>
4.3 Bylaws. The bylaws of the surviving corporation from the Subsequent
------
Merger shall be the bylaws of Camden immediately prior to the Subsequent
Effective Time.
4.4 Board of Directors. At the Subsequent Effective Time, the Board of
------------------
Directors of the surviving corporation shall be those persons serving as
directors of Camden immediately prior to the Subsequent Effective Time, as
constituted in accordance with Section 8.15 hereof, such persons to serve until
the earlier of their resignation or removal or until their respective successors
are duly appointed or elected and qualified, as the case may be.
4.5 Cancellation of Shares. Each share of KSB Common Stock issued and
----------------------
outstanding immediately prior to the Subsequent Effective Time shall, by virtue
of the Subsequent Merger and without any action on the part of Camden, be
canceled without receipt of any consideration thereof by Camden.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF KSB AND THE BANK
KSB and the Bank hereby jointly and severally represent and warrant to
Camden and CASI that:
5.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) KSB is a corporation duly organized, validly existing and in good
standing under the DGCL and a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "FRB") under the Bank Holding
---
Company Act of 1956, as amended (the "BHCA"). The Bank is a state chartered
----
savings bank duly organized, validly existing and in good standing under the
laws of the State of Maine. The deposit accounts of the Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
----
permitted by law and all premiums and assessments required in connection
therewith have been paid by the Bank. Each of KSB and the Bank has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do business
and is in good standing in each jurisdiction where the nature of the business
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and be in good standing would
not, either individually or in the aggregate, have a Material Adverse Effect.
(b) Except for the Bank, KSB does not have any Subsidiaries or
directly or indirectly own five percent or more of the capital stock or other
equity or similar interest in, or
14
<PAGE>
any interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
5.2 Certificate of Incorporation; By-Laws; Corporate Records. KSB and the
--------------------------------------------------------
Bank each has heretofore made available to Camden a complete and correct copy of
the Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to date, of KSB and the Bank. Such Certificate of
Incorporation, By-Laws and equivalent organizational documents are in full force
and effect. Neither KSB nor the Bank is in violation of any provision of its
Certificate of Incorporation or equivalent organizational documents or of its
By-Laws. The minute books of KSB and the Bank contain in all material respects
true and complete records of all meetings held and true and complete records of
all corporate actions taken of their respective stockholders and boards of
directors (including committees of their respective boards of directors).
5.3 Capitalization.
--------------
(a) The authorized capital stock of KSB consists of 2,400,000 shares
of KSB Common Stock and 200,000 shares of authorized but unissued preferred
stock, $.01 par value per share (the "KSB Preferred Stock"). As of the date
-------------------
hereof, (a) 1,321,265 shares of KSB Common Stock are issued and outstanding, all
of which are duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof, (b) 20,404 shares of KSB Common Stock are held in the treasury of KSB,
(c) no shares of KSB Common Stock are held by any of its subsidiaries, (d)
94,108 shares of KSB Common Stock are reserved for future issuance pursuant to
KSB Stock Option Plans, and (e) 262,932 shares of KSB Common Stock are reserved
for future issuance pursuant to the KSB Option Agreement. As of the date
hereof, no shares of KSB Preferred Stock are issued and outstanding. All shares
of KSB Common Stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) The authorized capital stock of the Bank consists of 1,000 shares
of Common Stock, par value $1.00 per share ("Bank Common Stock") (shares of Bank
-----------------
Common Stock being hereinafter collectively referred to as "Bank Shares"). As
-----------
of the date hereof, (a) 1,000 Bank Shares are issued and outstanding and owned
by KSB, all of which are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof and (b) no Bank Shares are held in the
treasury of the Bank, and (c) no Bank Shares are held by any other person.
(c) Except for KSB Stock Option Plans and the KSB Option Agreement,
there are no outstanding subscriptions, options, warrants, calls or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock
15
<PAGE>
of KSB or the Bank or obligating KSB or the Bank to issue or sell any shares of
capital stock of, or other equity interests in, KSB or the Bank. There are no
outstanding contractual obligations of KSB or the Bank to repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity interests in,
KSB or the Bank. The names of the optionees, the date of each option to purchase
shares of KSB Common Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under KSB Stock Option Plans are set forth in
Section 5.3 of the Disclosure Schedule
5.4 Authority.
---------
(a) KSB has full corporate power and authority to execute and deliver
this Agreement and the KSB Option Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the KSB Option
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of KSB are necessary to authorize this Agreement and the KSB Option
Agreement or the performance of its obligations hereunder and thereunder or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of the then
outstanding shares of KSB Common Stock) and thereby. The Board of Directors of
KSB (the "KSB Board") has approved this Agreement by unanimous vote and has
---------
directed that this Agreement and the transactions contemplated hereby, including
the Merger, be submitted to KSB's stockholders for approval at a meeting of such
stockholders. This Agreement has been duly and validly executed and delivered by
KSB and constitutes a legal, valid and binding obligation of KSB, enforceable
against KSB in accordance with its terms.
(b) The Bank has full corporate power and authority to execute and
deliver this Agreement and the Bank Merger Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Bank Merger Agreements, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of the Bank are necessary to
authorize this Agreement or the Bank Merger Agreements or the performance of its
obligations hereunder or thereunder or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the Bank Merger, the
approval and adoption of the Bank Merger Agreements by the Surviving Corporation
as the sole stockholder of the Bank). The Board of Directors of the Bank (the
"Bank Board") has approved this Agreement by unanimous vote and has directed
- -----------
that the Bank Merger Agreements and the transactions contemplated thereby,
including the Bank Merger, be submitted to KSB as the sole stockholder of the
Bank for its
16
<PAGE>
approval. This Agreement has been duly and validly executed and delivered by the
Bank and constitutes a legal, valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms. The Bank Merger
Agreements, upon execution and delivery by the Bank, will be duly and validly
executed and delivered by the Bank and will constitute a legal, valid and
binding obligation of the Bank, enforceable against the Bank in accordance with
its terms.
5.5 No Conflict. Neither the execution, delivery and performance of this
-----------
Agreement or the KSB Option agreement by KSB, nor the consummation by KSB of the
transactions contemplated hereby or thereby, nor the execution, delivery and
performance of this Agreement or the Bank Merger Agreements by the Bank, nor the
consummation by the Bank of the transactions contemplated hereby or thereby, nor
compliance by KSB or the Bank with any of the terms or provisions hereof or
thereof, will, (i) conflict with, violate or result in a breach of the
Certificate of Incorporation or By-Laws or equivalent organizational documents
of KSB, the Bank or any of their subsidiaries, (ii) conflict with, violate or
result in a breach of any material provision of any statute, code, ordinance,
law, rule, regulation, order, writ, judgment, injunction or decree applicable to
KSB or the Bank or by which any property or asset of KSB or the Bank is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of KSB or the Bank pursuant
to, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which KSB or the Bank is a party or by
which KSB or the Bank or any property or asset of KSB or the Bank is bound or
affected, except, in the case of clause (iii) above, for any such conflicts,
violations, breaches, defaults or other occurrences which would not be deemed
material.
5.6 Consents and Approvals.
----------------------
(a) The execution, delivery and performance of this Agreement and the
KSB Option Agreement by KSB, and the execution, delivery and performance of this
Agreement and the Bank Merger Agreements by the Bank, does not require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency or commission or other governmental or
regulatory authority or instrumentally, domestic or foreign, including, without
limitation, any Bank Regulator (as hereinafter defined) (each a "Governmental
------------
Entity"), except (i) for applicable requirements, if any, of the Securities
- ------
Exchange Act of 1934, as amended (the "Exchange Act"), state takeover laws, the
------------
pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), and filing and recordation of appropriate merger documents as
-------
required by the DGCL, (ii) for consents and approvals of
17
<PAGE>
or filings, registrations or negotiations with the FRB, the FDIC and the
Superintendent of the Bureau of Banking of the State of Maine (the "Maine
-----
Superintendent"), and (iii) the filings required by the Bank Merger Agreements.
- --------------
KSB and the Bank are not aware of any reason why the approvals, consents and
waivers of Governmental Entities referred to herein and in Section 8.3 should
not be obtained.
(b) The execution, delivery and performance of this Agreement and the
KSB Option Agreement by KSB, and the execution, delivery and performance of this
Agreement and the Bank Merger Agreements by the Bank, does not require any
consent, approval, authorization or permit of, or filing with or notification
to, any third party, except where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or notification, would not
prevent or significantly delay consummation of the Merger or the Bank Merger, or
otherwise prevent KSB or the Bank from performing its obligations under this
Agreement and the KSB Option Agreement or the Bank from performing its
obligations under the Bank Merger Agreements, or would not, either individually
or in the aggregate, be material.
5.7 Compliance. KSB and the Bank hold, and have at all times held, all
----------
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and,
except as disclosed in Section 5.7 of the Disclosure Schedule, have complied
with and are not in conflict with, or in default or violation of, (a) any
statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to KSB or the Bank or by which any property or asset of KSB
or the Bank is bound or affected or (b) any note, bond, mortgage, indenture,
deed of trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which KSB or the Bank is a party or by which KSB or
the Bank or any property or asset of KSB or the Bank is bound or affected,
except for any such non-compliance, conflicts, defaults or violations that would
not, individually or in the aggregate, be material; and neither KSB nor the Bank
knows of, or has received notice of, any material violation of any of the above.
Without limiting the generality of the foregoing, neither KSB nor the Bank has
been advised of the existence of any facts or circumstances which would cause
the Bank to be deemed not to be in satisfactory compliance with the applicable
provisions of the MBCA and, as applicable to the Bank, the Community
Reinvestment Act of 1977, as amended (the "CRA"), and the regulations
---
promulgated thereunder.
5.8 SEC Reports and Bank Reports.
----------------------------
(a) KSB has filed, and made available to Camden, true and complete
copies of all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1996, and has
---
heretofore delivered to Camden, in the form filed with the SEC, true and
complete copies of (i) its Annual Reports on Form 10-KSB for the fiscal years
ended December 31, 1996, December 31, 1997 and December 31,
18
<PAGE>
1998, respectively, (ii) its Quarterly Reports on Form 10-QSB since January 1,
1996, (iii) all proxy statements relating to KSB's meetings of stockholders
(whether annual or special) held since January 1, 1996, (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-QSB not referred to in clause (ii) above) filed by KSB with the SEC since
January 1, 1996, and (v) all communications mailed by KSB to its stockholders
since January 1, 1996 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being referred to herein,
collectively, as the "SEC Reports"). As of their respective dates, the SEC
-----------
Reports (A) complied in all material respects as to form with the requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the
--------------
Exchange Act, as the case may be, and the rules and regulations thereunder and
(B) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. KSB has timely filed all SEC Reports and other documents
required to be filed by it under the Securities Act and the Exchange Act.
Neither the Bank nor any of their other subsidiaries is required to file any
form, report or other document with the SEC. KSB has made available to Camden
true and complete copies of all amendments and modifications that have not been
filed by KSB with the SEC to all agreements, documents and other instruments
that previously had been filed by KSB with the SEC and are currently in effect.
(b) KSB, the Bank and their subsidiaries each has timely filed and
made available to Camden true and complete copies of all forms, reports and
documents required to be filed by each of them with all appropriate federal or
state governmental or regulatory authorities charged with the supervision of
banks or bank holding companies or engaged in the insurance of bank deposits,
including without limitation, the FRB, the FDIC and the Maine Superintendent
("Bank Regulators") since January 1, 1996, and has paid all fees and assessments
- -----------------
due and payable in connection therewith. Such reports as of their respective
date of filing complied in all material respects with the requirements of all
laws, rules and regulations enforced or promulgated by such Bank Regulators.
Except for normal periodic examinations conducted by the FRB, the FDIC, the
Maine Superintendent or any other Bank Regulator in the regular course of the
business of KSB and the Bank (the "Bank Examinations"), no Bank Regulator has
-----------------
initiated any proceeding or, to the knowledge of KSB and the Bank, investigation
into the business or operations of KSB or the Bank since December 31, 1995.
Except as disclosed on Section 5.8(b) of the Disclosure Schedule, KSB and the
Bank have resolved all violations, criticisms or exceptions by any Bank
Regulator with respect to any Bank Examination.
5.9 Financial Statements.
--------------------
(a) Each of the consolidated financial statements of KSB and the Bank,
including, in each case, the notes thereto, contained in the SEC Reports was
prepared, and the financial statements referred to in Section 8.8 hereof will be
prepared, in accordance with
19
<PAGE>
GAAP (except as may be indicated in the notes thereto) and each fairly presents,
and the financial statements referred to in Section 8.8 hereof each will fairly
present, the consolidated financial position, results of operations and changes
in financial position of KSB and the Bank as at the respective dates thereof and
for the respective periods indicated therein, subject, in the case of unaudited
statements, to normal and recurring year-end adjustments normal in nature and
not material in amount. Each of the consolidated financial statements of KSB and
the Bank, including, in each case, the notes thereto, contained in the SEC
Reports comply, and the financial statements referred to in Section 8.8 hereof
will comply, with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto. Without limiting the
generality of the foregoing, (x) the allowance for possible loan losses included
in the consolidated financial statements of KSB and the Bank contained in the
SEC Reports was, and the allowance for possible loan losses to be included in
the financial statements referred to in Section 8.8 hereof will be, determined
in accordance with GAAP and is, and will be, adequate to provide for losses
relating to or inherent in the loan and lease portfolios of KSB and the Bank as
of the balance sheet date reflected in each such KSB SEC Report (including
without limitation commitments to extend credit), and (y) the Other Real Estate
Owned ("OREO") included in the consolidated financial statements of KSB and the
----
Bank contained in the SEC Reports was, and the OREO included in the financial
statements referred to in Section 8.8 hereof will be, carried net of reserves at
the lower of cost or market value in accordance with GAAP or the regulations or
other requirements of the SEC, the FDIC and the Maine Superintendent. The books
and records of KSB and the Bank are true and complete in all material respects
and have been, and are being, maintained in all material respects in accordance
with applicable legal and accounting requirements.
(b) The consolidated balance sheets of KSB and the Bank as at December
31, 1998, contained in the SEC Reports, including the notes thereto, each makes,
and the consolidated balance sheets contained in the financial statements
referred to in Section 8.8 will make, adequate provision for, reflect or
disclose all material liabilities and obligations of every nature (whether
accrued, absolute, contingent or otherwise and whether due or to become due) of
KSB and the Bank as of December 31, 1998, and except as and to the extent set
forth on such consolidated balance sheets or as set forth in Section 5.9(b) of
the Disclosure Schedule, neither KSB nor the Bank has any material liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise and
whether due or to become due) which would be required to be provided for,
reflected or disclosed on a balance sheet, or in the notes thereto, prepared in
accordance with GAAP. To the knowledge of KSB and the Bank, no facts or
circumstances exist which would give either KSB or the Bank reason to believe
that a material liability or obligation that, in accordance with GAAP applied on
a consistent basis, should have been reflected or disclosed on such balance
sheet, was not so reflected or disclosed.
5.10 Absence of Certain Changes or Events. Except as disclosed in Section
------------------------------------
5.10 of the Disclosure Schedule, since December 31, 1998, except as contemplated
by this Agreement
20
<PAGE>
or as disclosed in any SEC Report filed since December 31, 1998 and prior to the
date of this Agreement, KSB and the Bank have conducted their businesses only in
the ordinary course and in a manner consistent with past practice and, since
December 31, 1998, there has not been (a) either individually or in the
aggregate, any Material Adverse Effect, and to the knowledge of KSB and the
Bank, no fact or condition exists which is reasonably likely to cause such a
Material Adverse Effect in the future, (b) any material damage, destruction or
loss with respect to any property or asset of KSB or the Bank, (c) any change by
KSB or the Bank in its accounting methods, principles or practices, other than
changes required by applicable law or GAAP or regulatory accounting as concurred
in by KSB's independent accountants, (d) any revaluation by KSB or the Bank of
any asset, including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable, other than in the
ordinary course of business consistent with past practice, (e) any entry into,
or renewal of, by KSB or the Bank into any contract or commitment of more than
$50,000 or with a term of more than one year, (f) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
KSB or the Bank or any redemption, purchase or other acquisition of any of its
securities, (g) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards pursuant to
the KSB Stock Option Plan or otherwise), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any directors, officers or employees of KSB or the Bank, or any grant
of severance or termination pay, or any contract or arrangement entered into to
make or grant any severance or termination pay, any payment of any bonus, or the
taking of any action not in the ordinary course of business with respect to the
compensation or employment of directors, officers or employees of KSB or the
Bank, (h) any strike, work stoppage, slowdown or other labor disturbance, (i)
any material election made by KSB or the Bank for federal or state income tax
purposes, (j) any change in the credit policies or procedures of KSB or the
Bank, the effect of which was or is to make any such policy or procedure less
restrictive in any material respect, (k) any material liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise and whether due
or to become due), including without limiting the generality of the foregoing,
liabilities as guarantor under any guarantees or liabilities for taxes, (l) any
forgiveness or cancellation of any indebtedness or contractual obligation other
than in the ordinary course of business consistent with past practice, (m) any
mortgage, pledge, lien or lease of any assets, tangible or intangible, of KSB or
the Bank other than in the ordinary course of business consistent with past
practice, (n) any acquisition or disposition of any assets or properties, or any
contract for any such acquisition or disposition entered into; provided that (A)
--------
no single acquisition or disposition of an asset or property shall exceed
$100,000, and (B) all acquisitions and dispositions of assets or properties by
KSB and the Bank shall in no event exceed $300,000 in the aggregate, or (o) any
lease of real or personal property entered into, other than in connection with
foreclosed property or in the ordinary course of business consistent with past
practice.
21
<PAGE>
5.11 Absence of Litigation. Except as set forth in Section 5.11 of the
---------------------
Disclosure Schedule, neither KSB nor the Bank is a party to any, and there are
no pending, or to the knowledge of KSB and the Bank, threatened legal,
administrative, arbitral or other claims, actions, proceedings or investigations
of any nature, against KSB or the Bank or any property or asset of KSB or the
Bank, before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, and no facts or circumstances have come
to KSB's or the Bank's attention which have caused either of them to believe
that a material claim, action, proceeding or investigation against or affecting
KSB or the Bank could reasonably be expected to occur. Neither KSB nor the
Bank, nor any property or asset of KSB or the Bank, is subject to any order,
writ, judgment, injunction, decree, determination or award which restricts its
ability to conduct business in any area.
5.12 Employee Benefit Plans.
----------------------
(a) Section 5.12 of the Disclosure Schedule sets forth a true and
complete list of all Plans maintained or contributed to by the Bank during the
six years preceding this Agreement. The term "Plans" means all employee benefit
-----
plans, arrangements or agreements that are maintained or contributed to, or that
were maintained or contributed to at any time during the six years preceding the
date of this Agreement, by KSB or the Bank or by any trade or business, whether
or not incorporated (a "KSB ERISA Affiliate"), all of which together with KSB or
-------------------
the Bank would be deemed a "single employer" within the meaning of Section 4001
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
-----
(b) KSB and the Bank have heretofore delivered to Camden true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) all required Forms 5500 and all related schedules for such
Plans (if applicable) for each of the last two years, (ii) the actuarial report
for such Plan (if applicable) for each of the last two years, and (iii) the most
recent determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been maintained so as to qualify
from the effective date of such Plan to the Effective Time, (iii) with respect
to each Plan which is subject to Title IV of ERISA, the present value of
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
such Plan, based upon the actuarial assumptions currently prescribed by the
Pension Benefit Guaranty Corporation for plan termination, did not, as of its
latest valuation date, exceed by a material amount the then current value of the
assets of such Plan allocable to such accrued benefits, and there has been no
"accumulated funding deficiency" (whether or not waived), (iv) no Plan provides
benefits, including without limitation death, medical or other benefits (whether
or not insured), with respect to current or former employees of KSB, the Bank or
any KSB ERISA Affiliate beyond their retirement or other termination of service,
other than (u) coverage
22
<PAGE>
mandated by applicable law, (v) life insurance death benefits payable in the
event of the death of a covered employee, (w) disability benefits payable to
disabled former employees, (x) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (y)
deferred compensation benefits accrued as liabilities on the books of KSB, the
Bank or any KSB ERISA Affiliate or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) with respect to each
Plan subject to Title IV of ERISA, no liability under Title IV of ERISA has been
incurred by KSB, the Bank or any KSB ERISA Affiliate that has not been satisfied
in full, no condition exists that presents a material risk to KSB, the Bank or
any KSB ERISA Affiliate of incurring a material liability to or on account of
such Plan, and there has been no "reportable event" (within the meaning of
Section 4043 of ERISA and the regulations thereunder), (vi) neither KSB, the
Bank, nor any KSB ERISA Affiliate has ever maintained or contributed to a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by KSB or the Bank as of the
Effective Time with respect to each Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither KSB, the Bank nor any KSB ERISA Affiliate has engaged in a
transaction in connection with which KSB, the Bank or any KSB ERISA Affiliate
has any material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) consummation of the transactions contemplated hereby will not
cause any amounts payable under any of the Plans to fail to be deductible for
federal income tax purposes under Section 280G of the Code, (x) there are no
pending or, to the knowledge of KSB and the Bank, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto, and (xi) with respect to any Plan
intended to be an "employee stock ownership plan" within the meaning of Section
409 of the Code (the "ESOP"), the outstanding indebtedness of the Plan does not
----
exceed $41,000.00.
(d) With respect to any Plan that is a welfare plan (within the
meaning of Section 3(1) of ERISA) (i) no such Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the Code, and (ii)
each such Plan complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of
ERISA and any applicable state continuation coverage requirements ("COBRA").
-----
(e) Except as prohibited by law (including Section 411(d)(6) of the
Code), each Plan may be amended, terminated, modified or otherwise revised by
KSB, the Bank or any KSB ERISA Affiliate as of the Effective Time to eliminate
without material effect, any and all future benefit accruals under any Plan
(except claims incurred under any welfare plan).
5.13 Labor Matters. Neither KSB nor the Bank is a party to any collective
-------------
bargaining or other labor union or guild contract. There is no pending or, to
the knowledge of KSB and the Bank, threatened, labor dispute, strike or work
stoppage against KSB or the Bank which may interfere with the respective
business activities of KSB or the Bank. Neither KSB
23
<PAGE>
nor Bank, nor, to the knowledge of KSB and the Bank, their respective
representatives or employees, has committed any unfair labor practices in
connection with the operation of the respective businesses of KSB or the Bank,
and there is no pending or, to the knowledge of KSB and the Bank, threatened,
charge or complaint against KSB or the Bank by the National Labor Relations
Board or any comparable state agency.
5.14 Property and Leases.
-------------------
(a) All of the real property owned or leased by KSB or the Bank is
listed on Section 5.14 of the Disclosure Schedule. Each of KSB and the Bank has
good and marketable title to all the real property referred to in Section 5.14
of the Disclosure Schedule and all other property owned by it and included in
the consolidated balance sheet of KSB and the Bank included in its Annual Report
on Form 10-KSB for the period ended December 31, 1998. Each parcel of real
property, and each item of personal property, owned or leased by KSB or the Bank
(i) is owned or leased free and clear of all mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties of any kind (collectively, "Liens"), other than
-----
(A) Liens for current taxes and assessments not yet past due or which are being
contested in good faith, (B) inchoate mechanics' and materialmen's Liens for
construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business of KSB or the Bank
consistent with past practice, (D) all matters of record, Liens and other
imperfections of title and encumbrances which, either individually or in the
aggregate, would not be material, and (E) those items that secure public or
statutory obligations or any discount with, borrowing from, or obligations to
any Federal Reserve Bank or Federal Home Loan Bank, interbank credit facilities,
or any transaction by the Bank acting in a fiduciary capacity (collectively,
"Permitted Liens"), and (ii) is neither subject to any governmental decree or
- ----------------
order to be sold nor is being condemned, expropriated or otherwise taken by any
public authority with or without payment of compensation therefor, nor, to the
knowledge of KSB or the Bank, has any such condemnation, expropriation or taking
been proposed. Neither KSB nor the Bank has received any notice of violation of
any applicable zoning regulation, ordinance or other law, order, regulation or
requirement relating to its properties.
(b) All leases of real property leased for the use or benefit of KSB
or the Bank to which KSB or the Bank is a party and all amendments and
modifications thereto, are in full force and effect, and there exists no default
under any such lease by KSB or the Bank, nor, to the knowledge of KSB and the
Bank, any event which with notice or lapse of time or both would constitute a
material default thereunder by KSB or the Bank. The consummation of the
transactions contemplated by this Agreement do not require the consent of any
landlord nor do they cause an event of default under any such leases.
5.15 Taxes.
-----
24
<PAGE>
(a) Each of KSB and the Bank has duly filed in correct form all
Federal, state, county and local information returns and tax returns required to
be filed by it on or prior to the date hereof (all such returns being true and
complete in all material respects) and has duly paid, discharged or made
provisions for the payment of all material Taxes (as hereinafter defined) and
other governmental charges which have been incurred or are due or claimed to be
due from it by Federal, state, county or local taxing authorities on or prior to
the date hereof (including without limitation, if and to the extent applicable,
those due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls, and any net worth tax),
other than Taxes or other charges that are not yet delinquent or are being
contested in good faith and have not been finally determined. The amounts set
up as reserves for Taxes on the consolidated balance sheet of KSB and the Bank
included in its Annual Report on Form 10-KSB for the period ended December 31,
1998 are sufficient in the aggregate for the payment of all material unpaid
Federal, state, county and local Taxes (including any interest or penalties
thereon), whether or not disputed, accrued or applicable, for the period ended
December 31, 1998 and all prior periods covered by such returns, and for which
KSB or the Bank is liable in its own right or as transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity. The federal income tax returns of KSB or the Bank have been
examined by the Internal Revenue Service ("IRS") for all years through 1995 and
---
any liability with respect thereto has been satisfied, and no deficiencies were
asserted as a result of such examination or all such deficiencies were
satisfied. The State of Maine tax returns of KSB and the Bank have not, in the
ten years prior to the date of this Agreement, been examined or audited by the
State of Maine. There are no material disputes pending or claims asserted for
Taxes or assessments upon KSB or the Bank, nor has KSB or the Bank has been
requested to give any currently effective waivers extending the statutory period
of limitation applicable to any Federal, state, county or local income tax
return for any period. In addition, (a) proper and accurate amounts have been
withheld by KSB or the Bank from their employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable Federal, state, county and local laws; (b) Federal, state, county and
local returns which are accurate and complete in all material respects have been
filed by KSB and the Bank for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes; and
(c) the amounts shown on such returns to be due and payable have been paid in
full or adequate provision therefor has been included by KSB in its consolidated
financial statements included in its Annual Report on Form 10-KSB for the period
ended December 31, 1998.
(b) No property of KSB or the Bank is property that is or will be
required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code (as in effect prior
to its amendment by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Section 168(h) of the Internal Revenue Code of 1986, as
amended (the "Code"). Neither KSB nor the Bank has been required to include in
----
income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by KSB or the Bank, and the IRS
has not initiated or
25
<PAGE>
proposed any such adjustment or change in accounting method. Neither KSB nor the
Bank is a party to any agreement, contract or arrangement that would,
individually or in the aggregate, result in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result in
payments that would be nondeductible pursuant to Section 162(m) of the Code.
(c) As used in this Agreement, the term "Taxes" means all Federal,
-----
state, county, local and foreign income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise and other taxes, charges, levies or
like assessments, including any net worth tax, together with all penalties and
additions to tax and interest thereon.
5.16 Certain Contracts.
-----------------
(a) Except as set forth in Section 5.16 of the Disclosure Schedule
and in the SEC Reports filed prior to the date of this Agreement, neither KSB
nor the Bank is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral): (i) with respect to the employment of
any director, officer, employee or consultant, (ii) which, upon the consummation
of the transactions contemplated by this Agreement or the Bank Merger
Agreements, will result in any payment (whether of severance pay or otherwise)
becoming due from KSB or the Bank to any officer or employee thereof, (iii)
which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement that has not been
filed or incorporated by reference in the SEC Reports, (iv) which is a
consulting or other agreement (including agreements entered into in the ordinary
course and data processing, software programming and licensing contracts) not
terminable on 60 days or less notice involving the payment of more than $50,000
per annum, (v) which materially restricts the conduct of any line of business by
KSB or the Bank, (vi) with or to a labor union or guild (including any
collective bargaining agreement), or (vii) (including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement. KSB has previously delivered to Camden true and complete copies of
all employment, consulting and deferred compensation agreements which are in
writing and to which KSB or the Bank is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section, whether or
not set forth in Section 5.16 of the Disclosure Schedule, is referred to herein
as a "KSB Contract".
------------
(b) (i) To the knowledge of KSB and the Bank, each KSB Contract
listed on such Disclosure Schedule is legal, valid and binding upon KSB or the
Bank, as the case may be, and in full force and effect, (ii) KSB and the Bank
have in all material respects performed all obligations required to be performed
by it to date under each such KSB Contract, and
26
<PAGE>
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of KSB or the
Bank under any such KSB Contract.
5.17 Loan Portfolio. Except as set forth in Section 5.17 of the Disclosure
--------------
Schedule, neither KSB nor the Bank is a party to any written or oral (a) loan
agreement, note or borrowing arrangement (including, without limitation, leases
and credit enhancements) (collectively, "Loans") the unpaid principal balance of
-----
which exceeds $75,000 and as to which the obligor is, as of the date of this
Agreement, over 90 days delinquent in payment of principal or interest, or (b)
Loan with any director, executive officer or, to the knowledge of KSB and the
Bank, five percent stockholder of KSB or the Bank, or to the knowledge of KSB
and the Bank, any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing. To the knowledge of KSB and
the Bank, all of the Loans originated and held currently and at the Effective
Time by KSB or the Bank, and any other Loans purchased and held currently and at
the Effective Time by KSB or the Bank, were solicited, originated and exist, and
will exist at the Effective Time, in material compliance with all applicable
loan policies and procedures of KSB and the Bank. Section 5.17 of the
Disclosure Schedule sets forth as of June 30, 1999, (i) all of the Loans in
original principal amount in excess of $75,000 of KSB or the Bank that as of the
date of this Agreement are classified by the Bank as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and the
identity of the obligor thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of KSB and the Bank that as
of the date of this Agreement are classified as such, together with the
aggregate principal amount of such Loans by category, it being understood that
no representation is being made that the FDIC or the Maine Superintendent would
agree with the loan classifications contained in Section 5.17 of the Disclosure
Schedule. KSB shall promptly inform Camden in writing of any Loan the original
principal balance of which exceeds $75,000 that becomes classified in the manner
described in this Section 5.17, or any Loan the classification of which is
materially and adversely changed at any time after the date of this Agreement.
The information (including electronic information and information contained on
tapes and computer disks) with respect to the Loans furnished to Camden by KSB
and the Bank is true and complete in all material respects.
5.18 Investment Securities. Section 5.18(a) of the Disclosure Schedule
---------------------
sets forth the book and market value as of June 30, 1999 of the investment
securities, mortgage backed securities, bank-owned life insurance policies and
securities held by KSB and the Bank. Section 5.18(b) of the Disclosure Schedule
sets forth the names of all the joint ventures in which KSB or the Bank has an
investment (whether or not such joint ventures remain active). Except for
pledges to secure public and trust deposits, FRB and Federal Home Loan Bank of
Boston borrowings, repurchase agreements and reverse repurchase agreements
entered into in
27
<PAGE>
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the
consolidated balance sheet of KSB and the Bank included in its Annual Report on
Form 10-KSB for the period ended December 31, 1998, and none of the material
investments made by KSB or the Bank since December 31, 1998, is subject to any
restriction (contractual, statutory or otherwise) that would materially impair
the ability of the entity holding such investment freely to dispose of such
investment at any time. KSB has (i) properly reported as such any investment
securities which are required under GAAP to be classified as "available for
sale" at the lower of cost or market, and (ii) accounted for any decline in the
market value of its marketable equity securities portfolio in accordance with
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 12 and Staff Accounting Bulletin No. 59, including without limitation the
recognition through KSB's consolidated statement of operations of any unrealized
loss with respect to any individual marketable equity security as a realized
loss in the accounting period in which a decline in the market value of such
security is determined to be "other than temporary."
5.19 Derivative Transactions. Except pursuant to those agreements
-----------------------
referenced in Section 5.19 of the Disclosure Schedule, neither KSB nor the Bank
is engaged in transactions in or involving forwards, futures, options on
futures, swaps or other derivative instruments except as agent on the order and
for the account of others other than Federal Home Loan Bank advances or in
connection with mortgage loan secondary market activities in the ordinary course
of business consistent with the Bank's past practices. To the extent that KSB
or the Bank is engaged in such transactions, to the knowledge of KSB and the
Bank, none of the counterparties to any contract or agreement with respect to
any such instrument is in default with respect to such contract or agreement and
no such contract or agreement, were it to be a Loan held by KSB or the Bank,
would be classified as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans," "Watch List", "Impaired", "Non-accrual Status" or
words of similar import. The financial position of KSB and the Bank on a
consolidated basis under or with respect to each such instrument has been
reflected in the books and records of KSB and the Bank in accordance with GAAP
consistently applied, and no open exposure of KSB or the Bank with respect to
any such instrument (or with respect to multiple instruments with any single
counterparty) exceeds $50,000.
5.20 Insurance. KSB and the Bank each has made available to Camden true
---------
and complete copies of all material policies of insurance of KSB and the Bank
currently in effect. All of the policies relating to insurance maintained by
KSB or the Bank with respect to its material properties and the conduct of its
business in any material respect (or any comparable policies entered into as a
replacement therefor) are in full force and effect and neither KSB nor the Bank
has received any notice of cancellation with respect thereto. All life
insurance policies on the lives of any of the current and former officers and
directors of KSB and the Bank which are maintained by KSB and the Bank or which
are otherwise included as assets on
28
<PAGE>
the books of KSB or the Bank (i) are, or will at the Effective Time be, owned by
KSB or the Bank, as the case may be, free and clear of any claims thereon by the
officers or members of their families, except with respect to the death benefits
thereunder, as to which KSB and the Bank agree that there will not be an
amendment prior to the Effective Time without the consent of Camden, and (ii)
are accounted for properly as assets on the books of the Bank in accordance with
GAAP in all material respects. Neither KSB nor the Bank has any material
liability for unpaid premiums or premium adjustments not properly reflected on
KSB's consolidated financial statements contained in the SEC Reports.
5.21 Environmental Matters.
---------------------
(a) Each of KSB and the Bank and, to the knowledge of KSB and the
Bank, any property in which it participates or has participated in the
management and, where required by the context, said term means the owner or
operator of such property (the "Participation Facilities") and any property in
------------------------
which KSB or the Bank holds a security interest, and where required by the
context, said term means the owner or operator of such property (the "Loan
----
Properties"), are, and have been, in material compliance with all applicable
- ----------
environmental laws and with all rules, regulations, standards and requirements
of the United States Environmental Protection Agency (the "EPA") and of state
---
and local agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or, to the
knowledge of KSB or the Bank, threatened, before any Governmental Entity or
other forum in which KSB or the Bank or any Participation Facility has been or,
with respect to threatened proceedings, may be, named as a defendant,
responsible party or potentially responsible party (i) for alleged noncompliance
(including by any predecessor), with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium (the "Environment")
-----------
of any pollutant, contaminant, or hazardous substance or hazardous material as
defined in or pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq., or any other
federal, state, or local environmental law, regulation, or requirement
("Hazardous Materials") or petroleum of any kind or origin or in any form, as
- ----------- ---------
defined in or pursuant to the Federal Clean Water Act, 33 U.S.C. (S) 1251 et
seq., or any other federal, state, or local environmental law, regulation, or
requirement ("Oil") whether or not occurring at or on a site owned, leased or
---
operated by KSB or the Bank or any Participation Facility, except as have not
been or would not be material.
(c) There is no suit, claim, action or proceeding pending or, to the
knowledge of KSB or the Bank, threatened, before any Governmental Entity or
other forum in which any Loan Property has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or potentially
responsible party (i) for alleged noncompliance
29
<PAGE>
(including by any predecessor) with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment of any Hazardous Material or Oil whether or not occurring at or on a
site owned, leased or operated by a Loan Property, except as have not been or
would not be material.
(d) Neither KSB, the Bank, nor to their knowledge any Participation
Facility or any Loan Property, has received any notice regarding a matter on
which a suit, claim, action or proceeding as described in subsection (b) or (c)
of this Section 5.21 could reasonably be based. No facts or circumstances have
come to KSB's or the Bank's attention which have caused it to believe that a
material suit, claim, action or proceeding as described in subsection (b) or (c)
of this Section 5.21 could reasonably be expected to occur.
(e) During the period of (i) KSB's or the Bank's ownership or
operation of any of their respective current properties, (ii) KSB's or the
Bank's participation in the management of any Participation Facility, or (iii)
KSB's or the Bank's holding of a security interest in a Loan Property, there has
been no release or presence of Hazardous Material or Oil in, on, under or
affecting such property or, to the knowledge of KSB or the Bank, such
Participation Facility or Loan Property, except where such release or presence
is not or would not, either individually or in the aggregate, be material. To
the knowledge of KSB and the Bank, prior to the period of (x) KSB's or the
Bank's ownership or operation of any of their respective current properties or
any previously owned or operated properties, (y) KSB's or the Bank's
participation in the management of any Participation Facility, or (z) KSB's or
the Bank's holding of a security interest in a Loan Property, there was no
release or presence of Hazardous Material or Oil in, on, under or affecting any
such property, Participation Facility or Loan Property, except where such
release or presence is not or would not, either individually or in the
aggregate, be material.
5.22 Intellectual Property. Each of KSB and the Bank owns or possesses
---------------------
valid and binding licenses and other rights to use without payment of any
material amount all material patents, copyrights, trade secrets, trade names,
service marks and trademarks used in its businesses, and neither KSB nor the
Bank has received any notice of conflict with respect thereto that asserts the
right of others. Each of KSB and the Bank has performed in all material
respects all the obligations required to be performed by them and are not in
material default under any contract, agreement, arrangement or commitment
relating to any of the foregoing.
5.23 Administration of Fiduciary Accounts. Each of KSB and the Bank has
------------------------------------
properly administered in all material respects all accounts for which it acts as
a fiduciary, including, but not limited to, accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable law. Neither KSB nor the Bank nor their respective officers,
directors or employees has committed any breach of trust with respect to any
30
<PAGE>
fiduciary account. The accountings for each such fiduciary account are true and
correct in all material respects and accurately reflects the assets of such
fiduciary account.
5.24 Agreements with Bank Regulators. Except as disclosed on Section 5.24
-------------------------------
of the Disclosure Schedule, neither KSB nor the Bank is a party to any written
agreement or memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, any Bank Regulator
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its loan loss allowances or reserves, its credit
policies or its management, nor has KSB or the Bank been informed by any Bank
Regulator that it is contemplating issuing or requesting any such order,
directive, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. Neither KSB nor the Bank is a
party to any agreement or arrangement entered into in connection with the
consummation of a federally assisted acquisition of a depository institution
pursuant to which KSB or the Bank is entitled to receive financial assistance or
indemnification from any governmental agency.
5.25 Material Interests of Certain Persons. No officer or director of KSB
-------------------------------------
or the Bank or any "associate" (as such term is defined in Rule 14a-1 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of KSB or the Bank that would be required to be
disclosed in a proxy statement to stockholders under Regulation 14A of the
Exchange Act.
5.26 Brokers' Fees; Opinions. No broker, finder or investment banker,
-----------------------
other than Keefe, Bruyette & Woods, is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, the Bank Merger Agreements or the KSB Option Agreement based upon
arrangements made by or on behalf of KSB or the Bank. The fee payable to Keefe,
Bruyette & Woods in connection with the transactions contemplated by this
Agreement is as described in an engagement letter between KSB and Keefe,
Bruyette & Woods, a true and complete copy of which has heretofore been
furnished to Camden. On or prior to the execution of this Agreement, KSB has
received the opinion of Keefe, Bruyette & Woods to the effect that, as of the
date of such opinion, the Merger Consideration to be received by the
stockholders of KSB pursuant to the Merger is fair to such stockholders, and
such opinion has not been amended or rescinded as of the date of this Agreement.
5.27 Joint Proxy Statement. The information contained in the Joint Proxy
---------------------
Statement to be sent to the stockholders of KSB in connection with the KSB
Meeting will not, on the date the Joint Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of KSB or at the time of the
KSB Meeting, contain any statement which, at such time and in the light of the
circumstances under which it is made, is false or misleading with
31
<PAGE>
respect to any material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the KSB Meeting which shall have
become false or misleading. The Joint Proxy Statement will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
5.28 State Takeover Laws. The Board of Directors of KSB has taken all
-------------------
necessary action prior to the date of this Agreement in connection with the
approval of the execution, delivery and performance of this Agreement, the Bank
Merger Agreements and the KSB Option Agreement, any purchase or other
transaction respecting KSB Common Stock provided for herein or therein, and the
other transactions contemplated hereby and thereby, including without limitation
approval by the affirmative vote of at least a majority of the members of KSB
Board and a majority of the non-employee directors of KSB Board, to exempt
Camden and CASI from the requirements of any "moratorium," "business
combination," "control share," "fair price" or other takeover defense laws and
regulations (collectively, "Takeover Laws"), if any, of the State of Delaware
-------------
and the State of Maine.
5.29 Year 2000.
---------
(a) Each of KSB and the Bank has adopted a plan (in each case, a "Year
----
2000 Plan") requiring testing, information-gathering and other procedures to
- ---------
conform to the deadlines and material requirements and guidelines applicable to
it as a provider of services using Information Technology and imposed by any
Bank Regulator or the FFIEC, to cause such Information Technology to be Year
2000 Compliant (such deadlines, material requirements and guidelines, as they
may be in effect from time to time, being referred to in this Agreement as the
"Year 2000 Regulatory Requirements").
- ----------------------------------
(b) Each of KSB and the Bank has taken appropriate actions and has
committed the resources reasonably necessary or otherwise appropriate to comply
with its Year 2000 Plan in a timely manner. Such actions (including the testing
and information-gathering procedures) have not produced any preliminary findings
or other results which would indicate that the Information Technology will not
be Year 2000 Compliant or that it will not be in compliance with the Year 2000
Regulatory Requirements; and it has not received any written notice or
preliminary oral notice from a Governmental Entity to one of its officers or
senior executive employees with respect to any adverse action against it
relating to Year 2000 Compliance.
(c) Each of KSB and the Bank has taken appropriate actions to assure
that the Bank has, and will continue to have at all relevant points in time,
adequate funds to meet loan and deposit customer demand in connection with the
Year 2000 date change and related circumstances.
32
<PAGE>
5.30 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to Camden pursuant to the provisions hereof, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances in which they are made, not
misleading. No information believed by KSB or the Bank to be material to the
Merger or the Bank Merger and which is necessary to make the representations and
warranties herein contained, taken as a whole, not misleading, to the knowledge
of KSB and the Bank, has been withheld from, or has not been delivered in
writing to, Camden.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF CAMDEN AND CASI
Camden, and as applicable CASI, hereby represents and warrants to KSB that:
6.1 Corporate Organization. Camden is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Maine.
CASI is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and all of the outstanding shares of
capital stock of CASI are owned, directly or indirectly, by Camden. Since the
date of its incorporation, CASI has not engaged in any activities other than in
connection with or as contemplated by this Agreement. United Bank is a banking
organization, duly organized, validly existing and in good standing under the
laws of the State of Maine, and all of the outstanding shares of capital stock
of United Bank are owned, directly or indirectly, by Camden. Each of Camden,
CASI and United Bank has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, either individually or in the aggregate, have
a material adverse effect on the business, assets, liabilities, financial
condition or results of operations of Camden and its subsidiaries taken as a
whole.
6.2 Authority. Each of Camden and CASI has full corporate power and
---------
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Each of
Camden and United Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreements, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Bank Merger Agreements, the performance by Camden and
CASI of its obligations hereunder, the performance by Camden and United Bank of
its obligations thereunder, the consummation by Camden and CASI of the
transactions contemplated hereby, and the consummation by Camden and United Bank
of the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Camden and CASI are necessary to authorize
33
<PAGE>
this Agreement, or on the part of Camden and United Bank are necessary to
execute the Bank Merger Agreements, or the performance of any of their
respective obligations hereunder or thereunder, as applicable, or to consummate
the transactions contemplated hereby or thereby, other than the approval of each
of their respective stockholders, if required. This Agreement has been duly and
validly executed and delivered by each of Camden and CASI and constitutes a
legal, valid and binding obligation of Camden and CASI, enforceable against each
such party in accordance with its terms. On the date executed and delivered by
Camden and United Bank, the Bank Merger Agreements will be duly and validly
executed and delivered by Camden and United Bank and will constitute a legal,
valid and binding obligation of Camden and United Bank, enforceable against each
such party in accordance with its terms.
6.3 No Conflict. Neither the execution, delivery and performance of this
-----------
Agreement by Camden or CASI, or the Bank Merger Agreements by Camden and United
Bank, nor the consummation by Camden and CASI of the transactions contemplated
hereby, nor the consummation by Camden and United Bank of the transactions
contemplated thereby, will (i) conflict with, violate or result in a breach of
the Certificate of Incorporation or By-Laws or equivalent organizational
documents of Camden, CASI or United Bank, as applicable, (ii) conflict with,
violate or result in a breach of any material provision of any statute, code,
ordinance, law, rule, regulation, order, writ, judgment, injunction or decree
applicable to Camden, CASI or United Bank, as applicable or by which any
property or asset of Camden, CASI or United Bank, as applicable, is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of Camden, CASI or United
Bank, as applicable, pursuant to, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Camden,
CASI or United Bank, as applicable is a party or by which Camden, CASI or United
Bank, as applicable, or any property or asset of such party is bound or
affected, except, in the case of clause (iii) above, for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities, financial condition or results of operations of
Camden and its subsidiaries taken as a whole.
6.4 Capitalization. As of the date hereof, the authorized stock of Camden
--------------
consists solely of 10,000,000 shares of Camden Common Stock, of which, as of the
date hereof, 6,557,650 shares were outstanding; 570,590 shares of Camden Common
Stock are directly or indirectly held by Camden as treasury stock; and there are
no shares of preferred stock outstanding as of the date hereof. As of the date
hereof, the authorized stock of CASI consists solely of 1,000 shares of CASI
Common Stock, par value $0.01 per share, of which, as of the date hereof, 1,000
shares were outstanding. The outstanding shares of Camden and CASI's
34
<PAGE>
capital stock are validly issued, fully paid and nonassessable, and subject to
no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, there are no shares of Camden or CASI capital
stock authorized and reserved for issuance, Camden and CASI do not have any
Rights issued and outstanding, and Camden and CASI do not have any commitment to
authorize, issue or sell any such shares or Rights, except pursuant to this
Agreement or Compensation and Benefit Plans. Since March 31, 1999, neither
Camden nor CASI has issued any shares of its stock or Rights in respect thereof
or reserved any shares for such purposes, other than pursuant to Compensation
and Benefit Plans.
6.5 Consents and Approvals. The execution, delivery and performance of
----------------------
this Agreement by Camden and CASI, and the Bank Merger Agreements by Camden and
United Bank, does not require any consent, approval, authorization or permit of,
or filing with or notification to any Governmental Entity, (i) except for those
referred to in Section 5.6 hereof, and (ii) except for any consent, approval,
authorization, permit of, or filing with, or notification to, any Governmental
Entity where failure to obtain any such consent, approval, authorization or
permit, or to make any such filing or notification, would not prevent or
significantly delay consummation of the Merger, or otherwise prevent Camden or
CASI from performing the obligations contemplated under this Agreement to be
performed by them or Camden or United Bank from performing its obligations under
the Bank Merger Agreements, or which, either individually or in the aggregate,
would not, in the reasonable judgment of the parties hereto, have a material
adverse effect on the business, assets, liabilities, financial condition or
results of operation of Camden and its subsidiaries taken as a whole.
6.6 Joint Proxy Statement. The information supplied by Camden and CASI
---------------------
for inclusion in the Joint Proxy Statement will not, on the date the Joint Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of KSB or at the time of the KSB Meeting, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
KSB Meeting which shall have become false or misleading.
6.7 SEC Reports and Bank Reports.
----------------------------
(a) Camden has filed, and made available to KSB, true and complete
copies of all forms, reports and documents required to be filed by it with the
SEC since January 1, 1996, and has heretofore delivered to KSB, in the form
filed with the SEC, true and complete copies of (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1996, December 31, 1997 and
December 31, 1998, respectively, (ii) its Quarterly Report on Form 10-Q since
January 1, 1996, (iii) all proxy statements relating to Camden's meetings of
stockholders (whether annual or special) held since January 1, 1996, (iv) all
other forms,
35
<PAGE>
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by Camden with the SEC since
January 1, 1996, and (v) all communications mailed by Camden to its stockholders
since January 1, 1996 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being referred to herein,
collectively, as the "Camden SEC Reports"). As of their respective dates, the
------------------
Camden SEC Reports (A) complied in all material respects as to form with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (B) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Camden
has timely filed all SEC Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act. Neither the Camden nor any of its
subsidiaries is required to file any form, report or other document with the
SEC. Camden has made available to KSB true and complete copies of all amendments
and modifications that have not been filed by Camden with the SEC to all
agreements, documents and other instruments that previously had been filed by
Camden with the SEC and are currently in effect.
(b) Camden and its subsidiaries each have timely filed and made
available to KSB true and complete copies of all forms, reports and documents
required to be filed by each of them with all appropriate Bank Regulators since
January 1, 1996, and has paid all fees and assessments due and payable in
connection therewith. Such reports as of their respective date of filing
complied in all material respects with the requirements of all laws, rules and
regulations enforced or promulgated by such Bank Regulators. Except for Bank
Examinations no Bank Regulator has initiated any proceeding or, to the knowledge
of Camden, investigation into the business or operations of Camden, Camden
National Bank or United Bank since December 31, 1995. Camden has resolved all
violations, criticisms or exceptions by any Bank Regulator with respect to any
Bank Examination.
6.8 Financial Statements Each of the consolidated financial statements of
--------------------
Camden and its subsidiaries, including, in each case, the notes thereto,
contained in the Camden SEC Reports was prepared in accordance with GAAP (except
as may be indicated in the notes thereto) and each fairly presents the
consolidated financial position, results of operations and changes in financial
position of Camden and its subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, subject, in the case of unaudited
statements, to normal and recurring year-end adjustments normal in nature and
not material in amount.
6.9 Compliance. Each of Camden, CASI, Camden National Bank and United
----------
Bank hold, and at all relevant times have held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in conflict with, or in default or violation of, (a) any statute, code,
ordinance, law, rule, regulation, order, writ, judgment, injunction or decree,
published policies and guidelines of any Governmental Entity, applicable to it
or by
36
<PAGE>
which any of its properties or assets is bound or affected, or (b) any note,
bond, mortgage, indenture, deed of trust, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is a party or by
which any of its properties or assets is bound or affected, except, in each
case, for the failure to obtain or maintain any required license, permit or
authorization or any such non-compliance, conflict, default or violation that
would not, individually or in the aggregate, prevent or significantly delay
consummation of the Merger. Camden has made available to KSB a true and correct
copy of the most recent CRA report pertaining to Camden.
6.10 Absence of Certain Changes or Events. Since December 31, 1998, except
------------------------------------
as contemplated by this Agreement or as disclosed in any Camden SEC Report filed
since December 31, 1998 and prior to the date of this Agreement, Camden and its
subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1998, there has
not been either individually or in the aggregate, any Material Adverse Effect,
and to the knowledge of Camden and its subsidiaries, no fact or condition exists
which is reasonably likely to cause such a Material Adverse Effect in the
future.
6.11 Employee Benefit Plans.
----------------------
(a) The term "Camden Plans" means all employee benefit plans,
------------
arrangements or agreements that are maintained or contributed to, or that were
maintained or contributed to at any time during the six years preceding the date
of this Agreement, by Camden or by any trade or business, whether or not
incorporated (a "Camden ERISA Affiliate"), all of which together with Camden
would be deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) (i) Each of the Camden Plans has been operated and administered
in all material respects in accordance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Camden Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been maintained
so as to qualify from the effective date of such Camden Plan to the Effective
Time, (iii) with respect to each Camden Plan which is subject to Title IV of
ERISA, there has been no "accumulated funding deficiency" (whether or not
waived), (iv) with respect to each Camden Plan subject to Title IV of ERISA, no
liability under Title IV of ERISA has been incurred by Camden or any Camden
ERISA Affiliate that has not been satisfied in full, no condition exists that
presents a material risk to Camden or any Camden ERISA Affiliate of incurring a
material liability to or on account of such Camden Plan, and there has been no
"reportable event" (within the meaning of Section 4043 of ERISA and the
regulations thereunder) other than those events as to which the 30 day notice
requirement is waived under Pension Benefit Guaranty Corporation Regulations
Section 4043, (v) neither Camden, nor any Camden ERISA Affiliate has ever
maintained or contributed to a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vi) all
37
<PAGE>
contributions or other amounts payable by Camden as of the Effective Time with
respect to each Camden Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the Code, (vii)
neither Camden nor any Camden ERISA Affiliate has engaged in a transaction in
connection with which Camden or any Camden ERISA Affiliate has any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, and
(viii) there are no pending or, to the knowledge of Camden, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Camden Plans or any trusts related thereto.
(c) With respect to any Camden Plan that is a welfare plan (within
the meaning of Section 3(1) of ERISA) (i) no such Camden Plan is funded through
a "welfare benefit fund," as such term is defined in Section 419(e) of the Code,
and (ii) each such Camden Plan complies in all material respects with the
applicable requirements of COBRA.
6.12 Environmental. Except as disclosed in any Camden SEC Report, any
-------------
Phase I Environmental Site Assessment prepared by or for the benefit of Camden,
or in Section 6.12 of the Disclosure Schedule:
(a) To the knowledge of Camden, each of Camden and its subsidiaries,
any Participation Facilities and any property in which Camden or any of its
subsidiaries holds a security interest, and where required by the context, the
Loan Properties, are, and have been, in material compliance with all applicable
environmental laws and with all rules, regulations, standards and requirements
of the EPA and of state and local agencies with jurisdiction over pollution or
protection of the environment.
(b) There is no suit, claim, action or proceeding pending or, to the
knowledge of Camden and its subsidiaries, threatened, before any Governmental
Entity or other forum in which Camden or any of its subsidiaries or, to the
knowledge of Camden, any Participation Facility has been or, with respect to
threatened proceedings, may be, named as a defendant, responsible party or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor), with any environmental law, rule, regulation, standard or
requirement or (ii) relating to the release into or presence in the Environment
of any Hazardous Materials or Oil whether or not occurring at or on a site
owned, leased or operated by Camden or any of its subsidiaries or any
Participation Facility, except as have not been or would not be material.
(c) To the knowledge of Camden, there is no suit, claim, action or
proceeding pending or threatened, before any Governmental Entity or other forum
in which any Loan Property has been or, with respect to threatened proceedings,
may be, named as a defendant, responsible party or potentially responsible party
(i) for alleged noncompliance (including by any predecessor) with any
environmental law, rule, regulation, standard or
38
<PAGE>
requirement or (ii) relating to the release into or presence in the Environment
of any Hazardous Material or Oil whether or not occurring at or on a site owned,
leased or operated by a Loan Property, except as have not been or would not be
material.
(d) Neither Camden nor any of its subsidiaries, nor to their
knowledge any Participation Facility or any Loan Property, has received any
notice regarding a matter on which a suit, claim, action or proceeding as
described in subsection (b) or (c) of this Section 6.12 could reasonably be
based. No facts or circumstances have come to Camden's nor any of its
subsidiaries' attention which have caused it to believe that a material suit,
claim, action or proceeding as described in subsection (b) or (c) of this
Section 6.12 could reasonably be expected to occur.
(e) To the knowledge of Camden, during the period of (i) Camden's and
its subsidiaries' ownership or operation of any of their respective current
properties, (ii) Camden's and its subsidiaries' participation in the management
of any Participation Facility, or (iii) Camden's and its subsidiaries' holding
of a security interest in a Loan Property, there has been no release or presence
of Hazardous Material or Oil in, on, under or affecting such property of Camden
or such Participation Facility or Loan Property, except where such release or
presence is not or would not, either individually or in the aggregate, be
material. To the knowledge of Camden and its subsidiaries, prior to the period
of (Camden's and its subsidiaries' ownership or operation of any of their
respective current properties or any previously owned or operated properties,
(y) Camden's and its subsidiaries' participation in the management of any
Participation Facility, or (z) Camden's and its subsidiaries' holding of a
security interest in a Loan Property, there was no release or presence of
Hazardous Material or Oil in, on, under or affecting any such property,
Participation Facility or Loan Property, except where such release or presence
is not or would not, either individually or in the aggregate, be material.
6.13 Agreements with Bank Regulators. Neither Camden nor any of its
-------------------------------
subsidiaries is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Bank Regulator which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy, its
loan loss allowances or reserves, its credit policies or its management, nor has
Camden or any of its subsidiaries been informed by any Bank Regulator that it is
contemplating issuing or requesting any such order, directive, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither Camden nor any of its subsidiaries is a party to
any agreement or arrangement entered into in connection with the consummation of
a federally assisted acquisition of a depository institution pursuant to which
Camden or any of its subsidiaries is entitled to receive financial assistance or
indemnification from any governmental agency.
39
<PAGE>
6.14 Year 2000.
---------
(a) Each of Camden and its subsidiaries (other than CASI) has adopted
a Year 2000 Plan requiring testing, information-gathering and other procedures
to conform to the Year 2000 Regulatory Requirements.
(b) Each of Camden and its subsidiaries (other than CASI) has taken
appropriate actions and has committed the resources reasonably necessary or
otherwise appropriate to comply with its Year 2000 Plan in a timely manner.
Such actions (including the testing and information-gathering procedures) have
not produced any preliminary findings or other results which would indicate that
the Information Technology will not be Year 2000 Compliant or that it will not
be in compliance with the Year 2000 Regulatory Requirements; and it has not
received any written notice or preliminary oral notice from a Governmental
Entity to one of its officers or senior executive employees with respect to any
adverse action against it relating to Year 2000 Compliance.
(c) Each of Camden and its subsidiaries (other than CASI) has taken
appropriate actions to assure that each of United Bank and Camden National Bank
has, and will continue to have at all relevant points in time, adequate funds to
meet loan and deposit customer demand in connection with the Year 2000 date
change and related circumstances.
6.15 Brokers' Fees. Except for the fees payable to Ryan, Beck & Co., no
-------------
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Camden or CASI.
6.16 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to KSB pursuant to the provisions hereof, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances in which they are made, not
misleading. No information believed by Camden or its subsidiaries to be
material to the Merger or the Bank Merger and which is necessary to make the
representations and warranties herein contained, taken as a whole, not
misleading, to the knowledge of Camden and its subsidiaries, has been withheld
from, or has not been delivered in writing to, KSB.
ARTICLE VII - CONDUCT OF BUSINESS PENDING
THE MERGER
40
<PAGE>
7.1 Covenants of KSB and the Bank.
-----------------------------
(a) KSB and the Bank each covenants and agrees that, between the date
of this Agreement and the Effective Time, unless Camden shall otherwise agree in
writing, the business of KSB and the Bank shall be conducted only in, and KSB
and the Bank shall not take any action except in, the usual, regular and
ordinary course of business and in a manner consistent with prudent banking
practice and generally to conduct their business in substantially the same way
as heretofore conducted, and without limiting the foregoing, to continue to
operate in the same geographic markets serving the same market segments and
without significant increase in the rate of growth of the Bank's loan portfolio.
KSB and the Bank shall use their reasonable best efforts to preserve
substantially intact the business organization of KSB and the Bank, to keep
available the present services of the officers, employees and consultants of KSB
and the Bank and to preserve the current relationships and goodwill of KSB and
the Bank with customers, suppliers and other persons with which KSB or the Bank
have business relationships, including without limitation, implementing a
deposit retention program in furtherance thereof.
(b) By way of amplification and not limitation of clause (a) above,
except as contemplated by this Agreement, the Bank Merger Agreements and the KSB
Option Agreement, KSB and the Bank shall not, between the date of this Agreement
and the Effective Time, directly or indirectly to do, or publicly announce an
intention to do, any of the following without the prior written consent of
Camden:
(i) amend or otherwise change its Certificate of Incorporation
or By-laws or equivalent organizational documents;
(ii) issue, deliver, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, delivery, sale, pledge, disposition, grant or
encumbrance of, any shares of capital stock of any class of KSB or the Bank
(other than the issuance of shares of KSB Common Stock upon the exercise of
KSB Stock Options issued in accordance with the provisions of the KSB Stock
Option Plan and outstanding prior to the date of this Agreement), or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest,
of KSB or the Bank, or enter into any agreement with respect to any of the
foregoing;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for (A) the declaration and payment by
KSB of a regular quarterly cash dividend, in a per share amount not to
exceed $0.04, and (B) the declaration and payment of a regular quarterly
cash dividend by the Bank to KSB provided that after the
41
<PAGE>
declaration and payment of such dividend, the Bank will remain "well
capitalized" under the applicable capital adequacy regulations of the FDIC;
(iv) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock, except upon the exercise or fulfillment of rights or options issued
or existing pursuant to employee benefit plans, programs or arrangements,
all to the extent outstanding and in existence on the date of this
Agreement;
(v) repurchase, redeem or otherwise acquire any shares of the
capital stock of KSB or the Bank, or any securities convertible into or
exercisable for any shares of the capital stock of KSB or the Bank;
(vi) enter into any new line of business or materially expand
the business currently conducted by KSB and the Bank or file any
application to relocate or terminate the operations of any banking office
of KSB or the Bank;
(vii) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership, other
business organization or any division thereof or any material amount of
assets, other than subject to Section 7.5 hereof;
(viii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any individual,
corporation or other entity, or make any loan or advance, other than in the
ordinary course of business consistent with past practice;
(ix) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice and, in any
event, regardless of whether consistent with past practice, undertake or
enter into (i) any contract or other commitment (other than contracts or
commitments related to Loans) involving an aggregate payment by or to KSB
or the Bank under any such contract or commitment of more than $50,000 or
having a term of one year or more from the time of execution, (ii) any
contract or commitment, or related contracts or commitments, for Loans
having an original principal amount of $400,000;
(x) authorize any single capital expenditure which is in
excess of $25,000 or capital expenditures which are, in the aggregate, in
excess of $50,000 for
42
<PAGE>
KSB and the Bank taken as a whole, except for written contractual
commitments entered into prior to the date of this Agreement as disclosed
in the Disclosure Schedule;
(xi) (i) except as required by applicable law or as specified
in Section 7.1(b)(xi) of the Disclosure Schedule, (x) adopt, amend, renew
or terminate any Plan or any agreement, arrangement, plan or policy between
KSB or the Bank and one or more of its current or former directors,
officers or employees, or (y) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares pursuant to the KSB Stock Option Plans or
otherwise); provided, however, that KSB and the Bank may, in consultation
-------- -------
with Camden, grant salary increases to its employees (other than those
employees who are officers) at the regular review date of such employees in
an aggregate amount for all employees not to exceed four percent (4%) of
the aggregate current annualized base salaries of such employees or
constitute more than a 10% increase with respect to any one employee; or
(ii) enter into, modify or renew any employment, severance or other
agreement with any director, officer or employee of KSB or the Bank, or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement
providing for any benefit to any director, officer or employee;
(xii) take any action with respect to changes in accounting
methods, principles or practices, other than changes required by applicable
law or GAAP or regulatory accounting as concurred in by KSB's independent
accountants;
(xiii) make any tax election or settle or compromise any Federal,
state, local or foreign tax liability;
(xiv) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the consolidated balance sheet
of KSB and the Bank included in Annual Report on Form 10-KSB for the period
ended December 31, 1998, or subsequently incurred in the ordinary course of
business and consistent with past practice or in connection with this
Agreement;
(xv) enter into any investment in real estate or in any real
estate development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings
which, in each case, do not require
43
<PAGE>
the advance of any new funds and are in the ordinary course of business
consistent with past practice;
(xvi) sell any securities in its investment portfolio, except
in the ordinary course of business, or engage in transactions in or
involving forwards, futures, options on futures, swaps or similar
derivative instruments;
(xvii) sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements or purchase or
sell any loans in bulk;
(xviii) take any action that is intended or reasonably can be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect, or any
of the conditions to the consummation of the Merger, the Bank Merger and
the other transactions contemplated by this Agreement set forth in Article
IX not being satisfied in any material respect, or in any material
violation of any provision of this Agreement, the Bank Merger Agreements or
the KSB Option Agreement, except, in every case, as may be required by
applicable law;
(xix) commit any act or omission which constitutes a material
breach or default by KSB or the Bank under any agreement or understanding
with Bank Regulators or under any material contract or material license to
which any of them is a party or by which any of them or their respective
properties is bound;
(xx) foreclose upon or take a deed or title to any commercial
real estate without first conducting a Phase I environmental assessment of
the property or foreclose upon any commercial real estate if such
environmental assessment indicates the presence of Hazardous Material in
amounts which, if such foreclosure were to occur, would be material;
(xxi) enter into or renew, amend or terminate, or give notice
of a proposed renewal, amendment or termination of or make any commitment
with respect to, (i) any contract, agreement or lease for office space,
operations space or branch space to which KSB or the Bank is a party or by
which KSB or the Bank or their respective properties is bound; (ii) any
lease, contract or agreement other than in the ordinary course of business
consistent with past practice including renewals of leases to existing
tenants of KSB or the Bank; (iii) regardless of whether consistent with
past practices, any lease, contract, agreement or commitment involving an
aggregate payment by or to KSB or the Bank of more than $50,000 or having a
term of one year or more from the time of execution;
44
<PAGE>
(xxii) change in any material respect its loan policies or
procedures, except as required by regulatory authorities; or
(xxiii) agree to do any of the foregoing.
(c) To the extent that KSB or the Bank is at any time prior to
Closing subject to any memorandum of understanding, cease and desist order,
injunction, order, judgment, decree or other regulatory restriction, KSB and the
Bank shall comply with all requirements of such regulatory restriction and take
all steps that are necessary to satisfy and discharge all of their respective
obligations thereunder.
7.2 Camden Products and Services. From and after the date hereof, Camden,
----------------------------
KSB and the Bank shall consult with each other on the introduction of products
and services not currently offered by KSB or the Bank which Camden would expect
to make available to customers following the Merger and the Bank Merger, and KSB
and the Bank shall consider offering such products and services to its customers
prior to the Effective Date, on terms and conditions mutually acceptable to
Camden, KSB and the Bank; provided, however, that nothing herein shall obligate
-------- -------
KSB or the Bank to offer any such products or services prior to the Effective
Time.
7.3 System Conversions. From and after the date hereof, Camden and the
------------------
Bank shall meet on a regular basis to discuss and plan for the conversion of the
Bank's data processing and related electronic informational systems to those
used by Camden and its Subsidiaries, which planning shall include, but not be
limited to, discussion of the possible termination by the Bank of third-party
service provider arrangements effective at the Effective Time or at a date
thereafter, non-renewal of personal property leases and software licenses used
by the Bank in connection with its systems operations and outsourcing, as
appropriate, of proprietary or self-provided system services, it being
understood that the Bank shall not be obligated to take any such action prior to
the Effective Time and, unless the Bank otherwise agrees, no conversion shall
take place prior to the Effective Time. In the event that the Bank takes, at
the request of Camden, any action relative to third parties to facilitate the
conversion that results in the imposition of any termination fees or charges,
Camden shall indemnify the Bank on terms reasonably satisfactory to the Bank for
any such fees and expenses, and the costs of reversing the conversion process,
if either Camden or CASI has failed to fulfill any material obligation under
this Agreement and such failure has been the cause of, or resulted in, the
termination or this Agreement pursuant to Section 10.1.
7.4 Certain Changes and Adjustments. Prior to the Closing, Camden, KSB
-------------------------------
and the Bank shall consult and cooperate with each other concerning the Bank's
loan, litigation and real estate valuation policies and practices (including
loan classifications and levels of reserves) to reflect Camden's plans with
respect to the conduct of the Surviving Corporation's business and the then
anticipated post-closing disposition of certain assets of the Surviving
Corporation
45
<PAGE>
following the Bank Merger; provided, however, that neither KSB nor the Bank
-------- -------
shall be obligated to take any action pursuant to this Section which is
inconsistent with GAAP and unless and until Camden acknowledges, and KSB and the
Bank are satisfied, that all conditions to its obligation to consummate the
Merger have been satisfied; and provided further, that neither KSB nor the Bank
-------- -------
shall be obligated to take any action pursuant to this Section 7.4 earlier than
five (5) business days prior to the Effective Date. No action taken by KSB or
the Bank pursuant to this Section or the consequences resulting therefrom shall
be deemed to be a breach of any representation, warranty, agreement or covenant
herein or constitute a Material Adverse Effect.
7.5 ALCO Management. KSB and the Bank agree that during the period from
---------------
the date of this Agreement through the Effective Time, they will consult with
Camden in the development of a reasonable program to manage the Bank's interest
sensitive assets and liabilities (including its fixed-rate mortgage portfolio
and its investment portfolio), which program will include a policy not to
acquire securities for the investment portfolio of the Bank other than
securities which were issued by the United States of America and have a maturity
date that is not more than two years after the date of acquisition thereof,
unless otherwise agreed by the parties. KSB, the Bank and Camden agree to
consult on investment programs to be administered by the Bank.
7.6 Covenants of Camden. During the period from the date of this
-------------------
Agreement and continuing until the Effective Time, Camden shall not, and shall
not permit any of its subsidiaries to, take any action that is intended or which
reasonably can be expected to result in any of its representations and
warranties set forth in this Agreement being untrue in any material respect, or
in any of the conditions to the Merger, the Bank Merger or other transactions
contemplated in this Agreement as set forth in Article IX not being satisfied in
any material respect, or in a material violation of any provision of this
Agreement, the Bank Merger Agreements or the KSB Option Agreement, except, in
every case, as may be required by applicable law.
7.7 Affiliate Agreements.
--------------------
(a) Not later than the 15th day prior to the mailing of the Joint
Proxy Statement, each party shall deliver to the other, a schedule of each
person that, to its knowledge, is or is reasonably likely to be, as of the date
of the relevant Meeting, deemed to be an "affiliate" of it (each, an
"Affiliate") as that term is used in SEC Accounting Series Releases 130 and 135
---------
and, in the case of KSB only, in Rule 145 under the Securities Act.
(b) Each party shall use its reasonable best efforts to cause each
person who may be deemed to be an Affiliate of it to execute and deliver to the
other party on or before the date of mailing of the Joint Proxy Statement an
agreement to comply with SEC Accounting Releases 130 and 135 and, in the case of
KSB only, with Rule 145 under the Securities Act, in
46
<PAGE>
the forms attached hereto as Exhibits A-1 ("Camden Affiliates Agreement") and A-
---------------------------
2 ("KSB Affiliates Agreement"), respectively.
------------------------
(c) Within thirty (30) days after the end of the first complete
calendar month ending at least thirty (30) days after the Closing Date, Camden
will publish results including at least thirty (30) days of combined operations
of Camden and KSB as referred to in the KSB Affiliates Agreement and as
contemplated by and in accordance with SEC Accounting Release No. 135.
7.8 Takeover Laws. No party shall take any action that would cause the
-------------
transactions contemplated by this Agreement and the KSB Option Agreement (in the
case of KSB) to be subject to requirements imposed by any Takeover Law and each
party shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement and the
KSB Option Agreement (in the case of KSB) from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect, that purports to apply to this Agreement, the KSB Option Agreement
(in the case of KSB) or the transactions contemplated hereby or thereby.
7.9 No Rights Triggered. Each of Camden, CASI and KSB shall take all
-------------------
steps necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (i) under its
charter or bylaws, or (ii) under any material agreement to which it or any of
its Subsidiaries is a party.
7.1 Shares Listed. In the case of Camden, Camden shall use its reasonable
-------------
best efforts to list, prior to the Effective Date, on the AMEX, upon official
notice of issuance, the shares of Camden Common Stock to be issued to the
holders of KSB Common Stock in the Merger.
ARTICLE VIII - ADDITIONAL AGREEMENTS
8.1 Stockholder Approvals. Each of Camden, CASI, KSB and the Bank shall
---------------------
take, in accordance with applicable law, applicable stock exchange or NASDAQ
Stock Market rules and its charter and bylaws, all action necessary to convene,
respectively: an appropriate meeting of the stockholders of Camden to consider
and vote upon any matters required to be approved by Camden stockholders for
consummation of the Mergers (including any adjournment or postponement, the
"Camden Meeting"); an appropriate meeting of the sole stockholder of CASI to
- ---------------
consider and vote upon the approval of this Agreement and any other matters
required to be approved by CASI's stockholder for consummation of the Mergers
(including any adjournment or postponement, the "CASI Meeting"); an appropriate
------------
meeting of the stockholders of KSB to consider and vote upon the approval of
this Agreement and any
47
<PAGE>
other matters required to be approved by KSB's stockholders for consummation of
the Mergers (including any adjournment or postponement, the "KSB Meeting;"); an
-----------
appropriate meeting of the sole stockholder of the Bank to consider and vote
upon the approval of this Agreement and any other matters required to be
approved by the Bank's stockholder for consummation of the Mergers (including
any adjournment or postponement, the "Bank Meeting;" and each of the Camden
------------
Meeting, the CASI Meeting, the KSB Meeting and the Bank Meeting, a "Meeting"),
-------
as promptly as practicable after the date hereof. The Board of Directors of each
of Camden, CASI, KSB and the Bank shall (subject to compliance with its
fiduciary duties as advised by its regular outside counsel, subsequently
confirmed in writing) recommend such approval by its respective stockholders,
and each of Camden, CASI, KSB and the Bank shall use its reasonable best efforts
to solicit such approval from its stockholders.
8.2 Registration Statement.
----------------------
(a) Camden and KSB agree to cooperate in the preparation of a
registration statement on Form S-4 (the "Registration Statement") to be filed by
----------------------
Camden with the SEC in connection with the issuance of Camden Common Stock in
the Merger (including the joint proxy statement and prospectus and other proxy
solicitation materials of Camden and KSB constituting a part thereof (the "Joint
-----
Proxy Statement") and all related documents). Camden and KSB agree to file a
- ---------------
draft of the Joint Proxy Statement with the SEC as promptly as practicable.
Each of Camden and KSB agrees to use all reasonable efforts to cause the
Registration Statement to be filed and declared effective under the Securities
Act as promptly as reasonably practicable after the SEC has cleared the Joint
Proxy Statement. Camden also agrees to use all reasonable efforts to obtain all
necessary state securities law or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement.
(b) Each of Camden and KSB agrees, upon request, to furnish promptly
the other party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Registration Statement, the Joint
Proxy Statement or any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any regulatory authority in
connection with the transactions contemplated hereby. Each of Camden and KSB
agrees, as to itself and its Subsidiaries, that none of the information supplied
or to be supplied by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and each
amendment or supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Joint Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the Camden Meeting and the KSB Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or any statement
which, in the light of the circumstances under which such statement is made,
will be
48
<PAGE>
false or misleading with respect to any material fact, or which will omit to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
statement in the Joint Proxy Statement or any amendment or supplement thereto.
Each of Camden and KSB further agrees that if it shall become aware prior to the
Effective Date of any information that would cause any of the statements in the
Joint Proxy Statement to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, it shall promptly inform the other party
thereof and shall take the necessary steps to correct the Joint Proxy Statement.
(c) In the case of Camden, Camden will advise KSB, promptly after
Camden receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of the Camden Common
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
8.3 Regulatory Matters.
------------------
(a) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement and the Bank Merger Agreements (including without limitation the
Merger and the Bank Merger). Camden, KSB and the Bank shall have the right to
review in advance, and to the extent practicable, each will consult the other
on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to either of them, as the case may be,
and any of their respective subsidiaries, which appear in any filing made with,
or written materials submitted to, any third party or any Governmental Entity in
connection with the Merger, the Bank Merger and the other transactions
contemplated by this Agreement and by the Bank Merger Agreements. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the Merger, the Bank Merger and other transactions
contemplated by this Agreement and the Bank Merger Agreements and each party
will keep the other apprised of the status of matters relating to the completion
of all of the transactions contemplated hereby.
(b) Camden, KSB, CASI and the Bank shall, upon request, furnish each
other with all information concerning themselves, their respective subsidiaries,
directors,
49
<PAGE>
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of Camden, KSB, CASI, the Bank or any of their respective
subsidiaries to any Governmental Entity in connection with the Merger, the Bank
Merger or the other transactions contemplated by this Agreement and the Bank
Merger Agreements.
(c) Camden, KSB, CASI and the Bank shall promptly furnish each other
with copies of written communications received by Camden or KSB, as the case may
be, or any of their respective subsidiaries, affiliates or associates (as such
terms are defined in Rule 12b-2 under the Exchange Act as in effect on the date
of this Agreement) from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the Merger, the Bank Merger and the other
transactions contemplated by this Agreement and the Bank Merger Agreement.
8.4 Access to Information.
---------------------
(a) Upon reasonable notice and subject to applicable laws relating to
the disclosure or exchange of information, KSB and the Bank shall afford to the
officers, employees, accountants, counsel and other representatives of Camden,
access, during normal business hours during the period prior to the Effective
Time, to all its officers, employees, agents, properties, books, loan
documentation and files, contracts, commitments and records and, during such
period, KSB and the Bank shall make available to Camden (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
or federal or state banking laws (other than reports or documents which KSB or
the Bank is not permitted to disclose under applicable law), (ii) copies of all
periodic reports to senior management, including, without limitation, reports on
non-performing loans and other asset quality matters and all materials furnished
to the KSB Board or the Bank Board relating to asset quality generally, and
(iii) all other information concerning the business, properties, assets and
personnel of KSB and the Bank as Camden may reasonably request. Neither KSB nor
the Bank shall be required to provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights of customers,
jeopardize the attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement or, in the event of any litigation or threatened
litigation between KSB, the Bank and Camden over the terms of this Agreement
where access to information will be adverse to the interests of KSB and the
Bank. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. Camden will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreements, dated _____,1999, among Camden, KSB and the Bank
(the "Confidentiality Agreement").
-------------------------
50
<PAGE>
(b) Upon reasonable notice and subject to applicable laws relating to
the disclosure or exchange of information, Camden shall afford to the officers,
employees, accountants, counsel and other representatives of KSB, reasonable
access, during normal business hours during the period prior to the Effective
Time, to the senior executive officers of Camden and all other available
documentation reasonably requested by KSB pertaining to the transactions
contemplated hereby. It is understood, however, that Camden shall not be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement or, in the event of any litigation or threatened litigation between
Camden, KSB and/or the Bank over the terms of this Agreement where access to
information will be adverse to the interests of Camden. The parties hereto will
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply. KSB will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) All information furnished by Camden to KSB, the Bank or its
representatives pursuant hereto shall be treated as the sole property of Camden
and, if the Merger shall not occur, KSB, the Bank and its representatives shall
return to Camden all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. KSB and the Bank shall, and shall use their reasonable
best efforts to cause their representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purpose. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to (i) any information which
(x) was already in KSB's or the Bank's possession prior to the disclosure
thereof by Camden; (y) was then generally known to the public; or (z) was
disclosed to KSB or the Bank by a third party not bound by an obligation of
confidentiality, or (ii) disclosures made as required by law.
(d) No investigation by any of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein or any condition to the obligations of the parties hereto.
8.5 No Solicitation. Neither KSB nor the Bank shall, directly or
---------------
indirectly, through any officer, director, agent or otherwise, solicit or
initiate the submission of any proposal or offer from any person relating to any
acquisition or purchase of all or (other than in the ordinary course of
business) any material portion of the assets of, or any equity interest in, KSB
or the Bank or any business combination with KSB or the Bank or, except to the
extent determined by the KSB Board, upon the written opinion of its regular
outside counsel, to be required by fiduciary obligations under applicable law,
participate in any negotiations
51
<PAGE>
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate,
any effort or attempt by any other person to do or seek any of the foregoing.
KSB and the Bank immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. KSB and the Bank shall notify Camden promptly if any
such proposal or offer, or any inquiry or contact with any person with respect
thereto, is made and shall, in any such notice to Camden, indicate in reasonable
detail the identity of the person making such proposal, offer, inquiry or
contact and the terms and conditions of such proposal, offer, inquiry or
contact. KSB and the Bank agree not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which KSB or
the Bank is a party.
8.6 Employee Benefits Matters.
-------------------------
(a) Provision of Benefits. At the Effective Time, until December 31,
2000, and subject to applicable law, Camden shall either (i) maintain the
existing KSB Compensation and Benefit Plans (other than long-term care benefits,
the ESOP and other stock-based benefits), or (ii) provide the employees of KSB
and the Bank ("KSB Employees") with substantially equivalent health, life
-------------
insurance, disability, retirement and other benefits (other than long-term care
benefits, the ESOP and other stock-based benefits), if any, as presently
provided by KSB to its own employees. After December 31, 2000, and subject to
applicable law, Camden shall provide the KSB Employees with the same health,
dental, pension, life insurance, disability, 401(k) plan and other benefits, if
any, as Camden then provides generally to its similarly situated employees.
With respect to the provision of such benefits to KSB Employees pursuant hereto,
to the extent KSB Employees participate after the Effective Time in employee
benefit plans other than KSB Compensation and Benefit Plans, all prior service
of such employees with KSB or the Bank shall be recognized under such plans for
all benefit plan for purposes of eligibility and vesting, but excluding benefit
accrual under any qualified defined benefit pension plan. Camden shall not
treat any KSB Employee as a "new" employee for purposes of any exclusion under
any health plan or dental plan of Camden or any of its affiliates for a
preexisting medical condition. Nothing herein is intended or should be construed
to provide a commitment for continued employment or to confer any rights on any
officer or employee of the Bank except as herein expressly provided.
(b) Parachute Payments. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall KSB or the Bank take any action
or make any payments that would result, either individually or in the aggregate,
in the payment of an "excess parachute payment" within the meaning of Section
280G of the Code or that would result, either individually or in the aggregate,
in payments that would be nondeductible pursuant to Section 162(m) of the Code.
52
<PAGE>
(c) Employment Agreement. The Chief Executive Officer of KSB shall
enter into an employment agreement with Camden or a Camden Affiliate on terms
mutually agreeable to both parties, with such employment agreement to take
effect at the Effective Time. The employment agreement to which the Chief
Executive Officer of KSB is a party as of the date hereof will terminate upon
the earlier of (i) execution of the employment agreement with Camden or a Camden
Affiliate, and (ii) the Effective Time.
8.7 Directors' and Officers' Insurance. Camden shall use its reasonable
----------------------------------
best efforts to maintain in effect for three years from the Effective Time, if
available, the current directors' and officers' liability insurance policy
maintained by KSB (provided that Camden may substitute therefor policies of at
--------
least the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall Camden be required to expend pursuant
- -------- -------
to this Section 8.7 more than the amount equal to 125% of the current annual
amount expended by KSB to maintain or procure insurance coverage pursuant
hereto. In connection with the foregoing, KSB and the Bank each agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
In addition, Camden acknowledges that the obligations of KSB to indemnify
its directors and officers (who are made a party or threatened to be made a
party or otherwise involved with respect to any action, suit, or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she was a director of KSB at or prior to the Effective Date) under
its Certificate of Incorporation and Bylaws, as they exist as of the date of
this Agreement, including the obligation to advance expenses, shall be assumed
by Camden by reason of the Merger.
8.8 Financial and Other Statements. Notwithstanding anything to the
------------------------------
contrary in Section 8.4, during the term of this Agreement, KSB, and when
required by subsection (f) hereof, Camden, shall provide to each other, in the
manner provided herein, the following documents and information:
(a) As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter ending after the date of this
Agreement, KSB will deliver to Camden its Quarterly Report on Form 10-QSB
as filed under the Exchange Act and the Bank's Quarterly Call Report as
filed with the FDIC. As soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year ending after the date of
this Agreement, KSB will deliver to Camden its Annual Report on Form 10-
KSB, as filed under the Exchange Act. KSB will also deliver to Camden,
contemporaneously with its being filed with the SEC, a copy of all Current
Reports on Form 8-KSB.
53
<PAGE>
(b) Promptly upon receipt thereof, KSB will furnish to Camden copies
of all internal control reports submitted to KSB or the Bank by independent
auditors in connection with each annual, interim or special audit of the
books of KSB or the Bank made by such auditors.
(c) As soon as practicable, KSB and the Bank will furnish to Camden
copies of all such financial statements and reports as they shall send to
its stockholders, the SEC or any other Governmental Entity, to the extent
any such reports furnished to any such Governmental Entity are not
confidential and except as legally prohibited thereby.
(d) Promptly upon receipt thereof KSB will notify Camden promptly
after its receipt of each examination report of any federal or state
regulatory or examination authority with respect to the condition or
activities of KSB or the Bank.
(e) With reasonable promptness, KSB and the Bank will furnish to
Camden such additional financial data as Camden may reasonably request.
(f) As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter ending after the date of this
Agreement, Camden will deliver to KSB its Quarterly Report on Form 10-Q as
filed under the Exchange Act and United Bank's Quarterly Call Report as
filed with the FDIC. As soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year ending after the date of
this Agreement, Camden will deliver to KSB its Annual Report on Form 10-K,
as filed under the Exchange Act. Camden will also deliver to KSB,
contemporaneously with its being filed with the SEC, a copy of all Current
Reports on Form 8-K.
8.9 Further Action. Camden, KSB, CASI and the Bank each shall, and shall
--------------
cause its subsidiaries to, use its reasonable best efforts (a) to take, or cause
to be taken, all actions necessary, proper or advisable to comply promptly with
all legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger or the Bank Merger and, subject to the conditions set
forth in Article IX hereof, to consummate the transactions contemplated by this
Agreement and the Bank Merger Agreements and (b) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party which
is required to be obtained by KSB, the Bank, Camden or CASI or any of their
respective subsidiaries in connection with the Merger or the Bank Merger and any
of the other transactions contemplated by this Agreement.
8.10 Public Announcements. Camden, KSB, CASI and the Bank shall consult
--------------------
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Bank Merger Agreements or any
transaction contemplated
54
<PAGE>
hereby or thereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national or regional securities exchange to which
Camden or KSB is a party or any requirement of agreement with any automated
interdealer quotation system.
8.11 Additional Agreements. In case at any time after the Effective Time
---------------------
any further action is necessary or desirable to carry out the purposes of this
Agreement or the Bank Merger Agreement, or to vest the Surviving Corporation or
the Bank, as applicable, with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger or the
Bank Merger, the proper officers and directors of each party to this Agreement
and their respective subsidiaries shall take all such necessary action as may be
reasonably requested by Camden.
8.12 Update of Disclosure Schedules. From time to time prior to the
------------------------------
Effective Time, KSB and Camden will promptly supplement or amend the Disclosure
Schedules to reflect any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedules or which is necessary to correct any information in the
Disclosure Schedules which has been rendered inaccurate thereby. No supplement
or amendment to the Disclosure Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Sections 9.1(a),
9.2(a) or 9.3(a) hereof, as the case may be, or the compliance by KSB or the
Bank with the covenants set forth in Article VII hereof, or Camden or CASI with
the covenants set forth in Section 7.6 and Section 8.8 hereof.
8.13 Current Information.
-------------------
(a) During the period from the date of this Agreement to the Effective
Time, KSB and the Bank will cause one or more of its designated representatives
(i) to confer on a regular and frequent basis (not less than monthly) with
representatives of Camden to report on (x) the general status of the ongoing
operations of KSB and the Bank, (y) the status of, and the action proposed to be
taken with respect to, those Loans held by KSB, the Bank or any of their
subsidiaries which, either individually or in combination with one or more other
Loans to the same borrower thereunder, have an aggregate original principal
amount of $75,000 or more and are classified or non-performing assets, and (z)
the status of, and the action proposed to be taken with respect to, foreclosed
property and other real estate owned, and (ii) to cooperate and communicate with
respect to the manner in which the business of KSB and the Bank are conducted
and the disposition of certain assets after the Effective Time, the type and mix
of products and services, personnel matters, branch alignment, the granting of
credit, and problem loan management, reserve adequacy and accounting. In
addition, KSB and the Bank will promptly make available to Camden the reports of
any independent or third-party loan review consultant received by either KSB or
the Bank. In order to facilitate the foregoing, KSB, the Bank and Camden shall
promptly establish a liaison committee (the "Liaison
-------
55
<PAGE>
Committee") which will be chaired by an officer designated by Camden and which
- ---------
will meet on a regular basis to discuss these matters and may establish sub-
committees from time-to-time to pursue various issues. During the period from
the date of this Agreement to the Effective Time, KSB and the Bank shall provide
Camden prior to such extensions with sufficient information to review new
extensions of credit and renewals having an original principal amount of more
than $400,000 and restructurings of loans having an original principal amount of
more than $75,000 and information detailing overall asset quality. The Bank
shall also allow Camden to designate one of its officers to attend the Bank's
credit committee meetings and be a non-voting attendee thereof.
(b) KSB and the Bank will promptly notify Camden of any material
change in the normal course of business or in the operation of the properties of
KSB or the Bank and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated), or the
institution or the threat of material litigation involving KSB or the Bank, and
will keep Camden reasonably informed of such events.
(c) To the extent not covered by paragraphs (a) and (b) above, KSB
and the Bank shall give prompt notice to Camden, and Camden shall give prompt
notice to KSB, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of KSB, the Bank, Camden
or CASI, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement or the
Bank Merger Agreements; provided, however, that the delivery of any notice
-------- -------
pursuant to this paragraph (c) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
8.14 Bank Merger.
-----------
(a) Camden and KSB shall take all actions necessary and appropriate,
including causing the entering into of appropriate merger agreements (the "Bank
----
Merger Agreements"), to cause United Bank to merge with and into the Bank
- -----------------
(individually, a "Bank Merger" and collectively, the "Bank Mergers"), as Camden
----------- ------------
deems advisable, in each case in accordance with applicable laws and regulations
and the terms of the applicable Bank Merger Agreement at the Effective Time or
as soon as practicable after consummation of the Mergers.
(b) Unless otherwise determined by Camden prior to the Closing, at
the effective time of the Bank Merger the Articles of Organization and By-laws
of the Bank, as amended prior to the consummation of the Bank Merger, shall be
the Articles of Organization and By-laws of the surviving corporation until
thereafter amended as provided by law and such Articles of Organization and By-
laws;
56
<PAGE>
(c) KSB shall be entitled to appoint the individuals listed on
Section 8.14 of the Disclosure Schedule as directors and officers of the Bank
after the effective time, each to hold office in accordance with the Articles of
Organization and By-Laws of the Bank and until their respective successors are
duly elected or appointed and qualified. The remainder of the directors and
officers of the Bank shall be appointed by Camden.
8.15 Post-Closing Governance. Camden shall take all necessary actions to
-----------------------
cause the size of its Board of Directors to be increased by two members,
effective as of the Subsequent Effective Time, and to cause the two members of
KSB's current Board of Directors listed on Section 8.15 of the Disclosure
Schedule to be elected to Camden's Board of Directors, such election to be
effective as of the Subsequent Effective Time.
ARTICLE IX - CONDITIONS TO THE MERGER
9.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative
vote of the stockholders of KSB, the Bank, Camden and CASI, as required;
(b) Regulatory Approvals. All necessary approvals, authorizations and
consents of all Governmental Entities required to consummate the Mergers
and the Bank Merger shall have been obtained and remain in full force and
effect, and all waiting periods relating to such approvals, authorizations
and consents shall have expired or been terminated (all such approvals and
the expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
------------------------------
(c) No Orders, Injunctions or Restraints; Illegality. No order,
injunction or decree (whether temporary, preliminary or permanent) issued
by federal or state governmental authority or other agency or commission or
federal or state court of competent jurisdiction or other legal restraint
or prohibition (an "Injunction") preventing the consummation of the Merger,
----------
the Bank Merger or any of the other transactions contemplated by this
Agreement or the Bank Merger Agreements shall be in effect and no
proceeding initiated by any governmental entity seeking an Injunction shall
be pending. No statute, rule, regulation, order, injunction or decree
(whether temporary, preliminary or permanent) shall have been enacted,
entered, promulgated or enforced by any Governmental Authority or other
agency or commission or federal or state court of competent jurisdiction,
which prohibits, restricts or makes illegal the
57
<PAGE>
consummation of the Merger, the Bank Merger or any of the other
transactions contemplated by this Agreement or the Bank Merger Agreements.
(d) Effective Registration Statement. The Registration Statement
shall have become effective and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC or any
other Governmental Entity.
(e) Tax Opinion Relating to the Merger. Camden shall have received
an opinion from Berry, Dunn, McNeil & Parker, and KSB shall have received
an opinion from Luse, Lehman, Gorman, Pomerenk & Schick, dated in each case
as of the Closing Date, substantially to the effect that, on the basis of
the facts, representations and assumptions set forth in such opinions which
are consistent with the state of facts existing at the Closing Date, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
In rendering such opinions, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Camden, KSB and others, reasonably satisfactory in form and
substance to such counsel.
(f) AMEX Listing. The shares of Camden Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the
AMEX, subject to official notice of issuance.
(g) Accounting Treatment. Camden shall have received from Berry,
Dunn, McNeil & Parker, independent public accountants for Camden, a letter,
dated as of or shortly before the Effective Date, stating its opinion that
the Merger shall qualify for "pooling of interests" accounting treatment.
KSB shall have received from Berry, Dunn, McNeil & Parker, independent
public accountants for KSB, a letter, dated as of or shortly before the
Effective Date, stating its opinion that KSB is a "poolable entity."
9.2 Conditions to Obligations of Camden and CASI. The obligations of
--------------------------------------------
Camden and CASI to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of KSB and the Bank in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, as applicable, and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time, and Camden shall have received a
certificate to such effect signed by the Chief Executive Officer and the
Chief Financial Officer of KSB and the Bank dated as of the Effective Date.
58
<PAGE>
(b) Agreements and Covenants. KSB and the Bank shall have performed
in all material respects all obligations and complied in all material
respects with all agreements or covenants of KSB and the Bank to be
performed or complied with by it at or prior to the Effective Date under
the this Agreement and the Bank Merger Agreements, and Camden shall have
received a certificate to such effect signed by the Chief Executive Officer
and Chief Financial Officer of KSB and the Bank dated as of the Effective
Date.
(c) Consents Under Agreements. The consent, approval or waiver of
each person (other than Requisite Regulatory Approvals contemplated in
Section 9.1(b)) whose consent or approval shall be required in order to
permit the lawful succession by the Surviving Corporation pursuant to the
Merger or the Bank as survivor to the Bank Merger, as the case may be, to
any material obligation, right or interest of KSB or the Bank under
agreement or instrument shall have been obtained, and none of such permits,
consents, waivers, clearances, approvals and authorizations shall contain
any term or condition which would materially impair the value of KSB and
the Bank to Camden.
(d) No Burdensome Condition. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon Camden, KSB,
the Surviving Corporation or the Bank or any of their respective
subsidiaries that Camden reasonably determines would materially and
adversely affect the business, operations, financial condition, property or
assets of the Surviving Corporation or the Bank as survivor to the Bank
Merger or otherwise materially impair the value of KSB or the Bank to
Camden (a "Burdensome Condition").
--------------------
(e) Agreements with Officers. Agreements, substantially in the form
attached as Exhibit D hereto, shall have been executed and delivered by all
---------
directors and officers of KSB or the Bank who own, or for purposes of Rule
13d-3 under the Exchange Act would be deemed to beneficially own, as of the
date of this Agreement, shares of KSB Common Stock.
(f) Legal Opinion. Camden shall have received the opinion of counsel
to KSB and the Bank, dated the Closing Date, in customary form and mutually
agreeable to the parties.
9.3 Conditions to Obligations of KSB and the Bank. The obligations of KSB
---------------------------------------------
and the Bank to effect the Merger are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Camden and CASI in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so
59
<PAGE>
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Effective Date and KSB shall have received a certificate signed by the
Chief Executive or Chief Financial Officer of Camden to such effect dated
as of the Effective Date.
(b) Agreements and Covenants. Camden and CASI shall have performed in
all material respects all obligations and complied in all material respects
with all of the respective agreements or covenants to be performed or
complied by such party under this Agreement and KSB shall have received a
certificate signed by the Chief Executive or Chief Financial Officer of
Camden to such effect dated as of the Effective Date.
(c) Legal Opinion. KSB shall have received the opinion of counsel to
Camden and CASI, dated the Closing Date, in customary form and mutually
agreeable to the parties.
ARTICLE X - TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated and the Merger, the
-----------
Bank Merger and the other transactions contemplated by this Agreement or the
Bank Merger Agreements may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated in this Agreement by the stockholders of KSB:
(a) by mutual written consent duly authorized by the Boards of
Directors of Camden, CASI, KSB and the Bank;
(b) by either Camden and CASI or KSB and the Bank if (i) the
Effective Time shall not have occurred on or before July 1, 2000; provided,
--------
however, that the right to terminate this Agreement under this Section
-------
10.1(b) shall not be available to any party whose failure to fulfill any
material obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date;
(c) by either Camden and CASI or KSB and the Bank (i) forty-five days
after the date on which any request or application for a regulatory
approval required to consummate the Merger or the Bank Merger shall have
been denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such requisite regulatory approval,
unless within the forty-five day period following such denial or withdrawal
a petition for rehearing or an amended application has been filed with such
Governmental Entity; provided, however, that no party shall have the right
-------- -------
to terminate
60
<PAGE>
this Agreement pursuant to this Section 10.1(c) (i) if suc denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein or (ii) if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree, ruling or taken
any other action restraining, enjoining or otherwise prohibiting the Merger or
the Bank Merger and such order, decree, ruling or other action shall have become
final and nonappealable;
(d) by either Camden and CASI or KSB and the Bank (provided that the
--------
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature cannot be
cured prior to the Effective Time or within thirty business days following
receipt by the breaching party of written notice of such breach from the other
party hereto;
(e) by either Camden and CASI or KSB and the Bank (provided that the
--------
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty business days following receipt by the breaching party of written
notice of such breach from the other party hereto;
(f) by Camden and CASI or KSB and the Bank (provided, that if the
--------
terminating party is KSB or the Bank, KSB and the Bank shall not be in material
breach of any of their obligations under Section 8.1) if any approval of the
stockholders of KSB required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or at any adjournment or postponement thereof;
(g) by Camden, if KSB Board shall not have publicly recommended to the
stockholders of KSB that such stockholders vote in favor of the approval of this
Agreement, the Merger and the other transactions contemplated hereby or shall
have withdrawn, modified or amended such recommendation in a manner adverse to
Camden;
(h) by KSB, if the Board of Directors of Camden shall not have publicly
recommended to the stockholders of Camden that such stockholders vote in favor
of the approval of this Agreement, the Merger and the other transactions
contemplated hereby
61
<PAGE>
or shall have withdrawn, modified or amended such recommendation in a manner
adverse to KSB;
(i) by the Board of Directors of KSB, upon written notice to Camden, any
time during the five day period commencing two days after the Determination Date
(as defined below), if both the following conditions are satisfied:
(i) the Average Closing Price of Camden Common Stock on the
Determination Date is less than $15.75 (such amount is referred to herein,
as the "Camden Floor Price"); and
------------------
(ii) (A) the quotient obtained by dividing the Average Closing
Price of Camden Common Stock on the Determination Date by Camden's Starting
Date Closing Price (the "Camden Ratio") is less than (B) the quotient
------------
obtained by dividing the Index Price as of the Determination Date by the
Index Price as of the Starting Date and subtracting 0.15 from the quotient
in this clause (ii)(B) (such number being referred to herein as the "Camden
------
Index Ratio").
-----------
Notwithstanding the foregoing provisions of this Section 10.1(i), if KSB
elects to exercise its termination right pursuant to this Section 10.1(i) it
shall give prompt written notice to Camden; provided, however, that such notice
of election to terminate may be withdrawn by KSB at any time within the above-
referenced five-day period. In the event that KSB gives notice of its intention
to exercise the termination provisions of this Section 10.1(i), Camden shall
have the option, exercisable within five (5) business days receipt thereof, to
increase the Exchange Ratio to equal the lesser of (i) a number (rounded to four
decimals) equal to a quotient, the numerator of which the Camden Floor Price
multiplied by the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price of Camden Common Stock, and (ii) a number
(rounded to four decimals) equal to a quotient, the numerator of which is the
Camden Index Ratio multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the Camden Ratio. If Camden elects to exercise its
option to increase the consideration in accordance with the terms of the
previous sentence within the aforementioned five business day period, it shall
give prompt written notice to KSB of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this Section
10.1(i), and this Agreement shall remain in effect in accordance with its terms
(except the Exchange Ratio shall have been modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as so adjusted.
For purposes of this Section 10.1, the following terms shall have the
meanings indicated:
62
<PAGE>
"Average Closing Price" means the average of the daily last sale prices of
---------------------
Camden Common Stock as reported on the AMEX (as reported in The Wall Street
Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the fifteen consecutive full trading days in which
such shares are traded on the AMEX ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the last Requisite Regulatory
------------------
Approval required for consummation of the Merger shall be received.
"Index Group" means the bank holding companies listed below, the common
-----------
stock of all of which shall be publicly traded as to which there shall not have
been, since the Starting Date and before the Determination Date, an announcement
of a proposal for such company to be merged with another unaffiliated company,
acquired by an unaffiliated company or for such company to acquire another
unaffiliated company or companies in transactions with an aggregate value
exceeding 10% of the acquiror's market capitalization as of the Starting Date.
In the event that the common stock of any such company ceases to be publicly
traded or any such announcement is made with respect to any such company, such
company will be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price. The
bank holding companies and the weights attributed to them are set forth on
Exhibit B hereto.
- ---------
"Index Price" on a given date means the weighted average (weighted in
-----------
accordance with the factors listed above) of the closing prices on such date of
the companies comprising the Index Group.
"Starting Date" means the last full day on which the AMEX was open for
-------------
trading prior to the execution of this Agreement.
If Camden or any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 10.1(i).
10.2 Effect of Termination; Expenses.
-------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 10.1, this Agreement shall forthwith become void, and there shall be no
liability on the part of any party hereto, except (i) as set forth in Section
7.3, this Section 10.2 or Section 11.2 and (ii) nothing herein shall relieve any
party from any liabilities or damages arising out of its gross negligence or
willful breach of any provision of this Agreement.
63
<PAGE>
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by the
gross negligence or willful breach of a party hereto, such party shall be liable
to the other party for all out-of-pocket costs and expenses, including, without
limitation, the reasonable fees and expenses of lawyers, accountants and
investment bankers, incurred by such other party in connection with the entering
into of this Agreement and the carrying out of any and all acts contemplated
hereunder ("Expenses"). The payment of Expenses is not an exclusive remedy, but
--------
is in addition to any other rights or remedies available to the parties hereto
at law or in equity.
(c) As a condition of Camden's willingness, and in order to induce
Camden, to enter into this Agreement and to reimburse Camden for incurring the
costs and expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, the Bank will make a cash payment
to Camden of $1,000,000 (the "Expense Fee"), which shall be subject to reduction
-----------
at the election of Camden (as described below), if (i) Camden has terminated
this Agreement pursuant to Section 10.1(g), (ii) Camden has terminated this
Agreement pursuant to Section 10.1(d) or Section 10.1(e), and the breach of the
representation, warranty, covenant or other agreement was caused by the gross
negligence or willful misconduct of KSB or the Bank, or (iii) KSB or the Bank
has breached any of the provisions of Section 8.5; provided, however, that
-------- -------
Camden shall not be entitled to receive the Expense Fee if either Camden or CASI
has failed to fulfill any material obligation under this Agreement and such
failure has been the cause of, or resulted in, the termination of this Agreement
pursuant to Section 10.1. Notwithstanding anything herein or in the KSB Option
Agreement to the contrary, in no event shall the aggregate amount of the Expense
Fee actually paid to Camden and the Total Profit (as defined in the KSB Option
Agreement) actually received by Camden upon exercise or waiver of any of its
rights under the KSB Option Agreement exceed $1,400,000 (the "Maximum Fee"). In
-----------
the event that Camden would be entitled to receive, pursuant to the terms of the
preceding sentence and/or the KSB Option Agreement, an aggregate amount that
exceeds the Maximum Fee, Camden may elect, in its sole discretion, to (y) reduce
the Expense Fee payable by KSB to Camden, or (z) relinquish a portion of the
Option or Option Shares (as such terms are defined in the KSB Option Agreement),
or elect to effect any combination of clause y or clause z above, such that the
-------- --------
aggregate of the Expense Fee payable to Camden and the Total Profit receivable
by Camden would not exceed the Maximum Fee.
Any payment required under this Section 10.2(c) will be (i) payable by KSB
and the Bank to Camden (by wire transfer of immediately available funds to an
account designated by Camden) within five business days after demand by Camden
and (ii) net of any other payments made by KSB and the Bank to Camden pursuant
to the provisions of Section 10.2(b).
(d) Except as otherwise provided in this Section 10.2, all costs
and expenses incurred in connection with this Agreement, the Bank Merger
Agreements and the transactions
64
<PAGE>
contemplated hereby and thereby shall be paid by the party incurring such
expenses, whether or not any of the transactions contemplated by this Agreement
is consummated.
10.3 Amendment. This Agreement may be amended by the parties hereto by
---------
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after the approval and
-------- -------
adoption of this Agreement and the transactions contemplated hereby, no
amendment may be made which would reduce the amount or change the type of
consideration into which each share of KSB Common Stock shall be converted upon
consummation of the Merger. This Agreement, including the provisions of this
Section 10.3, may not be amended except by an instrument in writing signed by
the parties hereto.
10.4 Waiver. At any time prior to the Effective Time, any party hereto
------
may (i) extend the time for the performance of any obligation or other act of
any other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided, however, that after the approval and adoption of this
-------- -------
Agreement and the approval of the transactions contemplated hereby by the
stockholders of KSB there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which would reduce the amount or change the form of the consideration into
which each share of KSB Common Stock shall be converted upon consummation of the
Merger delivered to KSB's stockholders hereunder other than as contemplated by
this Agreement. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE XI GENERAL PROVISIONS
11.1 Alternative Structure. Notwithstanding anything to the contrary
---------------------
contained in this Agreement, prior to the Effective Time, Camden shall be
entitled to revise the structure of the Merger, the Bank Merger and the other
transactions contemplated hereby and thereby, provided, that (i) there are no
--------
material adverse federal or state income tax consequences to KSB, the Bank and
its stockholders as a result of the modification; (ii) the consideration to be
paid to the holders of the shares of KSB Common Stock under this Agreement is
not thereby changed in kind or reduced in amount; (iii) there are no material
adverse changes to the benefits and other arrangements provided to or on behalf
of KSB's and the Bank's directors, officers and other employees; and (iv) such
modification will not be likely to delay materially or jeopardize receipt of any
required regulatory approvals or other consents and approvals relating to the
consummation of the Merger and the Bank Merger. This Agreement and any
65
<PAGE>
related documents shall be appropriately amended in order to reflect any such
revised structure.
11.2 Non-Survival of Representations, Warranties and Agreements. The
----------------------------------------------------------
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
10.1, as the case may be, except that the agreements set forth in Articles II
and III and Sections 8.6, 8.7, 8.14(c) and 8.15 shall survive the Effective Time
indefinitely and those set forth in the last sentence of Section 8.4(a) and in
Sections 8.4(b), Article X and Article XI hereof shall survive termination
indefinitely.
11.3 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 11.3):
if to Camden or CASI:
Camden National Corporation
2 Elm Street
Camden, ME 04843
Facsimile:
Attention: Robert W. Daigle
66
<PAGE>
with a copy to:
Goodwin, Procter & Hoar LLP
One Exchange Place
Boston, MA 02109
Facsimile: (617) 523-1231
Attention: William P. Mayer, Esq.
Stephen A. Boyko, Esq.
if to KSB or the Bank:
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Facsimile:
Attention: John C. Witherspoon
with a copy to:
John J. Gorman, Esq.
Luse, Lehman, Gorman, Pomerenk & Schick
5335 Wisconsin Avenue, N.W.
Washington, D.C. 20015
Facsimile: (202) 362-2902
11.4 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
11.5 Entire Agreement. This Agreement (including the Disclosure
----------------
Schedule and the Exhibits) and the KSB Option Agreement constitute, and the Bank
Merger Agreements when the same are executed by Camden and the Bank will
constitute, the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements
67
<PAGE>
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof except for the Confidentiality Agreement.
11.6 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
11.7 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person (other
than the directors and director nominees referenced in Sections 8.7, 8.14(c) and
8.15) any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
11.8 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
11.9 Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Maine applicable to contracts
executed in and to be performed in that State. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any state or federal court sitting in Augusta, Maine.
11.10 Headings. The table of contents and descriptive headings contained
--------
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
11.11 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits, Annexes or Schedules, such reference shall be to a Section
of or Exhibit, Annex or Schedule to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be July 27, 1999.
68
<PAGE>
11.12 Counterparts. This Agreement may be executed (including by
------------
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, Camden, CASI, KSB and the Bank have caused this
Agreement to be executed as a sealed instrument as of the date first written
above by their respective officers thereunto duly authorized.
Attest: CAMDEN NATIONAL CORPORATION
/s/ Susan M. Westfall By: /s/ Robert W. Daigle
- ---------------------- ---------------------------
Secretary Title: President
Attest: CAMDEN ACQUISITION SUBSIDIARY, INC.
/s/ Susan M. Westfall By: /s/ Robert W. Daigle
- ---------------------- ---------------------------
Secretary Title: President
Attest: KSB BANCORP, INC.
/s/ John C.Thien By: /s/ John C. Witherspoon
- ---------------------- ---------------------------
Secretary Title: President
Attest: KINGFIELD SAVINGS BANK
/s/ John C. Thien By: /s/ John C. Witherspoon
- ------------------------ --------------------------
<PAGE>
Exhibit A-1
-----------
Form of Affiliate Letter to Camden
----------------------------------
Camden National Corporation
2 Elm Street
Camden, Maine 04843
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of KSB Bancorp, Inc., a Delaware corporation ("KSB"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 of
the Rules and Regulations (the "Rules and Regulations") promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission. I have
been further advised that pursuant to the terms of the Agreement and Plan of
Merger dated as of July 27, 1999 (the "Merger Agreement"), between Camden
National Corporation, ("Camden"), Camden Acquisition Subsidiary, Inc. ("CASI"),
KSB and Kingfield Savings Bank (the "Bank"), KSB will be merged with and into
Camden (the "Merger") and, that as a result of the Merger, I may receive shares
of Camden Common Stock (as defined in the Merger Agreement) in exchange for
shares of KSB Common Stock (as defined in the Merger Agreement) owned by me.
Accordingly, I hereby represent, warrant and covenant to Camden that in the
event I receive any Camden Common Stock as a result of the Merger:
a. I shall not make any sale, transfer or other disposition of the Camden
Common Stock in violation of the Act or the Rules and Regulations.
b. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Camden Common Stock
to the extent I believe necessary with my counsel or counsel for KSB.
c. I have been advised that the issuance of Camden Common Stock to me
pursuant to the Merger will be registered with the Commission under
the Act pursuant to a Registration Statement on Form S-4. However, I
have also been advised that, since at the time the Merger will be
submitted for a vote of the stockholders of KSB, I may be deemed to
have been an affiliate of KSB and the distribution by me of the Camden
Common Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of Camden Common Stock issued to me in
the Merger unless (i) such sale, transfer or other disposition has
been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act,
or (iii) in the opinion of counsel reasonably acceptable to Camden and
its counsel, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
<PAGE>
d. I understand that Camden is under no obligation to register the sale,
transfer or other disposition of the Camden Common Stock by me or on
my behalf under the Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
e. I also understand that stop transfer instructions will be given to
Camden's transfer agent(s) with respect to the Camden Common Stock and
that there will be placed on the certificates for the Camden Common
Stock issued to me, or any substitutions therefor, a legend in
substantially the following form:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies
and may only be sold or otherwise transferred in
compliance with the requirements of Rule 145 or
pursuant to a registration statement under said act or
an exemption from such registration."
f. I also understand that unless the transfer by me of my Camden Common
Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Camden reserves the right
to place a legend on the certificates issued to my transferee in
substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof
within the meaning of Securities Act of 1933 and may
not be sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that this letter agreement shall terminate and
be of no further force or effect and the legends set forth in paragraphs (e) and
(f) above shall be removed by delivery of substitute certificates without such
legend and the related stop transfer restrictions shall be lifted forthwith, if
(i) any such shares of Camden Common Stock shall have been registered under the
Act for sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Camden Common
Stock are sold in accordance with the provisions of paragraphs (c), (e), (f) and
(g) of Rule 144 promulgated under the Act, or (iii) I am not at the time an
affiliate of Camden and have been the beneficial owner of the Camden Common
Stock for at least one year (or such other period as may be prescribed by the
Act and the rules and regulations promulgated thereunder) and Camden has filed
with the Commission all of the reports it is required to file under the
Securities Exchange Act of 1934, as amended, during the preceding twelve months,
or (iv) I am not and have not been for at least three months an affiliate of
Camden and have been the beneficial owner of Camden Common Stock for at least
two years (or such period as may be prescribed by the Act and the rules and
regulations promulgated thereunder), or (v) Camden shall have received a letter
from
2
<PAGE>
the staff of the Commission, or an opinion of counsel reasonably acceptable to
Camden, to the effect that the stock transfer restrictions and the legend are
not required.
I further represent to and covenant with Camden that from the date that is
thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of, or reduce the risk
of ownership with respect to, shares of KSB Common Stock or Camden Common Stock
held by me and that I will not sell, transfer or otherwise dispose of, or reduce
the risk of ownership with respect to, any shares of Camden Common Stock
received by me in the Merger or other shares of Camden Common Stock until after
such time as financial results covering at least thirty (30) days of combined
operations of Camden and KSB have been published by Camden, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other
public filing or announcement which includes the financial results of at least
thirty (30) days of combined operations; provided, however, that excluded from
-------- -------
the foregoing undertaking shall be such sales, pledges, transfers or other
dispositions of shares of KSB Common Stock or shares of Camden Common Stock
which are individually and in the aggregate de minimis within the meaning of
-- -------
Topic 2-E of the Commission's Staff Accounting Bulletin Series.
In addition, I represent to and covenant with Camden that from and after
the date hereof until such time as financial results covering at least thirty
(30) days of combined operations of Camden and KSB have been published by Camden
as provided above, I shall not purchase or otherwise acquire, nor sell, transfer
or otherwise dispose of, any shares of Camden Common Stock or KSB Common Stock
without the prior written consent of Robert W. Daigle, of Camden, which consent
shall only be withheld to preserve "pooling of interests" accounting treatment
of the Merger or in accordance with applicable laws.
Very truly yours,
_______________________________
Name:
Accepted this ___ day of
_______________, 199_ by
CAMDEN NATIONAL CORPORATION
By:________________________
Name:
Title:
3
<PAGE>
Exhibit A-2
-----------
Form of Affiliate Letter to KSB
-------------------------------
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Camden National Corporation, a Maine corporation ("Camden"), as
the term "affiliate" is used in and for purposes of Accounting Series Releases
130 and 135, as amended, of the Securities and Exchange Commission (the
"Commission"). I have been further advised that pursuant to the terms of the
Agreement and Plan of Merger dated as of July 27, 1999 (the "Merger Agreement"),
by and among Camden, Camden Acquisition Subsidiary, Inc., a Delaware corporation
and wholly owned subsidiary of Camden ("CASI"), KSB Bancorp., a Delaware
corporation ("KSB") and Kingfield Savings Bank (the "Bank"). KSB will be,
through a series of transactions, merged with and into Camden (the "Merger").
I represent to and covenant with KSB that from the date that is thirty (30)
days prior to the Effective Time (as defined in the Merger Agreement) until such
time as financial results covering at least thirty (30) days of combined
operations of Camden and KSB have been published by Camden, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other
public filing or announcement which includes the financial results of at least
thirty (30) days of combined operations, I will not sell, transfer or otherwise
dispose of, or reduce the risk of ownership with respect to, shares of Camden
Common Stock (as defined in the Merger Agreement) or KSB Common Stock (as
defined in the Merger Agreement) held by me; provided, however, that excluded
-------- -------
from the foregoing undertaking shall be such sales, pledges, transfer or other
dispositions of shares of Camden Common Stock or shares of KSB Common Stock
which are individually and in the aggregate de minimis within the meaning of
-- -------
Topic 2-E of the Commission's Staff Accounting Bulletin Series.
In addition, I represent to and covenant with KSB that from and after the
date hereof until such time as financial results covering at least thirty (30)
days of combined operations of Camden and KSB have been published by Camden as
provided above, I shall not purchase or otherwise acquire, nor sell, transfer or
otherwise dispose of, any shares of Camden Common Stock or KSB Common Stock
without the prior written consent of Robert W. Daigle, of Camden, which consent
shall only be withheld to preserve "pooling of interests" accounting treatment
of the Merger or in accordance with applicable laws.
Very truly yours,
_______________________________
Name:
Accepted this __ day of
_______________, 199_, by
KSB BANCORP, INC.
By:________________________
Name:
Title:
<PAGE>
EXHIBIT B
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Camden National Corp
- ----------------------------------------------------------------------------------------------------
Comparable Institutions
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Market Value
as of 7/21 Shares
Holding Company Ticker or most recent Outstanding
prior close (#mil)
- ----------------------------------------------------------------------------------------------------
1 ACNB Corporation ACNB $18,500 5,783
2 Arrow Financial Corporation AROW $25,875 6,149
3 Atlantic Bank & Trust Company ATLB $16,500 4,139
4 Bay Harbor Bankshares BHB $20,375 3,444
5 Boston Private Financial Holdings, Inc. BPFH $ 8,000 10,813
6 CCBT Bancorp, Inc. CCBT $18,250 8,971
7 Century Bancorp, Inc. CNBKA $18,750 5,822
8 Citizens & Northern Corporation CZNC $30,875 5,272
9 Community Banks, Inc. CTY $21,250 6,846
10 Drovers Bancshares Corporation DROV $22,875 4,696
11 First National Lincoln Corp FNLC $20,500 2,470
12 First of Long Island Corporation (*) FLIC $36,875 3,093
13 Granite State Bankshares, Inc. BSBI $24,000 5,870
14 Interchange Financial Services Corporation ISB $19,375 7,214
15 Merchants Bancshares, Inc. MBVT $23,500 4,239
16 PennRock Financial Services Corp. PRSS $22,250 5,998
17 Washington Trust Bancorp, Inc. WA* $17,375 10,119
- ----------------------------------------------------------------------------------------------------
INDEX Weighted Average $20,149
Camden National Corporation CAC $20,000
Information obtained from Bloomberg 7/22/99
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
BANK MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER, dated as of February ____, 2000 (the
"Agreement"), pursuant to Section 352 of Title 9-B of the Maine Revised Statutes
---------
by and between UNITED BANK, a banking corporation duly organized under the laws
of the State of Maine ("United Bank"), and KINGFIELD SAVINGS BANK, A Maine-
-----------
chartered stock savings bank (the "Bank").
----
WHEREAS, Camden National Corporation ("Camden"), Camden Acquisition
------
Subsidiary, Inc., KSB Bancorp, Inc. ("KSB") and the Bank are parties to an
---
Agreement and Plan of Merger, dated as of July ____, 1999, as such agreement may
be subsequently amended or modified (the "Acquisition Agreement"), providing
---------------------
for, among other things, the merger of KSB with and into Camden (the "Merger")
------
and the subsequent merger to United Bank with and into the Bank (the "Bank
----
Merger");
- ------
WHEREAS, United Bank and the Bank desire that as promptly as practicable
following the consummation of the Merger, United Bank be merged with and into
the Bank upon the terms and conditions contained in this Agreement so that, upon
consummation of the Bank Merger, the separate corporate existence of United Bank
shall cease and the Bank shall continue as the surviving bank of the Bank
Merger;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, United Bank and the Bank hereby
agree as follows:
ARTICLE I
The Bank Merger
1.01 The Bank Merger. The constituent corporations to the Bank Merger shall
be United Bank and the Bank. As promptly as practicable following consummation
of the Merger, receipt of the required approval of the Superintendent of the
Maine Bureau of Banking (the "Maine Superintendent"), approval of the
--------------------
stockholder's of each of United Bank and the Bank, receipt of all of the
required regulatory approvals and the expiration of all waiting periods related
to such approvals, the Bank Merger shall be effected pursuant to which United
Bank shall merge with and into the Bank. As a result of the Bank Merger, the
separate corporate existence of United Bank shall cease and the Bank shall
continue as the surviving bank of the Bank Merger (the "Surviving Bank"). At
--------------
the Effective Time (as defined in Section 1.04), all of the rights, privileges,
powers, franchises, properties and assets of United Bank and the Bank shall be
vested in the Surviving Bank, and all debts, liabilities, obligations,
<PAGE>
restrictions, disabilities and duties of United Bank and the Bank shall become
the debts, liabilities, obligations, restrictions and duties of the Surviving
Bank.
1.02 Name of Surviving Bank. The name of the Surviving Bank shall be
"[______________]."
1.03 Capital Stock. Unless otherwise determined by Camden prior to the
Effective Time by delivery to the Bank of an addendum to this Agreement, from
and after the Effective Time, the total number of shares of all classes of
capital stock that the Surviving Bank is authorized to issue is [____________]
million shares of common stock, par value $0.01 per share (the "Common Stock").
------------
The outstanding capital stock of the Surviving Bank shall be $[________]
represented by [__________] shares of Common Stock.
1.04 Effective Time. The Bank Merger shall be effected by (i) the filing
of this executed Agreement, together with the certified resolutions of the
constituent stockholders approving it, with the Maine Superintendent, and (ii)
the granting of approval of the Agreement and Bank Merger by the Maine
Superintendent. The term "Effective Time" shall mean 11:59 p.m. on February
--------------
______, 2000, and shall be evidenced by the Maine Superintendent's issuance of a
certificate to the Surviving Bank reflecting the Bank Merger.
1.05 Articles. The articles of incorporation of the Bank, as amended in
the manner set forth in Section 1.05 of Annex A hereto, shall be the articles of
-------
incorporation of the Surviving Bank (the "Articles") until further amended as
--------
provided therein and by applicable law.
1.06 By-laws. The by-laws of the Bank, as amended in the manner set
forth in Section 1.06 of Annex A hereto, shall be the by-laws of the Surviving
-------
Bank until thereafter amended as provided therein or in the Articles of the
Surviving Bank, as amended from time to time, or by applicable law.
1.07 Locations. The main office and established and authorized branches
of United Bank shall become the established and authorized branches of the
Surviving Bank and the main office and established and authorized branches of
the Bank shall become the main office and established and authorized branches of
the Surviving Bank, all as set forth in Section 1.07 of Annex A hereto.
-------
1.08 Directors and Officers.
(a) At the Effective Time, the initial directors of the Surviving
Bank shall be those persons whose respective names, addresses and occupations
are set forth in Section 1.08(a) of Annex A hereto, each to hold office in
-------
accordance with, and the service of such director shall be subject to the
provisions of, the Articles and by-laws of the Surviving Bank, as amended from
time to time.
2
<PAGE>
(b) At the Effective Time, the initial officers of the Surviving
Bank shall be those persons whose respective names and addresses are set forth
in Section 1.08(b) of Annex A hereto, each to hold office in accordance with,
-------
and the service of such officer shall be subject to the provisions of, the
Articles and by-laws of the Surviving Bank, as amended from time to time.
1.09 Committees of Board of Directors of Surviving Bank. The Committees
of the Board of Directors of the Surviving Bank and the persons who shall serve
on such committees shall be determined by the Board of Directors of the
Surviving Bank in accordance with its by-laws.
1.10 Additional Actions. If, at any time after the Effective Time, the
Surviving Bank shall consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Bank, title to and
possession of any property or right of United Bank acquired or to be acquired by
reason of, or as a result of, the Bank Merger, or (b) otherwise to carry out the
purposes of this Agreement, United Bank and its proper officers and directors
shall be deemed to have granted to the Surviving Bank an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving Bank
and otherwise to carry out the purposes of this Agreement; and the proper
officers and directors of the Surviving Bank are fully authorized in the name of
United Bank or otherwise to take any and all such action.
ARTICLE II
Cancellation of Shares
Each share of common stock, par value $0.01 per share, of United Bank
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Bank Merger and without any action on the part of the holder thereof be
canceled without receipt of any consideration thereof by United Bank.
ARTICLE III
Representations
Each of United Bank an the Bank represents that this Agreement has been
duly authorized, executed and delivered by such party and constitutes a legal,
valid and binding obligation of such party, enforceable against it in accordance
with the terms hereof.
3
<PAGE>
ARTICLE IV
Termination
Consummation of the Bank Merger contemplated hereunder is conditioned upon
the consummation of the Merger as provided in the Merger Agreement. This
Agreement shall terminate and forthwith become void automatically and without
any action on the part of United Bank or the Bank immediately upon the
termination of the Merger Agreement in accordance with Article X thereof, and
there shall be no futher liability on the part of United Bank or the Bank upon
such termination.
IN WITNESS WHEREOF, United Bank and the Bank have each caused this
Agreement to be executed by their duly authorized officers, as under seal, as of
the day and year first above written.
Attest: UNITED BANK
____________________________ By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
Attest: KINGFIELD SAVINGS BANK
____________________________ By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
4
<PAGE>
EXHIBIT D
VOTING AGREEMENT
Date: July 27, 1999
Camden National Corporation
Camden Acquisition Subsidiary, Inc.
2 Elm Street
Camden, Main 04843
Ladies and Gentlemen:
The undersigned (the "Stockholder") beneficially owns and has sole or
shared voting power with respect to the number of shares of the common stock,
par value $.01 per share (the "Shares"), of KSB Bancorp, Inc., a Delaware
corporation (the "Company"), indicated opposite the Stockholder's name on
Schedule 1 attached hereto.
- ----------
Simultaneously with the execution of this letter agreement, Camden
Acquisition Subsidiary, Inc. ("Purchaser"), Camden National Corporation, a Maine
corporation ("Parent"), the Company and Kingfield Savings Bank, a Maine
chartered savings bank and a wholly-owned subsidiary of the Company (the
"Bank"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger (the "Merger") of the
Company with and into Parent, which, as of a date immediately preceding the
Merger, will own all of the issued and outstanding stock of Purchaser. The
undersigned understands that Purchaser and Parent have undertaken and will
continue to undertake substantial expenses in connection with the negotiation
and execution of the Merger Agreement and the subsequent actions necessary to
consummate the Merger and the other transactions contemplated by the Merger
Agreement.
In consideration of, and as a condition to, Purchaser's and Parent's
entering into the Merger Agreement, and in consideration of the expenses
incurred and to be incurred by Purchaser and Parent in connection therewith, the
Stockholder, Purchaser and Parent agree as follows:
1. Agreement to Vote in Favor of Merger. The Stockholder (a) shall vote
or cause to be voted all of the Shares that such Stockholder shall be entitled
to so vote, whether such Shares are beneficially owned by such Stockholder on
the date of this letter agreement or are subsequently acquired at the special or
any other meeting of the Company's stockholders to be called and held following
the date hereof, in favor of the approval of the Merger Agreement and the Merger
and (b) shall vote or cause to be voted all such Shares, at such special meeting
or any other meeting of the Company's stockholders following the date hereof,
<PAGE>
against the approval of any other agreement providing for a merger, acquisition,
consolidation, sale of a material amount of assets or other business
combination of the Company or the Bank with any person or entity other than
Purchaser, Parent or their respective affiliates; except, in the case of either
(a) or (b), to the extent required by applicable law relating to fiduciary
obligations of directors upon the advice of its regular outside counsel,
subsequently confirmed in writing.
2. Restrictions on Sale or Other Disposition of Shares. The Stockholder
will not sell, assign, transfer or otherwise dispose of (including, without
limitation, by the creation of a Lien (as defined in paragraph 3 below)), or
permit to be sold, assigned, transferred or otherwise disposed of, any Shares
owned by the Stockholder, whether such Shares are held by the Stockholder on the
date of this letter agreement or are subsequently acquired, except (a) transfers
by will or by operation of law, in which case this letter agreement shall bind
the transferee, (b) transfers pursuant to any pledge agreement, subject to the
pledgee agreeing in writing to be bound by the terms of this letter agreement,
(c) transfers in connection with estate planning purposes, including transfers
to relatives, trusts and charitable organizations, subject to the transferee
agreeing in writing to be bound by the terms of this letter agreement, and (d)
transfers to any other stockholder of the Company who has executed a copy of
this letter agreement on the date hereof with respect to some or all of the
Shares held by such stockholder.
The Stockholder shall cause the Company to cause its transfer agent to note
on its records for the Company (in whatever form maintained) that such Shares
are subject to the restrictions on voting and transfer set forth herein, and at
Parent's reasonable request, the Stockholder shall have any existing
certificates subject to this Agreement canceled and reissued bearing the
following legend:
"THIS CERTIFICATE, AND THE SHARES REPRESENTED HEREBY, ARE
SUBJECT TO CERTAIN VOTING AND TRANSFER RESTRICTIONS CONTAINED IN
A VOTING AGREEMENT BY AND AMONG KSB BANCORP, INC., CAMDEN
NATIONAL CORPORATION AND CAMDEN ACQUISITION SUBSIDIARY, INC. AND
THE BENEFICIAL OWNER OF THESE SHARES AND MAY BE TRANSFERRED ONLY
IN COMPLIANCE THEREWITH. COPIES OF THE ABOVE-REFERENCED
AGREEMENT ARE ON FILE AT THE OFFICES OF KSB BANCORP, INC."
3. Representations. The Stockholder represents that the Stockholder has
the complete and unrestricted power and the unqualified right to enter into and
perform the terms of this letter agreement. The Stockholder further represents
that this letter agreement constitutes a valid and binding agreement with
respect to the Stockholder, enforceable against the Stockholder in accordance
with its terms. Except as set forth in Schedule 1, the Stockholder represents
----------
that the Stockholder beneficially owns the number of Shares indicated opposite
such Stockholder's name on said Schedule 1, free and clear of any liens, claims,
----------
2
<PAGE>
charges or other encumbrances or restrictions of any kind whatsoever ("Liens"),
and has sole or shared, and otherwise unrestricted, voting power with respect to
such Shares.
4. Term. Notwithstanding anything herein to the contrary, the agreements
contained herein shall remain in full force and effect until the earlier of (i)
the consummation of the Merger or (ii) the termination of the Merger Agreement
in accordance with Article X thereof.
5. Equitable Remedies. The Stockholder has signed this letter agreement
intending to be bound thereby. The Stockholder expressly agrees that this letter
agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against the Stockholder. All of the
covenants and agreements contained in this letter agreement shall be binding
upon, and inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
6. Miscellaneous. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same instrument. No waivers of any breach of this
letter agreement amended by Purchaser and Parent to the Stockholder shall be
construed as a waiver of any rights or remedies of Purchaser and Parent with
respect to any other stockholder of the Company and has executed a copy of this
letter agreement with respect to Shares held by such stockholder or with respect
to any subsequent breach of the Stockholder or any other such stockholder of the
Company. This letter agreement is deemed to be signed as a sealed instrument
and is to be governed by the laws of the State of Maine, without giving effect
to the principles of conflicts of laws thereof. If any provision hereof is
deemed unenforceable, the enforceability of the other provisions hereof shall
not be affected.
3
<PAGE>
Please confirm our agreement by signing a copy of this letter.
Very truly yours,
______________________________________
Name:
AGREED TO AND ACCEPTED
AS OF JULY ___, 1999
CAMDEN NATIONAL CORPORATION
CAMDEN ACQUISITION SUBSIDIARY, INC.
By: ____________________________
4
<PAGE>
ANNEX B
Preliminary Draft
_________, 1999
The Board of Directors
Camden National Corporation
2 Elm Street
Camden, Maine 04843
Members of the Board:
You have requested our opinion as investment bankers that the Exchange Ratio in
the Merger (the "Merger") between Camden National Corporation ("Camden") and KSB
Bancorp, Inc., ("KSB") the holding company for Kingfield Savings Bank, as
provided and described in the Merger Agreement is fair to the holders of Camden
Common Stock from a financial point of view.
Pursuant to the Agreement, KSB shall merge with and into Camden, and each share
of KSB's issued and outstanding common stock will be converted into and become
the right to receive 1.136 shares, subject to certain adjustments as set forth
in the Merger Agreement (the "Exchange Ratio"), of common stock of Camden. We
have assumed that the Merger will qualify as a tax free reorganization and will
be accounted for by Camden as a pooling-of-interests transaction.
Ryan, Beck & Co., Inc. as a customary part of its investment banking business,
is engaged in the valuation of banking and savings institutions and their
securities in connection with mergers and acquisitions. In conducting our
investigation and analysis of the Merger, we have met separately with members of
senior management of Camden and KSB to discuss their respective operations,
historical financial statements, strategic plans and future prospects. We have
reviewed and analyzed material prepared in connection with the Merger, including
but not limited to the following: (i) the Merger Agreement and related
documents; (ii) the joint proxy-statement prospectus; (iii) Camden's Annual
Reports to Shareholders and Annual Reports on Form 10-K for the years ended
December 31, 1998, 1997, and 1996 and Camden's Quarterly Reports on Form 10-Q
for the periods ended June 30, 1999, March 31, 1999, September 30, 1998, June
30, 1998 and March 31, 1998; (iv) KSB's Annual Reports to Shareholders and
Annual Reports on Form 10-KSB for the years ended December 31, 1998, 1997, and
1996, and KSB's Quarterly Reports on Form 10-QSB for the periods ended June 30,
1999, March 31, 1999, September 30, 1998, June 30, 1998, and March 31, 1998; (v)
certain operating and financial information provided to Ryan, Beck by the
managements of Camden and KSB relating to their business and prospects; (vi) the
historical stock prices and trading volume of Camden's common stock; (vii) the
publicly available financial data of commercial banking organizations which
Ryan, Beck deemed generally comparable to Camden; (viii) the historical stock
prices and trading volume of KSB's common stock; (ix) the publicly available
financial data of thrift organizations which Ryan, Beck deemed generally
comparable to KSB; (x) the terms of recent acquisitions of thrift
<PAGE>
Camden National Corporation
_____________, 199
Page 2
organizations which Ryan, Beck deemed generally comparable in whole or in part
to KSB; and (xi) the potential pro forma impact of the Merger on Camden's
financial condition, operating results and per share figures. We also conducted
or reviewed such other studies, analyses, inquiries and examinations as we
deemed appropriate.
While we have taken care in our investigation and analyses, we have relied upon
and assumed the accuracy, completeness and fairness of the financial and other
information provided to us by the respective institutions or which was publicly
available and have not assumed any responsibility for independently verifying
such information. We have also relied upon the managements of Camden and KSB as
to the reasonableness and achievability of the financial and operating forecasts
and projections (and the assumptions and bases therefor) provided to us and in
certain instances we have made certain adjustments to such financial and
operating forecasts which in our judgment were appropriate under the
circumstances. In addition, we have assumed with your consent that such
forecasts and projections reflect the best currently available estimates and
judgments of the respective managements. Ryan, Beck is not an expert in
evaluating loan and lease portfolios for purposes of assessing the adequacy of
the allowances for losses. Therefore, Ryan, Beck has not assumed any
responsibility for making an independent evaluation of the adequacy of the
allowance for loan losses set forth in the balance sheets of Camden and KSB at
June 30, 1999, and Ryan, Beck assumed such allowances were adequate and complied
fully with applicable law, regulatory policy, sound banking practice and
policies of the Securities and Exchange Commission as of the date of such
financial statements. We also assumed that the Merger in all respects is, and
will be consummated in compliance with all laws and regulations applicable to
Camden and KSB. We have not made or obtained any independent evaluations or
appraisals of the assets and liabilities of either Camden or KSB or their
respective subsidiaries, nor have we reviewed any individual loan files of
Camden or KSB or their respective subsidiaries.
In conducting our analysis and arriving at our opinion as expressed herein, we
have considered such financial and other factors as we have deemed appropriate
in the circumstances. In rendering our opinion, we have assumed that in the
course of obtaining the necessary regulatory approvals for the Merger, no
conditions will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger to Camden. Our opinion is necessarily based
on economic, market and other conditions and projections as they exist and can
be evaluated on the date hereof. Ryan, Beck did not and does not express any
opinion as to the price or range of prices at which Camden Common Stock might
trade prior to or subsequent to the Merger. We have not opined on the fairness
of the transaction should Camden elect to increase the Exchange Ratio in order
to avoid a termination of the Agreement by Camden because Camden's stock price
declined below $15.75 per share and declined in excess of 15% of the index (as
defined in the Merger Agreement).
<PAGE>
ANNEX C
Preliminary Draft
_________, 1999
Board of Directors
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Dear Gentlemen:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the stockholders of
KSB Bancorp, Inc. ("KSB" or the "Company"), of the consideration to be received
by such stockholders in the merger (the "Merger") between the Company and Camden
National Corp ("Camden"). We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Merger.
Pursuant to the Agreement and Plan of Merger, dated July 27, 1999, by and among
the Company and Camden (the "Agreement"), at the effective time of the Merger,
Camden will acquire all of the Company's issued and outstanding shares of common
stock. The holders of the Company's common stock will receive in exchange for
each share of Company common stock, shares of Camden common stock based on an
exchange ratio of 1.136 shares of Camden common stock for each share of KSB
common stock.
In addition, the holders of unexercised and outstanding options awarded pursuant
to the Company's 1993 and 1998 Stock Option Plans will receive merger
consideration as described in Section III.7 of the Agreement. The complete
terms of the proposed transaction are described in the Agreement, and this
summary is qualified in its entirety by reference thereto.
Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc., as part of
its investment banking business, is regularly engaged in the evaluation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, and distributions of listed and unlisted securities.
We are familiar with the market for common stocks of publicly traded banks,
savings institutions and bank and savings institution holding companies.
In connection with this opinion we reviewed certain financial and other business
data supplied to us by the Company including (i) the Agreement and Plan of
Merger by and among Camden National Corporation, Camden Acquisition Subsidiary,
Inc., KSB Bancorp, Inc., and Kingfield Savings Bank (ii) Annual Reports, Proxy
Statements and Form 10-Ks for the years ended December 31, 1993, 1994, 1995,
1996, 1997 and 1998, (iii) Form 10-Q for the quarter ended March 31,1999, and
other information we deemed relevant. We discussed with senior management and
the boards of directors of the Company and its wholly owned subsidiary,
Kingfield Savings Bank, the current
<PAGE>
Board of Directors
KSB Bancorp, Inc.
__________,1999
Page 2
position and prospective outlook for the Company. We considered historical
quotations and the prices of recorded transactions in the Company's common stock
since its initial public offering. We reviewed financial and stock market data
of other savings institutions, particularly in the northeastern region of the
United States, and the financial and structural terms of several other recent
transactions involving mergers and acquisitions of savings institutions or
proposed changes of control of comparably situated companies.
For Camden, we reviewed the audited financial statements, 10-K's, and Proxy
Statements for the years ended December 31, 1998, 1997, and 1996, 10-Q for the
quarter ended March 31, 1999 and certain other information deemed relevant. We
also discussed with senior management of Camden, the current position and
prospective outlook for Camden.
For purposes of this opinion we have relied, without independent verification,
on the accuracy and completeness of the material furnished to us by the Company
and Camden and the material otherwise made available to us, including
information from published sources, and we have not made any independent effort
to verify such data. With respect to the financial information, including
forecasts and asset valuations we received from the Company, we assumed (with
your consent) that they had been reasonably prepared reflecting the best
currently available estimates and judgment of the Company's management. In
addition, we have not made or obtained any independent appraisals or evaluations
of the assets or liabilities, and potential and/or contingent liabilities of the
Company or Camden. We have further relied on the assurances of management of
the Company and Camden that they are not aware of any facts that would make such
information inaccurate or misleading. We express no opinion on matters of a
legal, regulatory, tax or accounting nature or the ability of the Merger, as set
forth in the Agreement, to be consummated.
In rendering our opinion, we have assumed that in the course of obtaining the
necessary approvals for the Merger, no restrictions or conditions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Merger to the Company or the ability to consummate the Merger. Our
opinion is based on the market, economic and other relevant considerations as
they exist and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to the Company in connection with the Merger and will receive a fee for
such services. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement by the Company in connection with the
Merger.
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The Maine Business Corporation Act ("MBCA") permits a corporation to
indemnify or, if so provided in the bylaws, shall in all cases indemnify, a
director who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of their service in that
capacity. This indemnification shall include expenses, including attorney's
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by the director in connection with such actions, suit or proceeding;
provided that no indemnification may be provided for any director with respect
to any matter as to which the director shall have been finally adjudicated;
A. Not to have acted honestly or in the reasonable belief that the
director's actions was in or not opposed to the best interests of the
corporation or its shareholders; or
B. With respect to any criminal action or proceeding, to have had
reasonable cause to believe that the director's conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order or
conviction adverse to the director, or by settlement or plea of nolo contendere
or its equivalent, shall not of itself create a presumption that the director
did not act honestly or in the reasonable belief that the director's actions was
in or not opposed to the best interests of the corporation or its shareholders.
Notwithstanding the foregoing, a corporation shall not have the power to
indemnify any director with respect to any claim, issue or matter asserted by or
in the right of the corporation as to which that director is finally adjudicated
to be liable to the corporation unless the court in which the action, suit or
proceeding was brought shall determine that, in view of all the circumstances of
the case, that director is fairly and reasonably entitled to indemnity for such
amounts as the court shall deem reasonable.
As permitted by the MBCA, Camden's bylaws provide that Camden shall
indemnify its directors to the extent provided above, including the advancement
of expenses as prescribed by the bylaws.
II-1
<PAGE>
Item 21. Exhibits and Financial Statements.
(a) The following exhibits are filed as part of this Registration Statement
or incorporated herein by reference:
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
2.1 Agreement and Plan of Merger by and between Camden, Camden Acquisition
Subsidiary, Inc. and KSB, dated as of July 27, 1999 (Incorporated by
reference to Exhibit 2.1 to Form 8-K of Camden filed August 9, 1999 and
attached as Annex A to the Joint Proxy Statement/Prospectus included in
this Registration Statement).
5.1 Opinion of Rendle A. Jones, Esq., General Counsel to Camden, as to the
legality of the securities.*
8.1 Opinion of Luse, Lehman, Gorman, Pomerenk & Schick, P.C. as to certain
tax matters.*
8.2 Opinion of Berry, Dunn, McNeil & Parker, LLC as to certain tax
matters.*
10.1 Stock Option Agreement, dated as of July 27, 1999, by and between
Camden and KSB (Incorporated by reference to Exhibit 10.1 to Form 8-K
of Camden filed August 9, 1999).
23.1 Consent of Berry, Dunn, McNeil & Parker, LLC*
23.2 Consent of Ryan, Beck & Company, Inc.*
23.3 Consent of Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc.*
23.4 Consent of Rendle A. Jones, Esq., General Counsel to Camden
(included in Exhibit 5.1).
23.5 Consent of Luse, Lehman, Gorman, Pomerenk & Schick, P.C. (included in
Exhibit 8.1).
23.6 Consent of Berry, Dunn, McNeil & Parker, LLC (included in Exhibit 8.2).
24.1 Powers of Attorney (contained on signature pages to this Registration
Statement).
99.1 Opinion of Ryan, Beck & Company, Inc. as to the fairness of the
transaction to Camden (Attached as Annex B to the Joint Proxy
Statement/Prospectus included in this Registration Statement).
99.2 Opinion of Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. as to the fairness of the transaction to stockholders of
KSB (Attached as Annex C to the Joint Proxy Statement/Prospectus
included in this Registration Statement).
- -----------
* Filed herewith.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) of this Form.
(c) The Opinion of Ryan, Beck & Company, Inc. is attached as Annex B to the
Joint Proxy Statement/Prospectus included in this Registration Statement. The
Opinion of Charles Webb & Company, a division of Keefe, Bruyette & Woods, Inc.
is attached as Annex C to the Joint Proxy Statement/Prospectus included in this
Registration Statement.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, (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, as amended) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therin, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
II-2
<PAGE>
(c) The undersigned registrant undertakes that every prospectus: (i) that
is filed pursuant to paragraph (b) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar a indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that the claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that are incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Camden National
Corporation certifies that it has duly caused this registration statement (the
"Registration Statement") to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Camden, Maine on this 4th day of
October, 1999.
Camden Corporation
By: /s/ Robert W. Daigle
-------------------------------------
Robert W. Daigle
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby severally constitutes and appoints Robert W. Daigle, such
person's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that any said attorney-in-fact
and agent, or any substitute or substitutes of any of them, 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.
Signature Capacity Date
--------- -------- ----
/s/ Rendle A. Jones Chairman of the October 4, 1999
- -------------------------------- Board
Rendle A. Jones
/s/ Robert W. Daigle Director, President October 4, 1999
- -------------------------------- and Chief Executive
Robert W. Daigle Officer (Principal
Executive Officer)
/s/ Peter T. Allen Director October 4, 1999
- --------------------------------
Peter T. Allen
/s/ Ann W. Bresnahan Director October 4, 1999
- --------------------------------
Ann W. Bresnahan
/s/ Royce M. Cross Director October 4, 1999
- --------------------------------
Royce M. Cross
/s/ Robert J. Gagnon Director October 4, 1999
- --------------------------------
Robert J. Gagnon
/s/ John W. Holmes Director October 4, 1999
- --------------------------------
John W. Holmes
/s/ John S. McCormick, Jr. Director October 4, 1999
- --------------------------------
John S. McCormick, Jr.
/s/ Richard N. Simoneau Director October 4, 1999
- --------------------------------
Richard N. Simoneau
/s/ Susan M. Westfall Treasurer and Chief October 4, 1999
- -------------------------------- Financial Officer
Susan M. Westfall (Principal Financial
and Accounting Officer)
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
2.1 Agreement and Plan of Merger by and between Camden, Camden Acquisition
Subsidiary, Inc. and KSB, dated as of July 27, 1999 (Incorporated by
reference to Exhibit 2.1 to From 8-K of Camden filed August 9, 1999 and
attached as Annex A to the Joint Proxy Statement/Prospectus included in
this Registration Statement).
5.1 Opinion of Rendle A. Jones, Esq., General Counsel to Camden, as to the
legality of the securities.*
8.1 Opinion of Luse, Lehman, Gorman, Pomerenk & Schick, P.C. as to certain
tax matters.*
8.2 Opinion of Berry, Dunn, McNeil & Parker, LLC as to certain tax
matters.*
10.1 Stock Option Agreement, dated as of July 27, 1999, by and between
Camden and KSB (Incorporated by reference to Exhibit 10.1 to Form 8-K
of Camden filed August 9, 1999).
23.1 Consent of Berry, Dunn, McNeil & Parker, LLC*
23.2 Consent of Ryan, Beck & Company, Inc.*
23.3 Consent of Charles Webb & Company, a division of Keefe, BruyEtte &
Woods, Inc.*
23.4 Consent of Rendle A. Jones Esq., General Counsel to Camden (included
in Exhibit 5.1).
23.5 Consent of Luse, Lehman, Gorman, Pomerenk & Schick, P.C. (included in
Exhibit 8.1).
23.6 Consent of Berry, Dunn, McNeil & Parker, LLC (included in Exhibit 8.2).
24.1 Powers of Attorney (contained on signature pages to this Registration
Statement).
99.1 Opinion of Ryan, Beck & Company, Inc. as to the fairness of the
transaction to Camden (Attached as Annex B to the Joint Proxy
Statement/Prospectus included in this Registration Statement).
99.2 Opinion of Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. as to the fairness of the transaction to stockholders of
KSB (Attached as Annex C to the Joint Proxy Statement/Prospectus
included in this Registration Statement).
- -----------
* Filed herewith.
<PAGE>
EXHIBIT ( 5.1 )
Form of Opinion of Rendle A. Jones, Esq.
October 6, 1999
Camden National Corporation
Two Elm Street
Camden, MA 04843
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
I am the Chairman of the Board and General Counsel of Camden National
Corporation, a Maine corporation (the "Company"), and have represented the
Company in connection with a Registration Statement on Form S-4 which was filed
by the Company under the Securities Act of 1933, as amended, (the "Registration
Statement"), and which registers up to 1,481,799 shares of Common Stock, no par
value, of the Company (the "Shares") to be issued in connection with the
Company's merger (the "Merger") with KSB Bancorp, Inc., a Delaware corporation
("KSB"), pursuant to an Agreement and Plan of Merger dated as of July 27, 1999
(the "Merger Agreement"). In that capacity, I have reviewed the articles of
incorporation and by-laws of the Company, the Registration Statement, including
the exhibits thereto, the corporate proceedings taken by the Board of Directors
relating to the authorization of the issuance of the Shares and the Merger, and
such other certificates and documents as I have deemed necessary or advisable
for the issuance of this opinion.
Based upon the foregoing, I am of the opinion that, upon approval of the Merger
and the transactions contemplated by the Merger Agreement by the stockholders of
the Company and KSB in accordance with the terms and conditions set forth in the
Registration Statement, including but not limited to, the terms and conditions
of the Merger Agreement attached to the Joint Proxy Statement/Prospectus
included in the Registration Statement as Annex A, the filing of the Articles of
Merger with the Secretary of State of the State of Maine, and the issuance and
delivery of the Shares to the stockholders of KSB pursuant to the Merger, the
Shares will be duly authorized, validly issued, fully paid, and non-assessable.
The opinion expressed in this letter is limited to the matters set forth herein,
and no other opinions should be inferred beyond the matters expressly stated.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me and to my opinion in the Registration
Statement and the Joint Proxy Statement/Prospectus which is a part thereof.
Very truly yours,
/s/ Rendle A. Jones
- -------------------------
Rendle A. Jones, Esq.
General Counsel
<PAGE>
[Form of Opinion]
Exhibit 8.1
Board of Directors
KSB Bancorp, Inc.
Main Street
Kingfield, Maine 04947
Re: Federal Income Tax Consequences of Merger of Camden Acquisition
Subsidiary, Inc. with and into KSB Bancorp, Inc.
---------------------------------------------------------------
To the Members of the Board of Directors:
You have requested an opinion regarding federal tax consequences of a
proposed transaction involving the merger of KSB Bancorp, Inc., a bank holding
company organized under the laws of the State of Delaware ("KSB") with and into
Camden National Corporation ("Camden"), a Maine corporation ("Camden"). The
merger will be effected pursuant to the Agreement and Plan of Merger, dated as
of July 27, 1999, by and between Camden National Corporation, Camden Acquisition
Subsidiary, Inc. ("CASI"), KSB Bancorp, Inc., and Kingfield Savings Bank (the
"Bank") (the agreement shall be herein referred to as the "Merger Agreement").
The merger and related transactions are described in the Merger Agreement and in
the Proxy Statement/Prospectus (the "Proxy Statement") included in Camden's
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission in connection with the merger (the "Registration Statement"). All
capitalized terms used but not defined in this letter shall have the meanings
set forth in the Merger Agreement or the Proxy Statement.
Under the Merger Agreement, at the Effective Time, CASI shall be merged
with and into KSB (the "Merger") and the separate existence of CASI shall cease.
KSB shall be the surviving corporation in the Merger and shall continue its
corporate existence under the laws of Delaware as a wholly owned subsidiary of
Camden. By virtue of the Merger, automatically and without any action on the
part of the holder thereof, each share of KSB's common stock (the "KSB Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive that number of shares of the common stock of
Camden (the "Camden Common Stock") determined under the formula set out in the
Merger Agreement, subject to the payment of cash in lieu of fractional shares.
As soon as practicable thereafter, KSB will merge with and into Camden
(this second merger shall be referred to as the "Subsequent Merger";
collectively, the Merger and Subsequent
<PAGE>
Board of Directors
_______________, 1999
Page 2
Merger shall be referred to as the "Mergers.") The Subsequent Merger shall
become effective at the "Subsequent Effective Time". As a result of the
Subsequent Merger, the separate corporate existence of KSB shall cease and
Camden shall be the surviving corporation and continue its corporate existence
under the laws of Maine.
Our opinion is provided solely with respect to federal income tax
consequences of the Merger. This opinion is being delivered at your request and
pursuant to Sections 9.1(e) of the Merger Agreement.
In connection with the opinions expressed herein, we have examined and
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Merger Agreement and the Proxy Statement, and of such
corporate records of the parties to the Merger as we have deemed appropriate. We
have also received and relied upon, without independent verification, the
representations of KSB concerning KSB itself as well as the transaction
("Representations"); we have received and relied upon, without independent
verification, the representations of Camden concerning the transaction and
certain post-Merger plans ("Representations"). We have assumed that such
Representations are true and that the parties to the Merger will act in
accordance with the Merger Agreement. We have assumed that all daily operations
of Camden will be conducted in a manner wholly consistent with all
Representations provided by Camden. In addition, we have made such
investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
We will rely upon the accuracy of the Representations and the statements of
facts contained in the examined documents, particularly the Merger Agreement. We
have also assumed the authenticity of all signatures, the legal capacity of all
natural persons and the conformity to the originals of all documents submitted
to us as copies. We have assumed that the Merger will be consummated strictly in
accordance with the terms of the Merger Agreement.
The Merger Agreement and the Proxy Statement contain a detailed description
of the Merger. These documents as well as the Representations to be provided by
Camden and KSB are incorporated in this letter as part of the statement of the
facts.
LIMITATIONS ON OPINION
The opinions expressed herein are rendered only with respect to the issues
specified herein. We express no opinion with respect to any other federal, state
or local tax or other legal aspect of the transaction. If any of the above
referenced facts or Representations are not true, correct and complete in all
material respects, our opinion could be subject to change. In issuing
<PAGE>
Board of Directors
_______________, 1999
Page 3
our opinion, we are relying on the provisions of the Internal Revenue Code of
1986, as amended (the "Code") and regulations issued thereunder. All such
provisions are subject to change, which change can be retroactive in effect. Any
such change could have an effect on the validity of our opinions. We assume no
obligation to revise or supplement this opinion if any subsequent change were to
occur.
The opinion is our legal judgment as to certain of the federal income tax
consequences of the proposed Mergers. Our opinion is not binding on the Internal
Revenue Service and the Internal Revenue Service may reach a different
conclusion, which conclusion could be sustained by a court if litigated. The
opinion addresses certain tax consequences to KSB common stockholders who are
(i) citizens or residents of the United States; (ii) domestic corporations; or
(iii) otherwise subject to United States federal income tax on a net income
basis in respect of shares of KSB common stock ("U.S. Holders"). The opinion is
limited to the specific conclusions reached in the opinion and does not purport
to reach any other conclusions, such as the future use of tax attributes of the
parties, tax consequences to holders of KSB Common Stock who hold such shares as
other than capital assets or are insurance companies, tax exempt organizations,
financial institutions, dealers in securities, persons who acquired or acquire
shares of KSB Common Stock pursuant to the exercise of employee stock options or
otherwise as compensation and persons who hold KSB Common Stock in a hedging
transaction or as part of a straddle or conversion transaction. The opinion does
not address foreign, state, local, estate or other potential tax consequences of
the Mergers.
FEDERAL TAX OPINION
Based on the subject to the foregoing, the facts referenced in this
opinion, the Representations referred to above, and subject to the limitations
referenced herein, it is our opinion that for federal income tax purposes, under
the current law:
(1) The Mergers will constitute tax-free reorganizations under Section
368(a) of the Code. Camden, CASI and KSB will each be a party to the
Merger. Camden and KSB will be parties to the Subsequent Merger.
(2) No gain or loss will be recognized by Camden, CASI, KSB or the Bank as
a result of the Mergers.
(3) No gain or loss will be recognized by U.S. Holders who exchange all of
their KSB Common Stock solely for Camden Common Stock pursuant to the
Merger, except to the extent of any cash received in lieu of a
fractional share interest in Camden Common Stock.
<PAGE>
Board of Directors
________________, 1999
Page 4
(4) The tax basis of the Camden Common Stock received by U.S. Holders who
exchange their KSB Common Stock for Camden Common Stock pursuant to
the Merger will be the same as the tax basis of the KSB Common Stock
surrendered in exchange therefor, reduced by any amount allocable to a
fractional share interest for which cash is received and increased by
any gain recognized on the exchange.
(5) The holding period of Camden Common Stock received by U.S. Holders in
the Merger will include the holding period of KSB Common Stock
exchanged therefor, provided that such stockholder held such KSB
Common Stock as a capital asset on the KSB Effective Date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement of Camden filed in connection with the Merger and to the
references to us under the headings "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Tax Consequences of the Merger" in the Proxy Statement/Prospectus
on Camden and KSB. In giving such consent, we do not thereby admit that we are
in the category of persons whose consent is required under the Securities Act of
1933.
Sincerely,
Luse Lehman Gorman Pomerenk & Schick, P.C.
<PAGE>
[Form of Opinion]
Exhibit 8.2
____________, 1999
Camden National Corporation
P.O. Box 310
Camden, ME 04843
Ladies and Gentlemen:
We refer to the transaction described in a so-called "Agreement and Plan of
Merger by and among Camden National Corporation, Camden Acquisition Subsidiary,
Inc., KSB Bancorp, Inc., and Kingfield Savings Bank"(the "Agreement"), the most
recent draft of which is dated July 27, 1999. Any capitalized term used and not
defined herein has the same meaning given to it in said Agreement.
Pursuant to the terms of the Agreement, Camden Acquisition Subsidiary, Inc., a
newly-formed, direct, wholly-owned subsidiary of Camden National Corporation,
will be merged with and into KSB Bancorp, Inc.(the "Merger"). Subsequent to the
Merger, KSB Bancorp, Inc. will merge with and into Camden National Corporation
(the "Subsequent Merger"). Finally, United Bank will merge with and into
Kingfield Savings Bank (the "Bank Merger").
Berry Dunn McNeil & Parker, LLC (the "Firm") has been requested to provide an
opinion (the "Opinion") as to certain federal income tax consequences resulting
from the Merger. Specifically, with respect to these matters, you have asked the
Firm to address the federal income tax consequences of the following questions:
1. Whether the Merger and Subsequent Merger and Bank Merger will each
constitute a "reorganization" within the meaning of Section 368(a)(1) of
Internal Revenue Code of 1986, as amended (the "Code")?
2. Whether Camden National Corporation, Camden Acquisition Subsidiary, Inc.,
KSB Bancorp, Inc., United Bank, and Kingfield Savings Bank will each be a
"party to the reorganization" within the meaning of Section 368(b) of the
Code?
3. Whether gain or loss will be recognized to the Camden National Corporation
or its shareholders as a result of the transaction?
In rendering the Opinion, representatives of the Firm have relied upon the
accuracy and completeness of the facts, information, and representations
contained in the Agreement and other documents which we have deemed relevant and
necessary (these items are hereafter collectively
<PAGE>
Camden National Corporation
, 1999
Page 2
referred to as the "Documents"). The Opinion is conditioned, among other things,
not only upon such accuracy and completeness as of the date of such documents,
but also upon the continuing accuracy and completeness thereof as of the
Effective Time and Subsequent Effective Time.
Additionally, the Opinion is explicitly conditioned upon representations
contained in a certain letter dated as of the date hereof from Camden National
Corporation, (the "Representation Letter"). In that regard, the Firm hereby
incorporates by reference all of the statements of facts and factual
representations contained in the Documents and Representation Letter and, for
purposes of rendering the Opinion, the Firm has assumed (without attempting any
independent verification) that all of the statements of facts and factual
representations set forth in the Documents and Representation Letter are true
and complete.
I. OPINION
Based upon the foregoing facts, factual assumptions and representations set
forth in Sections II and III hereof, and the Code, Committee Reports,
legislative history and the relevant Internal Revenue Service and judicial
precedents as of the date hereof, the Firm is of the Opinion that:
1. The Merger, Subsequent Merger and Bank Merger will each constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code.
2. Camden National Corporation, Camden Acquisition Subsidiary, Inc., KSB
Bancorp, Inc., United Bank, and Kingfield Savings Bank will each be a
"party to the reorganization" within the meaning of Section 368(b) of the
Code.
3. No gain or loss will be recognized to Camden National Corporation, its
shareholders, its members, and the resulting reorganized entities as a
result of the transactions.
II. FACTS
A. TRANSACTION
For what has been represented to be valid business reasons, pursuant to the
Agreement, the following transactions will occur:
1. Camden Acquisition Subsidiary, Inc. will be formed as described above.
2. Camden Acquisition Subsidiary, Inc. will merge with and into KSB Bancorp,
Inc. pursuant to the applicable state laws with KSB Bancorp, Inc. being the
surviving corporation. As described in Section 3.1(a) of the Agreement,
each share of common stock of KSB Bancorp, Inc. will be converted into and
become the right to receive 1.136 shares of Camden National Corporation
common stock.
3. Each outstanding share of Camden Acquisition Subsidiary, Inc will be
converted into and exchangeable for one share of common stock of KSB
Bancorp, Inc.
<PAGE>
Camden National Corporation
, 1999
Page 3
4. No fractional shares of Camden Common Stock will be issued. In lieu
thereof Camden National Corporation will pay an amount of cash determined
pursuant to the provisions of Section 3.3 of the Agreement.
5. Soon after the Merger, Camden National Corporation shall cause KSB
Bancorp, Inc. to merge with and into Camden National Corporation (the
"Subsequent Merger".)
6. Soon after the Merger, Camden National Corporation shall cause United Bank
to merge with and into Kingfield Savings Bank (the "Bank Merger".)
III. REPRESENTATIONS
The following representations were made by the management of Camden National
Corporation. Camden National Corporation understands that these representations
form an integral part of the Firm's opinion regarding the Merger:
1. The Merger, Subsequent Merger and Bank Merger will be consummated in
compliance with the material terms of the Agreement and none of the
material terms and conditions therein have been waived or modified and
Camden National Corporation has no plan or intention to waive or modify
further any such material condition.
2. The ratio for the exchange of shares of stock of KSB Bancorp, Inc. for
common stock of Camden National Corporation in the Merger was negotiated
through arm's length bargaining. Accordingly, the fair market value of the
Camden National Corporation common stock to be received by KSB Bancorp,
Inc. stockholders in the Merger will be approximately equal to the fair
market value of the KSB Bancorp, Inc. stock surrendered by such
stockholders in exchange therefor.
3. The management of Camden National Corporation knows of no plan or
intention by any stockholder of KSB Bancorp, Inc. to sell, exchange,
transfer by gift or otherwise dispose of any of the shares of common stock
of Camden National Corporation to be received by them in the Merger. In
addition, the management of Camden National Corporation is not aware of
any transfers of KSB Bancorp, Inc. stock by any holders thereof prior to
the Effective Date which were made in contemplation of the Merger.
4. As a result of the Merger, KSB Bancorp, Inc. will transfer to Camden
Acquisition Subsidiary, Inc. at least ninety percent (90%) of the fair
market value of the net assets and at least seventy percent (70%) of the
fair market value of the gross assets of KSB Bancorp, Inc. held by it
immediately prior to the Merger. For this purpose, amounts used to pay
dissenters or to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by KSB Bancorp,
Inc. immediately prior to the Merger will be considered as assets held by
KSB Bancorp, Inc. immediately prior to the Merger. The management of
Camden National Corporation is not aware of KSB Bancorp, Inc. having
redeemed any of its stock, having made any distribution with respect to
any of the its stock, or having disposed of any of its assets in
anticipation of or as a part of a plan for the acquisition of it by Camden
Acquisition Subsidiary, Inc.
<PAGE>
Camden National Corporation
, 1999
Page 4
5. Prior to the Merger, Camden National Corporation will be in control of
Camden Acquisition Subsidiary, Inc. within the meaning of Section 368(c) of
the Code.
6. Camden National Corporation has no plan or intention to reacquire any of
its stock issued in the Merger.
7. Camden National Corporation is the owner of all of the outstanding stock of
Camden Acquisition Subsidiary, Inc.
8. The liabilities to which the transferred assets of KSB Bancorp, Inc. are
subject were incurred by KSB Bancorp, Inc. in the ordinary course of its
business. No liabilities of any person other than KSB Bancorp, Inc. will be
assumed by Camden National Corporation in the Subsequent Merger, and none
of the shares of KSB Bancorp, Inc. to be surrendered in exchange for Camden
National Corporation common stock in the Merger will be subject to any
liabilities.
9. Immediately after the Merger and Subsequent Merger, Camden National
Corporation intends to cause KSB Bancorp, Inc to continue the historic
business of KSB Bancorp, Inc. or use a significant portion of the historic
business assets of KSB Bancorp, Inc. in a business.
10. Camden National Corporation, Camden Acquisition Subsidiary, Inc. and KSB
Bancorp, Inc. will pay their respective expenses, if any, incurred in
connection with the Merger. Camden National Corporation, Camden Acquisition
Subsidiary, Inc. and KSB Bancorp, Inc. will not pay any of the expenses of
the stockholders of KSB Bancorp, Inc. incurred in connection with the
Merger.
11. There is no intercorporate indebtedness existing between Camden National
Corporation and KSB Bancorp, Inc. or between Camden Acquisition Subsidiary,
Inc. and KSB Bancorp, Inc. that was issued, acquired, or will be settled at
a discount.
12. Camden National Corporation is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
13. KSB Bancorp, Inc. is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
14. On the date of the Merger, the fair market value of the assets of KSB
Bancorp, Inc. will exceed the sum of its liabilities (including any
liabilities to which its assets are subject).
15. No stock of Camden Acquisition Subsidiary, Inc. will be issued in the
Merger.
16. The payment of cash in lieu of fractional shares of stock of KSB Bancorp,
Inc. was not separately bargained for consideration and is being made for
the purpose of saving Camden National Corporation the expense and
inconvenience of issuing fractional shares.
<PAGE>
Camden National Corporation
, 1999
Page 5
17. None of the compensation received by any stockholder-employee of KSB
Bancorp, Inc. (or its subsidiaries) pursuant to any employment, consulting
or similar arrangement is or will be separate consideration for, or
allocable to, any of his shares of KSB Bancorp, Inc. stock. None of the
shares of common stock of Camden National Corporation received by any
stockholder-employee of KSB Bancorp, Inc. (or its subsidiaries) pursuant to
the Merger (other than any such shares received in connection with the
termination in the Merger of certain stock options to purchase KSB Bancorp,
Inc. common stock) are or will be separate consideration for, or allocable
to, any such employment, consulting or similar arrangement. The
compensation paid to any stockholder-employee of KSB Bancorp, Inc. (or its
subsidiaries) pursuant to any such employment, consulting or similar
arrangement is or will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length
for similar services.
IV. CAVEATS AND LIMITATIONS
It is assumed for the purpose of this Opinion that the management of Camden
National Corporation, Camden Acquisition Subsidiary, Inc., KSB Bancorp, Inc.,
United Bank, and Kingfield Savings Bank are not aware of any facts inconsistent
with those set forth above and in the Documents. Also, it is assumed that the
Documents accurately reflect all consummated and proposed transactions. The
existence of inconsistent facts and/or consummated or proposed transactions not
set forth in the Documents could materially alter our opinions.
Additionally, the opinions expressed herein are based upon the provisions of the
Code, Treasury Regulations promulgated thereunder, judicial decisions, revenue
rulings and procedures and related authorities issued to, and in effect on, the
date of this opinion.
Furthermore, no assurance can be given that the Internal Revenue Service or the
courts will not alter their present views, either prospectively or
retroactively, or adopt new views in respect of our opinions. In that event, the
opinions expressed herein would necessarily have to be reevaluated in light of
any change in such views. We assume no obligation to advise you of any change in
any such provisions or views which would affect our opinions set forth herein.
Our opinion is based solely upon the facts, representations and assumptions
contained herein, and we have not undertaken an independent investigation of any
such facts or representations. Our opinion would require reevaluation in the
event of any change in any such fact or representation.
The opinions expressed in this opinion reflect what we believe to be the Federal
income tax consequences of the transactions described herein. Nevertheless, they
are only opinions, and no assurance can be given that the Internal Revenue
Service will not challenge any position taken in such opinions. Furthermore, it
should be noted that we express no opinion regarding tax consequences under the
laws of any state or local jurisdiction.
<PAGE>
Camden National Corporation
, 1999
Page 6
V. SUBSTANTIAL AUTHORITY
Without limiting the foregoing, providing the facts, assumptions, and
representations contained herein are correct, substantial authority, within the
meaning of Section 6662 of the Code, exists to each of the conclusions made in
this opinion.
VI. CONSENT
The opinions expressed herein are provided solely for the benefit of Camden
National Corporation, its shareholders, its members, and the resulting
reorganized entities. This letter should not be distributed to, nor may it be
relied upon by, any other organization or person; provided, however, that the
Firm hereby consents to the filing of this letter as an exhibit to the
Registration Statement.
Sincerely,
Berry, Dunn, McNeil & Parker, LLC
<PAGE>
Berry, Dunn, McNeil & Parker, LLC
EXHIBIT 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this S-4 Registration Statement of our report dated January 22,
1999 on our audit of the consolidated financial statements of Camden National
Corporation for the year ended December 31, 1998, which report is included in
Camden National Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998 and to all references to our Firm included in this S-4
Registration Statement.
We also consent to the incorporation by reference in the registration statement
of Camden National Corporation on Form S-4 of our report dated January 21, 1999
on our audit of the consolidated financial statements of KSB Bancorp, Inc. for
the year ended December 31, 1998, which report is included in the 1998 Form
10-KSB of KSB Bancorp, Inc. for the year ended December 31, 1998.
/s/ Berry, Dunn, McNeil & Parker, LLC
Portland, Maine
October 6, 1999
<PAGE>
Exhibit 23.2
CONSENT OF RYAN, BECK & CO.
We hereby consent to the references in the Joint Proxy Statement/Prospectus to
our opinion, dated October 6, 1999, with respect to the merger of Camden
National Corporation and KSB Bancorp, Inc., and to our firm, respectively, and
to the inclusion of such opinion as an annex to such Proxy Statement. By giving
such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Securities and Exchange Commission
thereunder.
RYAN, BECK & CO., INC.
By: /s/ David P. Downs
-------------------
David P. Downs
Senior Vice President
Livingston, NJ
October 6, 1999
<PAGE>
Exhibit 23.3
CONSENT OF CHARLES WEBB & COMPANY
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
Camden National Corporation
2 Elm Street
Camden, ME 04843-1903
Dear Sirs:
We hereby consent to: (i) the use of our opinion letter dated July 27, 1999, to
the Board of Directors of KSB Bancorp (the "Company") included as Annex C to the
Joint Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of the Company and Camden
National Corporation; and (ii) the references to such opinion in such Joint
Proxy Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we hereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
/s/ Charles Webb & Company
A Division of Keefe, Bruyette & Woods, Inc.
