FIRST ESSEX BANCORP INC, S-8, 1997-02-21

FIRST ESSEX BANCORP INC
S-8, 1997-02-21
STATE COMMERCIAL BANKS

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Registration No. ________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------

FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------

FIRST ESSEX BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------

DELAWARE 6035 04-2943217
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) NUMBER) IDENTIFICATION NUMBER)

71 MAIN STREET, ANDOVER, MASSACHUSETTS 01810
(508) 475-4313
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

-----------------------

COMMON STOCK OPTION AGREEMENT WITH IRVING J. GOSS
COMMON STOCK OPTION AGREEMENT WITH BRIAN W. THOMPSON
(FULL TITLE OF THE PLANS)
----------------

LEONARD A. WILSON
FIRST ESSEX BANCORP, INC.
71 Main Street
Andover, MA 01810
(508) 475-4313
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------

COPY TO:
STEPHEN J. COUKOS, ESQ.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800

----------------------------

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

================================== ================= =========================== ============================ ===================
Title of Each Class of Securities Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount
to be Registered Registered Price Per Share(1) Aggregate Offering Price(1) of Registration Fee
- ---------------------------------- ----------------- --------------------------- ---------------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value 114,465 shares $7.67 $877,947 $266.05
================================== ================= =========================== ============================ ===================

<FN>
(1) Pursuant to Rule 457(h), the offering price is calculated based upon
the exercise price determined pursuant to the option agreements.
</FN>
</TABLE>

<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

The following documents which have been filed by First Essex Bancorp,
Inc. (the "Company") with the Commission are incorporated by reference in and
made a part of this Registration Statement, as of their respective dates:

(i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;

(ii) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;

(iii) the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996;

(iv) the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996;

(v) the Company's current report on Form 8-K dated August 5, 1996;

(vi) the Company's current report on Form 8-K dated January 14,
1997, as supplemented by Amendment No. 1 dated February 13,
1997 and Amendment No. 2 dated February 21, 1997; and

(vii) the description of the Common Stock contained in the Company's
Form 8-A filed on August 21, 1987.

All documents filed by the Company pursuant to Sections 13(a), 13(c),
or 15(d) of the Exchange Act after the date of this Registration Statement and
prior to the filing of a post-effective amendment indicating that all of the
Common Stock offered hereby has been sold, or deregistering all of the Common
Stock that, at the time of such post-effective amendment remains unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement herein, or in any
subsequently filed document which also is or is deemed to be incorporated by
reference, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.

Item 4. Description of Securities.

Reference is made to the description of the Common Stock contained in
the Company's Form 8-A filed on August 21, 1987, incorporated herein by
reference pursuant to Item 3 above.

Item 5. Interests of Named Experts and Counsel.

Not applicable.

Item 6. Indemnification of Directors and Officers.

Section 145 of Delaware General Corporation Law provides that a
corporation may indemnify any director or officer made a party to any proceeding
against judgments, penalties, fines, settlements and reasonable expenses, unless
it is established that (i) the act or omission of the director was material to
the matter giving rise to the proceeding, and was committed in bad faith or was
a result of deliberate dishonesty, (ii) director actually received an improper
personal benefit or (iii) in a criminal proceeding, director had reasonable
cause to believe the act or omission was unlawful. A director may not be
indemnified in any proceeding charging improper personal benefit,

<PAGE>

if director was adjudged to be liable and, in a derivative action, there shall
not be indemnification if the director has been adjudged liable to the
corporation. A director or officer of a corporation who has been successful in
the defense of any proceeding shall be indemnified against reasonable costs
incurred in such defense. Indemnification may not be made unless authorized
pursuant to a determination that the director has met the requisite standard of
conduct.

Article V of the Company's By-Laws provides that any director, officer
or any person serving as a director, officer or agent of another corporation at
the request of the Company's Board of Directors (as evidenced by a vote of the
Company's Board of Directors) (the "Indemnitee") shall be indemnified and held
harmless by the Company to the fullest extent authorized by Delaware General
Corporation Law, against all expenses, liability and loss reasonably incurred or
suffered by the Indemnitee; provided, however, that, except for actions by such
Indemnitee against the Company to enforce the indemnification provision, the
Company shall indemnify Indemnitee only if the proceeding for which
indemnification is sought was authorized and ratified by the Company's Board of
Directors.

Item 7. Exemption from Registration Claimed.

Not applicable.

<PAGE>

Item 8. Exhibits.

<TABLE>
<CAPTION>
Exhibit No. Description Exhibit
<S> <C> <C>
4.1 Common Stock Option for Brian W. Filed herewith as Exhibit 4.1
Thompson

4.2 Common Stock Option for Irving J. Goss Filed herewith as Exhibit 4.2

4.3 Shareholder Rights Agreement, dated as Incorporated by reference to First Essex's
of October 12, 1989, as amended, Report on Form 8-K dated October 12, 1989 and
between First Essex and The First to Exhibit 28.2 of First Essex's Report on Form
National Bank of Boston as Rights Agent 8-K dated February 12, 1990

4.4 Agreement and Plan of Reorganization, Incorporated by reference to Exhibit 2.1 to First
dated as of August 5, 1996, by and Essex's Registration Statement on Form S-4,
among First Essex, Fines Financial Corp. Reg. No. 333-12793
and Pelham Bank and Trust Company, as
amended

23.1 Consent of Arthur Andersen LLP Filed herewith as Exhibit 23.1

23.2 Consent of Shatswell, MacLeod & Filed herewith as Exhibit 23.2
Company, P.C.

24 Power of Attorney Included in the signature page of this
Registration Statement
</TABLE>

Item 9. Undertakings.

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
First Essex Bancorp, Inc. has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the Town
of Andover, Commonwealth of Massachusetts, on this 21st day of February, 1997.

FIRST ESSEX BANCORP, INC.

By: /s/Leonard A. Wilson
Name: Leonard A. Wilson
Title: President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-8 relating to Common Stock has been signed
below by the following persons in the capacities and on the dates indicated; and
each of the undersigned officers and directors of First Essex Bancorp, Inc.
hereby severally constitutes and appoints Leonard A. Wilson and David W. Dailey,
and each of them, to sign for him, and in his name in the capacity indicated
below, such Registration Statement on Form S-8 relating to Common Stock of First
Essex Bancorp, Inc. for the purpose of registering such securities under the
Securities Act of 1933, as amended, and any and all amendments thereto, hereby
ratifying and confirming our signatures as they may be signed by our attorneys
to such Registration Statement and any and all amendments thereto.

<TABLE>
<CAPTION>
Signature Title Date

<S> <C> <C>
/s/Leonard A. Wilson President, Chief Executive Officer
Leonard A. Wilson and Director February 21, 1997

/s/David W. Dailey Principal Financial and Accounting
David W. Dailey Officer, Executive Vice President February 21, 1997

/s/Thomas S. Barenboim
Thomas S. Barenboim Director February 21, 1997

William L. Lane Director February __, 1997

/s/Frank J. Leone, Jr.
Frank J. Leone, Jr. Director February 21, 1997

/s/Robert H. Watkinson
Robert H. Watkinson Director February 21, 1997

Robert H. Pangione Director February __, 1997

/s/Augustine J. Fabiani
Augustine J. Fabiani Director February 21, 1997

/s/Walter W. Topham Director February 21, 1997
Walter W. Topham
</TABLE>

EXHIBIT 4.1

December 30, 1996

Mr. Brian W. Thompson
288 Iduna Lane
Amherst, MA 01002

Re: Common Stock Option

Dear Mr. Thompson:

Reference is made to section 2.12 of the Agreement and Plan of
Reorganization by and among First Essex Bancorp. Inc. ("First Essex"), Finest
Financial Corp. ("Finest") and Pelham Bank and Trust Company dated as of August
5, 1996, as amended as of September 27, 1996 (the "Agreement"). This letter will
confirm that the option to purchase shares of Finest common stock granted to you
by Finest on October 1, 1995, a copy of which is attached hereto as Exhibit A
(the "Finest Option"), shall be converted into an option to purchase shares of
First Essex Common Stock in accordance with the terms and conditions of section
2.12 of the Agreement. We hereby acknowledge that subsequent to the granting of
the Finest Option, Finest has completed a stock split resulting in the Finest
Option now being exercisable in accordance with its terms for 50,000 shares of
Finest Common Stock at an exercise price of $13.50 per share.

FIRST ESSEX BANCORP, INC.

By: /s/David W. Dailey
David W. Dailey
Executive Vice President

<PAGE>

EXHIBIT A

NEITHER THIS OPTION NOR THE SHARES OF STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
ASSIGNMENT, SALE, TRANSFER OR OTHER DISPOSITION OF THIS OPTION
OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND SUCH LAWS RELATED
THERETO, OR (ii) AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND SUCH LAWS IS AVAILABLE.

COMMON STOCK OPTION

To Purchase Shares of Common Stock, $1.00 par value of

FINEST FINANCIAL CORP.

Option No. 1 Number of Shares: 5,000

In connection with the Employment Agreement between Finest Financial
Corp. (the "Company") and Pelham Bank and Trust Company (the "Bank") (the
Company and the Bank, collectively referred to as the "Employers") and Brian
Thompson (the "Employee") dated as of October 1, 1995 (the "Agreement"), and for
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company does hereby grant the Employee an option to subscribe for and
purchase from the Company 5,000 shares (the "Option Shares") of the Company's
Common Stock, $1.00 par value (the "Common Stock"), upon the terms and
conditions set forth herein, and in the Agreement. All capitalized terms not
defined herein have the meaning specified in the Agreement.

1. Purchase Price.

The price at which the Option Shares may be purchased shall be One
Hundred Thirty-Five Dollars ($135.00) per share (the "Option Exercise Price").

2. Exercise Period.

The purchase rights evidenced by this Option are exercisable commencing
on the date any such rights vest in accordance with Section 3 hereof and ending
as of the close of business on October 1, 2005 (the "Expiration Date").

3. Vesting of Option.

Subject to the provisions of Section 4, the Employee's right to
exercise this Option shall be exercisable beginning on the first anniversary of
the date of grant for up to 20% of the Option Shares and, beginning on each
anniversary of the date of grant thereafter, for up to an additional 20% of the
Option Shares for each additional year, until, on the fifth anniversary date of
grant, the Option may be exercised as to 100% of the Option Shares (the "Vesting
Schedule").

4. Termination.

The Option shall terminate on the earlier of:

(i) the Expiration Date;

(ii) in the case of termination of the Term by reason of
death, six (6) months after the effective date of
such termination;

(iii) in the case of termination of the Term by reason of
disability, ninety (90) days after the effective date
of such termination;

<PAGE>

(iv) in the case of termination of the Term by the
Employers without cause, ninety (90) days after the
effective date of such termination; or

(v) in all other cases, the date on which the Term is
terminated.

The right to exercise this Option is subject to fulfillment of the
Employee's relocation obligations set forth in Section 7 thereof.
Notwithstanding the foregoing, this Option shall become fully vested and
immediately exercisable for 100% of the Option Shares, for a period of ninety
(90) days, upon the occurrence of a "Change of Control" as defined in the
Agreement.

5. Non-Transferability: Persons Able to Exercise.

The Option may not be transferred other than by will, the laws of
descent and distribution or pursuant to a qualified domestic relations order, as
defined in Section 414(p)(1)(B) of the Internal Revenue Code (the "Code").
During the life of the Employee, only he (or if he is incapacitated, his legal
guardian or attorney) may exercise the Option. However, if the Employee dies
while still employed by the Company and/or the Bank, the Option may be exercised
by his or her executors, administrators, legatees or distributees.

6. Method of Exercising Option.

The Option may be exercised, in whole or in part (but not as to
fractional shares), by written notice to the Company in the form of Attachment
A. This notice must be accompanied by payment of the Option Exercise Price for
the Option Shares being purchased. As soon as practical after receipt of this
notice and payment, and subject to the conditions of this Option and the
Agreement, the Company shall deliver a certificate or certificates representing
the purchased Option Shares registered in the name of the person or persons
exercising the Option. In the event the Option is exercised by any person other
than the Employee, the notice shall be accompanied by appropriate proof of the
right of such person to exercise the Option. All Option Shares purchased upon
the exercise of this Option and payment of the full Option Exercise Price will
be fully paid and nonassessable.

7. Stock Adjustments.

If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, or other change in the
corporate structure of the Company, corresponding adjustments shall be made by
the Board of Directors to the total number and kind of shares subject to the
Option.

8. No Fractional Shares.

No fractional shares shall be issued upon the exercise of this Option.
In lieu thereof, a cash payment shall be made equal to such fraction multiplied
by the fair market value of such shares of Common Stock, as determined in good
faith by the Company's Board of Directors.

9. Compliance with Laws.

(a) Withholding of Taxes. Pursuant to applicable federal,
state, local or foreign laws, the Company may be required to collect income or
other taxes upon the grant of this Option, exercise of the Option by the
Employee or at some other time. The Company may require, as a condition to the
exercise of this Option, or demand at such other time as it may consider
appropriate, that the Employee pay the Company the amount of any taxes which the
Company may reasonably determine is required to be collected or withheld and the
Employee shall comply with the requirement or demand of the Company. The Company
may withhold the Option Shares, or an equivalent dollar amount, or may accept
cash payments or issued and outstanding Common Stock of the Company in
satisfaction of any such obligation.

-2-
<PAGE>

(b) Securities Law Compliance. Upon exercise of the Option,
the Employee shall be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate to
permit the Company to issue or transfer the Option Shares in compliance with the
provisions of applicable federal and state securities laws. The Company, in its
discretion, may postpone the issuance and delivery of Option Shares upon any
exercise of this Option until the Option Shares may be issued in compliance with
the provisions of applicable federal and state securities laws. The Company may
require that prior to the issuance or transfer of Option Shares upon exercise of
the Option, the Employee enter into a written agreement to comply with any
restrictions on subsequent disposition that the Company deems necessary or
advisable under any applicable federal and state securities laws. Certificates
of Common Stock issued hereunder may be legended to reflect such restrictions.

(c) General. No Option Shares shall be issued upon exercise of
this Option unless and until all other legal requirements applicable to the
issuance of such Option Shares have been complied with.

10. Sale or Transfer of Shares; Legend.

The Option Shares shall not be assigned, sold, transferred or otherwise
disposed of unless either (i) they first shall have been registered under the
Act and applicable state securities laws, or (ii) the Company first shall have
been furnished with an opinion of legal counsel satisfactory to the Company to
the effect that an exemption from the registration requirements of the Act and
such laws is available. Each certificate representing any Common Stock shall
bear a legend substantially in the following form, as appropriate:

11. Miscellaneous.

(a) The Option hereby granted is expressly subject to all of
the terms and conditions contained in this Option and the Agreement, which is
incorporated herein by reference.

(b) Unless otherwise provided, the Board of Directors of the
Company shall make all determinations required to be made hereunder, and
interpret all provisions of this Option, as it deems necessary or desirable.
Such determinations and interpretations shall be binding and conclusive upon the
Company and the Employee.

(c) During the term of this Option, the Company shall at all
times reserve and keep available shares of Common Stock sufficient to satisfy
the requirements of this Option.

(d) By accepting this Option, the Employee represents and
warrants that it is acquiring this Option and the Option Shares for his own
account, for investment and not with a view to, or for sale in connection with,
any distribution thereof or any part thereof. The Employee represents and
warrants that he (i) is sophisticated and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company, (ii) has the ability to bear the economic
risks of an investment in the Company, and (iii) has been furnished with such
information and afforded the opportunity to ask questions of and to receive
answers from the Company necessary to make an informed investment decision with
respect to an investment in the Company.

(e) This Option may only be modified or amended by a writing
signed by both parties.

-3-

<PAGE>

(f) Any notices required to be given under this Option shall
be sufficient if in writing and if sent by certified mail, return receipt
requested, and addressed as follows:

-4-

<PAGE>

if to the Company:

Finest Financial Corp.
Pelham Plaza
Route 38, Bridge Street
Pelham, New Hampshire 03076-0298

If to the Employee:

Brian Thompson
288 Iduna Lane
Amherst, MA 01002

or to such other address as either party may designate under the provisions
hereof.

(g) The rights and obligations of the Company under this
Option shall inure to the benefit of and be binding upon the successors and
assigns of the Company.

(h) All rights and obligations under this Option shall be
governed by the laws of the State of New Hampshire.

(i) The paragraph headings used in this Option are for
convenience or reference, and are not to be construed as part of this Option.

(j) Unless otherwise required by law, the Employee shall not
disclose the terms of this Option or the fact of this Option to any third party
(other than his lawyers and accountants), including any employees of the Company
or the Bank without the prior written consent of the Company.

IN WITNESS WHEREOF, the parties have executed this Option as an
instrument under seal effective as of October 1, 1995.

FINEST FINANCIAL CORP.

By:______________________
Name:
Title:

EMPLOYEE

/s/Brian Thompson
Brian Thompson

-5-

<PAGE>

ATTACHMENT A

Finest Financial Corp.
Pelham Plaza
Route 38, Bridge Street
Pelham, New Hampshire 03076-0298

Attention: President

Gentlemen:

Pursuant to my Common Stock Option dated as of October 1, 1995, I
hereby elect to exercise the Option to the extent indicated:

- --------------------------------------------------------------------------------

Number of Shares Per Share Total
Which I Elect to x Price = Price
Purchase

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Enclosed with this letter is full payment of the total price of the
shares described above in the following form:

(1) a check in the amount of $________ payable to the order of the
Company; and/or

(2) shares of Common Stock of the Company properly endorsed and having
a fair market value equal to $_________.

Kindly issue a certificate or certificates to me representing the
shares which I am acquiring by this exercise, and deliver it to the address
provided above.

Very truly yours,

-------------------------
Brian Thompson

-6-

EXHIBIT 4.2

December 30, 1996

Mr. Iving J. Goss
4 Old Forge Road
Barrington, RI 02806

Re: Common Stock Option

Dear Mr. Goss:

Reference is made to section 2.12 of the Agreement and Plan of
Reorganization by and among First Essex Bancorp. Inc. ("First Essex"), Finest
Financial Corp. ("Finest") and Pelham Bank and Trust Company dated as of August
5, 1996, as amended as of September 27, 1996 (the "Agreement"). This letter will
confirm that the option to purchase shares of Finest common stock granted to you
by Finest on November 21, 1995, a copy of which is attached hereto as Exhibit A
(the "Finest Option"), shall be converted into an option to purchase shares of
First Essex Common Stock in accordance with the terms and conditions of section
2.12 of the Agreement. We hereby acknowledge that subsequent to the granting of
the Finest Option, Finest has completed a stock split resulting in the Finest
Option now being exercisable in accordance with its terms for 15,000 shares of
Finest Common Stock at an exercise price of $13.50 per share.

FIRST ESSEX BANCORP, INC.

By: /s/ David W. Dailey
David W. Dailey
Executive Vice President

<PAGE>

EXHIBIT A

COMMON STOCK OPTION

To Purchase Shares of Common Stock, $1.00 par value of

FINEST FINANCIAL CORP.

Option No. 1 Number of Shares: 1,500

In connection with the Employment Agreement between Finest Financial
Corp. (the "Company") and Pelham Bank and Trust Company (the "Bank") (the
Company and the Bank, collectively referred to as the "Employers") and Irving
Goss (the "Employee") dated as of November 21, 1995 (the "Agreement"), and for
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company does hereby grant the Employee an option to subscribe for and
purchase from the Company 1,500 shares (the "Option Shares") of the Company's
Common Stock, $1.00 par value (the "Common Stock"), upon the terms and
conditions set forth herein, and in the Agreement. All capitalized terms not
defined herein have the meaning specified in the Agreement.

1. Purchase Price.

The price at which the Option Shares may be purchased shall be One
Hundred Thirty-Five Dollars ($135.00) per share (the "Option Exercise Price").

2. Exercise Period.

3. Vesting of Option.

4. Termination

The Option shall terminate on the earlier of:

(i) the Expiration Date;

(ii) in the case of termination of the Term by reason of death, six
(6) months after the effective date of such termination;

<PAGE>

(iii) in the case of termination of the Term by reason of
disability, ninety (90) days after the effective date of such
termination;

(iv) in the case of termination of the Term by the Employers
without cause, ninety (90) days after the effective date of
such termination; or

(v) in all other cases, the date on which the Term is terminated.

5. Non-Transferability; Persons Able to Exercise.

6. Method of Exercising Option.

7. Stock Adjustments.

8. No Fractional Shares.

9. Compliance with Laws.

-2-

<PAGE>

equivalent dollar amount, or may accept cash payments or issued and outstanding
Common Stock of the Company in satisfaction of any such obligation.

(c) General. No Option Shares shall be issued upon exercise of
this Option unless and until all other legal requirements applicable to the
issuance of such Option Shares have been complied with.

10. Sale or Transfer of Shares; Legend. The Option Shares shal
not be assigned, sold, transferred or otherwise disposed of unless either (i)
they first shall have been registered under the Act and applicable state
securities laws, or (ii) the Company first shall have been furnished with an
opinion of legal counsel satisfactory to the Company to the effect that an
exemption from the registration requirements of the Act and such laws is
available. Each certificate representing any Common Stock shall bear a legend
substantially in the following form, as appropriate:

11. Miscellaneous.

(a) The Option hereby granted is expressly subject to all of
the terms and conditions contained in this Option and the Agreement, which is
incorporated herein by reference.

(c) During the term of this Option, the Company shall at all
times reserve and keep available shares of Common Stock sufficient to satisfy
the requirements of this Option.

-3-

<PAGE>

receive answers from the Company necessary to make an informed investment
decision with respect to an investment in the Company.

(e) This Option may only be modified or amended by a writing
signed by both parties.

(f) Any notices required to be given under this Option shall
be sufficient if in writing and if sent by certified mail, return receipt
requested, and addressed as follows:

if to the Company:

Finest Financial Corp.
Pelham Plaza
Route 38, Bridge Street
Pelham, New Hampshire 03076-0298

if to the Employee:

Irving Goss
(insert new address)

or to such other address as either party may designate under the provisions
hereof.

(g) The rights and obligations of the Company under this
Option shall inure to the benefit of and be binding upon the successors and
assigns of the Company.

(h) All rights and obligations under this Option shall be
governed by the laws of the State of New Hampshire.

(i) The paragraph headings used in this Option are for
convenience or reference, and are not to be construed as part of this Option.

IN WITNESS WHEREOF, the parties have executed this Option as an
instrument under seal effective as of November 21, 1995.

FINEST FINANCIAL CORP.

By: /s/ Leo Kahn
Name: Leo Kahn
Title: Chairman of the Executive Committee

EMPLOYEE:

/s/ Irving Goss
Irving Goss