SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BNH BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
John F. Trentacosta
(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), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
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:(1)
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
5) Total fee paid:
_______________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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>
BNH BANCSHARES, INC.
209 Church Street
New Haven, Connecticut 06510
(203) 498-3500
March 22, 1996
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
BNH BANCSHARES, INC., which will be held at The New Haven Lawn Club,
193 Whitney Avenue, New Haven, Connecticut 06511 on Tuesday, April 23,
1996, at 10:00 a.m.
It is extremely important that your shares be represented at this
meeting. Therefore, even if you expect to attend the meeting, we hope
that you will sign the enclosed Form of Proxy and return it promptly in
the enclosed postage paid envelope. You may revoke the Proxy later and
vote personally if you are able to attend the meeting.
Sincerely,
[insert signature]
GEORGE M. DERMER
Chairman of the Board of Directors
[insert signature]
F. PATRICK McFADDEN, JR.
President and Chief Executive Officer
<PAGE>
BNH BANCSHARES, INC.
209 Church Street
New Haven, Connecticut 06510
(203) 498-3500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Holders of
Shares of Common Stock:
NOTICE IS HEREBY GIVEN that pursuant to the call of its directors, the
Annual Meeting of Shareholders of BNH BANCSHARES, INC. (the "Company")
will be held at The New Haven Lawn Club, 193 Whitney Avenue, New Haven,
Connecticut 06511 on Tuesday, April 23, 1996, at 10:00 a.m., for the
purpose of considering and voting upon the following matters:
1. To elect the sixteen nominees for directors listed in the Proxy
Statement dated March 22, 1996 accompanying the notice of the meeting;
and
2. To approve a one-for-four reverse stock split of the Company's
issued Common Stock; and
3. To approve certain amendments to the BNH Bancshares, Inc. 1992
Stock Incentive Plan; and
4. To ratify the selection of Coopers & Lybrand L.L.P. as
independent accountants for the current fiscal year; and
5. To transact such other business as may properly come before the
meeting or an adjournment thereof.
Only those shareholders of record at the close of business on February
28, 1996 shall be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
[insert signature]
EVELYN R. MILLER,
Secretary
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU
DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY.
<PAGE>
PRELIMINARY COPIES
BNH BANCSHARES, INC.
209 Church Street
New Haven, Connecticut 06510
(203) 498-3500
PROXY STATEMENT
Approximate date of mailing to shareholders: March 22, 1996
Introduction
The following is a proxy statement by the Board of Directors of BNH
BANCSHARES, INC. (the "Company") in connection with the solicitation of
proxies for use at its Annual Meeting of Shareholders scheduled for
April 23, 1996.
At such meeting, the Company's shareholders will be asked to:
(1) elect directors; (2) approve a one-for-four reverse stock split of
the Company's issued Common Stock; (3) approve certain amendments to the
BNH Bancshares, Inc. 1992 Stock Incentive Plan; (4) ratify the selection
of Coopers & Lybrand L.L.P. as independent accountants for the Company
for the current fiscal year; and (5) transact such other business as may
properly come before the Annual Meeting.
The Company has 14,726,650 shares of Common Stock outstanding and
entitled to vote at its Annual Meeting. In certain circumstances, a
shareholder will be considered to be present at the Annual Meeting for
quorum purposes, but will not be deemed to have voted in the election of
directors or in connection with other matters presented for approval at
the Annual Meeting. Such circumstances will exist where a shareholder is
present but specifically abstains from voting, or where shares are
represented at a meeting by a proxy conferring authority to vote on
certain matters but not on the election of directors. Under Connecticut
law, such abstentions and non-votes have the effect of a vote against the
election of management's nominees.
The Board of Directors of the Company has fixed February 28, 1996 as
the record date for the determination of the shareholders entitled to
vote at that Meeting. The proxies of shareholders are being solicited by
the Board of Directors. A shareholder giving a proxy pursuant to this
solicitation may revoke it at any time prior to its exercise by giving
written notice to the Company, by appearing at the Annual Meeting on
April 23, 1996 and requesting withdrawal of the proxy, or by giving a
proxy bearing a later date. If a proxy is properly signed and is not
revoked by the shareholder, it will be voted at the Annual Meeting and
such vote will be cast in accordance with such shareholder's direction.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitations by mail, some directors, officers and regular
employees of the Company's subsidiary, The Bank of New Haven (the
"Bank"), without extra remuneration, may conduct solicitations by
telephone and personal interview. The Company may also request brokers,
custodians, nominees and fiduciaries to forward proxy solicitation
material to the beneficial owners of shares held of record by such
persons, and will reimburse them for reasonable out-of-pocket expenses
incurred by them in connection therewith.
The Company has engaged Proxy Services, Inc. to assist it in the
distribution of proxies. Pursuant to this engagement, Proxy Services,
Inc. will request brokers, custodians, nominees and fiduciaries to
forward proxy solicitation material to beneficial owners of shares held
of record by such person. Proxy Services, Inc. will receive a fee of
approximately $500, plus expenses, for such services.
ELECTION OF DIRECTORS
(Proposal 1)
Nominees
Pursuant to the terms of the Company's Bylaws, the Board of
Directors has set the size of the Board at sixteen (16) effective as of
the 1996 Annual Meeting of Shareholders. Accordingly, there are sixteen
(16) nominees for election as directors of the Company at the 1996 Annual
Meeting of Shareholders to serve until the next Annual Meeting of
Shareholders of the Company and until their successors shall have been
elected and shall have qualified. Each of the nominees, with the
exception of Messrs. Crowley and Cullen and Ms. Lamont, is currently
serving as a director of the Company. Richard L. Ades and Albert M.
D'Onofrio, who have served as Directors of the Company and the Bank, will
not stand for re-election to those positions at the 1996 Annual Meeting
of Shareholders. The Company wishes to thank Mr. Ades and Dr. D'Onofrio
for their years of service to the Company and the Bank.
The persons named in the form of proxy to represent shareholders at
the Annual Meeting are Theodore F. Hogan, Jr., Carl M. Porto and Cheever
Tyler. In the event that any nominee for director should become
unavailable for election for any reason, the persons named in the form of
proxy will consult with management of the Company and use their
discretion in voting the shares represented by such proxies. The
affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock present in person or by proxy at the Annual
Meeting of Shareholders at which a quorum is present is required for the
election of directors. The name of each nominee for director, his or her
principal occupation for the previous five years, his or her other
positions with the Bank and the Company, and his or her age and period of
service as a director of the Company are set forth below.
The Board of Directors recommends that the shareholders vote FOR the
election of the nominees for director listed below.
<TABLE>
<S> <C> <C>
Name, Principal Served as a
Occupation and Director of
Position with the the Company
Company and the Bank Age Since
_______________________________ ___________ ____________
Stephen P. Ahern............... 65 1989
Director of the Company and
the Bank; Vice President of
Ogden Allied Security
Services, a private security
service company. Mr. Ahern
also is a director of
Birmingham Utilities, Inc.
Martin R. Anastasio............ 54 1985
Director of the Company and
the Bank; Principal
and Vice President, Weinstein &
Anastasio, P.C., Certified
Public Accountants
Edward M. Crowley............. 39
President, Dichello Distributors,
Inc., 1994 to present; General
Sales Manager, Central
Distributors of Beer, Inc.,
1978 to 1993
James J. Cullen............... 48
President & Chief Executive
Officer, Hospital of Saint
Raphael, August, 1991 to present;
Executive Vice President of the
Hospital, January, 1989 to
August, 1991
George M. Dermer.............. 78 1985
Chairman of the Board of
Directors of the Company and
the Bank; Retired President,
Kramer Fur Co., Inc.,
Kramer Apparel, Inc. and
Peerless Fur Mfg. Co., Inc.
Thomas M. Donegan, P.E........ 54 1985
Director of the Company and
the Bank; President,
Donegan and Company, Inc.
(management consulting); President
and Chief Executive Officer,
Advanced Executive Aircraft, Inc.;
Executive Vice President and Chief
Operating Officer,
Capital Delta Partners, Inc.
(distributor of aircraft parts),
from May 1, 1994 to present
Victor B. Hallberg............ 66 1985
Director of the Company and
the Bank; President, L.G.
Defelice, Inc., Bernhard
Contracting Corp., Francis
P. Ryan Corp. and related
companies (construction-
related companies)
Theodore F. Hogan, Jr......... 63 1985
Director of the Company and
the Bank; Retired; Executive
Assistant to the Mayor, City
of New Haven, 1992 to January,
1994; Retired Director,
Office of Urban Affairs,
Southern New England
Telephone Co.
Karl J. Jalbert............... 69 1989
Director of the Company and
the Bank; President of
Connecticut Equities Group
and Jalco Properties
(investment companies)
Jean G. Lamont................... 51
Head of School, The Foote
School, New Haven, July 1,
1992 to present; Head of the
Upper School, The Allen-
Stevenson School, New York,
NY, September 1, 1981 to
June 30, 1992
Lawrence M. Liebman........... 65 1985
Director of the Company and
the Bank; Former Attorney-at-Law (retired
August, 1995); Private Investor;
Chairman, U.S. Reduction Company
(secondary aluminum smelting
company); trustee of various
Blanchard mutual funds
F. Patrick McFadden, Jr....... 58 1989
President, Chief Executive
Officer and director of the
Company and the Bank. Mr. McFadden
also is a director of The United
Illuminating Company.
Carl M. Porto................. 53 1988
Director of the Company and
the Bank; Attorney-at-Law,
Principal, Parrett, Porto,
Parese & Colwell, P.C.
Vincent A. Romei.............. 62 1985
Director of the Company and
the Bank; General
Partner, Colony Inn Hotel;
Partner, Bernhard Associates
(real estate); formerly Executive
Vice President of the Bernhard
Group (construction-related
companies), 1965 to 1991
Stanley Scholsohn............. 65 1985
Director of the Company and
the Bank; Former
Secretary-Treasurer, Star
Services, Inc. (health and
beauty aid distributors)
Cheever Tyler................. 58 1989
Director of the Company and
the Bank; President, Partnership
for Connecticut Cities and The
Nonprofit Strategies Group, 1994
to present; Attorney-at-law, Former
Partner, Wiggin & Dana
</TABLE>
SECURITY OWNERSHIP
The following table sets forth information as of February 28,1996
with respect to those persons known to the Company to be the beneficial
owners of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership (a) Class (b)
_____________________________ ________________________ __________
<C> <S> <S>
Cumberland Associates 1,260,000 (c) 8.56%
1114 Avenue of the Americas
New York, NY 10036
Heine Securities Corporation 1,323,000 (d) 8.98%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Kennedy Capital Management, Inc. 800,000 (e) 5.43%
425 N. New Ballas Road
St. Louis, MO 63141
</TABLE>
- ------------
(a) Unless otherwise indicated, each person has sole voting and sole
dispositive power with respect to the shares shown.
(b) The percentages shown are calculated on the basis of the number of
outstanding shares of the Company's Common Stock on February 28, 1996.
(c) Cumberland Associates is a limited partnership engaged in the
business of managing, on a discretionary basis, ten securities accounts.
According to information provided to the Company, Cumberland Associates
exercises sole dispositive and voting power with respect to 1,075,000
shares and shared dispositive and voting power with respect to 185,000
shares.
(d) Heine Securities Corporation ("HSC") is an investment advisor
registered under the Investment Advisors Act of 1940. One or more of
HSC's advisory clients is the legal owner of the shares shown. HSC has
sole dispositive and voting power with respect to shares pursuant to
investment advisory agreements with its clients.
(e) Kennedy Capital Management, Inc. is an investment advisor with
discretionary accounts for investment purposes. According to its
Schedule 13G filed with the Securities and Exchange Commission ("SEC") on
February 8, 1996, Kennedy Capital Management, Inc. exercises shared
dispositive and voting power with respect to the shares shown.
The following table sets forth for each director, nominee for
director and for each Named Executive Officer (see page ___) information
pertaining to his or her beneficial ownership of the Company's Common
Stock as of February 28, 1996. Each such person has sole investment
power and voting power over shares beneficially owned except where shared
ownership is indicated below.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial
Ownership of Percent of
Name Common Stock Common Stock
_______________________________ ____________ ____________
<C> <S> <S>
Richard L. Ades................ 32,027 (a)* **
Stephen P. Ahern............... 30,127 (b)* **
Martin R. Anastasio............ 81,449 (c)* **
Edward M. Crowley............. 1,000 **
James J. Cullen............... --- **
George M. Dermer.............. 64,139 (d)* **
Thomas M. Donegan, P.E........ 8,843 (e)* **
Albert M. D'Onofrio........... 40,913 (f)* **
Victor B. Hallberg............ 164,000 (g)* 1.11%
Theodore F. Hogan, Jr......... 28,097 (h)* **
Karl J. Jalbert............... 206,777 * 1.40%
Jean Lamont................... ___
Lawrence M. Liebman........... 66,494 (i)* **
F. Patrick McFadden, Jr....... 31,017 (j) **
Carl M. Porto................. 78,820 (k)* **
Vincent A. Romei.............. 166,801 (l)* 1.13%
Stanley Scholsohn............. 66,158 (m)* **
Cheever Tyler................. 10,800 * **
John F. Trentacosta........... 7,270 (n) **
</TABLE>
________________
* Includes 4,000 shares under stock options that are exercisable
within sixty days.
** Beneficially owns less than one percent (1%) of the Company's
Common Stock then outstanding.
(a) Includes 7,802 shares owned by Mr. Ades' wife and 6,978 shares in
the aggregate held in trust for members of Mr. Ades' family in which Mr.
Ades shares voting and investment power.
(b) Includes 1,127 shares owned by Ahern Family Limited Partnership, of
which Mr. Ahern is a general partner.
(c) Includes 15,277 shares owned by Weinstein & Anastasio, P.C. Pension
Plan and 25,500 shares owned by Weinstein & Anastasio, P.C. Profit
Sharing Plan, for both of which Mr. Anastasio is a Trustee for which he
shares voting and investment power, 3,686 shares owned in the aggregate
by members of Mr. Anastasio's family and 32,986 shares owned by Mr.
Anastasio's wife in which Mr. Anastasio does not have voting and
investment power.
(d) Includes 33,312 shares owned by Mr. Dermer's wife in which Mr.
Dermer shares voting and investment power.
(e) Includes 336 shares owned jointly by Mr. Donegan with his wife,
4,171 shares held in a retirement fund, 168 shares in an individual
retirement account ("IRA") for Mr. Donegan's benefit and 168 shares in an
IRA for Mrs. Donegan's benefit.
(f) Includes 23,377 shares in an IRA for Dr. D'Onofrio's benefit.
(g) Includes 126,334 shares in an IRA for Mr. Hallberg's benefit and
7,666 shares owned by Mr. Hallberg's wife.
(h) Includes 17,473 shares owned jointly by Mr. Hogan and his wife and
3,135 shares owned by his wife in which Mr. Hogan shares voting and
investment power.
(i) Includes an aggregate of 35 shares owned by Mr. Liebman as custodian
for his son and 1,409 shares in an IRA for Mr. Liebman's benefit.
(j) Includes 26,381 shares under stock options that are exercisable
within sixty days, 3,551 shares held in various retirement funds for
Mr. McFadden's benefit, 211 shares allocated to Mr. McFadden through his
contributions and the Company's matching contributions to the Company's
401(k) Profit Sharing Plan, 110 shares owned by Mr. McFadden's son, over
which Mr. McFadden has no voting or investment power.
(k) Includes 6,574 shares owned by the Porto Tire and Auto Pension Plan
of which Mr. Porto is Trustee and 25,642 shares owned by the Parrett,
Porto, Parese & Colwell Pension Profit Sharing Plan, 33,269 shares owned
by the Carl Porto, Grantor, Retained Income Trust, of which Mr. Porto is
Trustee, and 261 shares in an IRA for the benefit of Mr. Porto and his
wife.
(l) Includes 57,000 shares owned jointly by Mr. Romei and his wife and
84,426 shares in an IRA for the benefit of Mr. Romei.
(m) Includes 48,810 shares in the aggregate owned by Mr. Scholsohn's
family, and 13,348 shares in the aggregate held in trust for members of
Mr. Scholsohn's family.
(n) Includes 6,770 shares under stock options that are exercisable
within sixty days and 500 shares allocated to Mr. Trentacosta through his
contributions and the Company's matching contributions and the Company's
matching contributions to the Company's 401(k) Profit Sharing Plan.
Including the shares beneficially owned by the nominees as shown in
the preceding table, all of the executive officers and directors of the
Company as a group (23 persons) owned beneficially as of February
28,1996, 1,121,542 shares of the Company's Common Stock, including
113,835 shares under options that are exercisable within sixty days of
February 28, 1996, representing 7.56% of the Company's Common Stock then
outstanding.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company met nine times during 1995
and, together with three additional individuals, served as members of the
Board of Directors of the Bank. The Bank Board met 12 times during the
year. Each incumbent director of the Company or the Bank, with the
exception of Messrs. Ades, Hallberg, Scholsohn and Tyler, attended 75% or
more of the total of meetings of the Boards of Directors and meetings of
all Committees of the Boards on which he or she served during 1995.
Members of all Committees are elected annually. During 1995, the
Company's and the Bank's Boards of Directors maintained the Committees
referred to below in addition to the Compliance Committee and Loan
Committee of the Bank's Board of Directors.
The Company's Executive Committee presently consists of
Messrs. Dermer, Jalbert, Liebman, McFadden, Porto, Romei and Scholsohn.
In addition to the foregoing individuals, the Bank's Executive Committee
includes Thomas J. Cahill and John F. Trentacosta. The Executive
Committee generally acts on behalf of the Board of Directors. Members of
the Executive Committee are ex officio members of all committees of the
Board of Directors, except the Salary and Benefits Committee. The
Executive Committee met 13 times during 1995.
The Company's Audit Committee presently consists of Messrs. Porto,
Ades, Hogan, Romei and Tyler. The Bank's Audit Committee is comprised of
the same individuals. The Audit Committee is responsible for reviewing
the operations and financial position of the Company and the Bank. The
Audit Committee met five times during 1995.
The Company's Salary and Benefits Committee presently consists of
Messrs. Jalbert, Dermer, Hallberg, Hogan, Liebman, Porto, Romei and
Dr. D'Onofrio. The same individuals serve as the members of the Bank's
Salary and Benefits Committee. The Salary and Benefits Committee is
responsible for approving compensation for the Bank's executive officers
and administering the employee and director stock compensation plans.
The Salary and Benefits Committee met seven times in 1995.
The Nominating Committees of the Company and the Bank presently
consist of Messrs. Dermer, Jalbert and Porto. The Nominating Committees
consider candidates for nominees as directors of the Company and the
Bank. The Nominating Committee met once during 1995. The Nominating
Committee will consider nominees recommended by shareholders but has no
formal procedure for considering nominees recommended by shareholders.
COMPENSATION OF DIRECTORS
During the period January 1 through August 14, 1995, for each Bank
Board meeting attended, non-employee directors received $250. The
Chairman of the Board and the Chairman of the Audit and Loan Committees
each received a $150 per month retainer. The Chairman of the Compliance
Committee received a monthly retainer of $500 for the months of January
through May. Each non-employee director received $100 for each committee
meeting of the Board attended, with the exception of Executive Committee
meetings. All six non-employee members of the Executive Committee
received a monthly retainer of $450. In addition, Chairmen of the
various committees other than Loan, Audit and Compliance Committees
received $150 for each meeting chaired in addition to a $100 attendance
fee. Effective August 15, 1995, directors' fees were increased to $350
for each Bank Board meeting attended and $150 for each committee meeting
attended.
Stock Option Plan for Non-Employee Directors
At the 1992 Annual Meeting of Shareholders, the shareholders of the
Company approved the adoption of the BNH Bancshares, Inc. Stock Option
Plan for Non-Employee Directors (the "Director Option Plan"). The
Director Option Plan is administered by the Salary and Benefits Committee
of the Board of Directors.
Commencing on June 30, 1992 and on each June 30th thereafter during
the 10-year term of the Director Option Plan, each non-employee director
of the Company is granted a non-qualified stock option to purchase 1,000
shares of the Company's Common Stock (the "Annual Options"). The
exercise price for each Annual Option is the greater of the fair market
value of the Company's Common Stock on the date of grant or the par value
of the Common Stock on the date of exercise. Annual Options are
exercisable in full following six months from their grant date and expire
ten years from the grant date. However, Annual Options become
immediately exercisable in full upon the director's withdrawal from the
Board of Directors due to death, disability or retirement as defined in
the Director Option Plan. Payment of the exercise price may be made in
cash, previously acquired shares of Common Stock equal in value to the
exercise price or a combination of cash and Common Stock.
The Director Option Plan also provides that each non-employee
director of the Company may elect to receive non-qualified stock options
(the "Deferred Compensation Options") in lieu of all or part of the
retainers and fees payable to the director for service on the Board of
Directors and the Board of Directors of any subsidiary of the Company and
their respective committees ("Compensation").
As of February 28, 1996, 57,000 shares of Common Stock were reserved
for issuance upon the exercise of outstanding Annual Options at exercise
prices ranging from $1.25 to $1.50 per share and 311,644 shares remain
available for grants of awards under the Director Option Plan in 1996,
subject to adjustment for stock splits or similar capitalization changes.
None of the directors have elected to receive Deferred Compensation
Options in lieu of Compensation. Shares subject to options which lapse
without having been exercised become available for new grants.
The Board of Directors may discontinue or amend the Director Option
Plan at any time. However, without shareholder approval, the Board of
Directors may not amend the Director Option Plan to increase the number
of shares of Common Stock as to which options may be granted annually
under the Plan, modify the requirements for participation in the Plan,
extend the term of the Plan or the option periods provided therein, or
decrease the option price or otherwise materially increase the benefits
under the Plan. The Director Option Plan may not be amended more often
than once every six months except to comply with changes in tax laws.
The 1985 Warrant Plan for Directors
In 1985, the Company adopted the 1985 Warrant Plan for Directors of
the Company (the "Warrant Plan"), which has expired. On October 16, 1995
warrants for 183,219 shares of Common Stock authorized for issuance under
the Warrant Plan which had a per share exercise price of $9.81 after
adjustments for stock splits and stock dividends also expired. No
warrants have been granted or exercised under the Warrant Plan during the
last three fiscal years.
COMPENSATION OF EXECUTIVE OFFICERS
All of the executive officers of the Company are currently officers
of the Bank. The Company has no existing plan or arrangement to pay any
remuneration to such officers in addition to the compensation that they
will receive from the Bank in their respective capacities as officers of
the Bank. The table below sets forth a summary for the last three (3)
fiscal years of the cash and non-cash compensation paid or awarded by the
Bank to the Chief Executive Officer and the Chief Financial Officer, who
were the only two executive officers whose total annual salary and bonus
for 1995 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards (1)
(a) (b) (c) (d) (e) (f)
Name All Other
and Compen-
Principal Salary Bonus sation
Position Year ($) ($) Options (#) ($)
________________________ ____ ______ __________ ___________ _________
<S> <C> <C> <C> <C> <C>
F. Patrick McFadden, Jr.
President and Chief
Executive Officer 1995 177,028 34,200 (2) 62,182 (3) 6,365 (6)
1994 160,903 --- --- 5,460 (6)
1993 160,900 61,463 (4) 32,821 (5) 4,880 (6)
John F. Trentacosta
Executive Vice
President and Chief
Financial Officer 1995 102,217 12,750 (2) 29,673 (3) 2,044 (7)
1994 96,704 --- --- ---
1993 87,404 --- 7,155 (5) ---
</TABLE>
(1) Although the BNH Bancshares, Inc. 1992 Stock Incentive Plan (the
"1992 Stock Incentive Plan") permits grants of restricted stock,
freestanding stock appreciation rights and shares of Common Stock, cash
or a combination thereof contingent upon the attainment of certain
performance criteria, no grants of these incentives have been made.
(2) Annual bonuses received under the Company's Annual Incentive Bonus
Plan are reported in the year earned, although paid in the subsequent
year.
(3) Non-qualified stock options were granted pursuant to the Company's
1992 Stock Incentive Plan on August 15, 1995 with an exercise price equal
to $1.375 during the first year of the option, $1.49 during the second
year of the option, $1.62 during the third year of the option, $1.75
during the fourth year of the option, and $1.90 during the fifth year of
the option. The options expire on August 14, 2000 and are exercisable to
the extent of one-half of the number of shares on and after August 15,
1996 with the remaining one-half exercisable on or after August 15, 1997,
subject to acceleration in the event of a change in control of the
Company as defined in such option agreements.
(4) The $25,000 bonus paid in 1993 was subject to forfeiture if during
1994 Mr. McFadden resigned or was dismissed for reasons related to his
performance. The remaining portion of the bonus paid in 1993 ($36,463)
represents the last installment of the bonus payable under Mr. McFadden's
prior employment agreement, which expired in 1991 and which entitled Mr.
McFadden to receive $145,850, payable in installments of 25% per year
commencing February 15, 1990.
(5) Non-qualified stock options were granted pursuant to the Company's
1992 Stock Incentive Plan on December 15, 1993 with an exercise price
equal to 50% above the fair market value on the date of grant. These
options expire on December 14, 1998 and are exercisable to the extent of
one-third of the number of shares on or after December 15, 1994 and an
additional one-third of such shares on or after each successive
anniversary of the grant date.
(6) Premiums paid by the Company for term life insurance, of which Mr.
McFadden's estate is the beneficiary and the Company's matching
contribution to the Company's 401(k) Profit Sharing Plan for 1995.
(7) Consists of the Company's matching contribution to the 401(k) Profit
Sharing Plan for 1995.
Employment and Change in Control Agreements
Mr. McFadden has entered into an employment agreement with the Bank
as of May 1, 1993 which provides that he will serve as President and
Chief Executive Officer of the Company and the Bank for a base salary of
$160,000 per year (a reduction of $20,000 from his 1992 base salary of
$180,000). Unless earlier terminated by Mr. McFadden or the Bank in
accordance with the provisions of that agreement, the term of the
agreement will be for a period of one year and on the first day of each
month such term will automatically be extended for a period of one year
unless either party gives written notice that the agreement will not be
automatically so extended. In the event the Bank terminates the
agreement for cause (which is defined as gross malfeasance or gross
neglect of duty), or if Mr. McFadden terminates the agreement for any
reason other than those specifically described below, Mr. McFadden will
be entitled to any unpaid base salary through the date of termination.
If the Bank terminates the agreement for any reason other than for cause,
Mr. McFadden will be entitled to all unpaid base salary through the
remaining term of the agreement and any unpaid bonuses. If Mr. McFadden
terminates the agreement as a result of not being re-elected a director
of the Bank or the Company or for good reason (which is defined to
include an adverse change in his duties, failure by the Bank to provide
salary or other benefit payments on a timely basis, relocation of the
principal office of the Bank outside Connecticut or action by the Bank
under certain circumstances to diminish substantially the value of
Mr. McFadden's awards or benefits under the Bank's benefit plans or
policies), Mr. McFadden will be entitled to all unpaid base salary
through the remaining term of the agreement and any unpaid bonuses.
In addition, Messrs. McFadden and Trentacosta and four other
executive officers of the Bank have entered into Severance Agreements
with the Bank which provide for the payment of termination benefits in
the event of a change in control (as defined in the Severance
Agreements). In the event that there is an involuntary termination of
Mr. McFadden's or Mr. Trentacosta's employment (as defined in the
Severance Agreement to include such Officer's election to terminate his
employment under certain circumstances and to exclude termination due to
death, disability or retirement or termination for cause as defined
therein) within one year prior to the change in control or within the two
year period following a change in control, such officer will receive a
lump sum payment equal to three times his annual salary during the 12
months preceding the date of termination or the 12 months preceding the
date of the change in control, whichever is greater, in addition to a
continuation of certain employee benefits for a period of one year
following termination of employment.
The following table sets forth information on grants of stock
options pursuant to the Company's 1992 Stock Incentive Plan during the
fiscal year ended December 31, 1995 to the Named Executive Officers.
Such grants are reflected in the Summary Compensation Table above. No
stock appreciation rights have been granted under the 1992 Stock
Incentive Plan and no options or stock appreciation rights have been
granted under the BNH Bancshares, Inc. Stock Option Plan (the "1986
Option Plan") during 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants (1)
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted # in 1995 ($/sh) Date
_________________________ _________ __________ ________ ___________
<S> <C> <C> <C> <C>
F. Patrick McFadden, Jr. 62,182 40% (1) 8/14/2000
John F. Trentacosta 29,673 19% (1) 8/14/2000
</TABLE>
<TABLE>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for 5 Year
Option Terms (2)
Name 5% 10%
_________________________ _____________________________
<S> <C> <C>
F. Patrick McFadden, Jr. 23,318.25 51,921.97
John F. Trentacosta 11,127.37 24,776.95
</TABLE>
(1) Non-qualified stock options were granted pursuant to the Company's
1992 Stock Incentive Plan on August 15, 1995. The options expire on
August 14, 2000 and are exercisable to the extent of one-half of the
number of shares on and after August 15, 1996 with the remaining one-half
exercisable on or after August 15, 1997, subject to acceleration in the
event of a change in control of the Company as defined in such option
agreements. The options have an exercise price equal to $1.375 during
the first year of the option (the fair market value of the Common Stock
on the grant date), $1.49 during the second year of the option, $1.62
during the third year of the option, $1.75 during the fourth year of the
option, and $1.90 during the fifth year of the option. The 1992 Stock
Incentive Plan contains a provision which permits withholding taxes to be
paid in cash, with previously owned shares or by withholding cash or
shares from distributions of cash or stock awards, as the case may be.
(2) Potential realizable values are computed based upon the difference
between the assumed annual rates of stock price appreciation and the
exercise price in effect during the first year of the option of $1.375
(such options were not exercisable except in the event of a Change in
Control). In future years, as the option exercise price increases,
realizable gains will decrease accordingly. See Note 1 above.
The following table sets forth information concerning the fiscal
year-end value of unexercised options to purchase the Company's Common
Stock granted to the Named Executive Officers under the 1986 Option Plan
and the 1992 Stock Incentive Plan. The Named Executive Officers did not
exercise any stock options during 1995.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c)
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1995 December 31, 1995
(#) Exercisable/ ($) Exercisable/
Name Unexercisable Unexercisable (1)
____ _________________ _________________
<S> <C> <C>
F. Patrick McFadden, Jr. 26,381/73,122 0/$31,091
John F. Trentacosta 6,770/32,058 0/$14,837
</TABLE>
_____________________
(1) The option exercise prices for exercisable options were greater than
the average of the high and low prices of the Company's Common Stock as
quoted on the Nasdaq National Market tier of The Nasdaq Stock Market on
December 29, 1995. For unexercisable options (which were not exercisable
except in the event of a Change in Control), based upon the difference
between the exercise price in effect during 1995 and the last sales price
of $1.875 for the Company's Common Stock as quoted on the Nasdaq National
Market tier of The Nasdaq Stock Market on December 29, 1995. The
exercise price of such options increases on each anniversary of their
grant date.
Compensation Committee Interlocks and Insider Participation
The Salary and Benefits Committee of the Bank approved base salaries
for executive officers of the Bank for 1995, and administers and grants
awards under the Company's stock compensation plans. The following
non-employee directors served on the Salary and Benefits Committee during
the last fiscal year: Messrs. Dermer, Hallberg, Hogan, Jalbert, Liebman,
Porto and Romei and Dr. D'Onofrio. The Company has retained Mr. Porto
and Mr. Liebman or the law firms with which they were affiliated during
1995 and the Company intends to retain Mr. Porto and his firm during
1996. Mr. Liebman retired from the practice of law during 1995.
SALARY AND BENEFITS COMMITTEE
REPORT ON EXECUTIVE COMPENSATION FOR 1995
Notwithstanding anything to the contrary contained in any of the
Company's previous filings under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, that might
incorporate by reference future filings in whole or in part, including
this Proxy Statement, the following report and the Performance Graph
immediately following the report shall not be incorporated by reference
into any such filings.
The Salary and Benefits Committee of the Bank (the "Committee")
makes this report on executive compensation for the fiscal year ended
December 31, 1995. The Committee was solely responsible for approving
the total compensation of the Bank's executive officers during 1995 and
is composed entirely of outside directors.
The objective of the Company's executive compensation program is to
attract, motivate and retain key executives and to reward them based on
Company and individual performance. In particular, the compensation
program is designed to reward executive initiatives that enhance the
strategic position of the Company and that result in increases in
shareholder value.
Total executive compensation generally consists of three components:
base salary, annual incentives in the form of cash bonuses and equity
participation in the form of stock options. The Committee makes ongoing
reviews of each of these components in light of the specific criteria
described below and approves the amount and specific terms of each
component in a manner designed to meet the overall objectives of the
Company.
Base Salary. The base salaries of the Bank's executive officers are
determined by two factors: the salaries for similar positions in
financial institutions in the Northeast with comparable asset size and by
the executive's performance and contribution to the Company relative to
specific goals that have been set by the President and CEO and approved
by the Committee at the onset of the fiscal year. In determining
competitive salaries in the marketplace, the Committee examines survey
information that compares each executive's base salary to executives who
perform similar duties at other financial institutions, primarily banks,
located in the Northeast with assets between $250 million and $500
million (the "peer group"). The Committee's philosophy is to pay
salaries to high performing executives that are equivalent to the average
base compensation of executives who have similar employment
responsibilities within the peer group. Performance adjustments to base
salaries, if any, are recommended by the President and CEO and presented
to the Committee for review and approval. Each executive's performance
for the year is evaluated by the President and CEO on the basis of three
strategic initiatives of the Bank, namely (1) continued reduction in
classified assets and Other Real Estate Owned, (2) growth in loan
originations, and (3) continued development of the retail deposit
business. At the end of 1995, the Committee approved increases averaging
4.4% in executive base salaries (excluding the President and CEO) for
1996 funded through a Bank-wide merit pool. The size of the merit pool
was established on the basis of an estimate of the extent to which base
salaries, including the base salaries of executive officers other than
the CEO, are expected to change, on average, during 1996, based on
surveys of national consulting firms of base salaries paid primarily to
Connecticut companies. These merit increases allow executives to be
compensated at their respective average comparative base salary, as
adjusted for their individual accomplishments and unique contributions to
the Bank in the strategic areas described above.
Annual Incentives. The BNH Bancshares, Inc. Annual Incentive Bonus Plan
(the "Bonus Plan") is designed to promote the long-term success of the
Company by providing for the payment of annual cash bonuses to selected
key employees (6 in 1995) upon the achievement of performance goals
established by the Committee at the beginning of the Plan year. The
target awards, expressed as percentages of base salaries payable if
target performance levels are reached, were determined by an outside
compensation consultant and reflect the amount of annual bonuses paid to
executives with similar responsibilities in the peer group.
Subject to adjustment by the Committee, actual awards may range from zero
to 143 percent of the target award based upon performance levels. The
Committee determined that for 1995 the Company's Return on Average Equity
(before taxes and extraordinary items such as tax credits) ("ROAE") was
the sole performance criteria to measure executive officer performance
under the Bonus Plan. For the Named Executive Officers, the annual
bonuses paid under the Bonus Plan are set forth in the Summary
Compensation Table on page __ and reflect a payment of 100 % of the
target award amount. It is the Committee's belief that target awards
should be paid only when (1) rigorous performance goals have been met and
(2) the awards can be funded through achievement of the goals set under
the Bonus Plan.
Equity Participation. Equity participation is designed to align the
interests of management and investors, to encourage the proper balance in
the pursuit of short- and long-term objectives, and to reward management
only when shareholders benefit. Thus, stock options, which tie the
executives' compensation to the price of the Company's Common Stock, are
granted in such frequency and size so as to remain at the average level
of option awards to executives with similar responsibilities at other
institutions as determined by national surveys of company practices. The
Committee approved the stock option grants to executives in 1995. The
option awards made to the Named Executive Officers are shown in the Table
on page __. The options have a five-year life, with one-half of the
options exercisable on the first anniversary of the grant date and one-
half exercisable on the second anniversary. In keeping with the
Committee's philosophy that executives be compensated only for
performance that can be reasonably attributed to their efforts, the
options' exercise price increases from the initial exercise price of
$1.375 (the fair market value of the Company's Common Stock on the grant
date) 8.4% on each anniversary of the option grant date over the five-
year term of the option (which is equivalent to a 50% shareholder return
over the five year period). Thus, executives derive value from the
options only when they outperform these standards.
CEO Compensation
Mr. McFadden's base salary, annual bonus and stock option award in
1995 are set forth in Tables on pages __ and __. The criteria governing
the amounts of the compensation components paid to Mr. McFadden for 1995
are the same as those governing other executive officers of the Bank for
1995 which are described above. The bonus award was specifically
contingent upon the Bank's level of achievement on ROAE, and the
potential value of the stock option award depends upon the ability of
management to enhance the value of the Company's Common Stock over time.
The size of the target bonus awards and stock options grants are
determined by reference to compensation surveys prepared by an
independent consultant as described above. The Committee approved a
5.8% increase to Mr. McFadden's base salary for 1996. In making its
decision, the Committee considered two factors: (1) Mr. McFadden's base
salary in relation to the base salaries of CEO's within the peer group,
and (2) his 1995 performance in the three strategic areas described
above. Again, it is the Committee's philosophy to keep salaries at
average levels while recognizing special contributions and
accomplishments. In recommending an increase in Mr. McFadden's base
salary, the Committee specifically cited a number of key Bank
achievements, including, but not limited to, the following: increased
earnings and stock price; decreased classified assets and Other Real
Estate Owned; improved bank regulatory ratings, including replacement of
a Cease and Desist Order with a less stringent Memorandum of
Understanding as stipulated among the Bank, the Federal Deposit Insurance
Corporation and the Banking Commissioner of the State of Connecticut, and
managerial adroitness in retaining critical talent throughout the Bank.
Mr. McFadden's base salary for 1996 falls within the average range of
base salaries for CEO's in the peer group.
The Committee does not believe that the provisions of Section 162(m)
of the Internal Revenue Code of 1986, as amended, which limits the
deductibility of compensation in excess of $1 million in any year paid to
the executive officers named in the Company's proxy statement, will have
any impact upon the Company.
The Salary and Benefits Committee
Karl J. Jalbert
George M. Dermer
Albert M. D'Onofrio
Victor B. Hallberg
Theodore F. Hogan, Jr.
Lawrence M. Liebman
Carl M. Porto
Vincent A. Romei
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage
change in the cumulative total shareholder return on the Company's Common
Stock with the cumulative total return of the Nasdaq National Market
(U.S.) and Nasdaq Bank Stocks for the period of five fiscal years
commencing December 31, 1990 and ended December 29, 1995. The total
return assumes the reinvestment of dividends.
CHART
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG BNH
BANCSHARES, INC., NASDAQ STOCK MARKET AND NASDAQ BANK STOCKS
-- Graphical Representation of Data Table Below --
<TABLE>
FISCAL YEAR ENDED DECEMBER 31
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
________ ________ ________ ________ ________ _______
<S> <C> <C> <C> <C> <C> <C>
BNH
Bancshares
Inc. 100.00 45.83 32.30 45.83 33.33 62.50
Nasdaq
Stock
Market 100.00 164.09 186.87 214.51 209.69 296.30
Nasdaq
Bank
Stocks 100.00 160.56 238.85 272.39 271.41 404.35
</TABLE>
RELATED PARTY TRANSACTIONS
The Bank has made loans to and had other transactions in the
ordinary course of business with directors and officers and members of
the immediate family of, and business entities associated with, such
persons. The Board of Directors of the Bank believes that the terms of
all such loans and other transactions, including interest rates,
collateral and repayment terms, were fair and equitable and were
substantially the same as terms prevailing at the time for comparable
transactions with others, and that such loans and other transactions did
not involve more than normal risks of collectibility or present other
unfavorable features.
The Bank expects to have in the future banking transactions in the
ordinary course of its business with directors, officers, principal
shareholders and their associates, on substantially the same terms,
including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions with persons not affiliated
with the Bank.
The Company and its subsidiaries retained Lawrence M. Liebman,
Esquire and Carl M. Porto, Esquire, or law firms with which they were
affiliated, during 1995. The Company and its subsidiaries intend to
retain Mr. Porto or the law firm with which he is affiliated during 1996.
Mr. Liebman retired from the practice of law during 1995. Messrs.
Liebman and Porto currently are directors of the Company and the Bank.
Mr. Liebman is also the owner of Kramer's Inc., a women's apparel
store, which in 1991 filed a petition seeking protection under Chapter 11
of the United States Bankruptcy Code, which proceeding has now been
concluded.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who
own more than ten percent (10%) of the Company's Common Stock, to file
with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company on
Forms 3, 4 and 5. Officers, directors and ten percent (10%) shareholders
are required by SEC regulations to furnish the Company with copies of all
Forms 3, 4 and 5 they file.
To the Company's knowledge, based solely on the review of the copies
of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended December 31,
1995, all Section 16(a) filing requirements applicable to its officers,
directors and ten percent (10%) beneficial owners were complied with,
except that Mr. Liebman inadvertently failed to report the transfer
during 1993 of certain shares held by him as custodian for his son to his
son directly, and Mr. Candido (an executive officer of The Bank of New
Haven) failed to report the purchase of certain shares in October, 1995
for his sons. As a result, Mr. Liebman and Mr. Candido each made a Form
4 filing to reflect these transactions.
APPROVAL OF A ONE-FOR-FOUR REVERSE STOCK SPLIT
OF THE COMPANY'S ISSUED COMMON STOCK
(Proposal 2)
The Company's shareholders are being asked to approve the following
resolution adopted by the Company's Board of Directors:
RESOLVED, that, subject to receipt of the approval of the
affirmative vote of the holders of the majority of the voting power of
the shares of Common Stock represented at the Annual Meeting, effective
on the close of business on May 1, 1996 (the "Effective Time"), the
Company shall effectuate a one-for-four reverse stock split whereby each
shareholder of record on that date will be deemed to hold one share of
Common Stock for every four shares held by such shareholder immediately
prior to the Effective Time and the Company shall pay in cash the fair
value of fractional shares, as determined in accordance with a valuation
formula approved of by the Company's Chief Financial Officer.
Under the Company's Amended Certificate of Incorporation, the Company's
authorized capitalization consists of 30,000,000 shares
of Common Stock, without par value, of which, as of February 28, 1996,
there are outstanding 14,726,650 shares and 19,106 shares held in
treasury. Under the Company's Amended Certificate of Incorporation,
shareholders have no preemptive rights. In addition, as of February 28,
1996, an aggregate of 674,744 shares of Common Stock are authorized for
issuance under outstanding and future awards pursuant to the BNH
Bancshares, Inc. 1992 Stock Incentive Plan, the BNH Bancshares, Inc.
Stock Option Plan and the BNH Bancshares, Inc. Stock Option Plan for Non-
Employee Directors (the "Benefit Plans"). The Company is seeking
shareholder approval of certain amendments to the 1992 Stock Incentive
Plan, including an increase in the number of shares of Common Stock
authorized for issuance under that Plan. See Proposal 3 of this Proxy
Statement.
If the proposed reverse stock split is approved by shareholders, the
reverse stock split will be effective at the close of business on May 1,
1996 (the "Effective Time") and each holder of record of Common Stock
immediately prior to the Effective Time will be deemed to hold one share
of Common Stock for every four shares held by such shareholder
immediately prior to the Effective Time. The proposed reverse stock
split will not decrease the number of authorized shares of the Company's
Common Stock and will not affect the voting or other rights of Common
Stock. Shareholders will be required to exchange their existing stock
certificates for new stock certificates by surrendering their existing
stock certificates to the Company's transfer agent. In lieu of issuing
fractional shares, the Company will pay in cash the fair value of
fractional shares, as defined below.
The Purpose and Anticipated Effect of the Reverse Stock Split
In making its decision to approve and recommend the reverse stock
split, the Board of Directors believes that the relatively low per share
market price of the Company's Common Stock may impair the acceptability
of the Common Stock to certain institutional investors and other members
of the investing public. As of February 28, 1996, the last sales price
of the Company's Common Stock on The Nasdaq National Market tier of the
Nasdaq Stock Market was $2.00 per share. While the number of shares
outstanding should not, by itself, effect the marketability of a stock,
the type of investor who acquires it or the company's reputation in the
financial community, the Board of Directors believes that, in practice,
this is not necessarily the case as certain investors view low price
stock as unattractive or, as a matter of policy are precluded from
purchasing low priced shares. In addition, certain brokerage houses, as
a matter of policy, will not extend margin credit on stocks trading at
low prices. Furthermore, the Board of Directors believes that more
retail investors might be interested in the Company's Common Stock if
transaction costs related to buying and selling the stock could be
lowered. At a lower per share price, the typical brokerage commission is
generally higher as a percentage of the total transaction amount than
would be the commission at a higher trading price. However, the reverse
stock split may result in a shareholder owning an odd lot of Common
Stock. Shareholders may incur higher transactional costs to trade an odd
lot of Common Stock than would be incurred to trade a round lot of 100
shares. Shareholders should consult with their brokers concerning such
transactional costs.
While the impact of the reverse stock split on the market value of
the shares of the Company's Common Stock cannot be predicted with
certainty, it is expected that the reverse stock split would initially
result in the market price of each share of Common Stock being
approximately four times the price per share prevailing immediately prior
to the Effective Time, although the market price of all shares held by a
particular shareholder would remain approximately the same. No
assurance, however, can be given that the market price of the Common
Stock will rise in proportion to the reduction in the number of shares
outstanding as a result of the reverse stock split nor can assurance be
given that the reverse stock split will have the effects anticipated by
the Board of Directors as noted above.
As of February 28, 1996, there were approximately 2,000 shareholders
of record of the Company's Common Stock. Each shareholder's percentage
ownership of the Common Stock will not be altered by the proposed reverse
stock split except for the effect of the elimination of fractional
shares. The Company does not anticipate that the reverse stock split
will result in a significant reduction in the number of holders of record
of the Common Stock. The reverse stock split will not change the
Company's status as a registered company under the Securities Exchange
Act of 1934, as amended, or the qualification for trading the Common
Stock on the Nasdaq National Market tier of The Nasdaq Stock Market. The
Company estimates that it will cost less than $3,000.00 to pay for
fractional shares, which amount will be charged against the Company's
Capital Surplus Account as permitted under Connecticut law.
Following the Effective Time, the number of outstanding shares of
the Company's Common Stock would be approximately 3,681,662 shares
(assuming no additional shares of the Company's Common Stock have been
issued prior to the Effective Time since February 28, 1996), with
approximately 4,776 shares held in treasury. Shares subject to
outstanding awards and reserved for issuance under the Benefit Plans will
be adjusted to account for the reverse stock split in accordance with the
terms of such plans. The Company would have approximately 26,381,338
shares of authorized but unissued shares of Common Stock. Subject to
limitations of Connecticut law and other applicable laws and regulations
(including those requiring shareholder approval for certain transactions
under the rules of the National Association of Securities Dealers, Inc.),
the Board of Directors will have authority, on behalf of the Company, to
issue all or a portion of such authorized but unissued and unreserved
shares without a further amendment to the Amended Certificate of
Incorporation and without further approval of the Company's shareholders.
The Company presently has no intention to issue shares of Common Stock
other than upon the payment of awards under the Benefit Plans.
Payment for Fractional Shares
No fractional shares of Common Stock will be issued. Instead,
shareholders holding a number of shares of Common Stock not evenly
divisible by four and shareholders holding less than four shares of
Common Stock, upon surrender of such stock certificates, will receive
cash in lieu of a fractional share of Common Stock resulting from the
reverse stock split. The price payable by the Company for a fractional
share of Common Stock will be determined by multiplying the fraction of a
share held following the Effective Time by four times the average of the
last sales prices of the Common Stock as reported on the National Market
tier of The Nasdaq Stock Market on the five days prior to the Effective
Time.
Federal Income Tax Consequences
The Company has been advised by its counsel that under federal
income tax laws, the reverse stock split will result in no gain or loss
or other form of taxable income other than for payments made for
fractional shares. In addition, the tax basis for shares in the hands of
a shareholder prior to the Effective Time of the reverse stock split
would become the tax basis for the total number of shares to be held by
such shareholder immediately after such reverse stock split, and the
holding period of the shares held after the Effective Time would be
deemed the same as the holding period of the shares held prior to the
Effective Time of the reverse stock split. A shareholder who receives
cash in lieu of fractional shares of Common Stock will recognize capital
gain or loss in an amount equal to the difference between the amount of
cash received and the adjusted basis of the fractional share surrendered
for cash.
Authorization
Although authorization of the reverse stock split does not require
the approval of shareholders under Connecticut law, the Company's Board
of Directors has determined to submit the reverse stock split proposal to
a vote of the Company's shareholders. Connecticut law permits the Board
of Directors, in its discretion, to submit significant corporate matters
to the vote of the shareholders.
The approval of the reverse stock split requires the affirmative
vote of the holders of the majority of the shares of Common Stock
represented and voting at the Annual Meeting of Shareholders.
The Board of Directors recommends approval of the one-for-four
reverse stock split.
APPROVAL OF CERTAIN AMENDMENTS TO THE BNH BANCSHARES, INC. 1992 STOCK
INCENTIVE PLAN
(Proposal 3)
Summary of Proposed Amendments
At the Company's Annual Meeting of Shareholders in 1992,
shareholders approved the adoption of the BNH Bancshares, Inc. 1992 Stock
Incentive Plan (the "1992 Plan"). The shareholders are asked to consider
and vote upon a proposal to approve certain amendments to the 1992 Plan.
A summary of the principal features of the 1992 Plan, as amended,
follows.
On March 19, 1996, the Board of Directors adopted certain amendments
to the Plan, subject to approval by shareholders, including an increase
in the aggregate number of shares of the Company's Common Stock
authorized for issuance under the 1992 Plan from 250,000 to 550,000, an
increase of 300,000 shares (2% of the total shares of Common Stock
outstanding on February 28, 1996). Other amendments to the 1992 Plan
adopted by the Board of Directors include: (1) provisions to clarify the
Salary and Benefits Committee's (the "Committee") discretion to determine
the terms of awards, to accelerate the exercisability or vesting of
awards and to extend the award exercise period within limitations
contained in the Plan, (2) provisions to clarify the Committee's ability
to make awards singly, in combination or in tandem with other awards, (3)
amendments to the provisions governing payment of withholding taxes, and
(4) provisions to permit the award of transferrable non-qualified stock
options under certain circumstances.
The following table sets forth the number of shares covered by non-
qualified stock options ("NSOs") granted during 1995 under the 1992 Plan
to the persons listed below. The last sales price of the Company's
Common Stock on February 28, 1996 on the Nasdaq National Market tier of
The Nasdaq Stock Market was $_______ per share.
<TABLE>
<CAPTION>
Number of Shares Underlying
Name and Position Options
_________________ ___________________________
<S> <C>
F. Patrick McFadden, Jr.
Executive Officer 62,182
John F. Trentacosta
Executive Officer 29,673
All Executive Officers
of the group 156,909
All employees as a group ----
(excluding Executive Officers)
</TABLE>
Summary of the 1992 Plan, as Amended
____________________________________
The Company adopted the 1992 Plan in 1992 in order to use awards
thereunder to attract and retain key employees in the belief that
employee stock ownership and stock-related compensation encourage a
community of interest between employees and shareholders. The Company
has had stock option plans for its key employees in the past. The 1986
Option Plan expired on March 10, 1996. Options for an aggregate of
39,043 shares of the Company's Common Stock remain outstanding and
subject to exercise under the 1986 Plan. The 1992 Plan currently provides
for the issuance of an aggregate of 250,000 shares of the Company's
Common Stock, with 247,671 shares of Common Stock currently subject to
outstanding awards of NSOs and 2,329 shares currently available for
future awards under the 1992 Plan. Accordingly, because the number of
shares of Common Stock available for the grant of future awards under the
1992 Plan is currently limited, the Board of Directors is seeking
shareholder approval to increase the number of shares authorized for
issuance under the 1992 Plan by an additional 300,000 shares of Common
Stock so that incentive awards can continue to be made thereunder. The
following is a summary of the 1992 Plan, as amended.
Shares Subject to the 1992 Plan. As proposed to be amended, the
1992 Plan provides for the issuance or use for reference purposes of a
maximum of 550,000 shares of the Company's Common Stock (subject to
adjustment in the event of stock dividends, stock splits, mergers,
recapitalizations or similar transactions). If shareholders approve the
reverse stock split described in Proposal 2, adjustments will be made to
the number of shares authorized for issuance under the 1992 Plan, the
number of shares subject to outstanding awards and the exercise price of
such awards.
Awards under the 1992 Plan may be granted in the form of incentive
stock options ("ISOs"), NSOs, stock appreciation rights ("SARs"), which
may, but need not, be granted in conjunction with related stock options,
dividend equivalents, stock granted with or without restrictions (awards
of Common Stock with restrictions are referred to as "Restricted Stock")
and awards entitling the grantee to receive shares of Common Stock, cash
or a combination thereof contingent upon the attainment of certain
performance criteria ("Performance Stock"), as well as other types of
awards that the Committee determines to be consistent with the objectives
and limitations of the 1992 Plan. Shares delivered pursuant to the 1992
Plan upon the exercise of awards may be either authorized but unissued
shares of the Company's Common Stock or previously issued shares of the
Company's Common Stock reacquired by the Company. Shares reserved for
awards which terminate without having been exercised or vested become
available for new grants.
Duration. The term during which awards may be granted under the
1992 Plan will expire March 17, 2002.
Administration and Eligibility. The 1992 Plan is to be administered
by the Committee, which consists of not less than three directors who are
not employees of the Company, its parent or its subsidiaries, including
at least two non-employee directors who are members of the Executive
Committee of the Company's Board (and who may not be granted awards under
the 1992 Plan or any other discretionary award plan maintained by the
Company or any of its affiliates). The individuals eligible to
participate in the 1992 Plan will be certain employees of the Company or
its subsidiaries (whether or not they are directors of the Company), who
serve in executive, administrative or professional capacities who are
selected for awards in the discretion of the Committee. The Committee
also has the discretion, within the guidelines and limitations expressed
in the 1992 Plan, to determine the amount of each award, whether options
granted under the 1992 Plan will be ISOs (qualifying under the provisions
of Section 422 of the Code) or NSOs, the time of the awards, the date(s)
on which awards will be exercisable, and the form and terms of agreements
evidencing awards granted under the 1992 Plan and the acceleration or
waiver of award conditions. The Committee has full power and authority
to administer and interpret the 1992 Plan, and to adopt or amend rules,
regulations, agreements and guidelines for the conduct of its business.
Term of Awards. Awards granted under the 1992 Plan are exercisable
during the term of the award period as determined by the Committee and
specified in the agreement governing such respective award. The time
within which an award must be exercised, as specified by the Committee,
may not extend beyond the tenth anniversary of the date of the grant of
the award. Awards under the 1992 Plan are generally non-transferable
other than by will or by the laws of descent and distribution and may be
exercised only by the grantee or his or her legal representative during
the grantee's lifetime. As amended, the 1992 Plan would permit the
Committee to grant or amend NSOs to permit their transfer, without
consideration, to immediate family members, or a trust or partnership for
the benefit of such persons to the extent such transferability is in
accordance with the transfer restrictions, if any, applicable to a
grantee who is subject to Section 16 under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. As amended, the 1992 Plan
would not permit the transfer of awards pursuant to the terms of a
qualified domestic relations order. All unexercised options and SARs
terminate on the date a grantee's employment terminates, provided that
such awards may be exercised during certain periods, to be specified by
the Committee subject to certain stated limitations, following
termination of employment by reason of death, disability or retirement.
Exercise Price and Payment. The exercise price of each option
granted under the 1992 Plan will be established by the Committee and set
forth in the agreement governing the option and shall not be less than
the fair market value of the Company's Common Stock on the date of grant
of such option. In general, grants of Restricted Stock, Performance
Stock and dividend equivalents will require little or no payment upon
issuance.
The exercise of an option must be accompanied by payment in full of
the purchase price in cash, by check or by delivery of shares of the
Company's Common Stock previously acquired by the grantee equal in value
to the option price, or by a combination of cash and stock. In addition,
the Committee may authorize, in accordance with rules and regulations
adopted by it, payment of the option price by delivery of a properly
executed exercise notice together with irrevocable instructions to a
broker to deliver to the Company that portion of sales or loan proceeds
required to pay the option price in full. Participants under the 1992
Plan may pay withholding taxes by means of contributing cash or shares of
the Company's Common Stock previously acquired or by deducting shares of
Common Stock from the amount to be received upon the exercise or vesting
of an award in accordance with procedures adopted by the Committee. The
aggregate number and kind of shares which are reserved for issuance under
the 1992 Plan and which are subject to awards under the 1992 Plan and the
purchase price per share of shares subject to awards will be
appropriately adjusted by the Committee in the event of stock dividends,
stock splits, mergers, recapitalizations or similar transactions that
affect the Company's Common Stock.
Award and Exercise of SARs. SARs may be granted by the Committee
independently of or in conjunction with stock options granted
concurrently or previously under the 1992 Plan. SARs entitle the grantee
to receive in cash or in shares of Common Stock (or in a combination of
cash and stock) from the Company at exercise the difference between the
fair market value of a specified number of shares of the Company's Common
Stock on the date of exercise and the fair market value per share
specified in the agreement granting the SARs. SARs shall be exercisable
at such time and only to the extent provided in an SAR agreement or
related option. Upon exercise of an SAR, the number of shares subject to
exercise under a related option shall be reduced automatically by the
number of shares surrendered.
Amendment and Termination. The Board of Directors may amend,
suspend or terminate the 1992 Plan at any time prior to its specified
date of termination. Any amendment (1) effecting an increase in the
aggregate number of shares which may be issued under the 1992 Plan (other
than an increase merely reflecting a stock dividend, a recapitalization
or other such change), (2) extending the term of the 1992 Plan or the
maximum option periods provided thereunder, (3) decreasing the minimum
option price under the 1992 Plan, or otherwise materially increasing the
benefits accruing to grantees through awards under the 1992 Plan,
(4) abolishing the Committee, changing the qualification of its members
or withdrawing the 1992 Plan from its supervision, or (5) modifying the
eligibility requirements for participation in the 1992 Plan, must be
approved by the shareholders of the Company.
Federal Income Tax Consequences
NSOs and SARs. Under current law, there will generally be no
Federal income tax consequences to either the employee or the Company on
the grant of NSOs or SARs. Upon exercise of NSOs or SARs, the difference
between the fair market value of the Company's Common Stock at the date
of exercise and the exercise price is taxed at ordinary income rates, and
is subject to withholding tax by the Company. The exercise of NSOs or
SARs will result in a tax deduction to the Company, measured by such
difference. However, grantees who are subject to the six-month
restrictions on resale of Common Stock under Federal securities laws
will, unless they elect otherwise, generally not recognize ordinary
income until such restrictions lapse. The fair market value of the
Company's Common Stock at the date of exercise becomes the tax basis in
the hands of the grantee of shares acquired upon such exercise.
ISOs. Under the Internal Revenue Code, there are generally no
Federal income tax consequences to the employee or the Company upon the
grant or exercise of an ISO, except that the difference between the
option price and the fair market value of the Common Stock at the
exercise of the option will be an item of adjustment for purposes of the
alternative minimum tax. If the employee does not dispose of the stock
within two years from the grant date of the ISO, and holds the stock
after exercise for at least one year, the employee will be taxed at
long-term capital gain rates upon the sale of the stock and the Company
will not be entitled to a tax deduction in connection with the exercise
of the ISO. If the employee does not meet these holding period
requirements, the employee's gain upon disposing of the stock will
usually be taxed as ordinary income to the extent of the excess of the
fair market value of the shares on the date of exercise over the option
price. The balance of the amount received, if any, will be short-term or
long-term capital gain depending on how long the shares were held by the
employee. The Company will be allowed a tax deduction in the amount of
the grantee's ordinary income as a result of the disposition.
Restricted Stock, Performance Stock and Dividend Equivalents. If
Common Stock is transferred to an employee under the 1992 Plan, the
employee must include in gross income the excess of the then fair market
value of the stock over the amount, if any, paid for it in the first
taxable year in which such employee's beneficial interest in such Common
Stock is either transferable or not subject to a substantial risk of
forfeiture, unless the employee elects to be taxed upon the grant of such
an award. Generally, the employer is entitled to a deduction at the time
of and equal to the amount of the inclusion in the employee's gross
income. Dividends paid on Restricted Stock are treated as compensation
deductible by the employer and includable in the income of the employee
when paid, unless the employee elects to be taxed upon the grant of such
an award. Performance Stock granted under the 1992 Plan, receipt of
which is contingent on the attainment of performance goals established by
the Committee, is generally taxed to the employee upon attainment of the
goals at the end of such performance period. The employer is entitled to
a deduction for the payment of Performance Stock awards, whether paid in
stock, cash or in combination thereof, in an amount equal to the amount
included in the employee's gross income. Dividend equivalents are taxed
to the employee and are deductible by the employer when paid.
Approval of amendments to the 1992 Plan requires the affirmative
vote of the holders of at least a majority of the Common Stock of the
Company represented at the April 23, 1996 Annual Meeting.
The Board of Directors recommends that shareholders vote FOR
approval of amendments to the 1992 Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal 4)
The Company's Board of Directors is submitting for shareholder
approval its proposal to engage Coopers & Lybrand L.L.P., independent
accountants, as auditors of the Company for the fiscal year ending
December 31, 1996. On October 19, 1995, the Audit Committee of the Board
of Directors of the Company recommended and the Board of Directors of the
Company approved the dismissal of Price Waterhouse LLP, effective October
19, 1995, as the independent accountants engaged to perform the audit
examination of the Company's financial statements for the year ending
December 31, 1995. On October 19, 1995, the Company notified Price
Waterhouse LLP of the Board of Directors' decision to replace Price
Waterhouse LLP as independent accountants of the Company. Price
Waterhouse LLP acted as the auditors of the Company from the fiscal year
ending December 31, 1987 through the third quarter of 1995.
The reports of Price Waterhouse LLP on the financial statements of
the Company for the past two years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle, except that their
report on the Company's financial statements for the year ended December
31, 1993 included an explanatory paragraph regarding the uncertainty that
the Company could continue as a going concern.
During the Company's two most recent fiscal years and the subsequent
interim period ending October 19, 1995, there were no disagreements with
Price Waterhouse LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Price Waterhouse
LLP, would have caused Price Waterhouse LLP to make reference thereto in
their report on the financial statements for such years.
On October 19, 1995, the Audit Committee of the Board of Directors
recommended and the Company's Board of Directors approved the engagement
of Coopers & Lybrand L.L.P., effective October 19, 1995, to perform the
audit examination of the Company's financial statements for the year
ending December 31, 1995. During the Company's two most recent fiscal
years and through October 19, 1995, the Company has not consulted with
Coopers & Lybrand L.L.P. on items which (1) were or should have been
subject to SAS 50 or (2) concerned with subject matter of a disagreement
or reportable event with the former auditor.
The Company has furnished Price Waterhouse LLP and Coopers & Lybrand
L.L.P. with copies of the above statements and requested that they inform
the Company if any of the statements is incorrect or incomplete. Neither
Coopers & Lybrand L.L.P. nor Price Waterhouse LLP has indicated that any
of the above statements is incorrect or incomplete.
Representatives from Coopers & Lybrand L.L.P. will be present at the
Annual Meeting. They will be afforded an opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions from shareholders.
Audit services performed by Coopers & Lybrand L.L.P. during the past
fiscal year include audits of the financial statements of the Company,
services related to filings with the SEC and federal and state taxation
authorities and consultations on matters related to accounting and
financial reporting.
The Board of Directors recommends that shareholders vote FOR the
appointment of Coopers & Lybrand L.L.P. as described above.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
the Company knows of no other matters which may come before the Annual
Meeting. If any matters other than those referred to in this Proxy
Statement should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote each
proxy with respect to such matters in accordance with their best
judgment.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR INCLUSION IN 1997
PROXY MATERIAL
Any shareholder who intends to present a proposal at the Company's
1997 Annual Meeting of Shareholders is advised that, in order for such
proposal to be included in the Board of Directors' proxy material for
such meeting, the proposal must be received by the Company at its
principal executive office on or before November 27, 1996, directed to
the Secretary of the Company.
Any such shareholder would need to meet the requirements specified
in Rule 14a-8 under the Securities Exchange Act of 1934.
The Board of Directors would like you to attend the meeting in
person. However, whether or not you plan to attend the meeting, please
complete, date and sign the enclosed proxy card and return it in the
enclosed postage prepaid envelope as soon as possible. If you attend the
meeting, you may vote in person if you desire.
By Order of the Board of Directors
[insert signature]
Evelyn R. Miller,
Secretary
New Haven, Connecticut
March 22, 1996
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 12 contains a description in tabular form of a graph entitled
"Performance Graph" which represents the comparison of the cumulative
total shareholder return on the Company's Common Stock against the
cumulative total return of the NASDAQ Stock Market Index and the NASDAQ
Bank Stocks Index for the period of five years commencing December 31,
1990 and ending December 29, 1995, which graph is contained in the paper
format of this Proxy Statement being sent to Shareholders.
<PAGE>
PRELIMINARY COPIES
BNH BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
APRIL 23, 1996
The undersigned hereby appoints THEODORE F. HOGAN, JR., CARL M.
PORTO and CHEEVER TYLER, and each of them, with power of substitution,
proxies and agents of the undersigned to vote at the Annual Meeting of
Shareholders of BNH Bancshares, Inc. (the "Company"), to be held at The
New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut 06511 on
Tuesday, April 23, 1996, at 10:00 a.m. and at any adjournment thereof,
all shares of common stock of the Company which the undersigned would be
entitled to vote if personally present for the following matters.
The Board of Directors unanimously recommends a vote for the following:
1. ELECTION OF DIRECTORS
FOR: Check box to vote WITHHOLD AUTHORITY:
in favor of all nominees Check box to vote
listed below (except as against all nominees
marked to the contrary listed below [ ]
below) [ ]
Stephen P. Ahern, Martin R. Anastasio, Edward M. Crowley, James J.
Cullen, George M. Dermer, Thomas M. Donegan, Victor B. Hallberg,
Theodore F. Hogan, Jr., Karl J. Jalbert, Jean G. Lamont, Lawrence M.
Liebman, F. Patrick McFadden, Jr., Carl M. Porto, Vincent A. Romei,
Stanley Scholsohn and Cheever Tyler
(INSTRUCTION: To withhold authority and to vote against any individual
nominee while approving the other nominee(s) listed above, write the name
of such nominee being voted against in one of the spaces provided below.)
_______________ _______________ _______________ _____________
_______________ _______________ _______________ _____________
_______________ _______________ _______________ _____________
_______________ _______________ _______________ _____________
2. TO APPROVE A ONE-FOR-FOUR REVERSE STOCK SPLIT OF THE COMPANY'S
ISSUED COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO APPROVE CERTAIN AMENDMENTS TO THE BNH BANCSHARES, INC. 1992
STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. as the
independent accountants to audit the consolidated financial
statements of the Company for the calendar year 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may properly come before the
meeting or an adjournment thereof.
PLEASE SIGN ON THE REVERSE SIDE
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS AND THE RELATED PROXY STATEMENT.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AN AUTHORIZED PERSON.
_______________________________
Signature
_______________________________
Signature if held jointly
Dated: __________________, 1996
Please mark, sign, date and
return the proxy card promptly
using the enclosed envelope.
<PAGE>
APPENDIX
BNH BANCSHARES, INC.
1992 STOCK INCENTIVE PLAN,
AMENDED EFFECTIVE MARCH 19, 1996
1. Purposes.
The purposes of the BNH Bancshares, Inc. 1992 Stock Incentive Plan
(the "Plan") is to promote the interests of BNH Bancshares, Inc. (the
"Corporation") and its shareholders by attracting, retaining and
stimulating the performance of selected employees, giving such employees
the opportunity to acquire a proprietary interest in the Corporation's
business and an increased personal interest in its continued success and
progress.
2. Definitions.
Unless the context clearly indicates otherwise, the following terms
have the meanings set forth below.
"Board of Directors" or "Board" means the Board of Directors of the
Corporation.
"Code" means the Internal Revenue Code of 1986, as amended, now in
effect or as amended from time to time and any successor provisions
thereto.
"Committee" means the Salary and Benefits Committee of three or more
members appointed by the Board of Directors and selected from those
directors who are not employees of the Corporation, its parent or a
subsidiary, as defined in Section 424(e) and (f) of the Code, which shall
include at least two non-employee directors serving on the Executive
Committee of the Board of Directors. Members of the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 under the 1934
Act, or any law, regulation or other provision that may hereafter replace
such Rule. Such members shall not be eligible to receive stock, options
or stock appreciation rights under the Plan. The Board may at any time
and from time to time remove any member of the Committee, with or without
cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or
determination of the Committee reduced to writing and signed by all of
the members of the Committee shall be fully as effective as if it had
been made at a meeting duly called and held.
"Common Stock" means the common stock of BNH Bancshares, Inc.
"Disability", as applied to a Grantee, shall have the meaning set
forth in Section 22(e)(3) of the Code.
"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 by Nasdaq or the mean
between the bid and asked quotations for the Common Stock on that date as
reported by Nasdaq; provided that (i) if no such sales or quotations are
reported by Nasdaq for such date, or (ii) 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 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 (ii) does not apply.
"Grant Date", as used with respect to a particular award, means the
date on which such award is granted by the Committee pursuant to the
Plan.
"Grantee" means the individual to whom an award is granted pursuant
to the Plan.
"Immediate Family Members" of a Grantee means the Grantee's
children, grandchildren and spouse.
An "option" means an option granted pursuant to the Plan to purchase
shares of Common Stock and which shall be designated as either an
"incentive stock option" or a "non-qualified stock option."
"Performance Stock" means an award entitling the Grantee to payment
of shares of Common Stock or cash or a combination thereof contingent
upon the attainment of performance objectives determined in the
discretion of the Committee.
"Plan" means the BNH Bancshares, Inc. 1992 Stock Incentive Plan as
set forth herein and as amended from time to time.
"Restricted Stock" means an award of Common Stock with such
restrictions placed thereon as the Committee in its discretion deems
appropriate.
"Retirement", as applied to an employee, shall mean when the
employee's employment with the Corporation or any present or future
parent or subsidiary of the Corporation, as defined in Section 424 of the
Code, terminates following such employee's attaining sixty-five (65)
years of age.
"The 1934 Act" means the Securities Exchange Act of 1934, as
amended, now in effect or as amended from time to time and any successor
provisions thereto.
3. Administration.
(a) The Committee shall have all the powers vested in it by the
terms of the Plan, including exclusive authority (within the limitations
described herein) to select the employees to be granted awards under the
Plan, to determine the type, size and terms of awards to be made to each
employee selected (which need not be identical for each employee), to
determine the time when awards will be granted to employees, to establish
objectives and conditions, if any, for earning such awards, and the
waiver or acceleration thereof, to determine whether such awards will be
paid after the end of an award period, to accelerate the exercisability
or vesting of all or any portion of any award or to extend the period
during which an award is exercisable, based in each case on such
considerations as the Committee shall determine, and to determine all
other matters to be determined in connection with an award. The Committee
shall have full power and authority to administer and interpret the Plan
and to adopt, amend and waive such rules, regulations, agreements,
guidelines and instruments for the administration of the Plan and for the
conduct of its business as the Committee deems necessary or advisable.
The Committee's interpretation of the Plan and all actions taken and
determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all parties concerned,
including the Corporation, its stockholders, any Grantees and any other
employee of the Corporation or any of its subsidiaries.
(b) Options, stock appreciation rights, dividend equivalents,
Restricted Stock and Performance Stock shall be evidenced by written
agreements which shall contain such terms and conditions consistent with
the Plan as may be determined by the Committee. Each agreement shall be
signed on behalf of the Corporation by the Chief Executive Officer or
other duly authorized officer of the Corporation.
(c) All decisions made by the Board of Directors pursuant to the
provisions of the Plan shall be final and conclusive.
4. Eligibility and Participation.
The participants in the Plan shall consist of selected employees of
the Corporation and its present or future parent or subsidiaries, as
defined in Section 424 of the Code (whether or not directors of the
Corporation), who serve in executive, administrative or professional
capacities, as may from time to time be so designated by the Committee.
5. Effective Date of the Plan and Term of Option Period.
The Plan shall become effective upon its adoption by the Board of
Directors, provided, that no option or award granted pursuant to the Plan
shall be exercised or will vest prior to the approval of the Plan by the
Corporation's shareholders within twelve (12) months of its adoption by
the Board. The term during which awards may be granted under the Plan
shall expire on the tenth anniversary of the adoption of the Plan by the
Board of Directors. Subject to the provisions of Article 16 hereof, the
period during which an award under the Plan may be exercised shall be the
period, expiring not later than the tenth anniversary of the Grant Date
of the award, as may be determined by the Committee.
6. Awards.
(a) Types. Awards under the Plan shall be made with reference to
shares of Common Stock and may include, but need not be limited to,
shares of stock, which may be granted with or without restrictions in the
discretion of the Committee, options, stock appreciation rights, dividend
equivalents and Performance Stock. The Committee may make any other type
of award which it shall determine is consistent with the objectives and
limitations of the Plan. Awards under the Plan may be made singly, in
combination or in tandem with other awards.
(b) Performance Goals. The Committee may, but need not, establish
performance goals to be achieved within such performance periods as may
be selected by it in its sole discretion, using such measures of the
performance of the Corporation and/or its subsidiaries as it may select.
(c) Guidelines. From time to time, the Committee may adopt
written policies implementing the Plan. Such policies may include, but
need not be limited to, the type, size and terms of awards to be made to
employees and the conditions for payment of such awards. The Committee
may determine the amount and form of consideration, if any, payable on
the issuance or exercise of awards of stock, whether granted with or
without restrictions, and awards of Performance Stock. However, Common
Stock to be issued for such awards shall be issued either at no cost,
provided the consideration received for such shares is, in the opinion of
counsel to the Corporation, adequate under the laws of the Corporation's
state of incorporation, or a price not to exceed the par value of such
shares. Grantees of awards of stock, whether granted with or without
restrictions, and awards of Performance Stock must accept such awards by
execution of a written agreement with the Corporation in such form as the
Committee determines not more than sixty (60) days following the award
date or else such rights shall expire.
(d) Maximum Awards. A Grantee may be granted multiple awards under
the Plan. However, no one Grantee shall be granted an award if
immediately after such grant, were it made, he would be the owner or
would be deemed in accordance with Section 424 of the Code to be the
owner of more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or any of its subsidiaries.
7. Shares Subject to the Plan.
The shares of Common Stock that may be delivered or purchased or
used for reference purposes under the Plan shall be shares of the
Corporation's authorized Common Stock and may be unissued shares or
reacquired shares, as the Board of Directors may from time to time
determine. Subject to adjustment as provided in Article 17 hereof, the
aggregate number of shares to be delivered under the Plan shall not
exceed 550,000 shares. If any shares are subject to an award which for
any reason expires or terminates during the term of the Plan prior to the
issuance of such shares or other payment of such awards, the shares
subject to but not delivered under such award shall be available for
issuance under the Plan. In the case of an award of Restricted Stock any
part of which is forfeited prior to full vesting, such shares as are
forfeited prior to vesting shall be available for issuance under the
Plan. The shares referenced in an exercised stock appreciation right,
shares in lieu of which an optionee elects to receive cash, or shares
under a related option which is surrendered upon the exercise of a stock
appreciation right shall all be charged against the aggregate number of
shares available for issuance under the Plan.
8. Option Requirements.
(a) An Option shall not be exercisable after the expiration of the
option period set forth in the instrument evidencing such option.
(b) The Committee may provide, in the instrument evidencing an
Option, for the lapse of the Option, prior to the expiration of the
option period, upon the occurrence of any event specified by the
Committee.
(c) The price at which shares may be purchased upon exercise of a
particular option shall be determined by the Committee but such price
will neither be less than the Fair Market Value per share of Common Stock
on the Grant Date nor less than the par value per share of Common Stock
on the date of exercise.
9. Incentive Stock Options.
(a) An option designated by the Committee as an "incentive stock
option" is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
(b) The option price per share of Common Stock under an incentive
stock option shall be equal to the Fair Market Value of a share of Common
Stock on the Grant Date, provided, however, that the option price per
share of Common Stock on the date of exercise shall not be less than the
par value per share of Common Stock on the date of exercise.
(c) The aggregate Fair Market Value determined on the Grant Date
of the shares of Common Stock with respect to which incentive stock
options are granted under the Plan and any other plan of the Corporation
or its parent or subsidiaries which are exercisable for the first time by
any Grantee during any calendar year shall not exceed $100,000.
(d) Should Section 422 of the Code be modified during the term of
this Plan, such modification may be included in the Plan, if so approved
by the Board of Directors, upon recommendation by the Committee.
10. Stock Appreciation Rights.
The Committee may also grant stock appreciation rights to selected
employees. Stock appreciation rights granted in conjunction with options
under the Plan may be granted either at the time of grant of such options
pursuant to the Plan or by subsequent action prior to the exercise,
termination or expiration of such options. Such stock appreciation
rights shall be subject to the same terms and conditions as the related
options and may be exercised only at a time when the Fair Market Value of
a share of Common Stock exceeds the option price for such shares, the
options are otherwise exercisable, and if, at the time of such exercise,
the Grantee surrenders the privilege of exercising the related options to
the extent that the Grantee exercises a stock appreciation right. In the
event of a grant of stock appreciation right without a related option,
the Common Stock price referenced in such grant shall not be less than
the Fair Market Value per share of Common Stock on the Grant Date.
Upon exercise of a stock appreciation right and surrender of the
related option (or any portion of such option), if any, the Grantee shall
be entitled to receive, subject to the provisions of the Plan and such
rules and regulations as may be established by the Committee, a payment
equal to the product of (A) the excess of (i) the Fair Market Value of
one share of Common Stock at the time of such surrender over (ii) the
price per share specified in such related option or stock appreciation
rights agreement, times (B) the number of such shares called for by the
related option, or portion thereof, which is so surrendered or specified
in such stock appreciation rights agreement. Such payment shall be made
as determined by the Committee, in its sole discretion, either in
(i) cash, or (ii) shares of Common Stock valued at Fair Market Value as
of the date of exercise, or (iii) partly in cash and partly in shares of
Common Stock. Neither a stock appreciation right held by a Grantee who
is an officer or director of the Corporation, the exercise of which would
result in a cash payment, nor any related option shall be exercisable
during the first six months of the option period (or during the first six
months from the Grant Date of the stock appreciation right if granted
subsequently to the related option). If, upon settlement of a stock
appreciation right, a Grantee is to receive payment or a portion thereof
in shares of Common Stock, the number of shares shall be determined by
dividing such payment or portion by the Fair Market Value of a share of
Common Stock on the date of exercise. However, if the Committee, in its
discretion, decides to permit a Grantee who is an officer or director of
the Corporation to elect to receive cash in full or partial settlement of
the exercise of a stock appreciation right, then such election shall be
made during the period beginning on the third business day following the
date of release for publication of quarterly and annual summary
statements of sales and earnings of the Corporation and ending on the
twelfth business day following such date, unless a different period is
specified in Rule 16b-3 under the 1934 Act, as in effect at the time of
such exercise, or any law, rule, regulation or other provision that may
hereafter replace such Rule (the "Window Period").
The Committee shall also determine whether, and if so to what
extent, the exercise of an option shall be required as a condition to the
exercise of a related stock appreciation right. No stock appreciation
right can be exercised by a Grantee who is an officer or director of the
Corporation unless the Corporation has been subject to the reporting
requirements of Section 13 of the 1934 Act for at least one year prior to
the date of said exercise and has filed all reports and statements
required to be filed pursuant to that section during that period.
11. Dividend Equivalents.
The Committee may also grant dividend equivalents to employees
granted related awards under the Plan pursuant to rules and regulations
adopted by the Committee. The Committee may require or permit the
immediate payment or the waiver, deferral or investment of (1) dividends
paid on awards under the Plan, and (2) amounts equal to dividends which
would have been paid if shares subject to an award had been outstanding
on the dividend record date. No payment, credits or accruals shall be
made on shares subject to an award which are not yet issued and
outstanding on account of the payment of a stock dividend or other
distribution in kind on the Common Stock.
12. Exercise of Options and Stock Appreciation Rights.
(a) Each option and stock appreciation right granted shall be
exercisable in whole or in part at any time, or from time to time, during
the option period as the Committee may determine and specify in the
agreement pursuant to which such option or stock appreciation right is
granted, provided that the election to exercise an option or stock
appreciation right shall be made in accordance with applicable Federal
laws and regulations.
(b) No option may at any time be exercised with respect to a
fractional share or exercised in part with respect to fewer than
twenty-five shares. In the event that shares are issued pursuant to the
exercise of an option or a stock appreciation right, no fractional shares
shall be issued and the Committee shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares
shall be eliminated.
(c) No shares shall be delivered pursuant to the exercise of any
option or stock appreciation right, in whole or in part, until qualified
for delivery under such securities laws and regulations as the Committee
may deem to be applicable thereto and until, in the case of the exercise
of an option, payment in full of the option price is received by the
Corporation in cash, by check, in stock as provided in Article 13 hereof
or, if authorized by the Committee's regulations and accomplished in
accordance therewith, by delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to deliver promptly to
the Corporation the portion of sale or loan proceeds sufficient to pay
the option price. Neither the holder of an option or stock appreciation
right nor such holder's legal representative, legatee, or distributee
shall be or be deemed to be a holder of any shares subject to such option
or stock appreciation right unless and until a certificate or
certificates therefor is issued in his or her name or a person designated
by him or her.
13. Stock as Form of Exercise Payment.
A Grantee who owns shares of Common Stock may elect to use the
previously acquired shares, valued at the Fair Market Value on the last
business day preceding the date of delivery of such shares, to pay all or
part of the exercise price of an award, provided, however, that such form
of payment shall not be permitted unless at least one hundred shares of
such previously acquired shares are required and delivered for such
purpose and the shares delivered have been held by the Grantee for at
least six months.
14. Withholding Taxes for Awards.
Each Grantee receiving or exercising an award as a condition to such
receipt or exercise shall pay to the Corporation the amount, if any,
required to be withheld from distributions resulting from such receipt or
exercise under applicable Federal and State income tax laws ("Withholding
Taxes"). Such Withholding Taxes shall be payable as of the date income
from the award is includable in the Grantee's gross income for Federal
income tax purposes (the "Tax Date"). The Committee may establish such
procedures as it deems appropriate for the settling of withholding
obligations with shares of Common Stock, including, without limitation,
the establishment of such procedures as may be necessary to comply with
Rule 16b-3 under the 1934 Act.
15. Transfer of Awards.
Awards granted under the Plan may not be transferred except by will
or the laws of descent and distribution and, during the Grantee's
lifetime, may be exercised only by said Grantee or by said Grantee's
guardian or legal representative, except that the Committee may grant
non-qualified stock options that are transferable, or amend outstanding
non-qualified stock options to make them so transferable, without payment
of consideration, to Immediate Family Members of the Grantee or to trusts
or partnerships for such family members, which in the case of Grantees
who are subject to Section 16 of the 1934 Act shall be transferable in
accordance with such transferability restrictions, if any, as may be
imposed by Rule 16b-3 under the 1934 Act, as hereafter amended, if Rule
16b-3 under the 1934 Act is amended to permit restricted or unrestricted
transfers of derivative securities granted under plans intended to
qualify for the exemption provided by such rule, provided that any such
transferred non-qualified stock option shall continue to be subject to
the same terms and conditions that are applicable to such option prior to
its transfer (except that such transferred option shall not be further
transferrable by the transferee inter vivos).
16. Death, Disability, Retirement and Termination of Employment.
(a) An option, incentive or non-qualified, which has not
theretofore expired, shall terminate at the time of the death of the
Grantee or of the termination for any reason of the Grantee's employment
with the Corporation, its parent or subsidiaries, and no shares may
thereafter be delivered pursuant to such option, except that, subject to
the condition that no option may be exercised in whole or in part after
the date determined by the Committee, which date cannot be later than the
tenth anniversary of the Grant Date:
(i) Upon the termination of the employment of any such Grantee
due to Disability or Retirement, the Grantee may, within a period of up
to three years after the date of such termination, as determined by the
Committee, purchase some or all of the shares covered by the Grantee's
non-qualified stock options which were exercisable immediately prior to
such termination; and
(ii) Upon the termination of the employment of any such Grantee
due to Disability or Retirement, the Grantee may, within three months
after the date of such termination, twelve months in the case of
Disability, purchase some or all of the shares covered by an incentive
stock option which was exercisable under the Plan immediately prior to
such termination; an incentive stock option not exercised within three
months (twelve months in the case of Disability) after the date of
termination due to Disability or Retirement may be exercised within three
years after the date of such termination but no longer will be eligible
for the treatment afforded incentive stock options under Section 421 of
the Code; and
(iii) Upon the death of any such Grantee while in active service
or of any such disabled or retired Grantee within the above-referenced
periods, the person or persons to whom the rights under the option are
transferred by will or the laws of descent and distribution may, within
twelve months after the date of the Grantee's death, exercise some or all
of the Grantee's options which were exercisable on the date of death by
the Grantee.
Leaves of absence for such periods and purposes conforming to the
personnel policy of the Corporation as may be approved by the Committee
shall not be deemed terminations or interruptions of employment.
(b) In the event that a Grantee to whom a stock appreciation right
has been granted ceases employment with the Corporation, its parent and
subsidiaries for any reason, including death, Disability or Retirement,
such stock appreciation right shall be exercisable only to the extent and
upon the conditions that its related option, if any, is exercisable under
subparagraph (a) of this Article, or as provided in a stock appreciation
rights agreement, if such right is granted without a related option.
(c) The Committee may adopt rules and regulations, whether or not
inconsistent with this Article, but not inconsistent with the provisions
of Section 422 of the Code, setting forth the terms and conditions of
awards relating to the Grantee's rights in the event of termination of
employment.
17. Changes in Common Stock.
In the event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, or other change in
corporate structure or capitalization affecting the Common Stock, such
appropriate adjustment shall be made in the number, kind, option price,
etc., of shares subject to options, rights and other awards granted under
the Plan, including appropriate adjustment in the maximum number of
shares referred to in Article 7 of the Plan, as may be determined by the
Committee.
18. No Right to Employment.
Nothing in the Plan or any instrument executed pursuant hereto shall
confer upon any employee any right to continue in the employ of the
Corporation nor shall anything in the Plan affect the right of the
Corporation to terminate the employment of any employee, with or without
cause.
19. Legal Restrictions.
The Corporation will not be obligated to issue shares of Common
Stock or make any payment if counsel to the Corporation determines that
such issuance or payment would violate any law or regulation of any
governmental authority or any agreement between the Corporation and any
national securities exchange upon which the Common Stock is listed. In
connection with any stock issuance or transfer, the person acquiring the
shares shall, if requested by the Corporation, give assurances
satisfactory to counsel to the Corporation regarding such matters as the
Corporation may deem desirable to assure compliance with all legal
requirements. The Corporation shall in no event be obliged to take any
action in order to cause the exercise of any award under the Plan.
20. No Rights as Shareholders.
No Grantee, and no beneficiary or other person claiming through a
Grantee, shall have any interest in any shares of Common Stock allocated
for the purposes of the Plan or subject to any award until such shares of
Common Stock shall have been transferred to the Grantee or such person.
Furthermore, the existence of awards under the Plan shall not affect: the
right or power of the Corporation or its stockholders to make
adjustments, recapitalizations, reorganizations or other changes in the
Corporation's capital structure; the dissolution or liquidation of the
Corporation, or the sale or transfer of any part of its assets or
business; or any other corporate act, whether of a similar character or
otherwise.
21. Choice of Law.
The validity, interpretation and administration of the Plan
and of any rules, regulations, determinations or decisions made
thereunder, and the rights of any and all persons having or claiming to
have any interest therein or thereunder, shall be determined exclusively
in accordance with the laws of the State of Connecticut.
22. Amendment and Discontinuance.
The Board of Directors may alter, suspend, or discontinue the Plan,
but may not, without the approval of a majority of the holders of the
Common Stock, make any alteration or amendment thereof which operates
(a) to increase the total number of shares which may be granted under the
Plan, (b) to extend the term of the Plan or the maximum option periods
provided in the Plan, (c) to decrease the minimum option price provided
in the Plan, or otherwise materially increase the benefits accruing to
Grantees through awards under the Plan, or (d) to modify the eligibility
requirements for participation in the Plan.
Adopted by the Board of Directors at its meeting of March 17, 1992,
subject to approval of the Corporation's shareholders and amended by the
Board of Directors at its meeting of March 19, 1996, subject to approval
of the Corporation's shareholders.
Attest: ____________________________
Secretary
