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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BayBanks, Inc.
(Name of Registrant as Specified in Its Charter)
BayBanks, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(l)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transactions applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:\1/ <F1>
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[FN]
<F1> \1/Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
BAYBANKS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of Stockholders
of BayBanks, Inc. will be held at the offices of BayBank Systems, Inc.,
One BayBank Technology Place, Waltham, Massachusetts, on Thursday,
April 28, 1994, at 10:00 A.M.
1. To elect four directors to hold office for a term of three
years and until their respective successors are chosen and
qualified.
2. To vote on approval of a 1994 Restricted Stock Plan for the
Corporation providing for the issuance of up to 500,000 shares.
3. To transact such other business as may be in furtherance of or
incidental to the foregoing.
The business referred to above may be transacted at said meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 1,
1994, as the record date for determination of stockholders entitled to
notice of and to vote at said meeting or any adjournment thereof.
You are requested to sign the enclosed proxy and mail it to us
promptly in the enclosed self-addressed envelope, whether or not you
plan to attend the meeting in person. The giving of such proxy will not
affect your right to vote in person if you attend the meeting in
person.
ILENE BEAL, Clerk
Dated: March 21, 1994
<PAGE>
BAYBANKS, INC.
175 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
1994 ANNUAL MEETING
PROXY STATEMENT
DATED MARCH 21, 1994
This proxy statement is furnished to the stockholders of BayBanks,
Inc. (the "Corporation") in connection with the solicitation of proxies
to be used in voting at the Annual Meeting of Stockholders to be held
April 28, 1994. The enclosed proxy is solicited by the Board of
Directors of the Corporation.
The principal business expected to be transacted at the meeting
will be the election of four directors and the approval of a new 1994
Restricted Stock Plan for the Corporation. These matters are more fully
described below.
A person giving the enclosed proxy has the power to revoke it at
any time before it is exercised.
The Corporation will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of stock. In
addition to the use of the mails, proxies may be solicited by officers
and employees of the Corporation by personal interview, by telephone,
or by telegraph, the cost of which will be nominal. The Corporation has
retained Georgeson & Company Inc. to assist in the solicitation of
proxies for an estimated fee of $7,000 plus certain expenses.
VOTING SECURITIES AND VOTES REQUIRED
Only holders of Common Stock of record at the close of business on
March 1, 1994, will be entitled to vote at the meeting. As of that
time, 18,798,689 shares of Common Stock were outstanding, each of which
is entitled to one vote.
A majority in interest of the Corporation's Common Stock
outstanding and entitled to vote represented at a meeting in person or
by proxy constitutes a quorum for the transaction of business. The
affirmative vote of a majority of any quorum is sufficient to elect the
nominees for director, to approve the new Restricted Stock Plan, and to
transact any other business at the meeting. In calculating the votes
cast, broker non-votes would be treated as withholding authority to
vote for the nominees for election as directors, and abstentions and
broker non-votes would be treated as votes against approval of the 1994
Restricted Stock Plan. (A "broker non-vote" occurs when a registered
broker holding a customer's shares in the name of the broker has not
received voting instructions on a matter from the customer and is
barred by applicable rules from exercising discretionary authority to
vote on the matter, which the broker indicates on the proxy.)
BOARD OF DIRECTORS
At the meeting, four directors are to be elected to serve for the
ensuing three years and until their respective successors are chosen
and qualified. Unless the enclosed proxy withholds authority to vote
for one or more of the nominees or indicates a broker non-vote, the
shares represented by such proxy will be voted for the election as
directors of the nominees indicated in this proxy statement. If any
nominee becomes unavailable for any reason (which event is not
anticipated), the shares represented by the enclosed proxy may be voted
for such other person as may be determined by the holders of such
proxy.
The following table contains certain information as to the nominees
for election to the office of director of the Corporation and each
other person whose term of office as a director will continue after the
meeting, and includes the number of shares of Common Stock of the
Corporation beneficially owned, directly or indirectly, by each of such
persons as of February 17, 1994. The nominees for election to the
office of director at the meeting are Messrs. Gerson, Piper, Pollard,
and Torras and are indicated by an asterisk in the table that follows.
<TABLE>
<CAPTION>
Shares of
First Common
Principal Occupation Became Present Stock
and Other Directorships Director of Term Beneficially
Name Held in Public Corporations Age Corporation Expires Owned(1)<F2>
---- --------------------------- --- ----------- ------- --------
<S> <C> <C> <C> <C> <C>
John J. Arena Vice Chairman of the Board of the Corporation 56 1977 1996 10,134
John A. Cervieri Jr.(2)<F3> Chairman and President, Property Capital Associates, 63 1980 1996 4,422
Inc. -- Real estate investment and consulting firm;
Managing Trustee, Property Capital Trust, and Chairman
of the Board and Chief Executive Officer, Americana
Hotels and Realty Corporation
William M. Crozier, Jr.(2)<F3>Chairman of the Board and President of the Corporation 61 1974 1995 89,234
Samuel J. Gerson*<F1> Chairman of the Board and Chief Executive Officer, 52 1990 1994 1,841
Filene's Basement, Inc. -- Retailer
Donald L. Isaacs Vice Chairman of the Board of the Corporation 46 1992 1996 47,531
Norman E. MacNeil Chairman of the Board, Ark-Les Corporation -- 67 1971 1995 6,045
Manufacturer of switches and electrical components
Arlene A. McNamee Southeast Regional Administrator, Massachusetts 47 1990 1996 2,483
Society for the Prevention of Cruelty to Children --
Social services agency
Thomas R. Piper(2)<F3>*<F1> Senior Associate Dean and Industrial Bank of Japan 56 1979 1994 5,872
Professor of Business Administration, Harvard
University Graduate School of Business Administration
-- Educational institution
Richard F. Pollard*<F1> Vice Chairman of the Board of the Corporation 61 1983 1994 74,626
Glenn P. Strehle(2)<F3> Vice President and Treasurer, Massachusetts Institute 57 1979 1995 3,822
of Technology -- Educational institution; Director,
SofTech, Inc., and Trustee, Property Capital Trust
Joseph H. Torras*<F1> President and Chairman of the Board, Preco Corporation 69 1990 1994 51,741
-- Manufacturer of pulp, paper, and specialty products
Directors and Executive 409,960
Officers as a Group (2.2%)
<FN>
---------
<F1> *Nominee for election as director.
<F2> (1) Does not include a total of 26,635 shares of the Corporation's
Common Stock that are held by members of the immediate families of
two directors and one officer, who disclaim beneficial ownership of
such shares. Includes the following shares subject to options
exercisable as of February 17, 1994, or within 60 days thereafter:
Mr.Crozier 42,000, Mr. Isaacs 19,500, Mr. Pollard 23,000, and all
executive officers and directors as a group 137,166; as well as the
following shares of Restricted Stock as to which the holders have
voting power but will not have investment power until the
restrictions lapse: Mr. Arena 931, Mr. Crozier 12,000, Mr. Isaacs
9,200, Mr.Pollard 4,540, and all executive officers and directors
as a group 51,626. The group total includes 42,709 shares
beneficially owned by Michael W. Vasily, Executive Vice President
of the Corporation, of which 15,000 shares are subject to options
exercisable as of February 17, 1994, or within 60 days thereafter,
and 7,200 shares are Restricted Stock. None of the persons listed
beneficially owns more than 1% of the outstanding Common Stock.
<F3> (2) Member of the Executive Committee.
</TABLE>
<PAGE>
The preceding table shows the present principal occupation of the
directors listed, each of whom has had the same principal occupation for the
past five years except Mr. Arena and Ms.McNamee. Mr. Arena was a Trustee of
Batterymarch Financial Management until 1990, when he became an independent
investment management consultant. He assumed his present responsibilities with
the Corporation in 1992. Ms. McNamee continues as president of Richards and
Davis, Inc., a wholesale distributor of lumber, where she has been active in
management since 1988 and which position was her principal occupation during
the past five years until early 1993, when she joined the Massachusetts
Society for the Prevention of Cruelty to Children as Southeast Regional
Administrator.
NOMINEES FOR ELECTION
SAMUEL J. GERSON -- Mr. Gerson has been a director of the Corporation
since 1990 and is Chairman of the Board and Chief Executive Officer of
Filene's Basement, Inc. He is a trustee and member of the Board of Governors
of Newton-Wellesley Hospital, a trustee of Boston College, and a director of
the Kennedy Library Foundation. He also serves as chairman of the Urban League
of Eastern Massachusetts, director of The United Way of Massachusetts Bay,
trustee of the Boston Police Foundation, and overseer of the Boys & Girls
Clubs of Boston. Mr.Gerson holds a degree from Boston College and an M.B.A.
from Boston University.
THOMAS R. PIPER -- Professor Piper has been a director of the Corporation
since 1979 and since 1970 has been on the faculty of the Harvard University
Graduate School of Business Administration, where he is Senior Associate Dean
and Industrial Bank of Japan Professor of Finance. He is a graduate of
Williams College and the Harvard Business School, from which he received a
master's degree and, subsequent to serving in the United States Air Force, a
doctorate. Professor Piper is a member of the board of the MBA Enterprise
Corps and a member of both the American Finance Association and the Financial
Management Association. In addition, he is a corporator of Emerson Hospital
and until recently was a trustee of the Middlesex School.
RICHARD F. POLLARD -- Mr. Pollard has been a director of the Corporation
since 1983, when he became Vice Chairman of the Board. Before that, he held
the title of Executive Vice President, to which position he was elected in
1978 after serving as Senior Vice President and Senior Loan Administrator. Mr.
Pollard joined the Corporation in 1976 after a career of twenty-six years with
a major New York bank, where he attained the position of Senior Vice
President. Mr. Pollard is a graduate of Hofstra University and the Advanced
Management Program at the Harvard Business School. He is Chairman of the Board
of the Massachusetts Community and Banking Council, a community improvement
and outreach organization, and previously served as Chairman of the Board of
the Massachusetts Bankers Association. Mr. Pollard also serves as a trustee
and Vice Chairman of the Board of the Boston Ballet and as a trustee of
Emerson College.
JOSEPH H. TORRAS -- Mr. Torras has been a director of the Corporation
since 1990 and was a director of the former BayBank Valley Trust Company from
1980 until 1990. Since 1964, he has been President and Chief Executive Officer
of Preco Corporation, a manufacturer of pulp, paper, and specialty products
headquartered in Amherst, Massachusetts. He also serves as Chairman and
President of Eastern Fine Paper and as Chairman of both Lincoln Pulp & Paper
Company and Lincoln Land & Timber Company. Mr. Torras served as a Navy pilot
in World War II before earning his undergraduate degree from Yale University
and a master's degree from the Harvard Business School. He is a member of the
Yale University Development Board and serves as a Trustee of both Piedmont
College in Georgia and the University of Maine Pulp & Paper Foundation. Mr.
Torras also is a member of the Board of Trustees of Historic Deerfield and a
member of the Board of Governors of the Massachusetts General Hospital. Mr.
Torras, whose previous term as a director expires in 1995, recently resigned
from that term and was elected by the Board of Directors to a term expiring in
1994.
Committees of the Board. The Audit Committee is composed of Mr. Gerson,
Ms. McNamee, and Mr. Piper. The Audit Committee's primary functions are to
make annual recommendations to the Board of Directors as to the designation of
independent auditors for the Corporation, to meet with the auditors to review
the scope of the audit, to review the internal auditing procedures of the
Corporation and its subsidiaries, and to report to the Board on such matters.
In performing its functions, the Audit Committee held four meetings in 1993.
The Corporate Compensation Committee, the members of which also comprise the
Stock Option Committee, is composed of Messrs. Cervieri, Strehle, and Torras.
Its function is to consider and recommend action to the Board of Directors on
compensation matters. The Corporate Compensation Committee administers the
Corporation's Incentive Compensation Plan, Restricted Stock Plan, and, acting
as the Stock Option Committee, the Stock Option Plan. In addition, it
administers the Corporation's Supplemental Executive Retirement Plan and
Severance Pay Plan. In performing their functions in 1993, the Corporate
Compensation Committee held six meetings and the Stock Option Committee held
two meetings. The entire Board of Directors functions as a nominating
committee and considers nominations submitted to the Chairman of the Board and
President. The Board of Directors held twelve meetings in 1993.
Compensation of Directors. Directors are paid a fee of $1,000 for each
full meeting of the Board or a Committee of the Board they attend and an
annual retainer of $15,000. Each director in office immediately after the
Annual Meeting of Stockholders of the Corporation receives the annual retainer
in the form of shares of the Corporation's Common Stock. For tax purposes,
directors may elect to defer all or part of their cash compensation and to
receive their retainer shares subject to restrictions on transfer that permit
deferral of the realization of income on the value received. Officers of the
Corporation who are directors do not receive additional compensation for their
service as directors.
Compensation Committee Interlocks and Insider Participation. Certain of
the Corporation's executive officers and directors are at present, as in the
past, customers of its subsidiary banks and have transactions with such banks
in the ordinary course of business. In addition, certain of the directors,
including members of the Corporate Compensation Committee, are at present, as
in the past, also directors or officers of corporations or members of
partnerships that are customers of the Corporation's subsidiary banks and that
have transactions with such banks in the ordinary course of business. Such
transactions with executive officers and directors of the Corporation and with
such corporations and partnerships were at rates and charges comparable to
those charged to other customers of the subsidiary banks. Loans to executive
officers and directors and persons and entities related to them were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other customers
and did not involve more than normal risk of collectibility or present other
features unfavorable to the lending bank.
APPROVAL OF 1994 RESTRICTED STOCK PLAN
(ITEM 2 OF THE NOTICE OF MEETING)
The Board of Directors has adopted the BayBanks, Inc. 1994 Restricted
Stock Plan (the "Plan"), subject to stockholder approval, to replace the
Corporation's 1982 Restricted Stock Plan, which expired in 1992. Like the 1982
Plan, the purpose of the 1994 Plan is to attract, motivate, and retain
outstanding individuals as employees of the Corporation, to align their future
interests with those of the Corporation's stockholders, and to reward
appropriately those who make substantial contributions to the success and
welfare of the Corporation. The Board believes that increased ownership of the
Corporation's stock resulting from grants under the Plan would provide
important and meaningful incentives in this regard. Accordingly, the Board
recommends stockholder approval of the Plan as in the best interests of the
Corporation. A copy of the Plan is attached as Exhibit A to this proxy
statement.
The Plan is administered by the Corporate Compensation Committee of the
Board of Directors, the members of which are ineligible to receive grants
under the Plan.
The Plan authorizes the grant of shares of Common Stock subject to
forfeiture and to restrictions on transfer during restriction periods set by
the Committee. The maximum number of shares that may be granted is 500,000,
subject to appropriate adjustment in the event of a stock dividend, stock
split, or other recapitalization. Any shares forfeited to the Corporation
after the grantee has received dividends or other benefits of ownership, other
than voting rights, may not be reissued under the Plan.
Employees of the Corporation and its subsidiaries who have completed at
least six months' service are eligible to receive grants under the Plan. The
Committee in its sole discretion selects grant recipients and determines the
number of shares, the length of the restriction period, and all other terms
and conditions of each grant. Restrictions on transfer lapse at the end of the
applicable restriction period and may lapse upon the grantee's death,
disability, or retirement or in other circumstances determined by the
Committee, including a change in control of the Corporation. The Committee is
authorized to take such other actions as it considers appropriate to preserve
the rights of a grant recipient under the Plan in the event of a change in
control. The terms of each grant will be set forth in an agreement between the
grant recipient and the Corporation that may be amended by the Committee.
No grants may be made under the Plan after ten years from its adoption.
The Plan may be amended or terminated at any time by the Board of Directors,
subject to any necessary approval by the stockholders. In particular, under
current rules of the Securities and Exchange Commission, any Plan amendment
that would materially increase the number of shares issuable or other benefits
available under the Plan to executive officers of the Corporation would
require stockholder approval.
The Board of Directors recommends that the stockholders vote FOR with
respect to Item 2 of the Notice of Meeting. The enclosed proxy will be so
voted unless it indicates a broker non-vote or a contrary specification is
made thereon.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides summary
information on the cash compensation and certain other compensation paid,
awarded, or accrued by the Corporation and its subsidiaries for each of the
last three fiscal years to, or for, the five executive officers of the
Corporation who received the highest compensation for 1993 as measured by
their cash compensation and bonus.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
-------------------------- -----------------------------
Restricted Securities
Stock Underlying All Other
Name and Salary(2)<F2> Bonus(3)<F3> Awards(4)<F4> Options Compensation(5)<F5>
Principal Position Year ($) ($) ($) (#) ($)
------------------ ---- --------- -------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William M. Crozier, Jr. 1993 $461,250 $249,844 - 50,000 $29,696
Chairman of the 1992 410,250 102,570 $634,500 50,000 7,856
Board, 1991 381,000 - - - 4,078
President and
Director
Richard F. Pollard 1993 297,500 99,167 - - 17,362
Vice Chairman of the 1992 287,125 64,610 235,000 - 7,856
Board 1991 278,500 - - - 4,078
and Director
John J. Arena (1)<F1> 1993 268,750 111,979 - - 20,404
Vice Chairman of the 1992 187,500 46,880 - 50,000 -
Board
and Director
Donald L. Isaacs 1993 262,500 109,375 - 25,000 13,778
Vice Chairman of the 1992 236,250 59,060 235,000 25,000 7,856
Board 1991 217,750 36,295 - - 3,996
and Director
Michael W. Vasily 1993 183,750 53,594 - - 9,551
Executive Vice 1992 161,250 24,190 176,250 10,000 5,535
President 1991 146,500 14,650 - - 2,689
and Chief Financial
Officer
<FN>
- ---------
<F1>(1) Mr. Arena was employed by the Corporation as an executive officer
beginning on April 1, 1992. The salary and incentive compensation shown in
the table for 1992 are for the nine-month period April-December 1992.
<F2>(2) Includes amounts deferred pursuant to Section 401(k) of the Internal
Revenue Code.
<F3>(3) Incentive compensation based on performance for the years shown.
<F4>(4) Restricted Stock granted for the year shown, expressed as the dollar value
of the shares granted at the closing price on the date of grant. The
grants to Mr. Crozier and Mr.Pollard vest over a period of three years in
equal parts. The grants to Mr. Isaacs and Mr.Vasily vest over a period of
five years; restrictions will lapse on 7% of the shares granted on the
first anniversary of the date of grant and on 13%, 20%, 27%, and 33% of
the shares, respectively, on each of the next four anniversaries of the
date of grant. Dividends on Restricted Stock are paid at the same time and
in the same amounts as dividends on stock not subject to restriction. At
year end 1993, the number and aggregate value of Restricted Stock holdings
of each of the executive officers listed in the table were as follows, as
calculated using the year-end closing price of the Corporation's Common
Stock, which was $50.75: Mr. Crozier 22,665 shares, $1,150,248; Mr.
Pollard 10,368 shares, $526,176; Mr.Isaacs 10,530 shares, $534,397; and
Mr. Vasily 9,863 shares, $500,547. Not included are shares of Restricted
Stock held by Mr. Arena that he received as his annual director's retainer
prior to the time he became an executive officer of the Corporation.
<F5>(5) Consists of the dollar value of stock and cash payments made under the
Corporation's Employee Stock Ownership Plan ("ESOP") and related Excess
Benefit Plan for the years shown. Amounts included for 1993 cover the
ESOP and the Excess Benefit Plan payments for 1993, as well as the Excess
Benefit Plan payments for 1992 and 1991, which were paid in 1993. In the
case of Mr. Arena, consists of cash payments made pursuant to the terms of
his employment offer, which provided that until he becomes eligible to
participate in the Corporation's Profit Sharing Plan and ESOP (following
two years of employment) he will receive an annual cash payment equal to
the value of the amounts he would have received were he a participant in
those plans. Included for 1993 are the payment for 1993 and the payment
made in 1993 for 1992.
</TABLE>
<PAGE>
Stock Option Grants in Last Fiscal Year. The following table provides
information on stock options granted during 1993 to those executive officers
named in the Summary Compensation Table who received such grants.
<TABLE>
<CAPTION>
% of Total
Number of Securities Options Granted
Underlying Options to Employees in Exercise Price Expiration Grant Date
Name Granted(1)<F1> (#) Fiscal Year ($/share) Date Present Value(2)<F2>
- ------------------------------ ------------------------ ------- ------ ----- -------
<S> <C> <C> <C> <C> <C>
William M. Crozier, Jr. 50,000 51.3% $45.00 2/3/99 $515,000
Donald L. Isaacs 25,000 25.6% 45.00 2/3/03 308,250
<FN>
- ---------
<F1>(1) The options shown were granted as of February 3, 1993. Such options first
become exercisable as to one-third of the shares beginning on the second
anniversary of the date of the grant, and subsequently as to an additional
one-third of such shares beginning on each of the next two anniversaries
of the initial exercise date. Vesting of stock options is accelerated upon
a Change in Control of the Corporation (as defined in the 1988 Stock
Option Plan) so that all options become immediately exercisable. The
options were granted as "incentive" (i.e., tax-qualified) stock options to
the extent permitted by Internal Revenue Service regulations, and the rest
were granted as non-qualified stock options. (Shares acquired by the
exercise of incentive stock options are not taxed until sold; shares
acquired by the exercise of non-qualified stock options are taxable at the
time of exercise.)
<F2>(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value of the options an executive may
realize, if any, will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so that there is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model. The model assumes exercise of
options upon the expiration date; a future risk-free rate of return of
5.62% for an option term of six years and 6.45% for an option term of ten
years; a stock price volatility of .26684; a dividend yield of 4%; and no
forfeiture of options. These assumptions are based upon historical
experience and are not a forecast of future stock price performance or
volatility or of future dividend policy.
</TABLE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and Year-End Stock Option
Values. The following table provides information regarding the aggregate
number of shares of Common Stock of the Corporation received upon exercise of
options during the last fiscal year, the aggregate dollar value realized upon
exercise, and the total number of unexercised stock options held as of the end
of 1993 by the executive officers named in the Summary Compensation Table.
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options Options at
Shares at December 31, 1993 (#) December 31, 1993(1)<F1> ($)
Acquired on Value ---------------------------------- ----------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William M. Crozier, Jr. 1,936 $ 61,710 38,875 103,125 $747,906 $1,083,593
Richard F. Pollard 6,184 167,705 28,000 2,500 524,875 46,875
John J. Arena - - - 50,000 - 837,500
Donald L. Isaacs - - 17,875 51,625 287,156 542,968
Michael W. Vasily 5,000 148,117 20,500 10,500 440,625 156,875
<FN>
- -----
<F1>(1) Based on the difference between the closing price of the Common Stock on
December 31, 1993, which was $50.75, and the option exercise price for
each underlying grant.
</TABLE>
Pension Plan Table. Executive officers of the Corporation participate in
the Corporation's Retirement Plan and, if designated by the Corporate
Compensation Committee, in the Corporation's supplemental executive retirement
plan ("SERP"). The following table shows the estimated annual lifetime
retirement benefits payable from both plans to the executive officers named in
the Summary Compensation Table, beginning at age 65.
<TABLE>
<CAPTION>
Average Years of Service
Annual ----------------------------
Compensation 15 20 25-30 35
------------ -- -- ----- --
<S> <C> <C> <C> <C>
$200,000 .................................................... $ 60,000 $ 80,000 $100,000 $102,500
300,000 .................................................... 90,000 120,000 150,000 153,750
400,000 .................................................... 120,000 160,000 200,000 205,000
500,000 .................................................... 150,000 200,000 250,000 256,250
600,000 .................................................... 180,000 240,000 300,000 307,500
700,000 .................................................... 210,000 280,000 350,000 358,750
800,000 .................................................... 240,000 320,000 400,000 410,000
900,000 .................................................... 270,000 360,000 450,000 461,250
The amounts in the table have been calculated under the Retirement Plan
and SERP benefit formulas using the years of service and average annual
compensation levels specified in the table without taking into account any
offsets for Social Security benefits or benefit limitations under the Internal
Revenue Code. Compensation taken into account for the named executive officers
by the Retirement Plan and SERP benefit formulas is the same as the amounts
shown as salary and incentive compensation in the Annual Compensation portion
of the Summary Compensation Table. Average annual compensation is determined
using the three consecutive years in the ten years preceding retirement or
earlier termination of service in which compensation is the highest. Years of
service credited as of year-end 1993 for the named executive officers are as
follows: Mr. Arena (1 year, 9 months), Mr. Crozier (30 years), Mr.Isaacs (19
years), Mr. Pollard (17 years), and Mr. Vasily (15 years).
Severance Arrangements. The Corporation has a severance pay plan that
provides severance benefits to certain employees of the Corporation and its
subsidiaries in connection with a change in control of the Corporation.
Benefits are payable in the event of termination of employment without cause
or voluntary termination following certain events (such as a specified
reduction in salary or benefits) occurring within two years after a change in
control of the Corporation. Under the plan, the executive officers named in
the Summary Compensation Table would receive for each year of service a
severance payment of eight weeks' salary and pro rata incentive compensation,
covering up to a maximum of 156 weeks. They also would receive medical, life,
and other insurance coverages for the number of weeks used to compute
severance pay, as well as outplacement assistance valued at not less than 15%
of annual salary.
Under the terms of the Retirement Plan and SERP, the formulas currently
used to determine benefits would be modified in the event of a change in
control of the Corporation. A feature of the formulas provides smaller
benefits to terminating employees who are not yet eligible for retirement as
compared to employees with the same compensation and length of service who are
eligible for retirement. Since a participant's ability to continue as an
employee until retirement age could be affected by a change in control, this
feature of the benefit formulas would be deleted from such plans if a change
in control occurs. Also, in the event of a change in control, the number of
weeks used to compute severance pay under the severance pay plan will be added
to the age and service of SERP participants when their SERP benefits are
calculated.
Vesting of restricted stock and stock options would be accelerated upon a
change in control. Also, protections have been implemented to ensure, to the
extent possible, that employees and directors receive the value of
compensation or benefits earned but not received before a change in control.
CORPORATE COMPENSATION COMMITTEE AND STOCK OPTION
COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
Securities and Exchange Commission regulations require the compensation
committee of the board of directors of a publicly-traded company to publish in
each proxy statement involving the election of directors a report addressing
certain aspects of executive officer compensation for the last completed
fiscal year. The following report is provided in accordance with those
regulations.*<fn1>
<FN>
- ---------------
<fn1>*The Securities & Exchange Commission has requested that the report of the
Corporate Compensation Committee address any policy the Corporation may have
adopted with respect to a recent change in the Internal Revenue Code limiting
the income tax deductions of public companies for certain compensation in
excess of $1 million paid to any of the executive officers named in the proxy
statement compensation tables. No such officer of the Corporation received
applicable compensation at that level in 1993. At such time as it becomes
likely that applicable compensation for a covered executive will exceed the
deductibility limit, the Committee will consider whether or not adoption of a
policy in this regard would be desirable.
The compensation of the Corporation's executive officers reported for 1993
was paid or awarded pursuant to plans and arrangements that collectively are
intended to attract, retain, and motivate employees of outstanding ability,
control costs, link changes in compensation to individual and corporate
performance, and align the interests of management with the interests of the
Corporation's stockholders.
The Corporate Compensation Committee reviews executive officer salaries
each year and recommends to the Board of Directors appropriate adjustments
based on the Corporation's salary budget for the year, competitive salary
levels, changes in job responsibilities, and the performance of each
executive. The 1993 salary adjustment for Mr. Crozier was based upon the
Company's favorable 1992 financial performance and the research of external
compensation consultants, which helped the Committee identify the need to
bring, over time, Mr. Crozier's salary into the range of salaries of
executives with comparable responsibilities in the region and industry. With
respect to 1992 financial performance, the Committee considered the renewed
strength of earnings, the marked and continuing improvement in credit quality,
and the substantial bolstering of capital, which together permitted the
restoration of the dividend.
Executive officers of the Corporation (as well as other designated staff
members) are eligible to receive incentive compensation up to specified
percentages of their salaries under the Corporation's Incentive Compensation
Plan. Participants for each plan year are selected by the Corporate
Compensation Committee and are intended to be those individuals with positions
in which job performance can significantly affect profits. Awards under the
Plan are based partly on the performance of the Corporation (the Corporate
award) and partly on an evaluation of individual job performance. Corporate
performance normally accounts for one third of the award. Under the Plan the
Committee may recommend exceptions to the Board. Determination of the portion
of the Corporate award that will be paid in any year is made following the
close of the plan year on the basis of the Corporate Compensation Committee's
review of data comparing the Corporation's performance with the performance of
other similar companies and with previously established internal budget
targets. For 1993, the Corporate Compensation Committee determined that one
half of the Corporate Award would be paid (no Corporate award was paid for
1992) because the earnings results for the year, while not yet at fully
acceptable levels, exceeded budgetary targets. The portion of each award that
is determined specifically by an evaluation of individual performance is based
on the extent to which individual performance goals for the year were achieved
and, in the case of executive officers of the Corporation, an evaluation by
the Corporate Compensation Committee of the executive's job performance during
the year. In determining the incentive compensation award for Mr. Crozier for
1993, the Committee considered the successful earnings result for the year and
the sharp reduction in non-performing assets, both of which surpassed goals
set for the year. In addition, the Committee noted the many significant
strategic objectives accomplished, such as the successful introduction of
BayFunds, the strengthening of the Company's middle-management organization,
and the satisfaction of regulatory commitments undertaken in prior years.
The Corporation has a Stock Option Plan, which is a longer term incentive
plan intended to attract, motivate, and retain outstanding individuals as
employees of the Corporation and to reward those who make substantial
contributions to the success and welfare of the Corporation to the benefit of
the Corporation's stockholders. This plan also is intended to align the future
interests of the executives who receive grants under the Plan with the
interests of stockholders and provide compensation that is directly related to
enhancements in stockholder value. Benefits accrue over a number of years,
depending on the terms of the grants. The Stock option grant made in 1993 to
Mr. Crozier was in recognition of his leadership in producing the Company's
strong earnings recovery and to encourage his further development of the
Company's potential.
The Corporation's 1982 Restricted Stock Plan expired in 1992.
In 1993 the Corporation's executive officers also were eligible to
participate in the Corporation's Profit Sharing Plan, which is a tax-qualified
profit sharing plan and leveraged employee stock ownership plan ("ESOP") in
which substantially all employees of the Corporation and its subsidiaries who
have completed two years of service and 2,000 hours of employment participate.
Under the Plan's profit sharing formula profit sharing contributions equal 5%
of the Corporation's consolidated net income (excluding certain extraordinary
or non-recurring items) plus 10% of such net income above a threshold equal to
7.5% of consolidated equity capital. Profit sharing determined under the
formula may not reduce the Corporation's consolidated net income below such
threshold, nor may it exceed 15% of the total base salaries of all
participants. The Corporation is obligated to make contributions to the Plan
sufficient to make payments of principal and interest when due on the ESOP
loan, even though the profit sharing formula may call for a lower
contribution. The profit sharing formula produced a result for 1993 that was
slightly lower than the ESOP contribution for the year, a result largely
attributable to the substantial appreciation in the Corporation's Common Stock
price, which increased the value of the ESOP shares to be distributed. The
difference between the profit sharing result and the ESOP contribution for the
year will become part of the accumulated offset to the Corporation's future
profit sharing contributions created during the 1990-91 recession. In those
years profit sharing under the Plan's formula was not sufficient to cover
required ESOP loan repayments but the Company nevertheless made such payments
as required by the terms of the ESOP loan. Contributions to the ESOP and to
the Profit Sharing Plan are allocated among the accounts of participating
employees in the same proportion that each participant's base salary for the
year bears to the base salaries of all participants.
Glenn P. Strehle, Chairman
John A. Cervieri Jr.
Joseph H. Torras
<PAGE>
Five Year Stock Performance Graph. The following graph shows the
cumulative total shareholder return on the Corporation's Common Stock (stock
price appreciation plus dividends) over the five-year period ended December
31, 1993, and compares this return with that of the S&P Composite - 500 Stock
Index and the Dow Jones Eastern Bank Index.
[TO BE FILED IN PAPER]
[insert performance line graph]
OWNERSHIP OF COMMON STOCK
The following are the only known beneficial owners of more than 5% of the
Corporation's Common Stock.
</TABLE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
- ---------------------- ------------ ----
<S> <C> <C>
The Capital Group, Inc.(1)<F1> 1,779,000 shares (2)<F2> 9.5%
333 South Hope Street
Los Angeles, CA 90071
Marine Midland Bank, N.A. and 1,288,365 shares (4)<F4> 6.9%
BayBank, Co-Trustees of the
BayBanks Savings, Profit Sharing and
Stock Ownership Plan(3)<F3>
250 Park Avenue
New York, New York 10177
<FN>
- ---------
<F1>(1) The Capital Group, Inc. has filed a Securities and Exchange Commission
Schedule 13G reporting the above stock ownership in investment accounts
managed by several of its subsidiaries as of December 31, 1993, a copy of
which has been sent to the Corporation. One of such subsidiaries, Capital
Research and Management Company, which states that it is a registered
investment adviser, also has filed a Schedule 13G in which it reported
beneficial ownership of 1,155,000 of the shares shown (6.1% of the class)
as of December 31, 1993.
<F2>(2) Sole investment power with respect to all of such shares and sole voting
power with respect to 446,800 of such shares. Capital Research and
Management Company reports sole investment power, and no voting power,
with respect to 1,155,000 of such shares.
<F3>(3) BayBank, 7 New England Executive Park, Burlington, Massachusetts 01803,
disclaims beneficial ownership of 523,191 of the shares shown (2.8% of the
class). BayBank also is Trustee of the BayBanks Retirement Plan, in which
capacity it has sole investment power with respect to the 405,000 shares
of Common Stock held by that Plan (2.2% of the class). Under the
Retirement Plan, BayBank votes such shares and in the event of a tender
offer will tender them in the same proportions as participants in the ESOP
portion of the Profit Sharing Plan vote or tender the shares of Common
Stock allocated to their accounts. As trustee under other trusts
established by its customers, BayBank shares voting and investment power
over an additional 41,048 shares of Common Stock.
<F4>(4) Investment decisions with respect to the shares in the BayBanks, Inc.
Common Stock Fund portion of the Plan are made by the participants in that
fund. Marine Midland Bank, N.A., as Co-Trustee, votes all shares in the
Common Stock Fund in accordance with the voting instructions received from
participants in that fund and votes all shares of Common Stock in the ESOP
portion of the Plan in accordance with the voting instructions received
from participants to whom shares have been allocated. The Plan provides
that in the event of a tender offer the Co-Trustee will tender allocated
ESOP shares and shares in the Common Stock Fund as instructed by the
respective participants and will tender unallocated ESOP shares in the
same proportion as it tenders allocated ESOP shares.
</TABLE>
The Corporation's principal officers, directors, and 10% stockholders are
required by Section 16(a) of the Securities Exchange Act of 1934 to file
reports of ownership of, and transactions in, the Corporation's equity
securities with the Securities and Exchange Commission. Two reports covering
four Common Stock transactions in custodial accounts maintained by Ms.McNamee,
and a report of ownership of shares of Common Stock by a trust of which
Mr.Crozier is trustee but is not a beneficiary, were filed for 1993 after the
time such filings were required.
ACCOUNTANTS
The firm of KPMG Peat Marwick, independent public accountants, has audited
the accounts of the Corporation for a number of years and will do so for 1994.
Representatives of KPMG Peat Marwick are expected to be present at the Annual
Meeting, to be available to respond to appropriate questions, and to have the
opportunity to make a statement if they so desire.
STOCKHOLDER PROPOSALS AT 1995 ANNUAL MEETING
If any stockholder of the Corporation intends to present a proposal at the
1995 Annual Meeting of Stockholders and desires that it be considered for
inclusion in the Corporation's proxy statement and form of proxy for that
meeting, it must be received by the Corporation at 175 Federal Street, Boston,
Massachusetts 02110, no later than November 21, 1994.
GENERAL
While the Notice of Meeting calls for transaction of such other business
as may be in furtherance of, or incidental to, the matters described in the
Notice, the Board of Directors has no knowledge of any matters to be presented
for action by the stockholders at the meeting other than as set forth above.
The enclosed proxy gives discretionary authority, however, in the event that
any additional matters should be presented.
IN ADDITION TO THE CORPORATION'S ANNUAL REPORT, WHICH HAS BEEN MAILED TO
STOCKHOLDERS, ANY HOLDER OR BENEFICIAL OWNER OF THE CORPORATION'S COMMON STOCK
MAY OBTAIN A COPY OF THE CORPORATION'S FORM 10-K FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1993, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
WRITTEN REQUESTS FOR COPIES OF THE CORPORATION'S FORM 10-K SHOULD BE ADDRESSED
TO STEVEN P. ERWIN, TREASURER, BAYBANKS, INC., 175 FEDERAL STREET, BOSTON,
MASSACHUSETTS 02110.
ILENE BEAL, Clerk
<PAGE>
BAYBANKS, INC.
ANNUAL MEETING OF STOCKHOLDERS APRIL 28, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints John J. Arena,
Thomas R. Piper, and Glenn P. Strehle, and each of them, with full power of
substitution to each, proxies to represent the undersigned at the Annual Meeting
of Stockholders of BayBanks, Inc. to be held at the offices of BayBank Systems,
Inc., One BayBank Technology Place, Waltham, Massachusetts at 10:00 A.M. on
April 28, 1994, and at any adjournment thereof, and to vote as designated on the
reverse all shares of stock of BayBanks, Inc. that the undersigned would be
entitled to vote at said meeting. A majority of said proxies present and acting
at the meeting (or, if only one shall be present and acting, then that one) may
exercise all the powers granted hereby. SAID PROXIES ARE AUTHORIZED TO VOTE IN
THEIR DISCRETION UPON ANY OTHER MATTERS THAT MAY COME BEFORE THE MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<TABLE>
<S> <C>
[X]
Please mark votes as
in this example
1. ELECTION OF DIRECTORS
NOMINEES: Samuel J. Gerson, Thomas R. Each stockholder should specify by a mark in
Piper, Richard F. Pollard, Joseph H. the appropriate box how he wishes his shares
Torras voted.
IF NO SPECIFICATION IS MADE, SHARES WILL BE
FOR WITHHELD VOTED FOR THE ELECTION OF THE ABOVE DIRECTORS
[ ] [ ] AND FOR APPROVAL OF THE 1994 RESTRICTED STOCK
PLAN.
MARK HERE FOR
[ ] ___________________________________ ADDRESS CHANGE [ ]
For all nominees except as noted AND NOTE AT LEFT
above
Please sign, date, and return by April 28,
2. TO APPROVE THE 1994 RESTRICTED 1994. If signing as attorney or for an estate,
STOCK PLAN. trust or corporation, title or capacity should
be stated.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Signature:__________________________Date______
Signature:__________________________Date______
</TABLE>
EXHIBIT A
1994 RESTRICTED STOCK PLAN
1. PURPOSE.
The purpose of this Restricted Stock Plan (the "Plan") is to attract,
motivate, and retain outstanding individuals as employees of BayBanks, Inc.
(the "Corporation") and its Subsidiaries, as hereinafter defined, to align
their future interests with those of the Corporation's stockholders, and to
reward appropriately those who make substantial contributions to the success
and welfare of the Corporation.
2. STOCK SUBJECT TO THE PLAN.
The stock that may be granted under the Plan shall be the Common Stock,
$2.00 par value, of the Corporation. The maximum total number of shares of
such stock that may be issued under the Plan shall be 500,000 shares (except
as such amount may be adjusted in accordance with the provisions of Section 9
hereof). Such shares may be either unissued shares or reacquired shares.
If previously awarded shares are forfeited to the Corporation by reason of
termination of employment during the applicable Restriction Period, or for any
other reason, such shares shall not again be awarded under the Plan unless the
respective grant recipient has not had the benefits of ownership thereof
(other than voting rights). In the event the Corporation acquires or merges or
consolidates with another company, Common Stock issuable under the Plan as a
result of the Corporation's assumption of outstanding awards from such other
company or the substitution of grants under the Plan for outstanding awards of
such other company shall not reduce the shares available for grant under the
Plan.
3. ELIGIBILITY AND PARTICIPATION.
Individuals eligible to receive grants of Restricted Stock, as hereinafter
defined, under the Plan shall be those employees of the Corporation and its
Subsidiaries selected from time to time by the Plan's administrative
committee, provided, however, that each grant recipient must have been
employed by the Corporation or a Subsidiary for a period of at least six
months immediately preceding the date of grant. No person who is not an
officer or salaried employee of the Corporation or a Subsidiary shall be
eligible to receive a grant under the Plan. Grants made under the Plan in any
year shall neither preclude nor require selection of a grantee to receive
future grants or require that the grantee receive the same type or amount of
award as at any other time, or as may be received by any other grant recipient
at any time. Neither the Plan nor any action taken under the Plan shall be
construed as giving any grantee the right to be retained in the employ of the
Corporation or a Subsidiary.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a Committee (the "Committee") appointed
by, and to serve at the pleasure of, the Board of Directors of the Corporation
and consisting of three or more directors, each of whom is a "disinterested
person" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, or any successor provision, as applicable to the
Corporation at the time. Until the Board of Directors shall otherwise
determine, that Committee shall be the Corporate Compensation Committee.
Subject to the express provisions hereof, the Committee shall have sole and
complete authority to make grants of Restricted Stock. Such authority shall
include, but not be limited to, selecting individuals to receive grants under
the Plan, determining the number of shares of Common Stock (subject to the
limitations in Section 2 hereof) to be awarded to each grant recipient under
the Plan and the terms and conditions under which such grants shall be made,
and determining the duration and terms of each Restriction Period.
The Committee also shall have authority to adopt rules and regulations for
carrying out the Plan and to interpret, construe, implement, and otherwise
administer the provisions of the Plan. Decisions of the Committee shall be
final. A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present
(or acts approved in writing by a majority of the Committee) shall be the acts
of the Committee. The Committee shall keep minutes of its proceedings and from
time to time make such reports to the Board of Directors as the Board shall
direct.
5. EFFECTIVE DATE.
The Effective Date of the Plan shall be the date upon which the Plan is
adopted by the Board of Directors of the Corporation. The Plan shall terminate
if it is not approved within twelve months after the Effective Date by vote of
the holders of a majority of the stock of the Corporation present in person or
by proxy and entitled to vote at a special or annual meeting of the
stockholders of the Corporation.
6. TERMS AND CONDITIONS OF GRANTS.
6.1 Grants under the Plan shall consist of Restricted Stock, which shall
be shares of Common Stock of the Corporation transferred to grant recipients
in furtherance of the purposes of the Plan without, unless otherwise provided,
other payment and subject to the restrictions referred to in this Section 6.
All shares of Restricted Stock granted under the Plan shall be so granted for,
and in consideration of, past services rendered to the Corporation or a
Subsidiary and shall be subject to the following terms and conditions and to
such other terms and conditions, not inconsistent with the Plan, as shall be
prescribed by the Committee in its sole discretion and as shall be contained
in the Agreement referred to in Section 6.1(d) hereof.
(a) At the time of a grant of shares of Restricted Stock, the
Committee shall establish for all such shares received by a grantee (or,
if it is the intent that the total of such shares shall be divided into
separate parts, for each part of such total) a period of time (the
"Restriction Period") commencing with the date of the grant of such shares
during which time the shares may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as herein provided. Different
Restriction Periods may be fixed for different parts of the shares that
are being granted to a recipient, and the Restriction Period for one grant
may differ from the Restriction Period for other grants. Except for such
restrictions, unless otherwise determined by the Committee, the grant
recipient as owner of such Restricted Stock shall have all the rights of a
stockholder, including but not limited to the right to receive all
dividends paid on such Restricted Stock and the right to vote such
Restricted Stock. Unless otherwise determined by the Committee, the
restrictions shall terminate upon the earliest to occur of the expiration
of the Restriction Period or the grantee's death, disability, or
retirement, or in any other circumstances determined by the Committee at
the time of the grant or at any time thereafter.
(b) If a grant recipient ceases to be an employee of the Corporation
or a Subsidiary, all shares of Restricted Stock theretofore granted to him
as to which the restrictions imposed under this Section 6 have not
terminated or do not thereby terminate shall, except as provided in
Section 7 hereof, upon such cessation of employment be forfeited and
returned to the Corporation unless the Committee, in its discretion,
otherwise determines.
(c) Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the grantee and
deposited by him, together with a stock power endorsed in blank, with the
Corporation and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) contained in a Plan and an
Agreement between the registered owner and BayBanks, Inc. A copy of
such Plan and Agreement will be furnished to the holder of this
certificate upon written request and without charge."
(d) The grant recipient shall enter into an Agreement with the
Corporation, in a form not inconsistent with the Plan, agreeing to the
terms and conditions of the grant and such other matters as the Committee
shall in its sole discretion determine. The Agreement may be amended by
the Committee at any time to modify the Restriction Period with respect to
any shares of Restricted Stock the restrictions on which have not then
lapsed or in any other respect; provided that, except as provided in
Section 12, no amendment shall adversely affect the terms and conditions
of an outstanding grant without the written consent of the grant
recipient.
(e) Upon the termination of the restrictions imposed under this
Section 6, the Corporation shall return to the grantee (or his legal
representative, beneficiary, or heir) certificates, without a legend, for
the shares of Common Stock deposited with it pursuant to subsection (c)
hereof.
6.2 The Corporation or a Subsidiary, as the case may be, shall have the
right to deduct from amounts payable to the grantee, or to require the grantee
to pay, any taxes required by law to be withheld with respect to such
Restricted Stock. In the Committee's discretion such tax obligations may be
paid in whole or in part in shares of Common Stock, including shares retained
from the grant creating the tax obligation, valued at their fair market value
on the date of delivery.
6.3 No rights or interests of a grant recipient under the Plan may be
assigned, encumbered, or transferred except by will or the laws of descent and
distribution.
7. CHANGE IN CONTROL.
In order to preserve the rights of a grant recipient in the event of a
merger or consolidation of the Corporation with another corporation or of a
Change in Control of the Corporation, the Committee may in its discretion
include in the grant Agreement or in any amendment thereto (subject to the
proviso of Section 6.1(d)) provisions: (i)permitting restrictions on
Restricted Stock to lapse, in whole or in part, immediately prior to such
event, (ii)adjusting the terms of a grant in a manner determined by the
Committee to reflect the Change in Control, (iii) causing a grant to be
assumed, or new rights substituted therefor, by another entity, and/or (iv)
making such other provision as the Committee may consider equitable and in the
best interests of the Corporation. After a Change in Control of the
Corporation, the Corporation shall pay all reasonable legal fees, costs, and
other expenses incurred by any grantee in enforcing rights under this Plan or
the grant Agreement. The term "Change in Control" shall have such meaning with
respect to any grant of Restricted Stock as the Committee determines and is
specified in the Agreement for such grant.
8. SECURITIES AND OTHER LAWS.
In any case where in the opinion of the Committee, the issue and/or
delivery of shares of Common Stock under the Plan would violate requirements
of Federal or state securities or other laws, or the requirements of any
exchange on which the securities are listed, the Corporation shall be entitled
to postpone such issue and/or delivery until such requirements have been met.
The Committee may require representations and agreements from any grant
recipient in order to ensure compliance with Federal or state securities or
other laws.
9. ADJUSTMENT IN NUMBER OF SHARES.
In the event that there are any changes in the outstanding Common Stock of
the Corporation by reason of stock dividends, stock splits, or
recapitalizations (whether by way of mergers, consolidations, combinations, or
exchanges of shares or the like) the aggregate number and kind of shares
available under the Plan shall be appropriately adjusted by the Committee, if
necessary, to reflect equitably such change or changes. Any shares of stock or
other securities received by a grant recipient with respect to shares still
subject to the restrictions imposed by Section 6 will be subject to the same
restrictions and shall be deposited with the Corporation in accordance with
Section 6.
10. NOTICE OF ELECTION UNDER SECTION 83(B).
Each grant recipient making an election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, and the regulations and rulings
promulgated thereunder, will provide a copy thereof to the Corporation within
thirty days of the filing of such election with the Internal Revenue Service
and the Agreement referred to in Section 6 shall so provide.
11. TERM OF PLAN.
Unless sooner terminated the Plan shall terminate ten years from the
Effective Date and no Restricted Stock shall be granted thereafter.
12. AMENDMENTS AND TERMINATION.
The Plan or any portion hereof may be amended at any time and from time to
time or terminated by the Board of Directors, subject to such approval of the
stockholders as the Board of Directors shall deem necessary or advisable. No
amendment or termination shall adversely affect the terms and conditions of
outstanding grants without the written consent of the grantee, except that the
Plan and any Agreement may be amended without the consent of any grant
recipient in order to conform to restrictions or limitations imposed by
securities or tax laws or regulations, or any other laws or regulations deemed
by the Corporation to be binding upon it.
13. MISCELLANEOUS.
13.1 Transfer of Employment. The transfer of employment of an employee
from the Corporation to a Subsidiary or from a Subsidiary to the Corporation
or to another Subsidiary shall not constitute a termination of employment for
the purposes of the Plan.
13.2 Definition of Subsidiary. For all purposes of the Plan, the term
"Subsidiary" means any corporation of which the Corporation owns or controls
more than 50% of the outstanding shares of capital stock entitled ordinarily
(rather than in some contingency) to vote for the election of directors
(counting shares owned or controlled by a Subsidiary within this definition as
being owned or controlled by the Corporation).
