SCHEDULE 14A
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 |_|
Check the appropriate box:
|_| Preliminary proxy statement
|_| Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant ss. 240.14a-12
New England Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- --------------------------------------------------------------------------------
|_| 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:
N/A
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
- --------------------------------------------------------------------------------
(3) Filing Party:
N/A
- --------------------------------------------------------------------------------
(4) Date Filed:
N/A
- --------------------------------------------------------------------------------
[LETTERHEAD OF NEW ENGLAND BANCSHARES, INC.]
December 2, 2002
Dear Shareholder:
You are cordially invited to attend the special meeting of shareholders of
New England Bancshares, Inc. The meeting will be held at the Radisson Hotel, One
Bright Meadow Boulevard, Enfield, Connecticut on Thursday, January 16, 2003 at
2:00 p.m., local time.
The notice of special meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card promptly. If you attend the meeting, you may vote
in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ David J. O'Connor
-------------------------------------
David J. O'Connor
President and Chief Executive Officer
New England Bancshares, Inc.
660 Enfield Street
Enfield, Connecticut 06082
(860) 253-5200
- --------------------------------------------------------------------------------
Notice of Special Meeting of Shareholders
- --------------------------------------------------------------------------------
On Thursday, January 16, 2003, New England Bancshares, Inc. (the "Company")
will hold a special meeting of its shareholders at the Radisson Hotel, One
Bright Meadow Boulevard, Enfield, Connecticut. The meeting will begin at 2:00
p.m., local time. At the meeting, the shareholders will consider and act on the
following:
1. The approval of the New England Bancshares, Inc. 2003 Stock-Based
Incentive Plan;
2. The transaction of any other business that may properly come before
the meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Only shareholders of record at the close of business on November 19, 2002
are entitled to receive notice of and to vote at the meeting and any adjournment
or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Cynthia G. Gray
--------------------------
Cynthia G. Gray
Corporate Secretary
Enfield, Connecticut
December 2, 2002
IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies to ensure a quorum. A self-addressed envelope is
enclosed for your convenience. No postage is required if mailed in the United
States.
New England Bancshares, Inc.
__________________________________
Proxy Statement
__________________________________
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of New England Bancshares, Inc. ("New England
Bancshares" or the "Company") to be used at the special meeting of shareholders
of the Company. The Company is the holding company for Enfield Federal Savings
and Loan Association ("Enfield Federal" or the "Association"). The special
meeting will be held at the Radisson Hotel, One Bright Meadow Boulevard,
Enfield, Connecticut on Thursday, January 16, 2003 at 2:00 p.m., local time.
This proxy statement and the enclosed proxy card are being first mailed to
shareholders on or about December 2, 2002.
Voting and Proxy Procedure
Who Can Vote at the Meeting
You are entitled to vote your Company common stock if the records of the
Company show that you held your shares as of the close of business on November
19, 2002. If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in "street
name" and these proxy materials are being forwarded to you by your broker or
nominee. As the beneficial owner, you have the right to direct your broker on
how to vote. Your broker or nominee has enclosed a voting instruction card for
you to use in directing it on how to vote your shares.
As of the close of business on November 19, 2002, 2,049,875 shares of
Company common stock were outstanding, including 1,127,431 shares of common
stock issued to and held by Enfield Mutual Holding Company, the mutual holding
company parent of the Company and the Association. Each share of common stock
has one vote. As provided in the Company's Charter, a record owner of the
Company's common stock (other than Enfield Mutual Holding Company) which is
beneficially owned, either directly or indirectly, by a person who beneficially
owns in excess of 10% of the Company's outstanding shares, is not entitled to
any vote in respect of the shares held in excess of the 10% limit.
Attending the Meeting
If you are a shareholder of record as of the close of business on November
19, 2002, you may attend the meeting. However, if you hold your shares in street
name, you will need proof of ownership to be admitted to the meeting. A recent
brokerage statement or letter from a bank or broker are examples of proof of
ownership. If you want to vote your shares of Company common stock held in
street name in person at the meeting, you will have to get a written proxy in
your name from the broker, bank or other nominee who holds your shares.
Vote Required
A majority of the outstanding shares of common stock entitled to vote is
required to be represented at the meeting to constitute a quorum for the
transaction of business. If you return valid proxy instructions or attend the
meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner.
In voting on the New England Bancshares, Inc. 2003 Stock-Based Incentive
Plan (the "Incentive Plan"), you may vote in favor of the proposal, vote against
the proposal or abstain from voting. The approval of the Incentive Plan requires
the affirmative vote of a majority of the total shares outstanding and the
affirmative vote of the majority of total votes outstanding, excluding those
shares beneficially owned by Enfield Mutual Holding Company. Broker non-votes
and abstentions will have the effect of a vote against the proposal.
Enfield Mutual Holding Company owns 55.0% of the shares of common stock
entitled to vote at the special meeting. Enfield Mutual Holding Company has
indicated to the Company that it intends to vote such shares of common stock
"FOR" the proposal being presented thereby ensuring a quorum at the meeting and
the affirmative vote of a majority of the total shares outstanding.
Voting by Proxy
The Company's Board of Directors is sending you this proxy statement to
request that you allow your shares of Company common stock to be represented at
the special meeting by the persons named in the enclosed proxy card. All shares
of Company common stock represented at the meeting by properly executed and
dated proxies will be voted according to the instructions indicated on the proxy
card. If you sign, date and return a proxy card without giving voting
instructions, your shares will be voted as recommended by the Company's Board of
Directors. The Board of Directors recommends a vote "FOR" approval of the
Incentive Plan.
If any matters not described in this proxy statement are properly presented
at the special meeting, the persons named in the proxy card will use their
judgment to determine how to vote your shares. This includes a motion to adjourn
or postpone the meeting to solicit additional proxies. If the special meeting is
postponed or adjourned, your Company common stock may be voted by the persons
named in the proxy card on the new meeting date as well, unless you have revoked
your proxy. The Company does not know of any other matters to be presented at
the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the special
meeting, deliver a later dated proxy or attend the meeting and vote your shares
in person. Attendance at the special meeting will not in itself constitute
revocation of your proxy.
If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow to
have your shares voted. Your broker or bank may
2
allow you to deliver your voting instructions via the telephone or the Internet.
Please see the instruction form that is provided by your broker, bank or other
nominee and which accompanies this proxy statement.
Participants in Enfield Federal's ESOP and 401(k) Plan
If you participate in the Enfield Federal Savings and Loan Association
Employee Stock Ownership Plan or if you hold shares of Company common stock
through the Enfield Federal Savings and Loan Association Employees' Savings &
Profit Sharing Plan (the "401(k) Plan"), you will receive a voting authorization
form which will reflect all shares that you may direct the plan trustees to vote
on your behalf. Under the terms of the ESOP, all shares held by the ESOP are
voted by the ESOP trustee, but each ESOP participant may direct the trustee how
to vote the shares of Company common stock allocated to his or her account. As
of November 19, 2002, no shares had been allocated under the ESOP. However, for
voting purposes only, each ESOP participant will be deemed to have been
allocated one share of Company common stock. Unallocated shares of Company
common stock held by the ESOP and allocated shares for which no timely voting
instructions are received will be voted by the ESOP trustee in the same
proportion as shares for which the trustee has received voting instructions,
subject to the exercise of its fiduciary duties.
Under the terms of the 401(k) Plan, you are entitled to direct the plan
trustee how to vote the shares of Company common stock credited to your account
under the 401(k) Plan. The trustee will vote shares of Company common stock for
which it does not receive timely instructions from participants in the same
proportion as the instructions the trustee receives from participants.
The deadline for returning your voting instructions to each plan's trustee
is January 6, 2003.
Stock Ownership
The following table provides information as of November 19, 2002, with
respect to persons known by the Company to be the beneficial owners of more than
5% of the Company's outstanding common stock. A person may be considered to own
any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investing power.
Number of Shares Percent of Common
Name and Address Owned Stock Outstanding
- -------------------- ------------------- ---------------------
Enfield Mutual Holding Company 1,127,431(1) 55.0%
660 Enfield Street
Enfield, Connecticut 06082
- -------------------
(1) Shares of common stock were acquired by Enfield Mutual Holding Company in
the Association's mutual holding company reorganization, which was
completed on June 4, 2002. The members of the Board of Directors of the
Company and the Association also constitute the Board of Directors of the
Mutual Holding Company.
3
The following table provides information about the shares of Company common
stock that may be considered to be owned by each director of the Company, by the
executive officer named in the Summary Compensation Table and by all directors
and executive officers of the Company as a group as of November 19, 2002. A
person may be considered to own any shares of common stock over which he or she
has, directly or indirectly, sole or shared voting or investment power. Unless
otherwise indicated, each of the named individuals has sole voting and
investment power with respect to the shares shown.
Number of Percent of
Shares Common Stock
Name Owned Outstanding (1)
- ------- ------------ -----------------
Edward C. Allen................................................ 3,000 *
Lucien P. Bolduc............................................... 100 *
Peter T. Dow................................................... 2,500(2) *
Myron J. Marek................................................. 2,265 *
Dorothy K. McCarty............................................. 1,500 *
David J. O'Connor.............................................. 3,592 *
Richard K. Stevens............................................. 5,100 *
Richard M. Tatoian............................................. 1,000 *
All Executive Officers and Directors as a Group (9 persons).... 21,668 1.1%
* Less than 1% of shares outstanding
(1) Based on 2,049,875 shares of Company common stock outstanding and entitled
to vote as of November 19, 2002.
(2) Represents shares held in a trust in which Mr. Dow shares voting and
investment power.
Directors' Compensation
Fees. Each non-employee director of the Association receives $400 for each
board meeting and each Audit, ALCO or Planning Committee meeting they attend.
Additionally, each non-employee director of the Association receives $225 for
each Executive Committee meeting they attend. Chairmen of the respective
committees each receive an additional $50 for each committee meeting they
attend. Additionally, non- employee directors of New England Bancshares receive
an annual retainer of $4,000.
Directors' Retirement Plan. Enfield Federal maintains the Enfield Federal
Savings and Loan Association Director Fee Continuation Plan to provide eligible
non-employee directors with a retirement income supplement. Under the plan,
eligible non-employee directors are entitled to an annual benefit, as of their
Retirement Date, of $1,000 for each full year of service as a director from June
1, 1995, plus $250 for each full year of service as a director prior to June 1,
1995, with a maximum benefit of $6,000 per year payable in ten annual
installments. For purposes of the plan, "Retirement Date" is defined as the June
1st following a director's 70th birthday. Upon an eligible retired director's
death, but before the ten payments have been made, Enfield Federal is obligated
to pay the director's beneficiary, at its option, a discounted lump sum payment
equal to the remaining payments or the remaining installment payments. If an
active eligible non-employee director dies before his or her Retirement Date,
Enfield Federal is obligated to pay the director's designated beneficiary a
benefit equal to the discounted value of the ten annual installments the
director would have been entitled to had he or she lived to his or her
Retirement Date. At Enfield Federal's discretion, the benefit is payable in a
lump sum or in ten annual installments. Enfield Federal has acquired life
insurance policies for each of the eligible non-employee directors as an
informal source of funding for its obligations under the plan.
4
Incentive Plan. The Company is presenting the Incentive Plan to
shareholders for approval, under which all directors of the Company and the
Association are eligible to receive awards. To date, no awards under the
Incentive Plan have been made to any director. See Proposal 1 for a summary of
the material terms of the Incentive Plan.
Executive Compensation
Summary Compensation Table. The following information is furnished for the
President and Chief Executive Officer. No other executive officer of Enfield
Federal received a salary and bonus of $100,000 or more during the year ended
March 31, 2002.
Annual Compensation (1)
-------------------------------------- All Other
Name and Position Year Salary Bonus Compensation
- ------------------ -------- --------- -------- --------------
David J. O'Connor............................ 2002 $158,340 $21,800 $7,325(2)
President and Chief Executive Officer 2001 150,800 15,000 6,893
2000 140,245 14,000 4,777
- -------------------
(1) Does not include the aggregate amount of perquisites and other benefits,
which was less than $50,000 or 10% of the total annual salary and bonus
reported.
(2) Includes $1,695 in insurance premiums paid by Enfield Federal under an
endorsement method split-dollar life insurance arrangement, $989 related to
an additional life insurance policy for Mr. O'Connor and $4,641 in employer
matching contributions made under the 401(k) Plan.
Employment Agreement. Enfield Federal and New England Bancshares maintain
an employment agreement with Mr. O'Connor. The employment agreement is intended
to ensure that New England Bancshares and Enfield Federal will be able to
maintain a stable and competent management base. The continued success of New
England Bancshares and Enfield Federal depends to a significant degree on the
skills and competence of Mr. O'Connor.
The employment agreement provides for a three-year term. The term of the
employment agreement will be extended annually unless written notice of
non-renewal is given by the board of directors of Enfield Federal. The
employment agreement provides that the executive's base salary will be reviewed
annually. Mr. O'Connor's current base salary is $166,340. In addition to the
base salary, Mr. O'Connor's employment agreement provides for, among other
things, participation in stock benefits plans and other fringe benefits
applicable to executive personnel. The employment agreement provides for
termination by Enfield Federal for cause, as defined in the employment
agreement, at any time. If Enfield Federal chooses to terminate the executive's
employment for reasons other than for cause, or if the executive resigns from
Enfield Federal after specified circumstances that would constitute constructive
termination, the executive or, if he dies, his beneficiary, would be entitled to
receive an amount equal to the remaining base salary payments due to him for the
remaining term of the employment agreement and the contributions that would have
been made on his behalf to any employee benefit plans of New England Bancshares
and Enfield Federal during the remaining term of the employment agreement.
Enfield Federal would also continue and/or pay for Mr. O'Connor's life, health,
dental and disability coverage for the remaining term of the employment
agreement. Upon termination of the executive for reasons other than a change in
control, he must adhere to a one-year non-competition agreement.
5
Under the employment agreement, if voluntary (upon circumstances discussed
in the agreement) or involuntary termination follows a change in control of New
England Bancshares or Enfield Federal, Mr. O'Connor, or, if he dies, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(1) the payments due for the remaining terms of the agreement; or (2) three
times the average of the five preceding taxable years' annual compensation.
Enfield Federal would also continue Mr. O'Connor's life, health, dental and
disability coverage for 36 months. Section 280G of the Internal Revenue Code
provides that severance payments that equal or exceed three times the
individual's base amount are deemed to be "excess parachute payments" if they
are contingent upon a change in control. Individuals receiving excess parachute
payments are subject to a 20% excise tax on the amount of the payment in excess
of the base amount, and the employer would not be entitled to deduct such
amount.
All reasonable costs and legal fees paid or incurred by Mr. O'Connor in any
dispute or question of interpretation relating to the employment agreement will
be paid by Enfield Federal, if Mr. O'Connor is successful on the merits in a
legal judgment, arbitration or settlement. The employment agreement also
provides that Enfield Federal and New England Bancshares will indemnify Mr.
O'Connor to the fullest extent legally allowable.
Supplemental Executive Retirement Plans. Enfield Federal maintains the
Executive Supplemental Retirement Plan to provide Mr. O'Connor with an annual
retirement benefit of $172,796 payable in equal monthly installments over a
period of 180 months upon his attainment of age 65. Following the initial 180-
month period, additional amounts may be payable to Mr. O'Connor until his death
based on the performance of certain life insurance policies that Enfield Federal
has acquired as an informal funding source for its obligation to Mr. O'Connor.
If Mr. O'Connor voluntarily or involuntarily terminates his employment with
Enfield Federal, Mr. O'Connor will be entitled to receive at age 65 the balance
of his accrued benefit under the plan payable over 180 months and the additional
supplemental benefit he would have been entitled to had he remained in the
employ of Enfield Federal until his retirement. If Mr. O'Connor dies prior to
the commencement or completion of benefit payments under the plan, his
beneficiary will be entitled to the remaining installments or a lump sum of the
present value of his remaining installment payments, at the discretion of
Enfield Federal. If a change in control occurs (as defined in the plan),
followed by Mr. O'Connor's voluntary or involuntary termination of employment
with Enfield Federal, Mr. O'Connor will be entitled to receive at age 65 a
benefit equal to the benefits he would have received had he continued in the
employ of Enfield Federal until age 65.
Enfield Federal has established a rabbi trust to hold the insurance
policies purchased to satisfy the obligations of Enfield Federal with respect to
the Executive Supplemental Retirement Plan. Until the plan benefits are paid to
Mr. O'Connor, creditors may make claims against the trust's assets if Enfield
Federal becomes insolvent. As of March 31, 2002, Enfield Federal had accrued
$160,224 for its liabilities under the plan.
In addition to the Executive Supplemental Retirement Plan, Enfield Federal
maintains the Enfield Federal Savings and Loan Association Supplemental
Executive Retirement Plan. This plan provides restorative payments to executives
designated by the board of directors who are prevented from receiving the full
benefits contemplated by the ESOP's benefit formula and the full matching
contribution under the 401(k) Plan due to the legal limitations imposed on
tax-qualified plans. The board of directors of Enfield Federal has designated
Mr. O'Connor to participate in the plan. In addition to providing for benefits
lost under the ESOP and 401(k) Plan, the supplemental executive retirement plan
also provides supplemental benefits to participants upon a change in control (as
defined in the plan) before the complete scheduled repayment of the ESOP loan.
Generally, upon such an event, the supplemental executive retirement plan will
6
provide the participant with a benefit equal to what the participant would have
received under the ESOP had he remained employed throughout the term of the ESOP
loan, less the benefits actually provided.
Split-Dollar Life Insurance. In August 1999, Enfield Federal established a
split-dollar life insurance arrangement to provide Mr. O'Connor with a death
benefit. Under the terms of the arrangement, title and ownership of the life
insurance policy resides with Enfield Federal and Enfield Federal pays all of
the insurance premiums. Upon Mr. O'Connor's death, his beneficiaries will be
entitled to 25% of the total proceeds, less the cash value of the policy.
Enfield Federal will be entitled to the remaining life insurance proceeds.
Enfield Federal will be entitled at all times to the cash surrender value of the
life insurance policy.
Proposal 1
Approval of the New England Bancshares, Inc.
2003 Stock-Based Incentive Plan
The Board of Directors of the Company is presenting the New England
Bancshares, Inc. 2003 Stock-Based Incentive Plan for shareholder approval. The
purpose of the plan is to attract and retain qualified personnel, to provide
officers, employees and directors of the Company and the Association with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company, promote the attention of management to shareholders' concerns
and reward employees for outstanding performance. The following is a summary of
the material terms of the plan which is qualified in its entirety by the
complete text of the plan, which is attached hereto as Appendix A.
General
The plan authorizes the granting of options to purchase common stock of the
Company and awards of restricted shares of Company common stock (collectively,
options and restricted stock awards are referred to as "awards"). Subject to
certain adjustments to prevent dilution of awards to participants, the number of
shares of common stock reserved for awards under the plan is 200,000 shares,
consisting of 142,857 shares reserved for options and 57,143 shares reserved for
restricted stock awards. All employees and non-employee directors of the Company
and its affiliates are eligible to receive awards under the plan. The plan will
be administered by a committee consisting of the entire board of directors of
the Company (the "Committee"). In accordance with the terms of the plan,
authorized but unissued shares or shares previously issued and reacquired by the
Company may be used to satisfy awards under the plan. If authorized but unissued
shares are used to satisfy awards under the plan, it will result in an increase
in the number of shares outstanding and will have a dilutive effect on the
holdings of existing shareholders. The Company may establish a trust under which
the trustee will purchase, with contributions from the Company or the
Association, shares of Company common stock in the open market to fund the
Company's obligation for restricted stock awards. As of the date of this proxy
statement, no awards have been granted under the plan.
Types of Awards
General. The plan authorizes grants of: (1) options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code (options
which provide certain tax benefits to the recipients upon compliance with
applicable requirements, but which do not result in tax deductions to the
Company); (2) options that do not so qualify, referred to as non-statutory stock
options (options which do not provide the same income tax benefits to
recipients, but which may provide tax deductions to the Company); and
7
(3) restricted shares of Company common stock. Each type of award may be subject
to certain vesting or service requirements imposed by the Committee.
Options. Subject to the terms of the plan, the Committee has the authority
to determine the amount of options granted to any individual and the date or
dates on which each option will become exercisable. The exercise price of all
options will be determined by the Committee but will be at least 100% of the
fair market value of the underlying Company common stock at the time of grant.
The exercise price of any option may be paid in cash, Company common stock, or
any other form permitted by the Committee at its discretion. The term of options
will be determined by the Committee, but in no event will an option be
exercisable more than ten years from the date of grant (or five years from date
of grant for a 10% owner with respect to incentive stock options).
All options granted under the plan to employees may, at the discretion of
the Committee, qualify as incentive stock options to the extent permitted under
Section 422 of the Internal Revenue Code. Under certain circumstances, incentive
stock options may be converted into non-statutory stock options. To qualify as
incentive stock options under Section 422 of the Internal Revenue Code: (1) the
option must be granted to an employee; (2) the option must not be transferable
(other than by will or the laws of descent and distribution); (3) the exercise
price must not be less than 100% of the fair market value of the common stock on
the date of grant; (4) the term of the option may not exceed ten years from the
date of grant; and (5) no more than $100,000 of options may become exercisable
for the first time in any calendar year by any recipient. Notwithstanding the
foregoing requirements, incentive stock options granted to any person who is the
beneficial owner of more than 10% of the outstanding voting stock of the Company
may be exercised only for a period of five years from the date of grant and the
exercise price must not be less than 110% of the fair market value of the common
stock on the date of grant.
Unless the Committee determines otherwise, upon termination of an option
holder's services for any reason other than death, disability, retirement,
change in control or termination for cause, all then exercisable options will
remain exercisable for three months following the date of termination, or if
sooner, the expiration of the term of the option. If an option holder dies or
becomes disabled, all unexercisable options will become exercisable and remain
exercisable for one year, or if sooner, the expiration of the term of the
option. Generally upon retirement, only those options that were immediately
exercisable may be exercised and only for one year following the date of
termination, or if sooner, the expiration of the term of the option. However,
upon an individual's retirement, the Committee may permit all unvested stock
options to continue to vest provided the option holder remains employed by the
Company or the Association as a consultant or advisor or continues to serve the
Company or the Association as a director, advisory director or director
emeritus. If a change in control occurs, all option awards become vested and
remain exercisable for the term of the option. In the event of termination for
cause, all exercisable and unexercisable options held by the option holder will
be canceled.
Currently under generally accepted accounting principles, compensation
expense is generally not required to be recognized with respect to the award of
stock options.
Restricted Stock Awards. Subject to the terms of the plan, the Committee
has the authority to determine the amounts of restricted stock awards granted to
any individual and the dates on which restricted stock awards granted will vest.
Stock award recipients may receive amounts equal to accumulated cash and
stock dividends or other distributions (if any) with respect to shares awarded
in the form of restricted stock. In addition, recipients
8
of restricted stock awards may direct the voting of all shares (vested and
unvested) of Company common stock granted to them.
Unless the Committee determines otherwise, upon termination of the services
of a holder of a stock award for any reason other than death, disability, change
in control or retirement, all the holder's rights in unvested restricted stock
awards will be canceled. If the holder of the stock award dies or becomes
disabled, all unvested restricted stock awards held by such individual will
become fully vested. Generally, if the holder of a stock award retires, all
unvested restricted stock awards held by such individual will be canceled.
However, upon an individual's retirement, the Committee may permit all unvested
stock awards to continue to vest provided the holder of a stock award remains
employed by the Company or the Association as a consultant or advisor or
continues to serve the Company or the Association as a director, advisory
director or director emeritus. If a change in control occurs, all unvested stock
awards immediately vest. In the event of termination for cause, all unvested
stock awards held by such individual will be canceled.
Federal Income Tax Treatment
Options. An option holder will generally not recognize taxable income upon
the grant or exercise of any incentive stock option, provided that shares
transferred in connection with the exercise are not disposed of by the optionee
for at least one year after the option was exercised and two years after the
option was granted. If these holding periods are satisfied, upon disposal of the
shares, the amount by which the fair market value of the common stock exceeds
the exercise price of the option is recognized as income taxable at capital
gains rates. No compensation deduction may be taken by the Company as a result
of the grant or exercise of incentive stock options, assuming these holding
periods are met.
In the case of the exercise of a non-statutory stock option, an option
holder will recognize ordinary income equal to the aggregate amount by which the
fair market value of the common stock exceeds the exercise price of the option.
If shares received through the exercise of an incentive stock option are
disposed of before the satisfaction of the holding periods described above (a
"disqualifying disposition"), the option holder will recognize ordinary income
equal to the aggregate amount by which the fair market value of the common stock
exceeds the exercise price of the option for the year in which the disqualifying
disposition occurs. The amount of any ordinary income recognized by an optionee
upon the exercise of a non-statutory stock option or due to a disqualifying
disposition will be a deductible expense of the Company for federal income tax
purposes.
Restricted Stock Awards. A participant who has been awarded restricted
stock under the plan and does not make an election under Section 83(b) of the
Internal Revenue Code will not recognize taxable income at the time of the
award. At the time any transfer or forfeiture restrictions applicable to the
restricted stock award lapse, the recipient will recognize ordinary income and
the Company will be entitled to a corresponding deduction equal to the fair
market value of the stock at such time. Any dividend paid to the recipient on
the restricted stock at or prior to such time will be ordinary compensation
income to the recipient and deductible by the Company.
A recipient of a restricted stock award who makes an election under Section
83(b) of the Internal Revenue Code will recognize ordinary income at the time of
the award and the Company will be entitled to a corresponding deduction equal to
the fair market value of the Company common stock at such time. Any dividends
subsequently paid to the recipient on the restricted stock will be dividend
income to the recipient and not deductible by the Company. If the recipient
makes a Section 83(b) election, there are no federal
9
income tax consequences either to the recipient or the Company at the time any
transfer or forfeiture restrictions applicable to the restricted stock award
lapse.
Amendments
Subject to certain restrictions contained in the plan, the Board of
Directors may amend the plan in any respect, at any time, provided that no
amendment may affect the rights of the holder of an award without his or her
written consent and such amendment must comply with applicable law and
regulation.
Adjustments
If there is any change in the outstanding shares of common stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or if an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted awards, to prevent dilution, diminution or enlargement of the rights of
the holder. All awards under the plan will be binding upon any successors or
assigns of the Company.
Nontransferability
Unless the Committee determines otherwise, awards under the plan will not
be transferable by the recipient other than by will or the laws of intestate
succession or pursuant to a domestic relations order. With the consent of the
Committee, a recipient may permit transferability or assignment for valid estate
planning purposes of a non-statutory stock option as permitted under the
Internal Revenue Code and federal securities laws and a participant may
designate a person or his or her estate as beneficiary of any award to which the
recipient would then be entitled, if the participant dies.
Shareholder Approval and Effective Date of Plan
The plan will become effective: (i) immediately upon the affirmative vote
of a majority of the total shares outstanding and the affirmative vote of a
majority of the total shares outstanding, excluding those shares beneficially
owned by Enfield Mutual Holding Company; or (ii) on June 5, 2003 if the
requisite shareholder approval is not obtained.
New Plan Benefits
The Company anticipates that, following the effective date of the plan,
awards will be made to eligible directors, officers and employees at levels
consistent with peer institutions and prevailing industry practices. However, as
of the date of this proxy statement, no decisions have been made regarding the
granting of any options or stock awards under the plan.
The Board of Directors recommends that you vote "FOR" approval of the New
England Bancshares, Inc. 2003 Stock-Based Incentive Plan.
10
Miscellaneous
The Company will pay the cost of this proxy solicitation. In addition to
the solicitation of proxies by mail, Georgeson Shareholder Communications, Inc.,
a proxy solicitation firm, will assist the Company in soliciting proxies for the
special meeting. The Company will pay a fee of $5,000, plus out-of-pocket
expenses for these services. Proxies may also be solicited personally or by
telephone by directors, officers and other employees of the Company and the
Association without any additional compensation. The Company will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send proxy materials
to, and obtain proxies from, the beneficial owners, and will reimburse those
record holders for their reasonable expenses in doing so.
Shareholder Proposals and Nominations
To be considered for inclusion in New England Bancshares' proxy statement
and form of proxy relating to the 2003 Annual Meeting of Shareholders, a
shareholder proposal must be received by the Corporate Secretary of the Company
at the address set forth on the Notice of Special Meeting of Shareholders a
reasonable time before the Company begins to print and mail its proxy
solicitation materials. Any shareholder proposal will be subject to the
requirements of the proxy rules adopted by the United States Securities and
Exchange Commission.
The Bylaws of the Company, a copy of which may be obtained from the
Company, set forth the procedures by which a shareholder may properly bring
business before a meeting of shareholders, including director nominations. The
Bylaws of the Company provide that any shareholder may bring business before an
annual meeting provided the shareholder files a notice with the Secretary at
least five (5) days before the annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Cynthia G. Gray
-------------------------------
Cynthia G. Gray
Corporate Secretary
Enfield, Connecticut
December 2, 2002
11
APPENDIX A
NEW ENGLAND BANCSHARES, INC.
2003 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
------------
(a) "Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Holding Company, as such terms are defined in Sections 424(e)
and 424(f) of the Code.
(b) "Association" means Enfield Federal Savings and Loan Association, a
federally-chartered savings and loan association.
(c) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.
(d) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" of the Association or the Holding Company shall be
deemed to occur on the earliest of: (i) such time as any "person" (as
the term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Company
representing 20% or more of the Association's outstanding voting
securities or the right to acquire such securities, except for any
voting securities purchased by any employee benefit plan of the
Association; (ii) such time as individuals who constitute the Board of
Directors on the date hereof (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the
directors constituting the Incumbent Board (or members who were
nominated by the Incumbent Board), or whose nomination for election by
the Association's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members (or
members nominated by the Incumbent Board), shall be, for purposes of
this clause (ii), considered as though he or she were a member of the
Incumbent Board; (iii) such time as a reorganization, merger,
consolidation, or similar transaction occurs or is effectuated as a
result of which 60% of shares of the common stock of the resulting
entity are owned by persons who were not stockholders of the
Association immediately prior to the consummation of the transaction;
(iv) such time as substantially all of the assets of the Association
are sold or otherwise transferred to another corporation or other
entity that is not controlled by the Association. Notwithstanding
anything in this Plan to the contrary, in no event shall the
reorganization of the Association into the holding company form of
organization constitute a "Change in Control" for purposes of this
Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the Board of Directors or a committee designated by
the Board of Directors, pursuant to Section 2 of the Plan, to
administer the Plan.
(i) "Common Stock" means the common stock of the Holding Company, par
value $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a
long-term disability plan of the Holding Company or an Affiliate, or
in the absence of such a long-term disability plan or coverage under
such a plan, "Disability" shall mean a physical or mental condition
which, in the sole discretion of the Committee, is reasonably expected
to be of indefinite duration and to substantially prevent the
Participant from fulfilling his or her duties or responsibilities to
the Holding Company or the Association.
(l) "Effective Date" means the earlier of the date that Plan is approved
by shareholders or June 5, 2003.
(m) "Employee" means any person employed by the Holding Company or the
Association. Directors who are employed by the Holding Company or the
Association shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market, then the Fair Market Value shall be equal to
the closing price reported for such date;
(ii) If the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and
(iii)If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate. Whenever possible,
the determination of Fair Market Value by the Committee shall be
based on the prices reported in The Wall Street Journal. The
Committee's determination of Fair Market Value shall be
conclusive and binding on all persons.
(q) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to
meet the requirements of Section 422 of the Code.
(r) "Holding Company" means New England Bancshares, Inc., a federal
corporation.
(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not
intended to be and is not identified as an Incentive Stock Option or a
stock option granted under the Plan which is intended to be and is
identified as an Incentive Stock Option but which does not meet the
requirements of Section 422 of the Code.
A-2
(t) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(u) "Outside Director" means a member of the board(s) of directors of the
Holding Company or the Association who is not also an Employee of the
Holding Company or the Association.
(v) "Participant" means any person who holds an outstanding Award.
(w) "Plan" means this New England Bancshares, Inc. 2003 Stock-Based
Incentive Plan.
(x) "Retirement" means voluntary termination of employment with the
Holding Company or the Association at or after attaining age 65.
"Retirement" with respect to an Outside Director means the termination
of service from the board(s) of directors of the Holding Company or
the Association (for reasons other than Cause) after attaining age 70
and serving at least 10 years on the board(s) of directors of the
Holding Company or the Association.
(y) "Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(z) "Termination for Cause" means termination because of a Participant's
personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or
material breach of any provision of any employment agreement between
the Holding Company and/or any subsidiary of the Holding Company and a
Participant.
(aa) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for
the purposes set forth in the Plan.
(bb) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.
2. ADMINISTRATION.
---------------
(a) The Committee shall administer the Plan. The Committee shall consist of
the Board of Directors of the Company in accordance with the disinterested
administration requirements of Rule 16b-3 promulgated by the U.S. Securities and
Exchange Commission. The Board of Directors may also appoint one or more
separate committees of the Board of Directors, each composed of one or more
directors of the Holding Company or the Association who need not be
disinterested, that may grant Awards and administer the Plan with respect to
Employees and Outside Directors who are not considered officers or directors of
the Holding Company under Section 16 of the Exchange Act.
(b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and Award Agreements in all respects and (iv) make all other decisions
relating to the operation of the Plan. The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan. The Committee's
determinations under the Plan shall be final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award
A-3
Agreement shall constitute a binding contract between the Holding Company
and the Participant, and every Participant, upon acceptance of an Award
Agreement, shall be bound by the terms and restrictions of the Plan and the
Award Agreement. The terms of each Award Agreement shall be in accordance with
the Plan, but each Award Agreement may include any additional provisions and
restrictions determined by the Committee, in its discretion, provided that such
additional provisions and restrictions are not inconsistent with the terms of
the Plan. In particular and at a minimum, the Committee shall set forth in each
Award Agreement: (i) the type of Award granted; (ii) the Exercise Price of any
Option; (iii) the number of shares subject to the Award; (iv) the expiration
date of the Award; and (v) the manner, time, and rate (cumulative or otherwise)
of exercise or vesting of such Award. The Chairman of the Committee and such
other directors and officers as shall be designated by the Committee is hereby
authorized to execute Award Agreements on behalf of the Company and to cause
them to be delivered to the recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or the Association for determinations to be made pursuant to the
Plan.
3. TYPES OF AWARDS.
----------------
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(3) Stock Awards.
4. STOCK SUBJECT TO THE PLAN.
--------------------------
Subject to adjustment as provided in Section 12 of the Plan, the number of
shares reserved for Awards under the Plan is 200,000. Subject to adjustment as
provided in Section 12 of the Plan, the number of shares reserved hereby for
purchase pursuant to the exercise of Options granted under the Plan is 142,857.
The number of the shares reserved for Stock Awards is 57,143. The shares of
Common Stock issued under the Plan may be either authorized but unissued shares
or authorized shares previously issued and acquired or reacquired by the Trustee
or the Holding Company, respectively. To the extent that Options and Stock
Awards are granted under the Plan, the shares underlying such Awards will be
unavailable for any other use including future grants under the Plan except
that, to the extent that Stock Awards or Options terminate, expire or are
forfeited without having vested or without having been exercised, new Awards may
be made with respect to these shares.
5. ELIGIBILITY.
------------
Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan.
A-4
6. NON-STATUTORY STOCK OPTIONS.
----------------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
----------------
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-Statutory Stock Options. The Committee shall determine the
-------------------------------------
term during which a Participant may exercise a Non-Statutory Stock Option, but
in no event may a Participant exercise a Non-Statutory Stock Option, in whole or
in part, more than ten (10) years from the Date of Grant. The Committee shall
also determine the date on which each Non-Statutory Stock Option, or any part
thereof, first becomes exercisable and any terms or conditions a Participant
must satisfy in order to exercise each Non-Statutory Stock Option. The shares
of Common Stock underlying each Non-Statutory Stock Option may be purchased in
whole or in part by the Participant at any time during the term of such
Non-Statutory Stock Option, or any portion thereof, once the Non-Statutory Stock
Option becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
--------------------
accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, or (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family, (ii) any
trust solely for the benefit of members of the Participant's Immediate Family,
(iii) any partnership whose only partners are members of the Participant's
Immediate Family, and (iv) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family. Nothing contained in this Section 6(c) shall be construed to require the
Committee to give its approval to any transfer or assignment of any
Non-Statutory Stock Option or portion thereof, and approval to transfer or
assign any Non-Statutory Stock Option or portion thereof does not mean that such
approval will be given with respect to any other Non-Statutory Stock Option or
portion thereof. The transferee or assignee of any Non-Statutory Stock Option
shall be subject to all of the terms and conditions applicable to such
Non-Statutory Stock Option immediately prior to the transfer or assignment and
shall be subject to any other conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless otherwise
---------------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause, the Participant may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination or, if sooner, until the
expiration of the term of the Option.
A-5
(e) Termination of Employment or Service (Retirement). In the event of a
---------------------------------------------------
Participant's Retirement, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year from the date of Retirement
or, if sooner, until the expiration of the term of the Option; provided,
however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Options shall continue to vest in
accordance with the Award Agreement if the Participant is immediately engaged by
the Holding Company or an Affiliate as a consultant or advisor or continues to
serve the Holding Company or an Affiliate as a director, advisory director or
director emeritus.
(f) Termination of Employment or Service (Disability or Death). Unless
--------------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the date
of such termination, or, if sooner, until the expiration of the term of the
Option.
(g) Termination of Employment or Service (Termination for Cause). Unless
---------------------------------------------------------------
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date of
such Termination for Cause.
(h) Acceleration Upon a Change in Control. Upon a Change in Control, all
---------------------------------------
Non-Statutory Stock Options held by a Participant as of the date of the Change
in Control shall immediately become exercisable and shall remain exercisable
until the expiration of the term of the Option, regardless of whether the
Participant is employed or in service with the Association or the Holding
Company.
(i) Payment. Payment due to a Participant upon the exercise of a
--------
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.
7. INCENTIVE STOCK OPTIONS.
------------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
----------------
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
-------------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of
A-6
the Code, such Options in excess of such limit shall be treated as Non-Statutory
Stock Options. Fair Market Value shall be determined as of the Date of Grant
with respect to each such Incentive Stock Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
----------------------------------
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be transferable
--------------------
except by will or the laws of descent and distribution and is exercisable,
during his or her lifetime, only by the Employee to whom the Committee grants
the Incentive Stock Option. The designation of a beneficiary does not constitute
a transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise determined by the
------------------------------------
Committee, upon the termination of a Participant's employment or other service
for any reason other than Retirement, Disability or death, a Change in Control,
or Termination for Cause, the Participant may exercise only those Incentive
Stock Options that were immediately exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination, or, if sooner, until the expiration of the term of the
Option.
(f) Termination of Employment (Retirement). In the event of a Participant's
---------------------------------------
Retirement, the Participant may exercise only those Non-Statutory Stock Options
that were immediately exercisable by the Participant at the date of Retirement
and only for a period of one (1) year from the date of Retirement or, if sooner,
until the expiration of the term of the Option; provided, however, that upon the
Participant's Retirement, the Committee, in its discretion, may determine that
all unvested Options shall continue to vest in accordance with the Award
Agreement the Participant is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director, advisory director or director emeritus. Any
Option originally designated as an Incentive Stock Option shall be treated as a
Non-Statutory Stock Option to the extent the Option does not otherwise qualify
as an Incentive Stock Option pursuant to Section 422 of the Code.
(g) Termination of Employment (Disability or Death). Unless otherwise
---------------------------------------------------
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination,
or, if sooner, until the expiration of the term of the Option.
(h) Termination of Employment (Termination for Cause). Unless otherwise
----------------------------------------------------
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
A-7
(i) Acceleration Upon a Change in Control. Upon a Change in Control, all
---------------------------------------
Incentive Stock Options held by a Participant as of the date of the Change in
Control shall immediately become exercisable and shall remain exercisable until
the expiration of the term of the Option, regardless of whether the Participant
is employed or in service with the Association or the Holding Company.
(j) Payment. Payment due to a Participant upon the exercise of an Incentive
--------
Stock Option shall be made in the form of shares of Common Stock.
(k) Disqualifying Dispositions. Each Award Agreement with respect to an
----------------------------
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions) within 10 days of such
disposition.
8. STOCK AWARDS.
-------------
The Committee may make grants of Stock Awards, which shall consist of the
grant of some number of shares of Common Stock, to a Participant upon such terms
and conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) Grants of the Stock Awards. Stock Awards may only be made in whole
----------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates on
--------------------------
which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
---------------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the event of a
---------------------------------------------------
Participant's Retirement, any Stock Awards in which the Participant has not
become vested as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void;
provided, however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Stock Awards shall continue to vest
in accordance with the Award Agreement if the Participant is immediately engaged
by the Holding Company or an Affiliate as a consultant or advisor or continues
to serve the Holding Company or an Affiliate as a director, advisory director,
or director emeritus.
(e) Termination of Employment or Service (Disability or Death). Unless
--------------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
A-8
(f) Termination of Employment or Service (Termination for Cause). Unless
---------------------------------------------------------------
otherwise determined by the Committee, in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such Participant had to such unvested Stock Awards shall become
null and void.
(g) Acceleration of Vesting Upon a Change in Control. Upon a Change in
----------------------------------------------------
Control, all Stock Awards held by a Participant as of the date of the Change in
Control shall immediately vest and any further restrictions shall lapse.
(h) Issuance of Certificates. Unless otherwise held in Trust and registered
-------------------------
in the name of the Trustee, the Holding Company shall cause to be issued a stock
certificate to each Stock Award recipient, registered in the name of the Stock
Award recipient, evidencing such shares; provided, that the Holding Company
shall not cause such a stock certificate to be issued unless it has received a
stock power duly endorsed in blank with respect to such shares. Each such stock
certificate shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the New England Bancshares, Inc. 2003
Stock-Based Incentive Plan and Award Agreement entered into between
the registered owner of such shares and New England Bancshares, Inc.
or its Affiliates. A copy of the Plan and Award Agreement is on file
in the office of the Corporate Secretary of New England Bancshares,
Inc., 660 Enfield Street, Enfield, Connecticut 06082- 2900."
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(h), in connection with a Stock Award, shall be
held by the Holding Company or the Association, unless the Committee determines
otherwise.
(i) Non-Transferability. Except to the extent permitted by the Code, the
--------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(a) The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award until
full vesting of such shares has occurred. For purposes of this
section, the separation of beneficial ownership and legal title
through the use of any "swap" transaction is deemed to be a prohibited
encumbrance.
(b) Unless determined otherwise by the Committee and except in the event
of the Participant's death or pursuant to a domestic relations order,
a Stock Award is not transferable and may be earned in his or her
lifetime only by the Participant to whom it is granted. Upon the death
of a Participant, a Stock Award is transferable by will or the laws of
descent and distribution. The designation of a beneficiary shall not
constitute a transfer.
(c) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to such
Stock Award
A-9
may not, without the written consent of the Committee (which consent
may be given in the Award Agreement), be sold or otherwise disposed of
within six (6) months following the date of grant of the Stock Award.
(j) Treatment of Dividends. Participants are entitled to receive all cash
-----------------------
and stock dividends or other distributions declared and paid with respect to
shares underlying a Stock Award. The Committee shall determine when the
dividends or other distributions will be distributed to Participants.
(k) Voting of Stock Awards. Participants are entitled to vote or to direct
-----------------------
the Trustee to vote, as the case may be, all shares of Common Stock underlying a
Stock Award subject to the rules and procedures adopted by the Committee for
this purpose and in a manner consistent with the Trust agreement.
(l) Payment. Payment due to a Participant upon the redemption of a Stock
--------
Award shall be made in the form of shares of Common Stock.
9. METHOD OF EXERCISE OF OPTIONS.
------------------------------
Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms permitted by the
Committee, including, without limitation, payment by delivery of cash, Common
Stock or other consideration (including, where permitted by law and the
Committee, Awards) having a Fair Market Value on the day immediately preceding
the exercise date equal to the total Exercise Price, or by any combination of
cash, shares of Common Stock and other consideration, including exercise by
means of a cashless exercise arrangement with a qualifying broker-dealer, as the
Committee may specify in the applicable Award Agreement.
10. RIGHTS OF PARTICIPANTS.
-----------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
11. DESIGNATION OF BENEFICIARY.
---------------------------
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.
12. DILUTION AND OTHER ADJUSTMENTS.
-------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution is
A-10
made, the Committee may make such adjustments to previously granted Awards, to
prevent dilution, diminution, or enlargement of the rights of the Participant,
including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock or other securities that may underlie future Awards under
the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock or other securities underlying Awards already made under
the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non-Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding Company
and the Association.
13. TAXES.
------
Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing; provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan. Furthermore, Participants may direct the Committee to instruct the
Trustee to sell shares of Common Stock to be delivered upon the payment of an
Award to satisfy tax obligations.
14. NOTIFICATION UNDER SECTION 83(b).
---------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Committee of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.
15. AMENDMENT OF THE PLAN AND AWARDS.
---------------------------------
(a) Except as provided in paragraph (c) of this Section 15, the Board of
Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided, however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by law, regulation or otherwise. Failure to
ratify or approve amendments or modifications by shareholders shall be effective
only as to the specific amendment or modification requiring such ratification or
approval. Other provisions of this Plan will remain in full force
A-11
and effect. No such termination, modification or amendment may adversely affect
the rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) Except as provided in paragraph (c) of this Section 15, the Committee
may amend any Award Agreement, prospectively or retroactively; provided,
however, that no such amendment shall adversely affect the rights of any
Participant under an outstanding Award without the written consent of such
Participant.
(c) In no event shall the Board of Directors amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an Exercise Price below the
Fair Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the Exercise Price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
16. EFFECTIVE DATE OF PLAN.
-----------------------
The Incentive Plan shall become effective: (i) immediately upon the
affirmative vote of a majority of the total shares outstanding and the
affirmative vote of the majority of total shares outstanding, excluding those
shares beneficially owned by Enfield Mutual Holding Company; or (ii) on June 5,
2003.
17. TERMINATION OF THE PLAN.
------------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; or (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards is equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4 hereof. The Board of Directors
has the right to suspend or terminate the Plan at any time, provided that no
such action will, without the consent of a Participant, adversely affect a
Participant's vested rights under a previously granted Award.
18. APPLICABLE LAW.
---------------
The Plan will be administered in accordance with the laws of the United
States.
19. COMPLIANCE WITH FEDERAL REGULATIONS.
------------------------------------
This Plan will comply with the requirements set forth in 12 C.F.R. ss.
563b.500. Notwithstanding any other provision in this Plan, no shares of Common
Stock shall be issued with respect to any Award to the extent that such issuance
would cause Enfield Mutual Holding Company to fail to qualify as a mutual
holding company under federal regulations.
A-12
REVOCABLE PROXY
NEW ENGLAND BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
January 16, 2003
2:00 p.m. Local Time
_______________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of New England
Bancshares, Inc. (the "Company"), consisting of the full Board of Directors,
with full power of substitution, to act as proxy for the undersigned, and to
vote all shares of common stock of the Company which the undersigned is entitled
to vote only at the Special Meeting of Shareholders, to be held on January 16,
2003 at 2:00 p.m. Local Time, at the Radisson Hotel, One Bright Meadow
Boulevard, Enfield, Connecticut and at any and all adjournments thereof, with
all of the powers the undersigned would possess if personally present at such
meeting as follows:
The approval of the New England Bancshares, Inc. 2003 Stock-Based Incentive
Plan.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy, properly signed and dated, will be voted
"FOR" the proposal listed. If any other business is presented at the special
meeting, including whether or not to adjourn the meeting, this proxy will be
voted by the proxies in their best judgment. At the present time, the Board of
Directors knows of no other business to be presented at the Special Meeting.
Dated:___________________________
________________________________
SIGNATURE OF SHAREHOLDER
________________________________
SIGNATURE OF CO-HOLDER (IF ANY)
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Special Meeting of Shareholders and a
Proxy Statement dated December 2, 2002.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
_____________________________
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
[Enfield Federal Letterhead]
Dear ESOP Participant:
On behalf of the Board of Directors, I am forwarding to you a blue vote
authorization form and a Notice and Proxy Statement for the Special Meeting of
Shareholders of New England Bancshares, Inc. to be held on January 16, 2003. As
an ESOP participant you are entitled to instruct First Bankers Trust Company,
N.A. (the "ESOP Trustee") how to vote the shares of New England Bancshares, Inc.
common stock ("Common Stock") allocated to your account in the ESOP. As of
November 19, 2002, the record date for shareholders entitled to vote at the
Special Meeting, no shares of Common Stock held in the ESOP Trust had been
allocated to participants' accounts. However, for the sole purpose of providing
the ESOP Trustee with voting instructions, you will be deemed to have one share
of Common Stock allocated to your account. To direct the ESOP Trustee how to
vote the share of Common Stock deemed allocated to your ESOP account, please
complete and sign the enclosed blue vote authorization form and return it in the
enclosed postage-paid envelope no later than January 6, 2003. The shares of
Common Stock held in the ESOP Trust and the allocated shares for which timely
instructions are not received will be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions the ESOP Trustee receives
from participants regarding the shares of Common Stock deemed allocated to their
accounts, subject to the Employee Retirement Income Security Act of 1974.
Your vote will not be revealed, directly or indirectly, to any officer,
employee or director of New England Bancshares, Inc. or Enfield Federal Savings
and Loan Association.
Sincerely,
/s/ David J. O'Connor
-------------------------------------
David J. O'Connor
President and Chief Executive Officer
Name:____________________
Shares: 1 share
VOTE AUTHORIZATION FORM
I understand that First Bankers Trust Company, N.A., the ESOP Trustee, is
the holder of record and custodian of all shares of New England Bancshares, Inc.
(the "Company") common stock under the Enfield Federal Savings and Loan
Association Employee Stock Ownership Plan. I understand that my voting
instructions are solicited on behalf of the Company's Board of Directors for the
Special Meeting of Shareholders to be held on January 16, 2003.
You are to vote my share as follows:
The approval of the New England Bancshares, Inc. 2003 Stock-Based Incentive
Plan.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
The ESOP Trustee is hereby authorized to vote the share deemed allocated to
me in its trust capacity as indicated above.
- --------------------------------- -----------------------------------
Date Signature
Please date, sign and return this form in the enclosed postage-paid envelope no
later than January 6, 2003.
[Enfield Federal Letterhead]
Dear 401(k) Plan Participant:
On behalf of the Board of Directors, I am forwarding to you a green vote
authorization form and a Notice and Proxy Statement for the Special Meeting of
Shareholders of New England Bancshares, Inc. to be held on January 16, 2003. As
a holder of New England Bancshares, Inc. common stock under the Enfield Federal
Savings and Loan Employees' Savings and Profit Sharing Plan (the "401(k) Plan"),
you are entitled to direct the Bank of New York (the "Stock Fund Trustee") how
to vote the shares of New England Bancshares, Inc. common stock ("Common Stock")
credited to your account as of November 19, 2002, the record date for
shareholders entitled to vote at the Special Meeting. To do so, please complete
and sign the enclosed green vote authorization form and return it in the
accompanying postage-paid envelope by January 6, 2003.
The Stock Fund Trustee will vote all shares of Common Stock for which no
directions are given or for which timely instructions were not received in a
manner calculated to most accurately reflect the instructions received from
participants regarding shares of Common Stock credited to their 401(k) Plan
accounts.
Your vote will not be revealed, directly or indirectly, to any officer,
employee or director of New England Bancshares, Inc. or Enfield Federal Savings
and Loan Association.
Sincerely,
/s/ David J. O'Connor
-------------------------------------
David J. O'Connor
President and Chief Executive Officer
Name:____________________
Shares: ___________________
VOTE AUTHORIZATION FORM
I understand that the Bank of New York, the Stock Fund Trustee, is the
holder of record and custodian of all shares of New England Bancshares, Inc.
(the "Company") common stock credited to me under the Enfield Federal Savings
and Loan Association Employees' Savings and Profit Sharing Plan. I understand
that my voting instructions are solicited on behalf of the Company's Board of
Directors for the Special Meeting of Shareholders to be held on January 16,
2003.
You are to vote my shares as follows:
The approval of the New England Bancshares, Inc. 2003 Stock-Based Incentive
Plan.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
The Stock Fund Trustee is hereby authorized to vote the shares credited to
me in its trust capacity as indicated above.
- --------------------------------- -----------------------------------
Date Signature
Please date, sign and return this form in the enclosed postage-paid envelope no
later than January 6, 2003.