<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(d)
OF REGULATION S-T.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Eagle Financial Corp.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Eagle Financial Corp.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1/
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
/1/Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------
(4) Date Filed:
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Notes:
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<PAGE>
[LOGO OF EAGLE FINANCIAL CORP. APPEARS HERE]
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
(203) 589-4600
December 27, 1994
To the Shareholders of
Eagle Financial Corp.:
You are cordially invited to attend the annual meeting of shareholders (the
"Annual Meeting") of Eagle Financial Corp. ("Eagle") to be held on January 24,
1995 at 11:00 a.m., local time, at The Eastwood Country Club, 1301 Torringford
West Street, Torrington, Connecticut.
At the Annual Meeting, shareholders of Eagle will be asked to (i) elect two
directors, each for a three-year term, (ii) to approve a proposed amendment to
Eagle's 1991 Stock Option Plan to increase by 400,000 the number of shares
reserved for issuance upon the exercise of options granted under the plan, to
limit the number of options that may be granted to any officer or employee
during any calendar year to 40,000 and to approve the grant of an option for
7,500 shares to each current outside director and to future outside directors
upon the completion of one year of service, and (iii) to ratify the appointment
by the Board of Directors of Eagle's independent auditors. The Board of
Directors of Eagle unanimously recommends that you vote "FOR" the election of
the Board's nominees for election as directors, "FOR" the proposed amendment to
Eagle's 1991 Stock Option Plan and "FOR" the ratification of the appointment of
the Company's independent auditors. You are urged to read the accompanying
proxy statement, which provides information regarding Eagle and the nominees
for election as directors and the proposals.
Sincerely,
/s/ Frank J. Pascale
Frank J. Pascale
Chairman of the Board
/s/ Ralph T. Linsley
Ralph T. Linsley
Vice Chairman of the Board
<PAGE>
[LOGO OF EAGLE FINANCIAL CORP. APPEARS HERE]
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
(203) 589-4600
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 24, 1995
---------------------
TO THE SHAREHOLDERS OF
EAGLE FINANCIAL CORP.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of Eagle Financial Corp. ("Eagle") will be held on Tuesday, January
24, 1995, at 11:00 a.m., local time, at The Eastwood Country Club, 1301
Torringford West Street, Torrington, Connecticut for the following purposes:
1. Election of Directors. To elect two directors, each for a three-year
term (Proposal One);
2. Amendment of 1991 Stock Option Plan. Approval of a proposed amendment
to Eagle's 1991 Stock Option Plan to increase by 400,000 the number of
shares of Eagle Common Stock reserved for issuance upon the exercise of
options granted under the plan from 132,000 shares to 532,000 shares, to
limit the number of stock options that may be granted to any officer or
employee in any calendar year to 40,000 and to provide for the grant of an
option to purchase 7,500 shares to each current outside director and to
future outside directors upon the completion of one year of service
(Proposal Two);
3. Ratification of Appointment of Auditors. To ratify the appointment by
the Board of Directors of the firm of KPMG Peat Marwick LLP as independent
auditors of Eagle for the fiscal year ending September 30, 1995 (Proposal
Three); and
4. Other Business. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors of Eagle has fixed the close of business on December
9, 1994 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only shareholders of record at the
close of business on that date will be entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof.
By the Order of the Board of Directors
/s/ Frank J. Pascale
Frank J. Pascale
Chairman of the Board
/s/ Ralph T. Linsley
Ralph T. Linsley
Vice Chairman of the Board
Bristol, Connecticut
December 27, 1994
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE, SIGN AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
ANNUAL MEETING
PROXY STATEMENT
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 1
General.................................................................. 1
Solicitation, Voting and Revocability of Proxies......................... 1
ELECTION OF DIRECTORS (Proposal One)...................................... 2
MANAGEMENT................................................................ 6
Executive Officers....................................................... 6
Executive Compensation................................................... 7
Report of the Compensation and Stock Option Committees................... 12
Compensation and Stock Option Committees Interlocks and Insider
Participation........................................................... 13
Comparative Company Performance.......................................... 14
Section 16(a) Compliance................................................. 15
Certain Transactions..................................................... 15
STOCK OWNED BY MANAGEMENT................................................. 17
PRINCIPAL HOLDERS OF VOTING SECURITIES OF EAGLE........................... 18
AMENDMENT TO THE 1991 STOCK OPTION PLAN (Proposal Two).................... 19
Reasons for Amendment of 1991 Stock Option Plan.......................... 19
Description of 1991 Stock Option Plan.................................... 20
CHANGE IN INDEPENDENT AUDITORS............................................ 22
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (Proposal Three)...... 23
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS.............................. 23
OTHER MATTERS............................................................. 24
</TABLE>
<PAGE>
EAGLE FINANCIAL CORP.
222 MAIN STREET
BRISTOL, CONNECTICUT 06010
(203) 589-4600
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF EAGLE SHAREHOLDERS
TO BE HELD ON JANUARY 24, 1995
---------------------
INTRODUCTION
GENERAL
This Proxy Statement (the "Proxy Statement") is being furnished to the
shareholders of Eagle Financial Corp., a Delaware corporation ("Eagle" or the
"Company"), as part of the solicitation of proxies by its board of directors
(the "Board of Directors" or the "Board") from holders of the outstanding
shares of Eagle common stock, par value $.01 per share ("Common Stock"), for
use at the Annual Meeting of Shareholders of Eagle to be held on January 24,
1995 and at any adjournments thereof (the "Annual Meeting"). At the Annual
Meeting, shareholders will be asked to elect two members of the Board of
Directors (Proposal One), to approve a proposed amendment to Eagle's 1991 Stock
Option Plan to increase by 400,000 the number of shares of Common Stock
reserved for issuance upon the exercise of options granted under the plan from
132,000 to 532,000, to limit the number of options that may be granted to any
officer or employee in any calendar year to 40,000 and to provide for the grant
of an option to purchase 7,500 shares to each current outside director and to
future outside directors upon the completion of one year of service (Proposal
Two), and to ratify the appointment by the Board of Directors of the firm of
KPMG Peat Marwick LLP ("Peat Marwick") as independent auditors of Eagle for the
fiscal year ending September 30, 1995 (Proposal Three), and to transact such
other business as may properly come before the meeting or any adjournments
thereof. This Proxy Statement, together with the enclosed proxy card, is first
being mailed to shareholders of Eagle on or about December 27, 1994.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on December 9, 1994 as
the record date for the determination of the Eagle shareholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only holders of
record of shares of Common Stock at the close of business on such date will be
entitled to vote at the Annual Meeting, with each such share entitling its
owner to one vote on all matters properly presented at the Annual Meeting. On
the record date, there were approximately 1,825 holders of record of the
4,002,697 shares of Common Stock then outstanding. The presence, in person or
by proxy, of at least one-third of the total number of outstanding shares of
Common Stock entitled to vote at the Annual Meeting is necessary to constitute
a quorum at the Annual Meeting for the election of directors and other matters.
With respect to Proposal Two, the presence in person or by proxy of at least a
majority of all the outstanding shares of Common Stock entitled to vote is
required to constitute a quorum. Approval of Proposal Two requires the approval
of a majority of the votes present and entitled to vote. Shareholders' votes
will be tabulated by the persons appointed by the Board of Directors to act as
inspectors of election for the Annual Meeting. All shares represented and
entitled to vote at the Annual Meeting, whether voted or abstaining from
voting, will be counted as present and entitled to vote. Accordingly, an
abstention from voting on Proposal Two will have the same effect as a negative
vote. Broker non-votes will not be treated as a vote entitled to vote.
<PAGE>
If the enclosed form of proxy is properly executed and returned to Eagle in
time to be voted at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. Executed but unmarked
proxies will be voted FOR the election of the two nominees for election to the
Board of Directors, FOR the amendment to Eagle's 1991 Stock Option Plan and FOR
the ratification of the appointment of Peat Marwick as Eagle's independent
auditors for the fiscal year ending September 30, 1995. The Board of Directors
does not know of any matters other than those described in the Notice of Annual
Meeting that are to come before the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, the persons named in the proxy will
vote the shares represented by such proxy upon such matters as determined by a
majority of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with,
or by delivering a duly executed proxy bearing a later date to, Irene K.
Hricko, Corporate Secretary, Eagle Financial Corp., 222 Main Street, Bristol,
Connecticut 06010 or by attending the Annual Meeting and voting in person.
The cost of soliciting proxies will be borne by Eagle. In addition to use of
the mails, proxies may be solicited personally or by telephone or telegraph by
directors, officers and employees of Eagle. Eagle has retained Corporate
Investor Communications to solicit proxies for the Annual Meeting on Eagle's
behalf for $2,100 plus expenses. Eagle also will request persons, firms and
companies holding shares in their names or in the names of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners. Eagle will reimburse such persons for
their reasonable expenses incurred in that connection.
A copy of the Annual Report to Shareholders for the fiscal year ended
September 30, 1994 accompanies this Proxy Statement. THE COMPANY IS REQUIRED TO
FILE AN ANNUAL REPORT FOR ITS FISCAL YEAR ENDED SEPTEMBER 30, 1994 ON FORM 10-K
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). SHAREHOLDERS MAY
OBTAIN, FREE OF CHARGE, A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) BY WRITING
TO IRENE K. HRICKO, VICE PRESIDENT AND CORPORATE SECRETARY, EAGLE FINANCIAL
CORP., P.O. BOX 1157, BRISTOL, CONNECTICUT 06010.
ELECTION OF DIRECTORS
(PROPOSAL ONE)
At the Annual Meeting, two directors will be elected, each for a three-year
term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. The Board of Directors believes that the nominees will stand for
election and will serve if elected as directors. However, if any of the persons
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other
person as the Board of Directors may recommend.
Under Eagle's Bylaws, the Board of Directors currently is comprised of ten
people divided into three classes. The term of office of only one class of
directors expires in each year, and their successors are elected for terms of
three years and until their successors are elected and qualified. Effective
after the Annual Meeting, Mr. Frank J. Pascale will retire as Chairman and a
member of the Board of Directors. The Board of Directors has amended the Bylaws
to reduce the size of the Board from ten to nine directors effective following
the Annual Meeting. Consequently, two directors will be elected to the Board of
Directors at the Annual Meeting. The Board of Directors may consider
2
<PAGE>
increasing or decreasing the size of the Board or any particular class or
classes of directors in the future based on Eagle's needs. There is no
cumulative voting for election of directors. The two nominees receiving the
greatest number of votes cast for the election of directors at the Annual
Meeting will become directors at the conclusion of the tabulation of votes.
Eagle is the holding company for Eagle Federal Savings Bank (the "Bank"),
which is the resulting institution from the merger on January 1, 1993 of
Eagle's savings institution subsidiaries, First Federal Savings and Loan
Association of Torrington ("Torrington") and Bristol Federal Savings Bank
("Bristol"). Each director of Eagle currently also serves as a director of the
Bank, except for Mr. Pascale, who is not a director of the Bank and who will
retire from the Board of Directors of Eagle effective upon the Annual Meeting.
Information as to Nominees and Continuing Directors. The following table sets
forth the names of the Board of Directors' nominees for election as a director
and those directors who will continue to serve after the Annual Meeting. Also
set forth is certain other information with respect to each such person's age
at December 1, 1994, principal occupation or employment during the past five
years, the periods during which he has served as a director of Eagle and
positions currently held with Eagle.
<TABLE>
<CAPTION>
EXPIRATION
DIRECTOR OF CURRENT
AGE SINCE TERM POSITION(S) HELD WITH EAGLE
--- -------- ---------- ----------------------------
<S> <C> <C> <C> <C>
NOMINEES:
Richard H. Alden........... 58 1988 1995 Director
Ernest J. Torizzo.......... 54 1990 1995 Director
CONTINUING DIRECTORS:
Robert J. Britton.......... 42 1992 1996 Director; President and
Chief Executive Officer
George T. Carpenter........ 53 1988 1996 Director
Thomas V. LaPorta.......... 64 1986 1996 Director
Steven E. Lasewicz, Jr. ... 56 1990 1996 Director
Theodore M. Donovan........ 61 1988 1997 Director
Ralph T. Linsley........... 60 1988 1997 Vice Chairman of the Board
John F. McCarthy........... 54 1986 1997 Director
</TABLE>
Richard H. Alden became a director of Bristol in 1977. Upon the merger of
Bristol's holding company with Eagle in 1988, Mr. Alden became a director of
the Bank. He has been engaged in the private practice of law since 1962 in
Bristol, Connecticut.
Ernest J. Torizzo became a director of Torrington in 1984 and of Eagle upon
its formation in 1986. He is Executive Vice President of O&G Industries, Inc.,
a construction company headquartered in Torrington, Connecticut. Mr. Torizzo is
also part owner and a director of Burlington Construction Company in
Torrington, Connecticut.
Robert J. Britton, President and Chief Executive Officer of Eagle, joined
Torrington in 1978 and became Vice President and Chief Lending Officer of
Torrington in 1983 and Executive Vice President of Torrington in 1989. He has
served as an executive officer of Eagle since 1991 and as a director since
1992. Upon the merger of Bristol with Torrington in 1993, Mr. Britton became
the President and Chief Operating Officer of the Bank. Mr. Britton became
President and Chief Executive Officer of Eagle on October 1, 1994.
George T. Carpenter became a director of Bristol in 1972. Upon the merger of
Bristol's holding company with Eagle in 1988, he also became a director of
Eagle. Since 1977, Mr. Carpenter has been President of S. Carpenter
Construction Co., President and Treasurer of Carpenter Realty Co. and of
3
<PAGE>
Bristol Shopping Plaza, which firms are headquartered in Bristol, Connecticut.
Mr. Carpenter is a director of Barnes Group, Inc., a manufacturer of springs
and aircraft parts and distributor of automobile parts, which is headquartered
in Bristol, Connecticut.
Thomas V. LaPorta became a director of Eagle upon its formation in 1986,
having been a director of Torrington since 1979. Mr. LaPorta is the President
and Chairman of the Board of The LaPorta Funeral Home in Torrington,
Connecticut.
Steven E. Lasewicz, Jr. became a director of Bristol in 1986 and of Eagle in
1990. Upon the merger of Bristol with Torrington in 1993, Mr. Lasewicz became a
director of the Bank. He has been President of SELCO Controls, Inc. since 1977.
The firm is headquartered in West Hartford, Connecticut and installs and
services temperature control and building automation systems.
Theodore M. Donovan became a director of Bristol in 1982 and, upon the merger
of Bristol with Torrington in 1993, became a director of the Bank. Mr. Donovan
has been in the private practice of law in Bristol, Connecticut since 1959.
Ralph T. Linsley, Vice Chairman of the Board of Eagle, was employed by
Bristol in 1956 and became its President in 1971. Mr. Linsley became Chairman
of the Board of Bristol in 1986 and Chairman of the Board of Bristol's holding
company prior to its combination with Eagle in 1988. Upon the merger of Bristol
with Torrington in 1993, Mr. Linsley became the Chief Executive Officer of the
Bank. Mr. Linsley retired as President and Chief Executive Officer of Eagle and
Chief Executive Officer of the Bank on September 30, 1994 and will retire as an
employee of Eagle and the Bank effective December 31, 1994. Mr. Linsley will
become Chairman of the Board of Eagle following the retirement of Mr. Frank J.
Pascale as Chairman of the Board of Eagle effective at the Annual Meeting.
John F. McCarthy became a director of Torrington in 1984, a director of the
Bank in 1993 and of Eagle upon its formation in 1986. He is the President of
J&M Sales, Inc., a Torrington-based beer distributorship, and the President of
Thames River Recycling Co. in Newington, Connecticut.
Board of Directors Committees and Nominations by Shareholders. The Board of
Directors of Eagle acts as a nominating committee for selecting nominees for
election as directors. Eagle's Bylaws also permit shareholders eligible to vote
at the Annual Meeting to make nominations for directors if such nominations are
made pursuant to timely notice in writing to the Secretary of Eagle. To be
timely, such notice must be delivered to, or mailed to and received at, the
principal executive offices of Eagle not less than 30 days nor more than 90
days prior to the date of the meeting, provided that at least 45 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders. If less than 45 days' notice or prior public disclosure of the
date of the Annual Meeting is given or made to shareholders, notice by the
shareholder must be received by Eagle not later than the close of business on
the 15th day following the day on which such notice of the date of the Annual
Meeting was mailed or such public disclosure was made. Public disclosure of the
date of the Annual Meeting was made by filing a Current Report on Form 8-K
under the Securities Exchange Act of 1934 (the "Exchange Act") with the SEC on
November 2, 1994. A shareholder's notice of nomination must also set forth
certain information specified in Article III, Section 13 of Eagle's Bylaws
concerning each person the shareholder proposes to nominate for election and
the nominating shareholder. Eagle has not received any nominations for
directors from shareholders.
The Board of Directors of Eagle has appointed a standing Audit Committee
which met two times during the 1994 fiscal year. The members of the Audit
Committee currently are Messrs. LaPorta, Lasewicz and Torizzo. The Audit
Committee reviews the scope and results of the independent annual audit. The
Audit Committee also reviews the scope and results of audits performed by the
Company's internal auditor.
4
<PAGE>
The Compensation Committee of the Board of Directors reviews employee
compensation and makes recommendations to the Board regarding changes in
compensation. In addition, the Board of Directors has appointed a Stock Option
Committee to administer the Company's stock option plans and to make grants of
options thereunder. During the 1994 fiscal year, the Compensation Committee and
Stock Option Committee each held four meetings. The members of the Compensation
Committee currently are Messrs. Alden, Carpenter, Donovan, and McCarthy. The
Stock Option Committee currently consists of all non-employee directors.
During the 1994 fiscal year, Eagle held 13 meetings of the Board of
Directors. Each incumbent director attended more than 75% of the aggregate of
the total number of meetings held by the Board and of the total number of
meetings held by all committees of the Board on which he served during the
period that he served.
Compensation of Directors. Each non-employee director of Eagle receives an
annual retainer of $8,000 (including amounts paid by the Bank), $750 (including
amounts paid by the Bank) for each regular or special Board meeting attended,
and $700 for each committee meeting attended ($800, if a committee chairman).
Under Eagle's deferred compensation plan for non-employee directors of Eagle
and its subsidiaries, non-employee directors are permitted to defer all or a
portion of their director and committee fees until they cease to be directors.
Interest is paid on deferred amounts at a rate determined by the Board of
Directors on or before December 31 of each year or at such other times as the
Board determines. A director's deferred compensation under the plan generally
will be paid to such director only upon his retirement as a director, but the
director may apply to the Board of Directors to withdraw up to 100% of the
value of his deferred compensation account. During the 1994 fiscal year,
Messrs. Donovan and Lasewicz deferred a total of $4,599 and $17,600,
respectively, and are the only directors who deferred fees in fiscal 1994.
The Eagle deferred compensation plan replaced deferred compensation
arrangements which Bristol and Torrington had for non-employee directors, but
does not adversely affect the amounts previously accrued by such directors
under such arrangements. In fiscal 1994, the Bank maintained a deferred
compensation plan for the benefit of Mr. Linsley who is ineligible to
participate in the Eagle deferred compensation plan since he is an employee of
Eagle. The plan for Mr. Linsley is substantially similar to the Eagle deferred
compensation plan, except that interest is paid on the deferred amounts at a
rate equal to the variable rate paid on no term interest plans for IRA and
Keogh accounts. During the 1994 fiscal year, Mr. Linsley did not defer any
amounts paid or earned.
Since January 1, 1994, Eagle has maintained a Post-Retirement Compensation
Plan for Outside Directors (the "Post-Retirement Compensation Plan") under
which participating non-employee directors may receive post-retirement benefits
following their termination of service with Eagle's Board of Directors due to
retirement or removal from service, failure to be reelected to the Board after
accepting the nomination, becoming disabled or after a "change in control" as
defined under the Post-Retirement Compensation Plan. To be eligible to receive
such post-retirement benefits, the director may not have been an employee or
officer of Eagle or its subsidiaries and must have served five years on Eagle's
Board. Following his service with Eagle's Board of Directors, a participating
non-employee director shall continue to receive the annual retainer fee paid
during the last year such director served on the Board for a period equal to
the number of years and partial years served on the Board, up to a maximum of
10 years. In the event of the death of a participating director prior to
commencement of benefits under the Post-Retirement Compensation Plan or prior
to receiving the total number of payments to which he is entitled, a payment
equal to 100% of the benefit payable under the Post-Retirement Compensation
Plan will be made to the director's beneficiary or estate. No benefits are
payable to a director under the Post-Retirement Compensation Plan who is
removed
5
<PAGE>
from service by regulatory authorities or who is removed from the Board for
cause by Eagle's shareholders. No payments were made to any director under the
Post-Retirement Compensation Plan during the 1994 fiscal year.
Eagle has four stock option plans (the "Option Plans"), which were approved
by the shareholders of Eagle, or, in the case of the Bristol 1987 Option Plan,
by the shareholders of Bristol's holding company prior to its combination with
Eagle. The Option Plans are for the benefit of officers, directors and
directors emeriti of Eagle and its subsidiaries. The Option Plans currently
permit only one-time grants to directors and directors emeriti as specified in
the Plans. The option exercise price may not be less than 100% of the per share
fair market value of Eagle Common Stock on the date of grant of the option, and
the maximum option term is 10 years. During the 1994 fiscal year, no option
grants were made under the Option Plans to non-employee directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ITS NOMINEES FOR DIRECTOR.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of Eagle. All executive officers serve pursuant to
employment agreements. See "Management -- Executive Compensation."
<TABLE>
<CAPTION>
AGE AT
DECEMBER 1,
NAME 1994 POSITION(S) HELD WITH EAGLE
---- ----------- ------------------------------------------
<C> <C> <S>
Ralph T. Linsley 60 Vice Chairman
Robert J. Britton 42 President and Chief Executive Officer
Mark J. Blum 41 Vice President and Chief Financial Officer
Irene K. Hricko 63 Vice President and Corporate Secretary
Ercole J. Labadia 59 Vice President -- Administration
Barbara S. Mills 58 Vice President and Treasurer
</TABLE>
Information concerning the principal occupation of Messrs. Britton and
Linsley is set forth under "Election of Directors." Information concerning the
principal occupation during the last five years of those executive officers of
Eagle who are not directors of Eagle is set forth below.
Mark J. Blum, Vice President and Chief Financial Officer of Eagle, joined
Torrington in 1985 and became Treasurer in 1986. He has held similar positions
with Eagle since its formation in 1987. Upon the merger of Bristol with
Torrington in 1993, Mr. Blum became Senior Vice President and Chief Financial
Officer of the Bank.
Irene K. Hricko, Vice President and Corporate Secretary of Eagle, has served
in such positions since 1987. Upon the merger of Bristol with Torrington in
1993, Ms. Hricko became Vice President and Corporate Secretary of the Bank.
Prior thereto, she had been Corporate Secretary of both Torrington and Bristol
since 1983 and 1989, respectively.
Ercole J. Labadia, Vice President -- Administration of Eagle, has served in
such capacity with Eagle since 1988. Upon the merger of Bristol with Torrington
in 1993, Mr. Labadia became Executive Vice President -- Administration and
Operations of the Bank. Prior thereto, he had served as Executive Vice
President of Bristol since 1989.
Barbara S. Mills, Vice President and Treasurer of Eagle, has served in such
positions with Eagle since 1988. Upon the merger of Bristol with Torrington
1993, Ms. Mills became Vice President
6
<PAGE>
and Treasurer of the Bank. Prior thereto, Ms. Mills had served as Chief
Financial Officer of Bristol since 1982.
EXECUTIVE COMPENSATION
Compensation. The following table sets forth the salary compensation, cash
bonus and certain other forms of compensation paid by Eagle and its
subsidiaries for services rendered in all capacities during fiscal 1994, 1993
and 1992 to the Chief Executive Officer of Eagle during fiscal 1994, to each of
the other most highly compensated executive officers of Eagle whose total
compensation in fiscal 1994 exceeded $100,000, and to Mr. Howard E. Walsh who
retired from service as an executive officer with Eagle in 1994 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
---------------- -------------------
FISCAL NUMBER ALL OTHER
NAME AND PRINCIPAL POSITION(S) YEAR SALARY BONUS OF OPTIONS (C) COMPENSATION (E)
- - ------------------------------ ------ -------- ------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Ralph T. Linsley (a) 1994 $199,669 $56,545 7,500 $587,552(f)
Vice Chairman of the
Board, 1993 195,616 31,000 6,600 21,580
President and Chief
Executive 1992 155,420 30,780 3,300 16,602
Officer of Eagle and the
Bank
Howard E. Walsh (b) 1994 91,909 -- -- 200,281(f)
Vice President --
Investor 1993 149,445 -- -- 17,247
Relations of Eagle;
Executive 1992 142,967 22,065 3,000 (d) 14,872
Vice President -- Retail
Banking of the Bank
Robert J. Britton (a) 1994 132,460 32,200 5,250 19,458
Executive Vice President
and 1993 121,444 25,000 6,710 12,441
Director of Eagle;
President, 1992 96,566 15,300 2,453 8,978
Chief Operating Officer
and
Director of the Bank
Ercole J. Labadia 1994 111,177 27,140 3,750 16,430
Vice President --
Administration 1993 108,641 16,000 4,480 11,864
1992 98,620 15,300 -- 9,939
Mark J. Blum 1994 89,038 21,850 3,750 13,192
Vice President and Chief 1993 82,532 14,000 2,563 8,405
Financial Officer 1992 76,641 9,923 -- 7,198
</TABLE>
- - ---------------------
(a) Mr. Linsley retired as President and Chief Executive Officer of Eagle and
the Bank on September 30, 1994. Mr. Britton was elected President and Chief
Executive Officer of Eagle and the Bank effective September 30, 1994.
(b) Mr. Walsh retired as Vice President of Eagle and Executive Vice President
of the Bank on May 24, 1994.
(c) Option awards in fiscal 1993 and 1992 are adjusted to reflect a ten percent
stock dividend paid on September 1, 1993.
(d) Exercised on November 4, 1992.
(e) All other compensation includes, as the case may be, premiums paid by the
Company for term life insurance for Messrs. Linsley, Walsh and Labadia,
amounts contributed to the non-
7
<PAGE>
contributory employee stock ownership plan (the "ESOP") on behalf of each
named executive officer and the full value of accrued amounts payable to
Messrs. Linsley and Walsh relating to their retirements as executive
officers. See Note (f) below. For fiscal year 1994, the premiums paid by the
Company for term life insurance for Messrs. Linsley, Walsh and Labadia were
$3,600, $4,268, and $900, respectively. Participants share proportionately,
based on their annual compensation, in the benefits of the contributions
made to the ESOP and share proportionately, based on the amount credited to
their respective accounts under the ESOP, in the investment earnings or
losses of the trust fund. Fleet Bank, N.A. acts as trustee of the ESOP. For
fiscal year 1994, Messrs. Linsley, Walsh, Britton, Labadia and Blum were
allocated 1,313 shares, 577 shares, 916 shares, 731 shares and 621 shares,
respectively, pursuant to the ESOP, having a value (based on the market
value on September 30, 1994) of $27,902, $12,253, $19,458, $15,530 and
$13,192, respectively.
(f) As to Messrs. Linsley and Walsh, all other compensation includes amounts
previously accrued by Eagle and payable in connection with their
retirements as executive officers. Eagle has accrued a total of $556,050
relating to 60 monthly retirement payments to be to Mr. Linsley beginning
January 1995 and a total of $183,760 relating to retirement payments to be
made monthly to Mr. Walsh upon his turning age 70.
Option Grants. The following table contains information with respect to
grants of stock options to each of the named executive officers during the
fiscal year ended September 30, 1994. All such grants were made under Eagle's
1991 Stock Option Plan.
OPTION GRANTS IN 1994 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (A)
- - ------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION FOR
NUMBER OF OPTIONS GRANTED OPTION TERM(B)
SHARES UNDERLYING TO EMPLOYEES EXERCISE EXPIRATION --------------------
NAME OPTIONS GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
- - ----------------- ----------------- --------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ralph T. Linsley 7,500 16% $19.375 11-15-03 $ 41,386 $ 231,591
Howard E. Walsh -- -- -- -- -- --
Robert J. Britton 5,250 11% 19.375 11-15-03 63,970 162,114
Ercole J. Labadia 3,750 8% 19.375 11-15-03 45,693 115,796
Mark J. Blum 3,750 8% 19.375 11-15-03 45,693 115,796
</TABLE>
- - --------------------
(a) Option grants were made on November 16, 1993 and were exercisable in full
as of such date. All option grants were made at fair market value, as
determined by the closing price of the Common Stock on the day prior to the
date of grant.
(b) The dollar amounts under these columns are the result of calculations at
the 5% and 10% assumed annual growth rates mandated by the SEC and,
therefore, are not intended to forecast possible future appreciation, if
any, in Eagle's stock price. The calculations were based on the exercise
price.
Option Exercises and Holdings. The following table sets forth information
with respect to each of the named executive officers concerning the exercise of
stock options during the fiscal year ended September 30, 1994, and the value of
all unexercised options held by such individuals at such date.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN 1994 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS AT
NUMBER OF END FISCAL YEAR-END (B)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ralph T. Linsley 9,680 $134,224 29,720 -- $238,868 --
Howard E. Walsh -- -- -- -- -- --
Robert J. Britton -- -- 21,750 -- 169,964 --
Ercole J. Labadia -- -- 16,349 -- 146,878 --
Mark J. Blum -- -- 10,650 -- 75,914 --
</TABLE>
- - ---------------------
(a) Market value of Common Stock at date of exercise, less the exercise price.
(b) Based on the $21.25 closing price of the Company's Common Stock as reported
on The Nasdaq Stock Market's National Market System on September 30, 1994,
minus the exercise price.
Pension Plans. The Bank maintains a qualified defined benefit plan under the
Internal Revenue Code of 1986, as amended (the "Code"), which is subject to the
requirements of the Employee Retirement Income Security Act of 1974, as
amended. Retirement benefits are calculated by multiplying 2% of the average of
the five highest years of the employee's salary (including overtime and
bonuses, if any) by years of benefit service partially offset by the Estimated
Primary Social Security Benefit, as defined under the plan. Normal retirement
is age 65. Retirement benefits are fully vested after five years of service.
Provisions in the program allow for benefits to be delayed after age 65 or to
be paid to vested participants who terminate employment after they have
attained age 55. Benefits may be received in one of several forms, including a
lump sum cash payment or monthly installments payable to the employee during
his or her life and/or continuing to a contingent annuitant if he or she
survives the employee. Disability benefits under the plan are limited to the
vested early retirement benefit. If a member in active service dies before age
65 after becoming vested, the beneficiary would be entitled to a lump sum death
benefit equal to the commuted value of 120 monthly installments, which would
have been payable had his or her allowance commenced on the first day of the
month in which the member died.
At September 30, 1994, 229 persons were eligible to participate in the
pension plan, which number includes 220 employee participants, seven terminated
employees with a deferred interest, and two retired participants.
The following table illustrates current annual pension benefits under the
Bank's retirement plan for retirement in fiscal year 1995 at age 65 under the
most advantageous provisions available for various levels of compensation,
years of service, and full Social Security benefits. For 1994, pension benefits
are subject to a statutory maximum of $118,800, subject to cost-of-living
adjustments. Additionally, annual compensation in excess of $150,000 (subject
to cost of living increases) may not be used in calculation of retirement
benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------
ANNUAL
COMPENSATION 15 20 25 30 35
------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $28,300 $37,700 $ 47,200 $ 56,600 $ 66,000
125,000 35,800 47,700 59,700 71,600 83,500
150,000 43,300 57,700 72,200 86,600 101,000
175,000 50,800 67,700 84,700 101,600 111,759
200,000 58,300 77,700 97,200 111,759 111,759
225,000 65,800 87,700 109,700 111,759 111,759
250,000 73,300 97,700 111,759 111,759 111,759
</TABLE>
9
<PAGE>
As of September 30, 1994, Messrs. Linsley, Walsh, Britton, Labadia and Blum
had 38, 6, 16, 37, and 9 years of credited service, respectively, under the
pension plan.
Pursuant to a supplemental compensation agreement between Mr. Walsh and the
Bank, Mr. Walsh is entitled to receive certain supplemental retirement
benefits. See "Employment and Consulting Agreements."
Employment and Consulting Agreements. Mr. Walsh served as President and Chief
Executive Officer of Torrington pursuant to an employment agreement. Upon the
merger of Bristol with Torrington, Mr. Walsh's employment agreement was amended
to provide for his service as Executive Vice President -- Retail Banking of the
Bank, which assumed the obligations of Torrington under Mr. Walsh's employment
agreement as well as his consulting agreement described below. The term of his
employment agreement expired on May 24, 1994, when Mr. Walsh turned 65 years of
age.
Mr. Walsh and Eagle entered into a consulting agreement in 1988 which
provides that Mr. Walsh will provide consulting services to Eagle for five
years following his retirement (i.e., until May 24, 1999), for an annual fee of
$50,000.
Mr. Walsh and Torrington entered into a supplemental compensation agreement
effective as of October 31, 1990. Pursuant to that agreement, Mr. Walsh is
entitled to receive supplemental retirement benefits commencing on the first
day of the first month after he attains age 70. The supplemental retirement
benefits will be payable monthly in an annual amount equal to one-half of his
average annual income during the five-year period in which he was most highly
compensated, reduced by the annual amount of the benefits payable to Mr. Walsh
under the Company's pension plan and the pension plan of any of Mr. Walsh's
previous employers, and further reduced by an amount equal to 2% of the Social
Security retirement benefit received by Mr. Walsh multiplied by 6.5 (the number
of years Mr. Walsh was employed by the Company). In the event of the death of
Mr. Walsh while he is actively employed by the Company as a consultant, the
Company would be obligated to purchase an annuity for the benefit of Mr.
Walsh's wife that would pay an annual amount equal to 40% of Mr. Walsh's
average annual income during the five-year period in which he was most highly
compensated, reduced by the annual amount of the survivor benefits payable to
Mrs. Walsh under the Company's pension plan and the pension plans of any other
employers during the previous 15 years, and further reduced by an amount equal
to 2% of the Social Security survivor's benefit received by Mr. Walsh
multiplied by the number of years Mr. Walsh was employed by the Company.
In April 1994, Mr. Linsley entered into a new employment agreement with Eagle
and the Bank. The agreement was subsequently amended in July 1994 in connection
with Mr. Linsley's notice to Eagle and the Bank under the agreement that he was
retiring as President and Chief Executive Officer of the Bank effective
September 30, 1994 and will remain as an executive employee of Eagle and the
Bank through December 31, 1994, at which time Mr. Linsley's employment
agreement will terminate. Mr. Linsley's annual salary during the term of the
agreement is $215,000. Mr. Linsley's employment agreement also provides that
upon Mr. Linsley's voluntary termination not related to a "change in control"
as defined in the agreement, Mr. Linsley shall receive special retirement
payments from the Bank equal to three times his annual salary (based on his
salary at the time of such retirement). Such special retirement payments shall
be made in 60 equal monthly installments and will cease if Mr. Linsley accepts
employment with a significant competitor of the Bank.
In April 1994, Mr. Britton entered into a new employment agreement with Eagle
and the Bank. His employment agreement was subsequently amended in July 1994 in
connection with the appointment of Mr. Britton as President and Chief Executive
Officer of Eagle and Vice Chairman, President and Chief Executive Officer of
the Bank effective October 1, 1994. Mr. Britton's annual
10
<PAGE>
salary under the agreement is $140,000, with such increases as determined by
the boards of directors of Eagle and the Bank. Mr. Britton's salary then in
effect under the agreement may not be decreased without his written consent.
The term of Mr. Britton's agreement expires on March 31, 1997 and may be
renewed by the Bank and Eagle by written notice for one additional year on
March 31, 1995 and each subsequent March 31 thereafter during the term of the
agreement, unless Mr. Britton gives contrary written notice to Eagle and the
Bank prior to the renewal date.
In April 1994, Mr. Labadia entered into a new employment agreement with Eagle
and the Bank. Mr. Labadia's employment agreement is for an initial three-year
term and expires on March 3, 1997. The Bank and Eagle may renew the agreement
for an additional one-year period on March 31, 1995, and each subsequent March
31 thereafter during the term of the agreement, unless he gives contrary
written notice prior to the renewal date to Eagle and the Bank. The agreement
provides for an annual salary of $118,000, subject to annual increases as
determined by the board of directors of Eagle and the Bank. Mr. Labadia's
salary then in effect under the agreement may not be reduced without his
written consent.
In April 1994, Mr. Blum entered into a new employment agreement with Eagle
and the Bank. The initial term of his employment agreement is three years and
expires on March 31, 1997. Eagle and the Bank may renew the agreement by
written notice for one additional year on March 31, 1995 and each subsequent
March 31 thereafter during the term of the agreement, unless Mr. Blum gives
contrary written notice prior to the renewal date. The agreement provides for
an annual salary of $95,000, with such annual increases as determined by the
boards of directors of Eagle and the Bank. Mr. Blum's salary then in effect
under the agreement may not be decreased without Mr. Blum's written consent.
Each of the employment agreements with Messrs. Linsley, Britton, Labadia and
Blum also provides for participation in Eagle's and the Bank's retirement and
employee benefit plans. Each of the employment agreements may be terminated by
Eagle or the Bank at any time. The employee is not entitled to any benefits
under the employment agreement if he is terminated for "cause" as defined in
the employment agreement. If the employee is terminated "without cause," the
employee will be entitled to a cash payment equal to the employee's salary for
the remainder of the contract term. Each agreement also provides for a payment
to be made to the employee if the employee's service is terminated in
connection with or within two years after a "change in control" of Eagle or the
Bank, unless such termination occurs by virtue of normal retirement, permanent
and total disability or death; provided, however, that the employee shall not
have any right to receive a payment or benefit under the agreement which would
be considered a "parachute payment" under the Code. If the employee's
termination within two years of a change in control was voluntary with "good
reason" or was involuntary, the employee shall receive a lump-sum payment equal
to three times the employee's average annual compensation (as calculated for
federal income tax reporting purposes) for the prior five years prior to such
change in control less one dollar. It is currently estimated that, in the event
of an involuntary termination of employment or a voluntary termination with
"good reason" following a change of control, the amount payable to Messrs.
Linsley, Labadia, Britton and Blum would be $549,675, $325,128, $306,002 and
$237,704, respectively. The severance payments are limited to one year's
compensation in the case of a voluntary termination without "good reason" after
a "change in control." In addition to the foregoing severance payments, in the
event of the employee's termination "without cause" or following a change in
control, the employee is entitled to life, health and disability insurance
coverage for the remaining term of his employment contract and to continued
director's and officer's liability coverage.
Mr. Linsley has a consulting agreement with Eagle which provides that Mr.
Linsley will provide consulting services to Eagle (not to exceed 1,000 hours
per year) for a five year period commencing January 1, 1995 following his
retirement as an employee of Eagle for an annual fee of $50,000. The
11
<PAGE>
compensation and other benefits available to Mr. Linsley thereunder would
continue for the term of the agreement in the event of his death prior to
reaching the age of 70.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Company's compensation program is administered by the Compensation
Committee comprised of four non-employee members of the Company's Board of
Directors. All decisions by the committee relating to the compensation of
executive officers are approved by the full board. In addition, the Company's
Stock Option Committee, consisting of all of the disinterested non-employee
directors, makes all decisions concerning stock option grants. The decisions of
the Stock Option Committee are taken into account by the Compensation Committee
in the course of its analysis of appropriate compensation levels.
The Company's executive compensation program provides competitive levels of
compensation designed to integrate pay with the Company's annual and long term
performance goals. Underlying this objective are the following concepts:
supporting an individual pay-for-performance policy that differentiates
compensation levels based on corporate and individual performance; motivating
key senior officers to achieve strategic business objectives and rewarding them
for that achievement; providing compensation opportunities which are
competitive to those offered in the marketplace, thus allowing the Company to
compete for and retain talented executives who are critical to the Company's
long term success; and aligning the interest of executives with the long term
interests of the Company's stockholders.
In the interests of balancing all key shareholder interests, the Compensation
Committee believes that the compensation of the Chief Executive Officer ("CEO")
of the Company along with the compensation of other executive officers, should
be comprised of a combination of base pay, short-term annual incentive bonus
and long-term stock options. While these elements are balanced in total in
comparison to other banking organizations, the Compensation Committee believes
that potential compensation in the form of performance-related variable
compensation should be emphasized. Variable compensation will be both short-
term and long-term based. The resulting total package has been designed to
reward executives for the creation of long-term shareholder value in excess of
other comparable organizations.
Base Salary. In determining the appropriate amount of fixed base pay for
executives, the Compensation Committee compared the executive officers' base
salaries with those paid to executives of 26 thrift companies with assets of
$500 million to 1 billion. The Compensation Committee targeted salary range
midpoints at the marketplace average, with adjustments made to reflect
individual executive performance, experience and contribution. Also considered
was the fact that Eagle has consistently performed better than similarly sized
thrifts.
Incentive Bonus. The bonus component paid to executive officers is calculated
under the Company's Annual Incentive Compensation Plan, which is structured to
pay bonuses only upon fulfillment of predetermined corporate and individual
goals. Annual bonus payouts range from up to 40% of base pay for the CEO, up to
35% of base pay for executive and senior vice president and up to 25% of base
pay for vice presidents. Full bonus payouts are made only if the Company's
performance goals for return on average assets, return on average equity and
expense ratio are exceeded. Bonuses are not available if minimum performance
goals are not met. At its November 22, 1994 meeting, the Compensation Committee
determined that bonuses for fiscal 1994 would be paid at levels ranging from 7%
to 26% of base salary since Eagle' return on equity of .85%, return on assets
of 12.08% and expense ratio of 2.11% met bonus targeted levels of .84%, 10.85%
and 2.18%, respectively.
Stock Options. To encourage growth and shareholder value, stock options are
granted under the Company's option plans to key management personnel who are in
a position to make substantial
12
<PAGE>
contributions to the long-term success of the Company. The Stock Option
Committee and the Compensation Committee believe that the grant of options
focuses attention on managing the Company from the perspective of an owner with
an equity state in the business. The Stock Option Committee determined that
further options grants to executive officers during fiscal 1994 would reward
them for the Company's performance in fiscal 1994 and reinforce the link
between executive and shareholder interests. All options were granted at the
current market price on the date of grant. Since the value of an option bears a
direct relationship to the Company's stock price, it serves as an effective
long-term incentive, which is highly compatible with the interests of
shareholders, and is therefore an important element of the Company's
compensation policy.
CEO Compensation. Mr. Linsley's performance based-compensation, both the
short-term incentive bonus and the long-term stock option incentive, were
established after considering Eagle's fiscal 1994 performance relative to other
banks and thrifts companies the Company compares itself to for purposes of
establishing executive officers' salaries. Eagle achieved record net income of
$7.6 million in fiscal 1994, an increase of 23% over earnings for the prior
year. Eagle has now recorded higher earnings for five consecutive years despite
recessionary conditions in many of those years. Eagle's return on equity of
11.99%, return on assets of .85% and expense ratio of 2.24% for fiscal 1994
compares favorably with the Connecticut and national industry averages. Eagle's
level of non-performing assets to total assets has remained well below the
Connecticut, New England and national averages during the recession. In fiscal
1994 and over the last five years, Eagle's stock has outperformed both the S&P
500 and a peer index by a significant margin. See "Comparative Company
Performance."
<TABLE>
<CAPTION>
STOCK OPTION COMMITTEE COMPENSATION COMMITTEE
---------------------- ----------------------
<S> <C>
John F. McCarthy, Chairman John F. McCarthy, Chairman
Richard H. Alden Richard H. Alden
George T. Carpenter George T. Carpenter
Theodore M. Donovan Theodore M. Donovan
Steven E. Lasewicz, Jr.
Thomas V. LaPorta
Frank J. Pascale
Ernest J. Torizzo
</TABLE>
COMPENSATION AND STOCK OPTION COMMITTEES INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for fiscal 1994 was comprised of four non-employee
directors--Mr. John F. McCarthy, Mr. Richard H. Alden, Mr. George T. Carpenter
and Mr. Theodore M. Donovan. The Stock Option Committee is comprised of all
non-employee directors. Mr. Pascale served as President and Chief Executive
Officer of Eagle until his retirement on August 1, 1991.
Richard H. Alden, a director of Eagle and the Bank, is a partner in the law
firm of Anderson, Alden, Hayes & Ziogas LLC, located in Bristol, Connecticut.
The Bank retains Mr. Alden's law firm with regard to a variety of legal matters
and has paid such firm legal fees totaling $66,477, a portion of which was
reimbursed to the Bank by third parties, for services rendered from October 1,
1993 to December 1, 1994.
George T. Carpenter, a director of Eagle and the Bank, is President of The
Carpenter Realty Company, S. Carpenter Construction Co. and Bristol Shopping
Plaza, Inc. In 1992, Bristol entered into a five-year lease for office space
with S. Carpenter Construction Co., The Carpenter Realty Company, and Bristol
Shopping Plaza, Inc. for an annual rent of $45,000 for the first two years plus
maintenance fees, which rent is increased by $2,500 annually for each of the
three years thereafter. During fiscal 1991, Bristol entered into a five-year
lease for office space with The Carpenter Realty
13
<PAGE>
Company for an annual rent of $19,800 plus maintenance fees, which rent is
increased by $2,200 annually for the second and third years. Eagle and its
subsidiaries paid such affiliated entities of Mr. Carpenter an aggregate of
$87,862 in rental and maintenance fees for the period from October 1, 1993 to
December 1, 1994.
Theodore M. Donovan, a director of Eagle and the Bank, is a partner in the
law firm of Furey, Donovan, Eddy, Kocsis, Tracy & Daly, P.C., located in
Bristol, Connecticut. The Bank has retained Mr. Donovan's law firm with regard
to a variety of legal matters. The Bank paid such firm legal fees totaling
$20,913, a portion of which was reimbursed to the Bank by third parties, for
services rendered from October 1, 1993 to December 1, 1994.
Steven E. Lasewicz, Jr., a director of Eagle and the Bank, is President of
SELCO Controls, Inc., located in West Hartford, Connecticut. For the period
from October 1, 1993 to December 1, 1994, SELCO Controls, Inc. has provided
temperature control system maintenance and emergency services to the Bank, for
which it was paid $12,342.
Ernest J. Torizzo, a director of Eagle and the Bank, is part owner and a
director of Burlington Construction Company, located in Torrington,
Connecticut. During fiscal 1993 and the portion of fiscal 1994 up to December
1, 1994, Burlington Construction Company remodeled an office in Torrington for
the Bank and has been paid $8,561 for such services.
COMPARATIVE COMPANY PERFORMANCE
The following table sets forth comparative information regarding the
Company's cumulative shareholder return on its Common Stock over the last five
fiscal years. Total shareholder return is measured by dividing total dividends
(assuming dividend reinvestment) plus share price change for a period by the
share price at the beginning of the measurement period. The Company's
cumulative shareholder return over a five-year period is based on an investment
of $100 on September 30, 1989 and is compared to the cumulative total return of
the S&P 500 Index and the KBW 50 Index at each fiscal year-end during the last
five fiscal years.
14
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
EAGLE FINANCIAL CORP., S&P 500 INDEX AND KBW 50 INDEX
9/89 9/90 9/91 9/92 9/93 9/94
------------------------------------------------------
+
Eagle +
Financial + 100 82 98 168 237 268
Corporation +
+
+
S & P 500 + 100 91 119 132 149 155
+
+
KBW 50 + 100 54 97 108 138 147
+
+
SECTION 16(A) COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers to file with the SEC initial reports of ownership of the Company's
equity securities and to file subsequent reports when there are changes in such
ownership. Based on a review of reports submitted to the Company, the Company
believes that, since the beginning of fiscal year 1994, all Section 16(a)
filing requirements applicable to the Company's directors and officers were
complied with on a timely basis.
CERTAIN TRANSACTIONS
From time to time the Bank makes loans to its directors, officers and other
employees for the financing of their homes, as well as home improvement and
consumer loans. It is the belief of Eagle's management that these loans are
currently made in the ordinary course of business, and neither involve more
than normal risk of collectability nor present other unfavorable features other
than those discussed below. All loans to directors, nominees for director, and
executive officers must be approved by the full Board of Directors of the Bank,
and loans to all other employees are approved by one of two designated
officers. Loans to such individuals are made pursuant to the same underwriting
criteria as apply to loans to the general public. Such loans are written at the
prevailing interest rate for customers of the Bank, except that for certain
loans made prior to January 23, 1990,
15
<PAGE>
interest is charged at a preferential rate as long as the borrower remains
employed by the Bank (other than retired or disabled directors and employees
who continue to receive the preferential rate). Directors, officers and other
employees pay legal fees, appraisal fees and all other direct costs incurred
by the Bank in originating the loan.
Management believes that the loans to directors and officers were in
compliance with federal law and regulations in effect at the time the loans
were made. As a result of federal legislation enacted in August 1989, the Bank
is precluded from making loans to directors and executive officers on terms
that would not be offered to a member of the general public of comparable
credit standing seeking a comparable loan. Such legislation did not apply to
outstanding mortgage loans made by Bristol or Torrington prior thereto.
The following table sets forth certain information with regard to loans
(except deposit account loans) at preferential interest rates made by Bristol
or Torrington to directors, nominees for director and executive officers of
Eagle (and members of their immediate families) and to any corporation or
organization in which any director, nominee for director or executive officer
has a substantial interest, which were outstanding in amounts greater than
$60,000 in the aggregate at any time since October 1, 1993.
<TABLE>
<CAPTION>
HIGHEST AMOUNT
OUTSTANDING UNPAID BALANCE INTEREST RATE
SINCE AS OF AS OF
NAME/LOAN TYPE (A) OCTOBER 1, 1993 SEPTEMBER 30, 1994 SEPTEMBER 30, 1994
------------------ --------------- ------------------ ------------------
<S> <C> <C> <C>
Robert J. Britton
Mortgage............... $127,881 $125,498 5.625%
John F. McCarthy
Mortgage (b)........... 91,566 0 --
Ernest J. Torizzo
Mortgage............... 240,220 236,294 6.00
</TABLE>
- - ---------------------
(a) All mortgages are held jointly with spouse.
(b) On December 6, 1993, Mr. McCarthy paid his indebtedness under this
mortgage.
For a description of certain transactions regarding Messrs. Alden,
Carpenter, Donovan, Lasewicz and Torizzo and the Bank, see "Compensation and
Stock Option Committees Interlocks and Insider Participation."
Eagle is unaware of any other transactions to which Eagle or the Bank is
party in which any director or executive officer of Eagle has or will have a
direct or indirect material interest.
16
<PAGE>
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of December 9, 1994 with
respect to the shares of Eagle Common Stock beneficially owned by each director
and nominee for director of Eagle, each of the named executive officers, and by
all directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND POSITION(S) AMOUNT AND NATURE OF COMMON STOCK
WITH THE COMPANY BENEFICIAL OWNERSHIP (A) OUTSTANDING
-------------------- ------------------------ ------------
<S> <C> <C>
Richard H. Alden
Director 41,624 (b) 1.0%
Mark J. Blum
Vice President and Chief Financial Of-
ficer 31,305 (c) *
Robert J. Britton
Director, President and Chief Executive
Officer 56,171 (d) 1.4
George T. Carpenter
Director 56,134 (e) 1.4
Theodore M. Donovan
Director 26,211 *
Ercole J. Labadia
Vice President -- Administration 36,225 (f) *
Thomas V. LaPorta
Director 50,950 1.3
Steven E. Lasewicz, Jr.
Director 17,580 *
Ralph T. Linsley
Vice Chairman of the Board 64,203 (g) 1.6
John F. McCarthy
Director 38,012 (h) *
Frank J. Pascale
Chairman of the Board 57,718 1.4
Ernest J. Torizzo
Director 27,315 (i) *
Howard E. Walsh**
Vice President -- Investor Relations 6,946 (j) *
All directors and executive officers
as a group (14 persons) 541,212 (k) 12.5
</TABLE>
- - ---------------------
*Less than one percent.
** Mr. Walsh retired as Vice President of Eagle and Executive Vice President of
the Bank in May 1994.
(a) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of Eagle
Common Stock (1) over which he has or shares voting or investment power, or
(2) of which he has the right to acquire beneficial ownership at any time
within 60 days from December 9, 1994. As used herein, "voting power" is the
power to vote or direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares. All persons shown in
the table above have sole voting and investment power, except as otherwise
indicated. The number of shares reflected for each individual and the group
includes shares subject to options which are exercisable within 60 days
from December 9, 1994, including grants made under the amended 1991 Plan
that are subject to shareholder approval. The following individuals and
group held such options for the following number of shares as of such date:
Mr. Alden -- 16,300; Mr. Blum -- 25,650; Mr. Britton -- 46,750; Mr.
Carpenter -- 16,300; Mr. Donovan -- 16,300; Mr. Labadia -- 31,349; Mr.
LaPorta -- 16,300;
17
<PAGE>
Mr. Lasewicz -- 11,900; Mr. Linsley -- 37,220; Mr. McCarthy -- 16,300; Mr.
Torizzo -- 10,800; Mr. Pascale -- 31,205; Mr. Walsh -- 0; and all directors
and officers as a group -- 293,050.
(b) Includes 2,205 shares as to which Mr. Alden disclaims beneficial ownership.
(c) Includes 5,397 shares allocated to the account of Mr. Blum under the ESOP.
(d) Includes 6,341 shares allocated to the account of Mr. Britton under the
ESOP.
(e) Includes 4,906 shares as to which Mr. Carpenter disclaims beneficial
ownership and 25,568 shares held by S. Carpenter Construction Co., of which
Mr. Carpenter is President.
(f) Includes 4,876 shares allocated to the account of Mr. Labadia under the
ESOP.
(g) Includes 8,060 shares allocated to the account of Mr. Linsley under the
ESOP. Includes 3,776 shares as to which Mr. Linsley disclaims beneficial
ownership.
(h) Includes 1,312 shares owned by Mr. McCarthy's wife, 8,927 shares held by
J&M Sales, Inc., of which Mr. McCarthy is President, and 2,373 shares held
for the benefit of Mr. McCarthy under a profit sharing plan maintained by
J&M Sales, Inc.
(i) Includes 8,096 shares owned by Mr. Torizzo's wife.
(j) Consists of 6,946 shares allocated to the account of Mr. Walsh under the
ESOP.
(k) Includes 38,779 shares allocated to Eagle's current and retired executive
officers of the total 185,600 shares allocated to the accounts of all
participating employees under the ESOP.
PRINCIPAL HOLDERS OF VOTING SECURITIES OF EAGLE
The following table sets forth information at December 9, 1994 with respect
to ownership of Eagle Common Stock by each person believed by management to be
the beneficial owner of more than 5% of the outstanding Eagle Common Stock. The
historical information set forth below is based on beneficial ownership
information contained in the most recent Schedule 13D or 13G filed on behalf of
such person with the SEC.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS OF AMOUNT AND NATURE OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
------------------- -------------------- ------------
<S> <C> <C>
Fleet Financial Group, Inc. 227,913(a) 5.69%
One Constitution Plaza
Hartford, Connecticut
06115
</TABLE>
- - --------------------
(a) Fleet Financial Group, Inc. ("Fleet") filed a Schedule 13G, dated February
15, 1994, reporting that the shares are owned beneficially, as a fiduciary
for the account of others, and that it has shared voting and dispositive
power with respect to such shares. The shares beneficially owned by Fleet
Financial Group are held by Fleet Bank, N.A. in connection with the Eagle
Federal Savings Bank ESOP Trust. Fleet Bank, N.A., an affiliate of Fleet
Financial Group, Inc., is the trustee of the ESOP. As of December 9, 1994,
185,600 shares held by the ESOP Trust have been allocated to the accounts
of eligible employees of the Bank. The shares allocated to the accounts of
eligible employees held by the ESOP Trust will be voted at the Annual
Meeting as directed by such employees. The 38,980 unallocated shares held
by the Trust will be voted by Fleet in the same ratio as the allocated
shares. The amounts shown are based on information provided to Eagle.
18
<PAGE>
AMENDMENT TO THE 1991 STOCK OPTION PLAN
(PROPOSAL TWO)
The Board of Directors, subject to shareholder approval, has approved an
amendment to Eagle's 1991 Stock Option Plan (the "1991 Plan") to increase from
132,000 to 532,000 the number of shares of Eagle Common Stock reserved for
issuance upon the exercise of options granted under the Plan, to limit the
number of stock options that may be granted under the Plan to any single
employee or officer in any calendar year to 40,000 and to grant to each person
who is a non-employee director of Eagle on November 22, 1994, an option to
purchase 7,500 shares of Eagle Common Stock and to each non-employee director
who is elected to the Board of Directors after November 22, 1994 an option to
purchase 7,500 shares upon completion of one year of service.
The principal provisions of the 1991 Plan are summarized below. Such summary
does not, however, purport to be complete and is qualified in its entirety by
the terms of the 1991 Plan. Shareholders may obtain, free of charge, a copy of
the 1991 Option Plan by writing to Irene K. Hricko, Vice President and
Corporate Secretary, Eagle Financial Corp., P.O. Box 1157, Bristol,
Connecticut 06010.
REASONS FOR AMENDMENT OF THE 1991 STOCK OPTION PLAN
The increase in the number of shares reserved for grant under the 1991 Plan
is being sought primarily because few shares remain available to grant. At
December 9, 1994, 5,896 shares of authorized but unissued Common Stock
remained available for future grant under the terms of the 1991 Plan. The
purpose of the 1991 Plan is (i) to further the growth and success of Eagle by
enabling selected officers and employees of Eagle and/or its subsidiaries to
acquire shares of Common Stock of Eagle, thereby increasing their personal
interest in such growth and success, and (ii) to provide a means of rewarding
outstanding performance by such persons to Eagle. With the limited number of
shares which remain available for future grant under the 1991 Plan, the Board
of Directors believes that adoption of the amendment to the 1991 Plan to
increase by 400,000 the total number of shares available for grant thereunder
to 532,000 is appropriate at this time in order to assure that stock options
will continue to be available for grant to employees of Eagle and its
subsidiaries.
The Board has also voted to amend the 1991 Plan to specify that options
covering no more than 40,000 shares may be granted to any officer or other
employee during any calendar year. The limitation on the maximum number of
shares that may be granted to any individual in a calendar year is a
consequence of certain amendments to the Code that are effective for fiscal
years beginning in 1994 and subsequent years under which no deduction is
allowed for annual compensation in excess of $1 million paid by a publicly
traded corporation to its chief executive officer and the four other most
highly compensated officers. Under those provisions, there is no limitation on
the deductibility of "qualified performance-based compensation." To satisfy
this definition, (i) the compensation must be paid solely on account of the
attainment of one or more preestablished, objective performance goals; (ii)
the performance goal under which compensation is paid must be established by a
compensation committee comprised solely of two or more directors who qualify
as "outside directors" for purposes of the exception; (iii) the material terms
under which the compensation is to be paid must be disclosed to and
subsequently approved by shareholders of the corporation before payment is
made in a separate vote; and (iv) the compensation committee must certify in
writing before payment of the compensation that the performance goals and any
other material terms were in fact satisfied.
Under proposed regulations published on December 20, 1993 and December 2,
1994, in the case of compensation attributable to a stock option, the
performance goal requirement (summarized in (i) above) is deemed satisfied,
and the certification requirement (summarized in (iv) above) is
19
<PAGE>
inapplicable, if (1) the grant or award is made by the compensation committee;
(2) the plan under which the option is granted states the maximum number of
shares with respect to which options may be granted during a specified period
to an employee; and (3) under the terms of the option, the amount of
compensation is based solely on an increase in the value of the stock after the
date of grant. According to the proposed regulations, a director is an "outside
director" if he or she is not a current employee of the corporation; is not a
former employee who receives compensation for prior services (other than under
a qualified retirement plan); has not been an officer of the corporation; and
does not receive, directly or indirectly (including certain amounts paid to an
entity that employs the director or in which the director has a specified
beneficial ownership interest), remuneration from the corporation in any
capacity other than as a director. The proposed regulations provide that the
material terms of a performance goal will be approved by shareholders for
purposes of the foregoing rules if, in a separate vote, affirmative votes are
cast by a majority of the votes cast on the matter (including abstentions to
the extent abstentions are counted as voting under applicable state law). A
director who is "disinterested" within the meaning of certain regulations under
the Exchange Act will be treated as an outside director until the first meeting
of shareholders at which directors are elected that is held after December 31,
1995.
DESCRIPTION OF THE 1991 STOCK OPTION PLAN
The Board of Directors adopted the 1991 Plan in November, 1991, and it was
approved by the shareholders of Eagle in 1992. Under the terms of the 1991
Plan, 132,000 shares of authorized Common Stock of the Company are reserved for
issuance to officers, other full-time employees and directors of the Company
and its subsidiaries. The 1991 Plan provides for the grant of options that are
intended to qualify as "incentive stock options" under Section 422 of the Code
as well as non-incentive options. The Stock Option Committee administers the
1991 Plan.
Upon adoption of the 1991 Plan, non-employee directors of Eagle and Messrs.
Linsley, Pascale and Walsh were each granted options for 3,000 shares at an
exercise price of $10.125 per share, which was the fair market price of Eagle
common stock on the day of the grant. Under the 1991 Plan, as amended, new non-
employee directors of Eagle will receive options for 7,500 shares upon the
completion of one year of service as a director, subject to the availability of
options. The 1991 Plan, as amended, also provides for the grant of an option to
purchase 7,500 shares at an exercise price of $20.00 per share to each current
outside director. Set forth below is information concerning options granted
under the 1991 Stock Option Plan in connection with the amendment of the 1991
Stock Option Plan. Options granted under the amended 1991 Plan may not be
exercised until the amendment has been approved by shareholders.
NEW PLAN BENEFITS UNDER 1991 STOCK OPTION PLAN
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF OPTIONS
-------------- -----------------
<S> <C> <C>
Robert J. Britton, CEO $20.00 25,000
Ercole J. Labadia, Vice President 20.00 15,000
Mark J. Blum, Chief Financial Officer 20.00 15,000
Robert T. Linsley, Vice Chairman 20.00 7,500
All current executive officers as a group
(5 persons) 20.00 64,750
All non-employee directors as a group (8
persons) 20.00 60,000
All non-executive officer employees as a
group (4 persons) 20.00 23,250
</TABLE>
In general, the option exercise price under the 1991 Plan may not be less
than 100% of the fair market value of the common stock on the date of grant of
the option. The maximum option term is generally 10 years. No person can
receive any incentive stock option if, at the time of grant, such person owns
directly or indirectly more than 10% of the total combined voting power of
Eagle unless
20
<PAGE>
the option price is at least 110% of the fair market value of the common stock
and the exercise period of such incentive option is by its terms limited to
five years. There is also a $100,000 limit on the value of the stock
(determined at the time of grant) covered by incentive stock options that first
become exercisable by an optionee in any calendar year.
Payment for shares purchased under the 1991 Plan may be made either in cash
or by exchanging shares of common stock of Eagle with a fair market value equal
to or less than the total option price plus cash for any difference. The Stock
Option Committee may provide in an option agreement for payment upon delivery
of the stock certificate or certificates when certain conditions are met,
including the use of a licensed broker acceptable to Eagle to act as the agent
for the options and payment in cash or cash equivalent acceptable to Eagle.
If an employee's employment with Eagle or a subsidiary terminates by reason
of death, his or her options, whether or not then exercisable, may be exercised
at any time prior to the date on which the options would otherwise expire. If
an employee's employment with Eagle or a subsidiary terminates by reason of
permanent and total disability, his or her options, whether or not then
exercisable, may be exercised at any time during the term of the option. If the
optionee's employment terminates for any reason other than death or disability,
options held by such optionee terminate three months after the date of such
termination (but not later than the date the option would otherwise expire).
The Stock Option Committee may extend or shorten the period following a
termination of employment during which an option granted to an employee may be
exercised by so providing in a particular option agreement. Options granted to
non-employee directors of Eagle or a subsidiary shall remain exercisable until
the expiration of their original term, notwithstanding the director's
termination of service on the Board.
If the outstanding shares of common stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or
securities of Eagle, whether by reason of merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, split,
combination of shares, exchange of shares, or the like, an appropriate and
proportionate adjustment will be made in the number and kinds of shares subject
to the 1991 Plan, and in the number, kinds, and per share exercise price of
shares subject to the unexercised portion of options granted prior to any such
change. Any such adjustment in an outstanding option, however, will be made
without a change in the total price applicable to the unexercised portion of
the option but with a corresponding adjustment in the per share option price.
Upon any dissolution or liquidation of Eagle, or upon a reorganization,
merger or consolidation in which Eagle is not the surviving corporation, or
upon the sale of substantially all of the property of Eagle to another
corporation, or upon any transaction (including, without limitation, a merger
or reorganization in which Eagle is the surviving corporation) approved by the
Board of Directors which results in any person or entity owning 80% or more of
the total combined voting power of all classes of stock of Eagle, the 1991 Plan
and the options issued thereunder will terminate, unless provision is made in
connection with such transaction for the continuation of the plan and/or the
assumption of the options or for the substitution for such options of new
options covering the stock of a successor employer corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise price. In the event of such termination, all
outstanding options shall be exercisable in full during such period immediately
prior to the occurrence of such termination as the Board of Directors in its
discretion shall determine.
An optionee will not be deemed to have received taxable income upon the grant
or exercise of any incentive stock option (except that the alternative minimum
tax may apply). Any gain realized upon a disposition of shares received
pursuant to the exercise of an incentive stock option will be taxed as long-
term capital gain, so long as the optionee holds the shares for at least two
years after the date of grant and for at least one year after the date of
exercise. The grant of a nonstatutory
21
<PAGE>
option will not constitute taxable income to the optionee. Upon exercise of a
nonstatutory stock option, an optionee will be deemed to receive ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the underlying stock on the date of the exercise, subject
to the lapse of certain restrictions that may be imposed by the federal
securities laws.
Generally, neither gain nor loss will be recognized by the Company upon the
grant or exercise of an incentive stock option. Upon the exercise of a
nonstatutory stock option, the Company will be entitled to a deduction for the
amount recognized as ordinary income by the optionee. If Common Stock acquired
upon the exercise of an incentive stock option is disposed of prior to
satisfaction of the holding periods described above, generally the optionee
will be deemed to have realized as ordinary income, and Eagle will be allowed
to deduct, the excess of the market value at the date of exercise over the
option exercise price. If an optionee pays the exercise price of an option by
delivering shares of Common Stock, the exchange of shares generally will be
treated as a non-taxable transaction (provided, in the case of an incentive
stock option, that the shares delivered in payment are not shares acquired upon
exercise of an incentive stock option which have not satisfied the holding
period requirements discussed above).
The foregoing provides only a very general description of the federal income
tax consequences of transactions under the 1991 Plan, and participants should
consult a tax advisor as to their individual circumstances.
The Board of Directors may amend the 1991 Plan with respect to shares of
common stock as to which options have not been granted. However, Eagle's
shareholders must approve any amendment that would (1) materially change the
requirements as to eligibility to receive options; (2) increase the maximum
number of shares in the aggregate for which options may be granted (except for
adjustments upon changes in capitalization); (3) change the minimum option
price; (4) increase the maximum period during which options may be exercised;
(5) extend the term of the Plan; or (6) materially increase the benefits
accruing to eligible individuals under the 1991 Plan.
The Board of Directors at any time may terminate or suspend the 1991 Plan.
Unless previously terminated, the 1991 Plan will terminate automatically on
November 18, 2001. No termination, suspension or amendment of the 1991 Plan
may, without the consent of the optionee to whom an option has been granted,
adversely affect the rights of the holder of the option.
The proposal to amend the 1991 Stock Option Plan will be deemed approved upon
the affirmative vote of the holders of a majority of the voting power present
in person or by proxy and entitled to vote on the matter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE AMENDMENT TO THE 1991 STOCK OPTION PLAN.
CHANGE IN INDEPENDENT AUDITORS
Peat Marwick was Eagle's independent auditors for the fiscal years ending
September 30, 1993 and 1994. The Company's previous independent auditors, Ernst
& Young LLP ("Ernst & Young"), informed the Company by letter dated May 11,
1993, that such firm had declined to stand for re-election for the fiscal year
ending September 30, 1993. Ernst & Young further informed the Company that this
decision was based on strategic business considerations relating to their
Hartford office banking practice. The decision of Ernst & Young not to stand
for re-election was not related to any disagreement with the Company on any
matter of accounting principle or practices, financial statement disclosure, or
auditing procedure. The reports of Ernst & Young on the financial
22
<PAGE>
statements of the Company for each of the fiscal years in which Ernst & Young
served as the Company's independent auditors were unqualified and did not
contain any adverse opinions, disclaimers, qualifications or modifications as
to uncertainty, audit scope or accounting principle. On July 28, 1993, the
Company engaged the accounting firm of Peat Marwick, independent certified
public accountants, to serve as its independent auditors for the fiscal year
ending September 30, 1993.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL THREE)
The Board of Directors has appointed the firm of Peat Marwick to act as
independent auditors for the Company for the fiscal year ending September 30,
1995, subject to ratification of such appointment by the Company's
shareholders.
Unless otherwise indicated, properly executed proxies will be voted in favor
of ratifying the appointment of Peat Marwick to audit the books and accounts of
the Company for the fiscal year ending September 30, 1995. No determination has
been made as to what action the Board of Directors would take if the
shareholders do not ratify the appointment.
A representative of Peat Marwick is expected to be present at the Annual
Meeting and will be given an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in Eagle's proxy statement
and form of proxy relating to Eagle's 1996 annual meeting of shareholders must
be received by Eagle by August 30, 1995, pursuant to the proxy soliciting
regulations of the SEC. In addition, Eagle's Bylaws require that notice of
shareholder proposals and nominations for director be delivered to the
Secretary of Eagle not less than 30 days nor more than 90 days prior to the
date of an annual meeting, unless notice or public disclosure of the date of
the meeting occurs less than 45 days prior to the date of such meeting, in
which event, shareholders may deliver such notice not later than the 15th day
following the day on which notice of the date of the meeting was mailed or
public disclosure thereof was made. Nothing in this paragraph shall be deemed
to require Eagle to include in its proxy statement and form of proxy for such
meeting any shareholder proposal which does not meet the requirements of the
SEC in effect at the time.
23
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of Eagle does
not know of any other matters to be presented for action by the shareholders at
the 1995 Annual Meeting. If, however, any other matters not now known are
properly brought before the meeting, the persons named in the accompanying
proxy will vote such proxy in accordance with the determination of a majority
of the Board of Directors.
By Order of the Board of Directors
/s/ Frank J. Pascale
Frank J. Pascale
Chairman of the Board
/s/ Ralph T. Linsley
Ralph T. Linsley
Vice Chairman of the Board
Bristol, Connecticut
December 27, 1994
24
<PAGE>
EAGLE FINANCIAL CORP.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned shareholder of Eagle Financial Corp. ("Eagle") hereby
appoints George T. Carpenter and Steven E. Lasewicz, Jr., or either of them,
with full power of substitution in each, as proxies to cast all votes which the
undersigned shareholder is entitled to cast at the annual meeting of
shareholders (the "Annual Meeting") to be held on Tuesday, January 24, 1995 at
11:00 a.m., local time, at The Eastwood Country Club, 1301 Torringford West
Street, Torrington, Connecticut, and at any adjournments thereof, upon the
following matters. The undersigned shareholder hereby revokes any proxy or
proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1, AND FOR PROPOSALS 2 AND 3, AND IN ACCORDANCE WITH
THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS.
The undersigned shareholder may revoke this proxy at any time before it is voted
by delivering to the Corporate Secretary of Eagle either a written revocation of
the proxy or a duly executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting in person. The undersigned shareholder hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement.
(continued and to be signed and dated on reverse side)
-1-
<PAGE>
1. Election of two directors each for a three-year term.
FOR the nominees listed WITHHOLD AUTHORITY to vote
below. for all nominees listed below.
[_] [_]
NOMINEES: Richard H. Alden and Ernest J. Torizzo
- - --------------------------------------------------------------------------------
(Instruction: To withhold authority to vote for any individual
nominee print that nominee's name on the space provided.)
2. Approval of amendment to Eagle's 1991 Stock Option Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of appointment of KPMG Peat Marwick as independent
auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting, or any adjournments
thereof.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
Date:
---------------- ------------------------------------------------------
Signature of Shareholders or Authorized Representative
Please date and sign exactly as name appears hereon.
Each executor, administrator, trustee, guardian,
attorney-in-fact and other fiduciary should sign and
indicate his or her full title. Only one signature is
required in the case of Stock ownership in the name of
two or more persons, but all should sign if possible.
-2-
<PAGE>
EAGLE FINANCIAL CORP.
1991 STOCK OPTION PLAN
EAGLE FINANCIAL CORP. (the "Corporation") sets forth herein the terms
of this Stock Option Plan (the "Plan") as follows:
l. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 below) with
an opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries, and will encourage
such eligible individuals to remain in the employ or service of the Corporation
or that of one or more of its subsidiaries. Each stock option granted under the
Plan (an "Option") is intended to be an "incentive stock option" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended from
time to time, or the corresponding provision of any subsequently enacted tax
statute (the "Code"), except (i) to the extent that any such Option would exceed
the limitations set forth in Section 7 below; (ii) for Options specifically
designated at the time of grant as not being "incentive stock options"; and
(iii) for Options granted to directors of the Corporation who are not officers
or other salaried employees of the Corporation or any of its subsidiaries ("Non-
Employee Directors") or to directors of any subsidiary of the Corporation who
are not Non-Employee Directors and who are not officers or other salaried
employees of the Corporation or any of its subsidiaries ("Subsidiary
Directors").
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of Directors
-----
of the Corporation (the "Board"), which shall have the full power and authority
to take all actions, and to make all determinations required or provided for
under the Plan or any Option granted or Option Agreement (as defined in Section
8 below) entered into hereunder and all such other actions and determinations
not inconsistent with the specific terms and provisions of the Plan deemed by
the Board to be necessary or appropriate to the administration of the Plan or
any Option granted or Option Agreement entered into hereunder. All such actions
and determinations shall be by the affirmative vote of a majority of the members
of the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or by unanimous consent of the Board executed
in writing in accordance with the Corporation's Certificate of Incorporation and
By-Laws, and with applicable law. The interpretation and construction by the
<PAGE>
Board of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) Committee. The Board may from time to time appoint a Stock Option
---------
Committee (the "Committee") consisting of not less than two members of the
Board, none of whom shall be an officer or other salaried employee of the
Corporation or any of its subsidiaries, and each of whom shall qualify in all
respects as a "disinterested person" as defined in Rule 16b-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934. The Board,
in its sole discretion, may provide that the role of the Committee shall be
limited to making recommendations to the Board concerning any determinations to
be made and actions to be taken by the Board pursuant to or with respect to the
Plan, or the Board may delegate to the Committee such powers and authorities
related to the administration of the Plan, as set forth in Section 2(a) above,
as the Board shall determine, consistent with the Certificate of Incorporation
and By-Laws of the Corporation and applicable law. The Board may remove
members, add members, and fill vacancies on the Committee from time to time, all
in accordance with the Corporation's Certificate of Incorporation and By-Laws,
and with applicable law. The majority vote of the Committee, or acts reduced to
or approved in writing by a majority of the members of the Committee, shall be
the valid acts of the Committee.
(c) No Liability. No member of the Board or of the Committee shall be
------------
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the Plan or any
---------------------------
Option granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and conclusive.
(e) Action by the Board. The Board may act under the Plan other than
-------------------
by, or in accordance with the recommendations of, the Committee, constituted as
set forth in Section 2(b) above, only if all of the members of the Board are
"disinterested persons" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
3. STOCK
The stock that may be issued pursuant to Options granted under the
Plan shall be shares of Common Stock, par value $.01 per share, of the
Corporation
2
<PAGE>
(the "Stock"), which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate 532,000 shares,
which number of shares is subject to adjustment as hereinafter provided in
Section 17 below. If any Option expires, terminates, or is terminated for any
reason prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options granted
under the Plan.
4. ELIGIBILITY
(a) Employees and Subsidiary Directors. Options may be granted under
----------------------------------
the Plan to any full-time employee of the Corporation or any "subsidiary
corporation" thereof within the meaning of Section 424(f) of the Code (a
"Subsidiary") (including any such employee who is an officer or director of the
Corporation or any Subsidiary) or to any Subsidiary Director as the Board shall
determine and designate from time to time prior to expiration or termination of
the Plan. The maximum number of shares of Stock subject to Options that may be
granted under the Plan to any officer or other employee of the Corporation or
any Subsidiary in any calendar year is 40,000 shares (subject to adjustment as
provided in Section 17 hereof).
(b) Non-Employee Directors. Subject to the availability of shares
----------------------
issued under Section 3 of the Plan, (i) on the effective date (as defined in
Section 5(a) hereof) an Option to purchase up to the number of shares of Stock
specified below, at the price and upon the other terms and conditions specified
in the Plan, shall be granted under the Plan to the following Non-Employee
Directors:
<TABLE>
<CAPTION>
Name Number of Shares
<S> <C>
Richard H. Alden 3,000
George T. Carpenter 3,000
Theodore M. Donovan 3,000
Thomas V. LaPorta 3,000
Steven E. Lasewicz, Jr. 3,000
John F. McCarthy 3,000
Frank J. Pascale 3,000
Ernest J. Torizzo 3,000
</TABLE>
(ii) an Option to purchase up to 7,500 shares of Stock, at the price and upon
the other terms and conditions specified in the Plan, shall be granted under the
Plan to each Non-Employee Director who is first elected to the Board of
Directors of the Corporation after the effective date of the Plan and before
November 22, 1994 upon such Non-Employee Director completing one year of service
and (iii) an Option to purchase up to 7,500 shares of Stock, at the price and
upon the other terms and
3
<PAGE>
conditions specified in the Plan, shall be granted under the Plan to each
Non-Employee Director who is first elected to the Board
of Directors of the Corporation after November 22, 1994 upon such Non-employee
Director completing one year of service, provided, however, that such Option
-------- -------
shall not be exercised to the extent of more than 7,500 shares unless and until
Amendment Number 1 to the Plan has been approved by a majority of the votes
present and entitled to vote at a duly held meeting of the shareholders of the
Corporation at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy.In addition, each person who is a
Non-Employee Director on November 22, 1994, shall be granted an Option on that
date to purchase up to 7,500 shares of Stock, at the price and upon the other
terms and conditions specified in the Plan, provided, however, that such Option
-------- -------
shall not be exercised unless and until Amendment Number 1 to the Plan has been
approved by a majority of the votes present and entitled to vote at a duly held
meeting of the shareholders of the Corporation at which a quorum representing a
majority of all outstanding voting stock is present, either in person or by
proxy.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the date of
--------------
adoption by the Board, subject to approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
shareholders at which a quorum representing a majority of all outstanding voting
stock is, either in person or by proxy, present and voting on the Plan;
provided, however, that upon approval of the Plan by the shareholders of the
- - -------- -------
Corporation as set forth above, all Options granted under the Plan on or after
the effective date shall be fully effective as if the shareholders of the
Corporation had approved the Plan on the effective date. If the shareholders
fail to approve the Plan within one year of such effective date, any Options
granted hereunder shall be null and void and of no effect.
(b) Term. The Plan shall terminate on the date ten years from
----
the effective date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any
time and from time to time, prior to the date of termination of the Plan, grant
to such eligible individuals as the Board may determine ("Optionees"), Options
to purchase such number of shares of the Stock on such terms and conditions as
the Board may determine, including any terms or conditions which may be
necessary to qualify such Options as "incentive stock options" under Section 422
of the Code. The date on which the Board approves the grant of an Option shall
be considered the date on which such Option is granted.
4
<PAGE>
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in exception (ii) or (iii)
of Section 1) shall constitute an Incentive Stock Option to the extent that the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer corporation and its parent and subsidiary
corporations within the meaning of Section 422(d)(1) of the Code) does not
exceed $100,000.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Corporation and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
-------- -------
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option
(the "Option Price") shall be fixed by the Board and stated in each Option
Agreement, and shall be not less than the greater of par value or one hundred
percent of the fair market value of a share of the Stock on the date the Option
is granted (as determined in good faith by the Board); provided, however, that
-------- -------
in the event the Optionee would otherwise be ineligible to receive an "incentive
stock option" by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to stock ownership of more than ten percent), the Option
Price of an Option which is intended to be an "incentive stock option" (within
the meaning of Section 422 of the Code) shall be not less than the greater of
par value or one hundred and ten percent of the fair market value of a share of
Stock at the time such Option is granted. In the event that the Stock is listed
on an established national or regional stock exchange, is admitted to quotation
on the National Association of Securities Dealers Automated Quotation System, or
is publicly traded in an established securities market, in determining the fair
market value of the Stock, the Board shall use the closing price of the Stock on
such exchange or System or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading date immediately
before the Option is granted (or, if there is no such closing price, then the
Board shall use the mean between the highest bid and lowest asked prices or
between the high and low prices on such date), or, if no sale of the Stock has
been made on such day, on the next preceding day on which any such sale shall
have been made.
5
<PAGE>
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall terminate and all
----
rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted, or, with respect to Options granted
to persons other than Non-Employee Directors or Subsidiary Directors, on such
date prior thereto as may be fixed by the Board and stated in the Option
Agreement relating to such Option; provided, however, that in the event the
-------- -------
Optionee would otherwise be ineligible to receive an "incentive stock option" by
reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating
to stock ownership of more than ten percent), an Option granted to such Optionee
which is intended to be an "incentive stock option" (within the meaning of
Section 422 of the Code) shall in no event be exercisable after the expiration
of five years from the date it is granted.
(b) Option Period and Limitations on Exercise. Each Option granted to
-----------------------------------------
persons other than Non-Employee Directors or Subsidiary Directors under the Plan
shall be exercisable, in whole or in part, at any time and from time to time,
over a period commencing on or after the date of grant and ending upon the
expiration or termination of the Option, as the Board shall determine and set
forth in the Option Agreement relating to such Option. Without limiting the
foregoing, the Board, subject to the terms and conditions of the Plan, may in
its sole discretion provide that an Option may not be exercised in whole or in
part for any period or periods of time during which such Option is outstanding;
provided, however, that any such limitation on the exercise of an Option
- - -------- -------
contained in any Option Agreement may be rescinded, modified or waived by the
Board, in its sole discretion, at any time and from time to time after the date
of grant of such Option, so as to accelerate the time at which the Option may be
exercised. Each Option granted to Non-Employee Directors or Subsidiary
Directors shall be exercisable, in whole or in part, at any time and from time
to time, over a period commencing on the date of grant and ending upon the
expiration of the Option. Notwithstanding any other provisions of the Plan, no
Option granted to an Optionee under the Plan shall be exercisable in whole or in
part prior to the date the Plan is approved by the shareholders of the
Corporation as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable hereunder may
------------------
be exercised by delivery to the Corporation on any business day, at its
principal office, addressed to the attention of the Committee, of written notice
of exercise, which notice shall specify the number of shares with respect to
which the Option is being exercised, and shall be accompanied by payment in full
of the Option Price of the shares for which the Option is being exercised. The
minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of 100 shares or
the maximum number of shares available for purchase under the Option at the time
of exercise. Payment of the Option Price for the shares of Stock purchased
pursuant to the
6
<PAGE>
exercise of an Option shall be made (i) in cash or in cash
equivalents; (ii) through the tender to the Corporation of shares of Stock,
which shares shall be valued, for purposes of determining the extent to which
the Option Price has been paid thereby, at their fair market value (determined
in the manner described in Section 9 above) on the date of exercise; or (iii) by
a combination of the methods described in (i) and (ii). The Board may provide,
by inclusion of appropriate language in an Option Agreement, that payment in
full of the Option Price need not accompany the written notice of exercise
provided the notice of exercise directs that the Stock certificate or
certificates for the shares for which the Option is exercised be delivered to a
licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such Stock certificate or certificates
are delivered, the broker tenders to the Company cash (or cash equivalents
acceptable to the Company) equal to the Option Price for the shares of Stock
purchased pursuant to the exercise of the Option plus the amount (if any) of
federal and/or other taxes which the Company, may, in its judgment, be required
to withhold with respect to the exercise of the Option. An attempt to exercise
any Option granted hereunder other than as set forth above shall be invalid and
of no force and effect. Promptly after the exercise of an Option and the
payment in full of the Option Price of the shares of Stock covered thereby, the
individual exercising the Option shall be entitled to the issuance of a Stock
certificate or certificates evidencing his ownership of such shares. A separate
Stock certificate or certificates shall be issued for any shares purchased
pursuant to the exercise of an Option which is an "incentive stock option"
(within the meaning of Section 422 of the Code) ("Incentive Stock Option"),
which certificate or certificates shall not include any shares which were
purchased pursuant to the exercise of an Option which is not an Incentive Stock
Option. An individual holding or exercising an Option shall have none of the
rights of a shareholder until the shares of Stock covered thereby are fully paid
and issued to him and, except as provided in Section 17 below, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of such issuance.
11. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee to whom an Option is granted, only
such Optionee (or, in the event of legal incapacity or incompetency, the
Optionee's guardian or legal representative) may exercise the Option. No Option
shall be assignable or transferable by the Optionee to whom it is granted, other
than by will or the laws of descent and distribution.
12. TERMINATION OF SERVICE OR EMPLOYMENT
(a) Employees. Upon the termination of the employment of an Optionee
---------
with the Corporation or a Subsidiary, other than by reason of the death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
7
<PAGE>
Code) of such Optionee, any Option granted to an Optionee pursuant to the Plan
shall terminate three months after the date of such termination of employment,
unless earlier terminated pursuant to Section 10(a) above, and such Optionee
shall have no further right to purchase shares of Stock pursuant to such Option;
provided, however, that the Board may provide, by inclusion of appropriate
- - -------- -------
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 10(b)), in the event of termination
of employment of the Optionee with the Corporation or a Subsidiary, exercise an
Option, in whole or in part, at any time subsequent to such termination of
employment and prior to termination of the Option as provided in Section 10(a)
above, either subject to or without regard to any installment limitation on
exercise: imposed pursuant to Section 10(b) above. Whether a leave of absence
or leave on military or government service shall constitute a termination of
employment for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive. For purposes of the Plan, a
termination of employment with the Corporation or a Subsidiary shall not be
deemed to occur if the Optionee is immediately thereafter employed with the
Corporation or any Subsidiary.
(b) Non-Employee Directors and Subsidiary Directors. Any Option
-----------------------------------------------
granted to a Non-Employee Director or a Subsidiary Director shall not terminate
until the expiration of the ten-year term of the Option regardless of whether
the Non-Employee Director or a Subsidiary Director continues to serve as a
director of the Corporation or any subsidiary of the Corporation, as applicable.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death of an Employee. If the Optionee dies while employed by the
--------------------
Corporation or a Subsidiary, except as otherwise is provided in the Option
Agreement relating to such Option, the executors or administrators or legatees
or distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above), at any time
prior to termination of the Option as provided in Section 10(a) above, to
exercise any Option held by such Optionee at the date of such Optionee's death,
whether or not such Option was exercisable immediately prior to such Optionee's
death.
(b) Disability of an Employee. If the Optionee terminates employment
-------------------------
with the Corporation or a Subsidiary by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, then such Optionee shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above), at any time within
one year after such termination of employment and prior to termination of the
Option as provided in Section 10(a) above, to exercise, in whole or in part, any
Option held by such Optionee at the date of such termination of employment,
whether or not such Option was exercisable immediately prior to such termination
of employment;
8
<PAGE>
provided, however, that the Board may provide, by inclusion of
-------- -------
appropriate language in the Option Agreement, that the Optionee may (subject to
the general limitations on exercise set forth in Section 10(b) above), in the
event of the termination of employment of the Optionee with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an Option, in whole
or in part, at any time subsequent to such termination of employment and prior
to termination of the Option as provided in Section 10(a) above, either subject
to or without regard to any installment limitation on exercise imposed pursuant
to Section 10(b) above. Whether a termination of employment is to be considered
by reason of "permanent and total disability" for purposes of this Plan shall be
determined by the Board, which determination shall be final and conclusive.
(c) Death or Disability of a Non-Employee Director or a Subsidiary
--------------------------------------------------------------
Director. Any Option granted to a Non-Employee Director or a Subsidiary
- - --------
Director shall not terminate until the expiration of the Option under Section
10(a) above.
14. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Corporation.
15. REQUIREMENTS OF LAW
(a) Violations of Law. The Corporation shall not be required to sell
-----------------
or issue any shares of Stock under any Option if the sale or issuance of such
shares would constitute a violation by the individual exercising the Option or
the Corporation of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. Specifically in connection with the Securities Act of 1933 (as now
in effect or as hereafter amended), upon exercise of any Option, unless a
registration statement under such Act is in effect with respect to the shares of
Stock covered by such Option, the Corporation shall not be required to sell or
issue such Shares unless the Board has received evidence satisfactory to it that
the holder of such Option may acquire such shares pursuant to an exemption from
registration under such Act. Any determination in this connection by the Board
shall be final, binding, and conclusive. The Corporation may, but shall in no
event be obligated to, register any securities covered hereby pursuant to the
securities Act of 1933 (as now in effect or as hereafter amended). The
Corporation shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an
9
<PAGE>
Option shall not be exercisable unless and until the shares of stock covered by
such Option are registered or are subject to an available exemption from
registration the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The Plan is intended to comply with
--------------------------
Rule 16b-3 or its successor under the Securities exchange Act of 1934. With
respect to persons subject to Section 16 of the securities exchange Act of 1934,
any provision of the plan or action of the plan administrators that is
inconsistent with such Rule shall be deemed null and void to the extent
permitted by law and deemed advisable by the plan administrators.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
-------- -------
approval by a majority of the votes cast at a duly held meeting of shareholders
at which a quorum representing a majority of all outstanding voting stock of the
Corporation is, either in person or by proxy, present and voting on the
amendment, (a) materially change the requirements as to eligibility to receive
Options; (b) increase the maximum number of shares of Stock in the aggregate
that may be sold pursuant to Options granted under the Plan (except as permitted
under Section 17 hereof); (c) change the minimum Option Price set forth in
Section 9 hereof (except as permitted under Section 17 hereof); (d) increase the
maximum period during which Options may be exercised; (e) extend the term of the
Plan; or (f) materially increase the benefits accruing to eligible individuals
under the Plan. Except as permitted under Section 17 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the holder
of the Option, alter or impair rights or obligations under any Option
theretofore granted under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of Stock are
----------------
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Corporation by reason of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Corporation, occurring after the effective date of the
Plan, the number and kinds of shares for the purchase of which Options may be
granted under the Plan shall be adjusted proportionately and accordingly by the
Corporation. In addition, the number and kind of shares for which Options are
outstanding shall be adjusted proportionately
10
<PAGE>
and accordingly so that the proportionate interest of the holder of the Option
immediately following such event shall, to the extent practicable, be the same
as immediately prior to such event. Any such adjustment in outstanding Options
shall not change the aggregate Option Price payable with respect to shares
subject to the unexercised portion of the Option outstanding but shall include a
corresponding proportionate adjustment in the Option Price per share.
(b) Reorganization in Which the Corporation Is the Surviving
--------------------------------------------------------
Corporation. Subject to Subsection (c) hereof, if the Corporation shall be the
- - -----------
surviving corporation in any reorganization, merger, or consolidation of the
Corporation with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation.
(c) Reorganization in Which the Corporation Is Not the Surviving
------------------------------------------------------------
Corporation or Sale of Assets or Stock. Upon the dissolution or liquidation of
- - --------------------------------------
the Corporation, or upon a merger, consolidation or reorganization of the
Corporation with one or more other corporations in which the Corporation is not
the surviving corporation, or upon a sale of substantially all of the assets of
the Corporation to another corporation, or upon any transaction (including,
without limitation, a merger or reorganization in which the Corporation is the
surviving corporation) approved by the Board which results in any person or
entity owning eighty percent or more of the combined voting power of all classes
of stock of the Corporation, the Plan and all Options outstanding hereunder
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan and/or the assumption of
the Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. In the event of any
such termination of the Plan, each individual holding an Option shall have the
right (subject to the general limitations on exercise set forth in Section 10(b)
above), immediately prior to the occurrence of such termination and during such
period occurring prior to such termination as the Board in its sole discretion
shall determine and designate, to exercise such Option in whole or in part,
whether or not such Option was otherwise exercisable at the time such
termination occurs and without regard to any installment limitation on exercise
imposed pursuant to Section 10(b) above. The Board shall send written notice of
an event that will result in such a termination to all individuals who hold
11
<PAGE>
Options not later than the time at which the Corporation gives notice thereof to
its shareholders.
(d) Adjustments. Adjustments under this Section 17 related to stock
-----------
or securities of the Corporation shall be made by the Board, whose determination
in that respect shall be final, binding, and conclusive. No fractional shares
of Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Corporation. The grant of an Option pursuant to
-----------------------------
the Plan shall not affect or limit in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of the Corporation or
any Subsidiary, or to interfere in any way with the right and authority of the
Corporation or any Subsidiary either to increase or decrease the compensation of
any individual at any time, or to terminate any employment or other relationship
between any individual and the Bank, the Association, the Corporation or any
Subsidiary.
20. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
12
