UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ______)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14A-12
New England Bancshares, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(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):
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|_| 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.
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June 30, 2006
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of New England Bancshares, Inc. The meeting will be held at the Crowne Plaza
Hotel, One Bright Meadow Boulevard, Enfield, Connecticut on Thursday, August 10,
2006 at 1:00 p.m., local time.
The notice of annual meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
Directors and officers of the Company, as well as a representative of Shatswell,
MacLeod & Company, P.C., the Company's independent auditors, will be present to
respond to appropriate questions of stockholders.
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.
855 Enfield Street
Enfield, Connecticut 06082
(860) 253-5200
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Notice of Annual Meeting of Stockholders
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On Thursday, August 10, 2006, New England Bancshares, Inc. (the
"Company") will hold its annual meeting of stockholders at the Crowne Plaza
Hotel, One Bright Meadow Boulevard, Enfield, Connecticut. The meeting will begin
at 1:00 p.m., local time. At the meeting, the stockholders will consider and act
on the following:
1. The election of two directors to serve for terms of three
years;
2. The approval of the New England Bancshares, Inc. 2006 Equity
Incentive Plan;
3. The ratification of the appointment of Shatswell, MacLeod &
Company, P.C. as independent auditors for the Company for the
fiscal year ending March 31, 2007; and
4. 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
scheduled to come before the meeting.
Only stockholders of record at the close of business on June 16, 2006
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 proxy card, 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/ Nancy L. Grady
Nancy L. Grady
Corporate Secretary
Enfield, Connecticut
June 30, 2006
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.
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Proxy Statement
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This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of New England Bancshares, Inc. (the
"Company" or "New England Bancshares") to be used at the annual meeting of
stockholders of the Company. The Company is the holding company for Enfield
Federal Savings and Loan Association ("Enfield Federal"). The annual meeting
will be held at the Crowne Plaza Hotel, One Bright Meadow Boulevard, Enfield,
Connecticut on Thursday, August 10, 2006 at 1:00 p.m., local time. This proxy
statement and the enclosed proxy card are being mailed to stockholders of record
on or about June 30, 2006.
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 June
16, 2006. 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 or
nominee how to vote.
As of the close of business on June 16, 2006, there were 5,346,583
shares of Company common stock outstanding. Each share of common stock has one
vote. The Company's Articles of Incorporation provide that a record owner of the
Company's common stock who beneficially owns, either directly or indirectly, in
excess of 10% of the Company's outstanding shares, is not entitled to vote the
shares held in excess of the 10% limit.
Attending the Meeting
If you are a stockholder as of the close of business on June 16, 2006,
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 a 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 election of directors, you may vote in favor of both
nominees, withhold votes for both nominees or withhold votes as to either
nominee. There is no cumulative voting for the election of directors. Directors
are elected by a plurality of the votes cast at the annual meeting. This means
that the nominees receiving the greatest number of votes will be elected. Votes
that are withheld and broker non- votes will have no effect on the outcome of
the election.
In voting to approve the New England Bancshares, Inc. 2006 Equity
Incentive Plan (the "2006 Plan"), you may vote in favor of the proposal, against
the proposal or abstain from voting. For purposes of Maryland law and Nasdaq
requirements, the 2006 Plan requires the affirmative vote of a majority of the
votes cast at the annual meeting. For this vote standard, broker non-votes and
abstentions will not be counted as votes cast and will have no effect on the
voting. However, for the 2006 Plan to be implemented before December 28, 2006,
pursuant to Office of Thrift Supervision regulations, the 2006 Plan must receive
the affirmative vote of a majority of the votes eligible to be cast at the
annual meeting. For the Office of Thrift Supervision vote standard, broker
non-votes and abstentions will have the same effect as a negative vote. If the
2006 Plan is approved by a majority of the votes cast but not by a majority of
the votes eligible to be cast, the 2006 Plan will not be implemented until
December 28, 2006.
In voting on the ratification of the appointment of Shatswell, MacLeod
& Company, P.C. as independent auditors, you may vote in favor of the proposal,
against the proposal or abstain from voting. To be approved, this matter
requires the affirmative vote of a majority of the votes cast at the annual
meeting. Broker non-votes and abstentions will not be counted as votes cast and
will have no effect on the voting on this proposal.
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 annual 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 that you vote "FOR" each of the
nominees for director, "FOR" the approval of the New England Bancshares, Inc.
2006 Equity Incentive Plan and "FOR" ratification of the appointment of
Shatswell, MacLeod & Company, P.C. as the Company's independent auditors for the
2007 fiscal year.
If any matters not described in this proxy statement are properly
presented at the annual 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 annual
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, provided such
new meeting occurs within 30 days of the annual meeting and you have not revoked
your proxy. The Company does not currently 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 annual
meeting, deliver a later dated proxy or attend the meeting and vote your shares
in person by ballot. Attendance at the annual meeting will not in itself
constitute revocation of your proxy.
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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, bank or other nominee may allow you to
deliver your voting instructions via the telephone or the Internet. Please
review the proxy card or instruction form provided by your broker, bank or other
nominee that 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 (the "ESOP") or if you hold shares through the
Enfield Federal Savings and Loan Association Employees' Savings & Profit Sharing
Plan (the "401(k) Plan"), you will receive a vote authorization form for each
plan that reflects all the shares that you may direct the trustees to vote on
your behalf under the plans. Under the terms of the ESOP, the ESOP trustee votes
all shares held by the ESOP, but each participant in the ESOP may direct the
trustee how to vote the shares of New England Bancshares common stock allocated
to his or her account. The ESOP trustee, subject to the exercise of its
fiduciary duties, will vote all unallocated shares of common stock held by the
ESOP and allocated shares for which no timely voting instructions were received
in the same proportion as shares for which the trustee received timely voting
instructions. Under the terms of the 401(k) Plan, you are entitled to direct the
trustee how to vote the shares of New England Bancshares common stock credited
to your account in the 401(k) plan. The trustee will vote all shares of New
England Bancshares common stock for which no directions are given or for which
timely instructions were not received in the same proportion as shares for which
the trustee received voting instructions. The deadline for returning your voting
instructions to each plan's trustee is July 31, 2006.
Corporate Governance
General
The Company periodically reviews its corporate governance policies and
procedures to ensure that the Company meets the highest standards of ethical
conduct, reports results with accuracy and transparency and maintains full
compliance with the laws, rules and regulations that govern the Company's
operations. As part of this periodic corporate governance review, the Board of
Directors reviews and adopts best corporate governance policies and practices
for the Company.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that is
designed to promote the highest standards of ethical conduct by the Company's
directors, executive officers and employees. The Code of Ethics and Business
Conduct requires that the Company's directors, executive officers and employees
avoid conflicts of interest, comply with all laws and other legal requirements,
conduct business in an honest and ethical manner and otherwise act with
integrity and in the Company's best interest. Under the terms of the Code of
Ethics and Business Conduct, directors, executive officers and employees are
required to report any conduct that they believe in good faith to be an actual
or apparent violation of the Code of Ethics and Business Conduct.
As a mechanism to encourage compliance with the Code of Ethics and
Business Conduct, the Company has established procedures to receive, retain and
treat complaints regarding accounting, internal accounting controls and auditing
matters. These procedures ensure that individuals may submit concerns regarding
questionable accounting or auditing matters in a confidential and anonymous
manner.
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The Code of Ethics and Business Conduct also prohibits the Company from
retaliating against any director, executive officer or employee who reports
actual or apparent violations of the Code of Ethics and Business Conduct.
Meetings of the Board of Directors
The Company conducts business through meetings of its Board of
Directors and through activities of its committees. The Board of Directors
generally meets quarterly and may have additional meetings as needed. During
fiscal 2006, the Board of Directors held nine meetings. All of the current
directors attended at least 75% of the total number of the board meetings held
and committee meetings on which such directors served during fiscal 2006.
Committees of the Board of Directors
The following table identifies our standing committees and their
members. All members of each committee are independent in accordance with the
listing standards of the Nasdaq Stock Market, Inc.
Audit Compensation Nominating
Director Committee Committee Committee
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Lucien P. Bolduc......................... X
Peter T. Dow............................. X* X
William C. Leary......................... X
Myron J. Marek...........................
Dorothy K. McCarty.......................
David J. O'Connor........................
Richard K. Stevens....................... X X X*
Richard M. Tatoian....................... X* X
Number of Meetings in Fiscal 2006........ 4 1 1
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* Denotes Chairperson
Audit Committee. The Audit Committee assists the Board of Directors in
its oversight of the integrity of New England Bancshares' processes and systems
of internal controls concerning accounting and financial reporting and in its
review of compliance with applicable laws and regulations. The committee is also
responsible for engaging New England Bancshares' independent auditor and its
internal auditor and monitoring their conduct and independence. The Board of
Directors has designated Lucien P. Bolduc as an audit committee financial expert
under the rules of the Securities and Exchange Commission. The Audit Committee
operates under a written charter adopted by the Board of Directors, a copy of
which is included as Appendix A to this proxy statement. The report of the Audit
Committee required by the rules of the Securities and Exchange Commission is
included in this proxy statement. See "Proposal 3 - Ratification of Independent
Auditors - Audit Committee Report."
Compensation Committee. The Compensation Committee is responsible for
making recommendations to the full Board of Directors on all matters regarding
compensation and fringe benefits. The Compensation Committee operates under a
written charter adopted by the Board of Directors.
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Nominating Committee. The Nominating Committee assists the Board of
Directors in identifying qualified individuals to serve as Board members, in
determining the composition of the Board of Directors and its committees and in
monitoring a process to assess Board effectiveness. The Nominating Committee
also considers and recommends the nominees for director to stand for election at
the Company's annual meeting of stockholders. The procedures of the Nominating
Committee required to be disclosed by the rules of the Securities and Exchange
Commission are included in this proxy statement. See "Nominating Committee
Procedures." The Board of Directors has adopted a charter for the Nominating
Committee, which is not available on the Company's website but that was included
as an appendix to the Company's proxy statement for the 2004 annual meeting of
stockholders.
Attendance at the Annual Meeting. The Board of Directors encourages
each director to attend annual meetings of stockholders. All of the directors
attended the 2005 annual meeting of stockholders.
Directors' Compensation
Cash Retainer and Meeting Fees for Non-Employee Directors. The
following table sets forth the applicable retainers and fees that will be paid
to our non-employee directors for their service on our Boards of Directors
during fiscal 2007.
Annual Retainer for New England Bancshares Board Service.............. $4,000
Annual Retainer for Enfield Federal Board Service..................... 4,000
Fee for Attendance at Enfield Federal Board Meetings.................. 400
Fee for Attendance at Enfield Federal Committee Meetings (except
Executive Committee).............................................. 400
Fee for Attendance at Enfield Federal Executive Committee Meeting..... 225
Non-Employee Director Compensation. The following table sets forth the
total cash compensation paid to our non-employee directors for their service on
our Boards of Directors during fiscal 2006. During fiscal 2006, no restricted
stock awards or stock options were granted to our non- employee directors.
Directors Cash
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Lucien P. Bolduc........................................ $11,400
Peter T. Dow............................................ 14,150
William C. Leary........................................ 12,900
Myron J. Marek.......................................... 11,400
Dorothy K. McCarty...................................... 11,200
Richard K. Stevens...................................... 11,800
Richard M. Tatoian...................................... 12,000
Directors' Retirement Plan. Enfield Federal established the Enfield
Federal Savings and Loan Association Director Fee Continuation Plan to provide
the directors serving on the board as of the date of the plan's implementation
with a retirement income supplement. The plan has six participants. Under the
plan, participants 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
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director before June 1, 1995. The maximum benefit under the plan is $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 must 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 must 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. The benefit is payable, at Enfield Federal's discretion, 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.
Stock Ownership
The following table provides information as of June 16, 2006, 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
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Enfield Federal Savings and Loan Association 417,646(1) 7.8%
Employee Stock Ownership Plan
855 Enfield Street
Enfield, Connecticut 06082
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(1) Includes 350,945 shares that have not been allocated to participants'
accounts. Under the terms of the ESOP, the ESOP trustee will vote shares
allocated to participants' accounts in the manner directed by the
participants. The ESOP trustee, subject to its fiduciary responsibilities,
will vote unallocated shares and allocated shares for which no timely
voting instructions are received in the same proportion as shares for which
the trustee has received proper voting instructions from participants.
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The following table provides information about the shares of our common
stock that may be considered to be owned by each of our directors, by the
executive officers named in the Summary Compensation Table and by all of our
directors and executive officers as a group as of June 16, 2006. 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 Shares
Number of That May Be
Shares Acquired Within Percent of
Owned 60 Days By Common Stock
Name (excluding options) (1)(2)(3) Exercising Options (1) Outstanding (4)
- ------------------- --------------------------- ---------------------- ---------------
Lucien P. Bolduc............................... 9,934 8,700 *
Peter T. Dow................................... 16,717(5) 8,700 *
William C. Leary............................... 16,894 - *
Myron J. Marek................................. 13,788 8,700 *
Dorothy K. McCarty............................. 10,349 8,700 *
Scott D. Nogles................................ 16,126 2,842 *
David J. O'Connor.............................. 53,276(6) 50,749 1.9%
John F. Parda.................................. 21,858(7) 7,579 *
Richard K. Stevens............................. 27,858 8,700 *
Richard M. Tatoian............................. 10,165 8,700 *
All executive officers and directors as a group
(10 persons)................................... 196,965 113,370 5.7%
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* Less than 1% of shares outstanding
(1) The number of shares owned and the number of shares that may be acquired by
exercising options reflects the exchange of one share of the former New
England Bancshares common stock and options to purchase one share of the
former New England Bancshares common stock for 2.3683 shares or options to
purchase 2.3683 shares of current New England Bancshares common stock on
December 28, 2005 in connection with the Company's second-step conversion.
(2) Includes unvested shares of restricted stock held in trust under the New
England Bancshares, Inc. 2003 Stock- Based Incentive Plan, with respect to
which the beneficial owner has voting but not investment power as follows:
Messrs. Bolduc, Dow, Marek, Stevens and Tatoian and Ms. McCarty--2,317
shares; Mr. O'Connor--13,532 shares; and Mr. Parda--4,736 shares.
(3) Includes shares allocated under the Enfield Federal Savings and Loan
Association Employee Stock Ownership Plan, with respect to the individual
has voting but not investment power as follows: Mr. Nogles--865 shares; Mr.
O'Connor--8,660 shares; and Mr. Parda--4,506 shares.
(4) Based on 5,346,583 shares of our common stock outstanding as of June 16,
2006, plus the number of shares that each person may acquire within 60 days
by exercising stock options.
(5) Includes 10,920 shares held in a trust in which Mr. Dow shares voting and
investment power.
(6) Includes 703 shares held in trust in which Mr. O'Connor shares voting and
investment power.
(7) Includes 464 shares held in trust in which Mr. Parda shares voting and
investment power.
Proposal 1 -- Election of Directors
The Company's Board of Directors currently consists of eight members.
The Board is divided into three classes in equal as number as possible, each
with three-year staggered terms, with approximately one-third of the directors
elected each year. The nominees for election this year are Lucien P. Bolduc and
Myron J. Marek, each of whom is a director of the Company and Enfield Federal.
Each of the directors of the Company are considered independent under the
current listing standards of the Nasdaq Stock Market, except for David J.
O'Connor, who is an employee of the Company and Enfield Federal.
7
It is intended that the proxies solicited by the Board of Directors
will be voted for the election of the nominees named above. If any nominee is
unable to serve, the persons named in the proxy card will vote your shares to
approve the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
The Board of Directors recommends a vote "FOR" the election of each of
the nominees.
Information regarding the nominees and the directors continuing in
office is provided below. Unless otherwise stated, each individual has held his
or her current occupation for the last five years. The age indicated in each
nominee's biography is as of March 31, 2006. There are no family relationships
among the directors or executive officers. The indicated period for service as a
director includes service as a director of Enfield Federal.
Nominees for Election of Directors
The nominees standing for election are:
Lucien P. Bolduc is a certified public accountant with the accounting
firm of Mercik, Kuczarski & Bolduc, LLC located in Enfield, Connecticut. Age 46.
Director since 2002.
Myron J. Marek is a retired retail jeweler. Age 73. Director since
1987.
Directors Continuing in Office
The following directors have terms ending in 2007:
David J. O'Connor has been the President and Chief Executive Officer of
Enfield Federal since 1999 and of New England Bancshares since 2002. Mr.
O'Connor has over 30 years of banking experience in New England. Before joining
Enfield Federal, he was the Executive Vice President, Treasurer and Chief
Financial Officer of The Berlin City Bank, a community bank in New Hampshire.
Age 59. Director since 1999.
Richard K. Stevens is owner and President of Leete-Stevens, Inc., a
funeral home located in Enfield, Connecticut. Age 59. Director since 1995.
Richard M. Tatoian is a self-employed attorney practicing in Enfield,
Connecticut. Age 59. Director since 1995.
The following directors have terms ending in 2008:
Peter T. Dow is President of Dow Mechanical Corporation, a manufacturer
of quality control inspection equipment, located in Enfield, Connecticut. Mr.
Dow has also been a consultant with Dow Gage LLC, which provides consulting
advice to manufacturing companies, since December 2005. Mr. Dow was appointed
Chairman of the Board of Directors in April 2004. Age 66. Director since 1982.
William C. Leary has been a judge for the Probate Court of Windsor
Locks since 1971 and a partner with the firm of O'Malley Deneen Leary Messina
and Oswecki since 1994. Mr. Leary served as the Chairman of the Board of Windsor
Locks Community Bank, FSL from March 2002 until its acquisition by Enfield
Federal in December 2003. Age 67. Director since 2003.
8
Dorothy K. McCarty is a retired town clerk of Suffield, Connecticut.
Age 75. Director since 1990.
Proposal 2 -- Approval of the New England Bancshares, Inc.
2006 Equity Incentive Plan
On June 12, 2006, the Board of Directors adopted, subject to
stockholder approval at the annual meeting, the New England Bancshares, Inc.
2006 Equity Incentive Plan. The 2006 Plan will become effective: (1) immediately
upon the affirmative vote of a majority of votes eligible to be cast at the
annual meeting; or (2) on December 28, 2006 if the 2006 Plan is approved by the
majority of the votes cast at the annual meeting.
The Board has reserved 274,878 shares of Company common stock for
issuance upon the grant or exercise of awards pursuant to the 2006 Plan. All of
the Company's employees, officers and directors are eligible to participate in
the 2006 Plan. A summary of the 2006 Plan is set forth below. This summary is
qualified in its entirety by the full text of the 2006 Plan, which is attached
to this proxy statement as Appendix B.
Summary of the 2006 Plan
Purpose. The purpose of the 2006 Plan is to promote the Company's
success and enhance its value by linking the personal interests of its
employees, officers and directors to those of the Company's stockholders, and by
providing participants with an incentive for outstanding performance.
Permissible Awards. The 2006 Plan authorizes the granting of the
following:
o options to purchase shares of Company stock, which may be
non-statutory stock options or incentive stock options under
the U.S. Internal Revenue Code (the "Code"); and
o restricted stock, which is subject to restrictions on
transferability and subject to forfeiture.
Shares Available for Awards. Subject to adjustment as provided in the
plan, the aggregate number of shares of common stock reserved and available for
issuance pursuant to awards granted under the 2006 Plan is 274,878. Except for
shares retained or surrendered to satisfy tax withholding obligations, only
shares actually issued under the 2006 Plan count against the total number of
shares available under the 2006 Plan. Of the total shares available under the
2006 Plan, 196,342 may be issued in connection with the exercise of stock
options and 78,536 may be issued as restricted stock.
Administration. The 2006 Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Committee will have
the authority to: designate participants; determine the type(s) of awards to be
granted to each participant and the number, terms and conditions thereof;
establish, adopt or revise any rules and regulations as it may deem advisable to
administer the 2006 Plan; and make all other decisions and determinations that
may be required under the 2006 Plan. The Committee may delegate to officers of
the Company responsibility for awards to officers and employees not subject to
Section 16 of the Securities Exchange Act of 1934.
Limitations on Transfer; Beneficiaries. No award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or (except in the case of an incentive
9
stock option) pursuant to a qualified domestic relations order. The Committee
may permit other transfers where it concludes that such transferability does not
result in accelerated taxation, does not cause any option intended to be an
incentive stock option to fail to qualify as such, and is otherwise appropriate
and desirable, taking into account any factors deemed relevant, including,
without limitation, any state or federal tax or securities laws or regulations
applicable to transferable awards. A participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the
participant and to receive any distribution with respect to any award upon the
participant's death.
Acceleration Upon Certain Events. Unless otherwise provided in an award
agreement, if a participant's service terminates by reason of death or
disability, all of such participant's outstanding options and other awards in
the nature of rights that may be exercised will become fully vested and
exercisable and all time-based vesting restrictions on his or her outstanding
awards will lapse. The vesting of awards will also occur upon a change in
control of the Company.
Adjustments. In the event of a stock split, a dividend payable in
shares of Company common stock, or a combination or consolidation of the
Company's common stock into a lesser number of shares, the share authorization
limits under the 2006 Plan will automatically be adjusted proportionately, and
the shares then subject to each award will automatically be adjusted
proportionately without any change in the aggregate purchase price for such
award. If the Company is involved in another corporate transaction or event that
affects its common stock, such as an extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares, the share authorization limits under the 2006
Plan will be adjusted proportionately, and the Committee may adjust the 2006
Plan and outstanding awards to preserve the benefits or potential benefits of
the awards.
Termination and Amendment
The Board of Directors may, at any time and from time to time,
terminate or amend the 2006 Plan, but if an amendment to the 2006 Plan would
materially increase the number of shares of stock issuable under the 2006 Plan,
expand the types of awards provided under the 2006 Plan, materially expand the
class of participants eligible to participate in the 2006 Plan, materially
extend the term of the 2006 Plan or otherwise constitute a material amendment
requiring stockholder approval under applicable stock market or stock exchange
listing requirements or under applicable laws, policies or regulations, then
such amendment will be subject to stockholder approval. In addition, the Board
of Directors may condition any amendment on the approval of the stockholders for
any other reason. No termination or amendment of the 2006 Plan may adversely
affect any award previously granted under the 2006 Plan without the written
consent of the participant.
The Committee may amend or terminate outstanding awards; however, such
amendments may require the consent of the participant and, unless approved by
the stockholders or otherwise permitted by the anti-dilution provisions of the
2006 Plan, the exercise price of an outstanding option may not be reduced,
directly or indirectly, and the original term of an option may not be extended.
Prohibition on Repricing
As discussed above under "Termination and Amendment," outstanding stock
options cannot be repriced, directly or indirectly, without the prior consent of
the Company's stockholders. The exchange of an "underwater" option (i.e., an
option having an exercise price in excess of the current market value of the
underling stock) for another award would be considered an indirect repricing and
would, therefore, require the prior consent of the Company's stockholders.
10
Regulatory Restrictions
Under the 2006 Plan, the Committee may not grant options and restricted
stock to any one individual for shares that would exceed 25% of the shares
reserved for each type of award. The Committee may not grant options and
restricted stock to any non-employee individual director for shares that would
exceed 5% of the shares reserved for each type of award. The Committee may not
grant to non-employee directors, in the aggregate, options and restricted stock
that would exceed 30% of the shares reserved for each type of award. Unless
otherwise permitted by the Office of Thrift Supervision, all awards must vest
over a period of time no more rapidly than 20% per year commencing on the first
anniversary of the date of grant; however, awards may fully vest upon the death
or disability of an award recipient or upon a change in control. These
provisions comply with the rules and regulations of the Office of Thrift
Supervision.
Certain Federal Tax Effects
Nonstatutory Stock Options. There will be no federal income tax
consequences to the optionee or to the Company upon the grant of a nonstatutory
stock option under the 2006 Plan. When the optionee exercises a nonstatutory
option, however, he or she will recognize ordinary income equal to the excess of
the fair market value of the common stock received upon exercise of the option
at the time of exercise over the exercise price, and the Company will be allowed
a corresponding deduction, subject to any applicable limitations under Code
Section 162(m). Any gain that the optionee realizes when he or she later sells
or disposes of the option shares will be short-term or long-term capital gain,
depending on how long the shares were held.
Incentive Stock Options. There typically will be no federal income tax
consequences to the optionee or to the Company upon the grant or exercise of an
incentive stock option. If the optionee holds the option shares for at least two
years after the date the option was granted or for one year after exercise, the
difference between the exercise price and the amount realized upon sale or
disposition of the option shares will be long-term capital gain or loss, and the
Company will not be entitled to a federal income tax deduction. If the optionee
disposes of the option shares in a sale, exchange or other disqualifying
disposition before the required holding period ends, he or she will recognize
taxable ordinary income equal to the excess of the fair market value of the
option shares at the time of exercise over the exercise price, and the Company
will be allowed a federal income tax deduction equal to such amount. While the
exercise of an incentive stock option does not result in current taxable income,
the excess of the fair market value of the option shares at the time of exercise
over the exercise price will be an item of adjustment for purposes of
determining the optionee's alternative minimum taxable income.
Restricted Stock. Unless a participant makes an election to accelerate
recognition of the income to the date of grant as described below, a participant
will not recognize income, and the Company will not be allowed a tax deduction,
at the time a restricted stock award is granted, provided that the award is
subject to restrictions on transfer and is subject to a substantial risk of
forfeiture. When the restrictions lapse, the participant will recognize ordinary
income equal to the fair market value of the common stock as of that date (less
any amount he or she paid for the stock), and the Company will be allowed a
corresponding federal income tax deduction at that time, subject to any
applicable limitations under Code Section 162(m). If the participant files an
election under Code Section 83(b) within 30 days after the date of grant of the
restricted stock, he or she will recognize ordinary income as of the date of
grant equal to the fair market value of the stock as of that date (less any
amount paid for the stock), and the Company will be allowed a corresponding
federal income tax deduction at that time, subject to any applicable limitations
under Code Section 162(m). Any future appreciation in the stock will be taxable
11
to the participant at capital gains rates. However, if the stock is later
forfeited, the participant will not be able to recover the tax previously paid
pursuant to the Code Section 83(b) election.
Stockholder Approval, Effective Date of Plan and Regulatory Compliance
The 2006 Plan will become effective: (1) immediately upon the
affirmative vote of a majority of votes eligible to be cast at the annual
meeting; or (2) on December 28, 2006 if the 2006 Plan is approved by the
majority of the votes cast at the annual meeting.
Benefits to Named Executive Officers and Others
Awards, if any, will be granted under the 2006 Plan only after
stockholders approve the 2006 Plan. All awards under the 2006 Plan will be made
at the discretion of the Committee or under delegated authority. Therefore, it
is not possible to determine the benefits or amounts that will be received by
any individuals or groups pursuant to the 2006 Plan in the future, or the
benefits or amounts that would have been received by any individuals or groups
for the last completed fiscal year if the 2006 Plan had been in effect.
Equity Compensation Plan Information
The following table sets forth information about Company common stock
that may be issued upon exercise of options under all of the Company's equity
compensation plans as of March 31, 2006. The Company does not maintain any
equity compensation plans that have not been approved by shareholders.
Number of securities Number of securities remaining
to be issued upon Weighted-average available for future issuance
exercise of outstanding exercise price of under equity compensation plans
options, warrants and outstanding options, (excluding securities reflected in
rights warrants and rights column (a))
Plan category (a) (b) (c)
- -------------------------- -------------------------- ------------------------- ---------------------------------
Equity compensation
plans approved by
security holders 338,328 $6.68 86,324
Total 338,328 $6.68 86,324
The Board of Directors recommends that you vote "FOR" approval of the
New England Bancshares 2006 Equity Incentive Plan.
12
Proposal 3 -- Ratification of Independent Auditors
The Audit Committee of the Board of Directors has appointed Shatswell,
MacLeod & Company, P.C. to be the Company's auditors for the 2007 fiscal year,
subject to ratification by stockholders. A representative of Shatswell, MacLeod
& Company, P.C. is expected to be present at the annual meeting to respond to
appropriate questions from stockholders and will have the opportunity to make a
statement should he or she desire to do so.
If the ratification of the appointment of the auditors is not approved
by a majority of the votes cast by stockholders at the annual meeting, other
independent public accountants may be considered by the Audit Committee of the
Board of Directors.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of Shatswell, MacLeod & Company, P.C. as
independent auditors.
Audit Fees
The following table sets forth the fees billed to the Company for the
fiscal years ending March 31, 2006 and 2005 by Shatswell, MacLeod & Company,
P.C.:
2006 2005
------- -------
Audit Fees ................. $64,500 $61,000
Audit-Related Fees(1) ...... 78,600 --
Tax Fees(2) ................ 6,200 6,100
All other fees ............. -- --
--------------------------
(1) Consists of fees relating to the Company's second-step
conversion.
(2) Consists of tax filings and tax-related compliance and
other advisory services.
Pre-Approval of Services by the Independent Auditor
The Audit Committee will consider on a case-by-case basis and, if
appropriate, approve all audit and non-audit services to be provided by the
Company's independent auditors. Alternatively, the Audit Committee may adopt a
policy for pre-approval of audit and permitted non-audit services by the
Company's independent auditor.
The report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Audit Committee Report
The Company's management is responsible for the Company's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements and issuing an opinion on the conformity of those financial
statements with generally accepted accounting principles. The Audit Committee
oversees the Company's internal controls and financial reporting process on
behalf of the Board of Directors.
13
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles and the Audit Committee
has reviewed and discussed the consolidated financial statements with management
and the independent auditors. The Audit Committee discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication With Audit Committees), including the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and the clarity of the disclosures in the financial statements.
In addition, the Audit Committee has received the written disclosures
and the letter from the independent auditors required by the Independence
Standards Board Standard No. 1 (Independence Discussions With Audit Committees)
and has discussed with the independent auditors the auditors' independence from
the Company and its management. In concluding that the auditors are independent,
the Audit Committee considered, among other factors, whether the non-audit
services provided by the auditors were compatible with its independence.
The Audit Committee discussed with the Company's independent auditors
the overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In performing all of these functions, the Audit Committee acts only in
an oversight capacity. In its oversight role, the Audit Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors who, in their report, express an opinion on the conformity of the
Company's financial statements to generally accepted accounting principles. The
Audit Committee's oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions with management and the independent auditors do
not assure that the Company's financial statements are presented in accordance
with generally accepted accounting principles, that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
auditing standards or that the Company's independent auditors are in fact
"independent."
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-KSB for the year ended March 31, 2006 for filing with
the Securities and Exchange Commission. The Audit Committee also has approved,
subject to stockholder ratification, the selection of the Company's independent
auditors, for the fiscal year ending March 31, 2007.
Audit Committee of the Board of Directors of New England Bancshares, Inc.
Lucien P. Bolduc
Richard K. Stevens
Richard M. Tatoian
14
Executive Compensation
Summary Compensation Table
The following information is furnished for Messrs. O'Connor, Nogles and
Parda. No other executive officer of New England Bancshares received a salary
and bonus of $100,000 or more during the year ended March 31, 2006.
Long-Term
Compensation Awards
----------------------------
Annual Restricted Securities
Compensation (1) Stock Underlying
------------------- Awards Options/SARs All Other
Name and Principal Positions Year Salary Bonus ($)(2) (#) Compensation (3)
- ---------------------------- -------- --------- -------- ---------- ---------------- -------------------
David J. O'Connor................ 2006 $212,500 $50,000 $ -- -- $30,108
President and Chief Executive 2005 202,871 33,600 -- -- 28,617
Officer 2004 174,500 32,000 -- -- 26,203
John F. Parda.................... 2006 $100,000 $12,000 $ -- -- $14,553
Senior Vice President and 2005 96,634 15,000 -- 2,000(4) 13,336
Chief Loan Officer 2004 89,914 12,000 -- -- 12,777
Scott D. Nogles(5)............... 2006 $93,500 $12,000 $ -- -- $12,137
Senior Vice President and 2005 76,962 8,000 -- 3,000(4) 693
Chief Financial Officer
- --------------------------------
(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) The number and value of all unvested shares of restricted stock held by
each named executive officer as of March 31, 2006, is as follows, based
on $10.72, the closing price of the Company's common stock on March 31,
2006:
Number of Value of
Unvested Shares Unvested Shares
--------------- ----------------
Mr. O'Connor....................... 13,532 $145,063
Mr. Parda.......................... 4,736 50,770
Mr. Nogles ........................ -- --
(3) Details of the amounts reported in the "All Other Compensation" column
for 2006 are provided in the table below.
Mr. Mr. Mr.
Item O'Connor Parda Nogles
- ---- -------- ------- -------
Employer contribution to 401(k) plan ............... $ 6,375 $ 3,000 $ 2,735
Market value of allocations under the employee
stock ownership plan ............................ 19,825 10,739 9,252
Value of insurance premiums under endorsement method
split-dollar life insurance arrangement ......... 2,295 -- --
Value of life insurance policy ..................... 1,613 814 150
------- ------- -------
Total ..................................... $30,108 $14,553 $12,137
======= ======= =======
(footnotes continued on next page)
15
(4) The number of options granted in 2005 has been adjusted to reflect the
exchange of an option to purchase one share of former New England
Bancshares common stock for an option to purchase 2.3683 shares of
current New England Bancshares common stock on December 28, 2005 in
connection with the Company's second-step conversion.
(5) Mr. Nogles joined the Company in May 2004.
Employment Agreements. Enfield Federal and New England Bancshares each
maintain an employment agreement with Mr. O'Connor. The employment agreements
are intended to ensure that New England Bancshares and Enfield Federal will be
able to retain Mr. O'Connor's services. 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 agreements each provide for a three-year term. The
Enfield Federal employment agreement is renewable on an annual basis following a
review of Mr. O'Connor's performance by the Board of Directors. The New England
Bancshares employment agreement renews daily. The employment agreements provide
that Mr. O'Connor's base salary will be reviewed annually. Mr. O'Connor's
current base salary is $231,000.
In addition to the base salary, Mr. O'Connor's employment agreements
provide for, among other things, participation in stock benefit plans and other
fringe benefits applicable to executive personnel. Under the terms of both of
the employment agreements, Mr. O'Connor will be entitled to receive a severance
benefit if he is terminated by Enfield Federal or New England Bancshares without
cause or he voluntarily terminates for reasons constituting constructive
termination under the agreements. The severance benefit he would be entitled to
is equal to the 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. The employment
agreements also provide for a severance benefit if Mr. O'Connor voluntarily
(upon circumstances discussed in the agreement) or involuntarily terminates his
employment following a change in control of New England Bancshares or Enfield
Federal. The severance payment would be equal to the greater of: (1) the
payments due for the remaining term of the agreement; or (2) three times the
average of Mr. O'Connor's five preceding taxable years' annual compensation. In
addition to a severance payment, New England Bancshares or Enfield Federal would
also be required to continue and/or pay for Mr. O'Connor's life, health, dental
and disability coverage for thirty-six months following his termination of
employment in connection with a change in control.
Even though both the Enfield Federal and the New England Bancshares
employment agreements provide for a severance payment if a change in control
occurs, Mr. O'Connor would only be entitled to receive a severance payment under
one agreement. Mr. O'Connor would also be entitled to receive an additional tax
indemnification payment under the New England Bancshares employment agreement if
payments under the agreements or any other payments triggered liability under
the Code as an excise tax constituting "excess parachute payments." Under
applicable law, the excise tax is triggered by change in control-related
payments that equal or exceed three times the executive's average annual
compensation over the five years preceding the change in control. The excise tax
equals 20% of the amount of the payment in excess of one times the executive's
average compensation over the preceding five-year period.
Payments to Mr. O'Connor under the Enfield Federal employment agreement
are guaranteed by New England Bancshares if payments or benefits are not paid by
Enfield Federal. Payment under the New England Bancshares employment agreement
will be made by New England Bancshares. The employment agreements also provide
that the Enfield Federal and New England Bancshares will indemnify Mr. O'Connor
to the fullest extent legally allowable.
16
The employment agreements restrict Mr. O'Connor from competing against
New England Bancshares or Enfield Federal for a period of one year from the date
of termination of the agreement if Mr. O'Connor is terminated without cause,
except if such termination occurs after a change in control.
Change in Control Agreements. Enfield Federal currently maintains a
two-year change in control agreement with each of Messrs. Parda and Nogles. Each
agreement is renewable annually. Each agreement provides that if involuntary
termination or, under certain circumstances, voluntary termination follows a
change in control of the Company or Enfield Federal, the executive would be
entitled to receive a severance payment equal to 2.99 times his "base amount,"
as defined under the Internal Revenue Code. Enfield Federal would also continue
and/or pay for life, health and disability coverage for twenty-four months
following termination. Payments to the executive under each agreement will be
paid by the Company if payments (or other benefits) are not paid by Enfield
Federal.
Supplemental Executive Retirement Plans. Enfield Federal maintains the
Executive Supplemental Retirement Plan, as amended and restated, to provide Mr.
O'Connor with, upon his attainment of age 65, an annual retirement benefit of
$172,796 payable in equal monthly installments over a period equal to the later
of: (1) 20 years following Mr. O'Connor's retirement or termination of
employment for reason other than cause; or (2) Mr. O'Connor's lifetime. If Mr.
O'Connor voluntarily 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. If Mr. O'Connor is discharged form Enfield Federal for
reasons other than cause, he will be entitled to his annual benefit upon the
attainment of age 65. If Mr. O'Connor dies before the completion of benefit
payments under the plan, his beneficiary will receive the remaining installments
due from the plan. 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 receive a lump sum payment equal to the
actuarial equivalent of the benefit he would have received at age 65. The lump
sum payment will be made within 30 days following Mr. O'Connor's termination of
employment in connection with a change in control.
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, 2006, Enfield Federal had accrued
$519,000 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 designated
executives who are prevented from receiving the full benefits under the ESOP or
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 the 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 provide the participant with a benefit equal to
what the participant would have received under the ESOP had he or she 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
17
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.
Fiscal Year-End Option Values
No stock options were exercised by Messrs. O'Connor, Parda or Nogles
during the fiscal year ended March 31, 2006. The following table provides
certain information with respect to the number of shares of common stock
represented by outstanding options held by Messrs. O'Connor, Parda and Nogles as
of March 31, 2006.
Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options at Fiscal Money Options at Fiscal
Year-End(#) (1) Year-End($)(1) (2)
----------------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------- ------------------ ------------------- -------------- -----------------
David J. O'Connor................. 50,749 33,832 $219,235 $146,154
John F. Parda..................... 6,632 7,577 26,972 26,027
Scott D. Nogles................... 1,421 5,683 3,624 14,492
(1) The number of options reflect the exchange of an option to purchase one
share of former New England Bancshares common stock for an option to
purchase 2.3683 shares of current New England Bancshares common stock on
December 28, 2005 in connection with the Company's second-step conversion.
A corresponding adjustment was also made to each option's exercise price.
(2) Value of unexercised in-the-money stock options equals the market value of
shares covered by in-the-money options on March 31, 2006, less the option
exercise price. Options are in-the-money if the market value of shares
covered by the options is greater than the exercise price.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
These individuals are required by regulation to furnish the Company with copies
of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in Company common stock during the fiscal year ended March 31,
2006, except for one late report filed by Mr. Leary regarding three separate
purchase transactions, one late report filed by each of Messrs. Bolduc and
Stevens regarding one purchase transaction and one late report filed by each of
Karen W. Gaudreau, John J. Lee and Susan Warner, who are each directors of
Enfield Federal, regarding one purchase transaction.
Transactions with Management
The Sarbanes-Oxley Act generally prohibits loans by Enfield Federal to
its executive officers and directors. However, the Sarbanes-Oxley Act contains a
specific exemption from such prohibition for loans by Enfield Federal to its
executive officers and directors in compliance with federal banking
18
regulations. Federal banking regulations require that all loans or extensions of
credit to executive officers and directors of insured financial institutions
must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, except for loans made under programs generally available to all
employees, and must not involve more than the normal risk of repayment or
present other unfavorable features. Enfield Federal is therefore prohibited from
making any new loans or extensions of credit to executive officers and directors
at different rates or terms than those offered to the general public, except for
loans made pursuant to programs generally available to all employees, and has
adopted a policy to this effect. In addition, loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
loans to such person and his or her related interests, are in excess of the
greater of $25,000 or 5% of Enfield Federal's capital and surplus (up to a
maximum of $500,000) must be approved in advance by a majority of the
disinterested members of the Board of Directors.
Nominating Committee Procedures
General
It is the policy of the Nominating Committee of the Board of Directors
of the Company to consider director candidates recommended by stockholders who
appear to be qualified to serve on the Company's Board of Directors. The
Nominating Committee may choose not to consider an unsolicited recommendation if
no vacancy exists on the Board of Directors and the Nominating Committee does
not perceive a need to increase the size of the Board of Directors. To avoid the
unnecessary use of the Nominating Committee's resources, the Nominating
Committee will consider only those director candidates recommended in accordance
with the procedures set forth below.
Procedures to be Followed by Stockholders
To submit a recommendation of a director candidate to the Nominating
Committee, a stockholder should submit the following information in writing,
addressed to the Chairman of the Nominating Committee, care of the Corporate
Secretary, at the main office of the Company:
1. The name of the person recommended as a director candidate;
2. All information relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended;
3. The written consent of the person being recommended as a
director candidate to being named in the proxy statement as a
nominee and to serving as a director if elected;
4. As to the stockholder making the recommendation, the name and
address of such stockholder as they appear on the Company's
books; provided, however, that if the stockholder is not a
registered holder of the Company's common stock, the
stockholder should submit his or her name and address along
with a current written statement from the record holder of the
shares that reflects ownership of the Company's common stock;
and
5. A statement disclosing whether such stockholder is acting with
or on behalf of any other person and, if applicable, the
identity of such person.
19
In order for a director candidate to be considered for nomination at
the Company's annual meeting of stockholders, the recommendation must be
received by the Nominating Committee at least 120 calendar days before the date
the Company's proxy statement was released to stockholders in connection with
the previous year's annual meeting, advanced by one year.
Process for Identifying and Evaluating Nominees
The process that the Nominating Committee follows to identify and
evaluate individuals to be nominated for election to the Board of Directors is
as follows:
Identification. For purposes of identifying nominees for the Board of
Directors, the Nominating Committee relies on personal contacts of the committee
members and other members of the Board of Directors, as well as its knowledge of
members of the communities served by Enfield Federal. The Nominating Committee
will also consider director candidates recommended by stockholders in accordance
with the policy and procedures set forth above. The Nominating Committee has not
previously used an independent search firm to identify nominees.
Evaluation. In evaluating potential nominees, the Nominating Committee
determines whether the candidate is eligible and qualified for service on the
Board of Directors by evaluating the candidate under certain criteria, which are
described below. If such individual fulfills these criteria, the Nominating
Committee will conduct a check of the individual's background and interview the
candidate to further assess the qualities of the prospective nominee and the
contributions he or she would make to the Board.
Qualifications
The Nominating Committee has adopted a set of criteria that it
considers when it selects individuals to be nominated for election to the Board
of Directors. A candidate must meet the eligibility requirements set forth in
the Company's Bylaws, which include an age limitation requirement and a
requirement that the candidate not have been subject to certain criminal and
regulatory actions. A candidate also must meet any qualification requirements
set forth in any Board or committee governing documents.
If the candidate is deemed eligible for election to the Board of
Directors, the Nominating Committee will then evaluate the prospective nominee
to determine if he or she possesses the following qualifications, qualities or
skills:
o contributes to the range of talent, skill and expertise
appropriate for the Board;
o financial, regulatory and business experience, knowledge of
the banking and financial service industries, familiarity with
the operations of public companies and ability to understand
financial statements;
o familiarity with the Company's market area and participation
and ties to local businesses and local civic, charitable and
religious organizations;
o personal and professional integrity, honesty and reputation;
o the ability to represent the best interests of the
stockholders of the Company and the best interests of the
institution;
o the ability to devote sufficient time and energy to the
performance of his or her duties;
o independence under applicable Securities and Exchange
Commission and listing definitions; and
o current equity holdings in the Company.
20
The Committee will also consider any other factors the Nominating Committee
deems relevant, including age, diversity, size of the Board of Directors and
regulatory disclosure obligations.
With respect to nominating an existing director for re-election to the
Board of Directors, the Nominating Committee will consider and review an
existing director's Board and committee attendance and performance; length of
Board service; experience, skills and contributions that the existing director
brings to the Board; and independence.
Submission of Business Proposals and Stockholder Nominations
The Company must receive proposals that stockholders seek to include in
the proxy statement for the Company's next annual meeting no later than March 2,
2007. If next year's annual meeting is held on a date more than 30 calendar days
from August 10, 2007, a stockholder proposal must be received by a reasonable
time before the Company begins to print and mail its proxy solicitation for such
annual meeting. Any stockholder proposals will be subject to the requirements of
the proxy rules adopted by the Securities and Exchange Commission.
The Company's bylaws provide that, in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a stockholder must deliver notice of such
nominations and/or proposals to the Secretary not less than 90 days before the
date of the annual meeting. However, if less than 100 days' notice or prior
public disclosure of the date of the annual meeting is given to stockholders,
such notice must be received not later than the close of business of the tenth
day following the day on which notice of the date of the annual meeting was
mailed to stockholders or prior public disclosure of the meeting date was made.
A copy of the bylaws may be obtained from the Company.
Stockholder Communications
The Company encourages stockholder communications to the Board of
Directors and/or individual directors. All communications from stockholders
should be addressed to New England Bancshares, Inc., 855 Enfield Street,
Enfield, Connecticut 06082. Communications to the Board of Directors or to
individual directors should be in the care of Nancy L. Grady, Corporate
Secretary. Communications regarding financial or accounting policies should be
sent to the Chair of the Audit Committee. All other communications should be
sent to the Chair of the Nominating Committee.
Miscellaneous
The Company will pay the cost of this proxy solicitation. Georgeson
Shareholder Communications, Inc., a proxy solicitation firm, will be paid a fee
of $6,500 plus out-of-pocket expenses to assist the Company. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Company. Additionally, directors, officers and other
employees of the Company may solicit proxies personally or by telephone. None of
these persons will receive additional compensation for these activities.
The Company's Annual Report to Stockholders has been included with this
proxy statement. Any stockholder who has not received a copy of the Annual
Report may obtain a copy by writing to the Corporate Secretary of the Company.
The Annual Report is not to be treated as part of the proxy solicitation
material or as having been incorporated by reference into this proxy statement.
21
A copy of the Company's Form 10-KSB (without exhibits) for the fiscal
year ended March 31, 2006, as filed with the Securities and Exchange Commission
will be furnished without charge to all persons who were stockholders as of the
close of business on June 16, 2006 upon written request to Nancy L. Grady,
Corporate Secretary, New England Bancshares, Inc., 855 Enfield Street, Enfield,
Connecticut 06082.
If you and others who share your address own your shares in "street
name," your broker or other holder of record may be sending only one annual
report and proxy statement to your address. This practice, known as
"householding," is designed to reduce our printing and postage costs. However,
if a shareholder residing at such an address wishes to receive a separate annual
report or proxy statement in the future, he or she should contact the broker or
other holder of record. If you own your shares in "street name" and are
receiving multiple copies of our annual report and proxy statement, you can
request householding by contacting your broker or other holder of record.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nancy L. Grady
Nancy L. Grady
Corporate Secretary
Enfield, Connecticut
June 30, 2006
22
Appendix A
New England Bancshares, Inc.
Audit Committee Charter
I. Purpose
The role of the Audit Committee of New England Bancshares, Inc. (the
"Company") is to review: the quality and integrity of the Company's auditing,
accounting and financial reporting processes; the Company's compliance with
legal and regulatory requirements; the independent accountants qualifications
and independence; the internal and external audit functions; and the system of
internal controls. Consistent with this purpose, the Committee should encourage
continuous improvement of, and should foster adherence to, the Company's
policies, procedures and practices at all levels. In addition, the Committee
will strive to provide an open avenue of communication among the independent
accountants, management, the internal auditor and the Board of Directors. The
Committee will primarily fulfill these responsibilities by carrying out the
activities outlined in Section IV. of this Charter.
II. Composition
The Committee shall be comprised of at least three directors as
determined by the Board of Directors, each of whom shall be independent as
defined by applicable Nasdaq Listing Standards and free from any relationship
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgement as a member of the Committee. A Committee member will
not be considered independent if he or she accepts any consulting, advisory or
other compensatory fee from the Company or Enfield Federal Savings and Loan
Association ("Enfield Federal") or is affiliated with the Company or Enfield
Federal or any of their subsidiaries except in his or her capacity as a member
of the Board of Directors. All members of the Committee shall have a working
familiarity with basic finance and accounting practices and be able to read and
understand financial statements. Additionally, at least one member of the
Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting or any other comparable
experience or background that results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. In addition, the Committee shall endeavor to have one member
of the Committee who qualifies as an "audit committee financial expert," as
defined in applicable Securities and Exchange Commission regulations.
The members of the Committee shall be elected by the Board annually or
until their successors shall be duly elected and qualified. Unless a Chairperson
is elected by the full Board, the members of the Committee may designate a
Chairperson by majority vote of the full Committee membership.
III. Meetings
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. A quorum of the Committee shall be declared
when a majority of the appointed members of the Committee are in attendance.
A-1
IV. Responsibilities and Duties
To fulfill its responsibilities and duties, the Committee shall:
Documents/Reports Review
- ------------------------
1. Review and update this Charter as conditions dictate, but not less than
annually.
2. Review the regular internal reports to management prepared by the
internal auditor and management's response.
3. Review the Company's audited annual financial statements and the
independent accountants' report rendered with respect to such financial
statements, including reviewing the nature and extent of any
significant changes in accounting principles.
4. Review with management and the independent accountants all interim
financial reports.
5. Generally discuss earnings press releases and financial information as
well as any earnings guidance provided.
Independent Accountants and Internal Auditor
- --------------------------------------------
6. Select the independent accountants, considering independence and
effectiveness, and be ultimately responsible for their compensation and
oversight (including resolution of disagreements between management and
the accountant regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work, and each such
registered public accounting firm shall report directly to the
Committee. The Committee should confirm the independence of the
independent auditor by requiring them to disclose in writing all
relationships that, in the auditor's professional judgement, may
reasonably be thought to bear on the ability to perform the audit
independently and objectively.
7. Review the performance of the independent accountants and discharge the
independent accountants when circumstances warrant.
8. Ensure the rotation of the lead audit partner having primary
responsibility for the audit as required by law.
9. Set clear policies for hiring employees or former employees of the
independent accountants.
10. Review qualifications and performance of the internal auditor. The
Committee should also review and concur in the appointment, replacement
or dismissal of the internal auditor.
11. Approve, in advance, all permissible non-audit services to be completed
by the independent accountants. Such approval process will ensure that
the independent accountant does not provide any non-audit services to
the Company that are prohibited by law or regulation.
12. Review with the independent accountant and the internal auditor the
work to be performed by each to assure completeness of coverage,
reduction of redundant efforts and the effective use of resources.
13. Obtain and review, at least annually, a report by the independent
accountants describing (A) the auditor's internal quality control
procedures, (B) any material issues raised by its most recent internal
quality control review, or peer review, of the firm or by any inquiry
or investigation by governmental or professional authorities in the
preceding five (5) years relating to an independent audit conducted by
the firm and any steps taken to deal with such issues.
Financial Reporting Process
- ---------------------------
14. In consultation with the independent accountants and the internal
auditor, review the integrity of the organization's financial reporting
processes, both internal and external.
A-2
15. Ensure that the independent accountant discusses with the Committee
their judgements about the quality, not just the acceptability, of the
Company's accounting principles as applied in the financial reports.
The discussion should include such issues as the clarity of the
Company's financial disclosures and degree of aggressiveness or
conservatism of the Company's accounting principles and underlying
estimates and other significant decisions made by management in
preparing the financial disclosures.
16. Review and consider recommendations to the Company's auditing,
financial and accounting principles and practices and internal controls
as suggested by the independent accountants, management or the internal
auditor and monitor the implementation of such recommendations.
17. Prepare a report for inclusion in the Company's annual proxy statement,
in accordance with applicable rules and regulations.
Process Improvement
- -------------------
18. Review any significant difficulties, risk or exposures encountered
during the course of an audit by the independent accountants or the
internal auditor. From these discussions, assess and report to the
Board regarding how the findings should be addressed.
19. Periodically consult with each of the internal auditor and the
independent accountant out of the presence of management about
accounting procedures, internal controls and the fullness and accuracy
of the organization's financial statements.
20. Have in place procedures for (A) receiving complaints regarding
accounting, internal accounting controls or auditing matters and (B)
the confidential submission by employees of concerns regarding
questionable accounting.
21. Report regularly to the Board of Directors on issues relating to the
quality or integrity of the Company's financial statements and
financial reporting, the Company's compliance with legal and regulatory
requirements and the performance of the independent accountants and the
internal auditor.
Ethical and Legal Compliance
- ----------------------------
22. Review all legal and regulatory compliance matters that could have a
material impact on the Company's financial statements.
23. Review and approve all related-party transactions.
24. Be authorized to retain independent counsel and other advisors as it
deems necessary to carry out its duties and to assist it in the conduct
of any investigation. In connection therewith, the Committee shall be
provided appropriate funding as determined by the Committee for payment
to accountants and advisors.
25. Have prepared and update periodically a Code of Ethics and Business
Conduct. 0
26. Perform any other activities consistent with this Charter, the
Company's bylaws and governing law, as the Committee or the Board of
Directors deems necessary or appropriate.
A-3
APPENDIX B
New England Bancshares, Inc.
2006 Equity Incentive Plan
Article 1
Purpose
The purpose of the New England Bancshares, Inc. 2006 Equity Incentive
Plan (the "Plan") is to promote the success and enhance the value of New England
Bancshares, Inc. (the "Company"), by linking the personal financial and economic
interests of employees, officers and directors of the Company or any Affiliate
(as defined below) to those of Company stockholders and by providing such
persons with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract and retain the services of employees, officers and directors upon whose
judgment, interest, and special effort the successful conduct of the Company's
operation is largely dependent. Accordingly, the Plan permits the grant of
equity incentive awards from time to time to selected employees, officers and
directors of the Company and its Affiliates.
Article 2
Definitions
When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence, the word or
phrase shall generally be given the meaning ascribed to it in this Article 2
unless a clearly different meaning is required by the context. The following
words and phrases shall have the following meanings:
"Affiliate" means an entity that directly or through one or more
intermediaries controls, is controlled by or is under common control with, the
Company, as determined by the Committee.
"Award" means any Option or Restricted Stock Award granted to a
Participant under the Plan.
"Award Agreement" means a written document, in such form as the
Committee prescribes from time to time, setting forth the terms and conditions
of an Award.
"Board of Directors" means the Board of Directors of the Company.
"Change in Control" means the occurrence of any one of the following
events:
(1) Merger: The Company merges into or consolidates with another
------
corporation, or merges another corporation into the Company,
and, as a result, less than a majority of the combined voting
power of the resulting corporation immediately after the
merger or consolidation is held by persons who were
stockholders of the Company immediately before the merger or
consolidation.
(2) Acquisition of Significant Share Ownership: A report on
------------------------------------------
Schedule 13D or another form or schedule (other than Schedule
13G) is filed or is required to be filed under Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934, if the
schedule discloses that the filing person or persons acting in
concert has or have become the beneficial owner of 25% or more
of a class of the Company's voting securities, but this clause
(b) shall not apply to beneficial ownership of Company voting
shares held in a fiduciary
B-1
capacity by an entity of which the Company directly or
indirectly beneficially owns fifty percent (50%) or more of
its outstanding voting securities;
(3) Change in Board Composition: During any period of two
---------------------------
consecutive years, individuals who constitute the Company's
Board of Directors at the beginning of the two-year period
cease for any reason to constitute at least a majority of the
Company's Board of Directors; provided, however, that for
purposes of this clause (3), each director who is first
elected by the board (or first nominated by the board for
election by the stockholders) by a vote of at least two-thirds
(2/3) of the directors who were directors at the beginning of
the two-year period shall be deemed to have also been a
director at the beginning of such period; or
(4) Sale of Assets: The Company sells to a third party all or
--------------
substantially all of its assets.
"Change in Control Price" means the highest price per share of Shares
offered in conjunction with any transaction resulting in a Change in Control (as
determined in good faith by the Committee if any part of the offered price is
payable other than in cash) or, in the case of a Change in Control occurring
solely by reason of a change in the composition of the Board of Directors, the
highest Fair Market Value of the Shares on any of the thirty (30) trading days
immediately preceding the date on which a Change in Control occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee of the Board of Directors described in
Article 4 of the Plan.
"Company" means New England Bancshares, Inc. or any successor
corporation.
"Continuous Status as a Participant" means the absence of any
interruption or termination of service as an employee, officer or director of
the Company or any Affiliate, as applicable. Continuous service shall not be
considered interrupted in the case of sick leave, military leave or any other
absence approved by the Company or an Affiliate, in the case of transfers
between payroll locations or between the Company, an Affiliate or a successor or
performance of services in an emeritus, advisory or consulting capacity,
provided, however, that for purposes of an Incentive Stock Option, "Continuous
Status as a Participant" means the absence of any interruption or termination of
service as an employee of the Company or any Parent or Subsidiary, as
applicable.
"Covered Employee" means a covered employee as defined in Section
162(m)(3) of the Code.
"Disability" means any illness or other physical or mental condition of
a Participant that renders the Participant incapable of performing his customary
and usual duties for the Company, or any medically determinable illness or other
physical or mental condition resulting from a bodily injury, disease or mental
disorder which, in the judgment of the Committee, is permanent and continuous in
nature. The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant's condition.
Notwithstanding the above, with respect to an Incentive Stock Option, Disability
shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the
Code.
"Effective Date" has the meaning assigned such term in Section 3.1 of
the Plan.
B-2
"Eligible Participant" means an employee, officer or director
(including emeritus or advisory director) of the Company or any Affiliate.
"Exchange" means any national securities exchange or automated
quotation system on which the Stock may from time to time be listed or traded.
"Fair Market Value" on any date, means (i) if the Stock is listed on an
Exchange, the closing sales price on such Exchange on such date or, in the
absence of reported sales on such date, the closing sales price on the
immediately preceding date on which sales were reported, or (ii) if the Stock is
not listed on an Exchange, Fair Market Value shall mean a price determined by
the Committee in good faith on the basis of objective criteria.
"Grant Date" means the date an Award is made by the Committee.
"Incentive Stock Option" means an Option that is intended to be an
incentive stock option and meets the requirements of Section 422 of the Code or
any successor provision thereto.
"Non-Employee Director" means a director of the Company or an Affiliate
who is not a common law employee of the Company or an Affiliate.
"Nonstatutory Stock Option" means an Option that is not an Incentive
Stock Option.
"Option" means a right granted to a Participant under Article 7 of the
Plan to purchase Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.
"Parent or Subsidiary" means a "parent" or "subsidiary" as such terms
are defined in Sections 424(e) and (f) of the Code.
"Participant" means a person who, as an employee, officer or director
of the Company or any Affiliate, has been granted an Award under the Plan;
provided that in the case of the death of a Participant, the term "Participant"
refers to a beneficiary designated pursuant to Article 9.4 of the Plan or the
legal guardian or other legal representative acting in a fiduciary capacity on
behalf of the Participant under applicable state law and court supervision.
"Plan" means the New England Bancshares, Inc. 2006 Equity Incentive
Plan, as amended from time to time.
"Restricted Stock Award" means Stock granted to a Participant under
Article 8 of the Plan that is subject to certain restrictions and to risk of
forfeiture.
"Shares" means shares of the Company's Stock. If there has been an
adjustment or substitution pursuant to Article 10 of the Plan, the term "Shares"
shall also include any shares of stock or other securities that are substituted
for Shares or into which Shares are adjusted pursuant to Article 10 of the Plan.
"Stock" means the common stock of the Company, par value $0.01, and
such other securities of the Company as may be substituted for Stock pursuant to
Article 10 of the Plan.
"1933 Act" means the Securities Act of 1933, as amended from time to
time.
B-3
"1934 Act" means the Securities Exchange Act of 1934, as amended from
time to time.
Article 3
Effective Term of Plan
3.1 EFFECTIVE DATE. The Plan shall be effective:
(1) immediately upon the affirmative vote of a majority
of votes eligible to be cast at the Company's 2006
annual meeting; or
(2) on December 28, 2006, if the 2006 Plan is approved by
the majority of the votes cast at the annual meeting.
3.2 TERMINATION OF PLAN. The Plan shall terminate on the tenth
anniversary of the Effective Date. The termination of the Plan on such date
shall not affect the validity of any Award outstanding on the date of
termination.
Article 4
Administration
4.1 COMMITTEE. The Plan shall be administered by a Committee appointed
by the Board of Directors (which Committee shall consist of at least two
disinterested directors) or, at the discretion of the Board from time to time,
the Plan may be administered by the Board of Directors. It is intended that at
least two of the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and "outside directors" (within the meaning of Code Section 162(m) and
the regulations thereunder) and that any such members of the Committee who do
not so qualify shall abstain from participating in any decision to make or
administer Awards that are made to Eligible Participants who at the time of
consideration for such Award (i) are persons subject to the short-swing profit
rules of Section 16 of the 1934 Act, or (ii) are reasonably anticipated to
become Covered Employees during the term of the Award. However, the mere fact
that a Committee member shall fail to qualify under either of the foregoing
requirements or shall fail to abstain from such action shall not invalidate any
Award made by the Committee which Award is otherwise validly made under the
Plan. The members of the Committee shall be appointed by, and may be changed at
any time and from time to time in the discretion of, the Board of Directors. The
Board of Directors may reserve for itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes. To the extent the Board of Directors has
reserved any authority and responsibility or during any time that the Board of
Directors is acting as administrator of the Plan, it shall have all the powers
of the Committee hereunder, and any reference herein to the Committee (other
than in this Section 4.1) shall include the Board of Directors. To the extent
any action of the Board of Directors under the Plan conflicts with actions taken
by the Committee, the actions of the Board of Directors shall control.
4.2 ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of
administering the Plan, the Committee may from time to time adopt rules,
regulations, guidelines and procedures for carrying out the provisions and
purposes of the Plan and make such other determinations, not inconsistent with
the Plan, as the Committee may deem appropriate. The Committee's interpretation
of the Plan, any Awards granted under the Plan, any Award Agreement and all
decisions and determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Affiliate,
B-4
the Company's or an Affiliate's independent certified public accountants,
Company counsel or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. Except as provided below, the Committee has
the exclusive power, authority and discretion to:
(a) Grant Awards;
(b) Designate Participants;
(c) Determine the type or types of Awards to be granted to each
Participant;
(d) Determine the number of Awards to be granted an the number of
Shares to which an Award will relate;
(e) Determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price,
any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Accelerate the vesting, exercisability or lapse of
restrictions of any outstanding Award in accordance with
Articles 9 and 10 of the Plan, based in each case on such
considerations as the Committee in its sole discretion
determines;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules, regulations, guidelines
or procedures as it may deem necessary or advisable to
administer the Plan;
(j) Make all other decisions and determinations tha may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein.
Notwithstanding the above, the Board of Directors or the Committee may
also delegate, to the extent permitted by applicable law, to one or more
officers of the Company, the Committee's authority under subsections (a) through
(h) above, pursuant to a resolution that specifies the total number of Options
or Restricted Stock Awards that may be granted under the delegation, provided
that no officer may be delegated the power to designate himself or herself as a
recipient of such Awards; and provided further that no delegation of its duties
and responsibilities may be made to officers of the Company with respect to
Awards to Eligible Participants who as of the Grant Date are persons subject to
the short-swing profit rules of Section 16 of the 1934 Act, or who as of the
Grant Date are reasonably anticipated to become Covered Employees during the
term of the Award. The acts of such delegates shall be treated hereunder as acts
of the Committee and such delegates shall report to the Committee regarding the
delegated duties and responsibilities.
B-5
4.4 AWARD AGREEMENTS. Each Award shall be evidenced by an Award
Agreement. Each Award Agreement shall include such provisions, not inconsistent
with the Plan, as may be specified by the Committee.
Article 5
Shares Subject to the Plan
5.1 NUMBER OF SHARES. Subject to adjustment as provided in Article 10
of the Plan, the aggregate number of Shares reserved and available for issuance
pursuant to Awards granted under the Plan shall be 274,878.
5.2 SHARE COUNTING.
(a) To the extent that an Award is canceled, terminates, expires,
is forfeited or lapses for any reason, any unissued Shares
subject to the Award will again be available for issuance
pursuant to Awards granted under the Plan.
(b) If the exercise price of an Option is satisfied by delivering
Shares to the Company (by either actual delivery or
attestation), only the number of Shares issued in excess of
the delivery or attestation shall be considered for purposes
of determining the number of Shares remaining available for
issuance pursuant to Awards granted under the Plan.
(c) To the extent that the full number of Shares subject to an
Option is not issued upon exercise of the Option for any
reason (other than Shares used to satisfy an applicable tax
withholding obligation), only the number of Shares issued and
delivered upon exercise of the Option shall be considered for
purposes of determining the number of Shares remaining
available for issuance pursuant to Awards granted under the
Plan. Nothing in this subsection shall imply that any
particular type of cashless exercise of an Option is permitted
under the Plan, that decision being reserved to the Committee
or other provisions of the Plan.
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased in the open market.
5.4 LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to
the contrary (but subject to adjustment as provided in Section 10.1), the
maximum number of Shares that may be delivered pursuant to Options under the
Plan is 196,342 and the maximum number of Shares that may be delivered pursuant
to Awards of Restricted Stock under the Plan is 78,536. The maximum number of
Shares with respect to which Options may be granted during any one calendar year
under the Plan to any one Participant shall be 49,085.
Article 6
Eligibility
Awards may be granted only to Eligible Participants; except that
Incentive Stock Options may be granted only to Eligible Participants who are
employees of the Company or a Parent or Subsidiary of the Company.
B-6
Article 7
Stock Options
7.1 GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) Exercise Price. The exercise price of an Option shall not be
less than the Fair Market
Value as of the Grant Date.
(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole
or in part, subject to Section 7.1(d) of the Plan. The
Committee shall also determine the conditions, if any, that
must be satisfied before all or part of an Option may be
exercised or vested. The Committee may waive any exercise or
vesting provisions at any time in whole or in part based upon
factors as the Committee may determine in its sole discretion
so that the Option becomes exercisable or vested at an earlier
date.
(c) Payment. The Committee shall determine the methods by which
the exercise price of an Option may be paid, the form of
payment, including, without limitation, cash, Shares, or other
property (including "cashless exercise" arrangements), and the
methods by which Shares shall be delivered or deemed to be
delivered to Participants.
(d) Exercise Term. In no event may any Option be exercisable for
more than ten years from the Grant Date.
7.2 INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Lapse of Option. Subject to any earlier termination provision
contained in the Award Agreement, an Incentive Stock Option
shall lapse upon the earliest of the following circumstances;
provided, however, that the Committee may, prior to the lapse
of the Incentive Stock Option under the circumstances
described in subsections (3), (4) or (5) below, provide in
writing that the Option will extend until a later date, but if
an Option is so extended and is exercised after the dates
specified in subsections (3) and (4) below, it will
automatically become a Nonstatutory Stock Option:
(1) The expiration date set forth in the Award Agreement.
(2) The tenth anniversary of the Grant Date.
(3) Three months after termination of the Participant's
Continuous Status as a Participant for any reason
other than the Participant's Disability or death.
(4) One year after the termination of the Participant's
Continuous Status as a Participant by reason of the
Participant's Disability.
(5) One year after the Participant's death if the
Participant dies while employed, or during the
three-month period described in paragraph (3) or
during the one-year period described in paragraph (4)
and before the Option otherwise lapses.
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Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Articles 9 or 10 of the Plan, if a
Participant exercises an Option after termination of
employment, the Option may be exercised only with respect to
the Shares that were otherwise vested on the Participant's
termination of employment. Upon the Participant's death, any
exercisable Incentive Stock Options may be exercised by the
Participant's beneficiary, determined in accordance with
Section 9.4 of the Plan.
(b) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the Grant Date) of all Shares with respect
to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00
(or any higher value as may be permitted under Section 422 of
the Code).
(c) Ten Percent Owners. No Incentive Stock Option shall be granted
to any individual who, at the Grant Date, owns stock
possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or any Parent or
Subsidiary unless the exercise price per share of such Option
is at least 110% of the Fair Market Value per Share at the
Grant Date and the Option expires no later than five years
after the Grant Date.
(d) Expiration of Authority to Grant Incentive StocK Options. No
Incentive Stock Option may be granted pursuant to the Plan
after the day immediately prior to the tenth anniversary of
the Effective Date, or the termination of the Plan, if
earlier.
(e) Right to Exercise. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the
Participant or, in the case of the Participant's Disability,
by the Participant's guardian or legal representative.
(f) Eligible Grantees. The Committee may not grant an Incentive
Stock Option to a person who is not at the Grant Date an
employee of the Company or of an Affiliate.
Article 8
Restricted Stock
8.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. An Award of Restricted
Stock shall be evidenced by an Award Agreement setting forth the terms,
conditions and restrictions applicable to the Award.
8.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter. Except as otherwise provided in an Award Agreement, the
Participant shall have all of the rights of a stockholder with respect to the
Restricted Stock.
8.3 FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of Continuous
Status as a Participant during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be forfeited;
B-8
provided, however, that the Committee may provide in any Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from death or
Disability or in connection with a Change in Control, and the Committee may in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.
8.4 DELIVERY OF RESTRICTED STOCK. Unless otherwise held in a trust and
registered in the name of the trustee, reasonably promptly after the Grant Date
with respect to shares of Restricted Stock, the Company shall cause to be issued
a stock certificate, registered in the name of the Participant to whom the
Restricted Stock was granted, evidencing 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. 2006 Equity 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."
Such legend shall not be removed until the Participant vests in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8.4, in connection with a Restricted Stock
Award, shall be held by the Company or its Affiliates, unless the Committee
determines otherwise.
8.5 VOTING RIGHTS. Unless otherwise determined by the Committee at the
time of grant, a Participant holding Restricted Stock shall be entitled to
exercise full voting rights with respect to those Shares during the restriction
period.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the restriction period, a
Participant holding Restricted Stock may, if the Committee so determines, be
credited with dividends paid with respect to the underlying Shares. Such
dividends shall be paid to the Participant at times determined by the Committee
in its sole discretion. The Committee may apply any restrictions to the
dividends that the Committee deems appropriate.
Article 9
General Provisions Applicable to Awards
9.1 STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may,
in the discretion of the Committee, be granted either alone or in addition to
or, in tandem with, any other Award granted under the Plan.
9.2 TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from its Grant Date (or, if
Section 7.2(c) applies, five years from its Grant Date).
9.3 LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the
B-9
Company or an Affiliate, or shall be subject to any lien, obligation or
liability of such Participant to any other party other than the Company or an
Affiliate. No unexercised or restricted Award shall be assignable or
transferable by a Participant other than by will or the laws of descent and
distribution or, except in the case of an Incentive Stock Option, pursuant to a
domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if
that Code Section applied to an Award under the Plan; provided, however, that
the Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any Option intended to be an Incentive Stock Option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, state or federal tax or securities laws applicable to transferable
Awards.
9.4 BENEFICIARIES. Notwithstanding Section 9.3 of the Plan, a
Participant may, in the manner determined by the Committee, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant's death. A
beneficiary, legal guardian, legal representative or other person claiming any
rights under the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If no beneficiary has been designated
or survives the Participant, payment shall be made to the Participant's estate.
Subject to the foregoing, a beneficiary designation may be changed or revoked by
a Participant at any time provided the change or revocation is filed with the
Committee.
9.5 STOCK CERTIFICATES. All Stock issuable under the Plan is subject to
any stop- transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state securities laws, rules
and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted or traded. The Committee
may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.
9.6 ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided
in the Award Agreement, upon the Participant's death or Disability during his or
her Continuous Status as a Participant, all of such Participant's outstanding
Options and other Awards in the nature of rights that may be exercised shall
become fully exercisable and all time-based vesting restrictions on the
Participant's outstanding Awards shall lapse. Any Awards shall thereafter
continue or lapse in accordance with the other provisions of the Plan and the
Award Agreement. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(b) of the Plan,
the excess Options shall be deemed to be Nonstatutory Stock Options.
9.7 TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A Participant's
Continuous Status as a Participant shall not be deemed to terminate in a
circumstance in which a Participant transfers from the Company to an Affiliate,
transfers from an Affiliate to the Company, or transfers from one Affiliate to
another Affiliate. To the extent that this provision causes Incentive Stock
Options to extend beyond three months from the date a Participant is deemed to
be an employee of the Company, a Parent or Subsidiary for purposes of Sections
424(e) and 424(f) of the Code, the Options held by such Participant shall be
deemed to be Nonstatutory Stock Options.
B-10
Article 10
Change in Capital Structure; Change in Control
10.1 CHANGES IN CAPITAL STRUCTURE. In the event of a corporate event or
transaction involving the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend, recapitalization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
authorization limits under Article 5 shall be adjusted proportionately, and the
Committee may adjust the Plan and Awards to preserve the benefits or potential
benefits of the Awards. Action by the Committee may include: (i) adjustment of
the number and kind of shares which may be delivered under the Plan; (ii)
adjustment of the number and kind of shares subject to outstanding Awards; (iii)
adjustment of the exercise price of outstanding Awards or the measure to be used
to determine the amount of the benefit payable on an Award; and (iv) any other
adjustments that the Committee determines to be equitable. Without limiting the
foregoing, in the event of a subdivision of the outstanding stock (stock-split),
a declaration of a dividend payable in Shares, or a combination or consolidation
of the outstanding stock unto a lesser number of Shares, the authorization
limits under Article 5 shall automatically be adjusted proportionately, and the
Shares then subject to each Award shall automatically be adjusted
proportionately without any change in the aggregate purchase price therefor.
10.2 ACCELERATED VESTING AND PAYMENT. Subject to the provisions of
Section 10.3 of the Plan or as otherwise provided in the Award Agreement, in the
event of a Change in Control, unless otherwise specifically prohibited under law
or by the rules and regulations of an Exchange:
(a) Any and all Options granted hereunder shall become immediately
exercisable; additionally, if a Participant's employment or
service is involuntarily terminated or constructively
terminated for any reason except cause within twelve (12)
months of such Change in Control, the Participant shall have
until the expiration of the term of the Option to exercise
such Options;
(b) Any time-based and other restrictions imposed on Restricted
Stock shall lapse; and
(c) The Committee shall have the ability to unilaterally determine
that all outstanding Awards are cancelled upon a Change in
Control, and the value of such Awards, as determined by the
Committee in accordance with the terms of the Plan and the
Award Agreement, be paid out in cash in an amount based on the
Change in Control Price within a reasonable time subsequent to
the Change in Control.
10.3 ALTERNATIVE AWARDS. Notwithstanding Section 10.2 of the Plan, no
cash settlement or other payment shall occur with respect to any Award if the
Committee reasonably determines in good faith prior to the occurrence of a
Change in Control that such Award shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted Award hereinafter
called an "Alternative Award") by any successor as described in Section 12.16 of
the Plan; provided that any such Alternative Award must:
(a) Be based on stock which is traded on an established U.S.
securities market, or that the Committee reasonably believes
will be so traded within sixty (60) days after the Change in
Control;
(b) Provide such Participant with rights and entitlements
substantially equivalent to or better than the rights, terms
and conditions applicable under such Award;
B-11
(c) Have substantially equivalent economic value to such Award
(determined at the time of the Change in Control); and
(d) Have terms and conditions which provide that in the event that
the Participant's employment is involuntarily terminated or
constructively terminated, any conditions on a Participant's
rights under, or any restrictions on transfer or
exercisability applicable to, each such Alternative Award
shall be waived or shall lapse, as the case may be.
Article 11
Amendment, Modification and Termination
11.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate the
Plan without stockholder approval; provided, however, that if an amendment to
the Plan would, in the reasonable opinion of the Board of Directors or the
Committee, either (i) materially increase the number of Shares available under
the Plan, (ii) expand the types of awards under the Plan, (iii) materially
expand the class of participants eligible to participate in the Plan, (iv)
materially extend the term of the Plan, or (v) otherwise constitute a material
change requiring stockholder approval under applicable laws, policies or
regulations or the applicable listing or other requirements of an Exchange, then
such amendment shall be subject to stockholder approval; and provided, further,
that the Board of Directors or Committee may condition any other amendment or
modification on the approval of stockholders of the Company for any reason,
including by reason of such approval being necessary or deemed advisable to (i)
permit Awards made hereunder to be exempt from liability under Section 16(b) of
the 1934 Act, (ii) to comply with the listing or other requirements of an
Exchange, or (iii) to satisfy any other tax, securities or other applicable
laws, policies or regulations.
11.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:
(a) Subject to the terms of the applicable Award Agreement, such
amendment, modification or termination shall not, without the
Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested,
or otherwise settled on the date of such amendment or
termination (with the per-share value of an Option for this
purpose being calculated as the excess, if any, of the Fair
Market Value as of the date of such amendment or termination
over the exercise price of such Award);
(b) The original term of an Option may not be extended without the
prior approval of the stockholders of the Company;
(c) Except as otherwise provided in Article 10 of the Plan, the
exercise price of an Option may not be reduced, directly or
indirectly, without the prior approval of the stockholders of
the Company; and
(d) No termination, amendment, or modification of the Plan shall
adversely affect any Award previously granted under the Plan,
without the written consent of the Participant affected
thereby. An outstanding Award shall not be deemed to be
"adversely affected" by a Plan amendment if such amendment
would not reduce or diminish the value of such Award
determined as if the Award had been exercised, vested, or
otherwise settled on the date of such amendment (with the
per-share value of an Option for this purpose being
B-12
calculated as the excess, if any, of the Fair Market Value as
of the date of such amendment over the exercise or base price
of such Award).
Article 12
General Provisions
12.1 NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS. No Participant or
any Eligible Participant shall have any claim to be granted any Award under the
Plan. Neither the Company, its Affiliates nor the Committee is obligated to
treat Participants or Eligible Participants uniformly, and determinations made
under the Plan may be made by the Committee selectively among Eligible
Participants who receive, or are eligible to receive, Awards (whether or not
such Eligible Participants are similarly situated).
12.2 NO STOCKHOLDER RIGHTS. Except as otherwise provided in this Plan
or an Award Agreement, no Award gives a Participant any of the rights of a
stockholder of the Company unless and until Shares are in fact issued to such
person in connection with such Award.
12.3 WITHHOLDING. The Company or any Affiliate shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any exercise, lapse of restriction or other taxable event
arising as a result of the Plan. If Shares are surrendered to the Company to
satisfy withholding obligations in excess of the minimum withholding obligation,
such Shares must have been held by the Participant as fully vested shares for
such period of time, if any, as necessary to avoid variable accounting for the
Option. With respect to withholding required upon any taxable event under the
Plan, the Committee may, at the time the Award is granted or thereafter, require
or permit that any such withholding requirement be satisfied, in whole or in
part, by withholding from the Award Shares having a Fair Market Value on the
date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
12.4 NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan, any Award
Agreement or any other document or statement made with respect to the Plan,
shall interfere with or limit in any way the right of the Company or any
Affiliate to terminate any Participant's employment or status as an officer,
director or consultant at any time, nor confer upon any Participant any right to
continue as an employee, officer, director or consultant of the Company or any
Affiliate, whether for the duration of a Participant's Award or otherwise.
12.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Affiliate.
The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974 ("ERISA").
12.6 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Affiliate unless provided otherwise in such other plan.
12.7 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Affiliates.
B-13
12.8 TITLES AND HEADINGS. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
12.9 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
12.10 FRACTIONAL SHARES. No fractional Shares shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional Shares or whether such fractional Shares shall be eliminated
by rounding up or down.
12.11 GOVERNMENT AND OTHER REGULATIONS.
(a) Notwithstanding any other provision of the Plan no Participant
who acquires Shares pursuant to the Plan may, during any
period of time that such Participant is an affiliate of the
Company (within the meaning of the rules and regulations of
the Securities and Exchange Commission under the 1933 Act),
sell such Shares, unless such offer and sale is made (i)
pursuant to an effective registration statement under the 1933
Act, which is current and includes the Shares to be sold or
(ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set
forth in Rule 144 promulgated under the 1933 Act.
(b) Notwithstanding any other provision of the Plan, if at any
time the Committee shall determine that the registration,
listing or qualification of the Shares covered by an Award
upon any Exchange or under any federal, state or local law or
practice, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such Award or the
purchase or receipt of Shares thereunder, no Shares may be
purchased, delivered or received pursuant to such Award unless
and until such registration, listing, qualification, consent
or approval shall have been effected or obtained free of any
condition not acceptable to the Committee. Any Participant
receiving or purchasing Shares pursuant to an Award shall make
such representations and agreements and furnish such
information as the Committee may request to assure compliance
with the foregoing or any other applicable legal requirements.
The Company shall not be required to issue or deliver any
certificate or certificates for Shares under the Plan prior to
the Committee's determination that all related requirements
have been fulfilled. The Company shall in no event be
obligated to register any securities pursuant to the 1933 Act
or applicable state law or to take any other action in order
to cause the issuance and delivery of such certificates to
comply with any such law, regulation or requirement.
(c) Notwithstanding any other provision contained i the Plan, this
Plan shall comply with the requirements of 12 C.F.R. Section
563b.500.
12.12 GOVERNING LAW. To the extent not governed by federal law, the
Plan and all Award Agreements shall be construed in accordance with and governed
by the laws of the State of Maryland.
12.13 ADDITIONAL PROVISIONS. Each Award Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of the Plan.
B-14
12.14 INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
12.15 NO LIMITATIONS ON RIGHTS OF COMPANY. Subject to Section 12.16 of
the Plan, the grant of any Award shall not in any way affect the right or power
of the Company to make adjustments, reclassification or changes in its capital
or business structure or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any part of its business or assets. The Plan shall not restrict
the authority of the Company, for proper corporate purposes, to draft or assume
Awards, other than under the Plan, to or with respect to any person. If the
Committee so directs, the Company may issue or transfer Shares to an Affiliate,
for such lawful consideration as the Committee may specify, upon the condition
or understanding that the Affiliate will transfer such Shares to a Participant
in accordance with the terms of an Award granted to such Participant and
specified by the Committee pursuant to the provisions of the Plan.
12.16 SUCCESSORS. Any obligations of the Company or an Affiliate under
the Plan with respect to Awards granted hereunder, shall be binding on any
successor to the Company or Affiliate, respectively, whether the existence of
such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company or Affiliate, as applicable.
B-15
REVOCABLE PROXY
NEW ENGLAND BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
August 10, 2006
1:00 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 Lucien P. Bolduc, Peter
T. Dow, William C. Leary, Myron J. Marek, Dorothy K. McCarty, David J. O'Connor,
Richard K. Stevens and Richard M. Tatoian, or any of them, with full power of
substitution in each, 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 Annual Meeting of Stockholders to be held on August 10, 2006 at 1:00
p.m., local time, at the Crowne Plaza 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:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Lucien P. Bolduc and Myron J. Marek
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- ------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
- --------------------------------------------------------------------------------
2. The approval of the New England Bancshares, Inc. 2006 Equity Incentive
Plan.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
- --------------------------------------------------------------------------------
3. The ratification of the appointment of Shatswell, MacLeod & Company,
P.C. as independent auditors of New England Bancshares, Inc. for the
fiscal year ending March 31, 2007.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
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" each of the proposals listed. If any other business is presented at the
Annual Meeting, including whether or not to adjourn the meeting, this proxy will
be voted by the proxies in their judgment. At the present time, the Board of
Directors knows of no other business to be presented at the Annual Meeting. This
proxy also confers discretionary authority on the Proxy Committee of the Board
of Directors to vote with respect to the election of any person as director
where the nominees are unable to serve or for good cause will not serve and
matters incident to the conduct of the meeting.
Dated:
---------------------------------- ----------------------------------
SIGNATURE OF STOCKHOLDER
----------------------------------
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 Annual Meeting of Stockholders, a Proxy
Statement dated June 30, 2006 and an Annual Report to Stockholders.
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.
[New England Bancshares, Inc. Letterhead]
Dear ESOP Participant:
On behalf of the Board of Directors of New England Bancshares, Inc.
(the "Company"), I am forwarding you the attached vote authorization form to
convey your voting instructions to First Bankers Trust Services, Inc. (the
"Trustee") on the proposals to be presented at the Annual Meeting of
Stockholders of New England Bancshares, Inc. to be held on August 10, 2006. Also
enclosed is a Notice and Proxy Statement for the Annual Meeting of Stockholders
and a copy of the Company's Annual Report to Stockholders.
As a participant in the Enfield Federal Savings and Loan Association
Employee Stock Ownership Plan (the "ESOP"), you are entitled to vote all shares
of Company common stock allocated to your account as of June 16, 2006. All
allocated shares of Company common stock will be voted as directed by
participants, so long as participant instructions are received by the Trustee by
July 31, 2006. If you do not direct the Trustee how to vote the shares of
Company common stock allocated to your ESOP account, the Trustee will vote your
shares in a manner calculated to most accurately reflect the instructions it
receives from other participants, subject to its fiduciary duties.
To direct the voting of the shares of Company common stock allocated to
your account under the ESOP, please complete and sign the attached vote
authorization form and return it in the enclosed postage-paid envelope no later
than July 31, 2006. Your vote will not be revealed, directly or indirectly, to
any officer, employee or director of the Company or Enfield Federal Savings and
Loan Association.
Sincerely,
/s/ David J. O'Connor
David J. O'Connor
President and Chief Executive Officer
VOTE AUTHORIZATION FORM
I understand that First Bankers Trust Services, Inc. is the holder of
record and custodian of all shares of New England Bancshares, Inc. (the
"Company") common stock allocated to me under the Enfield Federal Savings and
Loan Association Employee Stock Ownership Plan. Further, I understand that my
voting instructions are solicited on behalf of the Company's Board of Directors
for the Annual Meeting of Stockholders to be held on August 10, 2006.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Lucien P. Bolduc and Myron J. Marek
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- ------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
- --------------------------------------------------------------------------------
2. The approval of the New England Bancshares, Inc. 2006 Equity Incentive
Plan.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
- --------------------------------------------------------------------------------
3. The ratification of the appointment of Shatswell, MacLeod & Company,
P.C. as independent auditors of New England Bancshares, Inc. for the
fiscal year ending March 31, 2007.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
The Trustee is hereby authorized to vote any shares allocated to me as
indicated above.
- --------------------------------- -------------------------------------
Date Signature
Please date, sign and return this form in the enclosed envelope no later than
July 31, 2006.
[New England Bancshares, Inc. Letterhead]
Dear 401(k) Participant:
On behalf of the Board of Directors of New England Bancshares, Inc.
(the "Company"), I am forwarding you the attached vote authorization form
provided to convey your voting instructions to Bank of New York (the "Trustee")
on the proposals to be presented at the Annual Meeting of Stockholders of New
England Bancshares, Inc. to be held on August 10, 2006. Also enclosed is a
Notice and Proxy Statement for the Annual Meeting of Stockholders and a copy of
the Company's Annual Report to Stockholders.
As a holder of Company common stock under Enfield Federal Savings and
Loan Association Employees' Savings & Profit Sharing Plan and Trust (the "401(k)
Plan"), you are entitled to direct the Trustee how to vote the shares of Company
common stock credited to your account as of June 16, 2006. The Trustee will vote
all shares of Company 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 other 401(k) participants.
Please complete, sign and return the attached vote authorization form
and return it in the enclosed postage-paid envelope provided by Muldoon Murphy &
Aguggia LLP no later than July 31, 2006. Your vote will not be revealed,
directly or indirectly, to any employee or director of the Company or Enfield
Federal Savings and Loan Association.
Sincerely,
/s/ David J. O'Connor
David J. O'Connor
President and Chief Executive Officer
VOTE AUTHORIZATION FORM
I understand that Bank of New York 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 & Profit Sharing Plan and Trust (the "401(k) Plan"). Further,
I understand that my voting instructions are solicited on behalf of the
Company's Board of Directors for the Annual Meeting of Stockholders to be held
on August 10, 2006.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Lucien P. Bolduc and Myron J. Marek
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- ------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
- --------------------------------------------------------------------------------
2. The approval of the New England Bancshares, Inc. 2006 Equity Incentive
Plan.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
- --------------------------------------------------------------------------------
3. The ratification of the appointment of Shatswell, MacLeod & Company,
P.C. as independent auditors of New England Bancshares, Inc. for the
fiscal year ending March 31, 2007.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED d
PROPOSALS.
The Trustee is hereby authorized to vote the shares of Company common
stock credited to my account in the 401(k) Plan in its trust capacity as
indicated above.
- --------------------------------- -------------------------------------
Date Signature
Please date, sign and return this form in the enclosed envelope no later than
July 31, 2006.