<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /x/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BOSTON PRIVATE BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
NAME OF COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/x/ No fee required.
/ / 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 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
- --------------------------------------------------------------------------------
<PAGE> 2
BOSTON PRIVATE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997 AT 9:00 A.M.
Notice to: Stockholders of BOSTON PRIVATE BANCORP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Boston Private Bancorp, Inc. (the "Company") will be held at 225
Franklin Street, 33rd Floor, Boston, Massachusetts, on Wednesday, May 21, 1997,
at 9:00 a.m., for the following purposes:
1. To elect five (5) Class III Directors of the Company;
2. To adopt the Boston Private Bancorp, Inc. 1997 Long-Term Stock
Incentive Plan;
3. To consider and act upon any other matter which may properly come
before the Meeting or any adjournment or postponement thereof.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned, or to which the Meeting may be
postponed.
The Board of Directors has fixed the close of business on March 21, 1997,
as the record date for determining the stockholders entitled to notice of and to
vote at the Meeting or any adjournment or postponement thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED
TO COMPLETE AND SIGN THE ENCLOSED PROXY CARD, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS, AND TO MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. ANY PROXY MAY BE
REVOKED BY DELIVERY OF A LATER DATED PROXY. STOCKHOLDERS OF RECORD WHO ATTEND
THE MEETING MAY VOTE IN PERSON BY NOTIFYING THE CLERK, EVEN IF THEY HAVE
PREVIOUSLY DELIVERED A PROXY.
By Order of the Board Of Directors
ANA E. STEELE
Clerk
Boston, Massachusetts
Dated: April 1, 1997
<PAGE> 3
BOSTON PRIVATE BANCORP, INC.
TEN POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 21, 1997
---------------------
GENERAL
This Proxy Statement (the "Proxy Statement") is furnished to the
stockholders of Boston Private Bancorp, Inc., a Massachusetts corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board of Directors") from holders of the
outstanding shares of the common stock, par value $1.00 per share (the "Common
Stock"), of the Company for use at the Annual Meeting of Stockholders (the
"Meeting") of the Company to be held on May 21, 1997, at 9:00 a.m. Boston time,
at 225 Franklin Street, 33rd Floor, Boston, Massachusetts 02110 and at any
adjournment or postponement thereof, for the purposes set forth herein.
The Notice of Annual Meeting of Stockholders and the accompanying proxy are
first being sent to stockholders on or about April 1, 1997.
The shares represented by the enclosed proxy will be voted as specified
therein if the proxy is properly executed and received prior to the Meeting and
not properly revoked. If a properly executed proxy is submitted and no
instructions are given, the proxy will be voted FOR the election of the nominees
to the Board of Directors and FOR approval of The Boston Private Bancorp, Inc.
1997 Long-Term Stock Incentive Plan (the "Stock Incentive Plan"). In accordance
with Securities and Exchange Commission (the "Commission") rules, boxes and
designated space are provided on the enclosed proxy card for stockholders to
mark if they wish (i) either to vote "for" or to "withhold authority" to vote
for one or more of the Company's nominees for directors and (ii) either to vote
"for" or "against" approval of the Stock Incentive Plan or to "abstain" from
voting on the Stock Incentive Plan. It is not anticipated that any matters other
than those set forth in this Proxy Statement will be presented at the Meeting.
If other matters are presented, proxies will be voted in accordance with the
discretion of the proxy holders.
A stockholder of record may revoke a proxy by filing an instrument of
revocation with Boston Private Bancorp, Inc., Ten Post Office Square Boston,
Massachusetts 02109, Attention: Clerk, by filing a duly executed proxy bearing a
later date or by appearing in person at the Meeting and withdrawing the proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, HOLDERS OF COMMON STOCK ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
VOTING AND QUORUM
The Board of Directors of the Company has fixed the close of business on
March 21, 1997, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Meeting. At the Record
Date 6,634,441 shares of Common Stock were outstanding and entitled to vote at
the Meeting and there were approximately 625 stockholders of record.
The holders of each share of Common Stock outstanding as of the close of
business on the Record Date shall be entitled to notice of, and to vote at, the
Meeting, or any adjournment or postponement thereof. Transferees after such date
will not be entitled to vote at the Meeting. Each holder of Common Stock is
entitled to one vote for each share held of record for each matter properly
submitted at the Meeting. The presence, in person or by proxy, of at least a
majority of the total number of outstanding shares of Common
<PAGE> 4
Stock is necessary to constitute a quorum for the transaction of business at the
Meeting. Abstentions, votes withheld for director nominees and "broker
non-votes" (that is, shares represented at the meeting which are held by a
broker or nominee and as to which (i) instructions have not been received from
the beneficial owner or the person entitled to vote and (ii) the broker or
nominee does not have discretionary voting power) shall be treated as shares
that are present and entitled to vote with respect to such matters for purposes
of determining whether a quorum is present. With respect to the election of
directors, the by-laws of the Company (the "By-laws") provide that such election
shall be determined by a plurality of votes cast by stockholders and thus shares
represented by a proxy that withholds authority to vote for a particular nominee
or nominees and broker non-votes will have no effect on the outcome of voting
for the election of directors. With respect to approval of the Stock Incentive
Plan, the affirmative vote of a majority of the votes present or represented at
the Meeting is required to approve the Stock Incentive Plan and thus abstentions
and broker non-votes will have the effect of a vote against approval of the
Stock Incentive Plan.
ANNUAL REPORT
All holders of record are being sent herewith a copy of the Company's 1996
Annual Report, which contains audited financial statements of the Company for
the fiscal years ended December 31, 1996, 1995 and 1994, and a copy of the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996, as filed with the Commission on March 25, 1997. These reports, however,
are not part of the proxy soliciting material.
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of fifteen members and is
divided into three classes, with each class elected for a three year term. One
class of directors is elected by the Company's stockholders at each annual
meeting. At the Meeting, five (5) Class III Directors will be elected to serve
until the 2000 annual meeting and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal. The Board of
Directors has nominated Herbert S. Alexander, Kate S. Flather, Lynn Thompson
Hoffman, Timothy L. Vaill and Charles O. Wood, III for re-election as Class III
Directors. Each nominee has agreed to continue to serve as a director, if
re-elected. If any nominee shall become unavailable for any reason, all proxies
will be voted for the election of such other person as the Board of Directors
may recommend.
Unless otherwise instructed, the persons named in the proxy will vote the
shares to which the proxy relates FOR the election of the nominees to the Board
of Directors.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE RE-ELECTION
OF THE FIVE NOMINEES OF THE BOARD OF DIRECTORS AS CLASS III DIRECTORS OF THE
COMPANY.
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<PAGE> 5
INFORMATION REGARDING DIRECTORS
INCUMBENT DIRECTORS
The following table sets forth certain information regarding the directors
of the Company, including the nominees for re-election at the Meeting as Class
III Directors, based on information furnished by them to the Company:
<TABLE>
<CAPTION>
DIRECTOR
AGE SINCE(1)
--- --------
<S> <C> <C> <C>
CLASS I -- TERM EXPIRES 1998
John M. Barry...................................... Boston, MA 51 1987
Eugene S. Colangelo................................ Westborough, MA 49 1987
Michael M. Davis, Esq.............................. Newton, MA 56 1995
Eugene F. Rivers, 3rd.............................. Dorchester, MA 47 1991
Allen Sinai........................................ Boston, MA 58 1995
CLASS II -- TERM EXPIRES 1999
Peter C. Bennett................................... Hingham, MA 58 1986
Axel J. Leblois (2)................................ Wellesley, MA 48 1997
Kathleen M. Graveline (3).......................... Needham, MA 45 1997
E. Christopher Palmer.............................. Weston, MA 55 1986
Robert A. Radloff.................................. Boston, MA 49 1993
CLASS III -- TERM EXPIRES 1997
Herbert S. Alexander (1)........................... Westborough, MA 55 1991
Kate S. Flather (1)................................ Concord, MA 55 1994
Lynn Thompson Hoffman (1).......................... Brookline, MA 48 1994
Timothy L. Vaill (1)............................... Andover, MA 55 1993
Charles O. Wood, III (1)........................... Chambersburg, PA 58 1989
</TABLE>
- ---------------
(1) Nominee for re-election.
(2) The Board of Directors elected Mr. Leblois to serve as a Class II director
of the Company for a term commencing January 15, 1997, and expiring in 1999.
(3) The Board of Directors elected Ms. Graveline to serve as a Class II director
of the Company for a term commencing May 21, 1997, and expiring in 1999.
The principal occupation and business experience during the last five (5)
years of each director is set forth below:
Herbert S. Alexander. Mr. Alexander is founder and managing partner of
Alexander, Aronson, Finning & Co., P.C., a firm of certified public accountants
established in 1973. He serves on the Boards of the Massachusetts Easter Seal
Society, the Alumni Board of Boston University School of Management, and the
Board of Directors of the Massachusetts Society of Certified Public Accountants.
Additionally, he is a member of the Advisory Council of the Northeastern
University Graduate School of Professional Accounting.
John M. Barry. Mr. Barry has been Chairman, Chief Executive Officer and
Treasurer of Amcare Medical Services, Inc., a home health care company
headquartered in Newton, Massachusetts, since prior to 1992. He is also
President of Cohasset Heights, Ltd., a sanitary landfill facility located in
Cohasset, Massachusetts. Formerly, Mr. Barry was co-owner of Barry Bros., Inc.,
the second largest commercial solid waste hauling company in Massachusetts. Mr.
Barry is Chairman of the Carol A. Barry Foundation, Inc., a foundation
established for the education and early detection of breast cancer and is the
President and serves on the Board of Directors of the Newton Boys & Girls Club.
Peter C. Bennett. Mr. Bennett is a Director and Executive Vice President
of State Street Research & Management Company where he has been a senior
executive since 1984. Mr. Bennett is the Chief Investment Officer -- Equities
and Head of the Equity Group. He is Chairman of the Board of Directors of
Christian
3
<PAGE> 6
Camps & Conferences, Inc., Boston, Massachusetts, and is Chairman of the Board
of Trustees of Gordon College where he also acts as Chairman of the Investment
Committee.
Eugene S. Colangelo. Mr. Colangelo is currently Chairman of the Board of
Julio Enterprises and has served as such since the early 1980s. Julio
Enterprises, a conglomerate headquartered in Westborough, Massachusetts,
operates numerous businesses including supermarkets, a newspaper, retail liquor
stores and a commercial and residential real estate business. Mr. Colangelo also
is an elected member of the Star Market Wholesale Advisory Group.
Michael M. Davis, Esq. Mr. Davis is a tax partner with the law firm of
Sullivan & Worcester. He specializes in representing closely held businesses and
developers and owners of real estate with respect to business matters, income
tax and estate planning. He also represents individuals and families with
substantial net worth represented by liquid assets or restricted securities.
Kate S. Flather. Ms. Flather is President of the Massachusetts Society for
the Prevention of Cruelty to Children with which she has been affiliated since
1980. She is a Director of the Child Welfare League of America, Inc., a Trustee
of the Concord Museum and a Governor's appointee to the Statewide Advisory
Council of the Office for Children. Ms. Flather previously served as
administrative aide to Senator John Sparkman of Alabama, Chairman of the Senate
Banking Committee and as a trust administrator of the New England Merchants
National Bank.
Kathleen M. Graveline. Ms. Graveline is Senior Vice President/Retail
Direct Distribution at John Hancock Financial Services where she has been
employed since 1996. Previously, she was a senior executive at Fidelity
Investments, Inc. and the Communique Group, Inc. Ms. Graveline is currently a
member of the John Hancock Signature Services Board of Directors.
Lynn Thompson Hoffman. Ms. Hoffman is the Founder and Principal of the
Atherton Companies, an investment firm specializing in the financing,
acquisition, development and management of historic real estate. Mrs. Hoffman
has served as such since 1983. She is President of the Shirley-Eustis House
Association, Founder and President of the Endowment for Children in Crisis,
Inc., Treasurer of the Massachusetts Society for the Prevention of Cruelty to
Children and Trustee of the Children's Advocacy Center of Suffolk County, Inc.
Axel J. Leblois. Mr. Leblois is currently Chairman of World Times,
publisher of The WorldPaper -- an international affairs publication that is
circulated in 25 countries. During 1991 through 1995, Mr. Leblois served as
President and CEO of Bull HN Information Systems, Inc., formerly Honeywell
Information Systems. Mr. Leblois is a director of Wang Laboratories, Inc, since
1984 and of International Data Group since 1996. Mr. Leblois is a Trustee of the
New England Conservatory of Music and of the French Library in Boston.
E. Christopher Palmer. Mr. Palmer is a Certified Public Accountant and
founder and principal of his own tax and financial advisory firm since 1977. Mr.
Palmer currently serves as Director, Chairman of the Audit Committee and member
of the Compensation Committee of Boston Life Sciences, Inc., a Director of
Coastal International, Inc. and a Trustee of two private foundations.
Robert A. Radloff. Mr. Radloff is a private investor who resides in
Boston, Massachusetts. From 1976 until 1991 Mr. Radloff was a senior executive
of The Boston Company Real Estate Counsel, Inc., an investment advisory firm and
wholly owned subsidiary of The Boston Company, Inc. He serves on the Board of
Directors of each of the Massachusetts Cultural Council, First Night, Inc., and
Friends of Vieilles Maisons Francaises, Inc. Additionally, he is a Trustee of
the Isabella Stewart Gardner Museum, an Overseer of WGBH Educational Foundation
as well as Children's Hospital, and he is a Member of the American Society of
Real Estate Counselors.
Eugene F. Rivers, 3rd. Reverend Rivers is Pastor of the Azusa Christian
Community Church in Dorchester, Massachusetts, where since 1984 he has been
dedicated to serving Boston's low-income African-American communities. He is a
Director of the Seymour Institute for Advanced Christian Studies and Director of
the Dorchester Uhuru Project, Inc. Additionally, he is co-founder of the
TenPoint Coalition, co-
4
<PAGE> 7
founder/co-director of the National TenPoint Leadership Foundation, and Chairman
of the Board of both Fleet Center Community Ticket Corporation and Boys & Girls
Club of Boston.
Dr. Allen Sinai. Dr. Sinai is President, CEO and Chief Global Economist,
Primark Decision Economics, Inc. (PDE) and Chief Global Economist and Vice
Chairman, The WEFA Group. Dr. Sinai is responsible for the PDE and WEFA
forecasts and analyses of the U.S. and world economics and financial markets,
translating this information for senior level decisionmakers in financial
institutions, corporations and government. Previously, Dr. Sinai served for over
13 years at Lehman Brothers, where he was Managing Director and Chief Global
Economist, and the Director of Lehman Brothers Global Economics. Dr. Sinai is
Adjunct Professor of Economics and Finance in the Lemberg Program of
International Economics and Finance at Brandeis University. He is a past
President and Fellow of the Eastern Economic Association and a Member of the
Executive Committee, Western Economic Association. He is a member of and
contributor to the National Bureau of Economic Research-National Science
Foundation Model Comparison Seminar. Additionally, he has been Chairman of The
Committee on Developing American Capitalism (CODAC), is a member of the Time
Magazine Board of Economists and a member of the Advisory Board of AYCO Asset
Management Company.
Timothy L. Vaill. Mr. Vaill is President and Chief Executive Officer of
the Company. Prior to joining the Company in 1993, he was a Senior Consultant at
Fidelity Investments during 1991 and 1992. Previously, Mr. Vaill spent 18 years
at The Boston Company where he assumed various executive positions including
President of Boston Safe Deposit & Trust Company. He is a Trustee of the New
England Aquarium, the USS Constitution Museum and serves as Chairman of the
Board of Trustees at Bay State College in Boston. He serves as a Director of the
TenPoint Coalition, is an Overseer at the New England Medical Center and was
formerly a Trustee at the Hyams Foundation. Mr. Vaill served as a Director of
the Massachusetts Society for the Prevention of Cruelty to Children (MSPCC) for
17 years and was the recipient of the MSPCC Annual Leadership Award for his
contributions to human services, education, finance and the arts. He is an
Advisory Board member of the Krisam Group, based in Washington, DC. He serves as
a Director of the Schreiber Corporation in Birmingham, Alabama and the Junior
Achievement Foundation in Stamford, Connecticut. He is also on the Board of the
Squam Lakes Conservation Society in Holderness, New Hampshire.
Charles O. Wood, III. Mr. Wood joined the Board of the Company in June
1989 and was elected Chairman of the Board on December 18, 1991. Until his
resignation in June 1988, Mr. Wood was a member of the Board of Directors of
Valley Bank & Trust Company in Chambersburg, Pennsylvania and of its holding
company. Mr. Wood is presently trustee of the Henry Francis du Pont Winterthur
Museum, the Isabella Stewart Gardner Museum and Bank of Boston Celebrity Series.
He is a Director of JLG Industries, a public company engaged in the
manufacturing and marketing of aerial lift platforms located in McConnellsburg,
Pennsylvania. A venture capital investor, Mr. Wood also serves on the boards of
directors of several early-stage businesses.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held thirteen (13) meetings during
1996. The Board of Directors of the Company's sole subsidiary, Boston Private
Bank & Trust Company (the "Bank"), held twelve (12) meetings during 1996. All
incumbent Directors attended at least 75% of the aggregate number of meetings of
the Board of Directors of each of the Company and the Bank and the committees of
which he or she was a member in 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
There are no standing committees of the Board of Directors of the Company.
Directors of the Company are elected in accordance with the By-laws, which
provide that directors may be nominated (i) by a majority of the Board of
Directors or (ii) by any holder of record of any shares of the capital stock of
the Company entitled to vote at the Annual Meeting of Stockholders. Any
stockholder who seeks to make such a nomination must be present in person at
such Annual Meeting and must comply with the notice provisions set forth below
under "STOCKHOLDER PROPOSALS".
5
<PAGE> 8
The standing committees of the Board of Directors of the Bank consist of
the Executive Committee, Compensation Committee, Loan Committee, Trust and
Investment Committee, Audit & Risk Management Committee, Community Reinvestment
Act ("CRA") Committee and the Nominating Committee.
The Executive Committee's principal function is to address significant
corporate and management matters between meetings of the full Board of
Directors. The present members of this committee are Eugene S. Colangelo,
Chairman, Robert A. Radloff, Timothy L. Vaill, and Charles O. Wood, III. The
Executive Committee held eleven (11) meetings during 1996.
The Compensation Committee of the Bank provides guidance to management and
the Board of Directors on matters of executive compensation and related
benefits, and makes recommendations to the Board where necessary on all
compensation and benefits programs of the Company. The present members of this
committee are Peter C. Bennett, Chairman, Lynn Thompson Hoffman, E. Christopher
Palmer and Charles O. Wood, III. The Compensation Committee held four (4)
meetings during 1996.
The Loan Committee of the Bank provides a comprehensive review function
(with the power to modify or disapprove) for personal and commercial loans of
$750,000 or more and for all residential mortgage loans of $1,000,000 or more.
The present members of the Loan Committee are Eugene S. Colangelo, Lynn Thompson
Hoffman, Robert A. Radloff, Chairman, and Timothy L. Vaill. The Loan Committee
held twenty-five (25) meetings during 1996.
The Trust and Investment Committee of the Bank advises the Board of
Directors regarding fulfilling its fiduciary responsibilities relating to
operation of the Trust Department of the Bank and the administration of
fiduciary accounts. The present members of this committee are Eugene S.
Colangelo, Michael M. Davis, Kate S. Flather and E. Christopher Palmer,
Chairman. The Trust and Investment Committee held twelve (12) meetings during
1996.
The Audit & Risk Management Committee of the Bank arranges for suitable
audits of the financial and business affairs of the Bank, reviews the results of
such examinations and reports its findings to the Board of Directors of the Bank
at least twice annually. The present members of this committee are Herbert S.
Alexander, Chairman, John M. Barry and Dr. Allen Sinai. The Audit & Risk
Management Committee held six (6) meetings during 1996.
The CRA Committee reports to the Bank's Board of Directors concerning
compliance with state and federal laws designed to promote the financial
involvement of banks in the communities in which they operate. The function of
the CRA Committee is to recommend to the Board of Directors of the Bank policies
and practices to assist the Bank in meeting its obligations to help meet the
needs of its local communities, including low and moderate-income neighborhoods
and to monitor the Bank's activities in other CRA-related areas. The present
members of this committee are John M. Barry, Eugene F. Rivers, 3rd, Chairman,
and Timothy L. Vaill. The CRA Committee held four (4) meetings during 1996.
The Nominating Committee recommends to the full Board of Directors of the
Bank candidates for election as directors of the Bank. Candidates are
recommended to the Nominating Committee by current members of the Board of
Directors of the Bank. The present members of this committee are Herbert S.
Alexander, Peter C. Bennett, Kate S. Flather, Chair, and Charles O, Wood, III.
The Nominating Committee held six (6) meetings during 1996.
COMPENSATION OF DIRECTORS
Effective June 1, 1995, Directors of the Company, who are not full-time
employees of the Company or any of its subsidiaries, receive compensation as
follows: the Chairman of the Board receives an annual retainer fee of $3,000;
each committee chairman receives an annual retainer fee of $2,500; and each
other director receives an annual retainer fee of $2,000. In addition,
non-employee directors receive $100 per Board of Directors and committee meeting
attended.
Directors are also eligible to receive options to purchase Common Stock
under the Directors' Stock Option Plan (the "Directors' Plan"). There are
200,000 shares of Common Stock reserved for issuance under
6
<PAGE> 9
the Directors' Plan. Annually, on or about June 1, non-employee directors are
automatically granted options to purchase the following: 3,000 shares to the
Chairman of the Board; 2,700 shares to the Chairman of the Executive Committee;
and 2,400 shares for each other non-employee director.
THE DIRECTORS' PLAN
The Directors' Plan became effective on March 31, 1993, with 90,000 shares
of the Common Stock reserved for issuance thereunder. In 1995, the Directors'
Plan was amended to provide for an additional 110,000 shares of Common Stock to
be reserved for issuance thereunder. Pursuant to the terms of the Directors'
Plan, the exercise price of an option may not be less than 100% of the fair
market value of the Common Stock at the time the option is granted. All options
granted under the Directors' Plan shall be Non-Qualified Stock Options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended. Stock options granted under the Directors' Plan will be
exercisable not earlier than one year and not later than ten years after the
date they are granted.
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table lists the name, age and position of each executive
officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ ---- -----------------------------------------------
<S> <C> <C>
Timothy L. Vaill.............. 55 President, Chief Executive Officer and Director
James D. Dawson............... 44 Executive Vice President and Chief Lending
Officer
James D. Henderson............ 56 Executive Vice President, Investment Management
& Trust
Amy E. Hunter................. 37 Executive Vice President, Residential Mortgage
Lending
Mark D. Thompson.............. 40 Executive Vice President and Treasurer
Carey H. Davis................ 39 Senior Vice President and Director of Marketing
Communication
Barbara M. Houlihan........... 41 Senior Vice President and Director of
Technology & Operations
Walter M. Pressey............. 52 Senior Vice President and Chief Financial
Officer
</TABLE>
The principal occupation and business experience during the last five years
(5) of each of the executive officers (other than executive officers who are
also directors) of the Company is as follows:
James D. Dawson. Mr. Dawson joined the Company in 1996 as Executive Vice
President and Chief Lending Officer, with responsibility for the Commercial
Banking business. Previously, Mr. Dawson was a Senior Vice President and Chief
Lending Officer at Andover Bank, after spending 10 years as a senior officer at
Shawmut Bank.
James D. Henderson. Mr. Henderson joined the Company in 1994 as Executive
Vice President, with responsibility for the Bank's Investment Management and
Trust business. From the early 1980's until joining the Company, Mr. Henderson
was Managing Director of Freedom Capital Management Corporation.
Amy E. Hunter. Ms. Hunter has been with the Company since its inception in
1987. She is an Executive Vice President with responsibility for the Bank's
residential mortgage lending business. Prior to joining the Company, Ms. Hunter
was a mortgage originator at Boston Safe Deposit & Trust Company.
Mark D. Thompson. Mr. Thompson joined the Company in 1994 as Executive
Vice President and Treasurer with responsibility for the Bank's Deposit
Management & Treasury business. From 1987 until the 1994, Mr. Thompson was a
senior officer of Wainwright Bank and Trust Company of which he was a founder.
Carey H. Davis. Ms. Davis joined the Company in 1996 as Senior Vice
President and Director of Marketing Communications. Beginning in 1993, Ms. Davis
worked with the Company as a consultant and provided marketing communication
services. Previously, Ms. Davis was Vice President and Director of Advertising
and External Affairs at the Boston Company.
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<PAGE> 10
Barbara M. Houlihan. Ms. Houlihan joined the Company in 1994 as Director
of Technology Planning and in 1996 was named Senior Vice President with
responsibility for Technology and Operations. During the previous ten years, Ms.
Houlihan served as Vice President, Client Trust Services at Fidelity
Investments, Inc., and she served as a senior officer at State Street Bank and
Trust Company.
Walter M. Pressey. Mr. Pressey joined the Company in 1996 as Senior Vice
President and Chief Financial Officer responsible for the overall management of
the finance functions. Previously, Mr. Pressey was employed for several years at
The Boston Company as a Senior Vice President.
Pursuant to the By-laws, the President, Treasurer and Clerk of the Company
hold office until the first meeting of the directors following the next annual
meeting of stockholders, or any special meeting held in lieu thereof. Other
officers shall hold office for such term, unless a shorter term is specified in
the vote electing or appointing them.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation. The following table sets forth information
concerning the compensation earned during each of three (3) fiscal years ended
December 31, 1996, 1995 and 1994, respectively, paid to the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company. No officer earned in excess of $1,000,000 for the periods
indicated.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
(A) (B) (C) (D)(1) (E) (G) (I)
- ----------------------------- ------ ---------- ------------ --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Timothy L. Vaill............. 1996 215,000 166,000(2) -- 25,000 4,500(3)
President and CEO 1995 195,000 75,550(2) -- 20,400 2,925(3)
1994 185,000 65,000 -- 30,300 1,850(3)
James D. Dawson.............. 1996 57,493(4) 25,250(2) -- 7,500 --
Executive Vice President and
Chief Lending Officer
James D. Henderson........... 1996 175,000 25,750(2) 88,129(5) 7,500 4,500(3)
Executive Vice President 1995 150,000 20,400(2) 55,000(5) 7,800 4,500(3)
1994 125,000 30,000 45,000(5) 35,100 --
Amy E. Hunter................ 1996 88,000(6) 26,000(2) 22,738(5) 7,750 3,770(3)
Executive Vice President 1995 80,000(6) 15,700(2) 18,537(5) 8,000 2,400(3)
Mark D. Thompson............. 1996 130,000 25,750(2) 46,702(5)(7) 7,500 4,500(3)
Executive Vice President and 1995 120,000 20,400(2) 35,140(5) 7,800 2,700(3)
Treasurer.................... 1994 105,385 15,000 40,000(5) 20,100 --
</TABLE>
- ---------------
(1) Represents bonus compensation earned in 1994, 1995 and 1996 and paid in
January 1995, 1996 and 1997, respectively.
(2) Includes Company-wide Longevity Bonus Awards in 1996 and 1995 respectively
of $250 to Mr. Dawson, $750 and $400 to Messrs. Henderson and Thompson,
$1,000 and $700 to Ms. Hunter, and $1,000 and $550 to Mr. Vaill.
(3) Represents contributions made to the executive by the Company under its
401(k) plan.
(4) Represents compensation from July 15 through December 1996.
(5) Represents payment pursuant to an individual incentive program developed for
the executive based upon the achievement of certain enumerated goals.
(6) Represents compensation based on a four-day work week.
(7) Includes $5,750 awarded to Mr. Thompson under a Bank-wide Cross-selling
Sales Incentive program.
8
<PAGE> 11
Option Grants. The following table sets forth information concerning the
individual grants of options to purchase Common Stock to the named executive
officers during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
OPTIONS
NUMBER OF GRANTED TO
SECURITIES EMPLOYEES IN EXERCISE
UNDERLYING OPTIONS FISCAL OR BASE
NAME GRANTED(#) YEAR PRICE ($/SH) EXPIRATION DATE
- --------------------------------------- ------------------ ------------ ------------- ----------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Timothy L. Vaill(1).................... 25,000 23.75 3.50 1/17/06
James D. Dawson(2)..................... 15,000 14.24 4.00 7/17/06
James D. Henderson(1).................. 7,500 7.12 3.50 1/17/06
Amy E. Hunter(1)....................... 7,750 7.36 3.50 1/17/06
Mark D. Thompson(1).................... 7,500 7.12 3.50 1/17/06
</TABLE>
- ---------------
(1) These options vest annually in equal installments over the three year period
ending January 17, 1999.
(2) These options vest annually in equal installments over the three year period
ending July 17, 1999.
Option Exercises and Holdings. The following table sets forth information
concerning each exercise of options to purchase Common Stock during the fiscal
year ended December 31, 1996 by each of the named executive officers and the
fiscal year-end number and value of unexercised options to purchase Common
Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FISCAL OPTIONS AT FISCAL
ON VALUE YEAR END(#) YEAR END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------- ------------ ------------ ------------------------- -------------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Timothy L. Vaill............ -- -- 170,202/36,250 $518,432/76,563
James D. Dawson............. -- -- 3,750/11,250 $ 4,688/14,063
James D. Henderson.......... -- -- 32,275/18,125 $ 78,944/41,094
Amy E. Hunter............... -- -- 10,438/ 9,562 $ 17,704/19,546
Mark D. Thompson............ -- -- 21,025/14,375 $ 50,819/31,719
</TABLE>
- ---------------
(1) Based on the closing bid price of $5.25 on the NASDAQ SmallCap Market on
December 31, 1996 less the exercise price of the option award. Unless
exercised, options expire ten years from the date granted.
STATEMENT OF COMPENSATION PHILOSOPHY
Compensation Strategy. The Board of Directors and the Compensation
Committee compensate members of senior management for their contributions to the
Company over both the short and the long-term, and to incent them in such a way
as to maximize their performance. Executive compensation is designed to create a
performance-oriented environment that differentiates awards based on
performance, aligns the interests of senior management with those of the
shareholders, attracts and retains key executives critical to the long-term
success of the Company and provides compensation opportunities which are fully
competitive with those offered in the marketplace. The Compensation Committee
reviews compensation studies to determine the competitiveness of its executive
compensation program. The relevant market used for compensation analysis
includes regional banks of comparable size with similar business mix, private
banking organizations within larger banks, and investment management and
advisory firms. When compared to the mid range of the relevant market, base
salaries are targeted to be at or somewhat below the market while
9
<PAGE> 12
performance-based compensation, which includes both short-term and long-term
incentives, are targeted to be at or above the market.
Base Salaries. The purpose of base salary is to attract and retain key
executives who are critical to the Company's long-term success by providing a
basic level of income comparable to that of executives in similar positions as
well as taking into account the individual's performance and experience. Normal
cost of living and appropriate merit adjustments will be made periodically.
Short-Term Incentives. The purpose of the Company's short-term incentive
plans is to motivate and reward executives for the achievement of earnings,
sales and growth targets as well as strategic initiatives in a given year in
support of a 'pay for performance' philosophy. Under this philosophy, the
Compensation Committee awards incentive payments in its discretion based on
results in three basic performance areas: overall company success, business line
sales growth and contribution to overall profitability and individual
performance. Performance is measured primarily on results achieved against
internal and external goals, taking into account key indicators and performance
measures as determined by the Compensation Committee each year.
Long-Term Stock Incentives. The purpose of the Company's stock incentive
plan is to encourage executives to acquire an ownership interest in the Company.
The Compensation Committee believes that ownership of Company Common Stock will
provide an incentive to achieve increases in shareholder value over the
long-term and will assure a closer identification of senior management with the
Company's shareholders by providing them with a more direct stake in the
Company's economic success and by aligning the interests of senior management
with those of the Company's stockholders.
AGREEMENTS WITH EXECUTIVE OFFICERS
The Company and the Bank entered into an Executive Employment Agreement
effective January 1, 1996 (the "Employment Agreement") to extend, amend and
restate the terms of Mr. Vaill's existing employment agreement, which expired in
accordance with its terms on December 31, 1995. The Employment Agreement
provides for a three-year term which expires December 31, 1998, a term which is
extended by one year each December 31st, beginning in 1996, unless the Company
provides thirty days' prior written notice to the contrary to Mr. Vaill.
Notwithstanding the foregoing, the Company may terminate the Employment
Agreement for cause (as defined in the Employment Agreement). If the Company
terminates the Employment Agreement without cause, Mr. Vaill will be entitled to
receive, among other things, his base salary for the remainder of the term plus
a pro-rata bonus for the year in which the termination occurs. If Mr. Vaill
terminates his employment for good reason ( as defined in the Employment
Agreement) within three years following a change in control (as defined in the
Employment Agreement and described below), Mr. Vaill will be entitled to receive
a payment equal to 2.99 times his average annual compensation for the five years
preceding the change in control, provided that the Company will not be required
to make any payment to the extent such payment would constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Internal Revenue Code
of 1986, as amended (a "Parachute Payment"). The Employment Agreement also
provides (i) that upon any voluntary termination by Mr. Vaill of his employment
(other than with good reason), he shall not be employed by any significant
competitor of the Company or the Bank (as defined in the Employment Agreement)
for two years following such termination and (ii) that Mr. Vaill shall not
disclose any confidential information obtained by him during his employment. Mr.
Vaill is also eligible to receive stock options under the Employee Incentive
Plan and certain incentive payments directly tied to the profit performance of
the Company and the Bank.
The Company and the Bank entered into Change in Control Protection
Agreements effective March 19, 1997 (the "Change in Control Agreements") with
each of the named executive officers, other than Mr. Vaill, and certain other
officers (each an "Executive" and collectively, the "Executives"). The Change in
Control Agreements provide for certain payments and other benefits upon the
occurrence of a change in control (as defined below) and termination by the
Company of an Executive without cause (as defined in the Change in Control
Agreements) or by the Executive for good reason (as defined in the Change in
Control Agreements) at any time during the three years after a change in control
(as defined below). Upon the occurrence of such
10
<PAGE> 13
events, (i) the Executives will receive a payment equal to 2 to 2.5 times his or
her average annual compensation for the five most recent taxable years preceding
the change in control; (ii) outstanding unvested stock options and restricted
stock awards held by the Executives shall become immediately exercisable or
otherwise vested and (iii) the Executives will be eligible to receive a pro-rata
bonus for the year in which the termination occurs. Notwithstanding the
foregoing, the Company will not be required to make any payment to the extent
such payment would constitute a Parachute Payment.
For purposes of the Change in Control Agreements a "change in control"
generally means the occurrence of any of the following events: (i) any person
(as such term is defined in Section 13(d) of the Securities Exchange Act of 1934
(the "1934 Act")), becomes a beneficial owner (as such term is defined in Rule
13d-3 under the 1934 Act) of at least 25% or more of the voting stock of the
Company; (ii) the majority of the Board of Directors of the Company consists of
individuals other than Incumbent Directors (as defined in the Change in Control
Agreements); or (iii) the stockholders of the Company approve (a) any
consolidation or merger of the Company (as defined in the Change in Control
Agreements), (b) any sale, lease, exchange or other transfer of all or
substantially all of the assets of the Company or (c) any plan of liquidation of
the Company.
11
<PAGE> 14
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of the Record Date
regarding (i) the security holdings of each person, including any group of
persons, known by the Company to be the beneficial owner of five percent (5%) or
more of the outstanding Common Stock, (ii) the ownership interest in the Common
Stock of each director of the Company and each named executive officer of the
Company in the Common Stock and (iii) the ownership interest of all directors
and executive officers of the Company, as a group. Except as indicated in the
notes following the table below, each person or group has sole voting and
investment power with respect to all shares of Common Stock listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNER CLASS(1)
- ------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
OWNERSHIP OF 5% OR MORE
Harder Management Company, Inc.(2)........................... 577,770 8.71
Somerset Court
28l Winter Street Suite 340
Waltham, MA 02154
Wood Investment Partners (3)................................. 525,000(4) 7.91
273 Lincoln Way East
Chambersburg, PA 17201
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
Herbert S. Alexander....................................... 36,065(5) *
John M. Barry.............................................. 101,076(5) 1.52
Peter C. Bennett........................................... 74,700(6) 1.13
Eugene S. Colangelo........................................ 86,599(7)(5) 1.30
Michael M. Davis........................................... 11,400(8) *
Kate S. Flather............................................ 10,000(9) *
Lynn Thompson Hoffman...................................... 53,400(10)(8) *
Axel J. Leblois............................................ 5,000 *
E. Christopher Palmer...................................... 26,000(5) *
Robert A. Radloff.......................................... 55,400(5) *
Eugene F. Rivers, 3rd...................................... 7,684(5) *
Allen Sinai................................................ 26,900(8) *
Charles O. Wood, III....................................... 525,000(4) 7.91
Timothy L. Vaill........................................... 282,472(11)(12) 4.13
James D. Henderson......................................... 49,275(13) *
James D. Dawson............................................ 10,625(14) *
Amy E. Hunter.............................................. 18,650(15) *
Mark D. Thompson........................................... 36,275(16) *
Walter M. Pressey.......................................... 7,250(17) *
Barbara M. Houlihan........................................ 8,400(18) *
Carey H. Davis............................................. 3,250(19) *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (21
PERSONS)................................................... 1,435,421(20) 20.52
</TABLE>
- ---------------
* Represents less then 1%
(1) As calculated pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934.
(2) In a Schedule 13G filed with the Commission, Harder Management Company,
Inc. ("Harder") has indicated that it is a Massachusetts registered
Investment Adviser holding 577,770 shares on behalf of its clients in
accounts over which it has investment discretion. Such Schedule 13G
indicates that no other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
such shares. In such Schedule 13G, Harder disclaims beneficial ownership of
such shares except in its capacity as an investment adviser.
12
<PAGE> 15
(3) Wood Investment Partners is a Pennsylvania general investment partnership,
of which Mr. Wood is the managing partner. Includes 5,000 shares subject to
options which are currently exercisable granted to Mr. Wood pursuant to the
Directors' Plan.
(4) Includes (i) 5,000 shares subject to options which are currently
exercisable granted to Mr. Wood pursuant to the Directors' Plan and (ii)
520,000 shares owned by Wood Investment Partners, of which Mr. Wood is the
managing partner.
(5) Includes 4,400 shares subject to options which are currently exercisable
granted pursuant to the Directors' Plan.
(6) Includes 4,700 shares subject to options which are currently exercisable
granted pursuant to the Directors' Plan.
(7) Includes 6,766 shares owned by Mr. Colangelo's wife and 16,236 shares owned
by two of Mr. Colangelo's children. Mr. Colangelo disclaims beneficial
ownership of all such shares.
(8) Includes 2,400 shares subject to options which are currently exercisable
granted pursuant to the Directors' Plan.
(9) Includes 3,400 shares subject to options which are currently exercisable
granted to Ms. Flather pursuant to the Directors' Plan.
(10) Includes 23,000 shares owned by Ms. Hoffman's husband. Ms. Hoffman
disclaims beneficial ownership of all such shares.
(11) Includes 3,000 shares owned by Mr. Vaill's children. Mr. Vaill disclaims
beneficial ownership of all such shares.
(12) Includes 197,702 shares subject to options which are currently exercisable
granted to Mr. Vaill pursuant to the 1988 Employee Incentive Stock Option
Plan ("the Employee Plan").
(13) Includes 47,275 shares subject to options which are currently exercisable
granted to Mr. Henderson pursuant to the Employee Plan.
(14) Includes 5,625 shares subject to options which are currently exercisable
granted to Mr. Dawson pursuant to the Employee Plan.
(15) Includes 16,750 shares subject to options which are currently exercisable
granted to Ms. Hunter pursuant to the Employee Plan.
(16) Includes 32,275 shares subject to options which are currently exercisable
granted to Mr. Thompson pursuant to the Employee Plan.
(17) Includes 6,250 shares subject to options which are currently exercisable
granted to Mr. Pressey pursuant to the Employee Plan.
(18) Includes 7,400 shares subject to options which are currently exercisable
granted to Ms. Houlihan pursuant to the Employee Plan.
(19) Includes 1,250 shares subject to options which are currently exercisable
granted to Ms. Davis pursuant to the Employee Plan.
(20) Includes 361,227 shares subject to options which are currently exercisable.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934, as amended, requires that the
Company's officers and directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission
and NASDAQ. In Fiscal Year 1996, Mr. Pressey, Mr. Dawson, Ms. Houlihan and Ms.
Davis inadvertently failed
13
<PAGE> 16
to file a Form 3 with respect to their status as an Executive Officer of the
Company. Each of these individuals subsequently filed the required forms.
PROPOSAL 2.
ADOPTION OF 1997 LONG-TERM STOCK INCENTIVE PLAN
PROPOSAL 2
On March 19, 1997, the Board of Directors adopted, subject to stockholder
approval at the Meeting, the Stock Incentive Plan to provide for the grant of
awards for an aggregate number of shares of Common Stock for each fiscal year
beginning after December 31, 1997 of up to the sum of the amounts described in
(i) and (ii) below:
(i) Such aggregate number of shares of Common Stock as does not exceed
four percent (4%) of the total shares of outstanding Common Stock
as of the last business day of the preceding fiscal year; any
shares of Common Stock described in this (i) which are not granted
as awards for a fiscal year shall not carry over and be available
for awards in any subsequent fiscal year.
(ii) The shares of Common Stock underlying any awards which are
forfeited, canceled, reacquired by the Company, satisfied without
the issuance of Common Stock or otherwise terminated (other than
by exercise) under this Plan.
The maximum number of shares of Common Stock available for awards under the
Stock Incentive Plan for the fiscal year beginning January 1, 1997 and ending
December 31, 1997 (the "Transition Year") shall be 155,877 shares, which amount
represents four percent (4%) of the total shares of outstanding Common Stock of
the Company as of the last business day of the fiscal year preceding the
Transition Year less the number of awards previously granted under the Employee
Plan during the Transition Year; any Shares described in this sentence which are
not granted as awards for the Transition Year shall not carry over and be
available for awards in any subsequent fiscal year.
Not to exceed this limitation, the Compensation Committee will determine
the actual number of shares of Common Stock which may be granted in any
particular year based on the Company's performance versus goals established by
the Compensation Committee.
The Stock Incentive Plan authorizes (i) the grant of stock options (as
described below) and (ii) the grant of shares of Common Stock with conditions
and restrictions.
Subject to adjustment for stock splits, stock dividends and similar events,
the total number of shares of Common Stock that can be issued under the Stock
Incentive Plan as Incentive Options (as described below) shall not exceed
3,000,000 shares of Common Stock over the ten year life of the Stock Incentive
Plan. Additionally, the number of shares of Common Stock that may be granted as
Restricted Stock Awards (as described below) shall not exceed 2% of the total
shares of Common Stock outstanding each year. In order to satisfy the
performance-based compensation exception to the $1 million cap on the Company's
tax deduction imposed by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Stock Incentive Plan also provides that awards of
options or restricted stock with respect to no more than 100,000 shares of
Common Stock may be granted to any one individual in any calendar year. The
shares issued by the Company under the Stock Incentive Plan may be authorized
but unissued shares, or shares reacquired by the Company. To the extent that
awards under the Stock Incentive Plan do not vest or otherwise revert to the
Company, the shares of Common Stock represented by such awards may be the
subject of subsequent awards.
Pursuant to applicable tax laws, stockholders must approve the adoption of
the Stock Incentive Plan. The Stock Incentive Plan is attached to this Proxy
Statement as Appendix A. The following discussion of the Stock Incentive Plan
does not purport to be complete and is qualified in its entirety by reference to
Appendix A.
14
<PAGE> 17
SUMMARY OF STOCK INCENTIVE PLAN
The following is a summary of certain features of the Stock Incentive Plan:
Plan Administration; Eligibility. The Stock Incentive Plan will be
administered by a Compensation Committee appointed by the Board of
Directors. All members of such Committee must be "non-employee directors"
as that term is defined under the rules promulgated by the Securities and
Exchange Commission and "outside directors" as that term is defined in
Section 162 of the Code and the regulations promulgated thereunder. The
Board of Directors or the Compensation Committee are authorized to adopt,
alter and repeal administrative rules, guidelines and practices governing
the operation of the Stock Incentive Plan at any time. However, no
amendment shall be made without the approval of the stockholders of the
Company if such amendment would increase the number of shares approved for
issuance under the Stock Incentive Plan.
The Compensation Committee has full power to select, from among the
employees eligible for awards, the employees to whom awards will be
granted, to make any combination of awards to such employees and to
determine the specific terms of any award, subject to the provisions of the
Stock Incentive Plan. All senior officers (including officers who are also
Directors of the Company) and other employees of the Company and its
subsidiaries who are responsible for or contribute to the management,
growth or profitability of the Company are eligible to receive awards under
the Stock Incentive Plan. All employees, approximately 83 people as of the
Record Date, are eligible to receive awards under the Stock Incentive Plan.
The number of shares of Common Stock that may be granted to executive
officers, directors who are not executive officers and non-executive
officers is undeterminable at this time, as such grants are subject to the
discretion of the Compensation Committee.
Termination of Employment. The Compensation Committee has the
authority to determine the conditions under which an employee will retain
rights under the Stock Incentive Plan upon termination of employment for
any reason, while holding any outstanding awards under the Stock Incentive
Plan. Notwithstanding the foregoing, if an employee terminates employment
by reason of retirement, disability or death any options that are vested
but not yet exercised shall be exercisable for a period of up to three
years from the date of termination of employment. If the employee
terminates employment for any other reason, any options that are vested but
not yet exercised shall be exercisable for a period of up to thirty days
from the date of termination of employment.
Change in Control Provisions. In the event of a change in control (as
defined in the Stock Incentive Plan) each option granted under the Stock
Incentive Plan will become immediately exercisable and each Restricted
Stock Award (as defined below) made under the Stock Incentive Plan will be
subject to such terms as have been provided by the Compensation Committee
in connection with such options and award.
Stock Options. The Stock Incentive Plan permits the Compensation
Committee to grant options to purchase Common Stock intended to qualify as
incentive stock options ("Incentive Options") under Section 422 of the
Code, and options that do no so qualify ("Non-Qualified Options"). The
Compensation Committee shall establish the option price at the time each
option is awarded, provided that the price shall not be less than 100% of
the Fair Market Value of the Common Stock. If the employee owns or is
deemed to own (by reason of the attribution rules applicable under Section
424(d) of the Code) more than 10% of the voting power of the Common Stock
then the option price for an Incentive Option shall not be less than 110%
of the Fair Market Value of the Common Stock and the term of such Incentive
Option shall not be more than five years from the date of grant. The "Fair
Market Value of the Common Stock" means the average of the high and low
reported sale prices at which the Common Stock is traded on the day prior
to the grant or if no Common Stock is traded on such date, the most recent
date on which the Common Stock was traded.
The Compensation Committee will fix the term of each option, and such
term may not exceed ten years from the date of the grant, subject to the
term limitations for grants of options to an employee who owns or is deemed
to own more than 10% of the voting power of the Common Stock. Upon
exercise, the
15
<PAGE> 18
exercise price must be paid in full either in cash or in other form
acceptable to the Compensation Committee, including by delivery of shares
of Common Stock already owned by the optionee. The exercise price may also
be delivered to the Company by a broker pursuant to irrevocable
instructions to the broker from the optionee.
To qualify as Incentive Options, options must meet additional federal
tax requirements, including limits on the value of shares subject to
Incentive Options which first become exercisable in any one calendar year,
and a shorter term and higher minimum exercise price in the case of certain
large stockholders.
Restricted Stock. The Compensation Committee may also award
restricted shares of Common Stock subject to such conditions and
restrictions as the Compensation Committee may determine (a "Restricted
Stock Award"). The conditions and restrictions applicable to a Restricted
Stock Award may include continued employment with the Company and the
achievement of certain Company performance criteria or both. In addition, a
Restricted Stock Award may be subject to the attainment of specified
performance goals or targets, as determined by the Compensation Committee.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax consequences under the
Code of the grant and exercise of the various types of benefits that may be
awarded under the Stock Incentive Plan.
Incentive Options
Under the Code, an employee will not realize taxable income by reason of
the grant or the exercise of an Incentive Option. If an employee exercises an
Incentive Option and does not dispose of the shares until the later of (a) two
years from the date the option was granted or (b) one year from the date the
shares were transferred to the employee, the entire gain, if any, realized upon
disposition of such shares will be taxable to the employee as long-term capital
gain, and the Company will not be entitled to any deduction. If an employee
disposes of the shares within such one-year or two-year period in a manner so as
to violate the holding period requirements (a "disqualifying disposition"), the
employee generally will realize ordinary income in the year of disposition and,
provided the Company complies with applicable withholding requirements, the
Company will receive a corresponding deduction, in an amount equal to the excess
of (1) the lesser of (x) the amount, if any, realized on the disposition and (y)
the fair market value of the shares on the date the option was exercised over
(2) the option price. Any additional gain realized on the disposition of the
shares acquired upon exercise of the option will be long-term or short-term
capital gain and any loss will be long-term or short-term capital loss depending
upon the holding period for such shares. The employee will be considered to have
disposed of his shares if he sells, exchanges, makes a gift of or transfers
legal title to the shares (except by pledge or by transfer on death). If the
disposition of shares is by gift and violates the holding period requirements,
the amount of the employee's ordinary income (and the Company's deduction) is
equal to the fair market value of the shares on the date of exercise less the
option price. If the disposition is by sale or exchange, the employee's tax
basis will equal the amount paid for the shares plus any ordinary income
realized as a result of the disqualifying distribution. The exercise of an
Incentive Option may subject the employee to the alternative minimum tax.
Special rules apply if an employee surrenders shares of Common Stock in
payment of the exercise price of an Incentive Option.
An Incentive Option that is exercised by an employee more than three months
after an employee's employment terminates will be treated as a Non-Qualified
Option for Federal income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in the case of an
employee who dies, the three-month employment rule does not apply.
Non-Qualified Options
There are no Federal income tax consequences to either the optionee, or the
Company on the grant of a Non-Qualified Option. On the exercise of a
Non-Qualified Option, the optionee (except as described below)
16
<PAGE> 19
has taxable ordinary income equal to the excess of the fair market value of the
Common Stock received on the exercise date over the option price of the shares.
The optionee's tax basis for the shares acquired upon exercise of a
Non-Qualified Option is increased by the amount of such taxable income. The
Company will be entitled to a Federal income tax deduction in an amount equal to
such excess, provided the Company complies with applicable withholding rules.
Upon the sale of the shares acquired by exercise of a Non-Qualified Option, the
optionee will realize long-term or short-term capital gain or loss depending
upon his or her holding period for such shares.
Special rules apply if an optionee surrenders shares of Common Stock in
payment of the exercise price of a Non-Qualified Option.
Parachute Payments
The exercise of any portion of any option that is accelerated due to the
occurrence of a change of control may cause a portion of the payments with
respect to such accelerated options to be treated as "parachute payments" as
defined in the Code. Any such parachute payments may be non-deductible to the
Company, in whole or in part, and may subject the recipient to a non-deductible
20% federal excise tax on all or portion of such payment (in addition to other
taxes ordinarily payable).
Limitation on Company's Deductions
As a result of Section 162(m) of the Code, the Company's Federal tax
deduction for certain awards under the Plan may be limited to the extent that
the Chief Executive Officer or other executive officer whose compensation is
required to be reported in the summary compensation table receives compensation
(other than performance-based compensation) in excess of $1 million a year.
EFFECTIVE DATE OF THE STOCK INCENTIVE PLAN
The Stock Incentive Plan will become effective upon the affirmative vote of
the holders of at least a majority of the shares of Common Stock present or
represented and entitled to vote at the Meeting. Awards under the Stock
Incentive Plan may be granted until May 21, 2007.
RECOMMENDATION
The Board of Directors believes it is in the best interests of the Company
to encourage stock ownership by officers and other employees of the Company and
provide competitive compensation opportunities consistent with performance. The
Board of Directors believes that stock options and other stock-based incentive
awards can play an important role in the success of the Company by encouraging
and enabling the officers and other employees of the Company and its
subsidiaries upon whose judgment, initiative and efforts the Company largely
depends on for the successful conduct of its business to acquire a proprietary
interest in the Company. The Board of Directors anticipates that providing such
persons with a direct stake in the Company will assure a closer identification
of the interests of such persons with those of the Company. However, under the
Employee Plan only 18,225 shares remain available for grant. The shares
available under the Employee Plan will not be utilized.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE STOCK INCENTIVE PLAN.
CERTAIN TRANSACTIONS
On July 14, 1987, the Bank originated a loan in the amount of $300,000 to
Peter C. Bennett, a director of the Company and the Bank. Mr. Bennett refinanced
the loan in February 1994 in the amount of $293,000. At December 31, 1996, the
outstanding balance remains $293,000. The loan is a first mortgage loan on Mr.
Bennett's primary residence, was made in the ordinary course of business under
normal credit terms, including interest rates and collateralization prevailing
at the time for comparable transactions with other persons, and does not
represent more than normal credit risk. In August, 1996, the Bank provided three
Letters of Credit, in the aggregate amount of $1,055,281, for Cohasset Heights,
Ltd. They are entirely secured by deposit
17
<PAGE> 20
accounts at the Bank. John M. Barry, a Director of the Company and the Bank, is
an officer and director of Cohasset Heights, Ltd. At December 31, 1996, the
Bank's commitment under these Letters of Credit remains $1,055,281. These
obligations were made in the ordinary course of business under normal credit
terms, including fees and collateralization, prevailing at the time for
comparable transactions with other persons and do not represent more than normal
credit risk.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company's regular employees may also solicit proxies personally or by telephone.
Banks, brokerage houses, custodians, nominees and other fiduciaries have been
requested to forward proxy materials to the beneficial owners of shares of
Common Stock held of record by them. Such custodians will be reimbursed for
their expenses.
INDEPENDENT AUDITORS
The Company has selected KPMG Peat Marwick LLP ("KPMG") as the independent
auditors for the Company for the fiscal year ending December 31, 1997. KPMG has
served as the Company's and the Bank's independent auditors since 1987. A
representative of KPMG will be present at the Meeting, will be given the
opportunity to make a statement if such representative so desires and will be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any other matters to be considered at the Meeting. If any other matters
properly come before the Meeting, the proxies will be voted in accordance with
the best judgment of the proxy holders.
A summary of the proceedings of the 1997 Annual Meeting of Stockholders
will be available after July 1, 1997, to any stockholder upon request to the
Clerk and upon payment of $10.00 to cover the cost of postage and production.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for inclusion in the
Company's proxy statement in connection with its 1998 annual meeting of
stockholders must submit the proposal so as to be received by the Clerk of the
Company at the principal executive offices of the company located at Ten Post
Office Square, Boston, Massachusetts 02109, not later than December 1, 1997. In
addition, in order to be included in the proxy statement, such a proposal must
comply with the requirements as to form and substance established by applicable
laws and regulations.
Stockholders wishing to present business for action at the 1998 annual
meeting or to nominate directors for election at a meeting of the Company's
stockholders, must do so in accordance with the By-laws. The By-laws provide,
among other requirements, that in order to be presented at an annual meeting,
such stockholder proposals or nominations may only be made by holders of record
who shall have given notice of such proposals or nominations and any other
required information to the Company no earlier than January 21, 1998, and no
later than March 21, 1998.
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APPENDIX A
BOSTON PRIVATE BANCORP, INC.
1997 LONG-TERM STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
SECTION 1: PURPOSE
The Boston Private Bancorp, Inc. (the "Company") 1997 Long-Term Stock
Incentive Plan (the "Plan") has been adopted to encourage and create significant
ownership of the Company's Common Stock by key management employees. Additional
purposes of the plan include:
- To motivate and reward the building of long-term shareholder value;
- To provide opportunities for acquiring longer term stock ownership
which will align the interests of senior officers and other key
employees with those of shareholders;
- To reinforce a strong performance orientation;
- To support retention of key individuals critical to the long-term
success of the company;
- To provide fully competitive compensation opportunities consistent
with performance; and
- To foster an affiliation with the Company and support collaborative
teamwork across lines of business.
SECTION 2: DEFINITIONS
- AWARD means any Stock Option or Restricted Stock Award granted under the
Plan.
- BOARD means the Company's Board of Directors.
- CHANGE IN CONTROL means any occurrence of events as defined in the Change
in Control Protection Agreements for Senior Officers.
- CODE means the Internal Revenue Code of 1986, as amended.
- COMMITTEE means a compensation committee of not less than two
non-employee members of the Board, appointed by the Board to administer
the Plan.
- COMPANY means Boston Private Bancorp, Inc., a corporation established
under the laws of the Commonwealth of Massachusetts, and any entity that
is directly or indirectly controlled by the Company or any entity in
which the Company has a significant equity interest as determined by the
Committee.
- EMPLOYEE means any person employed by the Company or any present or
future Subsidiary of the Company.
- FAIR MARKET VALUE means, with respect to Common Stock, the fair market
value of such property as determined by the Committee from time to time.
Under no circumstance shall the Fair Market Value be less than the par
value of the Common Stock. Generally, whenever the Common Stock is traded
on a public market, Fair Market Value means the average of the high and
low reported sales prices at which the Common Stock is traded on the day
prior to the grant, or, if no Common Stock is traded on such date, the
most recent date on which Common Stock was traded, as reflected on such
public market. The Committee in its sole discretion may establish any
other such Fair Market Value if in its determination this price is not a
fair and representative sales price for the Common Stock.
- INCENTIVE STOCK OPTION, OR ISO, means a Stock Option to purchase Shares
awarded to a Participant which is intended to meet the requirements of
Section 422 of the Code or any successor provision.
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- NON-QUALIFIED STOCK OPTION, OR NQSO, means a Stock Option to purchase
Shares of Common Stock awarded to a Participant which is not intended to
meet the requirements of Section 422 of the Code or any successor
provision.
- 1934 ACT means the Securities Exchange Act of 1934, as amended.
- PARTICIPANT means an employee of the Company, or any Subsidiary of the
Company, selected by the Committee (or its delegate as provided under
Section 4) to receive an Award under the Plan.
- REPORTING PERSON means an individual who is subject to Rule 16 of the
1934 Act by virtue of his or her relationship with the Company.
- RESTRICTED STOCK AWARD means an Award to a Participant comprised of
Common Stock granted under Section 7 of the Plan.
- SHARES means shares of the Common Stock of the Company. Stock Option
means an Award in the form of the right to purchase a specified number of
Shares at a specified price during a specified period.
- SUBSIDIARY means any corporation or other entity (other than the Company)
in any unbroken chain or corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other
interests possessing 50% or more of the economic interest or the total
combined voting power of all classes of stock or other interests in one
of the other corporations or entities in the chain.
SECTION 3: EFFECTIVE DATE
The Plan shall be effective as of May 21, 1997. No Awards may be made under
the Plan after ten years from the date of approval or after any earlier
termination of the Plan by the Board.
SECTION 4: ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the operation of the Plan as it shall from time to time
consider advisable. The Committee shall also have full discretion to interpret
the provisions of the Plan.
SECTION 5: ELIGIBILITY
The Board, upon recommendation of the Committee, may grant Awards to any
senior officer or other employee of the Company or its Subsidiaries as
determined by the Committee.
SECTION 6: STOCK AVAILABLE FOR AWARDS
(a) COMMON SHARES AVAILABLE. The maximum number of Shares available for
Awards under the Plan for each fiscal year beginning after December 31, 1997
shall be the sum of the amounts described in (i) and (ii) below.
(i) Such aggregate number of Shares of Common Stock as does not
exceed four percent (4%) of the total Shares of outstanding
Common Stock of the Company as of the last business day of the
preceding fiscal year: any Shares described in this (i) which are
not granted as Awards for a fiscal year shall not carry over and
be available for Awards in any subsequent fiscal year.
(ii) The Shares of Common Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without
the issuance of Stock or otherwise terminated (other than by
exercise) under this Plan.
The maximum number of Shares available for Awards under the Plan for the
fiscal year beginning January 1, 1997 and ending December 31, 1997 (the
"Transition Year") shall be 155,877 Shares, which amount represents four percent
(4%) of the total Shares of outstanding Common Stock of the Company as of the
last business day of the fiscal year preceding the Transition Year less the
number of awards previously
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granted under the Company's 1988 Employee Incentive Stock Option Plan during the
Transition Year: any Shares described in this sentence which are not granted as
Awards for the Transition Year shall not carry over and be available for Awards
in any subsequent fiscal year.
Not to exceed this limitation, the Committee will determine the actual
number of Shares which may be granted in each fiscal year based on the Company's
performance versus goals established by the Committee.
(b) SHARE USAGE LIMITS. For the period the Plan is in effect the aggregate
number of Shares that may be granted as Restricted Stock Awards shall not exceed
two percent (2%) of total Shares outstanding each year. Additionally, the
aggregate number of Shares that may be covered by Awards for any one Participant
each calendar year that the Plan is in effect shall not exceed 100,000 Shares.
Subject to the availability of Shares under the Plan, the maximum number of
Shares for which Incentive Stock Options may be granted over the ten-year life
of the Plan shall not exceed 3,000,000 Shares.
(c) ADJUSTMENTS. In the event of any stock dividend, stock split,
combination or exchange of Shares, merger, consolidation, spin-off or other
distribution (other than normal cash dividends) of Company assets to
shareholders, or any other change affecting Shares, such proportionate
adjustments, if any, as the Committee in its discretion may deem appropriate to
reflect such change shall be made with respect to (i) aggregate number of Shares
that may be issued under the Plan; (ii) the number of Shares covered by each
outstanding Award made under the Plan; and (iii) the option, base or purchase
price per Share for any outstanding Stock Options and other Awards granted under
the Plan provided that any such actions are consistently and equitably
applicable to all affected Participants. In addition, any Shares issued by the
Company through the assumption or substitution of outstanding grants or grant
commitments from an acquired entity shall not reduce the Shares available for
issuance under the Plan.
(d) COMMON STOCK USAGE. The Shares of Common Stock underlying any Awards
which are forfeited, canceled, reacquired by the Company, satisfied without the
issuance of Common Stock or otherwise terminated (other than by exercise) shall
be added back to the Shares of Common Stock available for issuance under the
Plan.
SECTION 7: AWARDS
(a) GENERAL. The Committee shall determine the type or types of Award(s)
(as set forth below) to be made to each Participant and shall approve the terms
and conditions of all such Awards in accordance with Sections 4 and 8 of the
Plan.
(b) STOCK OPTIONS. A Stock Option shall confer on a Participant the right
to purchase a specified number of Shares from the Company subject to the terms
and conditions of the Stock Option grant as determined by the Compensation
Committee. The Committee shall establish the option price at the time each Stock
Option is awarded, provided that price shall not be less than 100% of the Fair
Market Value. Stock Options may be in the form of ISOs or NQSOs. If a
Participant owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any subsidiary or parent
corporation and ISO is awarded to such Participant, the option price shall not
be less than 110% of the Fair Market Value at the time such ISO is awarded and
the term of such option shall be no more than five years from the date of grant.
The aggregate Fair Market Value at time of grant of the Shares covered by ISOs
exercisable by any one optionee in any calendar year shall not exceed $100,000
(or such other limit as may be required by the Code). The recipient of a Stock
Option grant shall pay for the Shares at the time of exercise in cash or such
other forms as the Committee may approve, including Shares valued at their Fair
Market Value on the date of exercise, or in a combination of forms. The
Committee may also permit Participants to have the option price delivered to the
Company by a broker pursuant to an arrangement whereby the Company, upon
irrevocable instructions from a Participant, delivers the exercised Shares to
the broker.
(c) RESTRICTED STOCK AWARDS. A Restricted Stock Award shall confer on a
Participant the right to receive a specified number of Shares subject to the
terms and conditions of the Award, which may include forfeitability
contingencies based on continued employment with the Company or on meeting
performance
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<PAGE> 24
criteria or both. Such Awards may be subject to the attainment of specified
performance goals or targets, as determined by the Committee and set forth in
the specific Award agreements.
SECTION 8: GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY AND EXERCISABILITY. Any Award under this Plan will be
non-transferable and accordingly shall not be assignable, alienable, salable or
otherwise transferable by the Participant other than by will or the laws of
descent and distribution. If so permitted by the Committee, a Participant may
designate a beneficiary or beneficiaries to exercise the Participant's rights
and receive any distributions under this Plan upon the Participant's death.
(b) GENERAL RESTRICTION. Each Award shall be subject to the requirement
that, if at any time the Committee shall determine, in its sole discretion, that
the listing, registration or qualification of any Award under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the grant or
settlement thereof, such Award may not be exercised or settled in whole or in
part unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the
Committee.
(c) GRANT TERMS AND CONDITIONS. Subject to the other provisions of the
Plan, the Committee shall determine the provisions and duration of grants made
under the Plan, including the Option Prices for all Stock Options, the
consideration, if any, to be required from Participants for Restricted Stock
Awards, and the conditions under which a Participant will retain rights under
the Plan in the event of the Participant's termination of employment while
holding any outstanding Awards.
(d) TAX WITHHOLDING. The Company shall have the right to deduct from any
settlement of an Award, including the delivery or vesting of Shares, made under
the Plan, a sufficient amount to cover withholding of any federal, state or
local taxes required by law or to take such other actions as may be necessary to
satisfy any such withholding obligations. The Committee may require or permit
Shares to be used to satisfy required tax withholding and such Shares shall be
valued at their Fair Market Value on the date the tax withholding is effective.
(e) DOCUMENTATION OF GRANTS. Awards made under this Plan shall be
evidenced by written agreements or such other appropriate documentation as the
Committee shall prescribe. The Committee need not require the execution of any
instrument or acknowledgment of notice of an Award under the Plan, in which
case, acceptance of such Award by the respective Participant will constitute
agreement to the terms of the Award.
(f) SETTLEMENT. The Committee shall determine whether Awards are settled
in whole or in part in cash, Shares, or other Awards.
(g) CHANGE IN CONTROL/OTHER TRANSACTIONS. In the event of a Change in
Control in the Company, each outstanding Stock Option shall automatically become
fully exercisable and each Restricted Stock Award shall be subject to such
terms, if any, with respect to a Change in Control as have been provided by the
Committee in connection with such Award. In order to preserve a Participant's
rights under an Award from this Plan or any predecessor plan in the event of a
merger or sale of all or substantially all of the assets of the Company in which
outstanding Shares of Stock are exchanged for securities, cash or other property
of an unrelated corporation or business entity or in the event of a liquidation
of the Company (in each case, a "Transaction"), the Committee in its discretion
may take one or more of the following actions: (i) provide that such Stock
Options shall be assumed or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written
notice to the optionees, provide that all unexercised Stock Options will
terminate immediately prior to the consummation of the Transaction unless
exercised by the optionee within a specified period following the date of such
notice, and/or (iii) in the event of a business combination under the terms of
which holders of the Stock of the Company will receive upon consummation thereof
a cash payment for each Share surrendered in the business combination, make or
provide for a cash payment to the optionees equal to the difference between (A)
the value (as determined by the Committee) of the consideration payable per
Share of Stock pursuant to the business combination (the
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<PAGE> 25
"Merger Price") times the number of Shares of Stock subject to such outstanding
Stock Options (to the extent then exercisable at prices not in excess of the
Merger Price) and (B) the aggregate exercise price of all such outstanding Stock
Options in exchange for the termination of such Stock Options, or (iv) make such
other provisions as the Committee may consider equitable and in the best
interests of the Company.
SECTION 9: MISCELLANEOUS
(a) PLAN AMENDMENT. The Committee may amend the Plan as it deems necessary
or appropriate to better achieve the purposes of the Plan, except that no
amendment without the approval of the Company's shareholders shall be made which
would increase the total number of Shares available for issuance under the Plan.
(b) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided by an applicable agreement or other
documentation of an Award.
(c) NO RIGHTS AS SHAREHOLDER. Only upon issuance of Shares to a
Participant (and only in respect to such Shares) shall the Participant obtain
the rights of a shareholder, subject, however, to any limitations imposed by the
terms of the applicable Award.
(d) NO FRACTIONAL SHARES. No fractional Shares shall be issued under the
Plan, however, the Committee may provide for a cash payment as settlement in
lieu of any fractional Shares.
(e) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Except as expressly
determined by the Committee, settlements of Awards received by Participants
under this Plan shall not be deemed as part of a Participant's regular,
recurring compensation for purposes of calculating payments or benefits from any
Company benefit or severance program (or severance pay law of any country). The
above notwithstanding, the Company may adopt other compensation programs, plans
or arrangements as it deems appropriate or necessary.
(f) TERMINATION OF EMPLOYMENT. If a Participant terminates employment for
reason of retirement, disability or death, any Stock Options which are vested
but not yet exercised shall be exercisable for a period of up to three years
from the date of termination of employment. If a Participant terminates
employment from the Company for any other reason, any Stock Options which are
vested but not yet exercised shall be exercisable for a period of up to thirty
days from the date of termination of employment.
(g) UNFUNDED PLAN. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or separate fund(s). Likewise, the Plan shall not
establish any fiduciary relationship between the Company and any Participant or
other person. To the extent any person holds any rights by virtue of an Award
granted under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company.
(h) SUCCESSORS AND ASSIGNEES. The Plan shall be binding on all successors
and assignees of a Participant, including, without limitation, the estate of
such Participant and the executor, administrator or trustee of such estate, or
any receiver or trustee in bankruptcy or representative of the Participant's
creditors.
(i) GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken under or relating to the Plan shall be determined in
accordance with the laws of the Commonwealth of Massachusetts and applicable
federal law.
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
1. To elect five (5) Class III Directors to serve until the 2000
Annual Meeting and until their successors are duly elected and
qualified.
- ------------------------------- NOMINESS: HEBERT S. ALEXANDER For All With- For All
BOSTON PRIVATE BANCORP,INC. KATE S. FLATHER Nominees hold Except
- ------------------------------- LYNN THOMPSON HOFFMAN [ ] [ ] [ ]
TIMOTHY L. VAILL
CHARTES O. WOOD, III
If you wish to withhold your vote from any of the nominees
listed above, mark the "For All Except" box and strike a
line through the nominee's(s') name(s) from whom you wish to
withhold your vote.
For Against Abstain
RECORD DATE SHARES: 2. To adopt the Boston Private Bancorp, [ ] [ ] [ ]
Inc. 1997 Long-Term Stock Incentive
Plan.
Mark box at right if you plan to attend the Meeting [ ]
-------------
Please be sure to sign and date this Proxy Date Mark box at right if an address change has been noted [ ]
- -------------------------------------------------------------- on the reverse side of this card.
- -------Stockholder sign here-----------Co-owner sign here-----
DETACH CARD DETACH CARD
BOSTON PRIVATE BANCORP, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
Your vote counts, and your are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and return
your proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, May 21, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Boston Private Bancorp, Inc.
BOSTON PRIVATE BANCORP, INC.
TEN POST OFFICE SQUARE
BOSTON MA 02109
The undersigned hereby constitutes and appoints Mark D. Thompson and Ana E. Steele, and each of them, as proxies of the
undersigned (the "Proxies"), each with full power to appoint his or her substitute, and hereby authorizes each of them to represent
and to vote all the shares of common stock of Boston Private Bancorp, Inc. (the "Corporation"), held of record by the
undersigned on March 21, 1997, at the Annual Meeting of Stockholders to be held on Wednesday, May 21, 1997 at 9:00 a.m., Boston
time, or any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION
IS GIVEN, THIS PROXY WILL BE VOTE FOR THE ELECTION OF THE NOMINEES FOR CLASS III DIRECTORS LISTED IN PROPOSAL 1, FOR THE APPROVAL OR
THE ADOPTION OF THE BOSTON PRIVATE BANCORP, INC. 1997 LONG-TERM STOCK INCENTIVE PLAN SET FORTH IN PROPOSAL 2 AND, IN THEIR
DISCRETION, THE PROXIES ARE EACH AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF. A STOCKHOLDERS WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS
NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE POSTAGE PAID ENVELOPE PROVIDED.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying Notice of Annual Meeting of Stockholders, the Proxy
Statement with respect thereto, the Corporation's Annual Report on Form 10-KSB for Fiscal Year 1996 and the Corporation's Annual
Report to Stockholders for Fiscal Year 1996, and hereby revoke(s) any proxy or proxies heretofore given. This proxy may be revoked
any time before it is exercised.
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- ------- PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. -----------
-----------------------------------------------------------------------------------------------------------------
NOTE: Please sign exactly as name(s) appear(s) hereon. When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership, please sign partnership name by authorized
person.
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</TABLE>
