SCHEDULE 14A INFORMATION
Proxy Statement Pursant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
New England Community Bancorp, Inc.
(Name of Registrant as Specified In Its Charter)
.............................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
..............................................................
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>
NEW ENGLAND COMMUNITY BANCORP, INC.
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1996
- --------------------------------------------------------------------------------
To Shareholders of New England Community Bancorp, Inc.
Notice is hereby given that the Annual Meeting of the Shareholders of New
England Community Bancorp, Inc. ("NECB"), will be held at 10:00 a.m. on May 21,
1996 at La Renaissance, 53 Prospect Hill Road (Route 5), East Windsor,
Connecticut, for the following purposes:
To elect a Board of Directors, as described in the accompanying Proxy
Statement.
To ratify the appointment of Shatswell, MacLeod & Company, P.C. as
independent auditors for the fiscal year ending December 31, 1996.
To approve the 1996 Incentive and Nonqualified Compensatory Stock
Option Plan, as described in the accompanying Proxy Statement.
To transact such other business as may properly be brought before the
meeting or any adjournment(s) thereof.
Only Shareholders of record at the close of business on the 29th day of
March, 1996, are entitled to notice of and to vote at this Annual Meeting.
By Order of the
Board of Directors
New England Community Bancorp, Inc.
/s/ John A. Coccomo, Sr.
John A. Coccomo, Sr.
Secretary
April 18, 1996
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND MAIL THE ENCLOSED PROXY
AS SOON AS POSSIBLE REGARDLESS OF WHETHER THEY PLAN TO ATTEND THE MEETING. ANY
PROXY GIVEN BY A SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED,
AND ANY SHAREHOLDER WHO EXECUTES AND RETURNS A PROXY AND WHO ATTENDS THE ANNUAL
MEETING MAY WITHDRAW THE PROXY AT ANY TIME BEFORE IT IS VOTED AND VOTE HIS OR
HER SHARES IN PERSON. A PROXY MAY BE REVOKED BY A SHAREHOLDER AT ANY TIME BEFORE
IT IS EXERCISED BY: (I) FILING A WRITTEN REQUEST AT OR BEFORE THE MEETING WITH
ANSON C. HALL, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER OF NEW
ENGLAND COMMUNITY BANCORP, INC., P. O. BOX 130, WINDSOR, CT 06095; (II) GIVING A
DULY EXECUTED PROXY BEARING A LATER DATE; OR (III) APPEARING PERSONALLY AT THE
MEETING AND GIVING A CONTRARY VOTE.
<PAGE>
PROXY STATEMENT FOR
NEW ENGLAND COMMUNITY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1996
SOLICITATION OF PROXIES
The enclosed proxy (the "Proxy") is solicited by the Board of Directors
(the "Board of Directors") of New England Community Bancorp, Inc. ("NECB"), Old
Windsor Mall, Windsor, Connecticut, 06095, for use at the Annual Meeting of
Shareholders, to be held on May 21, 1996, at 10:00 a.m., at La Renaissance, 53
Prospect Hill Road (Route 5), East Windsor, Connecticut, and at any and all
adjournments thereof. Any Proxy given may be revoked at any time before it is
actually voted on any matter in accordance with the procedures set forth on the
Notice of Annual Meeting. This Proxy Statement and the enclosed form of Proxy
are being mailed to shareholders (the "Shareholders") on or about April 18,
1996. The cost of preparing, assembling and mailing this Proxy Statement and the
material enclosed herewith is being borne by NECB. In addition to this
solicitation by mail, directors, officers and some regular employees of NECB,
without additional compensation, may make solicitations personally or by
telephone or telegraph. NECB will defray the expenses of such additional
solicitations.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 29, 1996 as
the record date (the "Record Date") for the determination of Shareholders
entitled to notice of and to vote at this Annual Meeting. As of the Record Date,
3,084,309 shares of the common stock of NECB (par value $.10 per share) (the
"NECB Common Stock") were issued and outstanding and held of record by
approximately 2,400 Shareholders, each of which shares is entitled to one vote
on all matters to be presented at this Annual Meeting. Votes withheld and
non-votes are not treated as having voted in favor of any proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table includes certain information as of March 15, 1996
regarding the principal shareholders (the "Principal Shareholders") of NECB.
With the exception of the Principal Shareholders listed below, NECB is not aware
of any beneficial owner of five percent (5%) or more of NECB's Common Stock.
<TABLE>
<CAPTION>
NAME AND AMOUNT OF
ADDRESS OF SHARES BENEFICIALLY PERCENTAGE
BENEFICIAL OWNERS OWNED (1) OF CLASS
- ---------------- ------------------- ----------
<S> <C> <C>
John A. Coccomo, Sr. ............................. 184,082 (2) 6.0%
130 West Street
Windsor, CT 06095
Angelina J. McGillivray .......................... 173,102 (3) 5.6%
195 Ethan Drive
Windsor, CT 06095
John Hancock Advisers, Inc. ...................... 165,000 (4) 5.3%
101 Huntington Avenue
Boston, MA 02119
</TABLE>
- -----------
1. Percentages are based upon the 3,084,309 shares of NECB Common Stock
outstanding on March 15, 1996. The definition of a beneficial owner of a
security includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or
shares voting power or investment power with respect to such security.
2. Includes 42,012 shares of NECB Common Stock (1.36%) owned by the John A.
Coccomo, Sr., Foundation for the Blind, Inc., a charitable trust of which
Mr. Coccomo is a trustee, ownership of which shares has been disclaimed by
Mr. Coccomo.
3. Includes 42,012 shares of NECB Common Stock (1.36%) owned by the John A.
Coccomo, Sr., Foundation for the Blind, Inc., a charitable trust of which
Mrs. McGillivray is a trustee, ownership of which shares has been
disclaimed by Mrs. McGillivray.
(footnotes continued on next page)
<PAGE>
(footnotes continued from previous page)
4. Based on filings made pursuant to the Securities Exchange Act of 1934,
which indicate that John Hancock Advisers, Inc. has direct beneficial
ownership of 165,000 shares of NECB Common Stock. Through their
parent-subsidiary relationship to John Hancock Advisers, Inc., John Hancock
Mutual Life Insurance Company, John Hancock Subsidiaries, Inc. and the
Berkeley Financial Group have indirect ownership of the same shares. The
shares are held by the John Hancock Bank & Thrift Opportunity Fund, a
closed-end diversified management company registered under ss.8 of the
Investment Company Act. John Hancock Advisers has the sole power to vote or
to direct the vote and sole power to dispose or to direct the disposition
of the 165,000 shares of the NECB Common Stock under an advisory agreement
with the John Hancock Bank & Thrift Opportunity Fund, dated July 24, 1994.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table includes certain information as of March 15, 1996
regarding the directors and executive officers of NECB.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS
NAME OF MARCH 15, 1996 (1)
- ----- ----------------------
Tadeus J. Buczkowski ...................... 17,788 (0.6%) (2)
John C. Carmon ............................ 18,240 (0.6%) (2)
John A. Coccomo, Sr. ...................... 184,082 (6.0%) (3)(8)
George A. Colli, Jr. ...................... 58,025 (1.9%) (4)
Gary J. DeNino ............................ 38,712 (1.3%) (2)
Frank A. Falvo ............................ 13,034 (0.4%) (2)
Dominic J. Ferraina ....................... 17,500 (0.6%) (2)(5)
Donat A. Fournier ......................... 28,656 (0.9%) (5)(6)
Charles D. Gersten ........................ 100,525 (3.3%) (2)
Anson C. Hall ............................. 6,486 (0.2%) (2)(9)
John R. Harvey ............................ 13,786 (0.4%) (2)
David A. Lentini .......................... 43,100 (1.4%) (2)(5)(7)
Angelina J. McGillivray ................... 173,102 (5.6%) (8)
Edward J. Szewczyk ........................ 12,242 (0.4%) (2)
-------
All Directors and Executive Officers
as a Group (14 persons) ................. 688,549 (22.3%) (10)
=======
- -----------
1. Percentages are based upon the 3,084,309 shares of NECB Common Stock
outstanding on March 15, 1996. The definition of beneficial owner includes
any person who, directly or indirectly, through any contract or agreement,
understanding, relationship or otherwise has or shares voting power or
investment power with respect to such security.
2. Includes shares owned by, or as to which voting power is shared with,
spouse, children or controlled business.
3. Includes 42,012 shares of NECB Common Stock (1.36%) owned by the John A.
Coccomo, Sr., Foundation for the Blind, Inc., a charitable trust of which
Mr. Coccomo is a Trustee, ownership of which shares has been disclaimed by
Mr. Coccomo.
4. Does not include 35,280 shares of NECB Common Stock (1.14%) owned by Mr.
Colli's family members, ownership of which shares Mr. Colli has disclaimed.
5. Includes 2,500 shares of NECB Common Stock (0.8%) in the NEBT Defined
Contribution Pension Plan over which Messrs. Lentini, Ferraina and Fournier
share voting power as Trustees. Such shares have been included in the
beneficial ownerships of each respective individual, and in the total
beneficial ownership of Directors and Executive Officers as a group.
6. Includes options to purchase 14,000 shares of NECB Common Stock at $5.00
per share and options to purchase 10,000 shares of NECB Common Stock at
$7.75 per share, exercisable within 60 days.
7. Includes options to purchase 20,000 shares of NECB Common Stock at $5.00
per share and options to purchase 15,000 shares of NECB Common Stock at
$7.75 per share, exercisable within 60 days.
8. Includes 42,012 shares of NECB Common Stock (1.36%) owned by the John A.
Coccomo, Sr., Foundation for the Blind, Inc., a charitable trust of which
Mrs. McGillivray is a Trustee, ownership of which shares has been
disclaimed by Mrs. McGillivray. Such shares have been included in total
beneficial ownership of Directors and Executive Officers as a group and in
the beneficial ownership of Director Coccomo, who also disclaims such
beneficial ownership.
9. Includes options to purchase 5,000 shares of NECB Common Stock at $7.75 per
share, exercisable within 60 days.
10. Includes all outstanding shares of NECB Common Stock and options owned or
controlled by Directors as of the Record Date. The shares owned by the John
A. Coccomo, Sr. Foundation for the Blind, Inc. and by the NEBT Defined
Contribution Pension Plan have been counted only once in determining the
total shares beneficially owned by all Directors and Executive Officers of
NECB as a group.
2
<PAGE>
MANAGEMENT OF NECB
EXECUTIVE OFFICERS OF NECB
<TABLE>
<CAPTION>
COMMENCEMENT
NAME AGE POSITION OF SERVICE
- ---- --- -------- ------------
<S> <C> <C> <C> <C>
David A. Lentini .................... 49 President and May 1993 (1)
Chief Executive
Officer of NECB
Frank A. Falvo ...................... 53 Executive Vice November 1995 (2)
President of NECB
Anson C. Hall ....................... 57 Vice President, June 1993 (3)
Chief Financial
Officer and Treasurer
of NECB
Donat A. Fournier ................... 47 Vice President June 1993 (4)
and Senior Loan
Officer of NECB
</TABLE>
- -----------
1. Mr. Lentini was appointed to serve as President and Chief Executive Officer
of NEBT and NECB in May, 1993. NEBT entered into an employment agreement
with Mr. Lentini in August of 1994, for a term of two years. Prior to
joining NEBT and NECB, Mr. Lentini served as President and Chief Executive
Officer of the Connecticut Bank of Commerce, Woodbridge, Connecticut from
September, 1992 through May, 1993. Mr. Lentini was employed by the Bank of
South Windsor as President and Chief Executive Officer from December, 1987
until September, 1992. Mr. Lentini serves as a director of NECB.
2. On November 30, 1995 NECB acquired all of the outstanding stock of The
Equity Bank, a Connecticut chartered commercial bank located in
Wethersfield, Connecticut ("EQBK"). NECB operates EQBK as a separate bank
subsidiary. Mr. Falvo continues to serve as President of EQBK and has held
that position since 1987. Mr. Falvo has been appointed as an Executive Vice
President of NECB. Mr. Falvo serves as a director of NECB.
3. In June, 1993, the Board of Directors appointed Mr. Anson C. Hall to serve
as Treasurer of NECB and as Senior Vice President and Chief Financial
Officer of NEBT. NEBT entered into an employment agreement with Mr. Hall in
August of 1994, for a period of two years. Between August 1992 and June
1993, Mr. Hall owned and operated a business, Bestway Management, a
management consulting firm serving small banks and businesses. Prior to
that time, Mr. Hall served as Senior Vice President, Treasurer and
Controller of Fleet Bank, N.A., Hartford, Connecticut until 1992.
4. In June, 1993, the Board of Directors appointed Mr. Donat A. Fournier to
serve as Executive Vice President and Chief Lending Officer of NEBT. NEBT
entered into an employment agreement with Mr. Fournier in August of 1994,
for a period of two years. Prior to his appointment by the Board of
Directors, Mr. Fournier served as Chief Operations Officer, Senior
Executive Vice President and Corporate Secretary of Eastland Financial
Corporation in Woonsocket, Rhode Island.
PROPOSAL (1)
ELECTION OF DIRECTORS
A Board of twelve (12) Directors is to be elected at this Annual Meeting,
to hold office until the next Annual Meeting and the election and qualification
of their successors.
The Nominating Committee of the Board of Directors has nominated the
following persons (the "Nominees"), and it is intended that Proxies will be
voted in favor of all of these persons. If, for any reason, any of the Nominees
is not able or willing to serve as a Director when the election occurs (a
situation which is not presently contemplated), it is intended that the Proxy
will be voted for the election of a substitute nominee in accordance with the
judgment of the Proxy holder. All Shareholders regardless of whether or not they
plan to attend the meeting in person are urged to send in Proxies.
The following table sets forth the name and age of each Nominee, his/her
principal occupation for the last five (5) years and the year in which he/she
was first elected as a director of NECB:
<TABLE>
<CAPTION>
POSITIONS
AND PRINCIPAL DIRECTOR
AGE OCCUPATION (1) OF NECB SINCE:
---- -------------- --------------
<S> <C> <C> <C>
Tadeus J. Buczkowski .......................... 69 Loss Control 1986
Director (Retired)
Hartford Insurance
Group
(table and footnotes continued on next page)
3
<PAGE>
(table and footnotes continued from previous page)
POSITIONS
AND PRINCIPAL DIRECTOR
AGE OCCUPATION (1) OF NECB SINCE:
---- -------------- --------------
John C. Carmon ................................ 48 President, Carmon 1985
Funeral Homes, Inc.
John A. Coccomo, Sr. .......................... 69 Secretary of NECB; 1985
Manager John A.
Coccomo Associates, LLC
(Real Estate,
Construction and
Land Development)
George A. Colli, Jr. .......................... 67 Assistant Secretary 1986
of NECB;
President, Colli-
Wagner (Real Estate)
Gary J. DeNino ................................ 41 President of IMSCO, 1995
Inc. a domestic market
representative of
international products
since 1982
Frank A. Falvo ................................ 53 Executive Vice 1995
President of NECB
since December, 1995
and President and Chief
Executive Officer of
EQBK since
its formation
Dominic J. Ferraina ........................... 63 Chairman of the 1986
Boards of NECB and
NEBT; Attorney
Charles D. Gersten ............................ 72 Attorney and founding 1995
partner of Gersten &
Clifford
John R. Harvey ................................ 48 Certified Public 1995
Accountant and
Partner in Harvey
& Horowitz, P.C.
David A. Lentini .............................. 49 President and 1993
Chief Executive
Officer of NECB
and NEBT(2)
Angelina J. McGillivray ....................... 45 President, 1993
Coccomo Associates
Realtors, Inc.
Edward J. Szewczyk ............................ 66 President, 1985
Southwood
Pharmacy, Inc.
</TABLE>
- -----------
1. All the directors and executive officers have been engaged in their
respective occupations for more than five years unless otherwise indicated.
2. Mr. Lentini was appointed to serve as President and Chief Executive Officer
of NEBT and NECB in May, 1993. NEBT entered into an employment agreement
with Mr. Lentini in August of 1994, for a term of two years. Prior to
joining NEBT and NECB, Mr. Lentini served as President and Chief Executive
Officer of the Connecticut Bank of Commerce, Woodbridge, Connecticut from
September, 1992 through May, 1993. Mr. Lentini was employed by the Bank of
South Windsor as President and Chief Executive Officer from December, 1987
until September, 1992.
4
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
NECB's Board of Directors has standing Executive, Audit and Nominating
Committees. The Board of Directors does not have a standing compensation
committee. Rather, the Executive Committee reviews and makes recommendations to
NECB's Board of Directors concerning compensation and benefits paid to NECB's
executive officers and employees. Additionally, a Stock Option Committee has
been formed to administer the 1996 Incentive and Nonqualified Stock Option Plan
(the "Stock Option Plan"), which the Board has adopted subject to approval by
Shareholders. Members of the committees are appointed annually by the Board of
Directors.
(a) EXECUTIVE COMMITTEE
The Executive Committee consists of: Dominic J. Ferraina, Chairman; Tadeus
J. Buczkowski; John C. Carmon; John A. Coccomo, Sr.; George A. Colli, Jr.; Frank
A. Falvo; Charles B. Gersten; David A. Lentini and Angelina J. McGillivray.
The Executive Committee has broad responsibilities and reviews all matters
which may significantly affect NECB, both in the present and in the future and
reviews the status of NECB at each meeting. In addition, the Executive Committee
performs the functions of strategic planning and determines issues related to
compensation programs and policies. The Executive Committee met five (5) times
during 1995.
(b) AUDIT COMMITTEE
The Audit Committee consists of: Edward J. Szewczyk, Chairman; John R.
Harvey and Angelina J. McGillivray.
The Audit Committee assists the Board of Directors of NEBT and EQBK in
fulfilling their fiduciary responsibilities relating to corporate accounting and
reporting practices of NEBT and EQBK, respectively.
The Audit Committee reviews the records and affairs of NECB to determine
its financial condition, reviews with management and the independent auditors
NECB's internal control systems, and monitors NECB's adherence in accounting and
financial reporting to generally accepted accounting principles. The Audit
Committee met five (5) times during 1995.
(c) NOMINATING COMMITTEE
The Nominating Committee consists of each member of the Board of Directors.
The members of the Nominating Committee met on March 21, 1996 and recommended
the proposed slate of Nominees, as presented in this Proxy Statement, to seek
election at the 1996 Annual Meeting to serve as directors of NECB. The
Nominating Committee will consider additional nominees during the year as
corporate needs dictate, and will advise the Board of Directors as to its
recommendations. The Nominating Committee will consider recommendations by
Shareholders for nomination as directors, provided such recommendations are
submitted in accordance with certain procedures set forth in NECB's Bylaws.
(d) STOCK OPTION COMMITTEE
On January 31, 1996, the Board of Directors formed a Stock Option Committee
which currently consists of all of the non-employee members of the Board of
Directors. The Board of Directors may fill vacancies and may from time to time
remove or add members to the Stock Option Committee. However, this Committee
must consist of at least three (3) members and all members of this Committee
must be "disinterested persons" as defined in Rule 16b-3 promulgated pursuant to
the Securities and Exchange Act of 1934, as amended. The initial and only
meeting of the Stock Option Committee to date was on January 31, 1996.
SHAREHOLDERS' NOMINATIONS OF DIRECTORS
- --------------------------------------
Nominations of persons for election to the Board of Directors may be made
at a meeting of Shareholders by or at the direction of the Board of Directors or
by any Shareholder of NECB entitled to vote for the election of directors, who
is present in person or by proxy at the meeting and who complies with certain
notice procedures set forth in NECB's Bylaws. Such nominations, other than those
made by or at the direction of the Board of Directors, must be made pursuant to
timely notice in writing to the Chairman of the Nominating Committee, which may
be sent in care of the Secretary of NECB.
5
<PAGE>
To be timely, a Shareholder's notice must be delivered to or mailed and
received at the principal executive offices of NECB not less than 60 days nor
more than 90 days prior to the meeting. However, if fewer than 70 days notice of
the date of the meeting is given or made to Shareholders, and the meeting is
held more than 30 days before or after the corresponding date of the annual
meeting held in the preceding year, then notice of the nomination by the
Shareholder to be timely must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
meeting was mailed to Shareholders. Notice of a Shareholders' meeting will be
deemed to have been given on the date of NECB's quarterly report, letter to
Shareholders or other communications to Shareholders disclosing the meeting
date, if the meeting is in fact held on that date or within 30 days thereafter.
A Shareholder's notice must set forth as to each person whom the Shareholder
proposes to nominate for election or re-election as a director: (i) the name,
age, business address, and, if known, residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of stock of NECB that are beneficially owned by such person, and (iv) any
other information relating to such person that is required to be disclosed in
solicitation of proxies for election of directors, or is otherwise required, in
each case, pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as director if
elected). In addition, any Shareholder making the nomination must promptly
provide any other information reasonably requested by NECB.
DIRECTOR ATTENDANCE
NECB's Board of Directors met twelve (12) times during 1995 and the Board's
various committees met as set forth above. No director, except John C. Carmon
and George A. Colli, Jr. attended fewer than 75% of the aggregate of (1) the
total number of meetings of NECB's Board of Directors which he/she was entitled
to attend, and (2) the total number of meetings held by all committees of NECB's
Board of Directors on which he/she served.
6
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS
AND DIRECTORS OF NECB
The following table provides certain information regarding the compensation
paid to the executive officers of NECB for services rendered in capacities to
NECB and its subsidiaries during the fiscal years ended December 31, 1995, 1994
and 1993. No other current executive officer of NECB received cash compensation
in excess of $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
--------------------------
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
-----------------------------------------------------------------------------
RESTRICTED |
OTHER ANNUAL | STOCK OPTIONS/ |
NAME AND PRINCIPAL COMPENSATION | AWARD(S) SARS LTIP | ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) ($) | ($) (#) PAYOUTS($) | COMPENSATION($)
----------------- ---- --------- -------- ------------ | --------- -------- --------- | ---------------
<S> <C> <C> <C> <C> <C>
David A. Lentini 1995 $140,000(1) $13,500 | 15,000 | $22,837(2)
President, Chief 1994 135,000(1) | 20,000 | 17,647(4)
Executive Officer 1993 83,082(3) | | 6,055(5)
of NECB; | |
President, Chief | |
Executive Officer | |
of NEBT | |
| |
Donat A. Fournier 1995 $ 95,000(6) $10,500 | 10,000 | $17,138(7)
Vice President, 1994 93,484(6) | 14,000 | 8,062
Senior Loan 1993 58,876(8) | | 357
Officer of NECB; | |
Executive Vice | |
President of NEBT | |
| |
Frank A. Falvo 1995 $125,000(9) $12,325 | |
Executive Vice | |
President of | |
NECB; President | |
and Chief Executive | |
Officer of EQBK | |
| |
Barry R. Loucks 1993 $209,990(10) | | $12,085(11)
Former Chairman, | |
President, Chief | |
Executive Officer | |
of NECB; | |
Former Chairman | |
and Chief Executive | |
Officer of NEBT | |
| |
Raymond G. Halsted 1993 $105,721(12) | | $12,603(13)
Former Senior Vice | |
President of | |
NECB; Former | |
President of NEBT | |
</TABLE>
- -----------
1. NEBT entered into an employment agreement with Mr. Lentini in August of
1994 for a term of two (2) years with automatic renewal provisions. See
"Employment Agreements."
2. NEBT provides Mr. Lentini with the use of an automobile and the typical
costs associated therewith. The total dollar value of this benefit amounted
to $2,116 in 1995. Pursuant to his Employment Agreement, NEBT paid $6,100
which is the dollar value of disability insurance premiums paid for the
benefit of Mr. Lentini. Additionally, NEBT contributed $9,000 to NEBT's
Defined Contribution Pension Plan for the benefit of Mr. Lentini.
3. Mr. Lentini joined NEBT in May, 1993.
4. NEBT provided Mr. Lentini with the use of an automobile and the typical
costs associated therewith. The total dollar value of this benefit amounted
to $2,116 in 1994. Pursuant to his employment agreement, NEBT paid $5,959
which is the dollar value of disability insurance premiums paid for the
benefit of Mr. Lentini. NEBT paid $870 which is the dollar value of group
life insurance and $423 which is the dollar value of insurance premiums
paid by NEBT with respect to term life insurance for the benefit of Mr.
Lentini. Additionally, NEBT contributed $8,279 to NEBT's Defined
Contribution Pension Plan for the benefit of Mr. Lentini.
5. NEBT provided Mr. Lentini with the use of an automobile and the typical
costs associated therewith. The total dollar value of this benefit amounted
to $1,261 in 1993. Pursuant to his Employment Agreement, NEBT paid $4,362
to Mr. Lentini which represented the amount which NEBT would have
contributed to its Defined Contribution Pension Plan if he was eligible to
participate therein. Additionally, the aggregate amount set forth in the
above table includes $432, which is the dollar value of insurance premiums
paid by NEBT with respect to term life insurance for the benefit of Mr.
Lentini.
6. NEBT entered into an Employment Agreement with Mr. Fournier in August of
1994 for a term of two (2) years with automatic renewal provisions. See
"Employment Agreements."
(footnotes continued on next page)
7
<PAGE>
(footnotes continued from previous page)
7. NEBT provides Mr. Fournier with the use of an automobile and the typical
costs associated therewith. The total dollar value of this benefit amounted
to $5,987 in 1995. Additionally, NEBT contributed $6,728 to NEBT's Defined
Contribution Pension Plan for the benefit of Mr. Fournier.
8. Mr. Fournier joined NEBT in May, 1993.
9. EQBK entered into an employment agreement with Mr. Falvo for a term of two
(2) years. See "Employment Agreements."
10. In March 1993, Mr. Loucks resigned from his senior management positions
with NECB and NEBT. He entered into a severance agreement. Under the
agreement with Mr. Loucks, Mr. Loucks received a severance payment of
$139,000 which sum approximated his 1992 compensation. Mr. Loucks received
health, life and disability benefits under NEBT's benefit plans for one
year following his resignation.
11. Pursuant to the severance agreement between Mr. Loucks, respectively, Mr.
Loucks received the automobile which he utilized while employed by NECB and
NEBT. The total dollar value of this benefit was $11,338. Additionally, the
aggregate amount set forth in the above table includes $747, which is the
dollar value of insurance premiums paid by NEBT with respect to term life
insurance for the benefit of Mr. Loucks.
12. In March 1993, Mr. Halsted resigned from his senior management position
with NECB and NEBT. He entered into a severance agreement. Under the
agreement, Mr. Halsted received a severance payment of $66,000. Mr. Halsted
received health, life and disability benefits under NEBT's benefit plans
for 32 weeks following his resignation.
13. Pursuant to the severance agreement, Mr. Halsted received the automobile
which he utilized while employed by NECB and NEBT. The total dollar value
of the benefit was $11,933. The aggregate amount set forth in the above
table includes $670, the dollar value of insurance premiums paid by NEBT
with respect to term life insurance for the benefit of Mr. Halsted.
PENSION PLAN
The Defined Contribution Pension Plan covering all eligible employees of
NECB's subsidiary, NEBT, calls for an annual contribution of 6% of an employee's
annual compensation. Full-time employees of NEBT who are 21 years of age and
have completed six months of continuous service are eligible to participate in
the defined contribution pension plan. Employee's interest in the contributions
under the defined contribution pension plan vest on a schedule of three to seven
years with three years being 20% vested and seven years being 100% vested. The
total contributions made during 1995 amounted to $227,000.
Effective January 1, 1991, EQBK adopted a 401(k) plan (the "Plan") for
employees of EQBK. The Plan is intended to comply with the requirements of
Section 401(k) of the Internal Revenue Code and in all material respects with
the Employee Retirement Income Securities Act of 1974 (ERISA).
Employees become eligible to participate in the Plan after one year of
employment. Employees may elect to contribute up to 20% of their monthly
earnings to the Plan. EQBK will contribute to each employee's account 50% of the
amount of the employee's elective contribution up to a maximum of 6% of such
employee's earnings. EQBK has the option at the end of the Plan year (December
31) to make additional contributions to each employee's account of up to a
maximum of the amount of the employee's aggregate elective contribution. The
total contributions made during 1995 amounted to $20,900.
Participating employees become fully vested in EQBK's matching contribution
after completing six years of service. All contributions by employees are fully
vested when made. All amounts contributed are invested in a Flexible Investment
Annuity contract with Principal Mutual Life Insurance Company.
INSURANCE
In addition to the cash compensation paid to the executive officers of
NECB, NEBT and EQBK, the executive officers receive group life, health,
hospitalization and medical insurance coverage. However, these plans do not
discriminate in scope, terms, or operation, in favor of officers or directors of
NECB, NEBT and EQBK and are available generally to all full-time employees.
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
With the exception of the individuals set forth in the table below, no
other executive officer of NECB was granted options to purchase shares of NECB
Common Stock in 1995. All shares purchased upon the exercise of any option must
be paid in full at the time of purchase.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS GRANTED EXERCISE OR FAIR MARKET
OPTION/SARS TO EMPLOYEES BASE PRICE VALUE ON DATE OF DATE OF EXPIRATION
NAME(1) GRANTED (#) IN FISCAL YEAR (S/SH) DATE OF GRANT GRANT(2) EXERCISE EXERCISE DATE
- ------- ------------ -------------- ----------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
David A. Lentini 15,000 50% $7.75 $7.50 1/24/95 1/24/96 1/24/98
President and
Chief Executive
Officer of NECB
Donat A. Fournier 10,000 33.3% $7.75 $7.50 1/24/95 1/24/96 1/24/98
Vice President and
Senior Loan Officer
of NECB
Anson C. Hall 5,000 16.6% $7.75 $7.50 1/24/95 1/24/96 1/24/98
Vice President,
Chief Financial Officer
and Treasurer of NECB
Executive Group 100%
</TABLE>
- -----------
1. Table does not include references to grant of stock options by the Board of
Directors to Messrs. Lentini, Fournier, Hall, Falvo and Veilleux granted
January 31, 1996 subject to Shareholder approval of the 1996 Incentive
Nonqualified Compensatory Stock Option Plan (the "Stock Option Plan") at
the May 21, 1996 Annual Meeting of Shareholders of NECB. On January 31,
1996, subject to Shareholder approval of the Stock Option Plan, the Board
granted of options to purchase 40,000 shares of NECB Common Stock to David
A. Lentini, 30,000 shares of NECB Common Stock to Donat A. Fournier, 30,000
shares of NECB Common Stock to Anson C. Hall, 30,000 shares of NECB Common
Stock to Frank A. Falvo and 10,000 shares of NECB Common Stock to Leo J.
Veilleux. The stock options are exercisable in five (5) equal annual
installments commencing in 1997, at the price of $10.25 per share.
2. The grant of each of these options by the Board of Directors was subject to
and received Shareholder approval.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The table below sets forth information regarding stock options that were
exercised, if any, during the last fiscal year, and unexercised stock options
held by executive officers of NECB:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE REALIZED OPTIONS/SARS OPTIONS/SARS
NAME ON EXERCISE(#) ($) AT FY-END(#) AT FY-END($)
----- -------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
David A. Lentini -0- -0- 20,000(1) $105,000
-0- -0- 15,000(2) 37,500
Donat A. Fournier -0- -0- 14,000(1) $ 73,500
-0- -0- 10,000(2) 25,000
Anson C. Hall -0- -0- 5,000(2) $ 12,500
</TABLE>
- -----------
1. As of December 31, 1995, the market value of the NECB Common Stock was
approximately $10.25 per share. As the option exercise price for the
options previously granted to Messrs. Lentini and Fournier in 1993, equals
$5.00 which amount is less than $10.25 per share at December 31, 1995, the
options were "In-the-Money" on December 31, 1995. Options are
"In-the-Money" if the fair market value of the underlying securities
exceeds the exercise price of the option.
2. The option exercise price for the options granted to Messrs. Lentini,
Fournier and Hall in 1995 equals $7.75, which amount is less than $10.25
per share at December 31, 1995. Accordingly, the options were "In-the
Money" on December 31, 1995.
3. Table does not include references to grant of stock options by the Board of
Directors to Messrs. Lentini, Fournier, Hall, Falvo and Veilleux granted
January 31, 1996 subject to Shareholder approval of the 1996 Incentive
Nonqualified Compensatory Stock Option Plan (the "Stock Option Plan") at
the May 21, 1996 Annual Meeting of Shareholders of NECB. On January 31,
1996, subject to Shareholder approval of the Stock Option Plan, the Board
granted options to purchase 40,000 shares of NECB Common Stock to David A.
Lentini, 30,000 shares of NECB Common Stock to Donat A. Fournier, 30,000
shares of NECB Common Stock to Anson C. Hall, 30,000 shares of NECB Common
Stock to Frank A. Falvo and 10,000 shares of NECB Common Stock to Leo J.
Veilleux. The stock options are exercisable in five (5) equal annual
installments commencing in 1997, at the price of $10.25 per share.
9
<PAGE>
DIRECTORS' FEES
During 1995, directors received $100 for each NECB Board Meeting attended
and $75 for each NECB Committee meeting attended. Officers who are also
directors received no additional compensation for their services as directors.
EMPLOYMENT AGREEMENTS
NEBT entered into employment agreements with Messrs. Lentini, Fournier and
Hall in August, 1994. A description of the terms and conditions of the
employment agreements with those executive officers whose cash compensation
exceeded $100,000 during 1995 are set forth below:
Mr. David A. Lentini's employment agreement provides for his employment as
President and Chief Executive Officer until July 30, 1997, unless the employment
agreement is extended by mutual agreement. In connection with his employment,
NEBT paid to Mr. Lentini an annual salary of $140,000 per year through December
31, 1995. Additionally, NEBT provides Mr. Lentini with the use of an automobile.
Pursuant to the employment agreement, Mr. Lentini is able to participate in
NEBT's standard health and accidental death plans. Additionally, NEBT has
provided Mr. Lentini with life insurance coverage on his life in an amount which
is no less than four times his annual base salary.
The employment agreement also provides that the Board of Directors of NEBT
may pay an incentive bonus to Mr. Lentini at their own option, and the amount of
such bonus is discretionary and will be determined by the Board of Directors.
The Board of Directors has indicated that it will consider noteworthy
contributions to the success of NECB and success in achieving or exceeding net
income objectives which the Board may from time to time establish or which may
be set forth in financial plans adopted by the Board of Directors.
Mr. Donat A. Fournier's employment agreement provides for his employment by
NEBT as its Executive Vice President and Chief Loan Officer until July 30, 1997,
unless the employment agreement is extended by mutual agreement. In connection
with his employment, NEBT paid to Mr. Fournier an annual salary of $95,000 per
year through December 31, 1995. Additionally, NEBT has agreed to supply Mr.
Fournier with the use of an automobile.
Pursuant to the employment agreement, Mr. Fournier is able to participate
in NEBT's standard health and accidental death plans.
The employment agreement also provides that the Board of Directors of NEBT
may pay an incentive bonus to Mr. Fournier at their own option, and the amount
of such bonus is discretionary and will be determined by the Board of Directors.
The Board of Directors has indicated that it will consider noteworthy
contributions to the success of NECB and success in achieving or exceeding net
income objectives which the Board may from time to time establish or which may
be set forth in financial plans adopted by the Board of Directors.
On September 1, 1989, Frank A. Falvo, President and Chief Executive Officer
of EQBK, signed an employment agreement approved by the Board of Directors which
became effective on March 15, 1990.
The employment agreement was written for a two (2) year term and
automatically renews each year unless written notice is given by either party.
If notice is given, then the agreement will terminate one (1) year later on the
anniversary of the commencement date next following the commencement date
anniversary with respect to which such notice was given. If Mr. Falvo dies
during the employment period, his estate receives all arrearage of salary and
expenses, six months' salary, and a pro rata share of any other accrued
benefits. If Mr. Falvo is terminated for cause, as defined in the employment
agreement, he will receive only his salary and other amounts which have been
earned but are unpaid on the date of termination.
CERTAIN RELATIONSHIPS AND RELATED MATTERS OF NECB
Some of the directors and executive officers of NECB, NEBT and EQBK and
companies or organizations with which they are associated, have had, and may
have in the future, banking transactions with NEBT and EQBK in the ordinary
course of NEBT's and EQBK's business. All such loans are currently performing in
accordance with their terms. Total loans to directors and executive officers of
NECB, NEBT and EQBK and associates of such executive officers and directors
outstanding during the past three years were as follows:
10
<PAGE>
DATE TOTAL INDEBTEDNESS OUTSTANDING
---- ------------------------------
December 31, 1995 ........... $6,971,000
December 31, 1994 ........... $3,337,000
December 31, 1993 ........... $2,465,000
Federal banking laws and regulations limit the aggregate amount of
indebtedness which banks may extend to bank insiders. Pursuant to such laws and
regulations, NEBT and EQBK may extend credit to executive officers, directors,
principal shareholders or any related interest of such persons, if the extension
of credit to such persons is in an amount that, when aggregated with the amount
of all outstanding extensions of credit to such individuals, does not exceed
NEBT's and EQBK's unimpaired capital and unimpaired surplus. As of December 31,
1995, 1994 and 1993 the aggregate amount of extensions of credit to insiders was
well below this limit.
NEBT and EQBK have had, and expect to have in the future, banking
transactions in the ordinary course of its business with directors, executive
officers, principal shareholders and their associates, on the same terms,
including interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others and, on terms that do not
involve more than the normal risk of collectibility or present other unfavorable
features.
During 1995, NEBT paid fees of $23,400 for certain legal services to
Dominic J. Ferraina, Chairman of the Boards of NECB and NEBT.
Charles D. Gersten, Trustee, a director of NECB and EQBK, is the lessor of
the property leased by EQBK at 1160 Silas Deane Highway, Wethersfield,
Connecticut. EQBK's lease, which commenced in 1989, provides that space in the
building will be leased for ten years with three five-year renewal options.
Beginning in 1994, until the end of the term of the lease, the rent is subject
to an annual increase equal to one-half of the prevailing cost of living rate
adjustment. Rent expense under this lease amounted to $183,600 during 1995. EQBK
considers the lease to have been written on terms comparable to the general
market at the time the lease was entered into and to have terms and conditions
as would have been negotiated with an outside party.
COMPLIANCE WITH FILINGS PURSUANT TO SECTION 16(a) OF THE SECURITIES AND EXCHANGE
ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
NECB's directors, executive officers, and persons who own more than 10% of
NECB's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. reports of
ownership and changes in ownership of NECB Common Stock. Executive officers,
directors and greater than 10% shareholders are required by regulations of the
SEC to furnish NECB with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to NECB or
written representations that no other reports were required, NECB believes that,
during the 1995 fiscal year, all filing requirements applicable to its executive
officers, directors and greater than 10% shareholders were complied with, except
that Mr. Colli filed one late report regarding one transaction.
PROPOSAL (2)
APPOINTMENT OF AUDITORS
Shatswell, MacLeod & Company, P.C. ("Shatswell, MacLeod & Company")
independent accountants, has been selected by the Board of Directors to serve as
independent accountants for NECB for the fiscal year ending December 31, 1996.
Although Shareholders will vote upon the ratification of the selection of
Shatswell, MacLeod & Company, and the Audit Committee will review the selection
if it is not ratified, the Board of Directors will have the right to continue to
retain Shatswell, MacLeod & Company as independent accountants in any event if
it desires to do so.
A representative of Shatswell, MacLeod & Company will be present at the
Annual Meeting to respond to appropriate questions and may make a statement if
he or she desires to do so.
The Board of Directors recommends a vote "FOR" the ratification of Proposal
(2).
The favorable vote of a majority of the shares present in person or
represented by Proxy at the meeting is required for the ratification of Proposal
(2).
11
<PAGE>
PROPOSAL (3)
PROPOSAL TO APPROVE NECB'S 1996 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
On January 31, 1996, the Board of Directors adopted the 1996 Incentive and
Nonqualified Stock Option Plan (the "Stock Option Plan") subject to approval by
the Shareholders to permit stock options to be granted from the 1996 Stock
Option Plan for a term of ten (10) years until January 31, 2006. Options for up
to an aggregate of 750,000 shares of the NECB's Common Stock may be issued under
the Stock Option Plan. The option price, which may not be less than 100% of the
fair market value of the NECB's Common Stock on the date of the grant, is to be
fixed by the Committee, as defined below, at the time of the grant of such
option. No option is exercisable in full or in part after the expiration of ten
(10) years from the date such option is granted. However, if the option is
granted to an individual who at the time the option is granted owns more than
ten percent (10%) of NECB's Common Stock, such option is not exercisable in full
or in part after the expiration of five (5) years from the date such option is
granted.
Approval of the Stock Option Plan by Shareholders is being sought in order
to comply with the rules of the National Association of Securities Dealers, Inc.
regarding the issuance of securities, the Internal Revenue Code and Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
The text of the Stock Option Plan is set forth in Exhibit A to this Proxy
Statement. The following is intended to be a summary of the Stock Option Plan's
principal terms and is subject to and qualified in its entirety by reference to
the complete text of the Stock Option Plan set forth in Exhibit A.
PURPOSE
The Board of Directors believes that stock ownership by key employees
contributes to the development and maintenance of strong management.
Accordingly, the purpose of the Stock Option Plan is to stimulate key managerial
employees of NECB and its subsidiaries who are in a position to contribute
materially to the long-term success of NECB by allowing such individuals to
acquire or increase their proprietary interest in NECB and to enable NECB to
attract and retain such key employees.
SHARES SUBJECT TO STOCK OPTION PLAN
There are 750,000 shares of NECB Common Stock authorized for nonqualified
and incentive stock option grants under the Stock Option Plan, which are subject
to adjustment in the event of stock splits, stock dividends and other
situations. On January 31, 1996, subject to Shareholder approval of the Stock
Option Plan, the Committee, as defined below, granted aggregate options to
acquire 140,000 shares among five key employees. As of March 31, 1996, 610,000
shares of NECB Common Stock remained available for grants subject to shareholder
approval of the Stock Option Plan.
EMPLOYEE PARTICIPANTS
Participants in the Stock Option Plan are selected by a Stock Option
Committee (the "Committee") and consist of key employees. Currently, there are
five persons participating in the Stock Option Plan. The Committee granted the
following options to the following persons, subject to Shareholder approval of
the Stock Option Plan:
STOCK OPTIONS
OPTIONEE GRANTED PRICE
-------- ------------- -----
David A. Lentini ...... 40,000 $10.25
Anson C. Hall ......... 30,000 $10.25
Donat A. Fournier ..... 30,000 $10.25
Frank A. Falvo ........ 30,000 $10.25
Leo J. Veilleux ....... 10,000 $10.25
ADMINISTRATION
The Stock Option Plan is administered by the Committee. Currently, the
Committee consists of all nonemployee members of the Board of Directors. The
Board of Directors may fill vacancies and may from time to time remove or add
members. However, this Committee must consist of at least three (3) members and
all members of the Committee must be disinterested persons as defined in Rule
16b-3 promulgated pursuant to the Exchange Act.
12
<PAGE>
The Board of Directors may periodically adopt rules and regulations for
carrying out the 1996 Stock Option Plan and amend the Stock Option Plan as
desired without further action by NECB's Shareholders except as required by
applicable law.
TERMINATION
The Stock Option Plan will continue in effect until all shares of stock
available for grant have been acquired through exercise of options, or for a
term of ten (10) years from its effective date, whichever is earlier. The Stock
Option Plan may be terminated at such earlier time as the Board of Directors may
determine.
TERMS OF STOCK OPTIONS
Awards under the Stock Option Plan consist of non-statutory stock options
(NSOs) and incentive stock options (ISOs). Options granted pursuant to the Stock
Option Plan to key employees need not be identical.
The purchase price under each option is established by the Committee but in
no event will the option price be less than 100% of the fair market value of
NECB's Common Stock on the date of grant. Options granted pursuant to the Stock
Option Plan are generally exercisable in five substantially equal installments
unless accelerated by the Committee. The closing price per share of NECB Common
Stock as reported on the Nasdaq National Market System on January 31, 1996 was
$10.25. The option price must be paid in full at the time of exercise. The price
may be paid in cash or, to the extent permitted by law, by the surrender of
shares of NECB owned for at least six months by the participant exercising the
option and having an aggregate fair market value on the date of exercise equal
to the option price, or by a combination of the foregoing equal to the option
price.
Options granted must expire within a period of not more than ten (10) years
from the grant date and are exercisable in five equal annual installments.
Options for key employees will have such other terms and be exercisable in such
manner and at such times as the Committee may determine. An option agreement for
key employees may provide for accelerated exercisability in the event of the
employee's death, disablement or retirement or other events including a merger
or sale of NECB, as determined by the Committee. The provisions of the Stock
Option Plan providing for the acceleration of the exercise date upon the
occurrence of such events may be considered as having an anti-takeover effect.
If the Board of Directors determines that an employee in the Stock Option
Plan has committed certain defined acts of misconduct such as embezzlement,
fraud, dishonesty, breach of fiduciary duty or deliberate disregard of NECB's
rules resulting in loss, damage or injury to NECB, neither the participant nor
his or her estate would be entitled to any option whatsoever. Each option is
transferable only by will or the law of descent and distribution and may only be
exercisable by the participant during his or her lifetime.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
Stock Option Plan is intended to be a summary of applicable federal law. State
and local tax consequences may differ. Because the federal income tax rules
governing options and related payments are complex and subject to frequent
change, optionees are advised to consult their tax advisors prior to exercise of
options or dispositions of stock acquired pursuant to option exercise.
ISOs and NSOs are treated differently for federal income tax purposes. ISOs
are intended to comply with the requirements of Section 422 of the Internal
Revenue Code. NSOs need not comply with such requirements.
An optionee is not taxed on the grant or exercise of an ISO. The difference
between the exercise price and the fair market value of the shares on the
exercise date will, however, be a preference item for purposes of the
alternative minimum tax. If an optionee holds the shares acquired upon exercise
of an ISO for at least two years following grant and at least one year following
exercise, the optionee's gain, if any, upon a subsequent disposition of such
shares is a long-term capital gain. The measure of the gain is the difference
between the proceeds received on disposition and the optionee's basis in the
shares (which generally equals the exercise price). If an optionee disposes of
stock acquired pursuant to exercise of an ISO before satisfying the one and
two-year holding periods described above, the optionee will recognize both
ordinary income and capital gain in the year of disposition. The amount of the
ordinary income will be the lesser of (i) the amount realized on disposition
less the optionee's adjusted basis in the stock (usually the option price) or
(ii) the difference between the fair market value of the stock on the exercise
date and the option price. The balance of the consideration received on such a
disposition will be a long-term capital gain if the stock had been held for at
13
<PAGE>
least one year following exercise of the ISO. NECB is not entitled to an income
tax deduction on the grant or exercise of an ISO or on the optionee's
disposition of the shares after satisfying the holding period requirement
described above. If the holding periods are not satisfied, NECB will be entitled
to a deduction in the year the optionee disposes of the shares, in an amount
equal to the ordinary income recognized by the optionee.
An optionee is not taxed on the grant of an NSO. On exercise, however, the
optionee recognizes ordinary income equal to the difference between the option
price and the fair market value of the shares on the date of exercise. NECB is
entitled to an income tax deduction in the year of exercise in the amount
recognized by the optionee as ordinary income. Any gain on subsequent
disposition of the shares is a long-term capital gain if the shares are held for
at least one year following exercise. NECB does not receive a deduction for this
gain.
STOCK OPTION PLAN BENEFITS
The Committee has full discretion to determine the number and amount of
options to be granted to key employees under the Stock Option Plan. Therefore,
the benefits and amounts that will be received by each of the named executive
officers, the executive officers as a group and all other key employees under
the Stock Option Plan are not presently determinable.
The Board of Directors recommends that Shareholders vote "FOR" the approval
of Proposal (3).
The favorable vote of a majority of the shares present in person or
represented by Proxy at the meeting is required for the approval of Proposal
(3).
PROPOSAL (4)
OTHER MATTERS
The Board of Directors does not know of any other matters which might come
before the Annual Meeting of Shareholders; however, if any other matters should
properly come before the meeting or any adjournment(s) thereof, it is the
intention of the persons named in the accompanying form of Proxy to vote thereon
in accordance with their judgment.
The Board of Directors recommends that Shareholders vote "FOR" the approval
of Proposal (4). The favorable vote of a majority of the shares present in
person or represented by Proxy at the meeting is required for the ratification
of Proposal (4).
THE BOARD OF DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSALS
(1), (2), (3), AND (4).
PROPOSALS OF SHAREHOLDERS
Proposals of Shareholders intended to be presented at the Annual Meeting of
Shareholders in 1997 must be received in writing by NECB at its office, P.O. Box
130, Windsor, CT, 06095, no later than January 22, 1997 for inclusion in NECB's
Proxy Statement and form of Proxy relating to that meeting.
GENERAL
NECB files with the Securities and Exchange Commission Annual Reports on
Form 10-K. A copy of the report for 1995 will be furnished, without exhibits and
without charge, to any Shareholder sending a written request to Anson C. Hall,
Vice President, Chief Financial Officer and Treasurer, New England Community
Bancorp, Inc., P.O. Box 130, Windsor, CT, 06095.
By Order of the
Board of Directors
New England Community Bancorp, Inc.
John A. Coccomo, Sr.
Secretary
April 18, 1996
14
<PAGE>
EXHIBIT A
NEW ENGLAND COMMUNITY BANCORP, INC.
1996 INCENTIVE AND NONQUALIFIED
COMPENSATORY STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
This 1996 Stock Plan ("Plan") is intended to afford an incentive to key
managerial employees of New England Community Bancorp, Inc. (the "Corporation")
who are in a position to contribute materially to the long-term success of the
Corporation to acquire or increase their proprietary interest in the Corporation
and to enable the Corporation to attract and retain such key employees. For
purposes of this Plan, the Corporation's "parent" or "subsidiaries", if any,
shall include any corporation which is a "parent corporation" or a "subsidiary
corporation" within the meaning of Sections 425 (e) and (f) of the Internal
Revenue Code of 1986, as hereafter amended (the "Code").
2. THE STOCK
Except as provided in Sections 6 and 7, the number of shares of stock which
may be optioned and sold under the Plan is 750,000 shares of Common Stock, $.10
par value, of the Corporation ("Shares"). If options granted under this Plan
shall expire or terminate for any reason without having been exercised in full,
the unpurchased Shares subject hereto shall again be available for the granting
of options under this Plan. Shares which are the subject of options to purchase
may be made available from authorized and unissued stock or from treasury stock.
3. ELIGIBILITY
An option shall be granted only to a person who at the time of the grant is
a key managerial employee of the Corporation or a subsidiary of the Corporation.
The term "key managerial employee" shall mean an employee (including officers),
who has responsibility for the management of the Corporation or its
subsidiaries. The committee designated pursuant to Section 8 ("Committee") shall
determine from time to time the key managerial employees to whom options shall
be granted and the number of Shares subject to each option.
4. OPTION TERMS
(a) Except as otherwise provided herein, the Option Price shall be fixed by
the Committee at the time of the grant of such option and shall not be less than
100% of the fair market value of the stock at the time the option is granted.
The Committee shall, in good faith, determine the fair market value of the stock
(without regard to any restrictions other than a restriction which, by its
terms, will never lapse) based upon the method set forth in paragraph (i) below,
or if the determination of fair market value by such method is not possible,
another reasonable method of valuation adopted by the Committee, or such other
method as may be permitted by the Code, or regulations or rulings promulgated
thereunder. In no event shall the Option Price be less than the par value of the
Shares. The Committee will use its best efforts to determine the fair market
value of the Shares subject to the option, but neither the Committee nor the
Corporation will be responsible for the payment of any tax imposed upon the
participants, nor will they reimburse participants for their payment of any tax
so imposed. Neither the Corporation, the Committee nor any member thereof makes
or shall make any representation or warranty to any participant regarding the
Federal or State income tax consequences or effects of participation in the
Plan.
(b) Subject to the provisions and limitations of this Plan, and subject to
applicable securities, tax and other laws and regulations, options may be
granted at such time or times and pursuant to such terms and conditions as may
be determined by the Committee during the period this Plan is in effect.
(c) Each Option shall provide that it may be exercised in five (5)
substantially equal annual installments commencing from the date set forth in
the Stock Option Agreement for such Option; provided, however, that no option
shall be exercised in full or in part after the expiration of ten (10) years
from the date such option is granted. However, if the option is granted to an
individual who at the time the option is granted owns stock possessing more than
ten (10%) percent of the total combined voting power of all classes of stock of
the Corporation or its parent or subsidiary, such option shall not be
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exercisable in full or in part after the expiration of five (5) years from the
date such option is granted. Except as otherwise specifically provided in the
Plan or the Stock Option Agreement between the Corporation and the employee,
options which have been granted to an employee will continue to be exercisable
only so long as the optionee remains an employee of the Corporation or its
parent or a subsidiary of the Corporation. Notwithstanding anything to the
contrary contained in this Section 4, the Committee may, in its sole discretion,
accelerate the option exercise period, based upon its evaluation of an
optionee's individual performance, as limited by subparagraph (d) hereof.
(d) Shares to be purchased upon the exercise of any option shall be paid
for, in full, in cash or by certified check payable to the order of the
Corporation (or to the extent permitted by law and the Corporation in
certificates of stock issued by the Corporation, which stock shall be assigned a
fair value by the Committee in its discretion provided that the stock
surrendered shall have been owned by the Grantee for at least six months) and
delivered to the Corporation at the time of such exercise.
(e) Each option granted under the Plan shall be evidenced by a Stock Option
Agreement between the Corporation and the employee. The Committee shall
initially make all decisions as to the form of Stock Option Agreement to be
entered into with each optionee. All forms of the Stock Option Agreement shall
contain such provisions, restrictions and conditions as are not inconsistent
with this Plan but need not be identical. The provisions of this Plan shall be
set forth in full or incorporated by reference in each Stock Option Agreement.
(f) Except as otherwise specifically provided in the Stock Option Agreement
between the Corporation and the employee, in the event an optionee retires or
otherwise ceases to be employed by the Corporation or its parent or any
subsidiary of the Corporation for any reason, including leaves of absences
(other than a termination by death, permanent and total disability within the
meaning of Section 22(e)(3) of the Code, or for cause), such employee shall have
the right to exercise any options which became exercisable prior to retirement
or cessation of employment but only within a period of three (3) months from the
date of cessation of employment (but in any event not later than the termination
date of the option), after which time any unexercised portion of all outstanding
options shall expire. If the optionee dies during such three-month period, the
executors, administrators, legatees or distributees of the optionee's estate
shall have the right to exercise such options during the remainder of such
period. In no event and under no circumstances may an option be exercised by an
employee (or his personal representative) after termination of the optionee's
employment for cause. Notwithstanding the foregoing provisions of this Section
4(f), the Stock Option Agreement or an amendment thereto between the Corporation
and the employee may provide that upon the retirement of the employee with the
consent of the Corporation or as may otherwise be determined by the Committee
upon the cessation of the employment of such employee, such employee shall have
the right to exercise any options granted to the employee but only within a
period of three (3) months from the date of cessation of employment (but in any
event not later than the termination date of the option).
(g) In the case of an employee who becomes permanently disabled within the
meaning of Section 22(e)(3) of the Code while in the employ of the Corporation,
or its parent or any subsidiary of the Corporation, any option which was
exercisable on the date when such employee became disabled may be exercised
within twelve (12) months after such employee ceases employment (but in no event
later than the termination date of the option) after which time any unexercised
portion of all outstanding options shall expire.
(h) In the event of the death of an optionee while in the employ of the
Corporation, its parent or any subsidiary of the Corporation, the executors,
administrators, legatees or distributees of the estate of the optionee shall
have the right to exercise any options which became exercisable prior to the
optionee's death but only within a period of twelve (12) months from the date of
the optionee's death (but in no event later than the termination date of the
option), after which time any unexercised portion of all outstanding options
shall expire. In the event an option is exercised by the executors,
administrators, legatees or distributees of the estate of the optionee, under
Subsection (f) or (h) of this Section 4, the Corporation shall be under no
obligation to issue Shares hereunder unless and until the Corporation is
satisfied that the person (or persons) exercising the option is the duly
appointed legal representative of the optionee's estate or the proper legatee or
distributee thereof.
(i) "Fair Market Value" of a share of Common Stock on any particular date
is the last sales price of a share of Common Stock on the Nasdaq National Market
System as reported for that date of Nasdaq or the mean between the bid and asked
quotations for the Common Stock on that date as reported by Nasdaq; provided
that (A) if no such sales or quotations are reported by Nasdaq for such date, or
(B) if in the opinion of the Committee sales of Common Stock on such date were
insufficient to constitute a representative market, the Fair Market Value of a
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share of Common Stock on such date shall be the last sales price or the mean
between the bid and asked quotations as reported by Nasdaq for the first
preceding date to which clause (B) does not apply.
5. NON TRANSFERABILITY
No option granted hereunder shall be transferable by the optionee other
than by will or by the laws of descent and distribution, and options shall be
exercisable, during the optionee's lifetime, only by such optionee; provided,
however, that in the event an optionee shall be subject to a legal disability,
his legal representative may exercise an option on his behalf.
6. STOCK DIVIDENDS OR RECAPITALIZATION
In the event of a stock dividend paid in shares of the class of stock
subject to any option outstanding hereunder, or recapitalization,
reclassification, split-up or combination of shares with respect to said class
of stock, the Committee shall make appropriate adjustments to the option price
under such option and to the kind and number of shares as to which such option
is then exercisable, to ensure that the optionee's proportionate interest shall
be maintained as before the occurrence of such event, and in any case an
appropriate adjustment shall also be made in the total number and kind of shares
of stock, and in any case an appropriate adjustment shall also be made in the
total number and kind of shares of stock reserved for the future granting of
options under this Plan. Any such adjustment made by the Committee pursuant to
this Plan shall be binding upon the holders of all unexpired options outstanding
hereunder.
7. MERGER, CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC.
If, subsequent to adoption of this Plan by the Board of Directors of the
Corporation, the Corporation shall become a party to any corporate
reorganization, merger, liquidation, spinoff, or agreement for the sale of
substantially all of its assets and property, the Committee shall make
appropriate arrangements, which shall be binding upon the holders of unexpired
options rights, for the substitution of new options for any unexpired options
then outstanding under this Plan, or for the acceleration of any such unexpired
options, to the end that the optionee's proportionate interest shall be
maintained as before the occurrence of such event.
8. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by the Executive Compensation Committee
(the "Committee") appointed by the Board of Directors. The Committee shall
consist of a minimum of three (3) members of the Board of Directors, each of
whom shall be a "disinterested person" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934. The Committee shall, in addition to its other
authority and subject to the provisions of this Plan, have authority in its sole
discretion to determine who are the officers and key employees of the
Corporation or any subsidiary of the Corporation eligible to receive options
under this Plan; which officers and key employees shall in fact be granted an
option or options; whether the option shall be an incentive stock option or a
nonqualified stock option; the number of Shares to be subject to each of the
options; the time or times at which the options shall be granted; and, subject
to Section 4 hereof, the price at which each of the options is exercisable, the
rate of option exercisability; and the duration of the option.
(b) The Committee shall adopt such rules for the conduct of its business
and administration of this Plan as it considers desirable. A majority of the
members of the Committee shall constitute a quorum for all purposes. The vote or
written consent of a majority of the members of the Committee on a particular
matter shall constitute the act of the Committee on such matter. The Committee
shall have the exclusive right to construe the Plan and the options issued
pursuant to it, correct defects, supply omissions and reconcile inconsistencies
to the extent necessary to effectuate the Plan and the options issued pursuant
to it, and such action shall be final, binding and conclusive upon all parties
concerned. No member of the Committee or the Board of Directors shall be liable
for any act or omission (whether or not negligent) taken or omitted in good
faith, or for the exercise of authority or discretion granted in connection with
this Plan to the Committee or the Board of Directors, or for the acts or
omissions of any other members of the Committee or the Board of Directors.
Subject to the numerical limitations on Committee membership set forth in
Subsection 8(a) hereof, the Board of Directors may at any time appoint
additional members of the Committee and may at any time remove any member of the
Committee with or without cause. Vacancies in the Committee, however caused, may
be filled by the Board of Directors if it so desires.
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9. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board of Directors,
subject to the approval by holders of a majority of the Common Shares present in
person or by proxy and entitled to vote at the 1996 Annual Meeting of
Shareholders. Options may be granted under the Plan prior to receipt of such
approval, provided that, in the event such approval is not obtained, the Plan
and all options granted under the Plan shall be null and void and of no force
and effect.
10. MODIFICATION, AMENDMENT, SUSPENSION AND TERMINATION
Unless sooner terminated, this Plan shall expire ten (10) years from the
date the Plan is adopted by the Board of Directors, or from the date of
shareholder approval, whichever is earlier. The Plan may be altered, suspended,
discontinued or terminated by the Board of Directors at any time, but no action
of the Board of Directors, unless approved by the shareholders, may increase the
maximum number of shares to be offered for sale or issued under the Plan (except
as permitted under Sections 6 and 7 above), change the manner of determining the
minimum option price or the price of outstanding options or terms of payments,
extend the term of the Plan or the period during which options may be granted or
exercised, or change the description of the class of persons eligible to receive
options under the Plan. Nothing contained herein shall be construed to permit a
termination, modification or amendment adversely affecting the rights of any
optionee under an existing option theretofore granted without the consent of
such optionee.
11. GENERAL
(a) Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any employee the right to continue in the employ of the
Corporation or its parent or subsidiary or any other corporation affiliated with
the Corporation, or interfere in any way with the rights of the Corporation or
its parent or subsidiary or any corporation affiliated with the Corporation to
terminate his or her employment.
(b) Corporate action constituting an offer of stock for sale to any
employee under the terms of the options to be granted hereunder shall be deemed
completed as of the date when the Committee authorizes the grant of the option
to the employee, regardless of when the option is actually delivered to the
employee or acknowledged or agreed to by the employee.
(c) The provisions of this Plan shall be binding upon and inure to the
benefit of the parties and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns.
(d) Wherever used herein, the singular shall be deemed to refer to and
include the plural, and vice versa, where appropriate. Wherever used herein, the
masculine shall be deemed to refer to and include the feminine and the neuter,
and vice versa, where appropriate.
(e) Nothing contained in this Plan or in any option agreement issued
hereunder shall impose any liability or responsibility on the Corporation, the
Board of Directors, the Committee or any member of either of the foregoing to
pay, or reimburse any participant for the payment of any tax arising out of, or
on account of the issuance of an option or options hereunder to any participant,
a participant's exercise of any option issued under this Plan or a participant's
sale, transfer or other disposition of any Shares acquired pursuant to the
exercise of an option issued hereunder. Any person receiving an option hereunder
shall expressly acknowledge and agree that such participation is voluntary and
that the participant will be solely responsible for all taxes to which he or she
may be or become subject as a consequence of such participation.
(f) As a condition to the exercise of any option, the Corporation may
require that an employee satisfy, through withholding from other compensation or
otherwise, the full amount of all federal, state and local income and other
taxes required to be withheld in connection with such exercise.
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