SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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[ ] Confidential, for Use of the Commission Only (as permitted by
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Community Bancorp
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(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
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COMMUNITY BANCORP.
Derby Road
Route 5
Derby, Vermont 05829
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2000
The Annual Meeting of Shareholders of Community Bancorp. will be held
at the Elks Club, Derby, Vermont, on Tuesday, May 2, 2000, at 5:30 p.m.,
for the following purposes:
1. To elect three directors to serve until the Annual Meeting of
Shareholders in 2003;
2. To consider and vote on an amendment to the Company's Articles of
Association to limit the liability of directors, except for certain
breaches of duty, as specified by Vermont law;
3. To consider and vote on an amendment to Article Eleven of the
Company's Articles of Association to modify existing language relating to
indemnification of directors, officers and others;
4. To ratify the selection of the independent public accounting firm
of A.M. Peisch & Company as the Company's external auditor for the fiscal
year ending December 31, 2000; and
5. To transact such other business as may properly be brought before
the meeting.
The close of business on March 7, 2000, has been fixed as the record
date for determining shareholders entitled to notice of, and to vote at,
the Annual Meeting.
By Order of the Board of Directors,
/s/ Rosemary M. Rowe
ROSEMARY M. ROWE
Secretary
Derby, Vermont
April 5, 2000
YOUR PROXY IS ENCLOSED. PLEASE FILL IN, DATE, SIGN AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING. IT IS IMPORTANT THAT YOU RETURN YOUR COMPLETED PROXY
PROMPTLY.
COMMUNITY BANCORP.
Derby Road
Route 5
Derby, Vermont 05829
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 2, 2000
This proxy statement is furnished in connection with the solicitation
of proxies by or on behalf of the Board of Directors of Community Bancorp.
(the "Company") for use at the Annual Meeting of Shareholders to be held on
Tuesday, May 2, 2000, at 5:30 p.m. at the Elks Club in Derby, Vermont or at
any adjournment or adjournments thereof. The proxy statement and
accompanying proxy card are first being sent to shareholders on or about
April 5, 2000.
Proxy cards duly executed and returned by a shareholder will be voted
as directed on the card. If no choice is specified, the proxy will be voted
(1) FOR the election of the three nominees set forth in the proxy; (2) FOR
the proposal to amend the Articles of Association to limit the personal
liability of directors in some circumstances; (3) FOR the proposal to amend
Article Eleven of the Articles of Association to modify the existing
language relating to indemnification of directors, officers and others; and
(4) FOR ratification of the selection of A.M. Peisch & Company as the
Company's external auditor for 2000. If other matters are voted upon,
persons named in the proxy and acting thereunder will vote in accordance
with the recommendations of management pursuant to the discretionary
authority conferred in the proxy. Any proxy may be revoked by written
notice to the Secretary of the Company before it is voted.
Only holders of record of the Company's shares of common stock
outstanding as of the close of business on March 7, 2000, the record date
for the meeting, will be entitled to notice of and to vote at the meeting.
As of the record date, there were 3,387,177 shares of the Company's common
stock issued and outstanding. Each share is entitled to one vote on all
matters presented to the shareholders for vote.
In order to constitute a quorum, shares of common stock representing
a majority of the total voting power of such shares must be present in
person or represented by proxy at the annual meeting. In accordance with
Vermont law, the Company intends to count as present for purposes of
determining the presence or absence of a quorum, shares present in person
but not voting and shares for which it has received proxies but with
respect to which holders thereof have withheld voting authority or
abstained from voting. Furthermore, shares represented by proxies returned
by a broker holding such shares in nominee or "street" name will be counted
for purposes of determining whether a quorum exists, even if such shares
are not voted on matters where discretionary voting by the broker is not
allowed ("broker non-votes").
Directors will be elected by a plurality of the votes cast. Withheld
votes and broker non-votes, if any, are not treated as votes cast and,
therefore, will have no effect on the proposal to elect directors. Approval
of each of the two proposals to amend the Company's Articles of Association
and the proposal to ratify the Company's independent accountants, as well
as approval of any other matter that may be brought before the meeting,
would require that more votes are cast in favor, than are cast against the
matter. Abstentions from voting and broker non-votes, if any, are not
treated as votes cast and therefore, would have no effect on the vote to
ratify the Company's independent accountants or to approve any such other
matter.
All expenses of this solicitation will be paid by the Company. This
solicitation of proxies by mail may be followed by a solicitation either in
person, or by letter or telephone by officers of the Company or by officers
or employees of its wholly-owned subsidiary, Community National Bank
(sometimes referred to in this proxy statement as the "Bank"). The Company
has requested banks, brokers and other similar agents or fiduciaries to
forward proxy materials to beneficial owners of stock and, if requested,
will reimburse them for their costs.
PRINCIPAL SECURITYHOLDERS
The following table shows the amount of common stock beneficially
owned by all directors, nominees for director and executive officers of the
Company as a group.
Amount & Nature of Beneficial
Ownership of Common Stock
-----------------------------
Sole Voting Shared Voting
& Investment & Investment Percent of
Power Power Class(1)
------------------------------------------
All Directors, Nominees & Executive
Officers as a Group (12 in number)(2) 347,289 61,625 12.07%
- --------------------
<FN>
<F1> Shareholdings are as of March 7, 2000, except for shares held through
the Company's Retirement Savings Plan, which are as of December 31,
1999, the date of the most recent Plan report, and for shares held in
an IRA account, which are as of February 25, 2000.
<F2> Share information for the group includes 52,386 shares held
indirectly by three of the members of the group by virtue of their
investment in the Community Bancorp. stock fund under the Company's
Retirement Savings Plan.
</FN>
In addition, as of March 7, 2000, 233,373 shares (6.89% of the
Company's issued and outstanding common stock) were held in fiduciary
capacity by the trust department of Community National Bank. It is the
Bank's practice not to vote such shares unless instructions are received
from the beneficial owner.
Except as set forth above, the Company is not aware of any
individual, group, corporation or other entity owning beneficially more
than 5% of the Company's outstanding common stock. The Company has no other
authorized class of stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and changes
in ownership with the Securities and Exchange Commission (SEC) and to
furnish the Company with copies of all such reports. The Company has
reviewed the copies of the Section 16 reports filed by the directors and
officers, or written representations from them that no Forms 5 were
required to be filed for 1999. Based solely on such review, the Company
believes that all Section 16 filing requirements applicable to its officers
and directors for 1999 were complied with.
ARTICLE 1
ELECTION OF DIRECTORS
The Articles of Association and the By-laws of the Company provide
for a Board of no fewer than nine and no more than twenty-five directors,
to be divided into three classes, as nearly equal in number as possible,
each class serving for a period of three years. The Board of Directors
presently consists of 10 members and the Board has voted to maintain the
number of directors at 10 for the ensuing year. The directors in the class
whose term will expire at the 2000 Annual Meeting of Shareholders are
Elwood Duckless, Rosemary M. Lalime and Anne T. Moore.
Unless authority is withheld, proxies solicited hereby will be voted
in favor of the three nominees, to hold office until the 2003 Annual
Meeting of Shareholders or until their successors are elected and qualify.
If for any reason not now known by the Company, any of such nominees should
not be able to serve, proxies will be voted for a substitute nominee or
nominees designated by the Board of Directors, or to fix the number of
directors at fewer than ten, as the directors in their discretion may deem
advisable.
The following table sets forth certain information concerning each of
the incumbent directors and other nominees:
Community Bancorp.
Director of Common Stock
Community Beneficially Owned
Principal Bancorp. and Percent of
Name and Age Employment Since (1) Class (2)
- ---------------------------------------------------------------------------------------------
Nominees to serve (if elected) until 2003 Annual Meeting:
Elwood Duckless Past President, 1987 119,299(3) 3.52%
Age 59 Newport Electric Co.
Newport, VT
Rosemary M. Lalime Principal Broker and Owner 1985 43,454(4) 1.28%
Age 53 All Seasons Realty
Newport, VT
Anne T. Moore Principal Real Estate Broker 1993 38,395(5) 1.13%
Age 56 Taylor Moore Agency Inc.
Derby, VT
(insurance and real estate)
Incumbent Directors to serve until 2002 Annual Meeting:
Thomas E. Adams Owner, NPC Realty, Inc. 1986 22,820(6) .67%
Age 53 Holland, VT
Jacques R. Couture Dairy Farmer/Maple Producer 1992 3,311(7) .10%
Age 49 Westfield, VT
Richard C. White President, Chief Executive Officer 1983 67,172(8) 1.98%
Age 54 and Director, Community Bancorp.;
and Community National Bank
Derby, VT
Incumbent Directors to serve until 2001 Annual Meeting:
Michael H. Dunn Book Dealer 1998 63,534(9) 1.88%
Age 58 Derby, VT
Marcel M. Locke Proprietor, Parkview Garage 1986 7,765(10) .23%
Age 61 Orleans, VT
Stephen P. Marsh Vice President, Treasurer and 1998 44,595(11) 1.32%
Age 52 Director, Community Bancorp.;
and Senior Vice President, Cashier
and Director, Community National Bank
Derby, VT
Dale Wells President, 1996 4,392 .13%
Age 54 Dale Wells Building Contractor, Inc.
St. Johnsbury, VT
- --------------------
<FN>
<F1> Each nominee and incumbent director is also a director of Community
National Bank. The dates indicated in the table reflect only service
on the Board of Directors of the Company and not Community National
Bank.
<F2> Except as otherwise indicated in the footnotes to the table, the
named individuals possess sole voting and investment power over the
shares listed. Shareholdings are as of March 7, 2000, except for (i)
shares held by Messrs. Marsh and White indirectly through
participation in the Community Bancorp. stock fund under the
Company's Retirement Savings Plan, which are as of December 31, 1999,
the date of the most recent Plan report; and (ii) shares held in Mr.
White's IRA, which are as of February 25, 2000.
<F3> Includes 20,299 shares held in trust for the benefit of Mrs.
Duckless. Mr. Duckless has shared voting and investment power over
the shares held in trust for Mrs. Duckless.
<F4> Includes 3,172 shares held by Mrs. Lalime jointly with Charles Brown,
as to which voting and investment power is shared.
<F5> Includes 17,826 shares held in a trust for the benefit of Mrs.
Moore's husband, as to which Mrs. Moore does not have voting or
investment power and disclaims beneficial ownership.
<F6> Includes 9,500 shares held in an IRA for Mr. Adams' benefit.
<F7> Includes (i) 1,724 shares held by Mr. Couture jointly with his wife,
as to which voting and investment power is shared; and (ii) 47 shares
held in a custodial account for Mr. Couture's minor child.
<F8> Includes (i) 32,105 shares indirectly owned by Mr. White by virtue of
his participation in the Community Bancorp. stock fund under the
Company's Retirement Savings Plan; (ii) 1,706 shares held by Mr.
White jointly with his wife; and (iii) 4,424 shares held in an IRA
for Mr. White's benefit. Mr. White has shared voting and investment
power over the shares held jointly with his wife.
<F9> Includes 7,505 shares held by a Company of which Mr. Dunn is
President and over which he has sole voting power.
<F10> Includes 3,437 shares held by Mr. Locke jointly with his wife, as to
which voting and investment power is shared.
<F11> Includes (i) 29,378 shares held by Mr. Marsh jointly with his wife,
as to which voting and investment power is shared; and (ii) 14,377
shares indirectly owned by Mr. Marsh by virtue of his participation
in the Community Bancorp. stock fund under the Company's Retirement
Savings Plan.
</FN>
Meeting Attendance
The Company's Board of Directors held four regular meetings and five
special meetings during 1999. Each incumbent director attended at least 75%
of the aggregate of all such meetings. In addition, all of the Company's
directors serve on the Bank's Board of Directors (which meets monthly) and
on various Board committees. Each of the directors attended at least 75% of
the scheduled Bank Board and committee meetings.
The Company's Board of Directors does not have a standing executive
committee. Although during 1999 the Board of Directors of the Company did
not have standing audit or compensation committees, similar functions were
performed by the Bank's Board of Directors or its committees. The Bank's
Board of Directors and its audit committee (also known as its Risk
Management Committee) review the findings and recommendations of the Bank's
independent public accountants, as well as the Bank's internal audit
procedures, examinations by regulatory authorities and matters having a
material effect on the Bank's financial position. The present members of
the Bank's audit committee are Thomas Adams (Chairman), Rosemary Lalime,
Elwood Duckless and Jacques Couture. During 1999 the Bank's audit committee
met five times.
In March of this year, the Company's Board of Directors adopted an
audit committee charter and appointed as members of the committee the same
individuals listed above who serve on the Bank's audit committee.
The functions of the Bank's compensation committee (known as its
Human Resources Committee) include reviewing and making recommendations to
the Board concerning the compensation of the Bank's officers and employees.
The present members of the Bank's Human Resources Committee are Michael
Dunn, Marcel Locke, Stephen Marsh, Anne Moore, Dale Wells and Richard
White. In addition, the Bank's Human Resources Officer attends meetings of
the Committee but is not a member and does not vote on matters considered
by the Committee. Mr. White and Mr. Marsh do not vote on matters affecting
their own compensation. The Bank's Human Resources Committee met two times
during 1999. A Report of the Human Resources Committee regarding executive
compensation is set forth on pages 6-8 of this proxy statement.
Compensation Committee Interlocks and Insider Participation
The Company is not aware of the existence of any interlocking
relationships between the senior management of the Company and that of any
other company.
Transactions with Management
Some of the incumbent directors, nominees and executive officers of
the Company, and some of the corporations and firms with which these
individuals are associated, are customers of Community National Bank in the
ordinary course of business, or have loans outstanding from the Bank, and
it is anticipated that they will continue to be customers of and indebted
to the Bank in the future. All such loans were made in the ordinary course
of business, do not involve more than normal risk of collectibility or
present other unfavorable features, and were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
same time for comparable Bank transactions with unaffiliated persons,
although directors were generally allowed the lowest interest rate given to
others on comparable loans.
Directors' Fees and Other Compensation
Directors of the Company who are not salaried employees of the Bank
receive an annual retainer of $4,000 for serving on the Board and a fee of
$250 per Board meeting. During 1999, each director of the Company also
served as a director of the Bank. Bank directors who are not salaried
employees of the Bank receive an annual retainer of $4,000, a fee of $250
per Board meeting and a fee of $250 per committee meeting. In addition to
the fees for meetings of the Bank's Board of Directors and its committees,
each Bank director attends at least six meetings per year of the Bank's
local advisory boards and receives a fee of $250 per meeting, except for
Mr. White and Mr. Marsh, who do not receive any fees for such attendance.
This fee structure is intended to compensate the Bank's directors for
attendance at Board meetings as well as for the time spent by them in
activities directly related to their service on the Board for which they
receive no additional compensation, including but not limited to attendance
at the annual directors' retreat and attendance at educational seminars or
programs on pertinent banking topics.
Directors who have served on the Board of the Company and/or the Bank
for at least five years and who are not salaried employees of the Bank are
entitled to receive upon retirement from the Board a lump sum payment of
$1,000 for each year of Board service. For this purpose, service rendered
as a director of the Company and of the Bank is not compensated separately.
The retirement benefits under this arrangement represent a general
unsecured obligation of the Company and no assets of the Company or the
Bank have been segregated to satisfy the Company's obligations under the
arrangement.
From time to time directors perform evaluations of loan collateral
for the Bank and are reimbursed for such services at the rate of $25 per
hour.
Directors' Deferred Compensation Plan
Under the terms of the Company's Deferred Compensation Plan for
Directors, directors of the Company and/or the Bank may elect to defer
current receipt of some or all of their director fees. Deferrals are
credited to a cash account which bears interest at the rate in effect for
the Bank's three-year certificate of deposit, as adjusted from time to
time. Payments are deferred until the participant's retirement, death or
disability, or at an earlier or later date elected by the participant.
Amounts deferred and accumulated interest represent a general unsecured
obligation of the Company and no assets of the Company or the Bank have
been segregated to satisfy the Company's obligations under the Plan.
Vote Required
Election of a nominee for director will require a plurality of the
votes cast in the election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 1.
REPORT OF HUMAN RESOURCES COMMITTEE
The Bank's Human Resources Committee reviews and makes
recommendations to the full Board on all compensation and benefits issues
relating to the President and Chief Executive Officer ("CEO") and other
executives of the Bank. The recommendations relating to the CEO are
formulated at the time of Mr. White's annual performance evaluation, which
usually occurs in June. Mr. White makes recommendations to the Committee
with respect to the compensation of the other executive officers, which are
then acted on by the Committee and recommended to the full Board.
The Committee and Board believe they have designed a compensation
package for the executive officers that will attract and retain competent
senior management for the Bank and provide for appropriate rewards for both
personal and Bank performance.
To reach these objectives, the Bank provides for a base salary which
is reviewed annually in relation to each individual's performance and a
cash bonus as a short term incentive, the amount of which depends upon the
Bank's performance. (The Bank's Officer Incentive Plan is described
elsewhere in this proxy statement.) The Bank does not currently provide for
long term incentives, such as stock options or similar benefits.
In determining appropriate salary levels, the Committee and the Board
review not only various individual and corporate performance indicators,
but also annual salaries and short term incentives provided by similar
companies to their senior officers. As of July, 1999, when Mr. White's
annual salary was last adjusted, this data was obtained through salary
surveys conducted by Sheehan & Company (Vermont Bankers Association,
Northern New England and New England community banks with assets from $100
million to $249 million); Watson Wyatt & Company (national data, community
banks with assets from $200 million to $500 million), the Bank
Administration Institute (New England community banks with assets of $100
million to $499 million) and the Sheshunoff & Company (national data,
community banks with assets from $100 million to $249 million). These
surveys were completed in 1998, showing 1998 base salaries and total cash
compensation numbers for 1997. 1999 data was unavailable to the Committee
as of July, 1999.
In Mr. White's case, the Board's annual review process includes
consideration of his self-evaluation covering certain key elements of his
written job description, including strategic planning, establishment and
overall implementation of operating policies, management of shareholder and
community relations and regulatory matters. The Board also undertakes its
own evaluation of Mr. White, reviewing various matters, including
leadership, planning and organization abilities, creativity and problem
solving, CRA (community reinvestment) and compliance.
Mr. White's strong performance in each of these areas resulted in the
adjustment (effective July 1, 1999) of his annual base salary rate from
$123,000 to $126,500, representing a 2.8% increase.
The table below shows Mr. White's cash compensation (base salary and
cash bonus) for 1999 and 1998 in relation to his peers at comparable
companies, as indicated in the following surveys of 1999 executive
compensation:
Mr. White
1999 $143,394
1998 $132,097
William M. Mercer & Company
Maine-New Hampshire-Vermont $181,700
All Northeast $176,200
Sheehan & Company
New England $172,417
Sheshunoff & Company $183,720
Bank Administration Institute $190,200
Watson Wyatt & Company $204,900
Average $180,847
The Committee also reviews, and makes recommendations to the full
Board relating to, major personnel policies including compensation and
benefit programs for other officers and staff. The Committee oversees the
administration of the Bank's Officer Incentive Plan and the Company's
401(k) plan, including the investment performance of the trustee.
The Committee comprises four non-employee directors plus the CEO and
the Chief Financial Officer ("CFO"). Neither the CEO nor the CFO
participates in recommendations or decisions pertaining to their own salary
and benefits although CEO White does participate in recommendations and
decisions regarding the CFO's compensation.
Community National Bank Human Resources Committee
Michael Dunn Anne Moore
Marcel Locke Dale Wells
Stephen Marsh Richard White
--------------------
Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the SEC,
neither the foregoing report nor the material set forth below under the
caption "STOCK PERFORMANCE GRAPH" shall be deemed to be filed with the SEC
for purposes of the Securities Exchange Act of 1934, nor shall such Report
or such material be deemed to be incorporated by reference in any past or
future filing by the Company under the Securities Exchange Act of 1934 or
the Securities Act of 1933, as amended.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(stock price appreciation plus reinvested dividends) on the Company's
common stock with the cumulative total return of the NASDAQ Composite Index
and the NASDAQ Bank Stock Index for the five years ended December 31, 1999.
Both indices are unmanaged indices maintained by NASDAQ.
Comparative Five-Year Stock Performance*
Community Bancorp NASDAQ Composite NASDAQ Banks
Quarter/Year Value End of Period Value End of Period Value End of Period
- ------------------------------------------------------------------------------
Dec-94 $100.00 $100.00 $100.00
Mar-95 $105.85 $108.68 $ 63.00
Jun-95 $109.35 $124.14 $ 76.90
Sep-95 $111.57 $138.78 $ 83.91
Dec-95 $112.33 $139.92 $ 81.65
Mar-96 $112.26 $146.47 $ 87.23
Jun-96 $119.84 $157.59 $ 96.37
Sep-96 $126.11 $163.16 $105.74
Dec-96 $131.72 $171.69 $117.67
Mar-97 $142.89 $162.47 $114.25
Jun-97 $149.59 $196.86 $130.14
Sep-97 $159.98 $226.47 $158.09
Dec-97 $178.81 $208.83 $142.05
Mar-98 $219.51 $235.45 $171.30
Jun-98 $211.35 $251.97 $189.81
Sep-98 $225.63 $214.42 $181.67
Dec-98 $195.27 $291.60 $259.64
Mar-99 $222.69 $327.33 $251.12
Jun-99 $217.73 $357.22 $267.88
Sep-99 $184.85 $365.20 $241.46
Dec-99 $177.36 $541.16 $242.63
<FN>
<F*> Cumulative total return assumes reinvestment of dividends
</FN>
Assumes $100 invested at the close of trading day preceding the first day
of the fifth preceding fiscal year in Community Bancorp. common stock,
NASDAQ Composite, and NASDAQ Banks.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers of the Company.
Position(s) with the Company and Subsidiaries
Name and Age and Occupation for the Past Five Years
- ------------ ---------------------------------------------
Richard C. White, 54 President, Chief Executive Officer and Director,
Community Bancorp. and Community National Bank
Stephen P. Marsh, 52 Vice President, Treasurer and Director, Community
Bancorp.; and Senior Vice President, Cashier and
Director, Community National Bank
Rosemary M. Rowe, 58 Secretary, Community Bancorp.; and Vice President,
Community National Bank
Alan A. Wing, 55 Vice President, Community Bancorp.; and Senior Vice
President, Community National Bank
EXECUTIVE COMPENSATION
The officers of the Company did not receive any compensation for
services rendered to the Company in 1999, but did receive compensation for
services rendered in their capacities as officers of the Bank.
The following table sets forth the compensation paid to the President
and Chief Executive Officer for services rendered to the Company and its
subsidiaries, in all capacities during 1999 and in each of the preceding
two years. Mr. White is the only executive officer whose combined salary
and bonus paid in 1999 exceeded $100,000.
Summary Compensation Table
Annual Compensation
Name and
Principal All Other
Position Year Salary(1) Bonus(2) Compensation(3)
- -----------------------------------------------------------------------
Richard C. White, 1999 $125,659 $17,735 $22,876
President, CEO & 1998 122,266 11,831 23,396
Director 1997 117,662 21,490 23,138
- --------------------
<FN>
<F1> Includes voluntary salary deferrals by Mr. White pursuant to the
Company's Retirement Savings (401(k)) Plan, as follows: 1999, $7,124;
1998, $6,604; and 1997, $6,862.
<F2> All bonuses were paid under the Bank's Officer Incentive Plan
(described below) in the year indicated, for services rendered in the
prior year. Bonuses for services rendered in 1999 will be calculated
and paid in the second quarter of 2000.
<F3> Includes the following: (i) discretionary contributions made by the
Company for Mr. White's account under the Company's Retirement
Savings Plan, described below, as follows: 1999, $11,192; 1998,
$20,094; and 1997, $19,707 and (ii) matching employer contributions
made under the Retirement Savings Plan for Mr. White's account, as
follows: 1999, $3,562; 1998, $3,302; and 1997, $3,431. Mr. White's
total for 1999 also includes a contribution of $8,122 to his account
under the Company's Money Purchase Plan, adopted in 1999.
</FN>
Except for the use of vehicles owned by the Bank by certain officers,
no director or executive officer received any special personal benefits
during 1999. In policy and practice, the Bank does not provide special
personal benefits to directors or officers.
Retirement Savings Plan
Employees who are age 21 or over and who have completed at least one
year of service (as defined in the plan) are eligible to participate in the
Community Bancorp. and Designated Subsidiaries' Retirement Savings Plan
(the "Plan"). The Plan contains features of a so-called 401(k) plan which
permit participants to make voluntary compensation deferrals on a tax-
deferred basis of up to 15% of their pre-tax compensation. For 2000 the
Plan limits the maximum annual deferral to $10,500 per participant. This
maximum is adjusted annually for inflation by the Internal Revenue Service.
The Company will make a discretionary matching contribution to the account
of participants equal to a percentage of the amount deferred. The matching
contribution percentage is established from time to time by the Company in
its sole discretion. The matching contribution percentage for 2000 has been
set at 50% of the amount deferred for deferrals of up to 5% of
compensation. Deferrals in excess of 5% of compensation are not matched by
the Company.
Participants are at all times fully vested in any rollover
contributions from other plans and in their own compensation deferrals.
Vesting in any discretionary employer contribution and in any matching
employer contribution begins after three years of service, with full
vesting upon seven years of service. Participants may direct the investment
of their Plan account among several funds maintained by the Plan trustee,
including a Community Bancorp. stock fund. Distribution of Plan accounts is
generally deferred until the participant's death, disability or retirement,
except in cases of financial hardship (as defined in the Plan). Benefits
are subject to income tax upon distribution and certain early withdrawals
may be subject to an additional 10% penalty tax. Distribution of Plan
benefits may be in the form of an annuity, a lump sum in cash, or in
certain circumstances, common stock of the Company.
In addition to voluntary compensation deferrals and matching employer
contributions, the Company makes an annual profit sharing contribution of
1% of compensation for the account of employees who do not meet the age and
service requirements for participation in the 401(k) features of the plan.
The Company also makes an annual discretionary profit sharing contribution
for the account of executive officers equal to a percentage, established
annually, of such officers' compensation. The amount of the contribution
made to Mr. White's account is disclosed in the footnotes to the summary
compensation table set forth above.
Money Purchase Plan
During 1999 the Board of Directors adopted a Money Purchase Plan for
eligible employees. Eligibility requirements for participation in the plan
are the same as described above for the Retirement Savings Plan. The
Company makes an annual money purchase plan contribution equal to 5.7% of
the participants' annual compensation. Participants may direct the
investment of their plan accounts among the same investment choices as are
available under the Retirement Savings Plan. Vesting in the employer
contribution begins after three years of service, with full vesting upon
seven years of service. Distribution of benefits is generally deferred
until the participant's death, disability or retirement, except in cases of
financial hardship. Benefits are subject to income tax upon distribution
and certain early withdrawals may be subject to a 10% penalty tax.
Officer Incentive Plan
The Bank maintains an Officer Incentive Plan (the "Plan") for its
executive officers and vice presidents. Each executive officer or vice
president having at least one year of service is eligible to participate in
the Plan. Under the Plan, two separate incentive pools are established, one
for the four executive officers and another for all vice presidents. The
incentive bonus pool for executive officers is determined by the Bank's
annual rating issued by IDC Financial Publishing, Inc., an industry-wide
recognized ranking service, and a weighted average return on equity over
the preceding four year period. The bonus pool under the Plan is determined
according to the following schedule:
IDC Rating Percent of After-Tax Earnings
-------------------------------------------------------------
Below Average 0
Average 1.00%
Excellent 2.75%
Superior 4.50%
Top 3 in State and Superior 6.00%
Average Return on Equity(1) Percent of After-Tax Earnings
- -------------------------------------------------------------------
less than 9.06% 0
9.06 to 10.55% 1.25%
10.56 to 12.05% 2.75%
12.06 to 13.55% 3.75%
13.56 to 15.05% 4.75%
15.06 to 16.55% 5.75%
16.56% and over 6.50%
(Average return on equity is based on five year average return on equity
for other Vermont banks as listed in the IDC Report.)
- --------------------
<F1> For calculation of 1999 bonuses, weighted average return on equity
gives 40% weight to 1999, 30% weight to 1998, 20% to 1997 and 10% to
1996.
</FN>
The results determined under the formulas in the above two tables are
averaged to determine the amount of the incentive pool for the Bank's
executive officers. The pool is divided into units and these units are
distributed to the four executive officers. The return on equity targets,
the applicable percentages of after-tax earnings and the allocation of the
incentive units among the executive officers are determined by the Human
Resources Committee of the Bank's Board of Directors, subject to the
approval of the full Board.
Because the amount of the incentive pool for executive officers
depends in part on the Bank's annual rating by IDC Financial Publishing,
Inc., which is not issued until the second quarter of the following year,
1999 bonus information for such officers was not yet available as of the
date of preparation of this proxy statement.
The incentive pools for Vice Presidents are determined by the
following schedule:
After-Tax Return
on Average Assets Percent of Salary
---------------------------------------
less than 1.00% 0
1.00% to 1.49% 8% of salary
1.50% and over 10% of salary
Distributions under the Plan to Vice Presidents (other than executive
officers) are ordinarily payable in January for services rendered during
the preceding fiscal year.
Although the Board of Directors of the Bank presently intends to
maintain an officer incentive plan, it may revise or replace the Plan at
any time with a new one. As a matter of policy, the Board views incentive
compensation as an important component of officer compensation since it
appropriately links the Bank's performance with the compensation of those
employees in the best position to contribute significantly to the Bank's
profitability.
Supplemental Retirement Plan
The Board of Directors has adopted a Supplemental Retirement Plan for
Mr. White and the other executive officers of the Bank to replace estimated
benefits lost as a result of the previous termination of the Bank's defined
benefit pension plan. The plan is intended to provide an annual benefit at
retirement approximating 75% of the average annual bonus received by the
officer. It is estimated that this benefit, combined with the projected
benefits under the Bank's 401(k) plan, will be approximately equal to the
benefit that would have been provided to the executive officers under the
terminated defined benefit pension plan. Benefit payments will be funded by
annual contributions to a rabbi trust.
ARTICLE 2
TO AMEND THE ARTICLES OF ASSOCIATION
TO LIMIT THE LIABILITY OF DIRECTORS IN CERTAIN CIRCUMSTANCES
At a meeting held on March 7, 2000, the Company's Board of Directors
voted to recommend to the shareholders that the Company's Articles of
Association be amended to provide for the limitation of the personal
liability of Directors for money damages for certain breaches of their
duties as Directors. This limitation of Director liability provision is
expressly sanctioned in Vermont's corporate law. And as provided by law,
the amendment would not eliminate personal liability for any financial
benefit received by the Directors, for reckless or intentional infliction
of harm, for an intentional or reckless criminal act or for unlawful
distributions. Management of the Company believes that adoption of the
amendment affords appropriate protection to individuals who serve as
directors and will thereby assist the Company in the future in attracting
and retaining individuals of high caliber to serve on the Company's Board
of Directors.
The text of the proposed amendment, which would add a new Article
Sixteen to the Company's Articles of Association, is contained in Exhibit A
to this proxy statement.
In recent years, litigation seeking to impose liability on, or
involving as witnesses, directors of corporations has become increasingly
common. Such proceedings are typically extremely expensive whatever their
eventual outcome. In view of the costs and uncertainties of litigation in
general, it is often prudent to settle proceedings in which claims against
a director or officer are made. Settlement amounts, even if immaterial to
the company involved and minor compared to the large amounts frequently
claimed, often exceed the financial resources of most individual
defendants. Even in proceedings in which a director is not named as a
defendant, he or she may incur substantial expenses or attorney's fees if
called as a witness or if he or she becomes involved in the litigation in
any other way. As a result, an individual may conclude that potential
exposure to costs and risks of litigation in which he or she may become
involved may exceed any benefit from serving as a director of a company.
Although the Company provides indemnification to its Directors and
others in some circumstances, it is prohibited by law from indemnifying an
individual in any action by or in right of the Company (a so-called
"shareholder derivative action") if he or she is adjudged liable to the
Company.
Compounding the problem has been the increasing difficulty and
expense that public companies encounter in obtaining directors' and
officers' liability insurance ("D&O Insurance") to protect directors and
officers from personal losses resulting from litigation relating to their
service as directors and officers. Coverage under D&O Insurance is no
longer routinely offered by competing insurers at a reasonable cost and is
frequently subject to severely restrictive terms and high deductibles.
Vermont's corporate law attempts to respond to these concerns, in
part, by permitting a corporation, upon receipt of stockholder approval, to
include a provision in its Articles of Association limiting the personal
liability of its directors to the corporation or its shareholders for
monetary damages for any action taken, or failure to take action, based on
certain breaches of fiduciary duty. The statute does not, however, permit
the elimination or limitation of liability of a director for (1) the amount
of a financial benefit received by a director to which the director is not
entitled; (2) an intentional or reckless infliction of harm on the
corporation or the shareholders; (3) a corporate distribution which
violates Section 8.33 of Title 11A of the Vermont Statutes Annotated; or
(4) an intentional or reckless criminal act. In addition, nothing in the
proposed amendment will affect the right of the Company or its shareholders
to pursue equitable remedies, such as an action to enjoin or rescind a
transaction involving a breach of duty by a director (although such
equitable remedies may not always be available) or a director's liability
under the federal securities laws. The limitation of liability provided by
the proposed amendment will not affect director liability to third parties.
Although the Company has thus far been successful in attracting and
retaining individuals of high caliber to serve as Directors, the Board of
Directors believes that it is desirable to provide the maximum possible
protection available by law to such persons in order to enhance future
director recruitment efforts and to reduce a significant disincentive to
serving on the Board. To that end, the Board proposes that the shareholders
adopt a new Article Sixteen as an amendment to the Company's Articles of
Association, which is intended to give directors of the Company the full
protection from monetary liability to the Company or its shareholders
available under Vermont law.
The proposed amendment would eliminate liability of directors to the
Company and its shareholders for money damages for certain breaches of the
directors' duties under Section 8.30 of Title 11A of Vermont Statutes
Annotated. That section requires directors to discharge their duties in
good faith and with the care an ordinarily prudent person in the same
position would exercise. Thus, if the amendment is adopted, shareholders
would not have a cause of action against directors for monetary damages for
a breach of their duty to exercise ordinary care in their actions.
The amendment would eliminate liability only for acts or omissions
occurring on or after the date it becomes effective. The amendment will not
become effective until the shareholders have approved it and it has been
filed with the Vermont Secretary of State. The Company is not aware of any
currently pending or threatened litigation or other proceedings or any
recent past litigation or proceedings which might have been materially
affected had this amendment been in effect at the time of such litigation.
In addition, the amendment is not being proposed in response to any
specific resignation, threat of resignation or refusal to serve by any
director or officer or potential director or officer. The Board of
Directors and management recognize that adoption of Article 2, as well as
Article 3 (relating to indemnification of directors and officers), will
have the effect of reducing the potential legal exposure of directors and
officers to personal liability for monetary damages resulting from their
service to the Company. As a result, directors have a personal interest in
the approval of these provisions. Because of such personal interest, the
Board of Directors may have a conflict of interest in recommending adoption
of Articles 2 and 3. However, the Board believes that, by increasing
protection available to directors and officers, the amendments will enhance
the Company's ability to attract and retain qualified directors and
officers. For this reason, the Board of Directors believes that adoption of
the proposed amendment is in the Company's best interests.
If the amendment is approved, any subsequent amendment or repeal of
the liability-limiting provision which has the effect of increasing
director liability would operate prospectively only, and would not affect
any action taken or failure to act prior to such amendment or repeal.
Shareholders should read this proposal in connection with the
proposal in Article 3 of this proxy statement, relating to the proposed
amendment to Article Eleven of the Articles of Association to modify the
provisions governing indemnification of directors, officers and others.
Vote Required
Approval of Article 2 will require that more votes be cast "for" than
"against" the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 2.
ARTICLE 3
TO AMEND THE ARTICLES OF ASSOCIATION TO MODIFY THE
PROVISIONS RELATING TO INDEMNIFICATION OF
DIRECTORS, OFFICERS AND OTHERS
At their meeting held on March 7, 2000 the Board of Directors voted
to recommend to shareholders that the Company's Articles of Association be
amended to modify Article Eleven, relating to indemnification of directors,
officers and others. The proposed amendment is intended to facilitate
compliance with Vermont's revised corporate laws and to provide greater on-
going flexibility to the Company in implementing suitable indemnification
provisions.
The text of Article Eleven, as it is proposed to be amended, is
contained in Exhibit B to this proxy statement. The text of Article Eleven,
as presently in effect, is contained in Exhibit C.
The indemnification provisions contained in Article Eleven of the
Company's Articles of Association were initially adopted at the time of the
Company's organization in 1983. At that time, applicable Vermont law did
not address in detail the subject of indemnification of corporate officers,
directors and employees. Effective in 1994, Vermont's corporate statute was
modernized and completely re-written. Among other things, the current
Vermont corporate statute creates standards of conduct and procedural
requirements governing indemnification of directors, officers, employees
and agents. While the existing Article Eleven provisions are consistent in
some respects with applicable requirements of current law, they are not
wholly consistent. The proposed amendment would eliminate any
inconsistencies by merely recognizing that the Company has the authority to
provide for indemnification of officers, directors, employees and agents to
the fullest extent permitted under the law, and would leave appropriate
implementation of that authority to the discretion of the Board of
Directors as it deems advisable, such as by Board resolution, contract or
adoption of a By-law. That provision will permit indemnification
arrangements to be created or modified as circumstances warrant, and
without the expense or delay associated with the shareholder amendment
procedures to modify indemnification provisions that are contained in the
Company's Articles of Association.
Should the amendment to Article Eleven be adopted by the
shareholders, the Board of Directors intends to implement the authority
thereby granted, including through adoption of an implementing By-law. The
text of the current draft of that By-law provision is set forth as Exhibit
D to this proxy statement. However, the Board of Directors would retain the
authority to modify that By-law language in its discretion, both before and
after its adoption, so long as the modification was not inconsistent with
applicable law. The Board would also have the authority under amended
Article Eleven to implement the indemnificaton provisions through other
means, such as by separate contract with the indemnified individuals.
The sample implementing By-law provision would incorporate the legal
standards for indemnification contained in Vermont's revised corporate
statute and would make indemnification of directors and officers of the
Company mandatory, except for those circumstances in which the corporate
law does not permit indemnification. In particular, the corporate law does
not permit indemnification in connection with any proceeding by or in right
of the corporation in which the director was adjudged liable to the
corporation or in connection with any proceeding in which the individual is
adjudged liable for receiving any improper personal benefit, whether or not
involving action in the individual's official capacity. The Company's
existing By-law provisions provide for mandatory indemnification of
directors and officers but are not fully consistent with the current legal
standards, as they only exclude from mandatory indemnification actions by
or in right of the Company.
In addition, the proposed implementing By-law would incorporate the
procedural requirements of the Vermont corporate statute for determining
whether indemnification is authorized in particular circumstances and for
evaluating reasonableness of expenses.
The existing indemnification provisions in Article Eleven state that
no indemnification may be made with respect to any claim, issue or matter
in relation to which the person was adjudged liable for gross negligence or
misconduct in the performance of his duty to the Company. That standard
does not fully conform to the current standard for indemnification in
Vermont's corporate statute. The implementing By-law would incorporate the
current standard by providing for indemnification of a director or officer
in connection with a proceeding if (i) the individual conducted himself in
good faith; (ii) he or she reasonably believed, with respect to matters
involving such person's official capacity, that his or her conduct was in
the Company's best interests and, in all other cases, that such conduct was
at least not opposed to the Company's best interests; and (iii) in the case
of any proceeding brought by a governmental entity, the individual had no
reasonable cause to believe that his or her conduct was unlawful and the
individual is not found to have engaged in a reckless or intentional
unlawful act.
The draft implementing By-law provides that the right to
indemnification vests and becomes a contract right at the time of the
occurrence of the events giving rise to the claim or proceeding. Any later
change to, or repeal of, the indemnification By-law would not affect that
vested right.
As with the existing indemnification provision, the implementing By-
law would recognize the Company's authority to purchase insurance on behalf
of any individual who may be entitled to indemnification.
It is the position of the Securities and Exchange Commission that
indemnification for liabilities under the federal securities laws is
against public policy as expressed in such laws and is, therefore,
unenforceable. Consequently, if a claim for indemnification for liability
under the federal securities laws is made, notwithstanding any
indemnification By-law, contract or other provision granting
indemnification rights to the Company's directors or officers, the question
of whether indemnification in such circumstances is against public policy
may have to be determined in appropriate court proceedings.
The Board intends to provide in its indemnification By-law that the
indemnification obligation covers acts and omissions that occurred before
its adoption, even though suit is not filed or a claim asserted until a
later time. In addition, it is intended that the By-law will automatically
implement any future statutory revisions broadening the scope of
permissible indemnification. Moreover, the implementing By-law will provide
that the right to indemnification and advancement of expenses conferred by
the By-law is not exclusive of any other right to indemnification that the
individual may have under law, by action of the Board of Directors or
shareholders, by contract or otherwise.
The Company is not aware of any currently pending or threatened
litigation or other proceedings or any recent past litigation or
proceedings to which the proposed amendment or draft implementing By-law
would apply. In addition, the amendment is not being proposed in response
to any specific resignation, threat of resignation or refusal to serve by
any director or officer or potential director or officer. The Board of
Directors and management recognize that adoption of Article 3, as well as
Article 2 (limitation of director liability), will have the effect of
reducing the potential legal exposure of directors and officers to personal
liability for monetary damages resulting from their service to the Company.
As a result, directors have a personal interest in the approval of these
provisions. Because of such personal interest, the Board of Directors may
have a conflict of interest in recommending adoption of Articles 2 and 3.
However, the Board believes that, by increasing protection available to
directors and officers, the amendments will enhance the Company's ability
to attract and retain qualified directors and officers. For this reason,
the Board of Directors believes that adoption of the proposed amendment is
in the Company's best interests.
Shareholders should read this proposal in connection with the
proposal in Article 2 of this proxy statement, relating to the proposed
amendment limiting the liability of directors.
Vote Required
Approval of Article 3 will require that more votes be cast "for" than
"against" the proposal. If approved, implementation of the proposal,
including through adoption of a By-law provision, will be effected by vote
of the Board of Directors pursuant to its general authority to amend the
Company's By-laws, without further vote of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 3.
ARTICLE 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of A.M. Peisch &
Company to continue as independent public accountants for the Company for
the fiscal year ending December 31, 2000, subject to ratification of the
appointment by the Company's shareholders. A.M. Peisch & Company were first
appointed as independent public accountants of the Company for the 1985
fiscal year. Unless otherwise indicated, properly executed proxies will be
voted in favor of ratifying the appointment of A.M. Peisch & Company as the
Company's independent certified public accountants for the fiscal year
ending December 31, 2000. No determination has been made as to what action
the Board of Directors will take if the shareholders do not ratify the
appointment.
A representative of A.M. Peisch & Company will be present at the
Annual Meeting. He will be given an opportunity to make a statement if he
so desires and will be available to respond to appropriate questions.
Vote Required
Ratification of the selection of the Company's independent
accountants for the ensuing year will require that more votes be cast "for"
than "against" the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 4.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1999, including consolidated financial statements and the
report of A.M. Peisch & Company thereon, accompanies this proxy statement.
SHAREHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange
Commission, the Company will be permitted to use its discretionary
authority conferred in the proxy card for the annual meeting to vote on a
shareholder proposal or director nominee even if the proposal or nominee
has not been discussed in the Company's proxy statement, unless the
shareholder-proponent has given timely notice to the Company of his or her
intention to present the proposal or nominee for vote at the meeting.
Assuming timely notice has been given, the proxies will only be voted on
the matter pursuant to the grant of discretionary authority if the Company
has described the proposal in the proxy statement and indicated how the
persons named as proxies intend to vote on the matter. In order to be
considered timely for consideration at the 2001 annual meeting, the
shareholder-proponent must furnish written notice to the Company of the
proposal or nominee no later than February 19, 2001.
If a shareholder seeks to have his or her proposal included in the
Company's proxy materials for the 2001 annual meeting, the notification
deadline is earlier than noted in the preceding paragraph. In order to be
included in the proxy material for the 2001 annual meeting, shareholder
proposals must be submitted in writing to the Secretary of the Company not
later than December 6, 2000, and must comply in all respects with
applicable rules and regulations of the Securities and Exchange Commission
relating to such inclusion. Any such proposal will be omitted from or
included in the proxy material at the discretion of the Board of Directors
of the Company, subject to such rules and regulations.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows
of no business that may come before the 2000 Annual Meeting except as set
forth above. If any other matters should properly come before the meeting,
it is expected that proxies will be voted on such matters in accordance
with the recommendations of management.
EXHIBIT A
---------
TEXT OF PROPOSED AMENDMENT TO THE ARTICLES OF ASSOCIATION
THE LIABILITY OF DIRECTORS IN CERTAIN CIRCUMSTANCES
To add a new Article Sixteen, reading in its entirely as follows:
ARTICLE SIXTEEN
---------------
LIMITATION OF DIRECTOR LIABILITY
--------------------------------
A Director of the Corporation shall have no personal liability to the
Corporation or to its shareholders for money damages for any action taken,
or any failure to take any action, solely as a director, based on a failure
to discharge his or her own duties in accordance with Section 8.30 of Title
11A of the Vermont Statutes Annotated, except for (a) the amount of a
financial benefit received by the Director to which the Director is not
entitled; (b) an intentional reckless infliction of harm on the Corporation
or its shareholders; (c) a violation of Section 8.33 of Title 11A of the
Vermont Statutes Annotated; or (d) an intentional or reckless criminal act.
This Article Sixteen shall not be deemed to eliminate or limit the
liability of a Director for any act or omission occurring prior to the date
this Article becomes effective. No amendment or repeal of this Article
Sixteen shall apply to or have any effect on the liability or alleged
liability of any Director of the Corporation for or with respect to any
acts or omissions of such Director occurring prior to such amendment or
repeal.
EXHIBIT B
---------
TEXT OF PROPOSED AMENDMENT TO THE ARTICLES OF ASSOCIATION
TO MODIFY THE PROVISIONS RELATING TO
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Article Eleven of the Company's Articles of Association is proposed
to be amended to read in its entirety as follows:
ARTICLE ELEVEN
--------------
INDEMNIFICATION
---------------
The Board of Directors is authorized to adopt such By-laws and other
regulations or arrangements (including contracts) providing for
indemnification of, and advancement of expenses to, any person who is or
was a director, officer, employee or agent of the Corporation, as the
Directors may deem advisable, to the extent not inconsistent with
applicable law.
EXHIBIT C
---------
TEXT OF ARTICLE ELEVEN OF THE ARTICLES OF ASSOCIATION
AS PRESENTLY IN EFFECT
Article Eleven of the Company's Articles of Association, as presently
in effect, reads in its entirety as follows:
ARTICLE ELEVEN
--------------
INDEMNIFICATION
---------------
Section A. The Corporation shall indemnify any person who was or is a
party or is threatened with being made a party to any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (all such actions, suits, and proceedings
and accompanying modifiers being comprehended by the term "Proceeding")
(excluding actions by, or in the right of, the Corporation), by reason of
the fact that he is or was a director or officer of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee, or agent of another person. Such indemnification may be made only
against those expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person
in connection with such proceeding if (i) he is successful on the merits;
or (ii) he acted in the transaction which is the subject of the proceeding
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Corporation, and, with respect to any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interest of the Corporation, nor, with respect to any criminal
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
Section B. The Corporation shall indemnify any person who was or is a
party or is threatened with being made a party to a proceeding by or in the
right of the Corporation by reason of the fact that he is or was a director
or officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another person.
Such indemnification may be made against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with
the defense of settlement of such proceeding if (i) he is successful on the
merits; or (ii) he acted in the transaction which is the subject of the
proceeding in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the Corporation. However, no
indemnification may be made in respect to any claim, issue, or matter in
relation to which such person shall have been adjudged to be liable for
gross negligence or misconduct in the performance of his duty to the
Corporation. Notwithstanding the foregoing exception, indemnification may
be made to the extent that the Court or administrative body in which such
proceeding was brought shall determine upon application that despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses as the Court or administrative body shall deem proper.
Section C. Any indemnification under Section A or Section B of this
Article (other than one ordered by a court) may be made by the Corporation
only upon a determination that indemnification of such person is proper in
the circumstances because he has met the applicable standard of conduct set
forth in such Section. Such determination shall be made by the Board of
Directors by a majority vote of a quorum consisting of directors who were
not parties to such proceeding; or, if such quorum is not obtainable (or,
even if obtainable, if a quorum of disinterested directors so directs), by
independent legal counsel in a written opinion, or by the shareholders of
the Corporation; or through such procedures as shall be authorized in the
By-laws of the Corporation.
Section D. Expenses incurred in defending a civil or criminal
proceeding may be paid by the Corporation in advance of the final
disposition of such proceeding as authorized by the Board of Directors or
other appropriate body or party in the manner provided in Section C of this
Article Twelve only when the Corporation has received an undertaking by or
on behalf of the person who is to receive such payment to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article Twelve.
Section E. In determining whether the standard of conduct set forth
in Section A or Section B has been met, it may be determined that a person
has met the standard as to some matters but not as to others, and the
amount of indemnification may be accordingly prorated.
Section F. The indemnification provided by Sections A through E shall
not be exclusive of any other rights to which a person may be entitled by
law, bylaw, agreement, vote of shareholders, or otherwise.
Section G. The indemnification provided by Section A through E shall
inure to the heirs, executors and administrators of any person entitled to
indemnification under this Article.
Section H. The Corporation may purchase and maintain insurance on any
person who is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
or agent of another person against any liability incurred by him in any
such position, or power to indemnify him against such liability under
Sections A through E.
EXHIBIT D
---------
SAMPLE DRAFT OF INDEMNIFICATION BY-LAW TO IMPLEMENT
AMENDED ARTICLE ELEVEN
ARTICLE NINE: INDEMNIFICATION
Section 9.01 Definitions. Terms not otherwise defined in this Article
shall have the meaning ascribed in the Vermont Business Corporation Law,
Title 11A of the Vermont Statutes Annotated, as in effect from time to
time.
Section 9.02 Authority to Indemnify.
(a) Except as provided in section 9.02(d) and subject to section
9.06, this Corporation shall indemnify an individual who is made a party to
a proceeding because he is or was a director against liability incurred in
the proceeding if:
(1) he conducted himself in good faith; and
(2) he reasonably believed:
(i) in the case of conduct in his official capacity with the
Corporation, that his conduct was in its best interest;
and
(ii) in all other cases, that his conduct was at least not
opposed to its best interests; and
(3) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for
a purpose he reasonably believed to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement
of section 9.02(a)(2)(ii).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of
conduct described in this section.
(d) The Corporation may not indemnify a director under this section:
(1) in connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the
Corporation; or
(2) in connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him.
(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the Corporation is limited to reasonable
expenses incurred in connection with the proceeding.
Section 9.03 Mandatory Indemnification in Certain Circumstances. This
Corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he was a
party because he is or was a director of the Corporation against reasonable
expenses incurred by him in connection with the proceeding.
Section 9.04 Advance for Expenses.
(a) The Corporation may pay for or reimburse the reasonable expenses
incurred by a director who is or was a party to a proceeding in advance of
final disposition of the proceeding if:
(1) the director furnishes the Corporation a written affirmation of
his good faith belief that he has met the standard of conduct
described in section 9.02;
(2) the director furnishes the Corporation a written undertaking,
executed personally or on his behalf, to repay the advance if
it is ultimately determined that he did not meet the standard
of conduct; and
(3) a determination is made that the facts then known to those
making the determination would not preclude indemnification
under this Article Nine.
(b) The undertaking required by section 9.04(a)(2) must be an
unlimited general obligation of the director but need not be secured and
may be accepted without reference to financial ability to make repayment.
Section 9.05 Court Ordered Indemnification. A director of this
Corporation who is a party to a proceeding may apply for indemnification to
the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any
notice the court considers necessary may order indemnification if it
determines:
(1) the director is entitled to mandatory indemnification under
section 9.03, in which case the court shall also order the
Corporation to pay the director's reasonable expenses incurred
to obtain court-ordered indemnification; or
(2) the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not he met the standard of conduct set forth in
section 9.02 or was adjudged liable as described in section
9.02(d), but if he was adjudged so liable his indemnification
is limited to reasonable expenses incurred.
Section 9.06 Determination and Authorization of Indemnification.
(a) The Corporation may not indemnify a director under section 9.02
unless authorized in the specific case after a determination has been made
that indemnification of the director is permissible in the circumstances
because he has met the standard of conduct set forth in Section 9.02.
(b) The determination referred to in section 9.06(a) shall be made:
(1) by the Board of Directors by majority vote of a quorum
consisting of directors not at the time parties to the
proceeding;
(2) if a quorum cannot be obtained under subdivision (1), by
majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may
participate), consisting solely of two or more directors not at
the time parties to the proceeding;
(3) by special legal counsel:
(i) selected by the Board of Directors or its committee in the
manner prescribed in subdivision (1) or (2); or
(ii) if a quorum of the Board of Directors cannot be obtained
under subdivision (1) and a committee cannot be designated
under subdivision (2), selected by majority vote of the
full Board of Directors (in which selection directors who
are parties may participate); or
(4) by the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the
proceeding may not be voted on the determination;
Notwithstanding the foregoing, if a "change in control" (as defined
in the federal Bank Holding Company Act of 1956, as amended) of the
Corporation shall have occurred within the preceding two years, the
determination shall be made by special legal counsel, unless otherwise
expressly agreed by the person claiming indemnification.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be
made by those entitled under section 9.06(b)(3) to select counsel.
If it is determined under this Section 9.06 that the claimant is
entitled to indemnification, payment to the claimant shall be made within
15 days after such determination or demand.
Section 9.07 Indemnification of Officers, Employees and Agents.
(a) An individual who is made a party to a proceeding because he is
or was an officer of the Corporation is entitled to mandatory
indemnification under section 9.03 and is entitled to apply for court-
ordered indemnification under section 9.05, in each case to the same extent
as a director.
(b)The Corporation shall indemnify and advance expenses under section
9.02 and 9.04 to an individual who is made a party to a proceeding because
he is or was an officer of the Corporation, subject to the same conditions
and limitations and to the same extent that these By-laws provide for
indemnification and advancement of expenses to a director.
(c) In the discretion of the Board of Directors, the Corporation may
indemnify and advance expenses under Sections 9.02 and 9.04 to an
individual who is made a party to a proceeding because he is or was an
employee or agent of the Corporation, subject to the same conditions and
limitations and to the same extent that these By-laws provide for
indemnification and advancement of expenses to a director.
Section 9.08 Insurance. The Corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer,
employee, or agent of the Corporation or who, while a director, officer,
employee, or agent of the Corporation, is or was serving at the request of
the Corporation as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, against
liability asserted against or incurred by him in that capacity or arising
from his status as a director, officer, employee, or agent, whether or not
the Corporation would have power to indemnify him against the same
liability under section 9.02 or 9.03.
Section 9.09 Contract Right. The right of indemnification conferred
upon directors and officers in this By-law shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred
in defending any proceeding in advance of its final disposition. The right
to indemnification under this Section 9.09 shall be deemed to vest upon the
occurrence of the event giving rise to the claim for indemnification and no
subsequent modification or repeal of this Article Nine or other action on
the part of the Corporation or otherwise shall operate to limit or impair
such right. Nothing in this Section 9.09 shall be deemed to create any
vested contract right to indemnification or advance of expenses in favor of
any person for whom indemnification or advancement of expenses is merely
permissive and not required under applicable law or this Article Nine.
Section 9.10 Enforcement of Rights. In any action brought by a
claimant to enforce the right to indemnification under this Article Nine,
it shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the requirements of Section 9.04
have been met), that the claimant has not met the standard of conduct which
makes it permissible under the Vermont Business Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation.
Section 9.11 Non-Exclusive Rights; Survival. The right to
indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this Article
Nine shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, other provision of the Articles of
Association or By-laws, contract, vote of stockholders or Directors or
otherwise. No repeal or modification of this Article Nine shall in any way
diminish or adversely affect the rights of any director, officer, employee
or agent of the Corporation hereunder in respect of any occurrence or
matter arising prior to any such repeal or modification.
Section 9.12 Severability. If any provision or provisions of this
Article Nine shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (i) the validity, legality and enforceability of the
remaining provisions of this Article Nine (including, without limitation,
each portion of any section of this Article Nine containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
held to be invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (ii) to the fullest extent possible, the
provisions of this Article Nine shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or
unenforceable.
Section 9.13 Application of this Article.
(a) These provisions do not limit the Corporation's power to pay or
reimburse expenses incurred by a director, officer or other person in
connection with his appearance as a witness in a proceeding at a time when
such individual has not been made a named defendant or respondent to the
proceeding.
(b) It is the intent of this Article Nine that the Corporation (i)
shall indemnify and advance expenses to directors and officers of the
Corporation and (ii) shall have the right to indemnify and advance expenses
to any employee or agent, in each case, to the fullest extent permitted by
applicable law. In the event that, after this Article Nine becomes
effective, any such applicable law is amended to permit expanded powers to
indemnify or advance expenses, the Corporation shall be deemed to have and
may exercise all such expanded powers, notwithstanding any contrary
provision of these By-laws.
(c) It is the intent of this Article Nine that it shall apply to acts
and omissions that occurred prior to its adoption, even though suit is not
filed or a claim is otherwise asserted until after such adoption.
PROXY
COMMUNITY BANCORP.
Proxy for Annual Meeting of Shareholders
May 2, 2000
The undersigned hereby appoints Robert Darby, Leonard Lippens and Roger
Whitcomb, or any one or more of them, attorney with full power of
substitution in each, to vote all of the common stock of Community Bancorp.
that the undersigned is (are) entitled to vote at the Annual Meeting of
Shareholders to be held at the Elks Club, Derby, Vermont, on Tuesday, May
2, 2000 at 5:30 p.m. and at any adjournment thereof.
1. ELECTION OF THREE DIRECTORS (Class expiring in 2003)
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed below
To serve until the Annual Meeting in 2003: ELWOOD DUCKLESS, ROSEMARY M.
LALIME and ANNE T. MOORE.
(INSTRUCTION: To withhold authority to vote for any individual nominee
while voting in favor of the others, strike a line through the nominee's
name in the list above.)
2. TO AMEND THE COMPANY'S ARTICLES OF ASSOCIATION BY ADDING A NEW
ARTICLE SIXTEEN LIMITING THE LIABILITY OF DIRECTORS IN CERTAIN
CIRCUMSTANCES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO AMEND ARTICLE ELEVEN OF THE COMPANY'S ARTICLES OF ASSOCIATION TO
MODIFY THE PROVISIONS RELATING TO INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO RATIFY THE SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTING FIRM OF
A.M. PEISCH & COMPANY AS THE COMPANY'S EXTERNAL AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, to act upon such other business as may properly come
before the meeting or any adjournment thereof. If any such business is
presented, it is the intention of the proxies to vote the shares
represented hereby in accordance with the recommendations of management.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholders. If no direction is made, this Proxy
will be voted FOR Items 1, 2, 3 and 4.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
Dated: , 2000
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Signature(s) of Shareholder(s)
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Signature(s) of Shareholder(s)
Please sign exactly as name is
printed on this proxy. When signing
as attorney, executor, administrator,
trustee, guardian, or in any other
representative capacity, please so
indicate. All joint owners should sign.
NOT A PROXY
COMMUNITY BANCORP.
ANNUAL MEETING OF SHAREHOLDERS
May 2, 2000
DINNER RESERVATION
Immediately following the Annual Meeting to be held at the Elks Club
in Derby, Vermont, on Tuesday, May 2, 2000, at 5:30 p.m., a dinner will be
served for all registered shareholders. Please indicate below whether you
plan to attend the dinner.
I/We will will not attend the dinner If stock is held jointly,
indicate the number attending the dinner One Two
If you are voting by proxy, please complete and return this card,
along with your fully-executed proxy card, in the enclosed postage paid
envelope. You should also complete and return this dinner reservation card
in the enclosed postage paid envelope even if you plan to vote your shares
in person rather than by proxy.
Dated: , 2000
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Signature
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Signature