Notice of
Annual Meeting
of Shareholders
April 17, 1996
and
Proxy Statement
Your Vote is Important
You are urged to exercise your right to vote by indicating your choices on
the enclosed proxy card. Please date, sign and promptly return
your proxy card in the enclosed postage-paid envelope. You may,
nevertheless, vote in person if you attend the meeting.
<PAGE>
WESTBANK CORPORATION
225 Park Avenue
West Springfield, Massachusetts 01089-3310
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
To be held Wednesday, April 17, 1996
March 20, 1996
To the Shareholders of Westbank Corporation:
Notice is hereby given that the 1996 Annual Meeting of
Shareholders of Westbank Corporation (the Notice is hereby given
that the 1996 Annual Meeting of Shareholders of Westbank Corporation
(the "Corporation") will be held at 9:00 A.M., on Wednesday, April
17, 1996 at the Carriage House at Storrowton Tavern, 1305 Memorial
Avenue, West Springfield, Massachusetts, 01089, for the following
purposes, all as set forth in the Proxy Statement accompanying this
notice:
1. To fix the number of Directors of the Corporation at twelve.
2. Election of the individuals listed as nominees in the Proxy
Statement accompanying this notice of meeting.
3. To approve the 1996 Stock Incentive Plan.
4. Ratification of the appointment of the firm of Deloitte & Touche
LLP as the Corporation's independent public accountants for the
fiscal year ending December 31, 1996.
5. To act upon such other matters as may properly be brought before
the meeting or any adjournment thereof.
The record date and hour for determining shareholders entitled
to notice of, and to vote at, the meeting has been fixed at 5:00
P.M., March 1, 1996.
By order of the Board of Directors
Robert J. Perlak
Clerk
West Springfield, Massachusetts
March 20, 1996
PLEASE SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE ENCLOSED FOR THAT PURPOSE. YOU MAY NEVERTHELESS
VOTE IN PERSON IF YOU DO ATTEND THE MEETING.
<PAGE>
PROXY STATEMENT
Approximate date of mailing
March 20, 1996
WESTBANK CORPORATION
225 Park Avenue
West Springfield, Massachusetts 01089-3310
(413) 747-1400
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
To be held April 17, 1996
INTRODUCTION
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies on behalf of the Board of Directors of
Westbank Corporation (the "Corporation") to be used at the 1996
Annual Meeting of Shareholders of the Corporation to be held at the
Carriage House at Storrowton Tavern, 1305 Memorial Avenue, West
Springfield, Massachusetts 01089 on Wednesday, April 17, 1996 at
9:00 A.M. and at any adjournments thereof.
The close of business on March 1, 1996, has been fixed as the record
date for determination of shareholders of the Corporation entitled
to notice of and to vote at the 1996 Annual Meeting of Shareholders.
The only class of issued and outstanding voting securities of the
Corporation is the $2.00 par value Common Stock (the "Common
Stock"). As of the record date the number of shares of Common Stock
outstanding and entitled to vote at the 1996 Annual Meeting of
Shareholders is 3,247,028. Each share of Common Stock is entitled
to one vote.
The affirmative vote of a majority of the shares of Common Stock of
the Corporation represented at the 1996 Annual Meeting is required
to fix the number of Directors, to approve the 1996 Stock Incentive
Plan and to appoint the auditor of the Corporation. The affirmative
vote of the plurality of the votes cast by shareholders is required
to elect Directors.
Execution of the enclosed proxy will not affect the shareholder's
right to attend the meeting and vote in person as a shareholder
giving a proxy has the power to revoke it any time before it is
exercised by delivering notice of revocation, or a duly executed
proxy bearing a later date, to the Treasurer of the Corporation.
<PAGE>
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide in substance that the Board
of Directors shall be divided into three classes as nearly equal in
number as possible, and that the term of office of one class shall
expire and a successor class shall be elected at each annual meeting
of shareholders. The By-Laws of the Corporation also provide that
the shareholders fix the exact number of Directors at the annual
meeting of shareholders. The Corporation's Board of Directors
presently consists of twelve members.
It is proposed by the Board of Directors that at the 1996 Annual
Meeting the number of Directors who shall constitute the full Board
of Directors until the next annual meeting shall be fixed at twelve
and that in accordance with the By-Laws of the Corporation four
nominees be elected to serve a three-year term until the 1999 Annual
Meeting of Shareholders and for such further time as may be required
for the election and qualification of their successors. Unless
returned proxies properly indicate that authority to vote for any of
the nominees named herein is withheld, all proxies received by the
Corporation in time for the 1996 Annual Meeting of Shareholders will
be voted to fix the number of Directors at twelve and, in the event
the number of Directors is so fixed, in favor of the election of the
nominees listed below. In the event any of the nominees named
herein becomes unable or unwilling to accept nomination for
election, the persons identified as proxies in the accompanying form
of proxy and authorized to vote in the election will vote the shares
represented by executed proxies in favor of the nomination and
election of such substitute nominees as the Board of Directors of
the Corporation may select.
The following tables name the individuals nominated for Director,
and those Directors of the Corporation who will continue to serve
after the meeting, and indicate their age, the period of time they
have served as Director of the Corporation or its predecessor, their
position with the Corporation, and their principal occupation or
employment. No nominee or Director holds a directorship in any
corporation, other than the Corporation, with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section 15(d) of such Act or
any corporation registered as an investment corporation under the
Investment Company Act of 1940.
The following individuals are nominees for election as a Director of
the Corporation at this 1996 Annual Meeting to serve for a
three-year term until the 1999 Annual Meeting of Shareholders:
Has Served
Nominee and On Board of
Current Occupation Directors of the
or Employment; Corporation or Corporate
Business Experience Its Predecessor Offices
During Past 5 Years Age Since Held
Mark A. Beauregard 44 1986 Director
Attorney - Resnic, Beauregard,
Waite and Driscoll
David R. Chamberland 57 1989 Director
President, Chicopee Building
Supply, Inc.
<PAGE>
Has Served
Nominee and On Board of
Current Occupation Directors of the
or Employment; Corporation or Corporate
Business Experience Its Predecessor Offices
During Past 5 Years Age Since Held
Robert J. Perlak 60 1987 Director
Private Investor - Formerly and Clerk
Assistant Chief Probation Officer
of Hampden County
James E. Tremble 57 1986 Director
President,
Valley Cinema, Inc.
The following Directors will continue to serve after the meeting:
Has Served
Nominee and On Board of
Current Occupation Directors of the
or Employment; Corporation or Corporate Term
Business Experience Its Predecessor Offices Expires
During Past 5 Years Age Since Held In
Roland O. Archambault 63 1989 Director 1998
Owner - Park Supply Co.
Donald R. Chase 49 1990 Director, 1998
President and Chief Executive Officer, President and
Westbank Corporation; President and Chief Executive
Chief Executive Officer; Park West Officer
Bank and Trust Company
John E. Fitzgerald 71 1961 Director 1998
Private Investor
Leroy F. Jarrett 68 1961 Director, 1997
President and Treasurer, Vice Chairman
New England Church Interiors of the Board
Ernest N. Laflamme, Jr. 64 1987 Director 1997
Treasurer, City of Chicopee;
President, Laflamme Oil
Russell Mawdsley 71 1975 Director 1998
President and Treasurer,
Russell-Hall, Inc.
<PAGE>
Has Served
Nominee and On Board of
Current Occupation Directors of the
or Employment; Corporation or Corporate Term
Business Experience Its Predecessor Offices Expires
During Past 5 Years Age Since Held In
Paul J. McKenna 69 1961 Director 1997
Orthodontist
Alfred C. Whitaker 69 1961 Director, 1997
Sales Consultant, Burke-Whitaker Chairman of the
Pontiac Cadillac Board and
Assistant Clerk
The total number of special and regular meetings of the Board of
Directors of the Corporation during the fiscal year ended December
31, 1995 was 12. Each Director attended at least 75% of all Board
of Directors meetings held in 1995 during the period for which each
was a Director. In addition to serving as Directors of the
Corporation, board members also serve as the Board of Directors of
the Corporation's wholly owned subsidiary, Park West Bank and Trust
Company ("Park West"). During 1995, the Board of Directors of Park
West met 25 times. All Directors attended at least 75% of all board
meetings of Park West during the period for which each was a
Director.
Committees
The Board of Directors each year appoints Directors to serve on
standing committees of the Board of Directors, including the
Executive Committee, the Compensation Committee, the Nominating
Committee and the Audit Committee. The members of the Executive
Committee, the Compensation Committee, the Nominating Committee and
the Audit Committee of the Corporation also make up these same
committees for Park West. All Directors attended at least 75% of
the meetings of committees of which they were a member during the
period each was a Director.
Executive Committee
The members of the Executive Committee of the Corporation and Park
West in 1995 were Messrs. Mawdsley, Chase, Fitzgerald, Jarrett,
Whitaker and Laflamme. The Executive Committees met 26 times during
1995.
Compensation Committee
The members of the Compensation Committee in 1995 were Messrs.
Mawdsley, Fitzgerald, Jarrett, Whitaker and Laflamme. The
Compensation Committee met 2 times in 1995.
Nominating Committee
The members of the Nominating Committee in 1995 were Messrs. Chase,
Fitzgerald, Laflamme, Chamberland and Whitaker. The Committee
nominates Directors for election by shareholders at the annual
meeting, reports to the Board of Directors on or before December 31
of each year its nominations and submits its nominees for Directors
for publication in the Notice of Annual Meeting of Shareholders and
Proxy Statement. The Committee met 4 times during 1995. The
Nominating Committee will consider nominees recommended by the
Corporation's shareholders prior to December 1 of each year.
<PAGE>
Audit Committee
The members of the Audit Committee of Park West in 1995 were Messrs.
Perlak, Archambault, Jarrett, Mawdsley and McKenna. The Committee
makes recommendations concerning the selection of an independent
auditor for the Corporation, and reviews the reports of the
independent auditor and subsidiary audit committees. The Audit
Committee of Park West met 5 times during 1995.
Executive Officers
In addition to the President of the Corporation who is a Director
and is listed in the tables above, the other Executive Officers of
the Corporation are as follows: Gary L. Briggs, age 45, is Executive
Vice President - Lending of Park West, having served as such since
1988 and during the four years prior to that time as Senior Vice
President of Park West; John M. Lilly, age 47, is Treasurer and
Chief Financial Officer of the Corporation, having served as such
since 1991, and is also Executive Vice President - Finance and
Treasurer of Park West, having served as such since 1988 and during
the four years prior to that time as Senior Vice President and
Treasurer of Park West; and Robert A. Gibowicz, age 52, is Senior
Trust Officer of Park West, having served as such since 1986 and as
Trust Officer for three years prior to that. Each Executive Officer
serves for a one-year term or until their successor is elected and
qualified.
BENEFICIAL OWNERSHIP OF STOCK
The following table sets forth certain information as of the record
date with respect to all individuals known to the Corporation to be
the beneficial owner of more than 5% of the outstanding Common Stock
of the Corporation:
Number of Percent of
Name and Address Shares Beneficially Outstanding
of Owner Owned(2) Shares
Richard S. Sullivan
Carol B. Sullivan 273,652 8.4%
96 Prynwood Road
Longmeadow, MA 01106
<PAGE>
The following table and related notes set forth information as of
the record date regarding the Corporation's Common Stock
beneficially owned by each Director and nominee and by Directors,
nominees and Officers of the Corporation and Park West as a group:
Number of Percent of
Name of Individual Shares Beneficially Outstanding
or Persons in Group Owned(1)(2)(3) Shares
Roland O. Archambault 17,647 .5%
Mark A. Beauregard 9,617(4) .3
David R. Chamberland 8,199(4) .3
Donald R. Chase 149,873(5) 4.6
John E. Fitzgerald 74,462 2.3
Leroy F. Jarrett 80,684 2.5
Ernest N. Laflamme, Jr. 38,690 1.2
Russell Mawdsley 47,749 1.5
Paul J. McKenna 57,537 1.8
Robert J. Perlak 44,269(4) 1.4
James E. Tremble 7,022(4) .2
Alfred C. Whitaker 33,000 1.0
All Directors, nominees and
Executive Officers as a group
(15 persons, including those
named above)(3)(5) 687,687 21.2
(1) Based upon information provided to the Corporation by the
indicated persons.
(2) Under regulations of the Securities and Exchange Commission, a
person is treated as the beneficial owner of a security if the
person directly or indirectly (through contract, arrangement,
understanding, relationship or otherwise) has or shares (a)
voting power, including the power to vote or to direct the
voting, of such security, or (b) investment power with respect
to such security, including the power to dispose or direct the
disposition of such security. A person is also deemed to have
beneficial ownership of any security that such person has the
right to acquire within 60 days.
(3) The information in the table includes all shares under stock
options which were exercisable on the record date or 60 days
thereafter. As of that date, Mr. Chase owned exercisable
options to purchase 131,058 shares, and all Directors and
Executive Officers as a group owned exercisable options to
purchase 268,746 shares.
(4) Indicates a nominee for election as a Director of the
Corporation at the 1996 Annual Meeting of Shareholders.
(5) For the purposes of the above table, the term "Executive
Officer" means any individual elected as an Executive Officer
of the Corporation or Park West or by their respective Boards
of Directors.
<PAGE>
EXECUTIVE MANAGEMENT COMPENSATION
Compensation decisions for executive officers of the Corporation are
made by the Compensation Committee, and approved by the full Board
of Directors. Mr. Chase, who is a member of the Board of Directors
as well as an executive officer of the Corporation, neither
participated in nor voted upon his compensation package.
Report of the Compensation Committee on Executive Management
Compensation
Set forth below is the report of the Compensation Committee of the
Corporation regarding executive management compensation, as required
by applicable rules of the Securities and Exchange Commission.
The executive compensation program of the Corporation consists of
three primary components: base salary, cash incentive compensation,
and stock options, all which are administered by the Compensation
Committee.
Decisions by the Compensation Committee relating to the compensation
of the Corporation's executive officers are approved by the full
Board of Directors, except as otherwise set forth herein. In
determining the proper amount of compensation for each executive
officer, the Compensation Committee considers various factors,
including, inter alia:
the performance of the Corporation;
the individual's performance as an executive officer of the
Corporation;
the amount of compensation paid to similarly situated
executive officers in similar sized corporations; and
the length of service with the Corporation.
In early 1994, the Compensation committee engaged Arthur Andersen &
Co. to assist in establishing salary levels and an incentive
compensation plan for the Corporation's senior executives. The
compensation process recommended by Arthur Andersen & Co. was
adopted by the Compensation Committee and is used in determining
executive officer compensation.
During 1995, Chief Executive Officer, Donald R. Chase received a
salary increase of $9,261, an increase of seven percent (7%) of his
base salary. The increase was recommended by the Compensation
Committee following its evaluation of Mr. Chase's performance as
Chief Executive Officer, and the overall performance of the
Corporation for 1994. In addition, as a result of the incentive
compensation plan Mr. Chase received a cash bonus of $46,305. The
Compensation Committee did not award any stock options to Mr. Chase
or any other executive officer during 1995.
The other executive officers named in the Summary Compensation
Table, Messrs. Briggs and Lilly, were also granted a salary
increase of seven percent (7%) during 1995 based on the
Corporation's and their individual performance.
The Compensation Committee believes that the 1995 compensation of
executive officers is reasonable given the Corporation's performance
and utilizing the criteria listed above.
Respectfully submitted by:
Russell Mawdsley John E. Fitzgerald Ernest N. Laflamme, Jr.
Chairman Leroy F. Jarrett Alfred C. Whitaker
The Compensation Committee
<PAGE>
Compensation Information
The following table sets forth the cash compensation paid to, as
well as long-term compensation paid for each of the last three
fiscal years, to all executive officers of the Corporation who
received over $100,000.00 in cash compensation during 1995:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary($) Bonus($) sation ($) Award(s)($) SARs(#) Payouts sation($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald R. Chase, 1995 $141,561 $46,305 N/A N/A N/A N/A $15,595
President and 1994 $132,300 $ 9,700 N/A N/A 88,000 N/A $17,714
Chief Executive Officer 1993 $126,000 $ 6,300 N/A N/A 22,802 N/A $17,879(1)
Gary L. Briggs 1995 $94,374 $30,870 N/A N/A N/A N/A $12,199
Executive Vice President- 1994 $88,200 N/A N/A N/A 36,000 N/A $ 8,560
Lending 1993 $84,000 N/A N/A N/A 12,500 N/A $10,864(2)
John M. Lilly, 1995 $94,374 $30,870 N/A N/A N/A N/A $12,199
Treasurer and 1994 $88,200 N/A N/A N/A 36,000 N/A $ 8,560
Chief Financial Officer 1993 $84,000 N/A N/A N/A 12,500 N/A $10,864(2)
</TABLE>
(1) Mr. Chase's other compensation during 1993 consisted of the
following--a $12,839.00 contribution to the Money Purchase
Pension Plan, described below, and an award of stock of the
Corporation valued at $5,040.00. Mr. Chase's other
compensation during 1995 and 1994 consisted soley of the
contribution to the Money Purchase Pension Plan.
(2) Messrs. Brigg's and Lilly's other compensation during 1993
consisted of the following--a $7,505 contribution to the Money
Purchase Pension Plan, described below, and an award of stock
of the Corporation valued at $3,360. Messrs. Brigg's and
Lilly's other compensation during 1995 and 1994 consisted soley
of the contribution to the Money Purchase Pension Plan.
1985 Incentive Stock Option Plan for Key Employees
In February, 1985, the Board of Directors of the Corporation
unanimously adopted the 1985 Incentive Stock Option Plan for Key
Employees (the "1985 Stock Plan"), which was approved by the
shareholders at the Annual Meeting in April, 1985. The 1985 Stock
Plan was amended by shareholders at the Corporation's 1994 Annual
Meeting, which amendment increased the number of shares of Common
Stock reserved thereunder by 200,000 shares.
The 1985 Stock Plan is administered by the Board of Directors. The
Board of Directors was authorized to grant stock options to the
professional and supervisory employees of the Corporation and its
subsidiaries at any time until February 19, 1995.
All options were granted at 100% of the fair market value of the
Common Stock of the Corporation on the date of the grant. Each
stock option terminates not more than 10 years after the date of the
grant. Options are exercisable in such installments as may be
determined by the Board of Directors. Payment of stock purchased on
the exercise of a stock option must be made in full at the time the
stock option is exercised. Options may not be assigned or
transferred other than by will or the laws of descent or
distribution.
<PAGE>
As of February 19, 1995 the 1985 Stock Option Plan expired, no
options were granted or available for granting during 1995.
A total of 16,342 options were exercised in 1995 and 1,901 options
were terminated during 1995. A total of 307,706 options remain
unexercised as of the record date.
Long Term Incentive Plans and Retirement Plans
The Corporation does not maintain any "Long Term Incentive Plans"
for its Executive Officers.
The Corporation has no pension, profit-sharing or similar plans for
its Executive Officers or employees. As set forth below, however,
the Executive Officers and employees are eligible to participate in
the Park West Money Purchase Pension Plan.
PARK WEST. Park West maintains a Money Purchase Pension Plan (the
"Plan") available to employees of the Corporation and Park West.
Full-time employees become eligible to participate in the Plan when
they have both (i) reached the age of 20-1/2 and (ii) completed six
months of service (as defined in the Plan).
Contributions to the Plan may be made by both Park West and a
participant. Park West's contributions will be made to the Plan
whether or not a participant chooses to contribute. The annual
contribution by Park West to each participant's account for 1995
equals 7% of a participant's annual compensation plus 5.7% of a
participant's annual compensation in excess of the participant's
Social Security Taxable Wage Base. During 1995, Park West
contributed $15,595 for the account of Donald R. Chase and $12,199
to accounts of Messrs. Briggs and Lilly. The contributions to the
accounts of Messrs. Chase, Briggs and Lilly are included in the
"All Other Compensation" column of the Summary Compensation Table
above.
During 1995, Park West contributed in the aggregate $44,078 for the
accounts of all Executive Officers of Park West to the Money
Purchase Pension Plan.
Director Compensation
During 1995, Directors of the Corporation who are not salaried
employees received Directors' fees of $10,000.00. The Chairman of
the Board of Directors received annual remuneration of $15,000.00,
while the Clerk of the Corporation received an annual fee of
$12,500.00. Directors who are also salaried employees receive no
additional compensation for their services as Directors of the
Corporation.
1995 Directors Stock Option Plan
In February 1995, the Board of Directors of the Corporation
unanimously adopted the 1995 Directors Stock Option Plan (the "1995
Plan"), which was approved by the shareholders at the Annual Meeting
in April 1995.
The 1995 Plan is administered by the non-employee directors. The
purpose of the 1995 Plan is to enhance the Corporation's ability to
attract and retain highly qualified individuals to serve as members
of the Corporation's Board of Directors and to provide additional
incentives to non-employee directors to promote the success of the
Corporation.
Under the 1995 Plan eligible directors were granted options to
purchase 3,000 shares at an exercise price of $6.00 per share during
1995. On each anniversary of the effective date of the 1995 Plan
each eligible director shall be granted an option to purchase 1,000
shares of the Corporation's Common Stock. A total of 33,000 options
were granted during 1995 at an option price of $6.00 per share and a
total of 11,000 options were granted during 1996 at an exercise
price of $7.13. A total of 81,000 shares remain available for
future grants under the 1995 Plan.
<PAGE>
Each stock option terminates not more than 10 years after the date
of the grant. Payment of stock purchased on the exercise of an
option must be made in full at the time the stock option is
exercised. Options may not be assigned or transferred other than by
will or the laws of decent or distribution. No stock options were
exercised during 1995.
Employment and Termination Agreements
Donald R. Chase has entered into a Termination Agreement with Park
West regarding termination of employment subsequent to a "change in
control" of Park West, as defined in the Termination Agreement.
Following the occurrence of a change in control, if Mr. Chase's
employment is terminated (except because of retirement, death,
disability, or for "cause" as defined in the Termination Agreement)
or is voluntarily terminated by Mr. Chase for "good reason" as
defined in the Termination Agreement, then Mr. Chase shall be
entitled to a lump sum payment approximately equal to three times
his average annual compensation for the previous five years.
Performance Comparison Graph
Set forth below is a graph illustrating the return that would have
been realized (assuming reinvestment of dividends) by an investor
who invested $100 on December 31, 1990 in each of the following:
(a) The Standard & Poor's 500 Index
(b) A hypothetical fund with investments in the stock of peer
corporations (the "Peer Group")
(c) Westbank Corporation
The Peer Group consists of New England community banks, traded on
NASDAQ National Stock Market, with assets totaling less than $500
million, not located in the metropolitan areas of New York or
Boston. The members of the Peer Group are:
BNH Bancshares, Inc. New England Community Bancorp
Bank of Southington New Milford Bank & Trust
Granite State Bankshares, Inc. Westport Bancorp, Inc.
1990 1991 1992 1993 1994 1995
S & P 500 Index 100.00 125.40 130.89 139.92 138.00 183.95
Peer Group 100.00 57.97 65.60 95.53 105.49 153.12
Westbank Corp. 100.00 77.94 114.22 213.53 235.24 310.90
<PAGE>
Miscellaneous
During 1995, certain of the Corporation's Executive Officers,
Directors and nominees for Director, beneficial owners of more than
5% of the outstanding common stock of the Corporation and members of
their immediate family and associates have had, and expect to have
in the future, transactions in the ordinary course of business with
Park West, including borrowings, on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and not
involving more than normal risk of collectibility or presenting
other unfavorable features.
EMPLOYEE STOCK OWNERSHIP PLAN
On January 1, 1989, the Corporation's Employee Stock Ownership Plan
(the "ESOP") became effective. The ESOP is administered and
otherwise governed by the provisions of the ESOP and a related Trust
Agreement. Pursuant to the terms of the ESOP, the Trustee may
invest the ESOP's Trust Assets in, among other investments, shares
of the Common Stock of the Corporation. As of the record date, no
shares of the Common Stock of the Corporation were owned by the ESOP
Trust.
APPROVAL OF 1996 STOCK INCENTIVE PLAN
Subject to shareholder approval, on February 21, 1996, the
Board of Directors unanimously adopted the WESTBANK CORPORATION 1996
Stock Incentive Plan (the 1996 Plan ) and recommends its approval by
shareholders. A copy of the 1996 Plan is attached hereto as Exhibit
A and is incorporated by reference herein. The Board of Directors
believes that in order to attract, retain and reward valuable
personnel, it is important for Westbank to adopt a more flexible,
stock-based incentive plan, which is both competitive with, and
responsive to, rapidly changing financial services industry
standards. The maximum number of shares of the Corporation which
may be issued under the 1996 Plan is 178,500 shares, subject to
adjustments in the event of stock splits, stock dividends or
reclassifications, recapitalization or other possible future changes
such as mergers or acquisitions.
The 1996 Plan authorizes the grant of any of the following
awards (hereinafter Employee Awards ) to employees of Westbank or
its subsidiaries ( Employees ): (i) stock options which do not
constitute incentive stock options within the meaning of Section 422
of the Code ( nonqualified stock options ), and (ii) incentive stock
options, which may be granted on a stand alone, combination or
tandem basis. The 1996 Plan also authorizes the automatic grant of
nonqualified stock options ( Director Stock Options ) to
non-employee Directors ( Eligible Directors ) upon the terms and
conditions set forth in the 1996 Plan.
Purpose
The 1996 Plan is intended to provide incentives and rewards for
Employees and Eligible Directors (i) to support the execution of
Westbank s business and human resource strategies and the
achievement of its goals and (ii) to associate the interests of
Employees and Eligible Directors with those of Westbank s
shareholders.
<PAGE>
Administration
The 1996 Plan will be administered by the Compensation
Committee (the "Committee"). In administering the 1996 Plan, the
Committee will determine, among other things (i) the Employees to
whom grants of Employee Awards will be made; (ii) the type of
Employee Award; (iii) the grant terms of an Employee Award
including, but not limited to, vesting schedule, grant price,
performance standards, length of relevant performance, restriction
or option period, post-retirement and termination rights, payment
alternatives, such as cash, stock, contingent awards or other means
of payment consistent with the purposes of the 1996 Plan, and (iv)
such other terms and conditions as the Committee deems appropriate.
The Committee may designate other persons to carry out its
responsibilities and such conditions and limitations as it may set,
other than its authority with regard to awards granted to employees
who are officers or directors of Westbank subject to the reporting
requirements of Section 16 of the Exchange Act ( Reporting Persons).
Participation
The Committee may grant Employee Awards under the 1996 Plan to
any Employee. In practice, Employee Awards are made to a group of
approximately 24 management Employees.
Eligible Directors are entitled to participate in the 1996 Plan
solely with respect to the grant of Director Stock Options and may
not receive any other awards under the 1996 Plan. The selection of
Eligible Directors is not subject to the discretion of the
Committee. Persons serving on the Committee who are Eligible
Directors may receive grants of Director Stock Options.
Stock Options
The Committee may grant a stock option to an Employee in the
form of an incentive stock option or a nonqualified stock option.
The exercise period for any stock option granted will be determined
by the Committee at the time of grant. The exercise price per share
of Westbank Common Stock covered by a stock option may not be less
than the fair market value of a share of Westbank Common Stock on
the date of grant. The exercise price is payable, at the Committee
s discretion, in cash, in shares of already owned Westbank Common
Stock or in any combination of cash and shares. Each option grant
may be exercised in whole, at any time, or in part, from time to
time, after the grant becomes exercisable.
Director Stock Options
Each person who is first elected or appointed to serve as a
Director after the effective date of the 1996 Plan and who is an
Eligible Director shall, upon such person s initial appointment or
election as an Eligible Director, automatically be granted Director
Stock Options. Commencing immediately after the adjournment of the
Westbank annual meeting this year and each year thereafter until the
annual meeting in 2001, each eligible Director who was an Eligible
Director immediately preceding such annual meeting and who has been
elected as a director at such annual meeting shall automatically be
granted Director Stock Options for 1,000 shares of Westbank Common
Stock if, but only if, the return on common equity of Westbank as
set forth in Westbank s annual report to shareholders for the
immediately preceding fiscal year is equal to or greater than 12%.
Each Director Stock Option shall become exercisable on and
after the first anniversary of the date of the grant. Director
Stock Options shall have an exercise price that is equal to the fair
market value of Westbank Common Stock on the date of the grant. The
option price upon exercise of any Director Stock Option shall be
paid to Westbank in full either in cash, in shares of already owned
Westbank Common Stock, or in any combination of cash or shares. No
Director Stock Option may be exercisable later than twenty years and
one day from the date of its grant. However, if an Eligible
Director ceases to be an Eligible Director for any reason, all
Director Stock Options which are otherwise exercisable shall
terminate on the earlier of three years after such cessation date or
the expiration date, whichever first occurs.
<PAGE>
Assignment
Except to the extent, if any, as may be permitted by the Code and
rules promulgated under Section 16 of the Exchange Act, (i) no award
under the 1996 Plan shall be assignable or transferable except by
will, by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code and (ii)
during the lifetime of a participant, the award shall be exercisable
only by such participant or such participant s guardian, legal
representative or assignee, pursuant to a qualified domestic
relations order.
Adjustments
The 1996 Plan provides that the aggregate number of shares of
Westbank Common Stock as to which awards may be granted to
participants, the number of shares thereof covered by each
outstanding award, and the price per share thereof in each such
award, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Westbank Common Stock
resulting from a stock split, stock dividend, combination or
exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation,
recapitalization or other such change. Any such adjustment may
provide for the elimination of fractional shares.
Change of Control
If there is a change of control (as defined in the 1996 Plan)
of Westbank, the following shall occur with respect to any Director
Stock Options outstanding or any Employee Awards outstanding as of
such change of control: (i) the time period for exercising or
realizing and all vesting periods of awards will be accelerated, all
restrictions will lapse and all performance standards will be deemed
to have been attained; (ii) with respect to stock options, during
the 60-day period following a change of control, a participant may
elect to receive, in lieu of shares of Westbank Common Stock, cash
equal to the excess of the fair market value of the shares of
Westbank Common Stock over the price at which the option was
exercisable; (iii) all awards become noncancellable; and (iv) if a
participant s employment terminates for any reason other than
retirement or death following a change of control, stock options
held by the participant may be exercised until the earlier of three
months after the termination date or the normal expiration date of
the stock options.
Grants to Reporting Persons
With respect to Reporting Persons, and if required to comply with
rules promulgated under Section 16 of the Exchange Act, (i) no award
providing for exercise, a vesting period, or a restriction period
shall permit unrestricted ownership of shares of Westbank Common
Stock by the participant for at least six months from the date of
grant, and (ii) shares of Westbank Common Stock acquired pursuant to
the 1996 Plan may not be sold or otherwise disposed of for at least
six months after acquisition.
Amendments and Termination
The Board of Directors may at any time terminate and, from time
to time, may amend or modify the 1996 Plan. Any such action of the
Board of Directors may be taken without the approval of Westbank
shareholders, but only to the extent that such shareholder approval
is not required by applicable law or regulation. There is no set
termination date for the 1996 Plan.
Except to the extent, if any, as may be permitted by rules
promulgated under Section 16 of the Exchange Act, the provisions of
the 1996 Plan relating to the amount, price and timing of Director
Stock Options may not be amended more than once every six months,
other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974 or the rules thereunder.
<PAGE>
Federal Income Tax Considerations
The following discussion summarizes the Federal income tax
consequences to participants who may receive grants of awards under
the 1996 Plan. The discussion is based upon interpretations of the
Code in effect as of January 1, 1996, and regulations promulgated
thereunder as of such date.
Nonqualified Stock Options. For Federal income tax purposes,
no income is recognized by a participant upon the grant of a
nonqualified stock option under the 1996 Plan. Upon the exercise of
an option, however, compensation taxable as ordinary income will be
realized by the participant in an amount equal to the excess of the
fair market value of a share of Westbank Common Stock on the date of
such exercise over the exercise price. A subsequent sale or
exchange of such shares will result in gain or loss measured by the
difference between (i) the exercise price, increased by any
compensation reported upon the participant s exercise of the option,
and (ii) the amount realized on such sale or exchange. Such gain or
loss will be capital in nature if the shares were held as a capital
asset and will be long-term if such shares were held for more than
one year.
Westbank is entitled to a deduction (subject to the provisions
of Section 162(m) of the Code) for compensation paid to a
participant at the same time and in the same amount as the
participant is considered to have realized compensation by reason of
the exercise of an option.
Incentive Stock Options. Not taxable income is realized by the
participant upon the grant or exercise of an incentive stock option.
If shares of Westbank Common Stock are issued to a participant
pursuant to the exercise of an incentive stock option granted under
the 1996 Plan, and if no disqualifying disposition of such shares is
made by such participant within two years after the date of grant or
within one year after the transfer of such shares to a participant,
then (a) upon sale of such shares, any amount realized in excess of
the option price will be taxed to such participant as a long-term
capital gain and any loss sustained will be a long-term capital
loss, and (b) no deduction will be allowed to Westbank for Federal
income tax purposes. Upon exercise of an incentive stock option,
the participant may be subject to alternative minimum tax on certain
items of tax preference.
If shares of Westbank Common Stock acquired upon the exercise
of an incentive stock option are disposed of prior to the expiration
of the two-years-from-grant/one-year-from-transfer holding period,
generally (a) the participant will realize ordinary income in the
year of disposition in the amount equal to the excess (if any) of
the fair market value of the shares at exercise (or, if less, the
amount realized on the disposition of the shares) over the option
price thereof, and (b) Westbank will be entitled to deduct such
amount (subject to the provisions of Section 162(m) of the Code).
Any further gain or loss realized will be taxed as short-term
capital gain or loss, as the case may be, and will not result in any
deduction by Westbank.
If an incentive stock option is exercised at a time when it no
longer qualifies as an incentive stock option, the option is treated
as a nonqualified stock option.
Effect on 1995 Director s Stock Option Plan and Other Plans
The 1996 Plan is in addition to other plans with option shares
granted, including the 1995 Director s Stock Option Plan, the 1985
Stock Plan, the Employee Stock Ownership Plan, and the Dividend
Reinvestment and Common Stock Purchase Plans. Outstanding awards
under these plans will remain in effect under the terms of their
respective grants.
<PAGE>
New Plan Benefits
As described above, the selection of the Employees who will
receive awards under the 1996 Plan, if it is approved by
shareholders, and the size and type of awards is generally to be
determined by the Committee in its discretion. No awards have been
made under the 1996 Plan, nor are any such awards now determinable.
Thus, it is not possible to predict the benefits or amounts that
will be received by or allocated to particular individuals or groups
of Employees in 1996.
The participation of Eligible Directors in the 1996 Plan is
limited to certain automatic grants of Director Stock Options. If
the 1996 Plan is approved by shareholders, on and after the date of
the 1996 Annual Meeting, each person elected or appointed to the
Board and each incumbent Eligible Director who is elected at the
Annual Meeting will receive a grant of Director Stock Options for
1,000 shares of Westbank Common Stock on the date of the Annual
Meeting for 1996 and each year thereafter, if Westbank s return on
common equity for 1995 and each year thereafter was in excess of
12%.
As indicated above, no determination has been made as to the
nature and amount of any awards which may be granted in the future
under the 1996 Plan if it is approved by shareholders.
Miscellaneous
The closing price per share of Westbank Common Stock on
February 21, 1996, as reported in the Wall Street Journal, was
$7.38.
Approval of the 1996 Plan requires the affirmative vote of the
holders of a majority of the outstanding shares of Westbank Common
Stock.
For the reasons stated herein, the Board of Directors
recommends that the shareholders vote FOR approval of the 1996 Plan.
DIVIDEND REINVESTMENT PLAN
In 1989, the Corporation implemented a Dividend Reinvestment
and Common Stock Purchase Plan, (the "Dividend Reinvestment Plan")
which was amended during 1995 and the amendment was approved by the
shareholders at the 1995 Annual Meeting. Pursuant to the amended
Dividend Reinvestment Plan, shareholders of the Corporation's Common
Stock may invest all or a portion of that shareholder's quarterly
cash dividend, plus to $10,000 per calendar quarter, in additional
shares of the Corporation's Common Stock. During 1995, 67,094
shares of the Corporation's Common Stock were purchased through the
Dividend Reinvestment and Common Stock Purchase Plan.
SHAREHOLDER RIGHTS PLAN
In 1989, the Corporation adopted a Shareholders Rights Plan, which
plan is intended to protect the interests of Shareholders in the
event the Corporation is confronted with a hostile takeover.
The Shareholder Rights Plan does not prevent an acquisition of the
Corporation on terms that are in the best interests of the
Shareholders. Under the terms of the Shareholder Rights Plan, the
Corporation has declared a dividend distribution of one Common Stock
Purchase Right for each outstanding share of Common Stock of the
Corporation to Shareholders of record as of January 2, 1990. A
Common Stock Purchase Right entitles a registered Shareholder to
purchase one share of Common Stock at an exercise price of $36 per
share, subject to adjustment. The Common Stock Purchase Right may
be exercised only upon the occurrence of certain events, including
an attempted hostile takeover, as described in the Shareholder
Rights Agreement. As of the record date, no Common Stock Purchase
Rights have been or are exercisable.
<PAGE>
RATIFICATION OF THE SELECTION OF
CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP ("Deloitte"), certified public accountants,
have served as auditors for the Corporation and as auditors for Park
West since 1994, and subject to ratification by the shareholders,
that firm has been chosen by the Board of Directors to act as the
Corporation's auditor for 1996. During 1995, Deloitte provided
audit services in connection with the examination of the financial
statements of the Corporation and Park West and other accounting
matters. Neither Deloitte nor any of its partners has any direct or
indirect financial interest in, or connection (other than as
independent auditor) with, the Corporation or Park West.
A representative of Deloitte & Touche LLP is expected to be present
at the Corporation's 1996 Annual Meeting of Shareholders. He/she
will have the opportunity to make a statement if he/she desires to
do so and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the
selection of Deloitte & Touche LLP as the Corporation's auditor, and
unless otherwise directed, proxies will be voted in favor of this
selection.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of
the Corporation is not aware of any business to be presented at the
1996 Annual Meeting other than matters referred to in the Notice of
Annual Meeting and this Proxy Statement. If any other matters
properly come before the meeting, or any adjournment thereof, the
enclosed Proxy will be voted on such matters in accordance with the
recommendations of the Corporation's Board of Directors.
AGREEMENT WITH REGULATORY AUTHORITIES
Since December 22, 1994, Park West has been operating under a
Memorandum of Understanding (the "Memorandum") with the Federal
Deposit Insurance Corporation (the "FDIC") and the Commissioner of
Banks for the Commonwealth of Massachusetts (the "Commissioner").
The Memorandum requires Park West to take certain actions to further
strengthen the financial position of the Bank.
A description of the major provision of the Memorandum is contained
in the Corporation's 1995 Annual Report to Stockholders.
MISCELLANEOUS
The expense of this solicitation on behalf of the Board of Directors
will be paid by the Corporation. To the extent necessary in order
to assure sufficient representation of shareholders at the meeting,
officers and employees of the Corporation or Park West may
personally, by telephone or by other means, contact shareholders to
request the return of proxies. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward
the proxy material to beneficial owners in order to solicit
authorizations for the execution of proxies. The Corporation may,
upon request, reimburse such banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in
forwarding such material.
SHAREHOLDER PROPOSALS
Holders of the Common Stock of the Corporation who wish to submit
proposals to be considered at the next Annual Meeting of
Shareholders of the Corporation, which meeting is scheduled to be
held on April 16, 1997, must submit such proposals to the
Corporation on or before November 24, 1996.
<PAGE>
ANNUAL REPORT
A copy of the Corporation's Annual Report for 1995 including
financial statements is enclosed. The Annual Report is not to be
regarded as proxy soliciting material.
By order of the Board of Directors
Robert J. Perlak
Clerk
Dated: March 20, 1996
NOTICE
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT
CHARGE BY ANY SHAREHOLDER OF THE CORPORATION UPON WRITTEN REQUEST
ADDRESSED TO JOHN M. LILLY, TREASURER, 225 PARK AVENUE, WEST
SPRINGFIELD, MASSACHUSETTS 01089-3310.
<PAGE>
WESTBANK CORPORATION PROXY
FOR 1996 ANNUAL SHAREHOLDERS MEETING -- April 17, 1996 I, the
undersigned holder of common stock of Westbank Corporation, hereby
appoint Lloyd S. Hall and Joseph L. Rolak, or either of them, with
the power of substitution, proxies of the undersigned to vote the
shares of the undersigned at the 1996 Annual Meeting of Shareholders
of Westbank Corporation to be held at 9:00 A.M., April 17, 1996 at
the Carriage House at Storrowton Tavern, 1305 Memorial Avenue, West
Springfield, Massachusetts, and at any adjournment thereof, with all
the powers the undersigned would possess if personally present.
Said proxies are specifically authorized to vote as indicated below.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION
LISTED BELOW UNLESS AUTHORITY IS WITHHELD OR OTHERWISE INDICATED.
ALL PROXIES EXECUTED CORRECTLY WILL BE VOTED AS DIRECTED. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS.
1. FIXING THE NUMBER OF DIRECTORS. To fix the number of Directors
of the Corporation at twelve (12).
FOR AGAINST ABSTAIN
2. ELECTION OF DIRECTORS. To elect the following Directors of the
Corporation for a three-year term until the 1999 Annual Meeting of
Shareholders.
Mark A. Beauregard FOR AGAINST ABSTAIN
David R. Chamberland FOR AGAINST ABSTAIN
Robert J. Perlak FOR AGAINST ABSTAIN
James E. Tremble FOR AGAINST ABSTAIN
3. TO APPROVE THE 1996 STOCK INCENTIVE PLAN.
FOR AGAINST ABSTAIN
4. SELECTION OF CERTIFIED PUBLIC ACCOUNTANTS. To ratify the
appointment, by the Board of Directors, of Deloitte & Touche
LLP as independent public accountants for the fiscal year
ending December 31, 1996.
FOR AGAINST ABSTAIN
5. OTHER BUSINESS. In their discretion, to act upon the
transaction of such other business as may properly come before
the meeting and any adjournment thereof.
Date:
(Signature of Shareholder)
(Signature if jointly held)
When signing as Attorney,
Executor, Administrator,
Trustee or Guardian, please
give full title. If more
than one Trustee, all should
sign. All joint owners must
sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
EXHIBIT A
WESTBANK CORPORATION
1996 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the WESTBANK CORPORATION 1996 Stock Incentive
Plan is to provide incentives and rewards for Employees and
Eligible Directors of the Corporation and its Subsidiaries (i) to
support the execution of the Corporation s business and human
resource strategies and the achievement of its goals and (ii) to
associate the interests of Employees and Eligible Directors with
those of the Corporation s shareholders.
2. Definitions
Award includes, without limitation, stock options (including
incentive stock options under Section 422 of the Code and Director
Stock Options), that are valued in whole or in part by reference
to, or are otherwise based on, the Common Stock as described in or
granted under this Plan.
Award Agreement means a written agreement entered into
between the Corporation and a Participant setting forth the terms
and conditions of an Award made to such Participant under this
Plan, in the form prescribed by the Committee.
Board means the Board of Directors of the Corporation.
Change of Control shall have the meaning specified in Section
12(b).
Code means the Internal Revenue Code of 1986, as amended from
time to time.
Committee means the Compensation Committee appointed by the
Board, each member of which shall be a disinterested person
within the meaning of Rule 16b-3 under the Exchange Act and shall
be an outside director within the meaning of Section 162(m) of
the Code. The Committee shall be composed of no fewer than the
minimum number of disinterested persons as may be required by Rule
16b-3.
Common Stock means the common stock of the Corporation, $2.00
par value.
Corporation means WESTBANK CORPORATION, a bank holding
company under the Bank Holding Company Act of 1956, headquartered
in West Springfield, Massachusetts.
Director Stock Option means the right, granted to an Eligible
director, to purchase Common Stock at a stated price for a
specified period of time. Each Director Stock Option shall be a
nonqualified stock option whose grant is not intended to comply
with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time.
Eligible Director means any statutory director of the
Corporation who is not an employee of the Corporation or any
Subsidiary.
Employee means an employee of the Corporation or a
Subsidiary.
Employee Award means an Award (other than a Director Stock
Option) to an Employee under this Plan.
<PAGE>
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Fair Market Value means the closing price of the Common Stock
as reported on the National Association of Securities Dealers
National Market System on the relevant valuation date or, if there
were no Common Stock transactions on the valuation date, on the
next preceding date on which there were Common Stock transactions;
provided, however, that the Committee may specify some other
definition of Fair Market Value with respect to any particular
Employee Award.
Participant means an Employee or an Eligible Director who has
been granted an Award under this Plan.
Plan means this WESTBANK CORPORATION 1996 Stock Incentive
Plan.
Plan Year means a twelve-month period beginning with January
1 of each year.
Reporting Person means an officer or director of the
Corporation subject to the reporting requirements of Section 16 of
the Exchange Act.
Subsidiary means any corporation or other entity, whether
domestic or foreign, in which the Corporation has or obtains,
directly or indirectly, a proprietary interest of more than 50% by
reason of stock ownership or otherwise.
3. Eligibility
(a) Any Employee selected by the Committee is eligible to
receive an Employee Award.
(b) Eligible Directors are entitled to participate in this
Plan solely with respect to the grant of Director Stock Options
and may not receive any other Awards under this Plan. The
selection of Eligible Directors is not subject to the
discretion of the Committee. Persons serving on the Committee
who are Eligible Directors may receive grants of Director Stock
Options.
4. Plan Administration
(a) This Plan shall be administered by the Committee. The
Committee shall periodically make determinations with respect
to the participation of Employees in this Plan, the type of
employee award, and except as otherwise required by law or this
Plan, the grant terms of Awards including vesting schedules,
price, performance standards, length of relevant performance,
restriction or option period, dividend rights, post-retirement
and termination rights, payment alternatives such as cash,
stock, contingent awards or other means of payment consistent
with the purposes of this Plan, and such other terms and
conditions as the Committee deems appropriate. Except as
otherwise required by this Plan, the Committee shall have
authority to interpret and construe the provisions of this Plan
and the Award Agreements and make determinations pursuant to
any Plan provision or Award Agreement which shall be final and
binding on all persons.
(b) The Committee may designate persons other than its members
to carry out its responsibilities under such conditions or
limitations as it may set, other than its authority with regard
to Awards granted to Reporting Persons.
<PAGE>
5. Stock Subject To The Provisions Of This Plan
(a) The stock subject to the provisions of this Plan shall
either be shares of authorized but unissued Common Stock,
shares of Common Stock held as treasury stock or previously
issued shares of Common Stock reacquired by the Corporation,
including shares purchased on the open market. Subject to
adjustment in accordance with the provisions of Section 10, the
total number of shares of Common Stock available for grants of
Awards of this Plan shall not exceed 178,500 shares of Common
Stock as reported in the Corporation s Annual Report on Form
10-K for the fiscal year ending immediately prior to such Plan
Year.
6. Employee Awards Under This Plan
As the Committee may determine, the following types of Employee
Awards may be granted under this Plan to Employees on a stand
alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares
of Common Stock at a fixed exercise price during a specified
time, all as the Committee may determine; provided that the
exercise price of any option shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of grant of
the Award.
(b) Incentive Stock Option. An award in the form of a stock
option which shall comply with the requirements of Section 422
of the Code or any successor Section as it may be amended from
time to time.
The aggregate fair market value of the stock (determined as
of the date of the grant of the option) for which any
employee may be granted incentive stock options intended to
quailify under Section 422 of the Code in any calendar year
shall not exceed the sum of $100,000 plus the carryover
amount, as hereinafter defined. For purposes of this
section, the carryover amount for an employee for any year
is equal to one-half of the amount by which $100,000
exceeds the value at time of grant of the stock for which
incentive stock options were granted in the prior year.
Amounts may be carried over three years. In determining
the maximum fair market value of the stock for which any
employee may be granted incentive stock options in any
calendar year, the $100,000 current year limitation shall
be applied first and then the carryover amount from the
earliest year.
7. Director Stock Options
Subject to the provisions of Section 5, Director Stock Options
shall be granted to Eligible Directors as provided in this Section
7 and the Committee shall have no discretion with respect to any
matters set forth in this Section 7. These Director Stock Option
terms and conditions shall be in addition to the terms and
conditions of the 1995 Director s Stock Option Plan.
(a) Vesting. Each Director Stock Option shall become
exercisable on and after the first anniversary of the date of
the grant.
(b) Number of Shares. Director Stock Options shall be granted
as follows:
Commencing immediately after the adjournment of the
Corporation s annual meeting of shareholders (an Annual
Meeting ) in 1996, and immediately after the adjournment of
the Annual Meeting each year thereafter until the Annual
Meeting in 2001, each Eligible Director who was an Eligible
Director immediately preceding such Annual Meeting and who
has been elected as a director at such Annual Meeting shall
automatically be granted Director Stock Options for 1,000
<PAGE>
shares of Common Stock if, but only if, the return on common
equity of the Corporation as set forth in the Corporation s
annual report to shareholders for the immediately preceding
fiscal year is equal to or greater than 12%.
(c) Option Price. Each Director Stock Option shall have an
option price ( Option Price ) that is equal to the Fair Market
Value of the Common Stock on the date the Director Stock Option
is granted.
(d) Duration of Options. No Director Stock Option may be
exercisable later than twenty years and one day from the date
of its grant.
(e) Payment. The Option Price upon exercise of any Director
Stock Option shall be payable to the Corporation in full either
(i) in U.S. dollars by personal check, bank draft or money
order payable to the order of the Corporation, by money
transfers or direct account debits, (ii) through the delivery
or deemed delivery based on attestation of ownership of shares
of Common Stock with a Fair Market Value at the time of
exercise equal to the total Option Price or (iii) by a
combination of the methods described in items (i) and (ii)
above.
(f) Termination of Director Stock Options. If an Eligible
Director ceases to be an Eligible Director for any reason, the
rights under any then outstanding Director Stock Option granted
pursuant to this Plan which are exercisable as of the date such
person ceases to be an Eligible Director shall terminate upon
the date determined as provided in Section 7(d), above, or
three years after such cessation date, whichever first occurs.
Any then outstanding Director Stock Option granted to such
Eligible Director which is not exercisable as of the date such
person ceases to be an Eligible Director shall terminate on and
as of such date.
8. Other Terms And Conditions
(a) Assignability. Except to the extent, if any, as may be
permitted by the Code and rules promulgated under Section 16 of
the Exchange Act, (i) no Award shall be assignable or
transferable except by will or by the laws of descent and
distribution and (ii) during the lifetime of a Participant, the
Award shall be exercisable only by such Participant.
Notwithstanding the foregoing, for Awards other than incentive
stock options within the meaning of Section 422 of the Code,
awards may be (i) assigned or transferred by a domestic
relations order from a court of competent jurisdiction and (ii)
exercised by a Participant's guardian, legal representative or
assignee pursuant to a domestic relations order from a court of
competent jurisdiction.
(b) Award Agreement. Each Award under this Plan shall be
evidenced by an Award Agreement.
(c) Rights As A Shareholder. Except as otherwise provided
herein or in any Award Agreement, a Participant shall have no
rights as a shareholder with respect to shares of Common Stock
covered by an Award until the date the Participant or his
nominee (which, for purposes of this Plan, shall include any
third party agent selected by the Committee to hold such shares
on behalf of a Participant), guardian or legal representative
is the holder of record of such shares.
(d) No Obligation To Exercise. The grant of an Award shall
impose no obligation upon the Participant to exercise the
Award.
(e) Payments By Participants. The Committee may determine
that Employee Awards for which a payment is due from a
Participant may be payable: (i) in U. S dollars by personal
check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii)
through the delivery or deemed delivery based on attestation to
the ownership of shares of Common Stock with a Fair Market
Value equal to the total payment due from the Participant;
(iii) by a combination of the methods described in (i) and (ii)
above; or (iv) by such other methods as the Committee may deem
appropriate.
<PAGE>
(f) Tax Withholding. The Corporation shall have the right
to withhold from any payments made under this Plan, or to
collect as a condition of payment, any taxes required by
law to be withheld. At any time when a Participant is
required to pay to the Corporation an amount required to be
withheld under applicable income tax laws in connection
with a distribution of shares of Common Stock pursuant to
this Plan, the Participant may satisfy this obligation in
whole or in part by electing to have the Corporation
withhold from such distribution shares of Common Stock
having a value equal to the amount required to be withheld.
The value of the shares of Common Stock to be withheld
shall be based on the Fair Market Value of the Common Stock
on the date that the amount of tax to be withheld shall be
determined (the Tax Date ). Any such election is subject
to the following restrictions: (i) the election must be
made on or prior to the Tax Date; (ii) the election must be
irrevocable; and (iii) the election must be subject to the
disapproval of the Committee. To the extent required to
comply with rules promulgated under Section 16 of the
Exchange Act, elections by Reporting Persons are subject to
the following additional restrictions: (i) no election
shall be effective for a Tax Date which occurs within six
months of the grant of the award; and (ii) the election
must be made either (A) six months or more prior to the Tax
Date or (B) during a period beginning on the third business
day following the date of release for publication of the
Corporation s quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day
following such date.
(g) Restrictions On Sale And Exercise. With respect to
Reporting Persons, and if required to comply with rules
promulgated under Section 16 of the Exchange Act, (i) no Award
providing for exercise, a vesting period, a restriction period
or the attainment of performance standards shall permit
unrestricted ownership of shares of Common Stock by the
Participant for at least six months from the date of grant, and
(ii) shares of Common Stock acquired pursuant to this Plan may
not be sold or otherwise disposed of for at least six months
after acquisition.
(h) Requirements Of Law. The granting of Awards and the
issuance of shares of Common Stock upon the exercise of Awards
shall be subject to all applicable requirements imposed by
federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction,
and by any stock exchanges upon which the Common Stock may be
listed. As a condition precedent to the issuer of shares of
Common Stock pursuant to the grant or exercise of an Award, the
Corporation may require the Participant to take any reasonable
action to meet such requirements.
9. Amendments
(a) Except as otherwise provided in this Plan, the Board may
at any time terminate and, from time to time, may amend or
modify this Plan. Any such action of the Board may be taken
without the approval of the Corporation s shareholders, but
only to the extent that such shareholder approval is not
required by applicable law or regulation, including
specifically Rule 16b-3 under the Exchange Act.
(b) Except to the extent, if any, as may be permitted by rules
promulgated under Section 16 of the Exchange Act, the
provisions of this Plan relating to the amount, price and
timing of Director Stock Options may not be amended more than
once every six months, other than to comport with changes in
the Code, ERISA or the rules thereunder.
(c) No amendment, modification or termination of this Plan
shall in any manner adversely affect any Awards theretofore
granted to a Participant under this Plan without the consent of
such Participant.
<PAGE>
10. Recapitalization
The aggregate number of shares of Common Stock as to which Awards
may be granted to participants, the number of shares thereof covered
by each outstanding Award, and the price per share thereof in each
such Award, shall all be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting
from a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification,
reorganization, redesignation, merger, consolidation,
recapitalization or other such change. Any such adjustment may
provide for the elimination of fractional shares.
11. No Right To Employment
No person shall have any claim or right to be granted an Award,
and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the
Corporation or a Subsidiary. Nothing in this Plan shall interfere
with or limit in any way the right of the Corporation or any
Subsidiary to terminate any Participant s employment at any time,
nor confer upon any Participant any right to continue in the employ
of the Corporation or any Subsidiary.
12. Change Of Control
(a) Notwithstanding anything contained in this Plan or any
Award Agreement to the contrary, in the event of a Change of
Control, as defined below, the following (i) may, in the sole
discretion of the Committee, occur with respect to any and all
Employee Awards outstanding as of such Change of Control and
(ii) shall occur with respect to any and all Director Stock
Options outstanding as of such Change of Control:
(i) automatic maximization of performance standards, lapse
of all restrictions and acceleration of any time periods
relating to the exercise, realization or vesting of such
Awards so that such Awards may be immediately exercised,
realized or vested in full on or before the relevant date
fixed in the Award Agreement;
(ii) upon exercise of a stock option or an incentive stock
option (collectively, an Option ) during the 60-day period
from and after the date of a Change of Control, the
Participant exercising the Option may in lieu of the receipt
of Common Stock upon the exercise of the Option, elect by
written notice to the Corporation to receive an amount in
cash equal to the excess of the aggregate Value (as defined
below) of the shares of Common Stock covered by the Option
or portion thereof surrendered determined on the date the
Option is exercised, over the aggregate exercise price of the
Option (such excess is referred to herein as the Aggregate
Spread ); provided, however, and notwithstanding any other
provision of this Plan, if the end of such 60-day period from
and after the date of a Change of Control is within six
months of the date of grant of an Option held by a
Participant who is a Reporting Person, such Option shall be
cancelled in exchange for a cash payment to the Participant
equal to the Aggregate Spread on the day which is six months
and one day after the date of grant of such Option. As used
in this Section 12(a)(ii) the term Value means the higher
of (i) the highest Fair Market Value during the 60-day period
from and after the date of a Change of Control and (ii) if
the Change of Control is the result of a transaction or
series of transactions described in paragraphs (i) or (ii)
of the definition of Change of Control, the highest price per
share of the Common Stock paid in such transaction or series
of transactions (which in the case of paragraph (i) shall be
the highest price per share of the Common Stock as reflected
in a Schedule 13D filed by the person having made the
acquisition);
<PAGE>
(iii) if a Participant s employment terminates for any
reason other than retirement or death following a Change of
Control, any Options held by such Participant may be
exercised by such participant until the earlier of three
months after the termination of employment or the expiration
date of such Options; and
(iv) all Awards become non-cancellable.
(b) A Change of Control of the Corporation shall be deemed
to have occurred upon the happening of any of the following
events:
(i) the acquisition, other than from the Corporation, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership of 20% or more of either the then outstanding
shares of Common Stock of the Corporation or the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors; provided, however, that any acquisition by the
Corporation or any of its Subsidiaries, or any employee
benefit plan (or related trust) of the Corporation or its
Subsidiaries, or any corporation with respect to which,
following such acquisition, more than 50% of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Common Stock and
voting securities of the Corporation immediately prior to
such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of
the then outstanding shares of Common Stock of the
Corporation or the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors, as the case may
be, shall not constitute a Change of Control;
(ii) individuals who, as of January 1, 1996, constitute the
Board as of the date hereof (the Incumbent Board ) cease for
any reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent
to such date whose election, or nomination for election by
the Corporation s shareholders, was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the directors of the
Corporation (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Corporation of a
reorganization, merger or consolidation of the Corporation,
in each case, with respect to which the individuals and
entities who were the respective beneficial owners of the
Common Stock and voting securities of the Corporation
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares
of Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of
the Corporation or of the sale or other disposition of all
or substantially all of the assets of the Corporation.
13. Governing Law
To the extent that federal laws do not otherwise control, this
Plan shall be construed in accordance with and governed by the law
of the Commonwealth of Massachusetts.
<PAGE>
14. Indemnification
Each person who is or shall have been a member of the Committee
or of the Board shall be indemnified and held harmless by the
Corporation against and from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit or proceeding to
which he may be a party or in which he may be involved by reason of
any action taken or failure to act under this Plan and against and
from any and all amounts paid by him in settlement thereof, with the
Corporation s approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him,
provided he shall give the Corporation an opportunity, at its own
expense, to handle and defend the same before he undertakes to
handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Corporation s Articles of Incorporation or By- Laws, as a matter of
law, or otherwise, or any power that the Corporation may have to
indemnify them or hold them harmless.
15. Savings Clause
This Plan is intended to comply in all aspects with applicable
law and regulation, including, with respect to those Employees who
are Reporting Persons, Rule 16b-3 under the Exchange Act. In case
any one or more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect under applicable
law and regulation (including Rule 16b-3), the validity, legality
and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby and the invalid, illegal or
unenforceable provisions shall be deemed null and void; however, to
the extent permissible by laws, any provision which could be deemed
null and void shall first be construed, interpreted or revised
retroactively to permit this Plan to be construed in compliance with
all applicable laws (including Rule 16b-3) so as to foster the
intent of this Plan. Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may
bifurcate this Plan so as to restrict, limit or condition the use of
any provision of this Plan to Participants who are Reporting Persons
without so restricting, limiting or conditioning this Plan with
respect to other Participants.
16. Effective Date And Term
The effective date of this Plan is February 21, 1996, subject to
its approval by the Corporation s shareholders at their next annual
meeting or any adjournment thereof, within twelve months following
the date of its adoption by the Board. This Plan shall remain in
effect until terminated by the Board.
