SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
MERCHANTS BANCSHARES, INC.
(A DELAWARE CORPORATION)
EMPLOYER IDENTIFICATION NO. 03-0287342
164 College Street, Burlington, VT 05401
Telephone: (802) 658-3400
Merchants Bancshares, Inc.
1996 Compensation Plan for Non-Employee Directors
(Full title of the plan)
Jennifer L. Varin
Merchants Bancshares, Inc.
275 Kennedy Drive
South Burlington VT 05403
(Name and address of agent for service)
(802) 658-3400
(Telephone number of agent for service)
CALCULATION OF REGISTRATION FEE:
- ------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To be To Be Price Offering Registration
Registered Registered Per Share Price Fee
Common Stock 100,000 $26.50 * $2,650,000 $803.03
$ 0.01 par value
per share
- --
- ---------------------
* This estimate is made pursuant to Rule 457(h) solely for the purpose of
determining the registration fee. The above calculation is based on the
offering of 100,000 shares at a purchase price of $26.50 per share, which
purchase price is the average of the high ($27.00) and low ($26.00) prices of
the Registrant's Common Stock as reported on the Nasdaq National Market on
September 2, 1997. In addition, pursuant to Rule 416(c), this registration
statement also covers an indeterminable amount of interests to be offered or
sold pursuant to the 1996 Compensation Plan for Non-Employee Directors
described herein.
MERCHANTS BANCSHARES, INC.
INDEX TO FORM S-8
ITEM PAGE
PART I
Item 1 - Plan Information.
Not required to be filed with the Commission
pursuant to Rule 424 (Sec. 230.424).
Item 2 - Registrant Information and Employee Plan
Annual Information.
Not required to be filed with the Commission
pursuant to Rule 424 (Sec. 230.424).
PART II
Item 3 - Incorporation of Documents by Reference 1
Item 4 - Description of Securities 1
Item 5 - Interests of Experts and Named Counsel 1
Item 6 - Indemnification of Directors and Officers 1-2
Item 7 - Exemption from Registration Claimed 2
Item 8 - Exhibits 2-3
Item 9 - Undertakings 3
Signatures 4-5
ITEM 3: Incorporation of Documents by Reference:
The following documents filed by Merchants Bancshares, Inc.
(the "Registrant") are hereby incorporated by reference in this
Registration Statement: (1) the Registrant's prospectus, dated
April 27, 1987, as filed with the SEC on April 27, 1987, pursuant
to Rule 424(b) of the Securities Act of 1933, as amended; (2) all
reports previously filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since December 31, 1996; and (3) the
description of the Common Stock contained in the Registrant's
Registration Statement on Form S-4 (Registration No. 33-16039),
filed with the SEC on September 14, 1983, and under Section 12(g)
of the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
In addition, all documents subsequently filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold
or which deregisters all of such securities then remaining
unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of
filing of such documents.
ITEM 4: Description of Securities:
A description of the Registrant's Common Stock to be offered
pursuant to this registration statement is not provided herein
because the Registrant's Common Stock is registered under Section
12 of the Exchange Act.
ITEM 5: Interests of Named Experts and Counsel:
Neither the Registrant's independent auditors, Arthur
Andersen LLP nor any individual employed by or associated with
such firm in a professional capacity, was employed by the
Registrant in connection with matters described in this
registration statement on a contingent basis or has, or is to
receive in connection with this offering, a substantial interest,
direct or indirect, in the Registrant or was connected with the
Registrant as a promoter, managing underwriter (or any principal
underwriter, if there are no managing underwriters), voting
trustee, director, officer or employee.
ITEM 6: Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law empowers
a Delaware corporation to indemnify its officers and directors
and certain other persons to the extent and under the
circumstances set forth therein.
The Restated Certificate of Incorporation of the Registrant
and the Amended By-laws of the Registrant provide for
indemnification of officers and directors of the Registrant and
certain other persons against liabilities and expenses incurred
by any of them in certain stated proceedings and under certain
stated conditions.
The Registrant intends to maintain insurance for the benefit
of its directors and officers insuring such persons against
certain liabilities, including liabilities under the securities
law.
ITEM 7: Exemption from Registration: Not applicable.
ITEM 8: Exhibits
The following exhibits are part of this Registration
Statement:
4.1 Restated Certificate of Incorporation of the Registrant
(Incorporated by reference to Exhibit B to Pre-Effective
Amendment No. 1 to the Registrant's Definitive Proxy
Statement for the Annual meeting of the Stockholders of the
Registrant), filed on April 25, 1987.
4.2 Amended By-Laws of the Registrant, filed on April 25,
1987 as Exhibit C to the Registrant's Proxy Statement.
5 Opinion and Consent of Bingham, Dana & Gould LLP as to
the legality of the securities registered.
23.1 Consent of Bingham, Dana and Gould LLP included in
Exhibit 5.
23.2 Consent of Arthur Andersen LLP.
10.1 1996 Compensation Plan for Non-Employee Directors.
ITEM 9: Undertakings:
The undersigned Registrant hereby undertakes:
1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement to include any material
information with respect to the plan of distribution not
previously disclosed in this Registration Statement or
any material change to such information in this
Registration Statement;
2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
3) To remove from registration by means of a post-effective
amendment any of the securities being registered that
remain unsold at the termination of the offering;
4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed
to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof; and
5) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the questions
whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
MERCHANTS BANCSHARES, INC.
FORM S-8
AUGUST 28, 1997
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized, in the City of
South Burlington, State of Vermont, on August 28, 1997
Merchants Bancshares, Inc.
/s/ Joseph L. Boutin
Joseph L. Boutin, President
Pursuant to the requirements of the Securities Act of 1933, the directors
have duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of South Burlington,
State of Vermont, on August 28, 1997.
1996 Compensation Plan for Non-Employee Directors
/s/ Raymond C. Pecor, Jr. /s/Joseph L. Boutin
Raymond C. Pecor, Jr. Joseph L. Boutin
Chairman of the Board President and CEO
/s/ Peter A. Bouyea __________________
Peter A. Bouyea Charles A. Davis
Director Director
/s/ Jeffrey L. Davis /s/ Michael G. Furlong
Jeffrey L. Davis Michael G. Furlong
Director Director
/s/ Leo O'Brien, Jr. /s/ Patrick S. Robins
Leo O'Brien, Jr Patrick S. Robins
Director Director
/s/ Benjamin F. Schweyer /s/ Robert A. Skiff
Benjamin F. Schweyer Robert A. Skiff
Director Director
/s/ Janet P. Spitler
Janet P. Spitler
Vice President and Treasurer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENTS
4.1 Restated Certificate of Incorporation of the Registrant
(Incorporated by reference to Exhibit B to Pre-Effective Amendment
No. 1 to the Registrant's Definitive Proxy Statement for the Annual
Meeting of the Stockholders of the Registrant, filed on April 25, 1987).
4.2 Amended By-Laws of the Registrant, (Incorporated by
reference to Exhibit C to the Registrant's Definitive Proxy
Statement for the Annual Meeting of the Stockholders of the
Registrant, filed on April 25, 1987.
5 Opinion and Consent of Bingham, Dana & Gould LLP as to the
legality of the securities being registered.
10.1 1996 Compensation Plan for Non-Employee Directors.
23.1 Consent of Bingham, Dana & Gould, LLP included in
Exhibit 5.
23.2 Consent of Arthur Andersen LLP.
EXHIBIT 5
September 2, 1997
Merchants Bancshares, Inc.
275 Kennedy Drive
Burlington VT 05403
Re: Registration Statement on Form S-8
Under the Securities Act of 1933, as Amended
--------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Merchants Bancshares, Inc., a
Delaware corporation (the "Company"), in connection with the
Company's Registration Statement on Form S-8 proposed to be filed
with the Securities and Exchange Commission on or about September
3, 1997 (the "Registration Statement").
The Registration Statement covers the registration of
100,000 shares of common stock, $0.01 par value per share, of the
Company (the "Shares"), which may be issued by the Company
pursuant to the Company's 1996 Compensation Plan for Non-Employee
Directors (the "Plan").
We have reviewed the corporate proceedings taken by the
Company with respect to the authorization of the Plan and the
issuance of the Shares thereunder. We have also examined and
relied upon originals or copies of such agreements, instruments,
corporate records, certificates, and other documents as we have
deemed necessary or appropriate to enable us to express the
opinions rendered hereby. In our examination, we have assumed
the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the
authenticity and completeness of all original documents reviewed
by us in original or copy form, and the legal competence of each
individual executing any document.
We further assume that all Shares issued under the Plan will
be issued in accordance with the terms of the Plan.
Subject to the limitations set forth below, we have made
such examination of law as we have deemed necessary for the
purposes of this opinion. This opinion is limited solely to the
Delaware General Corporation Law as applied by courts located in
Delaware, to the extent that it may apply to or govern the
transactions that are the subject of this opinion.
Based upon and subject to the foregoing, we are of the
opinion that the Shares, when issued and delivered pursuant to
the Plan will be validly issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BINGHAM, DANA & GOULD LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration
Statement pursuant to Merchants Bancshares, Inc. 1996 Compensation Plan for
Non-Employee Directors of our report dated January 16, 1997 incorporated by
reference in the Form 10-K of Merchants Bancshares, Inc. for the
year ended December 31, 1996 and to all references to our Firm
included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 27, 1997
EXHIBIT 10.1
MERCHANTS BANCSHARES, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
SECTION 1 PURPOSE
1.1 Purpose
SECTION 2 ADMINISTRATION
2.1 Management Committee
SECTION 3 PARTICIPATION
3.1 Participating Directors
SECTION 4 DEFERRED COMPENSATION
4.1 Maximum Number of Shares
4.2 Adjustment to Number of Shares
SECTION 5 COMPENSATION
5.1 Amount of Compensation
5.2 Compensation Election
5.3 Plan Year
SECTION 6 DEFERRED COMPENSATION
6.1 Deferred Common Stock
SECTION 7 GENERAL PROVISIONS
7.1 Issuance of Common Stock
7.2 Unfunded Obligation
7.3 Beneficiary; Family Transfer
7.4 Permanent Disability
7.5 Nonassignment
7.6 Termination and Amendment
7.7 Applicable Law
7.8 Effective Date and Term of the Plan
7.9 Compliance With Rule 16b-3 of the Exchange Act
MERCHANTS BANCSHARES, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
SECTION 1 PURPOSE
1.1 Purpose
The name of the Plan shall be the Merchants Bancshares, Inc.
l996 Compensation Plan for Non-Employee Directors (the "Plan").
The purpose of the Plan is to provide a compensation program for
non-employee directors ("Participating Directors") of Merchants
Bancshares, Inc. (the "Company") that will attract and retain
highly qualified individuals to serve as members of the Company's
board of directors (the "Board"). The Plan Participating
Directors are to receive their Compensation for service on the
Board in the form of cash, shares of Company common stock, par
value $0.01 per share, subject to restrictions as described
below, ("Common Stock") or any combination of the foregoing. For
purposes of the Plan, the term "Compensation" shall mean any and
all fees earned by a Participating Director for each regular or
special meeting and for any committee meetings attended.
SECTION 2 ADMINISTRATION
2.1 Management Committee
Subject to Section 7.7, the Plan shall be administered by a
management committee (the "Committee") consisting of the Chief
Executive Officer of the Company and such other senior officers
as the Chief Executive Officer shall designate. The Committee
shall interpret the Plan, shall prescribe, amend and rescind
rules relating to it from time to time as it deems proper and in
the best interests of the Company, and shall take any other
action necessary for the administration of the Plan. Any decision
or interpretation adopted by the Committee shall be final and
conclusive and shall be binding upon all Directors.
SECTION 3 PARTICIPATION
3.1 Participants
Each person who is a non-employee Director of the Company,
or of its subsidiary The Merchants Bank (the "Bank"), on the
Effective Date (as defined below) of the Plan shall become a
Participating Director on the Effective Date. Any other
individual shall become a Participating Director immediately upon
becoming a Director of the Company or the Bank.
SECTION 4 DEFERRED COMPENSATION
4.1 Maximum Number of Shares
Subject to Section 4.2, the maximum number of shares of
Common Stock which may at any time be awarded under the Plan is
100,000 shares of Common Stock. Awards may be made from shares
held in the Company's treasury or out of authorized but unissued
shares of the Company, or partly out of each, as shall be
determined by the Committee.
4.2 Adjustment to Number of Shares
In the event of a recapitalization, stock split,
stock dividend, exchange of shares, merger, reorganization,
change in corporate structure or shares of the Company or similar
event, the Board, upon recommendation of the Committee, may make
appropriate adjustments to the number of shares (i) authorized
for the Plan, and (ii) allocated under the Stock Election (as
defined in Section 6).
SECTION 5 COMPENSATION
5.1 Amount of Compensation
Each Director's compensation ("Compensation") shall be
determined in accordance with the Company's by-laws and shall be
paid, unless deferred pursuant to Section 6, according to the
ordinary practices of the Company (the "Payment Date"), unless
otherwise determined by the Committee.
5.2 Compensation Election
Prior to each Plan Year (as defined below) and subject to
such deadlines as may be established by the Committee from time
to time, each Participating Director may elect to receive all or
any portion of his or her compensation for such Year in the form
of shares of common stock subject to the restrictions described
in Section 6 below (a "Stock Election"), provided that a Stock
Election may not be made so as to apply to any fractional share.
If no election is received by the Company, the Participating
Director shall be deemed to have made an election to receive his
or her Compensation in undeferred cash. An election under this
Section 5.2 shall be irrevocable and shall apply to the
Compensation earned during the Plan Year (as defined below) for
which the election is effective.
5.3 Plan Year
The term "Plan Year" shall mean the calendar year, except
that the first Plan year shall begin on July 1, 1997 and shall
end on December 31, 1997.
SECTION 6 STOCK ELECTION
6.1 Deferred Common Stock
(a) If a Participating Director makes a Stock Election, then
the day on which he or she would have received cash in the
absence of such election shall be a "Measurement Date." On
each Measurement Date, the Committee or its delegate shall
calculate the number of shares of Common Stock ("Shares") by:
(i) dividing the cash the Participating Director would
have received on such date by the "Per Share Price", as defined
below (the number of Shares so determined being the "Basic
Shares"), and
(ii) multiplying the number of Basic Shares by the
"Risk Premium", as defined below, rounding any fractional Share
thus determined up to the nearest whole number (the number of
Shares so determined being the "Pay-Out Shares").
On the Measurement Date, the Pay-out Shares shall be issued
or otherwise transferred to the Participating Director or to a
trustee, via ledger transfer or such other method as is
determined by the Committee, or may be set aside as an unfunded
obligation to deliver shares in the future, subject to the
restriction that the Participating Director may not sell,
transfer or otherwise dispose of the Shares, except as provided
in Section 7.3 below, prior to the fifth anniversary of the
applicable Measurement Date. Shares subject to such an election
shall, until such fifth anniversary, be hereinafter referred to
as "Restricted Shares."
For example, if a Participating Director who is otherwise
entitled to cash fees of $900 on September 1, 1997 has made a
Stock Election with respect to the entire amount of the fee, and
if the Per Share Price is then $18, and the Committee has
declared a Risk Premium of 1.2 for that Plan Year, then the
Director shall receive 60 Restricted Shares (($900/18) x 1.2),
which cannot be sold or otherwise transferred by the
Participating Director until September 1, 2002.
(b) For purposes of this Section 6,
(i) the "Per Share Price" on any Measurement Date
shall mean the price at the close of trading on that day, and
(ii) the "Risk Premium" applicable during any Plan
Year, shall be a number, no less than 1.0 and no greater than
1.25, determined prior to the applicable Plan Year by the
Committee both to reflect the investment and other risks assumed
by the Participating Director in making the Stock Election and to
provide a reasonable inducement to the Director for making such
election.
To the extent the number of Shares issued or otherwise
transferred to a Participating Director on any Measurement Date
exceeds the number of Basic Shares, because of the application of
a Risk Premium greater than 1.0, such excess Shares shall be
referred to as "Risk Premium Shares".
(c) Notwithstanding the transfer restrictions provided
above, a Participating Director shall at all times enjoy full
voting and dividend rights in respect of Shares which have been
issued or otherwise transferred to the Participating Director as
a result of a Stock Election, provided that any Share or other
security of the Company or the Bank which is issued or otherwise
transferred to the Participating Director as a dividend on or
other distribution in regard to a Restricted Share (a
"Distributed Security") shall be subject to the same
restriction on transfer that is applicable to such Restricted
Share.
(d) If a Participating Director:
(i) resigns his position voluntarily without the
consent of a majority of the remaining members of the Board, or
(ii) is forced to resign from the Board for "Cause"
as provided in the Company's By-Laws,
then, the Director shall forfeit all his or her Restricted Shares
which are Risk Premium Shares, as well as any Distributed
Securities which derived from Risk Premium Shares.
(e) If any Restricted Shares or Distributed Securities are
actually delivered to the possession of the Participating
Director, they shall bear an appropriate legend.
(f) The Committee, in its discretion, may accelerate the
distribution of the Participating Director's Restricted Shares in
the event of the Participating Director's death or Permanent
Disability, or upon its determination that the Participating
Director (or his or her Beneficiary in the case of his or her
death) has incurred a severe financial hardship. The Committee in
making its determination may consider such factors and require
such information as it deems appropriate.
SECTION 7 GENERAL PROVISIONS
7.1 Issuance of Common Stock
The Company shall not be required to issue any certificate
for shares of Common Stock prior to:
(a) obtaining any approval or ruling from the Securities and
Exchange Commission, the Internal Revenue Service or any other
governmental agency which the Company, in its sole discretion,
deems necessary or advisable;
(b) listing the shares on any stock exchange on which the
Common Stock may then be listed; or
(c) completing any registration or other qualification of
such shares under any federal or state laws, rulings or
regulations of any governmental body which the Company, in its
sole discretion, determines to be necessary or advisable.
All certificates for shares of Common Stock delivered under
the Plan also shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which Common Stock
is then listed and any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to
such restrictions. The foregoing provisions of this paragraph
shall not be effective if and to the extent that the shares of
Common Stock delivered under the Plan are covered by an effective
and current registration statement under the Securities Act of
1933, as amended, or if and so long as the Committee determines
that application of such provisions is no longer required or
desirable. In making such determination, the Committee may rely
upon an opinion of counsel for the Company.
7.2 Unfunded Obligation
Any deferred amount to be paid to Participating Directors
pursuant to the Plan is an unfunded obligation of the Company.
The Company is not required to segregate any monies from its
general funds, to create any trusts, or to make any special
deposits with respect to this obligation. Beneficial ownership of
any investments, including trust investments that the Company may
make to fulfill this obligation shall at all times remain in the
Company. Any investments and the creation or maintenance of any
trust or memorandum accounts shall not create or constitute a
trust or a fiduciary relationship between the Committee or the
Company and a Participating Director, or otherwise create any
vested or beneficial interest in any Participating Director or
the Participating Director's Beneficiary or the Participating
Director's creditors in any assets of the Company whatsoever. The
Participating Directors shall have no claim against the Company
for any changes in the value of any assets that may be invested
or reinvested by the Company with respect to the Plan.
7.3 Beneficiary; Family Transfer
(a) Beneficiary. The term "Beneficiary" shall mean the
person or persons to whom payments are to be paid pursuant to the
terms of the Plan in the event of the Participating Director's
death. The designation shall be on a form provided by the
Committee, executed by the Participating Director, and delivered
to the Committee.
(b) Family Transfer. A Participating Director shall be
entitled to convey his or her Restricted Shares to a spouse,
parent, child, grandchild, other family member or dependent
reasonably acceptable to the Company or to a Trust for the
benefit of any such individual (in each case, a "Family
Transferee"), provided that:
(i) the Family Transferee shall have delivered to the
Company a voting trust document or other document satisfactory to
the Company conveying to the Participating Director or the
Company (or, if the Company is restricted from exercising a vote,
to a trustee selected by the Company) all rights with respect to
the voting of such Restricted Shares;
(ii) such Family Transferee shall be subject to all
the terms and conditions of any agreement as to the Restricted
Shares as would have been applicable to the Participating
Director from time to time;
(iii) such Family Transferee has duly executed a copy
of any agreement as to the Restricted Shares that has been
executed by such Participating Director; and
(iv) all references in this Plan and any agreement to
the Participating Director shall apply to the Family Transferee
with respect to the Restricted Shares so transferred.
In connection with a divorce, decree of separate maintenance
or other arrangement involving an adjustment of marital rights,
if a Participating Director is required to transfer all or a
portion of his Restricted Shares to his spouse, the Company shall
have the right to purchase from the Participating Director all
such Restricted Shares, unless the Participating Director files
with the Company a copy, executed by his or her spouse, of any
Agreement as to the Restricted Shares executed by the
Participating Director, and an irrevocable proxy of unlimited
duration, signed by his or her spouse, giving the Participating
Director exclusive power to act on all matters concerning the
Restricted Shares and this Plan.
7.4 Permanent Disability
A Participating Director shall be deemed to have become
disabled for purposes of the Plan if the Committee finds, upon
the basis of medical evidence satisfactory to it, that the
Participating Director is totally disabled, whether due to
physical or mental condition, so as to be prevented from engaging
in further service to the Company or any of its subsidiaries and
that such disability will be permanent and continuous during the
remainder of the Participating Director's life.
7.5 Nonassignment
The right of a Participating Director or Beneficiary to the
payment of any amounts under the Plan may not be assigned,
transferred, pledged or encumbered, nor shall such right or other
interests be subject to attachment, garnishment, execution or
other legal process.
7.6 Termination and Amendment
The Board may from time to time amend, suspend or terminate
the Plan, in whole or in part, and if the Plan is suspended or
terminated, the Board may reinstate any or all of its provisions.
No amendment, suspension or termination may impair the right of a
Participating Director or the Participating Director's designated
Beneficiary to receive benefits accrued prior to the effective
date of such amendment, suspension or termination. The Committee
may amend the Plan, without Board approval, to ensure that the
Company may obtain any regulatory approval or to accomplish any
other reasonable purpose, provided that the Committee may not
effect a change that would materially increase the cost of the
Plan to the Company. Notwithstanding the foregoing, the Board and
the Committee may not amend the Plan without the approval of the
stockholders of the Company to: (i) materially increase the
number of shares of Common Stock that may be issued under the
Plan, (ii) materially modify the eligibility for participation in
the Plan, or (iii) otherwise materially increase the benefits
accruing to the Participating Directors under the Plan.
The Plan shall not be amended more than once every six
months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder.
7.7 Applicable Law
The Plan shall be construed and governed in accordance with
the laws of the State of Vermont.
7.8 Effective Date and Term of the Plan
The Plan shall be effective as of May 22, 1997 (the
"Effective Date"), provided that the Plan is approved by the
Company's stockholders within the earlier of the date the
Company's next annual meeting of stockholders or twelve (12)
months after the date the Plan is adopted by the Board. To the
extent required for compliance with Section 16(b) of the Exchange
Act and rules promulgated thereunder, shares of Common Stock
distributed to Participating Directors may not be sold until a
date at least six (6) months after the date such stockholder
approval is obtained, or if earlier, such other date allowed by
Section 16(b) of the Exchange Act or rules promulgated
thereunder. The Plan shall terminate ten (10) years after the
approval of the Plan by the stockholders of the Company.
7.9 Compliance With Rule 16b-3 of the Exchange Act
The Company's intention is that, so long as any of the
Company's equity securities are registered pursuant to Section
12(b) or 12(g) of the Exchange Act, with respect to awards of
Common Stock, the Plan shall comply in all respects with Rule
16b-3 promulgated under Section 16(b) of the Exchange Act. If any
Plan provision is later found not to be in compliance with Rule
16b-3 of the Exchange Act, that provision shall be deemed
modified as necessary to meet the requirements of Rule 16b-3.
