KSB BANCORP, INC.
MAIN STREET
KINGFIELD, MAINE 04947
April 12, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of KSB Bancorp, Inc. (the "Company") to be held on Wednesday, May 12, 1999, at
the Inn on Winter's Hill, Kingfield, Maine, at 5:30 p.m.
As described in the enclosed Proxy Statement, the matter scheduled to
be presented for stockholder action at the Annual Meeting involves the election
of two directors. During this meeting, we will also report on the operations of
Kingfield Bank (the "Bank"), the wholly-owned subsidiary of the Company.
Detailed information concerning the activities and operating performance of the
Company and the Bank during the year ended December 31, 1998 is contained in the
enclosed Annual Report. Directors and officers of the Company, as well as
representatives of our independent auditors, will be present to respond to any
questions which stockholders may have.
We hope you will be able to attend this meeting in person. Whether or
not you expect to attend, we urge you to sign, date and return the enclosed
proxy card so that your shares will be represented.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I wish to thank you for your support and interest. I look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ John C. Witherspoon
-----------------------
John C. Witherspoon
President and Chief Executive Officer
<PAGE>
KSB BANCORP, INC.
MAIN STREET
KINGFIELD, MAINE 04947
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 12, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of KSB Bancorp, Inc. (the "Company") will be held at the Inn on
Winter's Hill, Kingfield, Maine on Wednesday, May 12, 1999 at 5:30 p.m., Maine
time, for the following purpose:
1. The election of two directors for a term of three years each.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
March 29, 1999 as the voting record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. Only holders of the Common Stock of the Company as of the close of
business on that date will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. A list of stockholders entitled to vote at
the Annual Meeting will be available at Kingfield Bank, Main Street, Kingfield,
Maine for a period of ten days prior to the Annual Meeting and will also be
available for inspection at the meeting itself.
By Order of the Board of Directors
Kingfield, Maine
April 12, 1999
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING,
IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
KSB BANCORP, INC.
MAIN STREET
KINGFIELD, MAINE 04947
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 12, 1999
-------------------------
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to stockholders of KSB Bancorp,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors of proxies to be used at the Annual Meeting of Stockholders ("Annual
Meeting") to be held on Wednesday, May 12, 1999 at 5:30 p.m., Maine time, at the
Inn on Winter's Hill, Kingfield, Maine and at any adjournments thereof. The 1998
Annual Report to Stockholders, including the consolidated financial statements
of the Company for the year ended December 31, 1998, accompanies this Proxy
Statement and Proxy Card, which are first being mailed to stockholders on or
about April 12, 1999.
Regardless of the number of shares of Common Stock owned, it is
important that stockholders be represented by proxy or be present in person at
the Annual Meeting. Stockholders are requested to vote by completing the
enclosed Proxy Card and returning it, signed and dated, in the enclosed
postage-paid envelope. Stockholders are urged to indicate the way they wish to
vote in the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxies will be voted FOR
the election of each of the nominees for director named in this Proxy Statement.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting 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
Annual Meeting.
1
<PAGE>
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. Proxies may also be solicited personally or by mail or
telephone by the Company's Directors, officers and regular employees, without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at this Annual Meeting consist of
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), with each share entitling its owner to one vote on all matters to be
voted on at the Annual Meeting, except as provided below. The close of business
on March 29, 1999 (the "Record Date") has been fixed by the Board of Directors
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournments thereof. The total number
of shares of the Company's Common Stock outstanding on the Record Date was
1,269,668 shares.
The presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum at this Annual Meeting. In the event there are
not sufficient votes for a quorum, or to approve or ratify any matter being
presented, at the time of this Annual Meeting, the Annual Meeting may be
adjourned in order to permit the further solicitation of proxies.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board to implement and
apply the Limit.
Voting Procedures and Method of Counting Votes
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote FOR the election of the
nominees proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more
of the nominees being proposed. Under Delaware law and the Company's Certificate
of Incorporation and Bylaws, Directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which authority to
vote for one or more of the nominees being proposed is withheld.
2
<PAGE>
Proxies solicited hereby will be returned to the Company, and will be
tabulated by inspectors of election designated by the Board.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the Company's Common Stock
are required to file certain reports regarding such ownership with the Company
and with the Securities and Exchange Commission ("SEC"), in accordance with the
Securities Exchange Act of 1934 (the "Exchange Act"). The following table sets
forth information regarding persons known to be beneficial owners of more than
5% of the Company's Common Stock outstanding as of March 29, 1999.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------- ----------------- --------
<S> <C> <C>
Kingfield Bank 122,103 9.6 %
Employee Stock Ownership Plan
c/o Kingfield Bank
Main Street
Kingfield, Maine 04947
John C. Witherspoon 91,187 (1) 7.1 %
c/o Kingfield Bank
Main Street
Kingfield, Maine 04947
Athena Capital Management, Inc. (2) 102,630 8.1 %
621 E. Germantown Pike, Suite 105
Plymouth Valley, Pennsylvania 19401
</TABLE>
- ---------------------------
(1) Includes 9,993 shares subject to future vesting under awards granted
pursuant to the Bank's Recognition and Retention Plans and Trusts ("BRPs")
and as to which voting may currently be directed. Includes 13,498 shares
subject to options granted pursuant to the Company's Incentive Stock Option
Plan that may be exercised within 60 days of the Record Date. Includes
12,239 shares allocated to Mr. Witherspoon's account under the Bank's
Employee Stock Ownership Plan (the "ESOP").
(2) Athena Capital Management is an investment company. The information
contained herein is based upon an Amended Schedule 13G beneficial ownership
report, dated January 26, 1999, filed by Athena Capital Management with the
SEC. Such Schedule 13G indicates that Athena Capital Management has shared
voting and investment power over these shares of Common Stock.
3
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
Each of the members of the Board of Directors of the Company also
serves on the Board of Directors of Kingfield Bank (the "Bank"), the Company's
wholly-owned subsidiary. Directors are elected for staggered terms of three
years each, with the term of office of only one class of Directors expiring in
each year. Directors serve until their successors are elected and qualified. No
person being nominated as a Director is being proposed for election pursuant to
any agreement or understanding between any person and the Company.
The nominees proposed by the Board for election at this Annual Meeting
are Roger G. Spear and John C. Witherspoon. Each of these nominees is presently
a Director of the Company. Set forth below is certain information concerning the
nominees and the other members of the Board as of March 29, 1999. The Board
believes that such nominees will stand for election and will serve if elected as
Director. However, if any of the nominees proposed by the Board of Directors
fails to stand for election or is unable to accept election, the proxies will be
voted for the election of such other person or persons as the Board of Directors
may recommend.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
THE NOMINEES WHOSE NAMES APPEAR BELOW.
<PAGE>
<TABLE>
<CAPTION>
NOMINEES
Amount and Nature of
Name, Age, Principal Occupation and Beneficial Ownership Percent
Business Experience for Past Five Years Expiration of Term of Stock (1) of Class
- --------------------------------------- ------------------ ---------------------------- --------
<S> <C> <C> <C>
Roger G. Spear, Age 55................ 2002 8,076 (2) 0.6 %
Mr. Spear was elected as
Director of the Bank and the
Company in March 1993. Mr.
Spear is Vice President of
Administration-Chief Financial
Officer of the University of
Maine at Farmington.
John C. Witherspoon, Age 42........... 2002 91,187 (3) 7.1 %
Mr. Witherspoon has served as
Chief Executive Officer and
Director of the Company since
its formation in 1993. He
joined the Bank in 1979 as an
administrative assistant and
served as Vice President from
June 1981 until January 1984.
In January 1984, Mr.
Witherspoon began to serve as
President and Chief Executive
Officer of the Bank and was
elected to serve on the Board
of Directors of the Bank in
1987.
<CAPTION>
CONTINUING DIRECTORS
Amount and Nature of
Name, Age, Principal Occupation and Beneficial Ownership Percent
Business Experience for Past Five Years Expiration of Term of Stock (1) of Class
- --------------------------------------- ------------------ ---------------------------- --------
<S> <C> <C> <C>
G. Norton Luce, Age 65................ 2000 23, 336 (2) 1.8 %
Mr. Luce has served as a
Director of the Company since
its formation in 1993. He has
served as a Director of the
Bank since 1978. Mr. Luce was
president of Mountain Fuel
Company/Valley Gas Company, a
heating oil and gas delivery
business, as well as heating
systems installations, from
1975 until his retirement in
October 1988.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONTINUING DIRECTORS
Amount and Nature of
Name, Age, Principal Occupation and Beneficial Ownership Percent
Business Experience for Past Five Years Expiration of Term of Stock (1) of Class
- --------------------------------------- ------------------ ---------------------------- --------
<S> <C> <C> <C>
Winfield F. Robinson, Age 61.......... 2000 44,238 (4) 3.4 %
Mr. Robinson has served as
Chairman of the Board of the
Company since its formation in
1993. He has served as a
Director of the Bank since
1976 and was elected Chairman
of the Board in 1986. Mr.
Robinson is President of
Timber Resource Group LLC, a
Maine-based forest products
firm.
William P. Dubord, Age 51............... 2001 19,464 (2) 1.5 %
Mr. Dubord has served as a
Director of the Company since
its formation in 1993. He has
served as a Director of the
Bank since 1988. Mr. Dubord is
a partner in the law firm of
Marden, Dubord, Bernier &
Stevens.
Theodore C. Johanson, Age 61.......... 2001 13,170 (2) 1.0 %
Mr. Johanson was appointed a
Director of the Bank and the
Company in October, 1996. Mr.
Johanson is the President of
Falcon Shoe Company in
Lewiston, Maine.
All Directors and Executive officers -- 282,321 (5)(6) 20.8 %
as a group (ten persons)..........
</TABLE>
<PAGE>
- -----------------------------------
(1) Unless otherwise indicated, each person effectively exercises sole (or
shared with spouse) voting and dispositive power as to the shares
reported.
(2) Includes 6,950 shares that may be acquired pursuant to the exercise of
stock options granted under the Directors' Stock Option Plan.
(3) Includes 9,993 shares subject to future vesting under awards granted
pursuant to the Bank's Recognition and Retention Plans and Trusts
("BRPs") and as to which voting may currently be directed. Includes
13,498 shares subject to options granted pursuant to the Company's
Incentive Stock Option Plan that may be exercised within 60 days of the
Record Date. Includes 12,239 shares allocated to Mr. Witherspoon's
account under the Bank's ESOP.
(4) Includes13,900 shares that may be acquired pursuant to the exercise of
stock options granted under the Directors' Stock Option Plan.
(5) Includes 12,300 shares subject to future vesting under awards granted
pursuant to the BRPs and as to which voting may currently be directed.
Includes 87,905 shares that may be acquired pursuant to the exercise of
stock options.
(6) Includes 30,339 shares allocated to the accounts of executive officers
under the ESOP. Excludes the remaining 90,051 shares of Common Stock,
or 7.1% of the shares of Common Stock outstanding, owned by the ESOP
for the benefit of the employees of the Company and the Bank who are
not executive officers. The ESOP Administrative Committee administers
the ESOP. Under the terms of the ESOP, shares of Common Stock allocated
to the account of employees are voted in accordance with the
instructions of the respective employees. Unallocated shares are voted
by the ESOP Trustee as directed by the Administrative Committee. The
Administrative Committee shall vote the unallocated shares in a manner
that reflects the directions received from employees as to allocated
shares, unless their fiduciary duties require otherwise. As of the
Record Date, 101,153 shares of Common Stock held by the ESOP had been
allocated to the accounts of employees, including the shares allocated
to the account of executive officers.
Meetings of the Board of Directors and Committees of the Board
During the year ended December 31, 1998, the Board of Directors of the
Company held four meetings, and the Board of Directors of the Bank held 14
meetings. Each Director of the Company is a Director of the Bank. No Director of
the Company attended fewer than 75% of the total meetings of the Board of
Directors and committees on which such Board member served during this period,
with respect to each the Company and the Bank.
The Board of Directors of the Company serves as the nominating
committee for directors. While the Board will consider nominees recommended by
the stockholders, it has not actively solicited recommendations from
stockholders. Nominations by stockholders must comply with certain procedural
and informational requirements set forth in the Company's Bylaws. See "Advance
Notice of Business to be Conducted at an Annual Meeting."
The Bank's compensation committee consists of Messrs. Dubord (Chairman)
and Robinson. The compensation committee reviews compensation, officer
promotions, benefits and other matters of personnel policy and practice. The
compensation committee met four times in 1998.
5
<PAGE>
The Bank's audit committee, consisting of Directors Dubord, Luce and
Spear, is responsible for reviewing audit performance and evaluating policies
and procedures relating to auditing functions and controls. The audit committee
met four times in 1998.
Directors' Compensation
Fees. Outside Directors of the Bank are paid an annual retainer of
$9,500 ($12,000 for the Chairman of the Board) of which $1,500 ($2,000 for the
Chairman) is paid in Company Common Stock. In addition, Outside Directors
receive a fee of $200 for each Board meeting and Committee meeting attended.
Directors Deferred Fee Plan. The Bank maintains a deferred fee plan for
members of the Board of Directors. Participation in the Deferred Fee Plan is
voluntary. Under the Deferred Fee Plan, a Director who wishes to participate in
the Plan executes an agreement whereby the Director agrees to defer receipt of a
certain amount of fees otherwise payable to him. The Director's account is
credited with interest based on the prime rate quoted in the Wall Street Journal
on December 31 of each year. Benefits (deferrals plus credited interest) are
payable to the Director for ten years beginning on the later of the first day of
the calendar month following the end of the Director's term of office due to
resignation, removal, failure to be re-elected, or the Director's seventieth
(70th) birthday. In the event of the Director's death, the Bank will make
specified monthly payments to the Director's beneficiary or beneficiaries within
30 days after the Director's death. The Bank's obligation under the Deferred Fee
Plan is an unfunded and unsecured promise to pay. However, at its sole and
exclusive option, the Bank may elect to fund the Deferred Fee Plan. Currently,
Messrs.
Robinson, Dubord and Spear participate in the Deferred Plan.
Directors Option Plans. In 1993, the Company adopted a stock option
plan for Directors who are not employees of the Company or its subsidiary. The
Directors Option Plan authorized the granting of non-statutory stock options for
an aggregate of 39,600 shares of Common Stock (as adjusted to reflect stock
dividends and stock splits paid by the Company on August 12, 1996 and July 10,
1997 (the "Stock Dividends")) to members of the Board of Directors who were not
employees of the Bank or the Company. The six members of the Board of Directors
at the time of the conversion of the Bank from the mutual to stock form and the
related initial public offering of the Common Stock, who were not officers or
employees of the Company or the Bank, received an option to purchase 4,950
shares of Common Stock, except that the Chairman of the Board received an option
to purchase 9,900 shares. Both of these figures have been adjusted to reflect
the Stock Dividends. Options as to a total of 39,600 shares of Common Stock have
been granted to Directors under this plan. The exercise price of any option
granted under the Directors Option Plan may be paid in cash or common stock.
Directors are also eligible to receive option grants under the 1998 Long-Term
Incentive Stock Option Plan. In 1998, the five members of the Board of Directors
who were not officers or employees of the Company of the Bank, received an
option to purchase 2,000 shares of Common Stock, except that the Chairman of the
Board received an option to purchase 4,000 shares. The exercise price of any
option granted under the Directors Option Plan may be paid in cash or common
stock.
6
<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth the cash
compensation paid by the Bank, for services rendered during the years ended
December 31, 1998, 1997 and 1996, to the Chief Executive Officer of the Bank and
the Company (the "Named Executive Officer").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Other
Year Annual Awards Payouts All Other
Name and Ended Salary Bonus Compensation Compensation
Principal Position December 31, (1) (2) (3)
==================== ============== ========== ========== =============== ------------------------- ----------- ==============
Restricted Options/
Stock SARS LTIP
Awards (#) Payouts
============ =========== ===========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John C. Witherspoon 1998 $125,000 $18,025 -- -- -- -- $34,036
President and Chief 1997 115,000 17,537 -- -- -- -- 53,564
Executive Officer 1996 100,800 12,000 -- -- -- -- 24,576
==================== ============== ========== ========== =============== ============ =========== =========== ==============
</TABLE>
- ------------------------------------
(1) Salary amount includes $8,343, $7,635 and $7,004, respectively,
deferred by Mr. Witherspoon pursuant to the Bank's 401(k) Retirement
and Savings Plan for the years ended December 31, 1998, 1997and 1996.
(2) Perquisites for the years ended December 31, 1998, 1997 and 1996 did
not exceed the lesser of $50,000 or 10% of the total of the salary and
bonus as reported for the Named Executive Officer.
(3) Includes $6,253, $5,453 and $4,760, respectively, of matching
contributions made by the Bank on Mr. Witherspoon's behalf pursuant to
the Bank's 401(k) Retirement and Savings Plan for the years ended
December 31, 1998, 1997 and 1996. Also includes $27,783, $48,111 and
$19,816, respectively, representing the market value of shares of
Common Stock allocated to Mr. Witherspoon under the Bank's ESOP for the
years ended December 31, 1998, 1997 and 1996.
<PAGE>
Employment Agreements. The Bank and the Company have entered into an
employment agreement with John C. Witherspoon, which provides for a three-year
term. On each anniversary date of the agreement, the term of the agreement may
be extended for an additional year such that the remaining term is three years.
If notice of renewal is not provided, the agreement will expire two years
thereafter. In addition to a current base salary of $125,000, the agreement
provides for, among other things, disability pay, participation in stock benefit
plans and other fringe benefits applicable to executive personnel. The agreement
provides for termination by the Bank or the Company for cause at any time,
without further obligation. If termination of employment for cause is disputed
by Mr. Witherspoon, the Company will continue making payments and providing
benefits to Mr. Witherspoon until the dispute is settled by arbitration. If it
is determined in arbitration that cause for termination existed, payments made
must be returned. In the event the Bank or the Company choose to terminate the
executive's employment for reasons other than cause, or the executive resigns
due to demotion or loss of responsibility, relocation, reduction in benefits and
perquisites or liquidation of the Bank or the Company, the executive will be
entitled to his base salary for the remaining term of the agreement. Life,
health and disability coverage would be provided for the remaining term of the
agreement. If termination, voluntary or involuntary, follows a change in control
of the Bank or the Company, the executive or, in the event of death, his
beneficiary would be entitled to (i) a severance payment equal to the greater of
the payments due for the remaining term of the agreement or three times the
average of the three preceding years base salary; and (ii) life, medical and
disability coverage for thirty-six (36) months.
7
<PAGE>
A "change in control" is generally defined to mean, during the term of
the agreement, the acquisition of Company or Bank stock that would require
Federal Reserve Board approval under the Bank Holding Company Act or under the
Change in Bank Control Act or the acquisition by a person, or group of persons,
of beneficial ownership of 20% or more of the Company's Common Stock, or a
tender offer, exchange offer, merger or other form of business combination, sale
of assets, or contested election of directors which results in a change of a
majority of the Board of Directors. Payments to the executive under the
agreement will be made by the Company in the event that payments or benefits are
not paid by the Bank.
Incentive Stock Option Plans. The Board of Directors of the Company has
established stock option plans which provide discretionary awards to its
officers and key employees. The grant of awards to employees under the option
plans is determined by a committee of the Board of Directors consisting of
non-employee directors.
Set forth in the table that follows is information relating to options
granted under the Stock Option Plans to the Named Executive Officer during 1998.
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
=========================================================================================================================
Individual Grants
Percent of Total
Options Granted Grant Date Present
to Employees in Exercise or Expiration Value (1)
Name Options Granted FY 1998 Base Price Date
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
John C. Witherspoon 17,000 27.6% $18.50 1/20/2008 $135,653
=========================== ================= =================== ============= ============== =======================
</TABLE>
- ------------------------------------
(1) The grant date present values per option share were derived using the
Black-Scholes option pricing model with the following assumptions:
volatility of 41.5%; risk free rate of return of 4.75%; dividend yield
of 0.63%; and a ten year option life.
Set forth below is certain information concerning options outstanding
to the Named Executive Officer at December 31, 1998, and the options exercised
by the Named Executive Officer during 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
Number of Unexercised Value of Unexercised In-
Options at The-Money Options at
Shares Acquired Value Year-End Year-End (2)
Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)
---- ------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John C. Witherspoon........ 19,968 $308,899 (1) 13,498 /13,600 $77,150 / $0
=========================== ================= ================= ========================== ==========================
</TABLE>
- ------------------------------------
(1) Equals the difference between the aggregate exercise price of the
options exercised and the aggregate fair market value of the shares of
Common Stock received upon exercise computed by using the last trade
price of the Common Stock as quoted on the Nasdaq Stock Market on the
date of exercise.
(2) Equals the difference between the aggregate exercise price of such
options and the aggregate fair market value of the shares of Common
Stock that would be received upon exercise, assuming such exercise
occurred on December 31, 1998, at which date the last trade price of
the Common Stock as quoted on the Nasdaq SmallCap Market was $15.50.
8
<PAGE>
Transactions With Certain Related Persons
There are loans outstanding from the Bank to certain of its Directors
and executive officers, and their related interests. All loans or extensions of
credit to executive officers and Directors, and their related interest, are made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with the general public
and do not involve more than the normal risk of repayment or present other
unfavorable features.
INDEPENDENT AUDITORS
The Company's independent auditors for the year ended December 31,
1998 were Berry, Dunn, McNeil & Parker, Certified Public Accountants ("BDMP").
The Board of Directors of the Company has selected BDMP as its independent
auditors for the year ending December 31, 1999. The selection was based in
general upon the accounting firm's overall fee structure for auditing services,
tax consulting, tax return review or preparation, and general consultations as a
result of competitive bids solicited by the Company. A representative of BDMP is
expected to attend the Annual Meeting. The representative will be given the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions from stockholders present at the Annual Meeting.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement in
connection with the annual meeting of stockholders to be held following the year
ending December 31, 1999, a stockholder proposal must be received by the
Secretary of the Company, at the address set forth on the first page of this
Proxy Statement, no later than December 14, 1999. Any stockholder proposal
submitted to the Company will be subject to SEC Rule 14a-8 under the Securities
Exchange Act of 1934.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for
certain business, or nominations to the Board of Directors, to be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than ninety (90)
days before the date fixed for such meeting. The notice must include the
stockholder's name, record address, and number of shares owned by the
stockholder, and describe briefly the proposed business, the reasons for
bringing the business before the annual meeting, and any material interest of
the stockholder in the proposed business. In the case of nominations to the
Board, certain information regarding the nominee must be provided.
9
<PAGE>
The date on which next year's Annual Meeting of Stockholders is
expected to held is May 10, 2000. Accordingly, advance notice for certain
business, or nominations to the Board of Directors, to be brought before the
Annual Meeting to be held in the year 2000 must be given to the Company by
February 10, 2000. If notice is received after February 10, 2000, it will be
considered untimely, and the Company will not be required to present the matter
at the stockholders meeting.
By Order of the Board of Directors
Kingfield, Maine
April 12, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
