Northeast Bancorp
232 Center Street
Auburn, Maine 04210
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held November 12, 1997
The Annual Meeting of Shareholders of Northeast Bancorp (the "Company")
will be held on Wednesday, November 12, 1997, at 6:00 p.m., Eastern Time, at
the Martindale Country Club, 527 Beech Hill Road, Auburn, Maine for the
following purposes:
1. To consider and act upon a proposal to amend the Articles of
Incorporation of the Company to delete the requirement that
directors be divided into three classes to serve a three-year
term of office each;
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2. To elect three directors;
3. To ratify the appointment of Baker Newman & Noyes, Limited
Liability Company as auditors for fiscal year 1998; and
4. To transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on October 1, 1997 are
entitled to notice of and to vote at the meeting.
A copy of the Annual Report for the fiscal year ended June 30, 1997 is
enclosed herewith.
By Order of the Board of Directors and President
Ariel Rose Gill
Clerk
October 9, 1997
IMPORTANT-Your Proxy Card is enclosed
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED STAMPED ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING.
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
NORTHEAST BANCORP
232 Center Street
Auburn, Maine 04210
(207) 777-6411
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
to be held on November 12, 1997
This Proxy Statement is furnished to shareholders of Northeast Bancorp
(the "Company") in connection with the solicitation by the Board of Directors
of the Company of proxies to be used at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Wednesday, November 12, 1997 at 6:00 p.m.,
Eastern Time, at the Martindale Country Club, 527 Beech Hill Road, Auburn,
Maine, and at any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted "FOR" the nominees and proposals
presented in the attached Notice of Annual Meeting of Shareholders. Except for
procedural matters incident to the conduct of the Annual Meeting, the Company
does not know of any matters other than those described in the Notice of Annual
Meeting that are to come before the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, the persons named in the
accompanying proxy will vote the shares represented by the proxies on such
matters as determined by a majority of the Board of Directors.
3
The presence of a shareholder at the Annual Meeting will not
automatically revoke such shareholder's proxy. However, shareholders may revoke
a proxy at any time prior to its exercise by filing with the Clerk of the
Company a written notice of revocation, by delivering to the Company a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers and regular employees, may also
solicit proxies personally or by telephone or telegraph. The Company will also
request persons, firms and corporations holding shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from the beneficial owners and will reimburse
the holders for their reasonable expenses in doing so.
It is anticipated that this Proxy Statement will be mailed to
shareholders on or about October 9, 1997.
The securities which can be voted at the Annual Meeting consist of shares
of the common stock, the Series A Preferred Stock and the Series B Preferred
Stock of the Company, with each share entitling its owner to one vote on all
matters.
REQUIRED VOTE FOR MATTERS
TO BE ACTED UPON AT ANNUAL MEETING
Under the Company's Articles of Incorporation, cumulative voting to elect
directors is not authorized. The close of business on October 1, 1997 (the
"Record Date") has been fixed by the Board of Directors as the record date for
the determination of shareholders entitled to vote at the Annual Meeting. There
were approximately 400 record holders of the Company's common stock as of that
date and the number of shares of common stock outstanding as of that date was
1,293,132. On the Record Date, there were 45,454 shares of Series A Preferred
Stock outstanding and 71,428 shares of Series B Preferred Stock, all held by
one record holder. Shares of the Company's common stock, Series A Preferred
Stock and Series B Preferred Stock have one vote per share on all matters.
Under both Maine law and the Company's bylaws, the presence, in person or by
proxy, of at least one-half of the outstanding shares of the Company's voting
stock entitled to vote is necessary to constitute a quorum at the Annual
Meeting.
With respect to the election of directors, both the bylaws of the Company
and Maine law provide that those candidates receiving the greatest number of
votes cast at a meeting of shareholders, duly called and at which a quorum is
present, shall be deemed elected. The Company's Articles of Incorporation now
provide that the directors shall be divided into three classes as nearly equal
in number as possible with each director to be elected for a three-year term of
office to expire at the third succeeding annual meeting of shareholders after
their election, except for directors elected by the Board to fill a vacancy
thereon, including a vacancy created by an increase in the number of directors,
who serve until the next Annual Meeting of Shareholders. At the Annual Meeting,
Shareholders will be asked to approve an amendment to the Company's Articles of
Incorporation to delete the requirement that the directors be divided into
three classes to serve a three-year term of office each. As a consequence of
4
these provisions and the prior action of the Board of Directors in decreasing
the number of directors from 15 to 12, those three nominees for director
receiving the greatest number of votes shall be deemed elected, regardless of
whether they receive a majority of the votes cast. Abstentions and broker
non-votes will be treated as not voting for the election of directors and will
have no effect in determining the nominees receiving the most affirmative
votes. In the event that the proposed amendment to the Articles of
Incorporation to delete the requirement that the directors be divided into
three classes is adopted by shareholders, then the three nominees listed below
will be elected to serve until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. In the event that the
proposed amendment to the Articles of Incorporation to delete the requirement
that the directors be divided into three classes is not adopted by
shareholders, then the proxy holders intend to vote the shares for which they
are holding proxies to elect the same nominees as directors to serve until the
2000 Annual Meeting of Shareholders.
With respect to an amendment to the Articles of Incorporation of a Maine
corporation, Maine law provides that a proposed amendment shall be adopted upon
receiving the affirmative vote of the holders of at least a majority of all
outstanding shares entitled to vote thereon. Holders of the Company's Series A
Preferred Stock and Series B Preferred Stock are not entitled to vote on the
proposed amendment to the Company's Articles as a class. The Company's Articles
of Incorporation provide that the affirmative vote of the holders of at least
two-thirds (2/3) of all of the shares entitled to vote for the election of
Directors shall be required to amend the Articles, notwithstanding the fact
that a lesser percentage may be specified by law. Therefore, the proposed
amendment will be approved upon receiving the affirmative vote of two-thirds
(2/3) of the outstanding shares of the Company's common stock, Series A
Preferred Stock and Series B Preferred Stock voting together as one class.
Abstentions and broker non-votes will be treated as not voting for the
amendment to the Company's Articles and will have the same effect as a vote
against the proposed amendment.
As to matters other than the election of directors and amendment to the
Company's Articles of Incorporation that may be brought before the Annual
Meeting, Maine law provides that any corporate action be taken at a
shareholders' meeting at which a quorum is present shall be authorized by a
majority of the votes cast by the holders of shares entitled to vote on the
subject matter, except to the extent that a greater vote is required by law or
by the Company's articles or bylaws. The bylaws of the Company provide that the
holders of a majority in interest of the shares having voting rights
represented at a meeting of shareholders shall decide any question brought
before such meeting, provided a quorum is present. As to any matter other than
the election of directors or amendment to the Company's Articles of
Incorporation, abstentions and broker non-votes will be treated as not voting
for such matter and will have the same effect as a vote against the matter
brought before the shareholders at the Annual Meeting.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of October 1, 1997, the following persons owned of record, or were
known to own beneficially, more than five percent (5%) of any class of the
outstanding shares of the Company:
5
Shares of the Company
Owned (Percentage
Name and Address of Outstanding Voting Stock)(1)
-------------------------- -------------------------------
Albert H. Desnoyers 132,694 (8.4%)
210 Washington Drive
Watchung, New Jersey 07060
Claude E. Savoie 101,700 (6.4%)
550 Sheldiac Road
Moncton, New Brunswick
Canada E1A 2T1
Ronald J. Goguen (2) 360,327 (22.8%)
111 St. George Street
Suite 200
Moncton, New Brunswick
Canada E1C 1T7
- -------------------
Shares of the Company's voting stock beneficially owned. A beneficial
owner of a security includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise has or shares the power to vote such security or the power to
dispose of such security. Included are shares owned by spouses and
relatives living in the same home as to which beneficial ownership may be
disclaimed and shares which may be obtained under warrants or upon the
exercise of conversion rights. Based on Schedules 13D and/or Forms 4 and
5 filed with the Securities and Exchange Commission.
Includes 45,454 shares of Series A Preferred Stock, 71,428 shares of
Series B Preferred Stock, 133,131 shares of Common Stock, and a warrant
to purchase 108,764 shares of common stock at a price of $7.00 per share,
owned by Square Lake Holding Corporation ("Square Lake"), a Maine
corporation which is owned by a Canadian corporation of which Ronald
Goguen is a 95% shareholder and director and 1,550 shares of Common Stock
held in an individual retirement savings plan. Shares of the Series A
Preferred Stock and Series B Preferred Stock are convertible into shares
of common stock without further consideration at a ratio of two for one.
ELECTION OF DIRECTORS
General
The Board of Directors of the Company presently consists of 12 persons.
The current Directors were elected for staggered terms of three years and until
their successors are elected and qualified. The directors are currently divided
into three classes of 3, 4 and 5 directors each. The term of office of only one
class of directors expires at the Annual Meeting.
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As noted above, at the Annual Meeting, shareholders will be asked to
approve an amendment to the Company's Articles of Incorporation to delete the
requirement that the directors be divided into three classes to serve a
three-year term of office each and to insert in its place a requirement that
directors be elected to serve until the next Annual Meeting of Shareholders and
until their respective successors are elected and qualified. In the event that
the proposed amendment to the Articles of Incorporation is adopted by
shareholders, then the three nominees listed below will be elected to serve
until the next Annual Meeting of Shareholders and until their successors are
elected and qualified. In the event that the proposed amendment to the Articles
of Incorporation to delete the requirement that directors be divided into three
classes is not adopted by shareholders, then the proxy holders intend to vote
the shares for which they are holding proxies to elect the same nominees as
directors to serve until the 2000 Annual Meeting of Shareholders. Although it
is anticipated that each nominee will be available to serve as a director,
should any nominee be unavailable to serve, proxies will be voted by the proxy
holders in their discretion for another person designated by the Board of
Directors. There are no arrangements or understandings between the Company and
any person pursuant to which any person has been elected as a director, except
that John Rosmarin has been nominated pursuant to the Agreement and Plan of
Merger dated as of May 9, 1997 by and among the Company, Northeast Bank, FSB
and Cushnoc Bank and Trust Company ("Cushnoc"), pursuant to which Cushnoc will
be merged with and into Northeast Bank, FSB. Mr. Rosmarin is a director of
Cushnoc. In the Agreement and Plan of Merger, the Company agreed to take all
action necessary to appoint or elect, effective with the completion of the
merger, a member of Cushnoc's Board of Directors to the Company's Board and to
nominate such person for election as a director at the next Annual Meeting of
Shareholders.
Edmond J. Vachon, who has been a director of the Company since its
formation in 1987, and whose term of office is scheduled to expire at the
Annual Meeting, has resigned effective at the Annual Meeting and has not been
nominated for election as a director at the Annual Meeting.
The following table sets forth certain information, some of which has
been obtained from the Company's records and some of which has been supplied by
the nominees and continuing directors, regarding the nominees for election to
the Board of Directors and the directors who will continue in office for the
remainder of their terms.
Shares of the
Company
Beneficially Owned
(Percentage of
Outstanding Voting
Positions With the Company Stock
and Present Principal Director in Parentheses Where
Name and Age Occupation or Employment Since Greater Than 1%) (1)
- ------------------------- ----------------------------------- -------- --------------------
Nominees
Ronald J. Goguen President, Major Drilling 1990 360,327 (22.8%)(2)
Age 52 Group International.
7
John W. Trinward, D.M.D. Chairman of the Board; Retired 1987 9,634 (3)
Age 72 Dentist.
John Rosmarin President and Chief Executive -- 417 (4)
Age 49 Officer of Saunders Manufacturing
& Marketing, an office products
manufacturer.
Directors whose terms expire in 1999
James D. Delamater President and Chief Executive 1987 40,970 (2.6%)
Age 46 Officer of the Company.
Philip C. Jackson Senior Vice President--Trust 1987 33,650 (2.1%)(5)
Age 53 Operations of Northeast Bank.
Ronald C. Kendall President, Kendall Insurance, Inc. 1987 22,680 (1.4%)(6)
Age 65 Vice President of Northeast
Financial Services Corporation, an
affiliate of the Company.
Normand R. Houde President, Servants of the Cross, 1996 None
Age 62 an ecumenical Christian community
and Director of the Alliance of
Love, a religious mission.
Directors whose terms expire in 1998
John B. Bouchard Owner, John B. Bouchard Builder. 1996 4,400
Age 61
Judith W. Hayes President, Consumers Maine 1994 1,000
Age 41 Water Company, a water utility
serving various communities in
Maine.
Stephen W. Wight Member, Sunday River Inn, LLC, 1987 11,500 (7)
Age 53 operator of a resort hotel; Member,
Wight Enterprises, LLC, a property
management company.
Dennis A. Wilson Owner, D. A. Wilson & Co., a 1989 28,200 (1.8%)
Age 62 trucking company.
A. William Cannan Executive Vice President and Chief 1996 21,241 (1.3%)
Age 55 Operating Officer of the Company
since 1993. President of Casco
Northern Bank, NA in Portland,
Maine from 1991 to 1993.
All directors and executive -- -- 556,478 (34.9%)(8)
officers as a group (16 persons)
- -------------------
Shares of the Company's voting stock beneficially owned. A beneficial
owner of a security includes any person who, directly or indirectly,
8
through any contract, arrangement, understanding, relationship, or
otherwise has or shares the power to vote such security or the power to
dispose of such security. Included are shares owned by spouses and
relatives living in the same home as to which beneficial ownership may be
disclaimed, shares which may be obtained under the Company's Stock Option
Plans and shares which may be obtained under warrants or upon the
exercise of conversion rights. The foregoing table includes 65,500 shares
of the Company's Common Stock subject to stock options, 116,882 preferred
shares convertible into 233,764 common shares and 108,764 shares of the
Company's Common Stock subject to a warrant. Of such shares, Mr.
Delamater has the right to acquire 20,000 shares subject to options, Mr.
Cannan has the right to acquire 21,000 shares subject to options, Mr.
Jackson has the right to acquire 5,000 shares subject to options, and
Square Lake Holding Corporation, of which Mr. Goguen is the beneficial
owner, has the right to acquire 108,764 common shares pursuant to a
warrant and 233,764 common shares pursuant to conversion rights
applicable to the Company's preferred shares. See "Common Stock Ownership
of Certain Beneficial Owners," above.
Includes 45,454 shares of Series A Preferred Stock, 71,428 shares of
Series B Preferred Stock, 133,131 shares of Common Stock, a warrant for
108,764 shares of common stock with an exercise price of $7.00 per share
owned by Square Lake and 1,550 shares of Common Stock held in an
individual retirement savings plan. See "Common Stock Ownership of
Certain Beneficial Owners," above.
Includes 534 shares owned by spouse, as to which beneficial ownership is
disclaimed by Mr. Trinward.
Consists of shares Mr. Rosmarin is entitled to receive pursuant to the
Agreement and Plan of Merger dated as of May 9, 1997 among the Company,
Northeast Bank, FSB and Cushnoc Bank and Trust Company (the "Merger
Agreement"). Mr. Rosmarin has been nominated pursuant to the terms of the
Merger Agreement. See "ELECTION OF DIRECTORS--General" above.
Includes 3,900 shares owned by spouse and 900 shares owned by children,
as to which beneficial ownership is disclaimed by Mr. Jackson.
Includes 1,850 shares owned by spouse, as to which beneficial ownership
is disclaimed by Mr. Kendall, and 17,800 shares held in trusts of which
Mr. Kendall is a trustee or beneficiary, as to which beneficial ownership
of 9,200 shares is disclaimed by Mr. Kendall.
Includes 4,900 shares owned by spouse and 1,500 shares owned by children,
as to which beneficial ownership disclaimed by Mr. Wight.
Includes 22,784 shares owned by spouses and members of immediate
families, as to which beneficial ownership has been disclaimed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES NAMED HEREIN.
Listed below is information concerning the executive officers of the
Company or of its banking subsidiary, Northeast Bank F.S.B. ("Northeast Bank"),
other than Messrs. Delamater, Cannan and Jackson.
9
Name and Age Positions with the Company Term of Office Officer Since
- --------------------- -------------------------------------- -------------- -------------
Richard E. Wyman, Jr. Chief Financial Officer of the Company one year 1992
Age 41
Henry Korsiak Senior Vice President--Operations of one year 1993
Age 54 Northeast Bank
Marilyn Wyman Senior Vice President--Human Resources one year 1987
Age 46 of Northeast Bank
Sterling Williams Senior Vice President--Commercial one year 1994
Age 46 Lending of Northeast Bank
Messrs. Delamater, Cannan and Jackson have served as officers of the
Company since 1987, 1993 and 1987, respectively. All officers are elected for a
term of one year.
Mr. Korsiak joined ASI Data Services, Inc., a data processing subsidiary
of the Company, in December of 1993. Prior to joining ASI, Mr. Korsiak had been
a Manager of Systems Analysis for Fleet Services Corp. in New York and Rhode
Island since 1978. Prior to joining the Company in 1994, Mr. Williams had
served as a Vice President of Fleet Bank of Maine since 1984, where he was a
Commercial Loan Officer and Workout Officer in that Bank's Managed Asset
Division.
The Board of Directors of the Company held 11 meetings during the year
ended June 30, 1997. The Audit Committee of the Company consists of the entire
Board of Directors and held one meeting in fiscal 1997. The Company has no
other standing committees, other than the Personnel and Compensation Committee.
The Personnel and Compensation Committee, which advises the Board on issues of
compensation for directors and officers and administers certain stock plans of
the Company, currently consists of Directors Bouchard, Goguen and Wight and
held six meetings in fiscal 1997. In fiscal 1997, each director attended at
least 75% of all meetings of the Board of the Company and meetings of any
Committee of which he or she was a member.
Executive Compensation and Other Information
Summary Compensation Table. The following table sets forth cash
compensation for the Company's chief executive officer and each other executive
officer of the Company who received total annual compensation exceeding
$100,000 for services rendered in all capacities to the Company and its
subsidiaries during the last three fiscal years.
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------- ---------------
Securities
Fiscal Other Annual Underlying All Other
10
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1) Options/SARs(2) Compensation($)
- --------------------------- ------ --------- -------- ------------------ --------------- ---------------
James D. Delamater 1997 136,000 0 8,279 1,000 10,855(3)
Director, President and 1996 126,000 2,000 3,133 0 10,013(4)
Chief Executive Officer 1995 110,000 15,000 9,712 4,000 10,228(5)
of the Company
A. William Cannan 1997 125,000 0 8,400 1,000 10,402(6)
Director, Executive Vice 1996 115,000 9,000 6,434 0 9,640(7)
President and Chief 1995 106,000 13,102 4,237 20,000 9,629(8)
Operating Officer
- -------------------
The values listed in this column include amounts for memberships in
civic, social and professional associations, use of automobiles furnished
by the Company, and director's fees.
Amounts listed in this column reflect the application of anti-dilution
provisions of options granted prior to the Company's December, 1995 100%
stock dividend.
Includes $685 in term life insurance premiums paid on behalf of Mr.
Delamater, $8,800 in direct contributions and a $1,370 matching
contribution under the Company's 401(k) Savings and Retirement Plan.
Includes $528 in term life insurance premiums paid on behalf of Mr.
Delamater, $7,569 in direct contributions and a $1,916 matching
contribution under the Company's 401(k) Savings and Retirement Plan.
Includes $537 in term life insurance premiums paid on behalf of Mr.
Delamater, $8,038 in direct contributions and a $1,653 matching
contribution under the Company's 401(k) Savings and Retirement Plan.
Includes $630 in term life insurance premiums paid on behalf of Mr.
Cannan, $7,900 in direct contributions and a $1,872 matching contribution
under the Company's 401(k) Savings and Retirement Plan.
Includes $497 in term life insurance premiums paid on behalf of Mr.
Cannan, $7,285 in direct contributions and a $1,858 matching contribution
under the Company's 401(k) Savings and Retirement Plan.
Includes $492 in term life insurance premiums paid on behalf of Mr.
Cannan, $7,569 in direct contributions and a $1,568 matching contribution
under the Company's 401(k) Savings and Retirement Plan.
Director Compensation. All directors of the Company also serve as
directors of Northeast Bank, F.S.B., the Company's banking subsidiary
("Northeast Bank"). Each director receives a combined annual retainer from the
Company and Northeast Bank of $1,000. In addition, each director receives $500
per Board meeting attended and $200 for each Board committee meeting attended
which is not held on the same day as a Board meeting. Directors receive only
one meeting fee when meetings of the Board of the Company and the Board of
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Northeast Bank are held on the same day. The Chairman of the Board receives an
additional annual retainer of $1,000 for serving as such.
During the last fiscal year, the Board voted to make certain payments to
former Directors Brown, Aldred and Morrell in the amounts of $5,000, $5,000 and
$13,200, respectively. Each of Messrs. Aldred and Morrell have resigned from
the Board, while Mr. Brown died while in office. The payment awarded to Mr.
Brown has been paid to his widow. The Board also has agreed to pay Mr. Vachon
$6,500. Mr. Vachon, whose term of office expires at the Annual Meeting, has
resigned effective at the Annual Meeting.
Stock Option Plans. 1987 Stock Option Plan. On March 20, 1987, the Board
of Directors of the Company adopted the Bethel Bancorp 1987 Stock Option Plan
(the "1987 Option Plan") as a performance incentive for directors, officers and
other employees of the Company and its subsidiaries. The 1987 Option Plan
became effective upon consummation of the conversion of the Company from mutual
to stock form, subject to the approval of the stockholders of the Company. The
Company's shareholders ratified the Option Plan at the 1988 Annual Meeting.
The 1987 Option Plan is administered by the Personnel and Compensation
Committee which recommends to the Board of Directors the persons to whom
options will be granted, the number of shares, the types of options and other
terms and conditions of the options.
Both "incentive stock options" and "nonqualified stock options" may be
granted pursuant to the 1987 Option Plan. The Company intends that the
"incentive stock options" granted under the 1987 Option Plan will qualify under
Section 422A of the Internal Revenue Code. Incentive stock options may only be
granted to employees of the Company and its subsidiaries. The market value of
shares covered by incentive stock options (determined as of the date of grant)
first exercisable under incentive stock options is limited to $100,000 per
calendar year. An optionee will not be deemed to receive taxable income upon
grant or exercise of an incentive stock option. Any gain realized at the time
of sale of shares acquired upon exercise of an incentive stock option will
constitute long-term capital gain to the optionee if the optionee holds the
stock for the longer of two years from the date the option was granted or one
year after the option was exercised. If the optionee holds the stock for a
shorter time, all gain upon disposition of the stock is ordinary income. No
gain or loss will be recognized by the Company as a result of the grant or
exercise of incentive stock options. In the case of nonqualified stock options,
which may be granted to employees and non-employee directors, an optionee will
be deemed to receive taxable income at ordinary income rates upon exercise of a
nonqualified stock option in an amount equal to the difference between the
exercise price and the fair market value of the common stock on the date of
exercise. The amount of such taxable income will be a tax deductible expense to
the Company.
All options granted under the 1987 Option Plan will be required to have
an exercise price per share equal to at least the fair market value of a share
of common stock on the date the option is granted. No option granted will be
exercisable (i) more than three months after the date on which the optionee
ceases to perform services for the Company (except that in the event of
disability, options may be exercisable for up to one year thereafter), or (ii)
10 years after the option is granted in the case of incentive stock options.
Payment for shares purchased pursuant to an option may be made in cash or check
or, if the option agreement permits, by delivery and assignment to the Company
of shares of common stock of the Company, including shares which may be
12
obtained upon exercise of the option, having a fair market value equal to the
aggregate exercise price, or by any combination of the foregoing.
1989 Stock Option Plan. On June 28, 1989, the Board of Directors of the
Company adopted the Bethel Bancorp 1989 Stock Option Plan (the "1989 Option
Plan") as a performance incentive for the directors, officers and other
employees of the Company and its subsidiaries. The 1989 Option Plan became
effective upon ratification by the Company's shareholders at the 1989 Annual
Meeting. The 1989 Option Plan is essentially identical to the 1987 Option Plan
and is administered by the Personnel and Compensation Committee of the Board of
Directors of the Company.
1992 Stock Option Plan. On September 2, 1992, the Board of Directors of
the Company adopted the Bethel Bancorp 1992 Stock Option Plan (the "1992 Option
Plan") as a performance incentive for the directors, officers and other
employees of the Company and its subsidiaries. The 1992 Option Plan became
effective upon ratification by the Company's shareholders at the 1992 Annual
Meeting. The 1992 Option Plan is essentially identical to the 1989 Stock Option
Plan and is administered by the Personnel and Compensation Committee of the
Board of Directors of the Company.
The following table sets forth certain information with respect to stock
options granted during fiscal 1997 to Messrs. Delamater and Cannan. The Company
has not granted stock appreciation rights ("SARs") to any executive officer.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
% of Total
Number of Options/SARs Exercise or
Securities Underlying Granted to Employees Base Price
Name Options/SARs Granted (#) in Fiscal Year ($/sh) Expiration Date
- ------------------ ------------------------ -------------------- ----------- ---------------
James D. Delamater 1,000 6.67% 12.50 7/1/2006
A. William Cannan 1,000 6.67% 12.50 7/1/2006
The following table sets forth certain information with respect to
outstanding stock options held by Messrs. Delamater and Cannan.
FY-End Option/SAR Values
Number of
Securities Underlying Value of Unexercised
Unexercised Options/SARs in-the-money Options/SARs
Shares at Fiscal Year-End (#) at Fiscal Year-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- ------------------ ----------- ----------- ------------------------ -------------------------
13
James D. Delamater 5,000 40,300 20,000/0 150,250/0
A. William Cannan 0 0 21,000/0 67,000/0
1994 Employee Stock Purchase Plan. On August 31, 1994, the Board of
Directors of the Company adopted the Bethel Bancorp 1994 Employee Stock
Purchase Plan (the "1994 Stock Purchase Plan"), which was approved by the
shareholders of the Company at the 1994 Annual Meeting.
The 1994 Stock Purchase Plan is administered by the Board's Personnel and
Compensation Committee and provides for twenty quarterly offerings of common
stock to employees. Participating employees will purchase shares with
accumulated payroll deductions. Each employee of the Company or its
subsidiaries who is age 21 and who has completed one year of service, with
1,000 hours of service, is eligible to participate in the 1994 Stock Purchase
Plan, except for certain employees with substantial stock interests in the
Company, taking into account rights to purchase stock accruing under the 1994
Stock Purchase Plan. The purchase price of a share of common stock sold
pursuant to each quarterly offering will be not less than the fair market value
per share on the date of exercise. The Board of Directors of the Company may
change the purchase price for any offering to a percentage of fair market value
not more than 100% and not less than 85%.
The 1994 Stock Purchase Plan terminates five years from the commencement
of the plan, unless sooner discontinued or terminated.
401(k) Employee Savings Plan. The Company maintains a 401(k)
profit-sharing plan. The 401(k) Employee Savings Plan, as amended, provides
that the Company shall make a contribution in each plan year in an amount to be
determined by the Company, not in excess of the Company's net profits for that
year. The Company's contribution is allocated among eligible employees in
proportion to each eligible employee's salary for such plan year. Any employee
who has completed one year of service and has attained the age of 21 is
considered an eligible employee under the plan. Under the plan, the Company
also makes matching contributions on behalf of employees who elect to
participate in the plan by contributing a portion of their compensation to the
plan. For the year ended June 30, 1997, the Company's profit sharing plan
expense was $120,390.
Transactions with Management
Certain of the directors and executive officers of the Company are at
present, as in the past, customers of Northeast Bank, F.S.B. ("Northeast") and
have transactions with Northeast in the ordinary course of business. In
addition, certain of such persons are at present also owners or officers of
corporations and business trusts, or are members of partnerships, which are
customers of Northeast and which have transactions, including loans, with
Northeast in the ordinary course of business. Such loans are on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others and do not involve more than
the normal risk of collectibility or present other unfavorable features. The
aggregate amount of such loans was $1,172,392 at June 30, 1997. Northeast
expects, in the future, to have banking transactions in the ordinary course of
business with the Company's executive officers and directors, and their
associates, on substantially the same terms, including interest rates and
14
collateral on loans, as those prevailing at the same time for comparable
transactions with unaffiliated persons.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers and directors
are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms filed with the
Commission since June 30, 1996 and furnished to the Company and written
representations that no additional forms were required, the Company believes
that all of its officers and directors complied with all Section 16(a) filing
requirements applicable to them, except that each of Mr. Delamater and Ms. M.
Wyman filed late one Form 4 with respect to an exercise of options.
AMENDMENT TO ARTICLES
At the Annual Meeting, the Company's shareholders will be requested to
approve an amendment to the Articles of Incorporation, as amended, of the
Company to delete the requirement that directors be divided into three classes
to serve a three-year term of office each. The resolution that will be offered
at the meeting to effect this amendment has been approved by the Board of
Directors of the Company and is set forth in Appendix A to this Proxy
Statement.
When originally adopted in 1987, the Articles of Incorporation of the
Company provided that at the 1988 Annual Meeting of Shareholders, the directors
would be divided into three classes as nearly equal in number as possible with
the term of office of the first class to expire at the 1989 Annual Meeting of
Shareholders, the term of office of the second class to expire at the 1990
Annual Meeting of Shareholders and the term of office of the third class to
expire at the 1991 Annual Meeting of Shareholders. The original Articles of
Incorporation of the Company provided further that at each Annual Meeting of
Shareholders following such initial classification of election, directors would
be elected to succeed those directors whose terms expired would be elected for
a three-year term of office to expire at the third succeeding Annual Meeting of
Shareholders after their election. At each of the Company's Annual Meetings
since 1991, directors have been elected for three-year terms to fill the
vacancies created by the expiration at the Annual Meeting of the term of the
preceding class of directors.
At the 1996 Annual Meeting of Shareholders, five directors were elected
for a term to expire in 1999. An additional nominee was elected to serve until
the 1997 Annual Meeting, and another nominee was elected to serve until the
1998 Annual Meeting. The election of the additional nominees to the classes of
directors whose terms expired at the 1997 and 1998 Annual Meetings was
necessary as a result of action of the Board of Directors increasing the number
of directors from 12 to 15 prior to the 1997 Meeting. As a result of the death
of Norris T. Brown, the resignations from the Board of Edmond J. Vachon, Robert
Morrell and Joseph A. Aldred, Jr. and the agreement with Cushnoc Bank and Trust
Company ("Cushnoc") that following the acquisition of Cushnoc a member of the
Board of Directors of Cushnoc be nominated as a director of the Company, the
Board of Directors has established the number of directors to be 12 following
the Annual Meeting of Shareholders. As a result, three directors have been
nominated for election at the Annual Meeting of Shareholders.
15
The Board has recommended that Shareholders adopt the amendment to the
Articles of Incorporation to give Shareholders the opportunity to evaluate and
elect all of the Directors on an annual basis and to encourage the Board to
engage in an internal analysis and self-evaluation on a regular basis. In the
event that the proposed amendment to the Articles of Incorporation to delete
the requirement that directors be divided into three classes to serve a
three-year term of office is adopted by Shareholders, then the three nominees
listed above will be elected to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified.
In the event that the proposed amendment to the Articles of Incorporation
is not approved by the requisite number of shareholders, as described above
under the caption "REQUIRED VOTE FOR MATTERS TO BE ACTED UPON AT ANNUAL
MEETING," then the proxy holders intend to vote the shares for which they are
holding proxies to elect the same nominees as directors to serve a three-year
term until the 2000 Annual Meeting of Shareholders and until their respective
successors are elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Baker Newman & Noyes, Limited
Liability Company ("Baker Newman & Noyes"), independent certified public
accountants, as the auditors for the Company for the current fiscal year ending
June 30, 1998. Baker Newman & Noyes has acted as the Company's principal
accountants since February 6, 1995. At the meeting, shareholders will vote upon
a proposal to ratify the selection of Baker Newman & Noyes as auditors. In the
event shareholders holding a majority of the shares entitled to vote
represented at the meeting fail to ratify the selection of Baker Newman & Noyes
as auditors, the Board of Directors will reevaluate its selection and may
choose another firm to serve as auditors for fiscal year 1998.
It is expected that a representative of Baker Newman & Noyes will be
present at the meeting to respond to appropriate questions relating to the
audit for the fiscal year ended June 30, 1997 or to the Company's financial
statements. The firm's representative will have the opportunity to make a
statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
SELECTION OF BAKER NEWMAN & NOYES AS AUDITORS.
SHAREHOLDER PROPOSALS
To be included in the Proxy Statement for the next annual meeting,
shareholder proposals must be received by June 11, 1998.
The Company's Articles of Incorporation require shareholders to comply
with certain provisions in nominating persons for election to the Board of
Directors. In general, advance notice of a proposed nomination is required to
be received by the Secretary of the Company not less than 30 days nor more than
60 days prior to any meeting of the shareholders. The Articles contain certain
other procedures which must be followed in making such nominations.
OTHER MATTERS
16
Management knows of no other matters to be brought before the meeting.
However, should any other matter requiring a vote of the shareholders properly
come before the meeting, the persons named in the enclosed proxy intend to vote
the proxy in accordance with their best judgment, discretionary authority to do
so being included in the proxy.
By Order of the Board of Directors and President
Ariel Rose Gill
Clerk
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, IS
AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO ARIEL ROSE
GILL, SECRETARY, NORTHEAST BANCORP, 232 CENTER STREET, AUBURN, MAINE 04210.
COPIES OF THE EXHIBITS TO THE REPORT, WHICH ARE VOLUMINOUS, WILL BE FURNISHED
UPON THE PAYMENT OF A REASONABLE FEE TO OFFSET THE COST OF REPRODUCTION AND
MAILING.
APPENDIX A
RESOLUTION FOR SHAREHOLDERS' MEETING
VOTED: That the Articles of Incorporation of Northeast Bancorp, a
Maine corporation, as heretofore amended, shall be further amended by
striking the following language as it appears in Article EIGHTH, Part
II, Section 1(a):
At the 1988 annual meeting of Shareholders, the Directors shall
be divided into three classes as nearly equal in number as
possible with the term of office of the first class to expire at
the 1989 annual meeting of Shareholders, the term of office of
the second class to expire at the 1990 annual meeting of
Shareholders and the term of office of the third class to expire
at the 1991 annual meeting of Shareholders. At each annual
meeting of Shareholders following such initial classification
and election, Directors elected to succeed those Directors whose
terms expire shall be elected for a three-year term of office to
expire at the third succeeding annual meeting of Shareholders
after their election.
and by inserting in its place the following:
Each Director elected to succeed those directors whose terms
expire at or after the 1997 annual meeting of Shareholders shall
be elected to serve until the next annual meeting of
Shareholders and until his or her successor is elected and
qualified.
[PROXY CARD]
17
PROXY This proxy is solicited by the Board of Directors PROXY
of
NORTHEAST BANCORP
Proxy for Annual Meeting of Shareholders--November 12, 1997
The undersigned hereby appoints Ariel Rose Gill and Sterling G. Williams,
and each of them severally, proxies of undersigned, with full power of
substitution, to vote all the shares of voting capital stock of Northeast
Bancorp (the "Company") that the undersigned is entitled to vote, at the Annual
Meeting of shareholders of the Company to be held on November 12, 1997, and at
any adjournments thereof.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
1. Proposal to amend the Company's Articles of Incorporation to delete
the requirement that directors be divided into three classes to
serve a three-year term of office each.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Election of Directors.
The nominees of the Board of Directors are as follows: Ronald J.
Goguen, John W. Trinward, John Rosmarin
[ ] FOR all the nominees listed above
[ ] AGAINST all the nominees listed above
[ ] FOR election of Directors, except vote withheld from the
following nominees: ___________________________
3. Proposal to ratify the appointment of Baker Newman & Noyes, Limited
Liability Company as auditors for fiscal year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This Proxy will be voted as directed herein. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 2 AND FOR PROPOSALS 1
and 3. Discretionary authority is hereby conferred upon the proxies with
respect to such other matters as may legally come before the meeting. The
undersigned hereby revokes any proxy heretofore given by the undersigned to
vote at the Annual Meeting or any adjournment thereof.
Please check if you plan to attend the meeting [ ].
Dated: ______________________________________, 1997
___________________________________________________
___________________________________________________
Signature(s)
Please sign here personally. If the stock is
registered in more than one name, each joint owner
or fiduciary should sign personally. Only
authorized officers should sign for a corporation.
