SUPPLEMENT NO. 1 TO PROSPECTUS DATED MAY 15, 1996
Maximum - 350,000 Shares
Minimum - 70,000 Shares
HARBOR BANKSHARES CORPORATION
Common Stock
Harbor Bankshares Corporation (the "Company") is offering up to 350,000
shares of its Common Stock (the "Common Stock"). The maximum number of shares of
Common Stock to be sold is 350,000 shares, and the minimum is 70,000 shares. At
the date of this Supplement, the Escrow Agent had received subscriptions to
purchase 91,868 shares of Common Stock in the offering, and was seeking
additional subscriptions through June 30.
One of the persons to which this offering was made (the "Purchaser") has
agreed to purchase 27,000 shares of the Company's Common Stock in this offering
but has required a separate stock subscription agreement. This agreement
contains certain terms not generally applicable to other investors in this
offering. For instance, to enable the Purchaser to comply with its internal
investment policies, the Company has agreed not to reduce the number of shares
of its issued and outstanding Common Stock (through share repurchases, dividends
or otherwise) if it would cause the Purchaser to be the holder of 5% or more of
the Company's issued and outstanding Common Stock, or if it would cause the
purchase price of the 27,000 shares to represent 10% or more of the Company's
total equity. Based upon the total stockholders' equity at March 31, 1996, as
adjusted for the sale of 118,868 shares of Common Stock in this offering, the
27,000 shares to be sold to the Purchaser will represent 4.93% of the Company's
outstanding Common Stock and 5.41% of its total stockholders' equity. In
addition, if the Company authorizes the issuance of a class of common stock
without voting rights but otherwise identical to the Common Stock ("Non-Voting
Common Stock"), commencing on the date of such authorization and continuing for
a period of six months thereafter but not later than June 30, 1997, the
Purchaser has the right to purchase, and the Company has agreed to sell to the
Purchaser, shares of the Non-Voting Common Stock at a per share purchase price
to be negotiated in good faith by the parties. The Company has no present plans
to issue Non-Voting Common Stock.
In addition, in connection with a proposed investment in 35,000 shares in
this offering, the Company has invited a representative of a proposed purchaser
of to sit on its Board of Directors. Assuming this investment is made, the
Company will expand its Board of Directors by one director, and appoint the
representative to the Board to fill the resulting vacancy. The new director will
serve until the next annual meeting of stockholders and until his successor has
been elected and qualified. The person who would be appointed to the Company's
Board under this arrangement is Stanley W. Tucker. Mr. Tucker is 49 years of age
and is currently the President of MSBDFA Management Group, Inc., a private funds
management company, and Managing General Partner of MMG Ventures, L.P., a
specialized small business development company. From 1992 until February 1995,
he served as the Executive Director of the Maryland Small Business Development
Financing Authority (a state agency which provides financing for small
businesses). He joined the agency in 1981 as its Deputy Director.
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Supplement No. 1 is June 26, 1996.
