SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
MERRILL MERCHANTS BANCSHARES, INC.
----------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined.):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
<PAGE>
[logo] Merrill Merchants Bancshares, Inc.
March 15, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Merrill Merchants Bancshares, Inc. (the "Company"), the holding
company for Merrill Merchants Bank (the "Bank") which will be held on April 15,
1999 at 5:30 p.m. Eastern Standard Time at the Holiday Inn Civic Center, 500
Main Street, Bangor, Maine 04401 (the "Annual Meeting").
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business that we will transact at the Annual Meeting. In addition to the
formal items of business, management will report on the operations and
activities of the Company and the Bank and you will have an opportunity to ask
questions.
The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in the
best interests of the Company and its stockholders and unanimously recommends a
vote "FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly,
whether or not you plan to attend the Annual Meeting. Your vote is important
regardless of the number of shares you own. Voting by proxy will not prevent you
from voting in person at the Annual Meeting but will assure that your vote is
counted if you cannot attend.
On behalf of the Board of Directors and the employees of Merrill
Merchants Bancshares, Inc. and Merrill Merchants Bank, we thank you for your
continued support and look forward to seeing you at the Annual Meeting.
Sincerely yours,
/s/ Edwin N. Clift /s/ William C. Bullock, Jr.
Edwin N. Clift William C. Bullock, Jr.
President and Chief Executive Officer Chairman
<PAGE>
MERRILL MERCHANTS BANCSHARES, INC.
201 MAIN STREET
BANGOR, MAINE 04401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: Thursday, April 15, 1999
Time: 5:30 p.m., local time
Place: Holiday Inn Civic Center
500 Main Street
Bangor, Maine 04401
At our 1999 Annual Meeting, we will ask you to:
o Elect three directors to serve for a three-year term expiring at the 2002
annual meeting. The following three directors are the Board of Director's
nominees:
Dennis L. Shubert, M.D. Frederick A. Oldenburg, Jr., M.D. Perry B. Hansen
o Ratify the appointment of Berry, Dunn, McNeil & Parker as our independent
auditors for the fiscal year ending December 31, 1999; and
o Transact any other business as may properly come before the Annual Meeting.
You may vote at the Annual Meeting if you were a stockholder of the
Company at the close of business on February 26, 1999, the record date.
By Order of the Board of Directors,
/s/ Norman Minsky
Norman Minsky,
Clerk
Bangor, Maine
March 15, 1999
================================================================================
You are cordially invited to attend the Annual Meeting. It is important that
your shares be represented regardless of the number of shares you own. The Board
of Directors urges you to sign, date and mark the enclosed proxy card promptly
and return it in the enclosed envelope. Returning the proxy card will not
prevent you from voting in person if you attend the Annual Meeting.
================================================================================
<PAGE>
GENERAL INFORMATION
General
We have sent you this Proxy Statement and enclosed proxy card because
the Board of Directors is soliciting your proxy to vote at the Annual Meeting.
This Proxy Statement summarizes the information you will need to know to cast an
informed vote at the Annual Meeting. You do not need to attend the Annual
Meeting to vote your shares. You may simply complete, sign and return the
enclosed proxy card and your votes will be cast for you at the Annual Meeting.
This process is described below in the section entitled "Voting Rights."
We began mailing this Proxy Statement, the Notice of Annual Meeting and
the enclosed proxy card on or about March 15, 1999 to all stockholders entitled
to vote. If you owned the Company's common stock ("Common Stock") at the close
of business on February 26, 1999, the record date, you are entitled to vote at
the Annual Meeting. As of January 31, 1999, there were 2,415,986 shares of
Common Stock outstanding.
Quorum
A quorum of stockholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the outstanding shares of
Common Stock of the Company entitled to vote are represented in person or by
proxy at the Annual Meeting, a quorum will exist. We will include proxies marked
as abstentions and broker non-votes to determine the number of shares present at
the Annual Meeting.
Voting Rights
You are entitled to one vote at the Annual Meeting for each share of
the Company's Common Stock that you owned as of record at the close of business
on February 26, 1999. The number of shares you own is listed on the proxy card.
You may vote your shares at the Annual Meeting in person or by proxy.
To vote in person, you must attend the Annual Meeting and obtain and submit a
ballot, which we will provide to you at the Annual Meeting. To vote by proxy,
you must complete, sign and return the enclosed proxy card. If you properly
complete your proxy card and send it to us in time to vote, your "proxy" (one of
the individuals named on your proxy card) will vote your shares as you have
directed. If you sign the proxy card but do not make specific choices, your
proxy will vote your shares FOR each of the proposals identified in the Notice
of the Annual Meeting.
If any other matter is presented, your proxy will vote the shares
represented by all properly executed proxies on such matters as a majority of
the Board of Directors determines. As of the date of this Proxy Statement, we
know of no other matters that may be presented at the Annual Meeting, other than
those listed in the Notice of the Annual Meeting.
<PAGE>
Vote Required
Proposal 1: The three nominees for director who receive the most votes
Elect Three will be elected. So, if you do not vote for a nominee, or
Directors you indicate "withhold authority" for any nominee on your
proxy card, your vote will not count "for" or "against" the
nominee. You may not vote your shares cumulatively for the
election of directors.
Proposal 2: The affirmative vote of a majority of the shares present
Ratify Appointment in person or by proxy at the Annual Meeting and entitled to
of Independent vote on this proposal is required to ratify the appointment
Public Accountants of Berry, Dunn, McNeil & Parker as the Company's
independent certified public accountants. So, if you
"abstain" from voting, it has the same effect as if you
voted "against" this proposal.
Effect of Broker Non-Votes
If your broker holds shares that you own in "street name," the broker
may vote your shares on the two proposals listed above even if the broker does
not receive instructions from you. If your broker does not vote on any of the
proposals, this will constitute a "broker non-vote." Here is the effect of a
"broker non-vote":
o Proposal 1: Elect Three Directors. A broker non-vote would have no effect
on the outcome of this proposal because only a plurality of votes cast is
required to elect a director.
o Proposal 2: Ratify Appointment of Independent Public Accountants. A broker
non-vote would have no effect on the outcome of this proposal.
Confidential Voting Policy
The Company maintains a policy of keeping stockholder votes
confidential. We only let our Inspector of Election and certain employees of our
trust department examine the voting materials. We will not disclose your vote to
management unless it is necessary to meet legal requirements. We will, however,
forward any written comments that you may have to management.
Revoking Your Proxy
You may revoke your proxy at any time before it is exercised by:
o Filing with the Clerk of the Company a letter revoking the proxy;
o Submitting another signed proxy with a later date; and
o Attending the Annual Meeting and voting in person, provided you file a
written revocation with the Clerk of the Annual Meeting prior to the voting
of such proxy.
If your shares are not registered in your own name, you will need
appropriate documentation from your stockholder of record to vote personally at
the Annual Meeting. Examples of such documentation include a broker's statement,
letter or other document that will confirm your ownership of shares of the
Company.
-2-
<PAGE>
Solicitation of Proxies
The Company will pay the costs of soliciting proxies from its
stockholders. Directors, officers or employees of the Company and the Bank may
solicit proxies by:
o mail;
o telephone; and
o other forms of communication.
We will also reimburse banks, brokers, nominees and other fiduciaries
for the expenses they incur in forwarding the proxy materials to you.
Obtaining an Annual Report on Form 10-KSB
If you would like a copy of our Annual Report on Form 10-KSB for the
year ended December 31, 1998, as filed with the Securities and Exchange
Commission ("SEC"), we will send you one (without exhibits) free of charge.
Please write to:
Deborah A. Jordan
Treasurer
Merrill Merchants Bancshares, Inc.
201 Main Street
Bangor, Maine 04401
-3-
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table contains Common Stock ownership information for
(i) persons known to the Company to "beneficially own" 5% or more of the
Company's Common Stock as of January 31, 1999; and (ii) each of the directors of
the Company and Named Executive Officers of the Company and the Bank named
elsewhere in this Proxy Statement. See "Information about Board of Directors and
Management." In general, beneficial ownership includes those shares that a
person has the power to vote, sell, or otherwise dispose. Beneficial ownership
also includes that number of shares which an individual has the right to acquire
within 60 days (such as stock options) of the date this table was prepared. Two
or more persons may be considered the beneficial owner of the same share. We
obtained the information provided in the following table from filings with the
SEC and with the Company. In this proxy statement, "voting power" is the power
to vote or direct the voting of shares, and "investment power" includes the
power to dispose or direct the disposition of shares.
<TABLE>
<CAPTION>
Amount of Percent of Shares
Name and Address Beneficial of Common Stock
of Beneficial Owner Ownership Outstanding (1)
------------------- ---------- ------------------
<S> <C> <C>
The Bullock Family Trust (2) (3) 226,044 8.9%
c/o William C. Bullock, Jr.
44 Bald Hill Reach Road
Orrington, Maine 04474
William C. Bullock, Jr. (2) (3) 226,044 8.9%
44 Bald Hill Reach Road
Orrington, Maine 04474
Perry B. Hansen (4) 188,974 7.5%
4521 Shadowbrook Court
Bettendorf, Iowa 52922
Edwin N. Clift (5) 119,889 4.8%
Leonard E. Minsky (6) 77,320 3.2%
Joseph H. Cyr (7) 76,950 3.2%
Joseph Sewall (8) 75,151 3.1%
Dennis L. Shubert, M. D. (9) 51,569 2.1%
Harold S. Wright (10) 46,000 1.9%
Susan B. Singer (11) 42,103 1.7%
Norman Minsky (12) 39,534 1.6%
Frederick A. Oldenburg, Jr., M.D. (13) 29,818 1.2%
Number of shares owned by all directors
and executive officers as a group 1,214,814 40.8%
(21 persons) (14).
</TABLE>
- --------------------------
(1) The total number of shares of the Company's Common Stock outstanding on
January 31, 1999 was 2,415,986.
(2) Includes 33,327 shares of Common Stock issuable upon the conversion of
the Debentures, 77,760 shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock and 6,856 shares of Common
Stock issuable upon the exercise of stock options.
(footnotes continued on following page)
-4-
<PAGE>
(3) Mr. Bullock is the trustee of The Bullock Family Trust.
(4) Includes 33,327 shares of Common Stock issuable upon the conversion of
the Debentures, 66,645 shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock and 13,122 shares of Common
Stock issuable upon the exercise of stock options.
(5) Includes 22,212 shares of Common Stock issued upon the conversion of
the Series A Preferred Stock and 54,474 shares of Common Stock issuable
upon the exercise of stock options.
(6) Includes 5,950 shares of Common Stock held by The Norman Minsky
Charitable Remainder Unitrust, of which Mr. Leonard Minsky is trustee.
(7) Includes 72,000 shares of Common Stock held jointly with his spouse.
(8) Held in the name of James W. Sewall Co., of which Mr. Sewall holds an
ownership interest.
(9) Includes 41,319 shares of Common Stock held by Walden Partnership, of
which Dr. Shubert holds a controlling interest. Also includes 5,300
shares of Common Stock held in the name of Dr. Shubert's children, of
which his spouse serves as Trustee.
(10) Includes 11,106 shares of Common Stock issuable upon the conversion of
the Series A Preferred Stock and 16,983 shares of Common Stock issuable
upon the exercise of stock options.
(11) Includes 4,950 shares of Common Stock issuable upon the exercise of
stock options.
(12) Includes 39,534 shares held in the name of GMM&S Associates, of which
Norman Minsky owns a controlling interest.
(13) Includes 17,028 shares of Common Stock held under the name Penobscot
Respiratory PA FBO Frederick A. Oldenburg, Jr.; 1,890 shares of Common
Stock issuable upon the exercise of stock options; and 7,200 shares of
Common Stock held by spouse and child.
(14) Includes 22,212 shares of Common Stock issuable upon the conversion of
Series A Preferred Stock, and 200,010 shares of Common Stock issuable
upon the exercise of stock options granted to the executive officers of
the Bank. See Notes (1) through (13).
-5-
<PAGE>
DISCUSSION OF PROPOSALS RECOMMENDED BY BOARD
-----------------------------------------
PROPOSAL (1)
ELECTION OF DIRECTORS
-----------------------------------------
General
The Board has nominated three persons for election as directors at the
Annual Meeting. Dr. Shubert and Mr. Hansen currently serve on the Company's
Board of Directors. Dr. Oldenburg was nominated by the Board of Directors to
replace Mr. Joseph Sewall, who is retiring from the Board of Directors upon the
expiration of his term at the 1999 Annual Meeting. If you elect the nominees,
they will hold office until the Annual Meeting in 2002, or until their
successors have been elected.
We know of no reason why any nominee may be unable to serve as a director.
If any nominee is unable to serve, your proxy may vote for another nominee
proposed by the Board. If for any reason these nominees prove unable or
unwilling to stand for election, the Board will nominate alternates or reduce
the size of the Board of Directors to eliminate the vacancy. The Board has no
reason to believe that its nominees would prove unable to serve if elected.
Nominees, Continuing and Retiring Directors
<TABLE>
<CAPTION>
Position(s)
Term Held with Director
Age(1) Expires the Company Since
------ ------- ----------- ------
<S> <C> <C> <C> <C>
Nominees
- --------
Perry B. Hansen 51 1999 Director 1992
Frederick A. Oldenburg, Jr., M.D. 51 1999 Director --
Dennis L. Shubert, M.D. 51 1999 Director 1998
Continuing Directors
- --------------------
William C. Bullock, Jr. 62 2001 Director, Chairman of the Board 1992
Edwin N. Clift 59 2001 Director, President and Chief 1992
Executive Officer
Joseph H. Cyr 58 2000 Director 1992
Leonard E. Minsky 71 2000 Director 1992
Susan B. Singer 49 2001 Director 1998
Harold S. Wright 74 2000 Director 1992
Retiring Director
- -----------------
Joseph Sewall 76 1999 Director 1992
</TABLE>
- ---------------------
(1) As of December 31, 1998.
-6-
<PAGE>
The principal occupation and business experience of each nominee for
election as director, each Continuing Director and Retiring Director is set
forth below.
Nominees
Perry B. Hansen has been a Director of the Company and the Bank since
1992. He was Chairman and Chief Executive Officer of The Rock Island Bank, Rock
Island, Illinois, and had held those positions from 1985-1998. Prior to that
time, he was the Chief Operating Officer and a director of Brenton First
National Bank, Davenport, Iowa, which was a member of the sixteen bank Brenton
Bank Holding Company. Presently he is an investor holding senior management
positions in several privately held companies.
Frederick A. Oldenburg, Jr., M.D. has served as a Director of the Bank
since 1996. Since 1973, he has been a practicing physician, and since 1993,
President and part owner of Penobscot Respiratory and also Director of
Respiratory Care at St. Joseph Hospital in Bangor. He is a graduate of Dartmouth
College and Case Western Reserve University Medical School. Dr. Oldenburg is
president of the National Association for the Medical Direction of Respiratory
Care.
Dennis L. Shubert, M.D. has served as a Director of the Company since
May 1998 and a Director of the Bank since 1992. He is a neurosurgeon and
President of Maine Neurosurgery of Bangor and Portland, Maine. Dr. Shubert is a
Bangor native who graduated from Tufts University, received an M.D. from George
Washington University and a Ph.D. from the University of Minnesota. Dr. Shubert
has been active in a number of professional organizations including: president
of the Penobscot County Medical Association and president of the Maine
Neurosurgical Society.
Continuing Directors
William C. Bullock, Jr. has served as Chairman of the Company and the
Bank since its inception. From 1988 to 1989, he was formerly chairman of
Merrill/Norstar Bank, which was a predecessor to Fleet Bank. Prior to the merger
of The Merrill Trust Company ("Merrill Bank") and Norstar Bank of Maine in 1988,
he served as chairman of the board and president of Merrill Bank, Bangor, and
was associated with that company in various capacities from 1969. Mr. Bullock
was also an executive vice president and director of Fleet/Norstar Financial
Group of Providence, Rhode Island, the holding company for Merrill/Norstar Bank,
from 1986 until 1988. Before joining Merrill Bank, Mr. Bullock served in a
number of officer positions for Morgan Guaranty Trust Company of New York. He is
a graduate of Yale University and attended the graduate school of business at
New York University. From 1987 to 1989, Mr. Bullock was a Class A director of
the Federal Reserve Bank of Boston. He currently serves as a director of a
number of Maine businesses including Bangor Hydro-Electric Company, Bangor,
Maine and Eastern Maine Healthcare, Bangor, Maine.
Edwin N. Clift has served as President and Chief Executive Officer of
the Company and the Bank since its inception and he has been involved in
organizational activities for the Company and the Bank on a full-time basis
since April 1992. From 1991 to 1992, he was executive vice president of Machias
Savings Bank, a mutual savings bank in Machias, Maine, where he was responsible
for all functions within the bank as directed by the president and the board of
directors. He has also served as senior vice president and senior divisional
commercial officer at Key Bank, a publicly traded company, where he was
responsible for commercial lending and business development activities. Mr.
Clift began his banking career at The Merrill Trust Company where he was
employed for 24 years with various titles and responsibilities including, senior
vice president and senior administrative officer, responsible for the overall
administration of the bank's branch system. Mr. Clift is a graduate of Strayer
College in Washington, D.C. and the Williams College School of Banking, and
attended the University of Maine. In 1998, he was elected to a three year term
as a Class A director of the Federal Reserve Bank of Boston. He is a past
president of the Independent
-7-
<PAGE>
Community Bankers Association of Maine and is a director and first vice
president of the Maine Bankers Association. Mr. Clift is Chairman of the St.
Joseph Healthcare Foundation board of trustees and Chairman of the Maine
Committee for Employer Support for the Guard and Reserve. He is a past president
of the Bangor Area Breakfast Rotary and has served many other economic, civic,
and charitable organizations. He is also a director of Seven Islands Land
Company, a privately held company that manages one million acres of certified
forest in Maine.
Joseph H. Cyr has served as a Director of the Company and the Bank
since 1992. He has been the owner of John T. Cyr & Sons, Inc., Old Town, Maine,
a privately held charter bus service, since 1967. Mr Cyr has been involved in
that business since 1962 and became the owner in 1967. He was formerly a
director of Norstar Bank in Bangor. He has been active in a number of civic and
charitable organizations including: trustee of Husson College; president of the
Bangor Area Chamber of Commerce; director of St. Joseph Hospital; and director
of the Maine Community Foundation. He is also a director of Bangor
Hydro-Electric Company, Bangor, Maine.
Leonard E. Minsky has served as a Director of the Company and the Bank
since 1992. He is the retired president of Superior Paper Products, Inc., a
wholesale distributor of institutional and commercial paper and maintenance
products, with which he was associated for 42 years. Mr. Minsky is a graduate of
the University of Maine and is a former director of Northeast Bank of Bangor. He
is active in a number of community organizations including: member of the Board
of Visitors for the University of Maine; chairman of the President's Council for
University Development; chairman of the University of Maine Patrons of the Arts,
a director of Acadia Hospital; and a director of the Maine Community Foundation.
He and Norman Minsky are brothers.
Susan B. Singer has served as a Director of the Company since May 1998
and as a Director of the Bank since 1992. She presently serves as Comptroller
and Vice President of MTL, Inc., a family-owned sales, rental and leasing
company located in Bangor, with which she has been associated for 18 years. Ms.
Singer is a current member of Congregational Beth Israel and a past board member
and treasurer. She serves on the board of directors of Eastern Maine Medical
Center Auxiliary. She was recently elected to the Y.W.C.A. board of directors.
Harold S. Wright has served as a Director of the Company and Director
and Vice Chairman of the Bank since 1992. He retired as executive vice president
of The Merrill Trust Company in 1987 after a 35 year banking career. He is a
former Potentate of Anah Temple Shrine, and has served as a director of a number
of privately held Maine companies, including Sawyer Management Co., Sherman
Lumber Company and Ward Log Homes.
Retiring Director
Joseph Sewall has served as a director of the Company since 1992 and
also served as a Director of the Bank from 1992 to 1996. He is Chairman of James
W. Sewall Company, a forest management, survey and aerial mapping company with
which he has been associated since 1945. He is a graduate of Bowdoin College. Mr
Sewall served five terms as president of the Maine Senate. He is a former
director of Merchants National Bank and Merrill Bancshares, Inc. Mr.
Sewall also serves as a trustee of the Maine Maritime Academy.
================================================================================
The Board of Directors unanimously recommends a vote "For" all of the nominees
for election as directors.
================================================================================
-8-
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
---------------------------------------
The Board of Directors has appointed Berry, Dunn, McNeil & Parker as
our independent public auditors for the Company for the fiscal year ending
December 31, 1999, and we are asking stockholders to ratify the appointment. A
representative of Berry, Dunn, McNeil & Parker is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
================================================================================
The Board of Directors unanimously recommends a vote "For" the ratification of
the appointment of Berry, Dunn, McNeil & Parker as independent auditors for the
Company.
================================================================================
INFORMATION ABOUT BOARD OF DIRECTORS AND MANAGEMENT
Board of Directors
The Company's Board of Directors currently consists of nine members.
The Company's Articles of Incorporation provides that the Board of Directors
shall be divided into three classes, as nearly equal in number as possible. The
terms of three directors expire at the Annual Meeting.
The Board of Directors oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the Board of Directors does not involve itself in the day-to-day
operations of the Company. The Company's executive officers and management
oversee the day-to-day operations of the Company. Our directors fulfill their
duties and responsibilities by attending regular meetings of the Board. Our
directors also discuss business and other matters with the Chairman and the
President, other key executives, and our principal external advisers (legal
counsel, auditors, financial advisors and other consultants).
The Board of Directors held 8 regular meetings during the fiscal year
ended December 31, 1998. With the exception of Directors Wright and Sewall, each
incumbent director attended at least 75% of the meetings of the Board of
Directors plus committee meetings on which that particular director served
during this period.
-9-
<PAGE>
Committees of the Board
The Board of Directors of the Company has established the following
committees:
EXECUTIVE The Executive Committee considers
COMMITTEE strategic, planning and industry issues and is
authorized to act as appropriate between
meetings of the Board of Directors.
Directors Bullock, Clift, Cyr, Singer, L.
Minsky, Shubert, Singer and Wright serve
as members of the committee.
The Executive Committee did not meet in the 1998
fiscal year.
AUDIT The Audit Committee reviews, acts on
COMMITTEE and reports to the Board of Directors with
respect to various auditing and accounting
matters, including the selection of the
Company's auditors, the scope of the annual
audits, fees to be paid to the auditors, the
performance of the Company's independent
auditors and the accounting practices of the
Company.
Directors Hansen, Oldenburg, Shubert, Singer and
Wright serve as members of the committee.
The Audit Committee met four times in the 1998
fiscal year.
COMPENSATION The Compensation Committee determines
COMMITTEE the salaries and incentive compensation of the
officers of the Bank and provides
recommendations for the salaries and incentive
compensation of the other employees and the
consultants of the Bank. The Compensation
Committee also administers the Company's various
incentive compensation, stock and benefit plans.
The Compensation Committee consists of
Directors L. Minsky, Cyr, Hansen, Shubert
and Singer.
The Compensation Committee met four times in the
1998 fiscal year.
The Board of Directors, acting as the nominating committee, met in
January, 1999 to select the nominees for election as directors at the Annual
Meeting.
Directors' Compensation
Directors' Fees. Currently, each director of the Company receives the
following fees:
o Non-employee directors of the Company receive $100 per month for their
attendance at monthly and any special meetings of the Board of Directors.
o Non-employee committee members also receive $50 for each committee meeting
that is not held on the same day as the Board of Directors meetings.
Non-employee directors may elect to have the payment of their directors'
fees deferred pursuant to the Directors' Deferred Compensation Plan. Total
directors' meeting and committee fees for fiscal 1998 were
-10-
<PAGE>
$14,755. We do not compensate our employees for service as directors. Directors
are also entitled to the protection of certain indemnification provisions in our
Articles of Incorporation and Bylaws.
Stock Option Plan. In addition, our directors are eligible to
participate in the Stock Option Plan. This stock benefit plan is discussed under
"Executive Compensation -- Stock Option Plan." No options under the Stock Option
Plan were granted to any non-employee director during the 1998 fiscal year.
Executive Officers
The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
Name Position Held with the Company
---- ------------------------------
William C. Bullock, Jr. Chairman
Edwin N. Clift President and Chief Executive Officer
Deborah A. Jordan Treasurer
The following individuals are executive officers of the Bank and hold
the offices set forth below opposite their names.
Name Position Held with the Bank
---- ---------------------------
William C. Bullock, Jr. Chairman
Edwin N. Clift President/Chief Executive Officer
Sara E. Carr Vice President/Compliance Officer
Charles W. Hart Secretary/Senior Vice President
Deborah A. Jordan Senior Vice President/Chief Financial
Officer/Treasurer
William P. Lucy Senior Vice President
Jane H. Madigan Senior Vice President
George H. Moore, Jr. Senior Vice President
Susan L. Rush Vice President
Lynne A. Spooner Senior Vice President
Reginald C. Williams, Jr. Senior Vice President
Harold S. Wright Vice Chairman
The Board of Directors elects the executive officers of the Company and
the Bank annually. The elected officers hold office until their respective
successors have been elected and qualified, or until death, resignation or
removal by the Board of Directors.
Biographical information of executive officers, who are not directors
of the Company, is set forth below.
Deborah A. Jordan, age 33, has served as Senior Vice President and
Chief Financial Officer of the Bank and Treasurer of the Company since 1993.
From 1987 to 1992, she was employed as an audit manager at Arthur Andersen LLP
in Boston. She is a graduate of Husson College and is a Certified Public
Accountant. Ms. Jordan serves as a director of Eastern Maine Technical College
Foundation and Opportunity Housing, Inc., as well as an advisory board member of
Husson College.
-11
<PAGE>
Sara E. Carr, age 56, has served as Vice President and Compliance
Officer of the Bank since 1992. She was previously employed as the Merchants
Plaza branch manager of Maine National Bank and its predecessor Merchants
National Bank, where she worked for 26 years. She is a graduate of Williams
College School of Banking, ABA Compliance School and ABA Graduate School of
Compliance. Ms. Carr serves on the Family Self-Sufficiency Committee of the
Bangor Housing Authority.
Charles W. Hart, age 59, has served as Senior Vice President and Head
of Branch Administration of the Bank since its inception. He has been involved
with the Company and the Bank since February 1992. From 1989 to 1991, he was
vice president and chief financial officer of Bean & Conquest, Motor Truck &
Trailer and Automotive Realty in Hermon, Maine, privately held related companies
engaged in the sales and service of heavy duty trucks and accessories. From May
1984 through June 1989, he was vice president of Merrill Bank, where he was in
charge of consumer loans at the Merrill Center branch and the indirect lending
program. Mr Hart began his 30 year banking career with Merchants National Bank,
which was a predecessor to Maine National Bank. Mr. Hart is a graduate of St.
Anselm College. He is a member of the Dedham School Board.
William P. Lucy, age 40, has served as Senior Vice President and Senior
Loan Officer of the Bank since 1992. Mr. Lucy began his banking career at
Merrill Trust Company in 1981, and he has both commercial lending and branch
administration experience. He is a graduate of the University of Maine and
Williams College School of Banking. Mr. Lucy is president of the board of the
Y.M.C.A., a member of the pension committee of St. Joseph Healthcare Foundation,
on the board of New Hope Hospice, a board member of Sewall Holding Company and
the Action Committee of 50, as well as an advisory board member for Beal
College.
Jane H. Madigan, age 51, has served as Senior Vice President and
Director of Marketing and Human Resources for the Bank since 1992. She is a
former educator who began her banking career at Merrill Bank in 1986. Prior to
joining the Bank, she was the Public Relations Manager for Fleet Bank of Maine.
She is a graduate of Manhattanville College, has a master's degree from the
University of Maine, and is a graduate of the ABA School of Bank Marketing. She
is a director of the New England School of Banking, the Maine Human Resource
Management Association and the Bangor-Brewer YWCA. She is also a member of the
Bangor Rotary, a member of the steering committee of Bangor Region Leadership, a
former member of the United Way of Eastern Maine, and former president of the
Abnaki Girl Scout Council.
George H. Moore, Jr., age 53, serves as Senior Vice President and
Senior Trust and Investment Officer for the Bank. Mr. Moore, who has sixteen
years of financial planning, investment management and administrative
experience, joined the Bank in 1993 to organize the department. From 1992 to
1993, Mr. Moore served as Trust and Investment Services Officer for Union Trust
Company of Ellsworth, Maine. Mr. Moore's other trust and investment banking
experience includes several years with The Merrill Trust Company. Mr. Moore is a
graduate of the University of Maine and the ABA's National Trust School. He
serves on the Planned Giving Committee of St. Joseph Healthcare; was a steering
committee member for the Heroes Breakfast, Pine Tree Chapter/American Red Cross;
and is a past board member of the Good Samaritan Agency.
Susan L. Rush, age 42, has served as Vice President of the Bank since
1992. Formerly the internal auditor of the Bank, she has served as Systems
Administrator for the Bank since 1997. She has 19 years of banking experience
beginning at The Merrill Trust Company and including various responsibilities in
the
-12-
<PAGE>
areas of commercial loan, branch management and internal audit. Ms. Rush is a
graduate of the University of Maine and the Cannon Bank Audit School.
Lynne A. Spooner, age 42, has served as Senior Vice President and Head
of the Residential Mortgage Department of the Bank since 1992. Ms. Spooner began
her banking career at Savings and Loan Association of Bangor in 1977 and brings
21 years of banking experience to her position. She is a graduate of Eastern
Maine Technical College. Ms. Spooner serves as first vice president of St.
Joseph Hospital Auxiliary, president of the board of the Warren Center for
Communication & Learning, on the loan review board of Penquis Community Action
Program, and is a member of the Zonta Club in Bangor.
Reginald C. Williams, Jr., age 53, has served as a Senior Vice
President and Head of Operations for the Bank since 1992. Mr. Williams began his
banking career at The Merrill Trust Company in 1968 and has experience in bank
operations and branch management. He is a graduate of the University of Maine,
where he also earned an M.B.A., and he is a graduate of the New England School
of Banking. He is actively involved with his church and the
Penobscot/Piscataquis Jail Ministry.
Executive Compensation
The following table sets forth cash and noncash compensation for the
fiscal years ended December 31, 1998, 1997 and 1996 awarded to or earned by
Edwin N. Clift, the Company's President and Chief Executive Officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation(1) Awards Payouts
----------------------------------- -------------------------------------------------
Other Restricted LTIP All Other
Annual Stock Options Payouts Compensation
Name and Principal Compensation Awards (#)(2) ($) ($)(3)
Positions Year Salary($) Bonus($) ($) ($)
------------------- ---- --------- -------- ------------ ---------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edwin N. Clift, 1998 115,000 40,000 -- -- 6,615 -- 7,842
President and 1997 110,000 30,000 -- -- -- -- 5,556
Chief Executive
Officer 1996 105,000 20,000 -- -- 10,755 -- 4,557
</TABLE>
- ---------------
(1) Under Annual Compensation, the column titled "Salary" includes base salary,
amounts deferred by Mr. Clift under the Company's 401(k) plan (but not
matching contributions made by the Company) and payroll deductions for
health insurance under the Company's health insurance plan.
(2) The options granted in 1996 are vested and exercisable at $5.33 per share
adjusted to reflect the 9:1 stock split and the 3% stock dividend, the 5%
stock dividend and the 5% stock dividend declared in 1996, 1997 and 1998,
respectively. The 6,615 options granted in 1998 are adjusted to reflect the
9:1 stock split and a 5% stock dividend in 1998, at an exercise price of
$6.77.
(3) Includes (1) employer contributions to the 401(k) plan for 1998, 1997 and
1996 as follows: $4,345, $2,705 and $2,142; and (2) dollar value of
premiums paid by the Bank with respect to term life insurance and life
insurance under the Life Insurance Endorsement Method Split-Dollar Plan
Agreement with the executive as follows: $3,497, $2,851 and $2,415.
Stock Option Plan. The Company provides long-term incentives to
executives, employees and directors through the grant of options under the
Company's Stock Option Plan (the "Plan"). The Plan is administered by the
Compensation Committee which has the authority to select the individuals who
will be awarded options and determine the amount and other conditions of such
awards subject to the terms of the Plan. The Compensation Committee also
determines whether a particular grant of options to an employee will satisfy the
qualifications of Section 422 of the Internal Revenue Code of 1986 with respect
to incentive stock options ("Qualified Stock Options"). The Plan prohibits
non-employee directors from receiving Qualified Stock Options. In addition, the
Compensation Committee determines the exercise price for the shares of Common
Stock underlying a particular option grant, provided that (i) the exercise price
of a
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<PAGE>
Qualified Stock Option is the fair market value of the underlying Common Stock
which must be at least 100% of the book value of the Company's Common Stock on
the date the Qualified Stock Option is granted; and (ii) the exercise price of
any option granted to an employee or director who owns at least 10% of the
Company's stock must be equal to 110% of the fair market value of the underlying
Common Stock. The terms and conditions of each option granted is evidenced by a
stock option agreement executed by the Company.
The Plan and options granted under the Plan will automatically
terminate upon (i) the dissolution or liquidation of the Company, (ii) a
reorganization, merger or consolidation of the Company with another corporation
whereby the Company does not survive or (iii) a sale of substantially all of the
Company's property or eighty percent (80%) of the Company's outstanding stock to
another corporation; unless such a transaction includes a written provision
providing for the continuation of the Plan or the options granted. If options
are terminated because of an event described in item (ii) or (iii), the Company
will pay the option holders an amount equal to the number of unvested,
underlying shares times the difference between the exercise price per share and
the fair market value of each share on the date of termination. This pay out is
subject to any restrictions in the Company's Articles of Incorporation or in any
financing agreement, indenture or other agreement which binds the Company.
The following table summarizes the option grants that were made to
Edwin N. Clift under the Stock Option Plan during the fiscal year 1998.
<TABLE>
<CAPTION>
Option/SAR Grants in Fiscal Year 1998
Individual Grants
-----------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or
Granted Fiscal Year Base Price Expiration
Name (#)(1) (%) ($ per Share) Date
---- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Edwin N. Clift,
President and Chief
Executive Officer ....... 6,615 8.5% 6.77 5/2003
</TABLE>
- ---------------
(1) All options are immediately exercisable upon grant, but subject to
forfeiture in the event the executive terminates his employment without the
approval of the Company within one year from the date of grant.
-14-
<PAGE>
The following table provides information with respect to Mr. Clift
concerning the exercise of options during the last fiscal year and the value for
"in-the-money" options held by him at year end, which represents the positive
spread between the exercise price of any such existing stock options and the
year-end price of the Common Stock.
Aggregated Option Exercises in 1998 Fiscal Year and 1998 Fiscal Year End
Option/Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Fiscal Options/SARs at Fiscal
Acquired on Value Year-end Year-end
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- ----------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Edwin N. Clift 21,000 160,860 54,474 / 0 339,060 / 0
</TABLE>
- ---------------
(1) Based upon a market price of $11.25 per share at December 31, 1998 minus
the exercise price.
Transactions with Certain Related Persons
Loan Transactions. From time to time the Bank makes mortgage or other
loans to its directors. Under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), loans to the Company's directors are
required to be made on terms substantially the same as those offered in
comparable transactions to other persons. Furthermore, FIRREA generally
prohibits loans above the greater of $25,000 or 5.0% of the Bank's capital and
surplus (up to $500,000) to directors and officers and their affiliates, unless
such loans are approved in advance by a disinterested majority of the Board of
Directors.
The Bank has had, and expects to have in the future, various loan and
other banking transactions in the ordinary course of business with the
directors, executive officers, and principal shareholders of the Bank and the
Company (or an associate of such person). All such transactions: (i) have been
and will be made in the ordinary course of business; (ii) have been and will be
made on substantially the same terms, including interest rates and collateral on
loans, as those prevailing at the time for comparable transactions with
unrelated persons; and (iii) in the opinion of management do not and will not
involve more than the normal risk of collectability or present other unfavorable
features. At December 31, 1998, the total dollar amount of extensions of credit
to directors, and executive officers identified in "Management -- Directors and
Executive Officers", and any of their associates was approximately $5.0 million,
which represented approximately 24% of total shareholders' equity at December
31, 1998, and which is below the percentage generally permitted under applicable
Federal banking regulations.
Debentures. Messrs. William C. Bullock and Perry B. Hansen each own
Debentures issued by the Company in the original principal amount of $150,000,
for a total aggregate original principal amount of $300,000. The debt evidenced
by the Debentures is unsecured. Upon the liquidation, dissolution or winding up
of the Company, the debt evidenced by the Debentures, including interest earned
thereon, will be paid prior to any payments made to holders of Common Stock and
Series A Preferred Stock. Interest on the principal amount of debt evidenced by
the Debentures accrues at the rate of 1% per annum in excess of the prime rate
of interest of BankBoston, N.A., (prime rate was 7.75% as of December 31, 1998).
Accrued interest is payable on March 31, June 30, September 30, and December 31
of each year until the Debentures are paid in full or converted into shares of
Common Stock. On or prior to September 30, 2002, the holders of the Debentures
must convert the entire principal amount thereof into shares of Common Stock of
the Company at a conversion rate equal to $4.50 of principal amount of the
Debentures for one share of Common Stock subject to adjustment for any further
recapitalization of the Common Stock (such as a split or reverse split of Common
Stock). The payment of interest and any principal amount under the Debentures is
subordinated to the prior payment of the principal and interest on all existing
and future obligations of the
-15-
<PAGE>
Company for money borrowed from any bank, trust company, insurance company, or
other financial institution engaged in the business of lending money, whether
such senior indebtedness is secured or unsecured or collateralized or not
collateralized.
Other Transactions with Affiliates. The Company's general counsel is
the law firm of Gross, Minsky, Mogul and Singal, P.A. Norman Minsky, the clerk
of the Company, a director of the Bank and a shareholder of the Company, is of
counsel within this firm. The firm also represents the Bank in real estate and
commercial loan closings, wherein the Bank's borrower typically pays the legal
fees and expenses.
The Company and the Bank have utilized Bacon Printing Company for
certain printing services and to purchase office supplies. John S. Bacon, a
Director of the Bank, is President of Bacon Printing Company. During the fiscal
years ended December 31, 1998 and 1997, the Company and the Bank paid to Bacon
Printing Company for services and office supplies a total of $83,000 and
$86,000, respectively.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that the Company's
directors, executive officers, and any person holding more than ten percent of
the Company's Common Stock file with the SEC reports of ownership changes, and
that such individuals furnish the Company with copies of the reports.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that all of our executive officers and directors complied with all Section 16(a)
filing requirements applicable to them.
-16-
<PAGE>
ADDITIONAL INFORMATION
Information About Stockholder Proposals
If you wish to submit proposals to be included in our 1999 proxy
statement for the 2000 Annual Meeting of Stockholders, we must receive them by
December 22, 1999, pursuant to the proxy soliciting regulations of the SEC. SEC
rules contain standards as to which stockholder proposals are required to be in
the proxy statement. Any such proposal will be subject to 17 C.F.R. ss.240.14a-8
of the rules and regulations promulgated by the SEC.
In addition, under the Companys Bylaws, if you wish to nominate a director
or bring other business before an annual meeting:
o You must be a stockholder of record and have given timely notice in writing
to the Clerk of the Company.
o Your notice must contain specific information required in our Bylaws.
By Order of the Board of Directors,
/s/ Norman Minsky,
------------------------------------
Norman Minsky,
Clerk
Bangor, Maine
March 15, 1999
----------------------------------------------------------------
| To assure that your shares are represented at the Annual |
| Meeting, please complete, sign, date and promptly return the |
| accompanying proxy card in the postagepaid envelope |
| provided. |
----------------------------------------------------------------
-17-
<PAGE>
P90337
<PAGE>
Merrill Merchants Bancshares, Inc. REVOCABLE PROXY
This Proxy is solicited on behalf of the Board of
Directors of Merrill Merchants Bancshares, Inc.
for the Annual Meeting of Stockholders to be
held on April 15, 1999.
The undersigned stockholder of Merrill Merchants Bancshares, Inc.
hereby appoints Edwin N. Clift and Deborah A. Jordan, and each of them, with
full powers of substitution, to represent and to vote as proxy, as designated,
all shares of common stock of Merrill Merchants Bancshares, Inc. held of record
by the undersigned on February 26, 1999, at the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 5:30 p.m., Eastern Standard
Time, on April 15, 1999, or at any adjournment or postponement thereof, upon the
matters described in the accompanying Notice of the 1999 Annual Meeting of
Stockholders and Proxy Statement, dated March 15, 1999, and upon such other
matters as may properly come before the Annual Meeting. The undersigned hereby
revokes all prior proxies.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given, this
Proxy will be voted FOR the election of all nominees listed in Item 1 and FOR
the proposal listed in Item 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors unanimously recommends a vote "FOR" all of the nominees
named in Item 1 and a vote "FOR" the proposal in Item 2.
- --------------------------------------------------------------------------------
Please mark your vote as |X|
indicated in this example.
I will attend the |_|
Annual Meeting.
1. Election of three Directors for FOR
terms of three years each. All nominees
Nominees: Dennis L. Shubert, (except as WITHHOLD
M.D., Frederick A. Oldenburg, otherwise for all
Jr., M.D. and Perry B. Hansen indicated) nominees
|_| |_|
Instruction: TO WITHHOLD
AUTHORITY to vote for any
individual nominee, write that
nominee's name in the space
provided:
-----------------------------------
2. Ratification of the appointment of
Berry, Dunn, McNeil & Parker as FOR AGAINST ABSTAIN
independent auditors for the fiscal |_| |_| |_|
year ending December 31, 1999.
The undersigned hereby acknowledges receipt of the Notice of the 1999 Annual
Meeting of Stockholders and the Proxy Statement, dated March 15, 1999 for the
1999 Annual Meeting.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)
Dated:____________________________________________________________ , 199__
Please sign exactly as your name appears on this proxy. Joint owners should each
sign personally. If signing as attorney, executor, administrator, trustee or
guardian, please include your full title. Corporate or partnership proxies
should be signed by an authorized officer.
