<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE 14A-12
INTERWEST BANCORP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INTERWEST BANCORP, INC.
(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:
N/A
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
N/A
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11:
N/A
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
N/A
[ ] 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:
N/A
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
N/A
(3) FILING PARTY:
N/A
<PAGE> 2
December 15, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of InterWest Bancorp, Inc., to be held at the Elks Club, 155 Northeast Ernst
Street, Oak Harbor, Washington, on Tuesday, January 20, 1998, at 2:00 p.m.,
local time.
The Notice of Annual Meeting of Stockholders and Proxy Statement on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of Bancorp. Directors
and Officers of Bancorp, as well as a representative of Ernst & Young LLP,
Bancorp's independent auditors, will be present to respond to any questions our
stockholders may have.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. IF YOU ATTEND THE
MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY CARD.
We look forward to seeing you at the meeting.
Sincerely,
Barney R. Beeksma Stephen M. Walden
Chairman of the Board President and Chief
Executive Officer
<PAGE> 3
INTERWEST BANCORP, INC.
275 SOUTHEAST PIONEER WAY
OAK HARBOR, WASHINGTON 98277
(360) 679-4181
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 20, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
InterWest Bancorp, Inc. ("Bancorp") will be held at the Elks Club, 155 Northeast
Ernst Street, Oak Harbor, Washington, on Tuesday, January 20, 1998, at 2:00
p.m., local time, for the following purposes:
(1) To elect three directors to three-year terms;
(2) To approve certain amendments to, and restatement of the 1993
Incentive Stock Option Plan; and
(3) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
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. Stockholders of record at the close
of business on December 2, 1997, are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
MARGARET MORDHORST
SECRETARY
Oak Harbor, Washington
December 15, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE BANCORP THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE> 4
PROXY STATEMENT
OF
INTERWEST BANCORP, INC.
275 SOUTHEAST PIONEER WAY
OAK HARBOR, WASHINGTON 98277
(360) 679-4181
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 20, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of InterWest Bancorp, Inc. ("Bancorp"), the
holding company for InterWest Bank (the "Bank"), to be used at the 1998 Annual
Meeting of Stockholders of Bancorp. The Annual Meeting will be held at the Elks
Club, 155 Northeast Ernst Street, Oak Harbor, Washington on Tuesday, January 20,
1998, at 2:00 p.m., local time. This Proxy Statement and the enclosed proxy card
are being mailed to stockholders on or about December 15, 1997.
VOTING AND PROXY PROCEDURE
Stockholders of record as of the close of business on December 2, 1997,
are entitled to one vote for each share of common stock ("Common Stock") of
Bancorp then held. As of December 2, 1997, Bancorp had 8,053,783 shares of
Common Stock issued and outstanding. The presence, in person or by proxy, of at
least a majority of the total number of outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Annual Meeting.
Abstentions will be counted as shares present and entitled to vote at the Annual
Meeting for purposes of determining the existence of a quorum. Broker non-votes
will not be considered shares present and will not be included in determining
whether a quorum is present.
The Board of Directors solicits proxies so that each stockholder has the
opportunity to vote on the proposals to be considered at the Annual Meeting.
When a proxy card is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy card.
Where no instructions are indicated, proxies will be voted FOR the nominees for
directors set forth below and FOR adoption of the amendments to, and restatement
of the 1993 Incentive Stock Option Plan ("1993 Plan"). If a stockholder attends
the Annual Meeting, he or she may vote by ballot.
Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed to
the Secretary of Bancorp or by filing a later proxy prior to a vote being taken
on a particular proposal at the Annual Meeting. Attendance at the Annual Meeting
will not automatically revoke a proxy, but a stockholder in attendance may
request a ballot and vote in person, thereby revoking a prior granted proxy.
If a stockholder is a participant in InterWest Bank's Employee Stock
Ownership Plan ("ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant in the ESOP may direct the trustees as to the manner
in which shares of Common Stock allocated to the participant's plan account are
to be voted. Unallocated shares of Common Stock held by the ESOP and allocated
shares for which no voting instructions are received will be voted by the
trustees.
1
<PAGE> 5
The directors to be elected at the Annual Meeting will be elected by a
plurality of the votes cast by stockholders present in person or by proxy and
entitled to vote. Stockholders are not permitted to cumulate their votes for the
election of directors. Votes may be cast for or withheld from each nominee.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election because directors will be elected by a plurality of votes cast.
With respect to the proposal to approve the amendments to, and restatement of
the 1993 Plan, stockholders may vote for the proposal, against the proposal or
may abstain from voting. Adoption of the amendments to, and restatement of the
1993 Plan will require the affirmative vote of a majority of shares of Common
Stock present or represented and entitled to vote at the Annual Meeting.
Abstentions will be counted as present and will have the effect of a vote
against the proposal. Broker non-votes will not be treated as entitled to vote
and will have no effect on the outcome.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Persons and groups who beneficially own in excess of five percent of
Bancorp's Common Stock are required to file certain reports disclosing such
ownership pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Based on such reports, management knows of no person who owned more than
five percent of the outstanding shares of Common Stock at December 2, 1997. The
following table sets forth, as of December 2, 1997, information as to the shares
of the Common Stock beneficially owned by each director, by the Chief Executive
Officer of Bancorp, by Bancorp's executive officers who received salaries and
bonuses in excess of $100,000 during the year ended September 30, 1997, ("named
executive officers") and by all executive officers and directors of Bancorp as a
group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED (1) SHARES OUTSTANDING
- ---- ---------------------- ------------------
<S> <C> <C>
DIRECTORS:
Barney R. Beeksma 259,845 3.2%
Larry Carlson 51,444 *
Michael T. Crawford 6,500 *
Jean Gorton 7,300 *
Henry Koetje 113,965 1.4%
C. Stephen Lewis 18,875 *
Clark H. Mock 3,500 *
Russel E. Olson 6,814 *
Vern Sims 183,400 2.3%
NAMED EXECUTIVE OFFICERS:
Stephen M. Walden** 206,060 2.5%
Gary M. Bolyard** 67,414 *
Clark W. Donnell 92,007 1.1%
Kenneth G. Hulett 69,911 *
H. Glenn Mouw 68,388 *
All Executive Officers
and Directors as a Group
(14 persons) 1,155,423 14.1%
</TABLE>
- ---------------
2
<PAGE> 6
* Less than 1 percent of shares outstanding.
** Mr. Walden and Mr. Bolyard are also directors of Bancorp.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table
possess voting and/or investment power. The amounts shown also include
the following amounts of Common Stock which the indicated individuals
have the right to acquire within 60 days of December 2, 1997, through
the exercise of stock options granted pursuant to Bancorp's stock option
plans: Mr. Beeksma, 3,363; Mr. Crawford, 500; Ms. Gorton, 500; Mr.
Lewis, 500; Mr. Mock, 500; Mr. Olson, 250; Mr. Sims, 500; Mr. Walden,
47,750; Mr. Bolyard, 14,213; Mr. Donnell, 33,125; Mr. Hulett, 28,525;
Mr. Mouw, 33,075; and all executive officers and directors as a group,
162,801. Shares held in accounts under the Bank's ESOP, as to which the
holders have voting power but not investment power, are also included as
follows: Mr. Beeksma, 39,629 shares; Mr. Walden, 26,669 shares; Mr.
Donnell, 10,809 shares; Mr. Hulett, 11,209 shares; Mr. Mouw, 12,795
shares; and all executive officers and directors as a group, 101,111
shares.
PROPOSAL I - ELECTION OF DIRECTORS
Bancorp's Board of Directors is currently composed of eleven members.
Bancorp's articles and bylaws provide that directors will be elected for
three-year staggered terms with approximately one third of the directors elected
each year. At the Annual Meeting, three directors will be elected to the class
of directors whose terms end in 2001. Michael T. Crawford, Jean Gorton and Vern
Sims, all of whom are serving presently as directors of Bancorp, have been
nominated for election to the term ending in 2001.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above named nominees. If any nominee is unable
to serve, the shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may recommend. At this
time the Board of Directors knows of no reason why the nominees might be
unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS.
CRAWFORD AND SIMS AND MS. GORTON.
3
<PAGE> 7
The following table sets forth certain information regarding the
nominees for election at the Annual Meeting, as well as information regarding
those directors continuing in office after the Annual Meeting.
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE ELECTED DIRECTOR(1) TERM TO EXPIRE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
BOARD NOMINEES
Michael T. Crawford 59 1994 2001(2)
Jean Gorton 63 1991 2001(2)
Vern Sims 72 1976 2001(2)
DIRECTORS CONTINUING IN OFFICE
Gary M. Bolyard 61 1996 1999
Henry Koetje 74 1957 1999
Clark H. Mock 61 1993 1999
Stephen M. Walden 54 1988 1999
Barney R. Beeksma 65 1974 2000
Larry Carlson 65 1996 2000
C. Stephen Lewis 55 1988 2000
Russel E. Olson 66 1988 2000
</TABLE>
- ---------------
(1) Includes service on the Board of Directors of the Bank.
(2) Assuming the individual is re-elected.
The present principal occupation and other business experience during
the last five years of each nominee for election and each director continuing in
office is set forth below:
BARNEY R. BEEKSMA has been associated with the Bank since 1960. He
currently serves as the Chairman of the Board after retiring from the position
of President and Chief Executive Officer of the Bank in January 1990. Mr.
Beeksma served as a representative for the 10th District in the Washington State
legislature from 1994 through 1996. Mr. Beeksma served as a director of the
Seattle Branch of the Federal Reserve Bank of San Francisco and was actively
involved with the U.S. League of Savings Institutions (now America's Community
Bankers) having served as Chairman of the organization from November 1988 to
November 1989.
GARY M. BOLYARD currently serves as Vice Chairman/Commercial Banking and
a director of Bancorp and the Bank, positions he has held since August 1996.
Prior to that time, Mr. Bolyard was President, Chief Executive Officer and a
Director of Central Bancorporation and Central Washington Bank and a Director of
North Central Washington Bank.
LARRY CARLSON is a partner in the law firm of Carlson, Drewelow, McMahon
& Kottkamp, Inc. PS, in Wenatchee, Washington. Mr. Carlson previously served on
the Board of Directors of Central Bancorporation and Central Washington Bank.
4
<PAGE> 8
MICHAEL T. CRAWFORD is Vice President, General Manager of Concrete
Nor'West, a division of Miles Sand & Gravel Co., Inc., with which he has been
associated since 1968.
JEAN GORTON is Senior Vice President of Planning for Trillium
Corporation, Bellingham, Washington, a land development and resource management
firm, with which she has been associated since 1983. She is currently serving as
a loaned executive to the College of Business and Economics at Washington State
University in Pullman, Washington.
HENRY KOETJE is a stockholder and part-time employee of Koetje Agency,
Inc., an insurance and real estate agency located in Oak Harbor, Washington. Mr.
Koetje is currently serving as a director and Chairman of the Board of Island
Title Co. located in Oak Harbor, Washington.
C. STEPHEN LEWIS is President and Chief Executive Officer of
Weyerhaeuser Real Estate Company, a real estate construction and development
subsidiary of the Weyerhaeuser Corporation with which he has been associated
since 1970.
CLARK H. MOCK is a management consultant in banking and real estate
having retired in May 1993 as Executive Vice President and Chief Credit Officer
of Seattle First National Bank. Mr. Mock's career with Seattle First National
Bank covered all phases of credit administration together with the disposition
of problem loans and assets.
RUSSEL E. OLSON retired in December 1994 as Vice President of Finance
and Treasurer for the Puget Sound Power & Light Company located in Bellevue,
Washington, an electric company with which he had been associated for over 35
years.
VERN SIMS is the principal owner, President and Chairman of Vern Sims
Ford, Inc., a Ford dealership in Sedro-Woolley, Washington, and is a part owner,
President and Chairman of Honda dealerships in Mount Vernon, Wenatchee, and
Bellingham, Washington.
STEPHEN M. WALDEN is President and Chief Executive Officer of Bancorp
and the Bank. Mr. Walden started his career at the Bank in 1966 and became Vice
President in 1974, Senior Vice President in 1977, Executive Vice President in
1984, President and Chief Operating Officer in 1988 and President and Chief
Executive Officer in January 1990.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of Bancorp and the Bank conduct their business
through meetings of the Boards and through their committees. During the fiscal
year ended September 30, 1997, the Board of Directors of Bancorp held 12
meetings and the Board of Directors of the Bank held 12 meetings. No director of
Bancorp or the Bank attended fewer than 75 percent of the total meetings of the
Boards and committees on which such person served during this period.
The Board of Directors of Bancorp and the Bank has an Audit Committee
currently consisting of Messrs. Olson (Chairman), Crawford, Carlson, Mock and
Ms. Gorton. The purpose of the Committee is to provide direction and oversight
to the Internal Auditor and to review the examinations of Bancorp and the Bank
by federal and state regulatory authorities and the audit by the independent
auditing firm. The Audit Committee met four times during the 1997 fiscal year.
5
<PAGE> 9
The Board of Directors of Bancorp and the Bank have an Executive
Committee currently consisting of Messrs. Beeksma (Chairman), Sims, Koetje,
Olson, Bolyard and Walden. The Committee acts as a decision-making body in lieu
of the entire Board of Directors. The Executive Committee meets on an as-needed
basis. The Executive Committee met two times during the 1997 fiscal year.
The Board of Directors of the Bank has a Compensation and Stock Option
Committee ("Committee"), consisting of Messrs. Sims (Chairman), Lewis, Koetje
and Beeksma. The purpose of the Compensation and Stock Option Committee is to
act as an ongoing advisory group to the Board of Directors on executive
compensation policies and procedures and other compensation-related items that
are corporate in nature (i.e., Bank-wide profit-sharing plans, stock option
plans, benefit plans, etc.). The Committee also administers the 1996 Outside
Directors Stock Options-For-Fees Plan. The Committee meets annually or on an
as-needed basis and met three times during the 1997 fiscal year.
The Board of Directors of Bancorp has appointed a Nominating Committee
consisting of Messrs. Koetje (Chairman), Walden and Mock. The Nominating
Committee is responsible for selecting nominees for election as director except
that the Board of Directors shall act as a nominating committee for selecting
management nominees for election as directors.
DIRECTORS' COMPENSATION
1996 Outside Directors Stock Options-for-Fees Plan ("1996 Director
Plan"). Each member of Bancorp's Board of Directors who is not an employee of
Bancorp or any subsidiary of Bancorp may participate in the 1996 Director Plan.
The 1996 Director Plan, adopted at the 1997 Stockholder meeting, establishes the
regular retainer fee for directors at $8,000 per year over the five-year term of
the plan. The 1996 Director Plan provides that each eligible director may elect
from among three options: (i) receive the $8,000 retainer in cash, payable
quarterly, (ii) receive an option covering 250 shares of Common Stock and a
$4,000 retainer in cash, payable quarterly, or (iii) receive an option covering
500 shares of Common Stock. As Chairman of the Board, during the fiscal year
1997, Barney R. Beeksma received an annual retainer of $66,495 and contributions
to the Bank's ESOP in the amount of $3,329 and to the Bank's 401(k) Plan in the
amount of $1,337.
Pursuant to director elections, which must be submitted by December 31
of each year during the term of the plan, directors will be granted options on
the first business day of the calendar year. All stock options awarded under the
1996 Director Plan will have an exercise price equal to 100 percent of the fair
market value of the Common Stock on the date of grant. Each option granted under
the 1996 Director Plan has a five-year term and will become exercisable on the
first anniversary of the grant date. If a director leaves the Board prior to
such date, all unexercisable options will be cancelled.
6
<PAGE> 10
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation received by the Chief Executive Officer of Bancorp and the named
executive officers for each of the three fiscal years ended September 30, 1997.
The Bank pays all compensation.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- ------------------------------
Securities
Other Annual Underlying All Other
Name and Position Year Salary($) Bonus($) Compensation($) Options(#) Compensation($)
- ----------------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Walden 1997(1) $227,250 $122,360 $ 25,250(1) 2,000 $ 12,414(2)
President and Chief 1996 198,674 74,565 22,500 2,500 13,626
Executive Officer 1995 163,749 73,024 22,125 -- 12,000
Clark W. Donnell 1997 $150,000 55,876 -- 1,000 14,291(3)
Executive Vice 1996 128,281 34,263 -- 2,500 12,847
President 1995 98,745 31,920 -- -- 10,453
Kenneth G. Hulett 1997 117,501 44,616 -- 600 12,640(4)
Executive Vice 1996 106,694 29,815 -- 2,500 10,787
President 1995 85,377 29,868 -- -- 9,696
H. Glenn Mouw 1997 136,251 51,075 800 14,431(5)
Executive Vice 1996 119,246 32,768 -- 2,500 12,016
President 1995 95,765 31,808 -- -- 10,206
Gary M. Bolyard 1997 135,960 -- -- 450 4,072(6)
Vice Chairman/ 1996(7) 11,000 -- -- -- 330
Commercial Banking
</TABLE>
- ------------------
(1) Represents an elective contribution by Mr. Walden to a non-qualified
deferred compensation plan.
(2) Includes contributions to the Bank's ESOP of $7,759 and to the Bank's
Salary Deferral 401(k) Plan and Trust ("401(k) Plan") of $4,655.
(3) Includes contributions to the Bank's ESOP of $8,932 and to the Bank's
401(k) Plan of $5,359.
(4) Includes contributions to the Bank's ESOP of $7,755 and to the Bank's
401(k) Plan of $4,885.
(5) Includes contributions to the Bank's ESOP of $9,019 and to the Bank's
401(k) Plan of $5,412.
(6) Represents contributions to the Bank's 401(k) Plan of $4,072.
7
<PAGE> 11
(7) Reflects compensation earned and a contribution to the Bank's 401(k)
Plan from September 1, 1996, the day that Mr. Bolyard joined the Bank
through September 30, 1996.
Employment Agreements. The Bank has entered into employment contracts
with Messrs. Walden, Mouw, Hulett and Donnell that provide for severance
benefits in the event employment is terminated following a change in control of
the Bank. Under these agreements, a change in control is defined generally to
include a merger involving the Bank, an acquisition of the Bank by another
institution or entity, a sale of substantially all of the assets of the Bank, a
change in beneficial ownership of 25 percent of the Bank stock or a change in
the majority of the Board of Directors. Upon a change in control, Messrs.
Walden, Mouw, Hulett and Donnell shall be entitled to a position of the same or
similar responsibility or authority and in the same geographical area and total
annual compensation and other benefits equal to or in excess of the total annual
compensation and benefits available to the employee during the prior 12 months.
The employer may terminate the agreement after a change in control, but will be
obligated to pay the employee twice the employee's average annual compensation
for the past five years.
In addition, Bancorp and the Bank have entered into an employment
agreement with Mr. Bolyard that expires on June 30, 1998. The agreement provides
for severance benefits in the event employment is terminated following a change
in control of the Bank. Under the agreement, a change in control is defined
generally to include a merger or consolidation involving Bancorp or the Bank, an
acquisition of Bancorp or the Bank by another institution or entity, a sale of
substantially all of the assets of Bancorp or the Bank, a change in beneficial
ownership of a majority or more of Bancorp's or the Bank's stock, or a change in
the majority of the Board of Directors or Bancorp or the Bank. Upon a change in
control, Mr. Bolyard will be entitled to receive all compensation and benefits
earned, and all remaining compensation payable through the expiration of the
employment agreement.
Severance Pay Agreements. The Bank entered into Severance Pay Agreements
(the "Severance Agreement") with Messrs. Walden, Mouw, Hulett and Donnell to
provide these employees with severance pay in the event of termination. The
terms of the Severance Agreements provide the employee an amount equal to three
week's total compensation for each 12 months of employment with the Bank and, as
the case may be, its successors. Total severance would not, however, exceed an
amount equal to an employee's total compensation during the prior 12-month
period.
Deferred Compensation Arrangements - The Bank has entered into a
Deferred Compensation Agreement with Mr. Walden, the President, Chief Executive
Officer and director of Bancorp and the Bank. This agreement has provided for
specific contributions from the Bank during the period from January 1990 through
January 1995. Currently, Mr. Walden makes elective contributions under the
approval of the Committee. All contributions to this Deferred Compensation
Agreement are fully vested at all times and increase in value at a rate equal to
the Bank's annual portfolio yield, less 0.5 percent. Commencing January 1, 2002,
the Bank will make payments to Mr. Walden at his option either through a lump
sum payment, or an annuity over a specified period of time.
Central Bancorporation ("Central") had previously entered into an
Executive Deferred Compensation Agreement with Gary M. Bolyard, who was the
President, Chief Executive Officer and a director of Central. Pursuant to the
acquisition of Central and its bank subsidiary, Central Washington Bank, by
Bancorp in August 1996, Bancorp assumed the agreement with Mr. Bolyard that
provides for certain deferred payments in consideration of Mr. Bolyard's
services and contributions to the growth and progress of Central. Upon
retirement on January 1, 2001, death, termination in connection with a
disability or a change in control, Mr. Bolyard is entitled to receive $57,635
annually from the date of such event for a period of 15 years. In connection
with this agreement, an insurance policy on the life of
8
<PAGE> 12
Mr. Bolyard in the face amount of $500,000 was purchased to offset future
payments which may be made under this deferred compensation agreement.
Option Grants in Last Fiscal Year. The following table sets forth
information concerning the grant of stock options to the Chief Executive Officer
and the named executive officers during the fiscal year ended September 30,
1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK PRICE
APPRECIATION
FOR OPTION TERM(2)
- ---------------------------------------------------------------------- -------------------
NUMBER OF % OF TOTAL
NAME SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION 5% 10%
GRANTED(1) IN FISCAL ($/SHARE) DATE
YEAR
---------- ---------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Walden 2,000 6.6% $32.75 12-17-06 $41,193 $104,390
Clark W. Donnell 1,000 3.3% $32.75 12-17-06 $20,596 $52,195
Kenneth G. Hulett 600 2.0% $32.75 12-17-06 $12,358 $31,317
H. Glenn Mouw 800 2.6% $32.75 12-17-06 $16,477 $41,756
Gary M. Bolyard 450 1.5% $32.75 12-17-06 $9,268 $23,488
</TABLE>
(1) Each option granted vests at the rate of 25 percent per annum. Options
will become immediately exercisable in the event of a change in control
of Bancorp. Each option was granted under Bancorp's 1993 Plan and has an
exercise price equal to the fair market value of the Common Stock on the
date of grant. Each of the indicated options was granted on December 17,
1996.
(2) The dollar gains under these columns result from calculations required
by the Securities and Exchange Commission's rules and are not intended
to forecast future price appreciation of the Common Stock. It is
important to note that options have value to the listed executives only
if the stock price increases above the exercise price shown in the table
during the effective option period. In order for the listed executives
to realize the potential values set forth in the 5% and 10% columns in
the table, the price per share of Bancorp's Common Stock would be
approximately $53.35 and $84.95, respectively, as of the expiration date
of the options.
Option Exercise/Value Table. The following information with respect to
options exercised during the fiscal year ended September 30, 1997, and remaining
unexercised at the end of the fiscal year, is presented for the Chief Executive
Officer and the named executive officers.
9
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
NAME EXERCISE(#) ($) OPTIONS AT YEAR END FISCAL YEAR END (1)
---- ----------- -------- --------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Walden 0 $0 47,750 2,750 $1,520,318 $37,188
Clark W. Donnell 0 $0 33,125 2,000 $1,050,191 $31,563
Kenneth G. Hulett 4,500 $150,223 28,525 1,700 $899,218 $29,313
H. Glenn Mouw 0 $0 33,075 1,850 $1,049,816 $30,438
Gary M. Bolyard 0 $0 14,213 337 $487,016 $2,528
</TABLE>
(1) On September 30, 1997, the closing price of Common Stock was $40.25. For
purposes of the foregoing table, stock options with an exercise price
less than that amount are considered to be "in-the-money" and are
considered to have a value equal to the difference between this amount
and the exercise price of the stock option multiplied by the number of
shares covered by the stock option.
Report of the Compensation Committee. The Committee is responsible for
establishing and implementing all compensation policies of Bancorp and its
subsidiaries. The Committee is also responsible for evaluating the performance
of the Chief Executive Officer of Bancorp and approving an appropriate
compensation level. The Chief Executive Officer evaluates the performance of the
executive vice presidents of Bancorp and recommends to the Committee individual
compensation levels for approval by the Committee.
The Committee believes that a compensation plan for executive officers
should take into account management skills, long-term performance results and
stockholder returns. The principles underlying compensation policies are: (i) to
attract and retain key executives who are highly qualified and are vital to the
long-term success of Bancorp and its subsidiaries; (ii) to provide levels of
compensation competitive with those offered throughout the banking industry;
(iii) to motivate executives to enhance long-term stockholder value by helping
them build their own ownership in the corporation; and (iv) to integrate the
compensation program with Bancorp's long-term strategic planning and measurement
processes.
Bancorp's current compensation plan involves a combination of salary,
bonuses to reward short-term performance, deferred compensation, and grants of
stock options to encourage long-term performance. The salary levels of executive
officers are designed to be competitive within the banking and financial
services industries. The Committee annually reviews Bancorp's industry peer
group and the Washington Financial Industry Survey and the America's Community
Banker's Survey of salaries to determine competitive salary levels. Individual
annual performance is reviewed to determine appropriate salary adjustments.
10
<PAGE> 14
A performance bonus plan is in effect for the officers of Bancorp, which
is designed to compensate for performance. The plan is designed to provide for
bonuses of up to 60 percent of salary for the chief executive officer, up to 45
percent of salary level for executive vice presidents, up to 25 percent of
salary for vice presidents, and up to 10 percent of salary for certain other
officers. Approximately half of the performance bonus is based on quantifiable
data such as return on average equity and the efficiency ratio.
The remainder is based on subjective evaluations of performance.
The Committee has awarded stock options to employees of Bancorp and its
subsidiaries in accordance with the provisions of the 1993 Plan approved by the
Board of Directors and the stockholders. Stock options are Bancorp's primary
long-range compensation program designed to reward performance that benefits
stockholders. Awards of stock options are intended to provide employees with
increased motivation and incentive to exert their best efforts on behalf of
Bancorp by enlarging their personal stake in its success through the opportunity
to increase the value of their stock ownership in Bancorp. Options issued to
employees are at a price equal to the average of the closing bid and ask prices
of the Common Stock on the date of the grant in order to ensure that any value
derived from the grant is realized by stockholders generally. The amount of
options granted to an employee is based on the employee's performance and
relative responsibilities within Bancorp. Options may have a deferred vesting
and will not be exercisable prior to vesting.
During the fiscal year ended September 30, 1997, the Compensation and
Stock Option Committee granted stock options totaling 30,340 shares to employees
of Bancorp and its subsidiaries.
During the fiscal year ended September 30, 1997, the base salary of
Stephen M. Walden, President and Chief Executive Officer of Bancorp, was
$227,250. In addition to this, he received a performance bonus of $122,360 and
was credited with $25,250 in deferred compensation. This resulted in total
compensation of $374,860, which represents a 27 percent increase from the
previous year. The performance bonus was paid based on his meeting the
performance criteria established by the Committee in the performance bonus plan.
The Committee believes the increase in compensation is appropriate based on
competitive salary surveys and the excellent performance of Bancorp.
The Committee also administers the 1996 Director Plan, whereby outside
directors are paid an annual fee of $8,000 payable in cash, stock options, or a
combination of cash and stock options.
COMPENSATION AND STOCK OPTION COMMITTEE
<TABLE>
<S> <C>
Vern Sims (Chairman) Henry Koetje
Barney R. Beeksma C. Stephen Lewis
</TABLE>
11
<PAGE> 15
Compensation Committee Interlocks and Insider Participation. Mr.
Beeksma, a member of the Compensation and Stock Option Committee, was formerly
President and Chief Executive Officer of the Bank. He retired from those
positions in 1990. Although the Committee approved compensation paid to
executive officers, the entire board of directors of Bancorp sets the
compensation for Mr. Beeksma as Chairman of the Board of Directors.
Performance Graph. The following graph compares the cumulative total
stockholder return on Bancorp's Common Stock with the cumulative total return on
the Nasdaq (U.S. Companies) Index and peer groups of the SNL Thrift Index, the
SNL $1-5 Billion Asset Thrift Index and the SNL Western Thrift Index. Total
return assumes the reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
PERIOD ENDING
-----------------------------------------------------------
INDEX 9/30/92 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
- ----- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
InterWest Bancorp, Inc. 100 153 143 158 306 425
Nasdaq (U.S. Companies Index) 100 131 132 182 216 207
SNL Thrift Index 100 156 171 223 270 469
SNL $1-5 Billion Thrift Index 100 167 183 241 295 504
SNL Western Thrift Index 100 134 129 166 202 367
</TABLE>
*Assumes that the value of the investment in Bancorp's Common Stock and each
index was $100 on September 30, 1992, and that all dividends were reinvested
12
<PAGE> 16
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Bancorp's executive officers
and directors, and persons who beneficially own more than 10 percent of any
registered class of Bancorp's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10 percent stockholders are required by
regulation to furnish Bancorp with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms it has received and
written representations provided to Bancorp by the above referenced persons,
Bancorp believes that during the fiscal year ended September 30, 1997, all
filing requirements applicable to its reporting officers, directors and greater
than ten percent beneficial owners were properly and timely complied with,
except that Messrs. Crawford, Lewis, Mock and Olson and Ms. Gorton each
inadvertently filed a late statement of change in beneficial ownership on Form 4
to report the exercise of stock options during January 1997; Mr. Hulett
inadvertently filed two late Forms 4 to report the exercise of stock options
during December 1996 and June 1997; and Mr. Carlson inadvertently filed three
late Forms 4, one to report the exercise of stock options in November 1997, the
second to report the sale of common stock in February 1997, and the third to
report the transfer of securities from between direct and indirect beneficial
ownership in June 1997.
TRANSACTIONS WITH MANAGEMENT
Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and must not involve more than the
normal risk of repayment or present other unfavorable features. The Bank is
therefore prohibited from making any new loans or extensions of credit to
executive officers and directors at different rates or terms than those offered
to the general public and has adopted a policy to this effect.
PROPOSAL II - APPROVAL OF AMENDMENTS TO, AND RESTATEMENT OF
THE 1993 INCENTIVE STOCK OPTION PLAN
On October 21, 1997, the Board of Directors of Bancorp adopted, subject
to stockholder approval, certain amendments to, and restatement of the 1993
Plan.
The objective of the 1993 Plan is to reward performance and build the
participant's equity interest in Bancorp by providing long-term incentives and
rewards to officers, key employees and other persons who provide services to
Bancorp and its subsidiaries and who contribute to the success of Bancorp by
their innovation, ability, industry, loyalty and exceptional service.
13
<PAGE> 17
The amendments adopted by the Board in connection with the amendment and
restatement of the 1993 Plan relate to the following items:
o an amendment authorizing the grant of non-incentive stock options
("NISOs") and providing for the transfer of NISOs by the
optionholder to family members;
o an amendment authorizing the Committee to include a "reload"
provision in any stock option agreement entered into after the
effective date of the amended and restated plan; and
o certain changes related to amendments to Rule 16b-3 under the
Exchange Act, which exempts certain transactions under employee
benefits plans such as the 1993 Plan from the short-swing trading
rules of federal securities legislation.
o miscellaneous amendments to reflect the assumption of the 1993
Plan by Bancorp in connection with the formation of Bancorp in
1995.
The following summary is a brief description of the material features of
the 1993 Plan, as amended and restated, and of the material amendments to the
1993 Plan. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE 1993
PLAN, AS AMENDED AND RESTATED, A COPY OF WHICH IS ATTACHED AS APPENDIX A.
SUMMARY OF THE 1993 PLAN
Type of Stock Option Grants. The 1993 Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and NISOs.
Administration. As amended and restated, the 1993 Plan is administered
by a committee of the Board of Directors consisting of at least two directors
who satisfy the "non-employee director" standard in Rule 16b-3 under the
Exchange Act. Subject to the terms of the 1993 Plan and resolutions of the
Board, the Committee interprets the 1993 Plan and is authorized to make all
determination and decisions thereunder. The Committee also determines the
participants to whom stock options will be granted, the type and amount of stock
options that will be granted and the terms and conditions applicable to such
grants.
Participants. All officers and employees of Bancorp and its
subsidiaries, as well as other persons who render services to Bancorp, are
eligible to participate in the 1993 Plan. At present, approximately 110 officers
and employees have been granted stock options covering, in the aggregate,
249,223 shares of Bancorp's Common Stock since the original effective date of
the 1993 Plan that was approved by the stockholders at the 1993 Annual Meeting.
Number of Shares of Common Stock Available. Shares of Common Stock to be
issued under the 1993 Plan may be either authorized but unissued shares, or
reacquired shares held by Bancorp in its treasury. Any shares subject to an
award, which expires or is terminated unexercised, will again be available for
issuance under the 1993 Plan.
Stock Option Grants. The exercise price of each ISO or NISO will not be
less than the fair market value of the Common Stock on the date the ISO or NISO
is granted. The aggregate fair market value of the shares for which ISOs granted
to any employee may be exercisable for the first time by such employee during
any calendar year (under all stock option plans of Bancorp and its subsidiaries)
may not exceed $100,000.
14
<PAGE> 18
The exercise price of an option may be paid in cash, Common Stock or
other property, by the surrender of all or part of the option being exercised,
by the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Committee.
Under the 1993 Plan, the Committee may permit participants to transfer
options to eligible transferees (as such eligibility is determined by the
Committee). Each option may be exercised during the holder's lifetime, only by
the holder or the holder's guardian or legal representative, and after death
only by the holder's beneficiary or, absent a beneficiary, by the estate or by a
person who acquired the right to exercise the option by will or the laws of
descent and distribution. Options may become exercisable in full at the time of
grant or at such other times and in such installments as the Committee
determines or as may be specified in the 1993 Plan. Options may be exercised
during periods before and after the participant terminates employment, as the
case may be. However, no option may be exercised after the tenth anniversary of
the date the option was granted. The Committee may, at any time and without
additional consideration, accelerate the date on which an option becomes
exercisable.
Under the 1993 Plan, as amended and restated, the Committee is
authorized to include a "reload" provision in any new option grant that would,
in the event a participant uses previously owned shares of Common Stock in
payment of the exercise price of outstanding options or the optionee's tax
withholding obligation. This provision provides for the automatic grant to the
participant of a new option covering the number of shares surrendered, including
shares related to the optionee's tax withholding obligation. The new option
would be of the same type and be subject to the same terms and conditions as the
exercised option.
Effect of a Change in Control. In the event of a Change in Control (as
defined in the 1993 Plan) or imminent Change in Control of Bancorp, each
outstanding stock option grant will become fully vested and immediately
exercisable. In addition, in the event of a Change in Control or imminent Change
in Control, the Committee may, in its discretion, provide for the cash
settlement of any stock option.
Term of the 1993 Plan. The 1993 Plan, as amended and restated, becomes
effective upon adoption by the Board, subject to stockholder approval. Any
options granted after the amendment and restatement of the 1993 Plan, but prior
to receipt of stockholder approval, are contingent upon such approval. The 1993
Plan will expire on the tenth anniversary of the original effective date of the
1993 Plan or January 1, 2003, unless sooner terminated by the Board.
Amendment of the 1993 Plan. The revision of Rule 16-3 under the Exchange
Act eliminated certain restrictions on a Board of Director's ability to amend an
employee benefit plan without stockholder approval. As amended and restated, the
1993 Plan allows the Board to amend the 1993 Plan without stockholder approval
unless such approval is required to comply with a tax law or regulatory
requirement.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the 1993 Plan is based on
federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or
to Bancorp upon the grant of an ISO and/or NISO. On the exercise of an ISO
during employment or within three months thereafter, the optionee will not
recognize any income and Bancorp will not be entitled to a deduction, although
the excess of the fair market value of the shares on the date of exercise over
the option price is includible in the optionee's alternative minimum taxable
income, which may give rise to alternative minimum tax liability for the
optionee. Generally, if the optionee disposes of shares acquired upon exercise
of an ISO within two
15
<PAGE> 19
years of the date of grant or one year of the date of exercise, the optionee
will recognize ordinary income, and Bancorp will be entitled to a deduction,
equal to the excess of the fair market value of the shares on the date of
exercise over the option price (limited generally to the gain on the sale). The
balance of any gain or loss will be treated as a capital gain or loss to the
optionee. If the shares are disposed of after the two year and one year periods
mentioned above, Bancorp will not be entitled to any deduction, and the entire
gain or loss for the optionee will be treated as a capital gain or loss.
On exercise of an NISO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable to
the optionee as ordinary income and deductible by Bancorp. Bancorp must properly
withhold taxes in respect of the exercise. This disposition of shares acquired
upon the exercise of a NISO will generally result in a capital gain or loss for
the optionee but will have no tax consequences for Bancorp.
New 1993 Plan Benefits. Although Bancorp anticipates that option grants
will be made to officers and employees on or after the effective date of the
amended and restated 1993 Plan, no specific determinations have been made
regarding the timing, recipients, size or terms of individual awards.
Vote Required and Board of Directors' Recommendation. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENTS TO, AND
RESTATEMENT OF THE 1993 PLAN. The affirmative vote of a majority of the votes
present in person or represented by proxy at the Annual Meeting will be required
to approve the amendments to, and the restatement of the 1993 Plan.
AUDITORS
The Board of Directors has appointed Ernst & Young LLP, independent
auditors, to serve as Bancorp's independent auditors for the fiscal year ending
September 30, 1998. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement if he or she so
desires.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy materials of Bancorp
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at Bancorp's main office at 275
Southeast Pioneer Way, Oak Harbor, Washington, no later than August 20, 1998.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
16
<PAGE> 20
In addition, Bancorp's Bylaws provide that if a stockholder intends to
nominate a candidate for election as a director, the stockholder must deliver
written notice of his or her intention to the Secretary of Bancorp not less than
thirty days nor more than sixty days prior to the date of a meeting of
stockholders; provided, however, that if less than thirty-one days' notice of
the meeting is given to stockholders, such written notice must be delivered to
the Secretary of Bancorp not later than the close of the tenth day following the
day on which notice of the meeting was mailed to stockholders. The notice must
set forth (i) the name, age, business address and, if known, residence address
of each nominee for election as a director, (ii) the principal occupation or
employment of each nominee, (iii) the number of shares of stock of Bancorp that
are beneficially owned by each such nominee, (iv) such other information as
would be required to be included in a proxy statement soliciting proxies for the
election of the proposed nominee pursuant to the Exchange Act, including,
without limitation, such person's written consent to being named in the proxy
statement as a nominee and to serving as a director, if elected, and (v) as to
the stockholder giving such notice (a) his or her name and address as they
appear on Bancorp's books and (b) the class and number of shares of Bancorp
which are beneficially owned by such stockholder.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by Bancorp. Bancorp
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of Bancorp may solicit proxies
personally or by telecopier or telephone at their regular salary or hourly
compensation.
Bancorp's 1997 Annual Report to Stockholders has been mailed along with
this Proxy Statement to all stockholders of record as of the close of business
on December 2, 1997. Any stockholder that has not received a copy of such annual
report may obtain a copy by writing to Bancorp. Such annual report is not to be
treated as part of the proxy solicitation material or having been incorporated
herein by reference.
A copy of Bancorp's Form 10-K as filed with the Securities and Exchange
Commission will be furnished without charge to stockholders of record as of
December 2, 1997, upon written request to Margaret Mordhorst, Secretary,
InterWest Bancorp, Inc., 275 Southeast Pioneer Way, Oak Harbor, Washington
98277.
BY ORDER OF THE BOARD OF DIRECTORS
MARGARET MORDHORST
SECRETARY
Oak Harbor, Washington
December 15, 1997
17
<PAGE> 21
APPENDIX A
INTERWEST BANCORP, INC.
AMENDED AND RESTATED
1993 INCENTIVE STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the InterWest
Bancorp, Inc. Amended and Restated 1993 Incentive Stock Option Plan (the
"Plan"). Prior to the formation of the Holding Company, the Plan was maintained
by the Holding Company's wholly-owned subsidiary, InterWest Bank. The purpose of
the amendment and restatement is to reflect the assumption of the Plan by the
Holding Company, to incorporate provisions relating to the grant of
Non-Incentive Stock Options, and to make other changes deemed necessary and
appropriate by the Board. The purpose of the Plan is to attract and retain the
best available personnel as officers and employees and to provide additional
incentive to employees of the Holding Company or any present or future parent or
subsidiary of the Holding Company to promote the success of the business. The
Plan is intended to provide for the grant of Incentive Stock Options, within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and Non-Incentive Stock Options. Each and every one of the provisions of
the Plan relating to Incentive Stock Options shall be interpreted to conform to
the requirements of Section 422 of the Code.
2. Definitions. As used herein, the following definitions shall
apply.
(a) "Award" means the grant by the Committee of an Incentive
Stock Option, a Non-Incentive Stock Option, or any combination thereof, as
provided in the Plan.
(b) "Board" shall mean the Board of Directors of the Holding
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Common Stock" shall mean common stock, $.20 par value per
share, of the Holding Company.
(e) "Committee" shall mean the Stock Option Committee appointed
by the Board in accordance with paragraph 4(a) of the Plan.
(f) "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
employment by the Holding Company or any present or future Parent or Subsidiary
of the Holding Company. Employment shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence approved by the
Holding Company or in the case of transfers between payroll locations of the
Holding Company or between the Holding Company, its Parent, its Subsidiaries or
a successor.
(g) "Effective Date" shall mean the date specified in Section 14
hereof.
1
<PAGE> 22
(h) "Employee" shall mean any person employed by the Holding
Company or any present or future Parent or Subsidiary of the Holding Company.
(i) "Holding Company" shall mean InterWest Bancorp, Inc., a
Washington corporation.
(j) "Incentive Stock Option" or "ISO" means an option to
purchase Shares granted by the Committee pursuant to Section 7 hereof which is
subject to the limitations and restrictions of Section 7 hereof and is intended
to qualify under Section 422 of the Code.
(k) "Non-Incentive Stock Option" or "Non-ISO" means an option to
purchase Shares granted by the Committee pursuant to Section 8, which option is
not intended to qualify under Section 422 of the Code.
(l) "Option" shall mean an Incentive or Non-Incentive Stock
Option granted pursuant to this Plan.
(m) "Optioned Stock" shall mean stock subject to an Option
granted pursuant to the Plan.
(n) "Optionee" shall mean any person who receives an Option.
(o) "Parent" shall mean any present or future corporation which
would be a "parent corporation" as defined in Subsections 424(e) and (g) of the
Code.
(p) "Participant" means any officer or key employee of the
Holding Company or any Parent or Subsidiary of the Holding Company or any other
person providing a service to the Holding Company who is selected by the
Committee to receive an Award.
(q) "Plan" shall mean this InterWest Bancorp, Inc. Amended and
Restated 1993 Incentive Stock Option and Plan.
(r) "Share" shall mean one share of the Common Stock.
(s) "Subsidiary" shall mean any present or future corporation
which would be a "subsidiary corporation" as defined in Subsections 424(f) and
(g) of the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 644,000 shares.
Such Shares may either be authorized but unissued or treasury shares.
An Award shall not be considered to have been made under the Plan
with respect to any Option which terminates and new Awards may be granted under
the Plan with respect to the number of Shares as to which such termination has
occurred.
2
<PAGE> 23
4. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered
by the Committee consisting of at least two directors of the Holding Company who
are "nonemployee directors" within the meaning of Rule 16b-3 of the regulations
issued under the Securities Exchange Act of 1934, as amended.
(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the expressed provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.
The Chairman of the Holding Company and such other officers as
shall be designated by the Committee are hereby authorized to execute
instruments evidencing Awards on behalf of the Holding Company and to cause them
to be delivered to the Participants.
(c) Effect of Committee's Decision. All decisions, determinations
and interpretations of the Committee shall be final and conclusive on all
persons affected thereby.
5. Eligibility.
(a) Awards may be granted to officers, key employees and other
persons. The Committee shall from time to time determine the officers and key
employees and other persons who shall be granted Options or Awards under the
Plan, the number to be granted to each such officers and key employees and other
persons under the Plan, and whether Options granted to each such Participant
under the Plan shall be Incentive and/or Non-Incentive Stock Options. In
selecting Participants and in determining the number of shares of Common Stock
to be granted to each such Participant pursuant to each Award granted under the
Plan, the Committee may consider the nature of the services rendered by each
such Participant, each such Participant's current and potential contribution to
the Holding Company, and such other factors as the Committee may, in its sole
discretion, deem relevant. Officers and key employees or other persons who have
been granted an Award may, if otherwise eligible, be granted additional Options
or Awards.
(b) The aggregate fair market value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by each Employee during the calendar
year in which they are first exercisable (under all Incentive Stock Option
plans, as defined in Section 422 of the Code, of the Holding Company or any
present or future Parent or Subsidiary of the Holding Company) shall not exceed
$100,000. Notwithstanding the prior provisions of this Section 5, the Committee
may grant Options in
3
<PAGE> 24
excess of the foregoing limitations, provided said Options shall be clearly and
specifically designated as not being Incentive Stock Options, as defined in
Section 422 of the Code.
6. Term of Plan. The Plan shall continue in effect for a term of ten
(10) years from January 1, 1993, the original effective date of the Plan prior
to its amendment and restatement, unless sooner terminated pursuant to Section
17. No Option shall be granted under the Plan after ten (10) years from January
1, 1993.
7. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each and every
Incentive Stock Option granted pursuant to the Plan shall comply with, and be
subject to, the following terms and conditions:
(a) OPTION PLAN.
(i) The price per share at which each Incentive Stock
Option granted under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the fair market value of
the Common Stock at the time such Incentive Stock Option is granted. For
such purposes, the price per share shall be not less than the average of
the bid and asked price on the business day preceding the grant of the
options.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock
at the time the Incentive Stock Option is granted, the Incentive Stock
Option price shall not be less than one hundred and ten percent (110%)
of the fair market value of the Common Stock at the time the Incentive
Stock Option is granted.
(b) PAYMENT.
Full payment for each share of Common Stock purchased upon the
exercise of any Incentive Stock Option granted under the Plan shall be made at
the time of exercise of each such Incentive Stock Option and shall be paid in
cash (in United States Dollars), Common Stock or a combination of cash and
Common Stock. Common Stock utilized in full or partial payment of the exercise
price shall be valued at its fair market value at the date of exercise. The
Holding Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No shares of Common Stock shall be issued
until full payment therefor has been received by the Holding Company, and no
Optionee shall have any of the rights of a shareholder of the Holding Company
until shares of Common Stock are issued to him.
(c) TERM OF INCENTIVE STOCK OPTION.
The term of each Incentive Stock Option granted pursuant to the
Plan shall be not more than ten (10) years from the date each such Incentive
Stock Option is granted, provided that in the case of an Employee who owns stock
representing more than 10% of the Common Stock
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<PAGE> 25
outstanding at the time the Incentive Stock Option is granted, the term of the
Incentive Stock Option shall not exceed five (5) years.
(d) EXERCISE GENERALLY.
Except as otherwise provided in Section 9 hereof, no Incentive
Stock Option may be exercised unless the optionee shall have been in the employ
of the Holding Company at all times during the period beginning with the date of
grant of any such Incentive Stock Option and ending on the date three (3) months
prior to the date of exercise of any such Incentive Stock Option. The Committee
may impose additional conditions upon the right of an Optionee to exercise any
Incentive Stock Option granted hereunder which are not inconsistent with the
terms of the Plan or the requirements for qualification as an Incentive Stock
Option under Section 422 of the Code.
(e) TRANSFERABILITY.
Any Incentive Stock Option granted pursuant to the Plan shall be
exercised during any Optionee's lifetime only by the Optionee to whom it was
granted and shall not be assignable or transferable otherwise than by will or by
the laws of descent and distribution.
8. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
and every Non-Incentive Stock Option granted pursuant to the Plan shall comply
with and be subject to the following terms and conditions:
(a) OPTION PRICE.
The exercise price per share of Common Stock for each
Non-Incentive Stock Option granted pursuant to the Plan shall be determined in
the same manner as the exercise price of an Incentive Stock Option by applying
the provisions of Section 7(a) of the Plan.
(b) PAYMENT.
Full payment for each share of Common Stock purchased upon the
exercise of any Non-Incentive Stock Option granted under the Plan shall be made
at the time of exercise of each such Non-Incentive Stock Option and shall be
paid in cash (in United States Dollars), Common Stock or a combination of cash
and Common Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at its fair market value at the date of exercise.
The Holding Company shall accept full or partial payment in Common Stock only to
the extent permitted by applicable law. No shares of Common Stock shall be
issued until full payment therefor has been received by the Holding Company and
no Optionee shall have any of the rights of a shareholder of the Holding Company
until the shares of Common Stock are issued to him.
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<PAGE> 26
(c) TERM.
The term of each Non-Incentive Stock Option granted pursuant to
the Plan shall be not more than ten (10) years from the date each such
Non-Incentive Stock Option is granted.
(d) EXERCISE GENERALLY.
The Committee may impose additional conditions upon the right of
any Participant to exercise any Non-Incentive Stock Option granted hereunder
which are not inconsistent with the terms of the Plan.
(e) TRANSFERABILITY.
Except as provided herein, no Non-Qualified Stock Option granted
under this Plan is transferable except by will or the laws of descent and
distribution. The Committee shall have discretionary authority to permit the
transfer of any Non-Incentive Stock Option to members of an Optionee's immediate
family, including trusts for the benefit of such family members and partnerships
in which such family members are the only partners; provided, however, that a
transferred Non-Incentive Stock Option may be exercised by the transferee on any
date only to the extent that the Optionee would have been entitled to exercise
the Non-Incentive Stock Option on such date had the Non-Incentive Stock Option
not been transferred. Any transferred Non-Incentive Stock Option shall remain
subject to the terms and conditions of the Participant's stock option agreement.
9. Effect of Termination of Employment, Disability or Death on Incentive
Stock Options.
(a) TERMINATION OF EMPLOYMENT.
In the event that any Optionee's employment by the Holding
Company shall terminate for any reason, other than Permanent and Total
Disability (as such term is defined in Section 22(e)(3) of the Code) or death,
all of any such Optionee's Incentive Stock Options, and all of any such
Optionee's rights to purchase or receive shares of Common Stock pursuant
thereto, shall automatically terminate on the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the expiration of
not more than three (3) months after the date of such termination of employment,
but only if, and to the extent that, the Optionee was entitled to exercise any
such Incentive Stock Options at the date of such termination of employment. In
the event that a subsidiary ceases to be a subsidiary of the Holding Company,
the employment of all of its employees who are not immediately thereafter
employees of the Holding Company shall be deemed to terminate upon the date such
subsidiary so ceases to be a subsidiary of the Holding Company.
(b) DISABILITY.
In the event that any Optionee's employment by the Holding
Company shall terminate as the result of the Permanent and Total Disability of
such Optionee, such Optionee
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<PAGE> 27
may exercise any Incentive Stock Options granted to him pursuant to the Plan at
any time prior to the earlier of (i) the respective expiration dates of any such
Incentive Stock Options or (ii) the date which is one (1) year after the date of
such termination of employment, but only if, and to the extent that, the
Optionee was entitled to exercise any such Incentive Stock Options at the date
of such termination of employment.
(c) DEATH.
In the event of the death of any Optionee, any Incentive Stock
Options granted to any such Optionee may be exercised by the person or persons
to whom the Optionee's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee's estate
during the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is one (1) year after the date of death of such Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 9(c), any
Incentive Stock Option held by an Optionee shall be considered exercisable at
the date of his death if the only unsatisfied condition precedent to the
exercisability of such Incentive Stock Option at the date of death is the
passage of a specified period of time.
(d) INCENTIVE STOCK OPTIONS DEEMED EXERCISABLE.
For purposes of Sections 9(a), 9(b) and 9(c) above, any Incentive
Stock Option held by any Optionee shall be considered exercisable at the date of
the termination of his employment if any such Incentive Stock Option would have
been exercisable at such date of termination of employment.
(e) TERMINATION OF INCENTIVE STOCK OPTIONS.
To the extent that any Incentive Stock Option granted under the
Plan to any Optionee whose employment by the Holding Company terminates shall
not have been exercised within the applicable period set forth in this Section
9, any such Incentive Stock Option, and all rights to purchase or receive shares
of Common Stock pursuant thereto, as the case may be, shall terminate on the
last day of the applicable period.
10. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. To the extent that any Non-Incentive Stock Option
granted under the Plan to any Optionee whose employment by the Holding Company
or the Association has terminated for any reason other than for cause, shall not
have been exercised, such Non-Incentive Stock Option, and the right to purchase
or receive shares of Common Stock pursuant thereto, as the case may be, shall
terminate upon the earlier to occur of (1) the date that is ten (10) years from
the date of grant of the Non-Incentive Stock Option or (2) the date that is one
(1) year from the date of the Optionee's termination of employment (two (2)
years in the event of termination of employment by reason of death or Permanent
and Total Disability (as such term is defined in Section 22(e)(3) of the Code)).
7
<PAGE> 28
11. Right of Repurchase and Restrictions on Disposition. The
Committee, in its sole discretion, may include, as a term of any Incentive Stock
Option or Non-Incentive Stock Option, the right (the "Repurchase Right"), but
not the obligation, to repurchase all or any amount of the Shares acquired by an
Optionee pursuant to the exercise of any such Options. The intent of the
Repurchase Right is to encourage the continued employment of the Optionee. The
Repurchase Right shall provide for, among other things, a specified duration of
the Repurchase Right, a specified price per Share to be paid upon the exercise
of the Repurchase Right and a restriction on the disposition of the Shares by
the Optionee during the period of the Repurchase Right. The Repurchase Right may
permit the Holding Company to transfer or assign such right to another party.
The Holding Company may exercise the Repurchase Right only to the extent
permitted by applicable law.
12. Recapitalization, Merger, Consolidation, Change in Control and
Similar Transactions.
(a) ADJUSTMENT.
Subject to any required action by the shareholders of the Holding
Company, the aggregate number of shares of Common Stock for which stock options
may be granted hereunder, the number of shares of Common Stock covered by each
outstanding stock option, and the exercise price per share of Common Stock of
each such stock option, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or decrease
in the number of such shares of Common Stock effected without the receipt of
consideration by the Holding Company.
(b) CHANGE IN CONTROL.
All outstanding Options shall become immediately exercisable in
the event of a change in control or imminent change in control of the Holding
Company, as determined by the Committee. In the event of such a change in
control or imminent change in control, the Optionee shall, at the discretion of
the Committee, be entitled to receive cash in an amount equal to the fair market
value of the Common Stock subject to any Incentive Stock Option over the Option
Price of such shares, in exchange for the surrender of such Options by the
Optionee on that date in the event of a change in control or imminent change in
control of the Holding Company. For purposes of this Section, "change in
control" shall mean: (i) the execution of an agreement for the sale of all, or a
material portion, of the assets of the Holding Company; (ii) the execution of an
agreement for a merger or recapitalization of the Holding Company or any merger
or recapitalization whereby the Holding Company is not the surviving entity;
(iii) a change of control of the Holding Company, as otherwise defined or
determined under regulations promulgated by any applicable bank regulatory
agency; or (iv) the acquisition, directly or indirectly, of the beneficial
ownership (within the meaning of that term as it is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended and the rules promulgated
thereunder) of twenty-five percent (25%) or more of the outstanding voting
securities of the Holding Company by any person, trust, entity or group. The
term "person" refers to an individual or a
8
<PAGE> 29
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. For purposes of this Section, "imminent change in
control" shall refer to any offer or announcement, oral or written, by any
person or persons acting as a group, to acquire control of the Holding Company.
The decision of the Committee as to whether a change in control or imminent
change in control has occurred shall be conclusive and binding.
(c) EXTRAORDINARY CORPORATE ACTION.
Subject to any required action by the shareholders of the Holding
Company, in the event of any change in control, recapitalization, merger,
consolidation, exchange of shares, spin-off, reorganization, tender offer,
liquidation or other extraordinary corporate action or event, the Committee, in
its sole discretion, shall have the power, prior or subsequent to such action or
event to:
(i) appropriately adjust the number of shares of Common
Stock subject to each stock option, the exercise price per share of
Common Stock, and the consideration to be given or received by the
Holding Company upon the exercise of any outstanding Option;
(ii) cancel any or all previously granted Options,
provided that appropriate consideration is paid to the Optionee in
connection therewith; and/or
(iii) make such other adjustments in connection with the
Plan as the Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable; provided, however, that no action
shall be taken by the Committee which would cause Incentive Stock
Options granted pursuant to the Plan to fail to meet the requirements of
Section 422 of the Code.
Except as expressly provided in Section 12(a) and 12(b)
hereof, no Optionee shall have any rights by reason of the occurrence of
any of the events described in this Section 12.
(d) ACCELERATION.
The Committee shall at all times have the power to accelerate the
exercise date of Options previously granted under the Plan.
13. Time of Granting Options. The date of grant of an Option under
the Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the determination shall be
given to each Employee to whom an Option is so granted within a reasonable time
after the date of such grant.
14. Effective Date. This amended and restated Plan shall become
effective upon adoption by the Board. Options may be granted prior to
ratification of the Plan by the stockholders if the exercise of such Options is
subject to such stockholder ratification.
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<PAGE> 30
15. Approval of Stockholders. The amended and restated Plan shall be
approved by stockholders of the Holding Company within twelve (12) months before
or after the date it becomes effective.
16. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on him by the grant of a new
Option at such time, or shall not materially decrease the Optionee's benefits
under the Option without the consent of the holder of the Option, except as
otherwise permitted under Section 18 hereof.
17. Reload Options.
On or after the grant date of any Non-Incentive Stock Option (or any
Incentive Stock Option awarded on or after the Effective Date of the Plan), the
Committee may provide for the automatic grant to the Optionee of a "reload"
Option in the event the Optionee surrenders Shares of Common Stock in
satisfaction of the exercise price upon the exercise of an Option or the
Optionee's tax withholding obligation. Each reload Option shall cover the same
number of Shares of Common Stock as the number of Shares of Common Stock
utilized by the Optionee to exercise the original Option (including shares
related to the Optionee's tax withholding obligation) and shall, to the extent
not inconsistent with any requirements applicable to an Incentive Stock Option
under the Code, be of the same type as the original Option.
18. Amendment and Termination of the Plan.
(a) ACTION OF THE BOARD.
The Board shall have complete power and authority to amend the Plan at
any time it is deemed necessary or appropriate; provided, however, that no
amendment shall be made without shareholder approval if such approval is
necessary for the Holding Company to comply with an applicable tax law or
regulatory requirement. No termination or amendment of the Plan may, without the
consent of the Optionee to whom any award shall theretofore have been granted
under the Plan, adversely affect the right of such individual under such award.
(b) CHANGE IN APPLICABLE LAW.
Notwithstanding any other provision contained in the Plan, in the
event of a change in any Federal or state law, rule or regulation which would
make the exercise of all or part of any previously granted Incentive and/or
Non-Incentive Stock Option unlawful or subject the Holding Company to any
penalty, the Committee may restrict any such exercise without the consent of the
Optionee or other holder thereof in order to comply with any such law, rule or
regulation or to avoid any such penalty.
10
<PAGE> 31
19. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to any Option granted under the Plan unless the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the rules
and regulations promulgated thereunder, any applicable state securities law and
the requirements of any stock exchange upon which the Shares may then be listed.
The inability of the Holding Company to obtain from any
regulatory body or authority deemed by the Holding Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder shall relieve
the Holding Company of any liability with respect to the nonissuance of such
Shares.
As a condition to the exercise of an Option, the Holding Company
may require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of Federal or state securities law.
20. Reservation of Shares. During the term of the Plan, the Holding
Company will reserve and keep available a number of Shares sufficient to satisfy
the requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have
any interest in any fund or special asset of the Holding Company by reason of
the Plan or the grant of any Incentive or Non-Incentive Stock Option to him
under the Plan. No trust fund shall be created in connection with the Plan or
any grant of any Incentive or Non-Incentive Stock Option hereunder and there
shall be no required funding of amounts which may become payable to any
Participant.
22. Withholding Tax. Where a Participant or other person is entitled
to receive Shares pursuant to the exercise of an Option pursuant to the Plan,
the Holding Company shall have the right to require the Participant or such
other person to pay the Holding Company the amount of any taxes which the
Holding Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or sell without notice, a number of such Shares sufficient
to cover the amount required to be withheld.
24. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Washington, except to the extent that
Federal law shall be deemed to apply.
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<PAGE> 32
REVOCABLE PROXY
INTERWEST BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 20, 1998
The undersigned hereby appoints Directors Koetje, Sims and Walden of the
Board of Directors of InterWest Bancorp, Inc. ("Bancorp") with full powers of
substitution to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of Bancorp which the undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held at the Elks Club, 155 Northeast
Ernst Street, Oak Harbor, Washington, on Tuesday, January 20, 1998, at 2:00
p.m., local time, and at any and all adjournments thereof, as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
1. The election as director of the nominees
listed below (except as marked to the
contrary below). [ ] [ ]
Michael T. Crawford
Jean Gorton
Vern Sims
INSTRUCTIONS: To withhold your vote
For any individual nominee, write the
nominee's name on the line below.
FOR AGAINST ABSTAIN
--- ------- -------
2. To approve the adoption of amendments
to, and the restatement of Bancorp's
1993 Incentive Stock Option Plan [ ] [ ] [ ]
3. To consider and act upon such other matters as may properly come before
the Annual Meeting or any adjournments thereof.
</TABLE>
The Board of Directors recommends a vote "FOR" the listed propositions.
This proxy also provides voting instructions to the Trustees of
InterWest Bank's Employee Stock Ownership Plan for participants with shares
allocated to their accounts.
<PAGE> 33
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THE BOARD OF DIRECTORS IN ITS BEST
JUDGMENT WILL VOTE THIS PROXY. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY ALSO
CONFERS DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT
TO APPROVAL OF THE MINUTES OF THE PRIOR MEETING OF STOCKHOLDERS, THE ELECTION OF
ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR GOOD CAUSE
WILL NOT SERVE, AND MATTERS INCIDENT TO THE CONDUCT OF THE 1998 ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of Bancorp at
the Annual Meeting of the stockholder's decision to terminate this proxy, then
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from Bancorp prior to the execution
of this proxy of Notice of Annual Meeting of Stockholders, a proxy statement
dated December 15, 1997, and an Annual Report to Stockholders.
Dated: _____________________, 199____
- ---------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ---------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED,
POSTAGE-PREPAID ENVELOPE.
