<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL MERCHANTS BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
March 20, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 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 27,
2000 at 5:00 p.m. local time at Pilot's Grill Restaurant, 1528 Hammond Street,
Bangor, Maine 04401 (the "Annual Meeting"). A reception will follow the Annual
Meeting.
The attached Notice of Annual Meeting and Proxy Statement describes 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. Please
join us for the reception even if you are unable to attend the business meeting
(please complete the reception postcard).
Sincerely yours,
Edwin N. Clift William C. Bullock, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER CHAIRMAN
<PAGE>
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<PAGE>
MERRILL MERCHANTS BANCSHARES, INC.
201 MAIN STREET
BANGOR, MAINE 04401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: THURSDAY, APRIL 27, 2000
TIME: 5:00 P.M., LOCAL TIME
PLACE: PILOT'S GRILL RESTAURANT
1528 HAMMOND STREET
BANGOR, MAINE 04401
At our 2000 Annual Meeting, we will ask you to:
- - Elect three directors to serve for a three-year term expiring at the
2003 Annual Meeting. The following three directors are the Board of
Director's nominees:
John S. Bacon Joseph H. Cyr J. Donald Mackintosh
- - Ratify the appointment of Berry, Dunn, McNeil & Parker as our
independent public accountants for the fiscal year ending December 31,
2000; and
- - 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 March 10, 2000, the record date.
By Order of the Board of Directors,
Norman Minsky,
CLERK
Bangor, Maine
March 15, 2000
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>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<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 20, 2000, to all stockholders entitled
to vote. If you owned the Company's common stock ("Common Stock") at the close
of business on March 10, 2000, the record date, you are entitled to vote at the
Annual Meeting. As of January 31, 2000, there were 2,528,071 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 March 10, 2000. 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 in
Ratify Appointment 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 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":
- - 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.
- - 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:
- - Filing with the Clerk of the Company a letter revoking the proxy;
- - Submitting another signed proxy with a later date; and
- - 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.
<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:
- - mail;
- - telephone; and
- - 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, 1999, 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
<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, 2000; 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>
NAME AND ADDRESS AMOUNT OF PERCENT OF SHARES
OF BENEFICIAL OWNER BENEFICIAL OF COMMON STOCK
------------------- OWNERSHIP OUTSTANDING (1)
--------- ---------------
<S> <C> <C>
The Bullock Family Trust (2) (3) 229,680 8.7%
c/o William C. Bullock, Jr.
44 Bald Hill Reach Road
Orrington, Maine 04474
William C. Bullock, Jr. (2) (3) 229,680 8.7%
44 Bald Hill Reach Road
Orrington, Maine 04474
Perry B. Hansen (4) 210,960 8.0%
67 South Longspur Drive
The Woodlands, TX 77380
Edwin N. Clift (5) 117,884 4.6%
Joseph H. Cyr (6) 94,896 3.8%
John S. Bacon (7) 88,686 3.5%
Leonard E. Minsky (8) 82,185 3.3%
Dennis L. Shubert, M.D., Ph.D. (9) 62,295 2.5%
Harold S. Wright (10) 49,824 1.9%
J. Donald Mackintosh (11) 49,281 1.9%
Susan B. Singer (12) 44,213 1.7%
Frederick A. Oldenburg, Jr., M.D. (13) 37,358 1.5%
Number of shares owned by all directors 1,193,801 40.0%
and executive officers as a group
(16 persons) (14).
</TABLE>
- -----------------
(1) The total number of shares of the Company's Common Stock outstanding on
January 31, 2000 was 2,528,071.
(footnotes continued on following page)
<PAGE>
(2) Includes 34,965 shares of Common Stock issuable upon the conversion of
the Debentures and 81,588 shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock.
(3) Mr. Bullock is the trustee of The Bullock Family Trust.
(4) Includes 34,965 shares of Common Stock issuable upon the conversion of
the Debentures, 69,933 shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock and 13,788 shares of Common
Stock issuable upon the exercise of stock options.
(5) Includes 23,311 shares of Common Stock issued upon the conversion of
the Series A Preferred Stock and 34,326 shares of Common Stock issuable
upon the exercise of stock options.
(6) Includes 75,599 shares of Common Stock held jointly with his spouse.
(7) Includes 13,962 shares of Common Stock held in the name of Mr. Bacon's
children and godchildren, of which he serves as Trustee.
(8) Includes 6,247 shares of Common Stock held by The Norman Minsky
Charitable Remainder Unitrust, of which Mr. Leonard Minsky is trustee.
(9) Includes 45,384 shares of Common Stock held by Walden Partnership, of
which Dr. Shubert holds a controlling interest. Includes 8,564 shares
of Common Stock held in the name of Dr. Shubert's children, of which
his spouse serves as Trustee. Also includes 3,150 shares of Common
Stock held by spouse.
(10) Includes 11,655 shares of Common Stock issuable upon the conversion of
the Series A Preferred Stock, 17,838 shares of Common Stock issuable
upon the exercise of stock options, and 1,525 shares of Common Stock
held by spouse.
(11) Includes 33,701 shares of Common Stock held jointly with his spouse and
5,203 shares of Common Stock issuable upon the exercise of stock
options.
(12) Includes 5,203 shares of Common Stock issuable upon the exercise of
stock options.
(13) Includes 19,863 shares of Common Stock held under the name Penobscot
Respiratory PA FBO Frederick A. Oldenburg, Jr.; 1,984 shares of Common
Stock issuable upon the exercise of stock options; and 7,560 shares of
Common Stock held by spouse and child.
(14) Includes 23,311 shares of Common Stock issuable upon the conversion of
Series A Preferred Stock, and 99,531 shares of Common Stock issuable
upon the exercise of stock options granted to the executive officers of
the Bank. See Notes (1) through (13).
<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. Mr. Cyr currently serves on the Company's Board of Directors.
Mr. Bacon and Mr. Mackintosh were nominated by the Board of Directors to replace
Mr. Wright and Mr. Minsky, who are retiring from the Board of Directors upon the
expiration of their terms at the 2000 Annual Meeting. If you elect the nominees,
they will hold office until the Annual Meeting in 2003, 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>
TERM POSITION(S)HELD DIRECTOR
NOMINEES AGE(1) EXPIRES WITH THE COMPANY SINCE
- -------- ------ ------- ---------------- -----
<S> <C> <C> <C> <C>
John S. Bacon 69 -- -- --
Joseph H. Cyr 59 2000 Director 1992
J. Donald Mackintosh 69 -- -- --
CONTINUING DIRECTORS
- --------------------
William C. Bullock, Jr. 63 2001 Director, Chairman of the Board 1992
Edwin N. Clift 60 2001 Director, President and Chief 1992
Executive Officer
Perry B. Hansen 52 2002 Director 1992
Frederick A. Oldenburg, Jr., M.D. 52 2002 Director 1999
Dennis L. Shubert, M.D., Ph.D. 52 2002 Director 1998
Susan B. Singer 50 2001 Director 1998
RETIRING DIRECTORS
- ------------------
Leonard E. Minsky 72 2000 Director 1992
Harold S. Wright 75 2000 Director 1992
</TABLE>
- ------------------
<PAGE>
(1) As of December 31, 1999.
The principal occupation and business experience of each nominee for
election as director, each Continuing Director and Retiring Director is set
forth below.
NOMINEES
JOHN S. BACON has served as a Director of the Bank since 1996. He is
president of Bacon Printing Company, a Bangor-based, family-owned printing
business with which he has been associated since 1948. Mr. Bacon was previously
a director of The Merrill Trust Company. He is a member of Bangor Rotary.
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.
J. DONALD MACKINTOSH has served as a Director of the Bank since 1992.
He is retired from the automobile industry where he worked for over 40 years,
most recently as the owner, president and general manager of Dow Motors, Inc., a
privately held automobile dealership in Ellsworth, Maine. Mr. Mackintosh is a
graduate of General Motors Institute where he received a B.A. degree. He is
currently a member of the Aircraft Owners and Pilots Association.
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
<PAGE>
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 Community
Bankers Association of Maine and is chairman 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.
PERRY B. HANSEN has been a Director of the Company and the Bank since
1992. He is chairman and chief executive officer of Auto Parts Express, LLP, an
auto parts wholesaler and retailer. 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 also an investor,
holding senior management positions in several privately held companies.
FREDERICK A. OLDENBURG, JR., M.D. has served as a Director of the
Company since May 1999 and a Director of the Bank since 1996. Since 1973, he has
been a practicing physician, and since 1993, director 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 past president of the National Association for the
Medical Direction of Respiratory Care.
DENNIS L. SHUBERT, M.D., PH.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
past 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.
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 20 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 and the Y.W.C.A.
RETIRING DIRECTORS
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; past chairman and member of the
President's Council for University Development; chairman of the University of
Maine Patrons of the Arts; a director of Acadia Hospital; a director of the
World Affairs Council of Maine; and a director of the Maine Community
Foundation. He and Norman Minsky are brothers.
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
<PAGE>
Company and Ward Log Homes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL
OF THE NOMINEES FOR ELECTION AS DIRECTORS.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Berry, Dunn, McNeil & Parker as
our independent public accountants for the Company for the fiscal year ending
December 31, 2000, 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 PUBLIC ACCOUNTANTS 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 12 regular meetings and one special meeting
during the fiscal year ended December 31, 1999. With the exception of Director
Wright, 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.
<PAGE>
COMMITTEES OF THE BOARD
The Board of Directors of the Company has established the following
committees:
EXECUTIVE The Executive Committee considers strategic planning and
COMMITTEE industry issues and is authorized to act as appropriate
between meetings of the Board of Directors.
Directors Bullock, Clift, Cyr, L. Minsky, Shubert, Singer
and Wright serve as members of the committee.
The Executive Committee did not meet in the 1999 fiscal
year.
AUDIT The Audit Committee reviews, acts on and reports to the
COMMITTEE 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 1999 fiscal
year.
COMPENSATION The Compensation Committee determines the salaries and
COMMITTEE 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 three times in the 1999
fiscal year.
The Board of Directors, acting as the nominating committee, met in
January, 2000 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:
- - Non-employee directors of the Company receive $50 per month for their
attendance at monthly and any special meetings of the Board of
Directors and any committee meeting held on the same day as the Board
of Directors' meetings.
- - Non-employee committee members also receive $100 for each committee
meeting that is not held on the same day as the Board of Directors
meetings.
- - Non-employee directors of the Bank receive $200 for their attendance at
monthly and any special meetings of the Board of Directors.
<PAGE>
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 1999 were $45,630. 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 1999 fiscal year.
EXECUTIVE OFFICERS
The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
NAME POSITION HELD WITH THE COMPANY
---- ------------------------------
<S> <C>
William C. Bullock, Jr. Chairman
Edwin N. Clift President and Chief Executive Officer
Deborah A. Jordan Treasurer
James A. MacLeod Secretary
</TABLE>
The following individuals are executive officers of the Bank and hold
the offices set forth below opposite their names.
<TABLE>
<CAPTION>
NAME POSITION HELD WITH THE BANK
---- ---------------------------
<S> <C>
William C. Bullock, Jr. Chairman
Edwin N. Clift President/Chief Executive Officer
Charles W. Hart Secretary/Executive Vice President
Deborah A. Jordan Executive Vice President/Chief Financial Officer/Treasurer
William P. Lucy Executive Vice President
</TABLE>
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.
CHARLES W. HART, age 60, has served as Executive Vice President since
December 1999, and as 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.
DEBORAH A. JORDAN, age 34, has served as Executive Vice President since
December 1999, and as 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
<PAGE>
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.
WILLIAM P. LUCY, age 41, has served as Executive Vice President since
December 1999, and as Senior Loan Officer of the Bank since 1992. Mr. Lucy began
his banking career at The 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 past
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.
JAMES A. MACLEOD, age 40, serves as Senior Vice President and Senior
Trust Officer for the Bank. Prior to joining the Bank in 1997, Mr. MacLeod
practiced law for 10 years in New Hampshire. A Bangor native, he graduated from
Boston University School of Law (LLM), Franklin Pierce Law Center (JD) and the
University of Maine (BA). Mr. MacLeod is a member of the New Hampshire
(inactive) and Maine Bar Associations. Mr. MacLeod serves as a director of the
Warren Center for Communication and Caring as well as a trustee of the Good
Samaritan Agency.
EXECUTIVE COMPENSATION
The following table sets forth cash and noncash compensation for the
fiscal years ended December 31, 1999, 1998 and 1997 awarded to or earned by
Edwin N. Clift, the Company's President and Chief Executive Officer.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
LONG TERM COMPENSATION
AWARDS PAYOUTS
NAME AND PRINCIPAL YEAR SALARY($) BONUS($) OTHER RESTRICTED OPTIONS LTIP ALL OTHER
POSITIONS ANNUAL STOCK (#)(2) PAYOUTS COMPENSATION
COMPENSATION AWARDS ($) ($)(3)
($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edwin N. Clift, 1999 125,000 40,000 -- -- -- -- 20,165
President and
Chief Executive Officer
1998 115,000 40,000 -- -- 6,945 -- 7,842
1997 110,000 30,000 -- -- -- -- 5,556
</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 6,945 options granted in 1998 are adjusted to reflect the 9:1 stock
split and a 5% stock dividend in 1998 and a 5% stock dividend in 1999,
at an exercise price of $6.45.
(3) Includes (1) employer contributions to the 401(k) plan for 1999, 1998
and 1997 as follows: $4,800, $4,345 and $2,705; 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: $15,365, $3,497 and
<PAGE>
$2,851.
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 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 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 1999 FISCAL YEAR AND 1999 FISCAL YEAR END
OPTION/VALUES
<TABLE>
<CAPTION>
SHARES VALUE
ACQUIRED REALIZED NUMBER OF SECURITIES VALUE OF UNEXERICSED
NAME ON UNDERLYING UNEXERCISED IN-THE-MONEY
EXERCISE ($) OPTIONS/SARS AND FISCAL OPTIONS/SARS AT FISCAL
YEAR-END YEAR-END
(#) (#) ($)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
<S> <C> <C> <C> <C>
Edwin N. Clift 22,883 186,039 34,326 / 0 143,712 / 0
</TABLE>
- -----------------
(1) Based upon a market price of $9.25 per share at December 31, 1999 minus
the exercise price.
<PAGE>
TRANSACTIONS WITH CERTAIN RELATED PERSONS
LOAN TRANSACTIONS. From time to time the Bank makes mortgage or other
loans to its directors. Under Section 22(h) of the Federal Reserve Act ("FRA")
and the Federal Reserve's Regulation O thereunder, 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, FRA 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, 1999, 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 $5.7 million,
which represented approximately 27% of total shareholders' equity at December
31, 1999, 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 8.50% as of December 31, 1999).
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 $4.29 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 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 collateratized 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 and a shareholder of the Company, is of counsel within this firm.
In addition, Louis H. Kornreich, an attorney at this law firm, serves as a
Director of the Bank. The firm 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 3l, 1999 and 1998, the Company and the Bank paid to Bacon
Printing Company for services and office supplies a total of $86,000 and
$83,000, respectively.
<PAGE>
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.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16 of the Exchange Act requires the Holding Company's executive
officers and directors, and any person owning more than ten percent (10%) of a
class of the Holding Company's stock, to file certain reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive Officer James A. MacLeod failed to file a Form 3 in a timely
manner reporting the ownership of 1,230 shares of Common Stock and 9,961 shares
of Common Stock issuable upon the exercise of stock options.
Based solely upon a review of the reports filed with the SEC and
furnished to the Holding Company, as well as information furnished to the
Holding Company by various reporting persons, the Holding Company believes that
all other Section 16(a) filing requirements were complied with.
<PAGE>
ADDITIONAL INFORMATION
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in our 2000 proxy
statement for the 2001 Annual Meeting of Stockholders, we must receive them by
November 20, 2000, 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.
Section 240.14a-8 of the rules and regulations promulgated by the SEC.
In addition, under the Company's Bylaws, if you wish to nominate a
director or bring other business before an annual meeting:
- - You must be a stockholder of record and have given timely notice in
writing to the Clerk of the Company.
- - Your notice must contain specific information required in our Bylaws.
By Order of the Board of Directors,
Norman Minsky,
CLERK
Bangor, Maine
March 20, 2000
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
<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 27,
2000.
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 March 10, 2000, at the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") to be held at 5:00 p.m., Eastern Standard Time, on April
27, 2000, or at any adjournment or postponement thereof, upon the matters
described in the accompanying Notice of the 2000 Annual Meeting of Stockholders
and Proxy Statement, dated March 20, 2000, 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>
<TABLE>
<S> <C>
The Board of Directors uanimously recommends
a vote "FOR" all of the nominees named in Item 1 Please mark your vote as indicated in this example. /X/
and a vote "FOR" the proposal in Item 2.
</TABLE>
1. Election of three Directors for terms of three years
each. NOMINEES: John S. Bacon, Joseph H. Cyr, and
J. Donald Mackintosh
FOR / / WITHHOLD / /
All nominees (except for all
as otherwise 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
independent public accountants for the fiscal year ending December 31,
2000.
FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby acknowledges receipt of the Notice of the 2000 Annual
Meeting of Stockholders and the Proxy Statement, dated March 20, 2000 for the
2000 Annual Meeting.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Signature(s)
Dated: _____________ , 2000
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.
