THE
WILBER CORPORATION
245 Main
Street
Oneonta,
New York 13820
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
to be
held February 27, 2009
NOTICE
IS HEREBY GIVEN that a Special Meeting of Shareholders of The Wilber Corporation
(the “Company”) will be held as follows:
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Place:
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The
Wilber National Bank
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254
Main Street
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Oneonta,
New York 13820
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Date:
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February
27, 2009
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Time:
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10:00
a.m.
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The
Special Meeting will be held for the following purposes:
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1.
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To
approve an amendment to the Company’s Restated Certificate of
Incorporation to authorize the issuance of up to 100,000 shares of
preferred stock, no par value per share. A copy of the proposed amendment
is set forth in Appendix A to the accomp
anying Proxy
Statement.
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2.
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Such
other business as may properly come before the Special Meeting or any
adjournment thereof.
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Only
shareholders of record at the close
of business on January 9, 2009 are
entitled to notice of, and to vote at, the Special Meeting.
It
is important that your shares are represented at the meeting. Accordingly,
please sign, date and mail the enclosed proxy in the enclosed postage-pai
d envelope, whether or not
you plan to attend the meeting. If you do attend the Special Meeting, you may
revoke your proxy and vote your shares in person.
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By
Order of the Board of Directors
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Joseph
E. Sutaris
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Secretary
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Oneonta,
New York
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January
23, 2009
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THE
WILBER CORPORATION
245 Main
Street
Oneonta,
New York 13820
(607)
432-1700
PROXY
STATEMENT
SPECIAL
MEETING OF SHAREHOLDERS
February
27, 2009
Solicitation
of Proxies
This
Proxy Statement is being furnished to shareholders of The Wilber Corporation
(the “Company”) in connection with the solicitation of proxies on behalf of the
Company’s Board of Directors (the “Board”) to be used at a special meeting of
shareholders (the “Special Meting”). The Special Meeting will be held on
February 27, 2009, at 254 Main Street, Oneonta, New York 13820, beginning at
10:00 a.m. (local time), and any adjournments thereof.
At
the Special Meeting, we will ask shareholders to approve an amendment to the
Company’s Restated Certificate of Incorporation to authorize the issuance of up
to 100,000 shares of preferred stock, no par value per share.
OUR BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED AMENDMENT TO THE
COMPANY’S RESTATED CERTIFICATE OF INCORPORATION.
The
Board is soliciting your proxy to vote at the Special Meeting and at any
adjournments of the Special Meeting. Please complete the enclosed proxy card and
return it in the enclosed return enve
lope as soon as possible.
Each of our shareholders has one vote for each share of common stock owned. The
proposed amendment must be approved by a majority of the outstanding shares
entitled to vote.
Shareholders
of record at the close of business on January 9, 2009, are entitled to receive
notice of the Special Meeting and are entitled to vote at the meeting, or at an
adjournment of the meeting. This is known as the “Record Date.” As of the Record
Date, there were 10,503,704 shares of the Company’s common stock, par value $.01
per share, issued and outstanding.
In
this Proxy Statement, the terms “we,” “our,” “us,” or similar terms refer to the
Company. References in this Proxy Statement to the “Bank” refer to Wilber
National Bank, our wh
olly owned
subsidiary.
This
Proxy Statement and accompanying Notice of Special Meeting are first being
mailed to shareholders on or about January
23,
2009.
IMPORTANT:
PLEASE READ THIS PROXY STATEMENT CAREFULLY BEFORE YOU DECIDE HOW TO VOTE. THE
PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE OF FURTHER REQUESTS FOR
PROXIES TO ENSURE A QUORUM AT THE MEETING. WE HAVE ENCLOSED A SELF-ADDRESSED
ENVELOPE, WHICH YOU CAN USE TO RETURN YOUR PROXY CARD. NO POSTAGE IS REQUIRED IF
YOU MAIL THE ENVELOPE IN THE UNITED STATES.
Voting
and Revocability of Proxies
If
you sign and return a proxy card in the form that the Board is soliciting so we
receive it before the polls close at the Special Meeting, yo
ur votes will
be cast as you have marked on the proxy card, unless you revoke your proxy
before the polls close. If you properly sign and return your proxy card but you
do not mark on it how you want to vote on any matter, then the Board, as your
proxy, wi
ll vote
your shares in favor of approving the proposed amendment to the Company’s
Restated Certificate of Incorporation. We do not know of any other matters that
shareholders may present for a vote at the Special Meeting. If any shareholder
properly presen
ts any other matter for a vote, including a proposal to
adjourn the Special Meeting, the Board members indicated on the proxy card, as
the holders of your proxy, may vote on those matters based on their
judgment.
If
you sign and return the enclos
ed proxy card, you may revoke it at any
time before the polls are closed. If you want to revoke your proxy, you must:
(i) sign and deliver a written notice to the Secretary of the Company, at or
before the Special Meeting, dated after the date of your proxy, stating that you
want to revoke the proxy; (ii) sign and deliver to the Secretary of the Company,
at or before the Special Meeting, another proxy card relating to the same shares
with a later date; or (iii) attend the Special Meeting and vote in person.
Attending the Special Meeting does not automatically revoke a proxy unless you
also take one of the three actions described in the prior sentence. Any written
notice revoking a proxy must be delivered to Joseph E. Sutaris, Secretary, The
Wilber Corporation, 245 Main Street, Oneonta, New York 13820.
Quorum
If
5,251,853 shares of our common stock are present in person or represented by
proxy at the meeting, there will be a quorum, which will allow the Special
Meeting to commence. Once a q
uorum is present, the Special Meeting can
continue even if some shareholders leave the meeting. If a shareholder is
present in person or by proxy but abstains from voting any shares, or if a
broker submits a proxy for shares but does not vote those shares, then the
shares are counted as present for purposes of determining a quorum. Shareholder
votes will be tabulated by the persons appointed by the Board to act as
inspectors of election of the Special Meeting.
Required
Vote
A
majority vote of the shares outstanding and entitled to vote, represented in
person or by proxy, is required to approve the proposed amendment to the
Company’s Restated Certificate of Incorporation as well as any other matter,
that may be presented for a vote at the
Special
Meeting.
Proxy
Cards
If
you submit a properly completed proxy card to the Company on the form
distributed with this Proxy Statement, it will be voted if received before the
voting is closed at the Special Meeting. The proxy will be voted in the manner
directed on the proxy card. If the proxy card is signed and returned but no
directions are given, the proxy will be voted “FOR” the approval of the proposed
amendment to the Company’s Restated Certificate of Incorporation.
Solicitation
Expenses
The
cost of this Proxy Statement and the related proxy solicitation will be borne by
the Company. In addition, directors, officers and regular employees of the
Company may solicit proxies personally, by telephone or by other means, without
additional compensation. The Company will, upon the request of brokers, dealers,
banks and voting trustees, and their nominees, who were holders of record of
shares of the Company’s capital stock or participants in depositories on
the Record Date, bear
their reasonable expenses for mailing copies of this Proxy Statement and
accompanying Notice of Special Meeting and the form of proxy card to the
beneficial owners of such shares.
Important
Information for Shareholders Whose Stock Is Held in Street Name
If
you hold your stock in street name, which means that your stock is held for you
in a brokerage account and is not registered on our stock records in your own
name, please tell your broker as soon as possible how to vote yo
ur shares
to make sure that your broker votes your shares before the polls close at the
Special Meeting. If your stock is held in street name, you do not have the
direct right to vote your shares or revoke a proxy for your shares unless your
broker gives you that right in writing.
Principal
Owners of Our Common Stock
The
following table provides you with information, to the best of our knowledge,
about stock ownership by directors, executive officers, and any person or group
known by us to own ben
eficially more than 5% of
our outstanding common stock. The information is as of the Record
Date.
Name
of Beneficial Owner
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Amount
and Nature
of
Beneficial
Ownership
(1)
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Percentage
Ownership
(2)
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The
AE & AT Farone Foundation, Inc.
620
Michigan Avenue NE, Washington, DC 20064
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808,420
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7.70
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%
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Wilber
National Bank
(3)
245
Main Street, Oneonta, New York 13820
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807,931
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7.69
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%
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Directors
and Executive Officers
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Brian
R. Wright
Director
and Chairman of the Company and the Bank
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3,433,600
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32.69
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%
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Alfred
S. Whittet
(4)
Director
and Vice Chairman of the Company and the Bank
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16,000
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*
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Douglas
C. Gulotty
President
& Chief Executive Officer and Director of the Company and the
Bank
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1,700
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*
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Mary
C. Albrecht
(5)
Director
of the Company and the Bank
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4,000
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*
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Olon
T. Archer
(6)
Director
of the Company and the Bank
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41,100
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*
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Thomas
J. Davis
Director
of the Company and the Bank
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27,500
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*
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Joseph
P. Mirabito
(7)
Director
of the Company and the Bank
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80,000
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*
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James
L. Seward
Director
of the Company and the Bank
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1,600
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*
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Name
of Beneficial Owner
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Amount
and Nature
of
Beneficial
Ownership
(1)
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Percentage
Ownership
(2)
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Geoffrey
A. Smith
Director
of the Company and the Bank
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4,800
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*
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David
F. Wilber, III
(8)
Director
of the Company and the Bank
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273,461
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2.58
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%
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Joseph
E. Sutaris
Executive
V.P., Chief Financial Officer, Treasurer and Secretary of the Company and
the Bank
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300
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*
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Jeffrey
C. Lord
Regional
President (of the Bank), Southern Tier and Hudson Valley
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1,800
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*
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Brian
M. Bisaccio
Regional
President (of the Bank), Northern Tier
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0
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*
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Robert
A. Hayes
Senior
Vice President of Mortgage Lending and Market Development (of the
Bank)
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0
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*
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All
Company Directors and Executive Officers as a Group (14
persons)
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3,885,861
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37.00
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%
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(1)
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Under
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), a person is considered a beneficial owner of a security
if he/she has or shares voting power or investment power over the security
or has the right to acquire beneficial ownership of the security within 60
days from the date of this filing. “Voting Power” is the power to vote or
direct the voting of shares. “Investment Power” is the power to dispose or
direct the disposition of shares.
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(2)
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There are 10,503,704
sha
res of the Company’s stock issued and outstanding as of the
Record Date. An asterisk (“*”) means that the percentage held is less than
1%.
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(3)
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The
Bank acts as Trustee for these shares held for certain
customers.
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(4)
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Mr.
Whittet owns 8,700 shares directly. Mr. Whittet’s spouse owns 7,300
shares.
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(5)
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Ms.
Albrecht owns 3,000 shares directly. Ms. Albrecht’s spouse owns 1,000
shares to which Ms. Albrecht disclaims beneficial
ownership.
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(6)
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Mr.
Archer owns 14,400 shares personally and 26,700 shares through a
corporation in which he is a 100% owner.
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(7)
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Mr. Mirabito’s
spouse owns
79,360 shares solely and 640 shares jointly with
Mr. Mirabito. Mr. Mirabito retains investment power over all shares to
which he claims beneficial ownership.
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(8)
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Mr.
Wilber owns 66,741 shares personally and 58,295 shares as a fiduciary. Mr.
Wilber’s spouse owns 90,130 shares personally and 58,295 shares as a
fiduciary. Mr. Wilber disclaims beneficial ownership to his spouse’s
shares.
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PROPOSAL
NO. 1
AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION
The
Proposed Amendment
Our
Board of Directors has proposed an amendment (“Proposed Amendment”) to our
Restated Certificate of Incorporation to authorize 100,000 shares of preferred
stock, no par value per share. Our Restated Certificate of Incorporation
currently authorizes only the issuance of common stock. If approved by the
Company’s shareholders, the Proposed Amendment will vest in the board of
directors the authority to issue the preferred stock in one or more classes or
series and, to the extent permitted by law, fix and determine the preferences,
limitations and relative rights of the shares of any class or series so
established. The Proposed Amendment would give the Company’s Board of Directors
the flexibility, at any time or from time to time, without further shareholder
approval (except as may be required by
applicable laws,
regulatory authorities or the rules of any stock exchange on which our
securities are then listed), to create one or more classes or series of
preferred stock and to determine by resolution the terms of each such class or
series. We are asking our shareholders to approve the Proposed Amendment at the
Special Meeting. The complete text of the Proposed Amendment is set forth as
Appendix A to this Proxy Statement.
Background
and Reasons for the Proposed Amendment
In
response to the current financial crisis, on October 3, 2008, Congress enacted
the Emergency Economic Stabilization Act of 2008 (“EESA”), which includes the
Troubled Asset Relief Program (“TARP”). On October 14, 2008, the U.S. Department
of the Treasury (the “Treasury”) announced that, using the authority granted to
it under TARP, it would make equity investments in healthy banks and bank
holding companies pursuant to its Capital Purchase Program (“CPP”). The purpose
of the CPP is to increase t
he flow of financing to
businesses and consumers, support the national economy, strengthen market
stability and improve the strength of financial
institutions.
The
Company applied to participate in the CPP on November 7, 2008. Participation in
the CPP requires the Company to authorize and issue preferred stock to the
Treasury. Under the CPP, the Treasury will purchase preferred stock (“Senior
Preferred Stock”) in companies that choose to participate, in amounts ranging
from a minimum of 1% to a maximum of 3% of each participating institution’s
risk-weighted assets. Qualifying institutions that sell Senior Preferred Stock
to the Treasury are expected to use the cash proceeds they receive primarily to
fund additional lending activities, though procee
ds also may be used by
companies for other corporate purposes.
On
December 11, 2008, the Treasury notified the Company that its application to
participate in the CPP had been preliminarily approved for $12 million, or
approximately 2% of the Company’s risk-weighted assets. Approval of our
application does not obligate us to participate in the CPP or to sell any
capital stock to the Treasury.
If we do participate in the CPP, we
intend to sell the entire amount of preferred stock for which we have
been approved ($12
million). We would participate in the Treasury’s program for public companies
(those whose securities are registered under the federal securities laws and
file periodic reports under the Exchange Act.
) We will continue to
assess the relative benefits and costs of participation in the CPP and we may
still decide not to participate. However, for us to be eligible to participate
at all, our shareholders must approve the Proposed Amendment so that the Company
is authorized to issue preferred stock. Whether or not we participate in the
CPP, if the Proposed Amendment is approved, our Board of Directors will be
authorized to issue preferred shares at any time it deems it appropriate to do
so, and will be authorized to set the preferences, limitations and relative
rights, within legal limits, of such stock.
In
addition to selling preferred stock to the Treasury under the CPP, the Proposed
Amendment would permit our Board of Directors to issue preferred stock from time
to time in the futu
re for other purposes, and in other transactions, up
to the total number of shares authorized by our Restated Certificate of
Incorporation. If we found it necessary or desirable to increase our capital in
the future, several methods of doing that would be available to us. For example,
we could issue and sell new shares of common stock, sell trust preferred
securities or, to a limited extent, issue subordinated debt. However, recent
unfavorable conditions in the capital markets generally have made it more
difficult for financial institutions to increase their capital through sales of
common stock and trust preferred securities, and issuing subordinated debt is
not as effective a method of increasing capital as the issuance of new equity
securities.
We
want to emphasize that the Company is in sound financial condition and is
considered “well capitalized” under all applicable regulatory capital
guidelines. The Company’s application to participate in the CPP is totally
voluntary. The Company’s Board
of Directors believes that our
participation in the CPP will permit the Company to add capital on favorable
terms and assist the Company to take advantage of future growth opportunities.
We do not presently plan or intend to participate in any transaction
involving the issuance of
preferred stock other than the Treasury’s purchase of Senior Preferred Stock.
However, having the authority to issue and sell preferred stock, in addition to
common stock, trust preferred securities and debt securities, would give our
Board of Directors an additional option and more flexibility in tailoring the
terms of the equity securities we can issue to meet specific future market
conditions or financing or acquisition opportunities. We believe that it is in
the Company’s best
interests to allow the Board the flexibility to tailor
the specific terms of each series of preferred stock that may be issued in the
future to meet specific market conditions, or the facts and circumstances of
specific financing or acquisition opportunities, without the expense, delay, and
uncertainty that would result if a meeting of our shareholders was required to
approve each issuance of preferred stock or the terms of each specific series of
preferred stock. The Proposed Amendment would give our Board of Directors the
maximum amount of flexibility in designing and issuing preferred stock in the
future.
Effect of the Proposed
Amendment
If
the Proposed Amendment is approved, the Board of Directors will be authorized to
issue preferred stock,
from time to time, with full, limited or no voting
power, and with all the designations, preferences and relative, participating,
optional or special voting rights, and qualifications, limitations or other
restrictions upon the preferred stock, as may be provided in resolutions adopted
by the Board of Directors. The authority of the Board of Directors will include,
but is not limited to, the determination of the following with respect to shares
of any class or series of preferred stock other than the Senior Preferred
Stock:
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the
distinctive designation of and the number of shares (up to the number of
shares authorized) of any class or series of preferred
stock;
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the
rate and time at which, and the terms and conditions upon which, dividends
shall be paid and whether such dividends shall be cumulative or
noncumulative;
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whether
the shares will be convertible into, or exchangeable for, shares of any
other class or series of stock and the terms and conditions of the
conversion or exchange;
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whether
the shares will be subject to redemption, the redemption price or prices,
and the time or times at which, and the terms and conditions upon which,
the shares may be redeemed;
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the
rights, if any, of the holders of the shares upon the voluntary or
involuntary liquidation of the Company;
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the
terms of the sinking fund or redemption or purchase account, if any, to be
provided for the shares; and
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the
voting powers, full or limited, if any, of the holders of the
shares.
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Possible
Anti-Takeover Effects of the Proposed Amendment
The
Proposed Amendment could have the effect of making it more difficult or time
consuming for a third party to acquire a majority of our outstanding voting
stock or otherwise effect a change of control of the Company. For example, in
the event of a proposed merger, tender offer or other attempt to gain control of
the Company that the Board of Directors does not believe is in the Company’s
best interests, the Board of Directors will have the
ability to issue shares
of preferred stock with certain rights, preferences and limitations that make
the proposed takeover attempt more difficult to complete.
The
authorization to issue preferred stock could also benefit present management. A
p
otential acquiror may be discouraged from attempting a takeover of the
Company because the Board of Directors possesses the authority to issue
preferred stock. As a result, members of management may be able to retain their
positions more easily.
The
Board of Directors does not intend to issue preferred stock for the purpose of
implementing any shareholder rights plan or for any other defensive or
anti-takeover purpose. Rather, the Board of Directors intends to issue preferred
shares only for the p
urpose of increasing the
Company’s earning assets, facilitating acquisitions, joint ventures, strategic
alliances, capital-raising transactions and for other corporate purposes that
the Board determines to be in the Company’s best interests.
The
Proposed Amendment is not in response to any attempt to acquire control
of the Company, and we are not aware of any such attempt. The Proposed Amendment
is not an effort to make it more difficult to replace incumbent management and
is not part of a plan to adopt a series of anti-takeover measures, nor does the
Company have any present intention of proposing the adoption of anti-takeover
measures in the future.
The
Company’s Restated Certificate of Incorporation contains other provisions which
coul
d potentially
make a change of control of the Company more difficult. These provisions
include:
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the
classification of the Board of Directors into three classes, so that each
class of directors serves for three years, with one class being elected
each year;
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a
supermajority (66 2/3%) shareholder vote requirement for approval of a
merger, consolidation, liquidation or dissolution of the Company or the
sale or other disposition of all or substantially any of its assets;
and
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the
ability of the Board of Directors to consider a number of factors in
deciding whether to oppose a tender offer, including the
possible impact on
the Company’s employees, customers, suppliers, creditors and
communities.
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The
Company’s Board of Directors will ensure that the proposed purchase by the
Treasury of the Company’s Senior Preferred Stock and Warrants will not be
prohibited by any of the anti-takeover provisions in the Company’s Restated
Certificate of Incorporation.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED
AMENDMENT
Terms
of the Senior Preferred Stock
The
terms of the Senior Preferred Stock as prescribed in the CPP will ultimately be
determined by the Treasury. The anticipated terms of the Senior Preferred Stock,
based upon information currently available to
us, are summarized below
and in the term sheet attached to this Proxy Statement as Appendix B. The final
terms of our participation in the CPP, including the specific terms of the
Senior Preferred Stock and the related warrants, would be set forth in
inve
stment agreements and related documents to be issued by the Treasury
and executed by us. The general forms of these investment agreements and related
documents are available on the Treasury’s website, at
www.treas.gov/initiatives/eesa/application-documents
.
THE
COMPANY CAN OFFER NO ASSURANCE THAT THE CONGRESS OR TREASURY WILL NOT CHANGE THE
TERMS AND CONDITIONS OF THE SENIOR PREFERRED STOCK, THAT THE TREASURY WILL ALLOW
THE COMPANY TO PARTICIPATE IN THE CPP, OR THAT THE COMPANY WILL ELECT TO
PART
ICIPATE IN THE
CPP IF IT IS ACCEPTED BY THE TREASURY.
General
If
our shareholders approve the Proposed Amendment, our Restated Certificate of
Incorporation, as amended thereby, would authorize the Company to issue up to
100,000 shares
of preferred stock with no par value per share. If the
Company participates in the CPP, we will issue 12,000 shares of Senior Preferred
Stock for an aggregate purchase price of $12 million. Subject to limitations on
use of proceeds that may be specified by the Treasury, we would expect to use
the proceeds of the issuance of the Senior Preferred Stock for lending and other
general corporate purposes.
Should
our shareholders approve the Proposed Amendment, the Company will file a
Certificate of Ame
ndment to our Restated Certificate of Incorporation
with respect to the Senior Preferred Stock with the New York Secretary of State,
pursuant to the New York Business Corporation Law. This action will permit the
Company to issue the Senior Preferred Stock. When issued, the Senior Preferred
Stock would have a fixed liquidation preference of $1,000 per share. If we
liquidate, dissolve or wind up our affairs, holders of Senior Preferred Stock
would be entitled to receive, out of our assets that are available for
distribution to shareholders, an amount per share equal to the liquidation
preference per share plus any unpaid dividends for all prior dividend periods
plus a pro rata portion of the dividend for the then-current dividend period to
the date of liquidation. The Senior Preferred Stock would not be convertible
into our common stock or any other class or series of our securities and would
not be subject to any sinking fund or any other obligation of us for their
repurchase or retirement. Subject to applicab
le securities laws, the
Treasury would be permitted to sell or transfer the Company’s Senior Preferred
Stock at any time.
Ranking
The
Senior Preferred Stock issued to Treasury would rank senior to the Company’s
common stock and at an e
qual level in the capital structure with any
other preferred shares other than preferred shares which by their terms rank
junior to any other preferred shares.
Dividends
Holders
of Senior Preferred Stock, in
preference to the holders of our common
stock and of any other shares of our stock ranking junior to the Senior
Preferred Stock as to payment of dividends, would be entitled to receive cash
dividends, payable from assets legally available for such payment. The dividends
would be cumulative and payable at a rate of 5.00% per annum until the fifth
anniversary of the date of issuance, and thereafter at a rate of 9.00% per annum
applied to the $1,000 liquidation preference per share and would be paid
quarterly in arrears on the 15th day of February, May, August and November of
each year commencing on May 15, 2009. The amount of dividends payable per share
of Senior Preferred Stock on each dividend payment date would be calculated on
the basis of a 360-day year consisting of twelve 30-day months.
The
consent of the Treasury would be required for any increase in the dividends paid
on the Company’s common stock until the earlier of: (i) the third anniversary of
the date of issue of the Senior Preferred St
ock; and (ii) the date on
which the Senior Preferred Stock has been redeemed in whole or the Treasury has
transferred all Senior Preferred Stock to third parties.
The
Company is subject to various general regulatory policies and requirements
rel
ating to the payment of dividends, including requirements to maintain
adequate capital above regulatory minimums. The Federal Reserve is authorized to
determine, under certain circumstances relating to the financial condition of a
bank holding company, such as us, that the payment of dividends would be an
unsafe or unsound practice and to prohibit payment thereof.
Conversion
Rights
The
Senior Preferred Stock would not be convertible into shares of any other class
or series of our stock
.
Redemption
The
Senior Preferred Stock would not be redeemable prior to the third anniversary of
the date of issuance, except with the proceeds of a qualified equity offering
that results in proceeds to the Company of not less than 2
5% of the issue
price of the Senior Preferred Stock. As prescribed by the Treasury, a qualified
equity offering is the sale by us for cash, following the date of issuance of
the Senior Preferred Stock, of common stock or perpetual preferred stock that
qual
ifies as Tier 1
capital under the Federal Reserve’s risk-based capital guidelines. On any date
after the third anniversary of the date of issuance, we may redeem the Senior
Preferred Stock in whole or in part. Any such redemption would be at a cash
redempt
ion price of $1,000 per share of Senior Preferred Stock, plus any
unpaid dividends for all prior dividend periods for that share, plus a pro rata
portion of the dividend for the then-current dividend period to the redemption
date. Holders of Senior Preferred Stock would have no right to require the
redemption or repurchase of the Senior Preferred Stock. Under the risk-based
capital guidelines applicable to bank holding companies, any redemption of the
Senior Preferred Stock would be subject to the Federal R
eserve’s prior approval.
Liquidation
Rights
In
the event that we voluntarily or involuntarily liquidate, dissolve or wind up
our affairs, holders of Senior Preferred Stock would be entitled to receive an
amount per share equal to the
fixed liquidation preference of $1,000 per
share of Senior Preferred Stock, plus any unpaid dividends for all prior
dividend periods plus a pro rata portion of the dividend for the then-current
dividend period to the date of liquidation. Holders of the Senior Preferred
Stock would be entitled to receive the liquidation amount out of our assets that
are available for distribution to shareholders, after payment or provision for
payment of our debts and other liabilities, but before any distribution of
assets is made to holders of our common stock or any other shares ranking, as to
that distribution, junior to the Senior Preferred Stock.
If
the Company’s assets are not sufficient to pay the total liquidation amount in
full to all holders of Senior
Preferred Stock and all holders of any
shares of our stock ranking as to any such distribution on parity with the
Senior Preferred Stock, the amounts paid to the holders of Senior Preferred
Stock and to such other shares would be paid pro rata in accordance with the
respective total liquidation amount for those holders. If the total liquidation
amount per share of Senior Preferred Stock has been paid in full to all holders
of Senior Preferred Stock and the liquidation preference of any other shares
having parity with the Senior Preferred Stock has been paid in full, the holders
of common stock or any other shares ranking, as to such distribution, junior to
the Senior Preferred Stock would be entitled to receive all of our remaining
assets according to their respective rights and preferences.
Voting
Rights
Except
as indicated below or as otherwise required by law, the holders of Senior
Preferred Stock would not have any voting rights, other than class voting rights
on: (i) any authorizat
ion or issuance of shares ranking senior to the
Senior Preferred Stock; (ii) any amendment to the rights of the Senior Preferred
Stock; or (iii) certain mergers, exchanges or similar transaction that would
adversely affect the rights of the Senior Preferred Stock. If dividends on the
Senior Preferred Stock are not paid in full for six dividend periods, whether or
not consecutive, the holders of the Senior Preferred Stock will have the right
to elect, together with any voting parity stock, two directors. The right to
elect directors will end when full dividends have been paid for four consecutive
dividend periods.
Regulatory
Capital Treatment
We
expect the Senior Preferred Stock will qualify as Tier I capital under the
Federal Reserve’s
risk-based capital
guidelines applicable to bank holding companies.
Transferability
The
Senior Preferred Stock would not be subject to any contractual restrictions on
transferability, and we will be obligated to file a shelf registration statement
with the Securities and Exchange Commission (“SEC”) under the Securities Act of
1933, covering the resale of the Senior Preferred Stock by the Treasury. We
would also grant to the Treasury piggyback registration rights for the Senior
Preferre
d Stock and
take such other steps as may be reasonably requested to facilitate the transfer
of the Senior Preferred Stock, including, if requested by the Treasury, using
reasonable efforts to list the Senior Preferred Stock on a national securities
exchange. The Treasury may transfer the Senior Preferred Stock to third parties
at any time.
Additional
Terms of the Capital Purchase Program
Limits
on Executive Compensation
As
a condition to participation in the CPP, the Company and its se
nior
executive officers must agree to limits on executive compensation. Specifically,
the Company must:
|
•
|
ensure
that incentive compensation for these executives does not encourage
unnecessary and excessive risk taking;
|
|
|
|
|
•
|
require
reimbursement of any bonus or incentive compensation paid to any such
executive, based on statements of earnings, gains or other criteria that
are later proven to be materially inaccurate;
|
|
|
|
|
•
|
not
make certain employment severance payments, generally referred to as
“golden parachute payments” (as defined in the Internal Revenue Code) to
any such executive; and
|
|
|
|
|
•
|
agree
to not deduct for tax purposes any executive compensation in excess of
$500,000 annually for each such
executive.
|
Additionally,
the Company and its senior executive officers covered by EESA must waive and
release the Treasury from any
claims that we and such senior executive
officers may otherwise have as a result of the issuance of any regulations which
modify the terms of benefits plans, arrangements and agreements to eliminate any
provisions that would not be in compliance with the executive compensation and
corporate governance requirements of Section 111 of EESA and any guidance or
regulations issued by the Treasury on or prior to the date of issue to carry out
the provisions of such law. We expect that each executive officer will agree in
writing to be bound by the applicable CPP restrictions on compensation during
any period that he or she is a senior executive officer and the Treasury holds
an equity or debt position acquired through the CPP. The Company will modify
its executive compensation plans and agreements to comply with the
reimbursement, golden parachute and other provisions of Section 111 of
EESA.
Warrants
Under
the CPP, in addition to the Senior Preferred Stock, the Treasury would receive
warrants to
purchase a number of shares of our common stock having an
aggregate market price equal to 15% of the Senior Preferred Stock on the date of
issuance. The initial exercise price of the warrants, and the market price for
determining the number of shares of c
ommon stock subject to the
warrants, would be the market price for the Company’s common stock on the date
of issuance of the Senior Preferred Stock (calculated on a twenty-day trailing
average), subject to certain anti-dilution adjustments. The warrants
wo
uld have a term of ten years and would be immediately exercisable upon
issuance. The Treasury would agree not to exercise any voting power with respect
to any shares of common stock issued upon exercise of the warrants, but the
warrants would, subject to certain restrictions, be transferable, and the
transferee may not be subject to any restrictions on voting rights. The number
of shares subject to the warrants would be reduced by 50% if, prior to December
31, 2009, we have received aggregate gross proceeds of not less than 100% of the
issue price of the Senior Preferred Stock in a qualified equity offering. To the
extent we redeem the Senior Preferred Stock held by the Treasury, we would have
a right to repurchase any warrants or any common stock issued upon exercise of
the warrants and held by the Treasury at fair market value.
Certain
Effects of Participation in the Capital Purchase Program
Rights
of Existing Common Shareholders
The
Company currently has only one class of capital stock and that is common stock.
If the Company participates in the CPP, the rights of its common shareholders
would generally not be affected, except that the Treasury’s ownership interest
in the Company would be a preferred interest and would entitle the
Treasury to certain preferences over the common stock shareholders.
Issuance of Senior Preferred Stock would give its holders the right, in case we
are ever liquidated, to be paid the liquidation value of the Senior Preferred
Stock out of our residual assets before any payment is made to the common
shareholders. All dividends due on the Senior Preferred Stock would have to be
paid before any dividends could be paid on our common stock. The issuance of the
Senior Preferred Stock and warrants to purchase shar
es of our common stock may
reduce our earnings per share of common stock, which could negatively affect the
Company’s common stock price. Also, the amount of our common stock dividends
could not be increased in the first three years that the Treasury owns
the Senior Preferred Stock without the consent of the Treasury. If we do
not pay the dividends on the Senior Preferred Stock in full for six dividend
periods, whether or not consecutive, the holders of the Senior Preferred Stock
would have the right to elect two directors to our Board of Directors. That
right would continue until all past dividends on the Senior Preferred Stock are
paid in full for four consecutive dividend periods.
Dilution
of Common Shareholders
Because
the preferent
ial liquidation amount of the Senior Preferred Stock would
equal its gross purchase price, the issuance of the Senior Preferred Stock would
not change the tangible book value of our common stock, pro rated between the
Senior Preferred Stock and our common
stock on the basis of
their relative tangible book value. Because the Senior Preferred Stock’s claim
on our earnings would be limited to a fixed amount, the tangible book value of
our common stock before the payment of any common stock distributions may
in
crease or decrease in the future depending on whether our earnings
exceed the amount required to pay dividends due on the Senior Preferred Stock or
not. As noted above, we would not be able to pay dividends on our common stock
unless we had paid all dividends due on the Senior Preferred Stock.
If
we issue Senior Preferred Stock to the Treasury, we would also have to issue to
the Treasury warrants to purchase shares of our common stock for an exercise
price equal to the average closing price of ou
r stock for the 20 trading
days immediately pr e ceeding the date on which we sign the agreement to
sell the Senior Preferred Stock to the Treasury. The average trading
price of
the
Company’
s common stock
for the 20 days preceding
the Treasury’s preliminary
approval was $ 6.56. Based on this
price, the Company will issue approximately 274,400 warrants. The warrants
would expire the earlier of when they are exercised or ten years from the date
of issue. If the warrants are exercised at any time when the exercise price is
less than the tangible book value of the shares received, the exercise would be
dilutive to the tangible book value of the then existing common shareholders.
The amount of the dilution would depend on the number of common shares issued on
exercise of the warrants and the amount of the difference between the exercise
price and the book value of the common shares.
Registration
Rights
If
we sell Senior Preferred Stock and
warrants to the Treasury, the Treasury
will be permitted to transfer these securities to a third person at any time,
and, therefore, we would be required to grant registration rights to the
Treasury. Those rights require us, at our expense, to register wit
h the SEC some or all of
our securities that are held by the Treasury in order to permit the Treasury to
make a public offering of those securities whenever it wishes. We will also be
required to grant the Treasury “piggyback” registration rights giving
Tr
easury the right to include its Senior Preferred Stock, the warrants
and the common stock underlying the warrant in any separate registration of our
securities with the SEC. The out-of-pocket cost to us of doing so, as well as
the indirect cost of the time that would have to be spent by our personnel,
could be substantial.
Pro
Forma Financial Information
The
following unaudited pro forma financial information of the Company for the
fiscal year ended December 31, 2007, and for the nine-months
ended
September 30, 2008, shows effects of a $12 million issuance of Senior Preferred
Stock to the Treasury pursuant to the CPP. The pro forma financial data
presented below may change materially if the Company elects to issue a lesser
amount of Senior Pr
eferred Stock, or if the
timing and utilization of the proceeds, as well as certain other factors
including the strike price of the warrants, any subsequent changes in the
Company’s common stock price, and the discount rate used to determine the fair
value
of the Senior Preferred Stock changes. Accordingly, we can provide
no assurance that the pro forma scenario included in the following unaudited pro
forma financial data will ever be achieved. We have included the following
unaudited pro forma consolidated financial data solely for the purpose of
providing shareholders with information that may be useful for purposes of
considering and evaluating the Proposed Amendment.
The
Wilber Corporation
Pro
Forma Condensed Consolidated Statements of Income
Proforma
Impact of CPP Proceeds of $12 million and Warrants for 274,390
Shares
|
|
Year
Ended December 31, 2007
|
|
|
|
|
|
(Dollars
in thousands, except per share data)
|
|
|
|
|
|
Actual
|
|
unaudited
adjustments
|
|
Pro
forma
|
|
Net
interest income
|
|
$
|
24,556
|
|
$
|
480
|
|
$
|
25,036
|
(1)
|
Provision
for loan losses
|
|
|
900
|
|
|
|
|
|
900
|
|
Net
interest income after provision for loan losses
|
|
|
23,656
|
|
|
480
|
|
|
24,136
|
|
Total
other income
|
|
|
7,036
|
|
|
|
|
|
7,036
|
|
Total
other expenses
|
|
|
20,857
|
|
|
|
|
|
20,857
|
|
Income
before income taxes
|
|
|
9,835
|
|
|
480
|
|
|
10,315
|
|
Total
income taxes
|
|
|
2,128
|
|
|
173
|
|
|
2,301
|
(2)
|
Net
income
|
|
$
|
7,707
|
|
$
|
307
|
|
$
|
8,014
|
|
Less:
Preferred dividends
|
|
|
—
|
|
|
600
|
|
|
600
|
(3)
|
Less:
Discount accretion
|
|
|
|
|
|
25
|
|
|
25
|
(3)
|
Net
income available to common shareholders
|
|
|
7,707
|
|
|
(318
|
)
|
|
7,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.73
|
|
$
|
(0.03
|
)
|
$
|
0.70
|
|
Diluted
|
|
$
|
0.73
|
|
$
|
(0.03
|
)
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
10,544,768
|
|
|
|
|
|
10,544,768
|
|
Diluted
|
|
|
10,544,768
|
|
|
84,115
|
|
|
10,628,883
|
(4)
|
|
|
Nine
Months Ended September 30, 2008
|
|
|
|
|
|
(Dollars
in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Actual
|
|
unaudited
adjustments
|
|
Pro
forma
|
|
Net
interest income
|
|
$
|
19,348
|
|
$
|
360
|
|
$
|
19,708
|
(1)
|
Provision
for loan losses
|
|
|
900
|
|
|
|
|
|
900
|
|
Net
interest income after provision for loan losses
|
|
|
18,448
|
|
|
360
|
|
|
18,808
|
|
Total
other income
|
|
|
4,815
|
|
|
|
|
|
4,815
|
|
Total
other expenses
|
|
|
17,813
|
|
|
|
|
|
17,813
|
|
Income
before income taxes
|
|
|
5,450
|
|
|
360
|
|
|
5,810
|
|
Total
income taxes
|
|
|
1,222
|
|
|
130
|
|
|
1,352
|
(2)
|
Net
income
|
|
$
|
4,228
|
|
$
|
230
|
|
$
|
4,458
|
|
Less:
Preferred dividends
|
|
|
—
|
|
|
450
|
|
|
450
|
(3)
|
Less:
Discount accretion
|
|
|
|
|
|
19
|
|
|
19
|
(3)
|
Net
income available to common shareholders
|
|
|
4,228
|
|
|
(239
|
)
|
|
3,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.40
|
|
$
|
(0.02
|
)
|
$
|
0.38
|
|
Diluted
|
|
$
|
0.40
|
|
$
|
(0.02
|
)
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
10,503,704
|
|
|
|
|
|
10,503,704
|
|
Diluted
|
|
|
10,503,704
|
|
|
65,573
|
|
|
10,569,277
|
(4)
|
(1)
Assumes that the estimated CPP proceeds of the amount applied for are used to
invest in AAA-rated five-year U.S. government agency bonds with a yield of 4.00%
per annum and effected at the beginning of the period. The actual impact
to
(2)
Additional income tax expense is attributable to additional net interest income
as described in Note 1.
(3)
Consists of dividends on Senior Preferred Stock at a 5% annual rate as well as
accretion of discount on Senior Preferred Stock upon issuance. The discount is
determined based on the value that is allocated to the warrants upon issuance.
The discount is accreted back to par value over a five-year term, which is the
expected life of the Senior Preferred Stock upon issuance. The estimated
accretion is based on a number of assumptions which are subject to change. These
assumptions include the discount rate of 12% on the Senior Preferred Stock
and assumptions underlying
the value of the warrants which included a16.2% estimated volatility of the
Company’s stock, an estimated 5.22% dividend yield, a risk-free interest rate of
2.37% and an exercise price equal to the 20-day trailing average Common
Stock price of $6.56 per share prior to closing. The estimated proceeds
are allocated based on the relative fair value of the warrants as compared to
the fair value of the Senior Preferred Stock. The fair value of the warrants is
determined under a Black-Scholes model. The model includes assumptions regarding
the Common Stock price, dividend yield, and stock price volatility, as well as
assumptions regarding the risk-free interest rate. The lower the value of the
warrants, the less negative impact on net income and earnings per share
available to common shareholders. The fair value of the Senior Preferred Stock
is determined based on assumptions regarding the discount rate (currently
estimated at 9%) on the Senior Preferred Stock. The lower the discount rate, the
less negative impact on net income and earnings per share available to common
shareholders.
(4) As
described in the section of this Proxy Statement captioned
“Terms
of the Senior Preferred Stock,”
theTreasury woul receive warrants to
purchase a number of common shares having a market price equal to 15% of the
aggregate amount of the Senior Preferred Stock purchased by the Treasury. The
initial exercise price for the warrants, and the market price for determining
the number of common shares subject to
the warrants, is
calculated based on the average of the closing prices of the Company’s common
shares on the 20 trading days ending on the last trading day prior to the date
the Company’s application for participation in the CPP was preliminarily
approved
by the U.S. Treasury, which was December 4, 2008. This pro forma
information assumes the Company issued warrants to purchase 274,390 common
shares at an exercise price of $6.56 on January 1, 2007, and the Warrant
remained outstanding for the entire period presented. The treasury stock method
was used to determine dilution due to the warrants for the periods
presented.
The
Wilber Corporation
Pro
Forma Condensed Consolidated Balance Sheet Data and Capital Ratios
(Dollars
in thousands)
|
|
September
30, 2008
|
|
|
|
|
|
Balance
Sheet Data:
|
|
Actual
|
|
CPP
|
|
Proforma
(2)
|
|
Total
assets (1)
|
|
|
888,218
|
|
|
12,000
|
|
|
900,218
|
|
Total
liabilities
|
|
|
818,421
|
|
|
|
|
|
818,421
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
12,000
|
|
|
12,000
|
|
Discount
on preferred stock (3)
|
|
|
|
|
|
(123
|
)
|
|
(123
|
)
|
Warrants
(3)
|
|
|
|
|
|
123
|
|
|
123
|
|
Common
stock
|
|
|
140
|
|
|
|
|
|
140
|
|
Additional
paid-in capital
|
|
|
4,224
|
|
|
|
|
|
4,224
|
|
Retained
earnings
|
|
|
65,103
|
|
|
|
|
|
65,103
|
|
Accumulated
other comprehensive income
|
|
|
330
|
|
|
|
|
|
330
|
|
Total
stockholders’ equity
|
|
|
69,797
|
|
|
12,000
|
|
|
81,797
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Tier
1 capital ratio
|
|
|
10.64
|
%
|
|
|
|
|
12.56
|
%
|
Total
risk-based capital ratio
|
|
|
11.84
|
%
|
|
|
|
|
13.75
|
%
|
Tier
1 leverage ratio
|
|
|
7.39
|
%
|
|
|
|
|
8.76
|
%
|
Equity
to assets ratio
|
|
|
7.86
|
%
|
|
|
|
|
9.09
|
%
|
(1)
Assumes proceeds were initially invested in Government Securities as of the
balance sheet date in anticipation of future lending opportunities.
(2) Reflects the impact of
the issuance of $12
million of Senior Preferred Shares and the related
Warrant to purchase 274,390 of The Wilber Corporation’s common shares to the
U.S. Treasury under the Capital Purchase Program.
(3) The
carrying values of the preferred stock and warrants are based on their estimated
relative fair value at issue date.
|
Pro
Forma Condensed Consolidated Balance Sheet Data and Capital
Ratios
|
|
|
|
|
|
|
(Dollars
in thousands)
|
September
30, 2008
|
|
|
|
Balance
Sheet Data:
|
Actual
|
Proforma
(1)
|
Total
assets
|
888,218
|
900,218
|
|
|
|
Total
liabilities
|
818,421
|
818,421
|
|
|
|
Total
stockholders' equity
|
69,797
|
81,797
|
|
|
|
|
|
|
Capital
Ratios:
|
|
|
Tier
1 capital ratio
|
10.64%
|
12.56%
|
Total
risk-based capital ratio
|
11.84%
|
13.75%
|
Tier
1 leverage ratio
|
7.39%
|
8.76%
|
Equity
to assets ratio
|
7.86%
|
9.09%
|
|
|
|
(1)
(1) Reflects the impact of the issuance of $12 million of Senior Preferred
Shares and the related warrants to purchase 275,229 of the
Company's common shares to the Treasury under the
CPP.
|
Delivery
of Documents to Shareholders Sharing an Address
In
some instances, only one proxy statement is being delivered to two or more
shareholders who share an address. The Company has not recei
ved contrary
instructions from any shareholder. However, the Company will promptly deliver
additional copies of its proxy statement to any shareholder who makes such a
request. Any shareholder who wishes to receive separate copies of the proxy
statement in the future may notify Joseph E. Sutaris, Secretary, The Wilber
Corporation, 245 Main Street, Oneonta, New York 13820. Alternatively, any
shareholders sharing an address who are receiving multiple copies of the proxy
statements may also notify Mr. Sutaris to request delivery of only one
copy.
Other
Matters
It
is not expected that any matter not referred to herein will be presented for a
vote at the Special Meeting. If any other matters are properly brought before
the Special Meeting, the persons
named in the proxies or
authorized substitutes will have discretion to vote on such matters in
accordance with their best judgment.
Incorporation
by Reference
The
rules of the SEC permit us to “incorporate by reference” certain information we
file with the SEC into this Proxy Statement. This means that we can
disclose important information to shareholders by referring the shareholders to
another document. Any information incorporated by reference into this Proxy
Statement is considered to be part of this Proxy Statement from the date we file
that information with the SEC. Any reports filed by us with the SEC after the
date of this Proxy Statement will automatically update and, where applicable,
supersede any of the information incorporated by reference into this Proxy
Statement.
We
incorporate herein by reference the following information filed with the
SEC:
1)
The Company’s audited consolidated financial statements and the notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2007, as filed with the SEC on March 12, 2008, together with the
supplemental financial information, management’s discussion and analysis of
financial condition and results of operations and quantitative and
qualitative disclosures
about market risk contained in such Annual Report on Form 10-K;
and
2)
The Company’s unaudited consolidated financial statements and the notes thereto
included in the Company’s Quarterly Reports on Form 10-Q for the three months
ended March 31, 2008, June 30, 2008, and September 30, 2008, as filed with the
SEC on May 9, 2008, August 6, 2008, and November 10, 2008, respectively,
together with the management’s discussion and analysis of financial condition
and results of
operations and quantitative and qualitative disclosures about market risk
contained in such Quarterly Reports on Form 10-Q.
A copy of any of the above referenced
documents will be furnished, without charge, by writing to the Corporate
Secretary, The Wilber Corporation, 245 Main Street, Oneonta, New York 13820.
Such documents are also available at
http:www.cfpproxy.com/5458sm.
PLEASE
SIGN, DATE AND MAIL YOUR PROXY NOW.
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By Order of the Board of
Directors
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Oneonta,
New York
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Joseph
E. Sutaris
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January
23, 2009
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Secretary
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Appendix
A
AMENDMENT
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF
THE
WILBER COPORATION
The
text of paragraphs “3” and “4” of our Restated Certificate of Incorporation is
deleted and replaced in its entirety with the following:
3. The
total authorized capital stock of the corporation shall be 16,100,000 shares,
consisting of 16,000,000 shares of common stock and 100,000 shares of preferred
stock which may be issued in one or more classes or series. The shares of common
stock shall constitute a single class and shall have a par value of $.01. The
shares of preferred stock of each class or series shall be without par value,
except that the amendment authorizing the initial issuance of any class or
series, adopted by the Board of Directors as provided herein, may provide that
shares of any class or series shall have a specified par value per share, in
which event all of the shares of such class or series shall have the par value
per share so specified.
4. The
Board of Directors of the corporation is expressly authorized from time to time
to adopt and to cause to be executed and filed without further approval of the
shareholders amendments to this Certificate of Incorporation authorizing the
issuance of one or more classes or series of preferred stock for such
consideration as the Board of Directors may fix. In an amendment authorizing any
class or series of preferred stock, the Board of Directors is expressly
authorized to determine:
(a)
The distinctive designation of the class or series and the num
ber of
shares which will constitute the class or series, which number may be increased
or decreased (but not below the number of shares then outstanding in that class
or above the total shares authorized herein) from time to time by action of the
Board of Directors;
(b)
The dividend rate on the shares of the class or series, whether dividends will
be cumulative, and, if so, from what date or dates;
(c)
The price or prices at which, and the terms and conditions on which, the shares
of the
class or
series may be redeemed at the option of the corporation;
(d)
Whether or not the shares of the class or series will be entitled to the benefit
of a retirement or sinking fund to be applied to the purchase or redemption of
such shares and
, if
so entitled, the amount of such fund and the terms and provisions relative to
the operation thereof;
(e)
Whether or not the shares of the class or series will be convertible into, or
exchangeable for, any other shares of stock of the corpor
ation or other
securities, and if so convertible or exchangeable, the conversion price or
prices, or the rates of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and conditions of such
conversion or exchange;
(f)
The rights of the shares of the class or series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the
corporation;
(g)
Whether or not the shares of the class or series will have priorit
y over,
parity with, or be junior to, the shares of any other class or series in any
respect, whether or not the shares of the class or series will be entitled to
the benefit of limitations restricting the issuance of shares of any other class
or series having priority over or on parity with the shares of such class or
series and whether or not the shares of the class or series are entitled to
restrictions on the payment of dividends on, the making of other distributions
in respect of, and the purchase or redemption of shares of any other class or
series of preferred stock or common stock ranking junior to the shares of the
class or series;
(h)
Whether the class or series will have voting rights, in addition to any voting
rights provided by law, an
d if so, the terms of such
voting rights; and
(i)
Any other preferences, qualifications, privileges, options and other relative or
special rights and limitations of that class or series.
Appendix
B
TARP
Capital Purchase Program
Senior
Preferred Stock and Warrants
Summary of Senior Preferred
Terms
Issuer:
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Qualifying
Financial Institution (“Q
F I
”)
means (i) any U.S. bank or U.S. savings association not controlled by a
Bank Holding Company (“BHC”) or Savings and Loan Holding Company (“SLHC”);
(ii) any top-tier U.S. BHC, (iii) any top-tier U.S. SLHC which engages
solely or predominately in activities that are permitted for financial
holding companies under relevant law; and (i
v) any U.S. bank or
U.S. savings association controlled by a U.S. SLHC that does not engage
solely or predominately in activities that are permitted for financial
holding companies under relevant law. QFI shall not mean any BHC, SLHC,
bank or savings assoc
iation controlled by a foreign bank or
company. For purposes of this program, “U.S. bank,” “U.S. savings
association,” “U.S. BHC” and “U.S. SLHC” mean a bank, savings association,
BHC or SLHC organized under the laws of the United States or any State of
th
e United
States, the District of Columbia, any territory or possession of the
United States, Puerto Rico, Northern Mariana Islands, Guam, American
Samoa, or the Virgin Islands.
The
United States Department of the Treasury will determine eligibility and
allocation for QFIs after consultation with the appropriate Federal
banking agency.
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Initial
Holder:
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United
States Department of the Treasury (the “UST”)
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Size:
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QFIs
may sell preferred stock to the UST subject to the limits and terms
described below.
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Each
QFI may issue an amount of Senior Preferred equal to not less than 1% of
its risk-weighted assets and not more than the lesser of (i) $25 billion
and (ii) 3% of its risk-weighted assets.
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Security:
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Senior
Preferred, liquidation preference $1,000 per share. (Depending upon the
QFI’s available authorized preferred shares, the UST may agree to purchase
Senior Preferred with a higher liquidation preference
per share, in which
case the UST may require the QFI to appoint a depositary to hold the
Senior Preferred and issue depositary receipts.)
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Ranking:
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Senior
to common stock and pari passu with existing preferred shares other
than preferred shares which by their terms rank junior to any existing
preferred shares.
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Regulatory
Capital
Status:
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Tier
1.
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Term:
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Perpetual
life.
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Dividend:
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The
Senior Preferred will pay cumulative dividends at a rate of 5% per annum
until the fifth anniversary of the date of this investment and thereafter
at a rate of 9% per annum. For Senior Preferred issued by banks which are
not subsidiaries of holding companies, the Senior Preferred will pay
non-cumulative dividends at a rate of 5% per annum until the fifth
anniversary of the date of this investment and thereafter at a rate of 9%
per annum. Dividends will be payable quarterly in arrears on February 15,
May 15, August 15 and November 15 of each year.
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Redemption:
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Senior
Preferred may not be redeemed for a period of three years from the date of
this investment, except with the proceeds from a Qualified Equity Offering
(as defined below) which results in aggregate gross proceeds to the QFI of
not less than 25% of the issue price of the Senior Preferred. After the
third anniversary of the date of this investment, the Senior Preferred may
be redeemed, in whole or in part, at any time and from time to time, at
the option of the QFI. All redemptions of the Senior Preferred shall be at
100% of its issue price, plus (i) in the case of cumulative Senior
Preferred, any accrued and unpaid dividends and (i
i) in the case of
noncumulative Senior Preferred, accrued and unpaid dividends for the
then current dividend period (regardless of whether any dividends are
actually declared for such dividend period), and shall be subject to the
approval of the QFI’s pri
mary federal bank
regulator.
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“Qualified
Equity Offering” shall mean the sale by the QFI after the date of this
investment of Tier 1 qualifying perpetual preferred stock or common stock
for cash.
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Following
the redemption in whole of the Senior Preferred held by the UST, the QFI
shall have the right to repurchase any other equity security of the QFI
held by the UST at fair market value.
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Restrictions
on
Dividends:
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For
as long as any Senior Preferred is outstanding, no dividends may be
declared or paid on junior preferred shares, preferred shares ranking pari
passu with the Senior Preferred, or common shares (other than in the case
of pari passu repurchase or redeem any junior preferred shares,
preferred shares ranking pari passu with the Senior Preferred or common
shares, unless (i) in the case of cumulative Senior Preferred all accrued
and unpaid dividends for all past dividend periods on the Senior Preferred
are fully paid or (ii) in the case of non-cumulative Senior Preferred the
full dividend for the latest completed dividend period has been declared
and paid in full.
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Common
dividends:
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The UST’s consent
shall be required for any
increase in common dividends per share
until the third anniversary of the date of this investment unless prior to
such third anniversary the Senior Preferred is redeemed in whole or the
UST has transferred all of the Senior Preferred to third
parties.
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Repurchases:
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The
UST’s consent shall be required for any share repurchases (other than (i)
repurchases of the Senior Preferred and (ii) repurchases of junior
preferred shares or common shares in connection with any
benefit plan in the
ordinary course of business consistent with past practice) until the third
anniversary of the date of this investment unless prior to such third
anniversary the Senior Preferred is redeemed in whole or the UST has
transferred all of the
Senior Preferred to third parties. In
addition, there shall be no share repurchases of junior preferred shares,
preferred shares ranking pari passu with the Senior Preferred, or common
shares if prohibited as described above under “Restrictions on
Dividends.”
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Voting
rights:
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The
Senior Preferred shall be non-voting, other than class voting rights on
(i) any authorization or issuance of shares ranking senior to the Senior
Preferred, (ii) any amendment to the rights of Senior Preferred, or (iii)
any merger, exchange or similar transaction which would adversely affect
the rights of the Senior Preferred.
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If
dividends on the Senior Preferred are not paid in full for six dividend
periods, whether or not consecutive, the Senior Preferred will have the
right to elect 2 directors. The right to elect directors will end when
full dividends have been paid for four consecutive dividend
periods.
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Transferability:
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The
Senior Preferred will not be subject to any contractual restrictions on
transfer. The QFI will file a shelf registration statement covering the
Senior Preferred as promptly as practicable after the date of this
investment and, if necessary, shall take all action required to cause such
shelf registration statement to be declared effective as soon as possible.
The QFI will also grant to the UST piggyback registration rights for the
Senior Preferred and will take such other steps as may be reasonably
requested to facilitate the transfer of the Senior Preferred including, if
requested by the UST, using reasonable efforts to list the Senior
Preferred on a national securities exchange. If requested by the UST, the
QFI will appoint a depositary to hold the Senior Preferred and issue
depositary receipts.
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Executive
Compensation:
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As
a condition to the closing of this investment, the QFI and its senior
executive officers covered by the EESA shall modify or terminate all
benefit plans, arrangements and agreements (including golden parachute
agreements) to the extent necessary to be in compliance with, and
following the closing and for so long as UST holds any equity or debt
securities of the QFI, the QFI shall agree to be bound by, the executive
compensation and corporate governance requirements of Section 111 of the
EESA and any guidance or regulations issued by the Secretary of the
Treasury on or prior to the date of this investment, to carry out the
provisions of such subsection. As an additional condition to closing, the
QFI and its senior executive officers covered by the EESA shall grant to
the UST a waiver releasing the UST from any claims that the QFI and such
senior executive officers may otherwise have as a result of the issuance
of any regulations which modify the terms of benefits plans, arrangements
and agreements to eliminate any provisions that would not be in compliance
with the executive compensation and corporate governance requirements of
Section 111 of the EESA and any guidance or regulations issued by the
Secretary of the Treasury on or prior to the date of this investment to
carry out the provisions of such
subsection.
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Summary of Warrant
Terms
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Warrant:
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The UST will receive
warrants to purchase a number of shares of common stock of the QFI having
an aggregate market price equal to 15% of the Senior Preferred amount on
the date of investment, subject to reduction as set forth below under
“Reduction.” The i
nitial exercise price for the warrants, and the
market price for determining the number of shares of common stock subject
to the warrants, shall be the market price for the common stock on the
date of the Senior Preferred investment (calculated on a 20-trading day
trailing average), subject to customary anti-dilution adjustments. The
exercise price shall be reduced by 15% of the original exercise price on
each six-month anniversary of the issue date of the warrants if the
consent of the QFI stockholders described below has not been received,
subject to a maximum reduction of 45% of the original exercise
price.
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Term:
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10
years
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Exercisability:
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Immediately
exercisable, in whole or in part
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Transferability:
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The
warrants will not be subject to any contractual restrictions on transfer;
provided that the UST may only transfer or exercise an aggregate of
one-half of the warrants prior to the earlier of (i) the date on which the
QFI has received aggregate gross proceeds of not less than 100% of the
issue price of the Senior Preferred from one or more Qualified Equity
Offerings and (ii) December 31, 2009. The QFI will file a shelf
registration statement covering the warrants and the common stock
underlying the warrants as promptly as practicable after the date of this
investment and, if necessary, shall take all action required to cause such
shelf registration statement to be declared effective as soon as possible.
The QFI will also grant to the UST piggyback registration rights for the
warrants and the common stock underlying the warrants and will take such
other steps as may be reasonably requested to facilitate the transfer of
the warrants and the common stock underlying the warrants. The QFI w
ill apply for the
listing on the national exchange on which the QFI’s common stock is traded
of the common stock underlying the warrants and will take such other steps
as may be reasonably requested to facilitate the transfer of the warrants
or the common
stock.
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Voting:
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The
UST will agree not to exercise voting power with respect to any shares of
common stock of the QFI issued to it upon exercise of the
warrants.
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Reduction:
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In
the event that the QFI has received aggregate gross proceeds of not less
than 100% of the issue price of the Senior Preferred from one or more
Qualified Equity Offerings on or prior to December 31, 2009, the number of
shares of common stock underlying the warrants then held by the UST shall
be reduced by a number of shares equal to the product of (i) the number of
shares originally underlying the warrants (taking into account all
adjustments) and (ii) 0.5.
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Consent:
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In
the event that the QFI does not have sufficient available authorized
shares of common stock to reserve for issuance upon exercise of the
warrants and/or stockholder approval is required for such issuance under
applicable stock exchange rules, the QFI will call a meeting of its
stockholders as soon as practicable after the date of this investment to
increase the number of authorized shares of common stock and/or comply
with such exchange rules, and to take any other measures deemed by the UST
to be necessary to allow the exercise of warrants into common
stock.
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Substitution:
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In
the event the QFI is no longer listed or traded on a national securities
exchange or securities association, or the consent of the QFI stockholders
described above has not been received within 18 months after the issuance
date of the warrants, the warrants will be exchangeable, at the option of
the UST, for senior term debt or another economic instrument or security
of the QFI such that the UST is appropriately compensated for the value of
the warrant, as determined by the
UST.
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