================================================================================
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 [_] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a
WESTBANK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] 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:
----------------------------------------------------------------------
================================================================================
WESTBANK CORPORATION
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
APRIL 21, 2004
AND
PROXY STATEMENT
================================================================================
Your Vote Is Important
You are urged to exercise your right to vote by indicating
your choices on the enclosed proxy card. Please date, sign
and promptly return your proxy card in the enclosed
postage-paid envelope. You may, nevertheless, vote in person
if you attend the meeting.
================================================================================
WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01089-3310
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 21, 2004
MARCH 15, 2004
TO THE SHAREHOLDERS OF WESTBANK CORPORATION:
Notice is hereby given that the 2004 Annual Meeting of Shareholders of Westbank
Corporation (the "Corporation") will be held at 9:00 AM on Wednesday, April 21,
2004, at the Best Western Sovereign Hotel & Conference Center, 1080 Riverdale
Street, West Springfield, Massachusetts, for the following purposes, all as set
forth in the Proxy Statement accompanying this notice:
1. Election of the individuals listed as nominees in the Proxy Statement
accompanying this notice of meeting.
2. To approve the Westbank Corporation 2004 Recognition and Retention
Plan.
3. Ratification of the appointment of the firm of Grant Thornton LLP as
the Corporation's independent public accountants for the fiscal year
ending December 31, 2004.
4. To act upon such other matters as may properly be brought before the
meeting or any adjournment thereof.
The record date and hour for determining shareholders entitled to notice of, and
to vote at, the meeting has been fixed at 5:00 PM, March 1, 2004.
By order of the Board of Directors
Robert J. Perlak
Clerk
West Springfield, Massachusetts
March 15, 2004
PLEASE SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY
IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE.
YOU MAY, NEVERTHELESS, VOTE IN PERSON IF YOU DO ATTEND THE MEETING.
1
PROXY STATEMENT
Approximate date of mailing
March 15, 2004
WESTBANK CORPORATION
225 PARK AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01089-3310
(413) 747-1400
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 2004
INTRODUCTION
This Proxy Statement is furnished to shareholders in connection with the
solicitation of proxies on behalf of the Board of Directors of Westbank
Corporation (the "Corporation") to be used at the 2004 Annual Meeting of
Shareholders of the Corporation to be held at the Best Western Sovereign Hotel &
Conference Center, 1080 Riverdale Street, West Springfield, Massachusetts, on
Wednesday, April 21, 2004 at 9:00 AM and at any adjournments thereof.
The close of business on March 1, 2004 has been fixed as the record date for
determination of shareholders of the Corporation entitled to notice of and to
vote at the 2004 Annual Meeting of Shareholders. The only class of issued and
outstanding voting securities of the Corporation is the $2.00 par value Common
Stock (the "Common Stock"). As of the record date, the number of shares of
Common Stock outstanding and entitled to vote at the 2004 Annual Meeting of
Shareholders is 4,459,920. Each share of Common Stock is entitled to one vote.
The affirmative vote of a majority of the shares of Common Stock of the
Corporation represented at the 2004 Annual Meeting is required to approve the
Westbank Corporation 2004 Recognition and Retention Plan and to appoint the
auditor of the Corporation. The affirmative vote of a plurality of the votes
cast by shareholders is required to elect Directors.
Execution of the enclosed proxy will not affect the shareholder's right to
attend the meeting and vote in person. A shareholder that has given a proxy has
the power to revoke it at any time before it is exercised by delivering notice
of revocation, or a duly executed proxy bearing a later date, to the Treasurer
of the Corporation.
2
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide, in substance, that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible and that the term of office of one class shall expire and a successor
class shall be elected at each Annual Meeting of the Shareholders. The
Corporation's Board of Directors presently consists of nine members.
Six Directors will continue to serve after the 2004 Annual Meeting of
Shareholders. In accordance with the By-Laws of the Corporation, three (3)
nominees shall be elected to serve a three(3)-year term, until the 2007 Annual
Meeting of Shareholders, and for such further time as may be required for the
election and qualification of their successors. Unless returned proxies properly
indicate that authority to vote for any of the nominees named herein is
withheld, all proxies received by the Corporation in time for the 2004 Annual
Meeting of Shareholders will be voted in favor of the election of the nominees
listed below. In the event any of the nominees named herein becomes unable or
unwilling to accept nomination for election, the persons identified as proxies
in the accompanying form of proxy will vote the shares represented by executed
proxies in favor of the nomination and election of such substitute nominees as
the Board of Directors of the Corporation may select.
The following tables name the individuals nominated for Director and those
Directors of the Corporation who will continue to serve after the Meeting, and
indicate their age, the period of time they have served as Director of the
Corporation or its predecessor, their position with the Corporation, and their
principal occupation or employment. No nominee or Director holds a directorship
in any corporation, other than the Corporation, with a class of securities
registered pursuant to Section 12 of the Securities and Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act or any corporation
registered as an investment company under the Investment Company Act of 1940.
3
The following individuals are nominees for election as a Director of the
Corporation at the 2004 Annual Meeting to serve for a 3-year term until the 2007
Annual Meeting of Shareholders:
NOMINEE AND CURRENT OCCUPATION HAS SERVED ON BOARD OF
OR EMPLOYMENT; BUSINESS DIRECTORS OF THE CORPORATION CORPORATE
EXPERIENCE DURING THE PAST 5 YEARS AGE OR ITS PREDECESSOR SINCE OFFICES HELD
- ---------------------------------- --- ------------------------ ------------
Roland O. Archambault
PRESIDENT AND OWNER
PINNACLE RACEWAY 71 1989 Director
Donald R. Chase
VICE CHAIRMAN OF THE BOARD,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
WESTBANK CORPORATION;
PRESIDENT AND Director, Vice Chairman of
CHIEF EXECUTIVE OFFICER the Board, President and
WESTBANK 57 1990 Chief Executive Officer
George R. Sullivan
CHIEF EXECUTIVE OFFICER
SULLIVAN PAPER COMPANY, INC. 50 1997 Director
The following Directors will continue to serve after the meeting:
DIRECTOR AND CURRENT OCCUPATION HAS SERVED ON BOARD OF
OR EMPLOYMENT; BUSINESS DIRECTORS OF THE CORPORATION CORPORATE
EXPERIENCE DURING THE PAST 5 YEARS AGE OR ITS PREDECESSOR SINCE OFFICES HELD TERM EXPIRES IN
- ---------------------------------- --- ------------------------ ------------ ---------------
Mark A. Beauregard
ATTORNEY
RESNIC, BEAUREGARD,
WAITE AND DRISCOLL 52 1986 Director 2005
David R. Chamberland
PRESIDENT
CHICOPEE BUILDING SUPPLY, INC. 65 1989 Director 2006
Ernest N. Laflamme, Jr.
TREASURER Director,
CITY OF CHICOPEE 72 1987 Chairman of the Board 2006
G. Wayne McCary
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
EASTERN STATES EXPOSITION 61 1999 Director 2006
Robert J. Perlak
CORPORATE CLERK
WESTBANK CORPORATION;
PRIVATE INVESTOR 68 1987 Director and Clerk 2005
James E. Tremble
PRESIDENT
VALLEY COMMUNICATIONS SYSTEMS, INC. 65 1986 Director 2005
4
The total number of special and regular meetings of the Board of Directors of
the Corporation during the fiscal year ended December 31, 2003 was twelve (12).
Each Director attended at least 75% of all Board of Directors meetings held in
2003 during the period for which each was a Director. All Directors are
encouraged to attend the Annual Meeting of Shareholders. Nine (9) Directors
attended the 2003 Annual Meeting of Shareholders.
All members of the Board of Directors, with the exception of Mr. Chase, are
"independent" as that term is defined by the applicable listing standards of
Nasdaq. Mr. Chase is considered an inside Director due to his employment as an
executive officer of the Corporation.
COMMITTEES
The Board of Directors each year appoints Directors to serve on standing
committees of the Board of Directors, including the Executive Committee, the
Compensation Committee, the Nominating Committee and the Audit Committee. The
members of the Executive Committee, the Compensation Committee, the Nominating
Committee and the Audit Committee of the Corporation also make up these same
committees for Westbank ("the Bank"), the wholly owned subsidiary of the
Corporation. All Directors attended at least 75% of the meetings of committees
of which they were a member during the period each was a Director.
EXECUTIVE COMMITTEE
The members of the Executive Committee in 2003 were Messrs. Laflamme,
Beauregard, Chase, Sullivan and Tremble. The Executive Committee met eleven (11)
times during 2003.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors consists of five (5)
Directors. Current member of the Committee are Messrs. Laflamme, Beauregard,
McCary, Sullivan and Tremble. Each of the members of the Compensation Committee
meets the definition of an "independent director" as defined in the National
Association of Securities Dealers ("Nasdaq") listing standards, as those
standards have been modified or amended. The Compensation Committee determines
compensation for executive officers of the Company and the Bank, which
determinations are approved by the Board of Directors. The Compensation
Committee met four (4) times during 2003.
5
NOMINATING COMMITTEE
The Nominating Committee of the Board of Directors consists of three (3)
Directors. Current member of the Nominating Committee are Messrs. Chamberland,
Laflamme and Sullivan. The Board of Directors has adopted a written charter for
the Nominating Committee, a copy of which is attached to this proxy statement as
Appendix B and is available at the Company's Web site,
www.westbankcorponline.com. Each current member of the Nominating Committee
meets the definition of an "independent director" as defined in the Nasdaq
listing standards, as those standards have been modified or amended. The
Nominating Committee met one (1) time during 2003.
The Nominating Committee identifies candidates for the Board of Directors and
recommends individuals to be presented for shareholder approval at the annual
meeting of shareholders and to fill any vacancies on the Board. Prospective
nominees are evaluated by the Nominating Committee on the basis of a subjective
review of the background of each prospective nominee and the current needs of
the Company. Factors considered by the Committee include:
o the candidate's background, including, but not limited to, education
and employment experience;
o the candidate's standards of integrity, work ethic and commitment;
o the candidate's ability to devote sufficient time and effort to the
duties of a Director, including, but not limited to, the candidate's
service on other boards of directors; and
o the candidate's specific skills and experience in light of the needs
of the Company and the Board of Directors, including, but not limited
to, the need for specific expertise to serve on committees of the
Board
The Committee may also consider other factors as it deems appropriate. The
Committee may determine to interview candidates, either in person or by
telephone. Upon completion of the evaluation process, the Committee recommends
candidates for election to the Board of Directors.
The policy of the Nominating Committee is to consider any Director candidate
recommended by the shareholders on the same basis that the Committee considers
candidates identified by the Committee. Recommendations must be made in writing
to Clerk, Westbank Corporation, 225 Park Avenue, Post Office Box 149, West
Springfield, Massachusetts 01090-0149, with whatever supporting material the
shareholder deems appropriate. All requests must be received at the above
address on or before December 1, 2004 for consideration at the 2005 Annual
Meeting of Shareholders.
TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
From time to time, the Corporation, through the Bank, enters into banking
transactions, in the ordinary course of business, with certain of the executive
officers and Directors of the Corporation, their immediate families or entities
in which such persons may have a ten percent (10%) beneficial interest or for
which such persons may serve as executive officers. All loans made to such
persons are on substantially the same terms as comparable transactions and do
not involve more than the normal risk of collection. The aggregate amount of
such loans at December 31, 2003 was $6,996,000. As of the date of this Proxy
Statement, all of the loans described herein are performing loans in accordance
with their original terms.
6
REPORT OF THE AUDIT COMMITTEE
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER CORPORATION FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE CORPORATION SPECIFICALLY
INCORPORATES THIS REPORT BY REFERENCE THEREIN.
The Audit Committee of the Board of Directors has developed a charter for the
Committee, which was approved by the full Board on May 15, 2003. The complete
text of the charter, which reflects standards set forth in SEC regulations and
Nasdaq rules, is attached to this Proxy as Appendix C.
The members of the Audit Committee are Messrs. Archambault, Chamberland, McCary
and Sullivan. The Board of Directors, in its business judgment , has determined
that all members of the Audit Committee are "independent", as required by the
applicable listing standards of Nasdaq and the Sarbanes-Oxley Act of 2004, and
the rules promulgated thereunder.
Management of the Company is responsible for the preparation, presentation and
integrity of the Company's financial statements and for the effectiveness of
internal control over financial reporting. Management and the internal Audit
Department are responsible for maintaining the Company's accounting and
financial reporting principles and internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent auditors are responsible for auditing the Company's financial
statements, expressing an opinion as to their conformity with generally accepted
accounting principles and annually auditing management's assessment of the
effectiveness of internal controls over financial reporting.
As set forth in more detail in the charter, the Audit Committee's primary
responsibilities fall into three (3) broad categories:
o first, the Committee is charged with monitoring the preparation of
quarterly and annual financial reports by the Corporation's
management, including discussions with management and the
Corporation's outside auditors about the annual financial statements
and key accounting and reporting matters;
o second, the Committee is responsible for matters concerning the
relationship between the Corporation and its outside auditors,
including recommending their appointment or removal, subject to
ratification by the shareholders; reviewing the scope of their audit
services and related fees, as well as any other services being
provided to the Corporation; and determining whether the outside
auditors are independent (based in part on the annual letter provided
to the Corporation by the outside auditors pursuant to INDEPENDENCE
STANDARDS BOARD STANDARD NO. 1); and
o third, the Committee oversees management's implementation of an
effective system of internal controls, including review of policies
relating to legal and regulatory compliance, ethics and conflicts of
interests; and review of the activities and recommendations of the
Corporation's internal and external auditing programs.
7
The Committee has implemented procedures to ensure that during the course of
each fiscal year it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under the Committee's charter. To carry
out its responsibilities, the Committee met four (4) times during Fiscal Year
2003.
The members of the Audit Committee are not full-time employees of the Company
and are not performing the functions of auditors or accountants. As such, it is
not the duty or responsibility of the Audit Committee or its members to conduct
"field work" or other types of auditing or accounting review or procedures or to
set auditor independence standards. Members of the Committee necessarily rely on
the information provided to them by management and the independent accountants.
Accordingly, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted accounting standards,
that the financial statements are presented in accordance with generally
accepted accounting principles, or that the Company's auditors are, in fact,
"independent."
In overseeing the preparation of the Corporation's financial statements, the
Committee met with both management and the Corporation's outside auditors to
review and discuss all financial statements prior to their issuance and to
discuss significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included discussion
with the outside auditors of matters required to be discussed pursuant to
STATEMENT ON AUDITING STANDARDS NO. 61 (COMMUNICATION WITH AUDIT COMMITTEES).
With respect to the Corporation's outside auditors, the Committee, among other
things, discussed with Grant Thornton LLP matters relating to its independence,
including the disclosures made to the Committee as required by the INDEPENDENCE
STANDARDS BOARD STANDARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES).
Listed below are aggregate fees billed to date to the Corporation for the fiscal
year ended December 31, 2003 by the Corporation's principal accounting firm,
Grant Thornton LLP:
- --------------------------------------------------------------------------------
Audit Fees $105,521
Tax Services $ 30,601 (a)
(a) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
- --------------------------------------------------------------------------------
Finally, the Committee continued to monitor the scope and adequacy of the
Corporation's internal auditing program, including proposals for adequate
staffing and to strengthen internal procedures and controls where appropriate.
8
On the basis of these reviews and discussions, the Committee recommended to the
Board of Directors that the Board approve the inclusion of the Corporation's
audited financial statements in the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003, for filing with the Securities and
Exchange Commission.
Respectfully submitted by:
Roland O. Archambault David R. Chamberland
CHAIRMAN G. Wayne McCary
George R. Sullivan
THE AUDIT COMMITTEE
CODE OF ETHICS
The Company has adopted a Code of Ethics applicable to the members of the Board
of Directors, all employees of the Company, the Chief Executive Officer, the
Chief Financial Officer, the Controller and persons performing similar
functions. A copy of the Code of Ethics is attached to this Proxy Statement as
Appendix D and is available at the Company's Web site,
www.westbankcorponline.com. The Company will report amendments to or waivers
from its Code of Ethics as such apply to the Company's Chief Executive Officer,
Chief Financial Officer and Controller in a manner consistent with Item 10 of
Form 8-K of the Securities and Exchange Commission.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders may communicate directly with the Chairman of the Board of
Directors or the Board of Directors as a group by writing to the Chairman of the
Board of Directors, Westbank Corporation, 225 Park Avenue, Post Office Box 149,
West Springfield, Massachusetts 01090-0149. Shareholders may communicate with
any committee of the Board of Directors by writing to the Chairman of such
committee at the address listed above. All correspondence will be reviewed by
the Clerk of the Company, who shall forward the correspondence to the
appropriate Director or committee.
EXECUTIVE OFFICERS
In addition to the President of the Corporation, who is a Director and is listed
in the tables above, the other executive officers of the Corporation are as
follows: Gary L. Briggs, age 53, is Executive Vice President of the Corporation
and the Bank; John M. Lilly, age 55, is Treasurer and Chief Financial Officer of
the Corporation and is also Executive Vice President and Treasurer of the Bank.
Each executive officer serves for a one-year term or until their successor is
elected and qualified.
9
BENEFICIAL OWNERSHIP OF STOCK
The following table sets forth certain information as of the record date with
respect to all individuals known to the Corporation to be the beneficial owner
of more than 5% of the outstanding Common Stock of the Corporation:
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF OWNER BENEFICIALLY OWNED (1) OUTSTANDING SHARES
- ------------------------- --------------------- ------------------
Richard S. Sullivan
Carol B. Sullivan
96 Prynwood Road 8.43%
Longmeadow, MA 01106 375,949
Donald R. Chase
Diana L. Chase
39 Timber Ridge Road
West Springfield, MA 01089 352,463 (2) 7.90%
10
______________________
(1) Under regulations of the Securities and Exchange Commission, a person is
treated as the beneficial owner of a security if the person directly or
indirectly (through contract, arrangement, understanding, relationship or
otherwise) has or shares (a) voting power, including the power to vote or
to direct the voting, of such security, or (b) investment power with
respect to such security, including the power to dispose or direct the
disposition of such security. A person is also deemed to have beneficial
ownership of any security that such person has the right to acquire within
60 days.
(2) Included in the shares beneficially owned by Mr. Chase are 245,175
unexercised stock options.
The following table and related notes set forth information as of the record
date regarding the Corporation's Common Stock beneficially owned by each
Director and nominee and by Directors, nominees and officers of the Corporation:
NAME OF INDIVIDUAL NUMBER OF SHARES PERCENT OF
OR PERSONS IN GROUP BENEFICIALLY OWNED (1)(2)(3) OUTSTANDING SHARES
- ------------------- ---------------------------- ------------------
Roland O. Archambault 26,202 (4) .59%
Mark A. Beauregard 28,992 .65
David R. Chamberland 10,412 .23
Donald R. Chase 352,463 (4)(5) 7.90
Ernest N. Laflamme, Jr. 67,737 1.52
G. Wayne McCary 12,975 .29
Robert J. Perlak 54,231 1.22
George R. Sullivan 36,500 (4) .82
James E. Tremble 31,170 .70
All Directors, nominees and
Executive Officers as a group
(11 persons, including those 861,580 19.35
named above)(3) (5)
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's Directors, Executive Officers and
holders of more than 10% of the Corporation's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Corporation. The Corporation believes that, during the fiscal year ended
December 31, 2003, all such persons complied with all Section 16(a) filing
requirements. In making this statement, the Corporation has relied upon the
written representations of its Directors and Executive Officers.
11
____________________
(1) Based upon information provided to the Corporation by the indicated
persons.
(2) Under regulations of the Securities and Exchange Commission, a person is
treated as the beneficial owner of a security if the person directly or
indirectly (through contract, arrangement, understanding, relationship or
otherwise) has or shares (a) voting power, including the power to vote or
to direct the voting of such security, or (b) investment power with respect
to such security, including the power to dispose or direct the disposition
of such security. A person is also deemed to have beneficial ownership of
any security that such person has the right to acquire within 60 days.
(3) The information in the table includes all shares under stock options that
were exercisable on the record date or 60 days thereafter. As of that date,
Mr. Chase owned exercisable options to purchase 245,175 shares, and all
Directors and Officers as a group owned exercisable options to purchase
488,100 shares.
(4) Indicates a nominee for election as a Director of the Corporation at the
2004 Annual Meeting of Shareholders.
(5) For the purposes of the above table, the term "Executive Officer" means any
individual elected as an Executive Officer of the Corporation.
EXECUTIVE MANAGEMENT COMPENSATION
Compensation decisions for executive officers of the Corporation are made by the
Compensation Committee and approved by the full Board of Directors. Mr. Chase,
who is a member of the Board of Directors, as well as an executive officer of
the Corporation, is not a member of the Compensation Committee and neither
participated in the discussion of nor voted upon his compensation package as a
member of the Board of Directors.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE MANAGEMENT COMPENSATION
Set forth below is the report of the Compensation Committee of the Corporation
regarding executive management compensation, as required by applicable rules of
the Securities and Exchange Commission.
The executive compensation program of the Corporation consists of three (3)
primary components: base salary, cash incentive compensation and stock options,
all of which are administered by the Compensation Committee.
Decisions by the Compensation Committee relating to the compensation of the
Corporation's executive officers are approved by the full Board of Directors,
except as otherwise set forth herein. In determining the proper amount of
compensation for each executive officer, the Compensation Committee considers
various factors, including, inter alia:
o the performance of the Corporation;
o the individual's performance as an executive officer of the
Corporation;
o the amount of compensation paid to similarly situated executive
officers in similar sized corporations; and
o the length of service with the Corporation.
During 2001, the Corporation engaged the firm of Kaeding, Ernst & Company to
review the Bank's retirement plans for executive officers, including the 1995
Westbank Executive Supplemental Retirement Plan. As a result of this review, the
Compensation Committee adopted the 2001 Supplemental Retirement Plan. The
purpose of the supplemental plans is to provide executives with retirement
benefits that are comparable to those provided to its other employees.
Supplemental retirement benefits are provided to all of the executive officers
and certain other participants under various non-qualified plans. The 2001
Supplemental Plan is designed to provide a retirement benefit at normal
retirement (age 65) equal to seventy-five percent (75%) of the participant's
compensation at retirement, less fifty percent (50%) of the Social Security
benefit and the simple life annuity value of the participant's account balances
derived from employer-provided contributions under all qualified and
non-qualified defined contribution plans maintained by the Corporation.
Supplemental retirement benefits are provided to certain employees, including
each executive officer, whose benefits under the Westbank Money Purchase Plan
are limited in amount under federal tax laws and regulations.
12
During 2001, the Compensation Committee engaged Thomas Warren & Associates, Inc.
to assist in establishing salary levels and an incentive compensation plan for
the Corporation's senior executives pursuant to the Corporation's Incentive
Compensation Plan, which is used by the Compensation Committee as a guide in
determining executive officer compensation.
The Corporation also maintains the 1996 Incentive Stock Option Plan ("the 1996
Plan"). The 1996 Plan was established to promote the growth and profitability of
the Corporation and provide key employees with an incentive to achieve corporate
goals.
During 2003, the Chief Executive Officer, Donald R. Chase, received a salary
increase of $34,097, an increase of eight percent (8%) of his base salary. The
increase was recommended by the Compensation Committee following its evaluation
of Mr. Chase's performance as Chief Executive Officer and the overall
performance of the Corporation for 2002. In addition, as a result of The
Incentive Compensation Plan, Mr. Chase received a cash bonus, payable in 2004,
of $171,694 based on the Corporation's 2003 performance.
The Compensation Committee believes that the 2003 compensation of executive
officers was reasonable, given the Corporation's performance and utilizing the
criteria listed above.
Respectfully submitted by:
Ernest N. Laflamme, Jr. Mark A. Beauregard
CHAIRMAN G. Wayne McCary
George R. Sullivan
James E. Tremble
COMPENSATION INFORMATION
The following table sets forth the cash compensation paid, as well as long-term
compensation paid, for each of the last three fiscal years to all executive
officers of the Corporation who received over $100,000.00 in cash compensation
during 2003.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARD PAYOUTS
OTHER ---------- -------------
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION ($) AWARD(S)($) SAR'S(#) PAYOUTS SATION ($)(1)
- ------------------ ---- -------- -------- ---------- ----------- -------- ------- -------------
Donald R. Chase 2003 $440,197 $171,694 N/A N/A N/A N/A $233,594
PRESIDENT AND 2002 $406,100 $158,986 N/A N/A 102,375 N/A $194,909
CHIEF EXECUTIVE OFFICER 2001 $376,544 $ 58,880 N/A N/A N/A N/A $115,916
Gary L. Briggs 2003 $223,803 $ 38,579 N/A N/A N/A N/A $ 67,207
EXECUTIVE VICE PRESIDENT- 2002 $206,758 $ 71,442 N/A N/A 31,500 N/A $ 55,056
LENDING 2001 $192,761 $ 26,460 N/A N/A N/A N/A $ 38,813
John M. Lilly 2003 $225,959 $ 77,158 N/A N/A N/A N/A $ 88,257
TREASURER AND 2002 $208,995 $ 71,442 N/A N/A 31,500 N/A $ 72,971
CHIEF FINANCIAL OFFICER 2001 $194,765 $ 26,400 N/A N/A N/A N/A $ 47,283
13
(1) The items included for 2003 consist of the following: annual contribution
on behalf of the Money Purchase Pension Plan amounting to $20,822 for each
executive; annual allocation under the company's supplemental pension plans
of $205,772, $39,894 and $60,785 for the accounts of Messrs. Chase, Briggs
and Lilly respectively; annual contribution on behalf of the company's 401K
plan of $7,000, $6,491 and $6,650 for Messrs. Chase, Briggs and Lilly
respectively.
EMPLOYMENT AGREEMENT
Westbank Corporation has entered into an employment agreement with Mr. Donald R.
Chase to secure his services as President and Chief Executive Officer. This
employment agreement has a term of three years, beginning on December 17, 2003,
and may be renewed annually after a review of the executive's performance. This
agreement provides for an initial minimum annual salary of $429,235,
discretionary cash bonuses, and participation on generally applicable terms and
conditions in other compensation and fringe benefit plans. It also guarantees
customary corporate indemnification and errors and omissions insurance coverage
throughout the employment term and for so long as the executive is subject to
suit for claims deriving from service to Westbank Corporation and Westbank after
termination. Westbank Corporation and Westbank may terminate the executive's
employment, and the executive may resign, at any time with or without cause.
However, in the event of termination during the term without cause, the
executive will be owed severance benefits generally equal to the value of the
cash compensation and fringe benefits (including the value of accruals under
both tax-qualified and nonqualified benefits plans in which he participates)
that the executive would have received if he had continued working for the
remaining unexpired term of the agreement. The same severance benefits would be
payable if the executive resigns during the term following: a loss of title,
office or membership on the board of directors; material reduction in duties,
functions or responsibilities; or other material breach of contract by Westbank
Corporation or Westbank that is not cured within 30 days. For 90 days after a
change in control, the executive may resign for any reason and collect severance
benefits as if he had been discharged without cause, calculated as if the
remaining unexpired term of the agreement were three years. If Westbank
Corporation or Westbank experiences a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
their assets as contemplated by section 280G of the Internal Revenue Code, a
portion of any severance payments under the employment agreement might
constitute an "excess parachute payment" under current federal tax laws. Federal
tax laws impose a 20% excise tax, payable by the executive, on excess parachute
payments. Under the employment agreement, Westbank Corporation would reimburse
the executive for the amount of this excise tax and would make an additional
gross-up payment so that, after payment of the excise tax and all income and
excise taxes imposed on the reimbursement and gross-up payments, the executive
will retain approximately the same net after-tax amounts under the employment
agreement that he would have retained if there were no 20% excise tax. The
effect of this provision is that Westbank Corporation, rather than the
executive, bears the financial cost of the excise tax. Neither Westbank
Corporation nor Westbank could claim a federal income tax deduction for an
excess parachute payment, excise tax reimbursement payment or gross-up payment.
CHANGE OF CONTROL AGREEMENTS
Westbank Corporation and Westbank have jointly entered into thirty-month change
of control agreements with each of Messrs. Briggs and Lilly. The term of these
agreements is perpetual until Westbank gives notice of non-extension, at which
time the term is fixed for three years. Generally, Westbank may terminate the
employment of any officer covered by these agreements, with or without cause, at
any time prior to a change of control without obligation for severance benefits.
14
However, if Westbank or Westbank Corporation signs a merger or other business
combination agreement, or if a third party makes a tender offer or initiates a
proxy contest, it could not terminate an officer's employment without cause
without liability for severance benefits. The severance benefits would generally
be equal to the value of the cash compensation and fringe benefits that the
officer would have received if he or she had continued working for an additional
thirty months. Westbank would pay the same severance benefits if the officer
resigns after a change of control. If Westbank or Westbank Corporation
experiences a change in ownership, a change in effective ownership or control,
or a change in the ownership of a substantial portion of their assets as
contemplated by section 280G of the Internal Revenue Code, a portion of any
severance payments under the change of control agreements might constitute an
"excess parachute payment" under current federal tax laws. Federal tax laws
impose a 20% excise tax, payable by the officer, on excess parachute payments.
Under the change of control agreement, Westbank Corporation would reimburse the
officers for the amount of this excise tax and would make an additional gross-up
payment so that, after payment of the excise tax and all income and excise taxes
imposed on the reimbursement and gross-up payments, the officers would retain
approximately the same net-after tax amounts under the change of control
agreement that they would have retained if there were no 20% excise tax. The
effect of this provision is that Westbank Corporation, rather than the officers,
bears the financial cost of the excise tax. Neither Westbank Corporation nor
Westbank could claim a federal income tax deduction for an excess parachute
payment, excise tax reimbursement payment or gross-up payment.
1985 INCENTIVE STOCK OPTION PLAN FOR KEY EMPLOYEES
In February, 1985, the Board of Directors of the Corporation unanimously adopted
the 1985 Incentive Stock Option Plan for Key Employees (the "1985 Stock Plan"),
which was approved by the shareholders at the Annual Meeting in April, 1985.
The 1985 Stock Plan is administered by the Board of Directors. The Board of
Directors was authorized to grant stock options to the professional and
supervisory employees of the Corporation and its subsidiaries at any time until
February 19, 1995.
All options were granted at 100% of the fair market value of the Common Stock of
the Corporation on the date of the grant. Each stock option terminates not more
than 10 years after the date of the grant. Options are exercisable in such
installments as may be determined by the Board of Directors. Payment of stock
purchased on the exercise of a stock option must be made in full at the time the
stock option is exercised. Options may not be assigned or transferred, other
than by will or the laws of descent or distribution.
As of February 19, 1995, the 1985 Stock Plan expired. No options were granted or
available for granting during 2003.
A total of 6,750 options were exercised in 2003. No options were terminated
during 2003 and a total of 506 options remain unexercised as of the record date.
15
1996 STOCK INCENTIVE PLAN
On February 21, 1996, the Board of Directors unanimously adopted the Westbank
Corporation 1996 Stock Incentive Plan (the "1996 Plan"), which was approved by
the shareholders at the Annual Meeting in April, 1996. The 1996 Plan was amended
at the 2002 Annual Meeting of Shareholders to increase the number of shares
reserved for issuance thereunder by 200,000.
The 1996 Plan is administered by the Compensation Committee (the "Committee").
The Committee is authorized to grant Employee Awards under the 1996 Plan to any
employee. In practice, Employee Awards are made to a group of management
employees.
All options are granted at 100% of the fair market value of the Common Stock of
the Corporation on the date of the grant. Each stock option terminates not more
than 10 years after the date of the grant. Options are exercisable in such
installments as may be determined by the Committee. Payment of stock purchased
on the exercise of a stock option must be made in full at the time the stock
option is exercised. Options may not be assigned or transferred, other than by
will or the laws of descent or distribution.
The Board of Directors may, at any time, terminate and, from time to time, may
amend or modify the 1996 Plan, without approval of Westbank shareholders, except
to the extent that such shareholder approval is required by applicable law or
regulation. There is no set termination date for the 1996 Plan.
No stock options were granted during 2003, while 20,800 options were exercised
and 1,050 options were terminated. A total of 505,670 options remain unexercised
as of the record date and 11,950 options are available for future grants.
AGGREGATED EXERCISES AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE (1) UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME ON EXERCISE (#) REALIZED ($) OPTIONS AT FY-END (#) AT FY-END ($)
- ---------------- --------------- ------------ -------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Donald R. Chase 0 0 211,050 34,125 $1,550,912 $192,156
Gary L. Briggs 0 0 75,600 10,500 589,450 59,125
John M. Lilly 0 0 75,600 10,500 589,450 59,125
(1) Based on the difference between the options exercise price and the closing
price of the common stock on the date the options were exercised.
16
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information as of December 31, 2003
concerning outstanding awards and securities available for future issuance
pursuant to the Corporation's equity compensation plans.
=======================================================================================================
(c)
(a) (b) Number of securities remaining
Number of securities to Weighted-average available for future issuance
be issued upon exercise exercise price of under equity compensation
of outstanding options, outstanding options, plans (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a)
- ------------------------- ----------------------- -------------------- -----------------------------
Equity compensation plans 627,080 $10.78 26,000
approved by security
holders
- ------------------------- ----------------------- -------------------- -----------------------------
Equity compensation plans N/A N/A N/A
not approved by security
holders
- ------------------------- ----------------------- -------------------- -----------------------------
Total 627,080 $10.78 26,000
=======================================================================================================
LONG-TERM INCENTIVE PLANS AND RETIREMENT PLANS
As set forth below, executive officers and employees are eligible to participate
in the Westbank Money Purchase Pension Plan.
The Bank maintains a Money Purchase Pension Plan (the "Plan") available to
employees of the Corporation and the Bank. Full-time employees become eligible
to participate in the Plan when they have both (i) reached the age of 20-1/2 and
(ii) completed six (6) months of service (as defined in the Plan).
Contributions to the Plan may be made by both the Bank and a participant. The
Bank's contributions will be made to the Plan whether or not a participant
chooses to contribute. The annual contribution by the Bank to each participant's
account for 2003 equals 7% of a participant's annual compensation, plus 5.7% of
a participant's annual compensation in excess of the participant's Social
Security Taxable Wage Base.
17
DIRECTOR COMPENSATION
During 2003, Directors of the Corporation who are not salaried employees
received Directors' fees of $14,000. The Chairman of the Board of Directors
received annual remuneration of $19,500, while the Clerk of the Corporation
received an annual fee of $16,500. Directors who are also salaried employees
receive no additional compensation for their services as Directors of the
Corporation.
1995 DIRECTORS STOCK OPTION PLAN
In February, 1995, the Board of Directors of the Corporation unanimously adopted
the 1995 Directors Stock Option Plan (the "1995 Plan"), which was approved by
the shareholders at the Annual Meeting in April, 1995.
The 1995 Plan is administered by the non-employee Directors. The purpose of the
1995 Plan is to enhance the Corporation's ability to attract and retain highly
qualified individuals to serve as members of the Corporation's Board of
Directors and to provide additional incentives to non-employee Directors to
promote the success of the Corporation.
On each anniversary of the effective date of the 1995 Plan, each eligible
Director is granted an option to purchase 1,000 shares of the Corporation's
Common Stock. A total of 8,000 options were granted on February 15, 2004 at an
option price of $22.90 per share. A total of 6,050 shares remain available for
future grants under the 1995 Plan. The Plan is scheduled to terminate on
February 15, 2005.
Each stock option terminates not more than 10 years after the date of the grant.
Payment of stock purchased on the exercise of an option must be made in full at
the time the stock option is exercised. Options may not be assigned or
transferred, other than by will or the laws of descent or distribution. A total
of 20,325 options were exercised during 2003.
18
1996 STOCK INCENTIVE PLAN
On February 21, 1996, the Board of Directors adopted the Westbank Corporation
1996 Stock Incentive Plan (the "1996 Plan"), which was approved by the
shareholders at the Annual Meeting in April 1996.
The 1996 Plan authorizes the automatic grant of nonqualified stock options
("Director Stock Options") to non-employee Directors ("Eligible Directors") upon
the terms and conditions set forth in the 1996 Plan. The 1996 Plan is intended
to provide incentives and rewards for employees and Eligible Directors (i) to
support Westbank's business and human resource strategies and the achievement of
its goals, and (ii) to associate the interests of employees and Eligible
Directors with those of Westbank's shareholders. The Directors portion of the
plan has expired and no Director Stock Options were granted in 2003.
No Director Stock Option may be exercisable later than twenty years and one day
from the date of its grant. However, if an Eligible Director ceases to be an
Eligible Director for any reason, all Director Stock Options which are otherwise
exercisable shall terminate on the earlier of three years after such cessation
date or the expiration date, whichever first occurs. A total of 3,150 Director
Stock Options were exercised and 3,281 Options were terminated during 2003.
CARGILL BANK DIRECTORS AND OFFICERS STOCK OPTION PLAN
On September 7, 2001, Cargill Bank, a wholly owned subsidiary of the
Corporation, merged with and into Park West Bank and Trust Company, a wholly
owned subsidiary of the Corporation, and presently operate under the name
Westbank.
During 1992, Cargill Bancorp, Inc., adopted a Stock Option Plan for its
Directors and officers, which plan is now administered by the Corporation. All
options expire fifteen (15) years after the date of the grant. A total of 3,400
options were exercised during 2003, while no options terminated and 9,164
options remain unexercised. No options are available for future grants.
19
PERFORMANCE COMPARISON GRAPH
Set forth below is a graph illustrating the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 in common
stock of the Corporation on December 31, 1998, in each of the following:
a. The Standard & Poor's 500 Index
b. A hypothetical fund with investments in the stock of peer corporations
(the "Peer Group")
c. Westbank Corporation
The Peer Group consists of New England financial institutions with assets
totaling between $400 million and $1 billion. The members of the Peer Group are:
Bancorp Rhode Island, Inc. MASSBANK Corp. Northeast Bancorp
Bar Harbor Bank Shares Merchants Bancshares, Inc. Northway Financial, Inc.
Central Bancorp, Inc. Mystic Financial, Inc. Slade's Ferry Bancorp
First National Lincoln Corporation New Hampshire Thrift Bancshares, Inc. Union Bankshares, Inc.
Hingham Institution for Savings NewMil Bancorp, Inc. Wainwright Bank & Trust Company
LSB Corporation
-------- -------- -------- -------- -------- --------
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- --------------------- -------- -------- -------- -------- -------- --------
Westbank Corporation $ 100.00 $ 69.42 $ 59.56 $ 85.51 $ 125.30 $ 179.81
- --------------------- -------- -------- -------- -------- -------- --------
Custom Peer Group $ 100.00 $ 83.21 $ 72.81 $ 81.43 $ 101.45 $ 138.93
- --------------------- -------- -------- -------- -------- -------- --------
S&P 500 $ 100.00 $ 119.53 $ 107.41 $ 93.40 $ 71.57 $ 90.46
- --------------------- -------- -------- -------- -------- -------- --------
MISCELLANEOUS
During 2003, certain of the Corporation's executive officers, Directors and
nominees for Director, beneficial owners of more than 5% of the outstanding
common stock of the Corporation and members of their immediate family and
associates had, and expect to have in the future, transactions in the ordinary
course of business with the Bank, including borrowings, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and not involving more than
normal risk of collectibility or presenting other unfavorable features.
20
EMPLOYEE STOCK OWNERSHIP PLAN
On January 1, 1989, the Corporation's Employee Stock Ownership Plan (the "ESOP")
became effective. The ESOP is administered and otherwise governed by the
provisions of the ESOP and a related Trust Agreement. Pursuant to the terms of
the ESOP, the Trustee may invest the ESOP's Trust Assets in, among other
investments, shares of the Common Stock of the Corporation. As of the record
date, no shares of the Common Stock of the Corporation were owned by the ESOP
Trust.
ADOPTION OF THE WESTBANK CORPORATION
2004 RECOGNITION AND RETENTION PLAN
GENERAL PLAN INFORMATION
The Board of Directors of the Corporation has adopted the Westbank Corporation
2004 Recognition and Retention Plan, subject to approval by a majority of the
holders of the outstanding shares of our common stock. The following summary is
qualified in its entirety by the full text of the plan document. The plan
document is included at the end of this Proxy Statement as Appendix A and is
incorporated by reference into this proposal.
WHY WE ARE ASKING FOR SHAREHOLDER APPROVAL
We are asking for shareholders to approve the Westbank Corporation 2004
Recognition and Retention Plan so that we will be able to grant stock awards to
certain key officers, employees and directors. Most of the companies with which
we compete for directors and management-level employees are public companies
that offer stock awards as part of their director and officer compensation
packages. By approving this plan, our shareholders will enable us to offer a
more competitive compensation package in attracting and retaining highly
qualified directors, officers and employees. In addition, the value of the stock
awards that we would grant under this plan relates directly to the market price
of our common stock. Adding stock awards to our compensation packages would link
the financial interest of our directors, officers and employees with the
financial interest of our shareholders.
Applicable regulations permit us to implement a stock award plan only if we
obtain the approval of the holders of a majority of our shares of common stock.
If we do not receive this approval, it will not be possible for us to grant
stock awards under this plan. In this event, we expect that the Board will
consider substituting other forms of compensation to assure that our
compensation packages for officers, directors and employees are competitive with
those of other publicly traded financial services companies in our market area.
21
PURPOSE OF THE RECOGNITION AND RETENTION PLAN
The purpose of the plan is to promote the growth and profitability of the
Corporation and its shareholders, to provide certain key officers, employees and
directors of the Corporation and its affiliates with an incentive to achieve
corporate objectives, to attract and retain individuals of outstanding
competence and to provide such individuals with an equity interest in the
Corporation.
DESCRIPTION OF THE RECOGNITION AND RETENTION PLAN
ADMINISTRATION. The plan will be administered by those members of the
Compensation Committee of the Board who are "disinterested directors" under the
federal tax and securities laws. In general, disinterested directors are
directors who (1) are not, and never were, officers or employees of the
Corporation or the Bank; and (2) do not receive material compensation from the
Corporation or the Bank except for service as a director. There must be at least
two disinterested directors on the Compensation Committee and this committee has
broad discretionary powers.
STOCK SUBJECT TO THE RECOGNITION AND RETENTION PLAN. The Corporation will
establish a trust and will contribute certain amounts of money or property to be
determined by the Board of Directors, in its discretion. No contributions by
participants will be permitted. The trustee will invest the assets of the trust
primarily in the shares of our common stock that will be used to make restricted
stock awards. It is currently anticipated that the fund will purchase common
stock on the open market or in private transactions and that the trust will not
purchase previously authorized but unissued shares from the Corporation. The
trust is not authorized to purchase more than 88,100 shares of common stock of
the Corporation and cannot purchase more than this number. As of February 18,
2004, the aggregate fair market value of the shares to be purchased under this
plan was $1,995,465 based on the closing sales price per share of the
Corporation's common stock of $22.65 on the Nasdaq National Market on February
17, 2004.
ELIGIBILITY. The committee selects the people who receive restricted stock
awards under the plan. Any employee of the Corporation, the Bank or any
affiliate approved by the Board of Directors may be selected to receive stock
awards. As of February 18, 2004, the committee had not selected the employees
and directors who will receive stock awards.
TERMS AND CONDITIONS OF AWARDS. The committee may, in its discretion, grant
awards of restricted stock to eligible individuals, up to a maximum of 88,100
shares. The committee will determine at the time of the grant the number of
shares of common stock subject to an award, the vesting schedule applicable to
the award and may, in its discretion, establish other terms and conditions
applicable to the award. In setting terms and conditions, it must not grant
restricted stock awards with an effective date that is before the date that we
receive shareholder approval for the plan.
As a general rule, shares of our common stock that are subject to a restricted
stock award are held in trust for the benefit of the award recipient until
vested and, when vested, are transferred from the fund to the award recipient.
While the shares are held in the fund, the award recipient receives dividends
and exercises voting rights. In the alternative, the committee may authorize the
immediate distribution of the restricted shares to the award recipient in the
form of a stock certificate bearing a legend containing the applicable vesting
restrictions.
22
MERGERS AND REORGANIZATIONS. The number of shares available under the plan and
any outstanding awards will be adjusted to reflect any merger, consolidation or
business reorganization in which the Corporation is the surviving entity, and to
reflect any stock split, stock dividend or other event generally affecting the
number of shares. If a merger, consolidation or other business reorganization
occurs and the Corporation is not the surviving entity, the funding agent will
hold any money, stock, securities or other property received in the fund, and
adjust any award by allocating such money, stock, securities or other property
to the individual eligible for the award.
TERMINATION OR AMENDMENT
The Board of the Corporation has the authority to suspend or terminate the plan
in whole or in part at any time by giving written notice to the committee, but
the plan may not be terminated while there are outstanding awards that may vest
in the future. Upon the termination of the plan, the trustee will make
distributions from the trust as directed by the committee and will return any
remaining assets of the trust to the Corporation.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to be a summary and is not a comprehensive
description of the federal tax laws, regulations and policies affecting the
Corporation and recipients of awards that may be granted under the plan. Any
descriptions of the provisions of any law, regulation or policy are qualified in
their entirety by reference to the particular law, regulation or policy. Any
change in applicable law or regulation or in the policies of various taxing
authorities may have a significant effect on this summary. The plan is not a
qualified plan under Section 401(a) of the Internal Revenue Code.
The stock awards under the plan do not result in federal income tax consequences
to either the Corporation or the award recipient. As a general rule, once the
award is vested and the shares subject to the award are distributed, the award
recipient will generally be required to include in ordinary income, for the
taxable year in which the vesting date occurs, an amount equal to the fair
market value of the shares on the vesting date. The Corporation will generally
be allowed to claim a deduction, for compensation expense, in a like amount. If
dividends are paid on unvested shares held under the plan, such dividend amounts
will also be included in the ordinary income of the recipient. The Corporation
will be allowed to claim a deduction for compensation expense for this amount as
well.
Section 162(m) of the Internal Revenue Code limits the Corporation's deductions
for compensation in excess of $1.0 million per year for the chief executive
officer and the two other most highly paid executives named in its proxy
statement. Compensation amounts resulting from restricted stock awards will be
subject to this deduction limitation if this amount of the restricted stock
awards plus other compensation of the executive that is subject to the limit
exceeds $1.0 million. No executive of the Corporation currently receives
compensation subject to this limitation. We expect that the committee will take
these deduction limits into account in setting the size and the terms and
conditions of restricted stock awards. However, the committee may decide to
grant restricted stock awards all or a portion of which will exceed the
deduction limit.
23
The preceding statements are intended to summarize the general principles of
current federal income tax law applicable to awards that may be granted under
the plan. State and local tax consequences may also be significant.
The Board of Directors unanimously recommends a vote "for" the adoption of the
Westbank Corporation 2004 Recognition and Retention Plan.
DIVIDEND REINVESTMENT PLAN
In 1989, the Corporation implemented a Dividend Reinvestment and Common Stock
Purchase Plan (the "Dividend Reinvestment Plan"), which was amended during 1995
and the amendment was approved by the shareholders at the 1995 Annual Meeting.
Pursuant to the amended Dividend Reinvestment Plan, shareholders of the
Corporation's Common Stock may invest all or a portion of that shareholder's
quarterly cash dividend, plus up to $10,000 per calendar quarter, in additional
shares of the Corporation's Common Stock. The Dividend Reinvestment Plan was
amended in 2002 to increase by 500,000 the number of shares reserved for
issuance thereunder. The 2002 amendment was approved by shareholders at the 2002
Annual Meeting. During 2003, 42,308 shares of the Corporation's Treasury Stock
were reissued through the Dividend Reinvestment and Common Stock Purchase Plan.
24
RATIFICATION OF THE SELECTION OF
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors solicited proposals from various accounting firms to act
as the Corporation's certifying accountants for the fiscal year ending December
31, 2003. After reviewing the proposals received, the Board of Directors
approved a recommendation of the Audit Committee that the Corporation select as
its certifying accountants the firm of Grant Thornton LLP ("Grant"). The
shareholders approved the selection of Grant at the 2003 Annual Meeting of
shareholders.
Grant's report on the Corporation's financial statements during the most recent
fiscal year preceding the date hereof contain no adverse opinion or disclaimer
of opinions, and was not qualified as to audit scope or accounting principles.
During the last fiscal year and the subsequent interim periods preceding the
date hereof, there were no disagreements between the Corporation and Grant on
any matters of accounting principle or practices, financial statements
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Grant, would have caused Grant to make a reference to the
subject matter of disagreements in connection with its reports.
None of the "reportable events" described under Item 304(a)(1)(v) of Regulation
S-K promulgated under the Securities Exchange Act of 1934 ("Regulation S-K")
occurred within the Corporation's two most recent fiscal years and any
subsequent interim periods preceding the date hereof.
During the last fiscal year and the subsequent interim periods preceding the
2003 fiscal year, the Corporation did not consult Grant regarding any of the
matters or events set forth in Item 304(a)(2)(I) and (ii) of Regulation S-K.
Representatives of Grant are expected to attend the 2004 Annual Meeting of
Shareholders and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the selection of
Grant Thornton LLP as the Corporation's auditors and, unless otherwise directed,
proxies will be voted in favor of this selection.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of reports furnished to the Corporation or written
representations that no forms were required, the Corporation believes that the
Corporation's officers, Directors and greater than ten percent (10%) beneficial
owners complied with the requirements of section 16(a) of the Securities and
Exchange Act of 1934.
25
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Corporation is not aware of any business to be presented at the 2004 Annual
Meeting other than matters referred to in the Notice of Annual Meeting and this
Proxy Statement. If any other matters properly come before the meeting, or any
adjournment thereof, the enclosed Proxy will be voted on such matters in
accordance with the recommendations of the Corporation's Board of Directors.
MISCELLANEOUS
The expense of this solicitation on behalf of the Board of Directors will be
paid by the Corporation. To the extent necessary in order to assure sufficient
representation of shareholders at the Meeting, officers and employees of the
Corporation may personally, by telephone or by other means, contact shareholders
to request the return of proxies. Banks, brokerage houses and other
institutions, nominees or fiduciaries will be requested to forward the proxy
material to beneficial owners in order to solicit authorizations for the
execution of proxies. The Corporation may, upon request, reimburse such banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding such material.
STOCKHOLDER PROPOSALS
Any stockholder proposals (including Director nominations) submitted pursuant to
Exchange Act Rule 14a-8 and intended to be presented at the Corporation's 2005
Annual Meeting of Stockholders must be received by the Corporation by December
20, 2004 to be eligible for inclusion in the Proxy Statement and Form of Proxy
to be distributed by the Board of Directors in connection with such meeting.
Such proposals must also comply with the requirements as to form and substance
established by the SEC if such proposals are to be included in the Proxy
Statement and Form of Proxy.
The Corporation's By-Laws provide that any stockholder proposals (including
Director nominations) intended to be presented at the Corporation's 2005 Annual
Meeting, other than a stockholder proposal submitted pursuant to Exchange Act
Rule 14a-8, must be received in writing at the principal executive office of the
Corporation on or between the dates of December 17, 2004 and January 31, 2005,
together with all supporting documentation required by the Corporation's Amended
By-Laws. However, if the 2005 Annual Meeting is scheduled to be held on a date
more than thirty (30) days before April 21, 2005, or more than sixty (60) days
after April 21, 2005, a stockholder's notice shall be timely filed if delivered
to, or received by, the Corporation at its principal executive office not later
than the close of business on the later of (a) seventy-five (75) days prior to
the date of such rescheduled Meeting or (b) the fifteenth (15th) day following
the day on which public announcement of the date of such Annual Meeting is first
made by the Corporation.
26
ANNUAL REPORT
A copy of the Corporation's Annual Report for 2003, including financial
statements, is enclosed. The Annual Report is not to be regarded as proxy
soliciting material.
By order of the Board of Directors
Robert J. Perlak
Clerk
Dated: March 15, 2004
NOTICE
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY
SHAREHOLDER OF THE CORPORATION UPON WRITTEN REQUEST ADDRESSED TO JOHN M. LILLY,
TREASURER, 225 PARK AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01089-3310.
27
APPENDIX A
----------
WESTBANK CORPORATION
2004 RECOGNITION AND RETENTION PLAN
-----------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I:
PURPOSE
Section 1.1 General Purpose of the Plan............................... A-4
ARTICLE II:
DEFINITIONS
Section 2.1 Award..................................................... A-4
Section 2.2 Award Notice.............................................. A-4
Section 2.3 Bank...................................................... A-4
Section 2.4 Beneficiary............................................... A-4
Section 2.5 Board..................................................... A-4
Section 2.6 Change of Control......................................... A-5
Section 2.7 Code...................................................... A-6
Section 2.8 Committee................................................. A-6
Section 2.9 Company................................................... A-6
Section 2.10 Disability................................................ A-6
Section 2.11 Disinterested Board Member................................ A-6
Section 2.12 Effective Date............................................ A-7
Section 2.13 Eligible Director......................................... A-7
Section 2.14 Eligible Employee......................................... A-7
Section 2.15 Employer.................................................. A-7
Section 2.16 Exchange Act.............................................. A-7
Section 2.17 FDIC Regulations.......................................... A-7
Section 2.18 Person.................................................... A-7
Section 2.19 Plan...................................................... A-7
Section 2.20 Retirement................................................ A-7
Section 2.21 Share..................................................... A-7
Section 2.22 Trust..................................................... A-8
Section 2.23 Trust Agreement........................................... A-8
Section 2.24 Trust Fund................................................ A-8
Section 2.25 Trustee................................................... A-8
A-1
ARTICLE III:
SHARES AVAILABLE UNDER PLAN
Section 3.1 Shares Available Under Plan............................... A-8
ARTICLE IV:
ADMINISTRATION
Section 4.1 Committee................................................. A-8
Section 4.2 Committee Action.......................................... A-9
Section 4.3 Committee Responsibilities................................ A-9
ARTICLE V:
THE TRUST FUND
Section 5.1 Contributions............................................. A-9
Section 5.2 The Trust Fund............................................A-10
Section 5.3 Investments...............................................A-10
ARTICLE VI:
AWARDS
Section 6.1 To Eligible Directors.....................................A-10
Section 6.2 To Eligible Employees.....................................A-10
Section 6.3 Awards in General.........................................A-11
Section 6.4 Share Allocations.........................................A-11
Section 6.5 Dividend Rights...........................................A-11
Section 6.6 Voting Rights.............................................A-12
Section 6.7 Tender Offers.............................................A-12
Section 6.8 Limitations on Awards.....................................A-13
ARTICLE VII:
VESTING
Section 7.1 Vesting of Awards.........................................A-13
Section 7.2 Designation of Beneficiary................................A-13
Section 7.3 Manner of Distribution....................................A-14
Section 7.4 Taxes.....................................................A-15
A-2
ARTICLE VIII:
AMENDMENT AND TERMINATION
Section 8.1 Termination...............................................A-15
Section 8.2 Amendment.................................................A-15
Section 8.3 Adjustments in the Event of a Business Reorganization.....A-15
ARTICLE IX:
MISCELLANEOUS
Section 9.1 Status as an Employee Benefit Plan........................A-16
Section 9.2 No Right to Continued Employment..........................A-16
Section 9.3 Construction of Language..................................A-16
Section 9.4 Governing Law.............................................A-17
Section 9.5 Headings..................................................A-17
Section 9.6 Non-Alienation of Benefits................................A-17
Section 9.7 Notices...................................................A-17
Section 9.8 Required Regulatory Provisions............................A-18
Section 9.9 Approval of Shareholders..................................A-18
A-3
WESTBANK CORPORATION
2004 RECOGNITION AND RETENTION PLAN
-----------------------------------
ARTICLE I:
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN
The purpose of the Plan is to promote the growth and profitability of Westbank
Corporation and its affiliated companies and to provide eligible directors,
certain key officers and employees or Westbank Corporation and its affiliated
companies with an incentive to achieve corporate objectives, to attract and
retain directors, key officers and employees of outstanding competence, and to
provide such directors, officers and employees with an equity interest in
Westbank Corporation and its affiliated companies.
ARTICLE II:
DEFINITIONS
-----------
The following definitions shall apply for the purposes of this Plan, unless a
different meaning is plainly indicated by the context:
SECTION 2.1 AWARD means a grant of shares to an Eligible Director or
Eligible Employee, pursuant to Section 6.1 or 6.2.
SECTION 2.2 AWARD NOTICE means, with respect to a particular Award, a
written instrument signed by the Corporation and the Award
recipient evidencing the granting of the Award and
establishing the terms and conditions thereof.
SECTION 2.3 BANK means Westbank and any successor thereto.
SECTION 2.4 BENEFICIARY means the person designated by and Eligible
Director or Eligible Employee, pursuant to Section 7.2, to
receive distribution of any shares available for distribution
to such Eligible Director or Eligible Employee, in the event
such Eligible Director or Eligible Employee dies prior to
receiving distribution of such shares.
SECTION 2.5 BOARD means the Board of Directors of the Company.
A-4
SECTION 2.6 CHANGE OF CONTROL means any of the following events:
(a) the consummation of a reorganization, merger or
consolidation of the Company with one or more other
persons, other than a transaction in which:
(i) at least 51% of the equity ownership
interests of the entity resulting from such
transaction are beneficially owned (within
the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as
amended ("Exchange Act"), in substantially
the same relative proportions by persons
who, immediately prior to such transaction,
beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange
Act) at least 51% of the outstanding equity
ownership interests in the Company; and
(ii) at least 51% of the securities entitled to
vote generally in the election of directors
of the entity resulting from such
transaction are beneficially owned (within
the meaning of Rule 13d-3 promulgated under
the Exchange Act) in substantially the same
relative proportions by persons who,
immediately prior to such transaction,
beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange
Act) at least 51% of the securities entitled
to vote generally in the election of
directors of the Company;
(b) the acquisition of all or substantially all of the
assets of the Company or beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the outstanding
securities of the Company entitled to vote generally
in the election of directors by any person or by any
persons acting in concert;
(c) a complete liquidation or dissolution of the Company;
(d) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board
of Directors of the Company do not belong to any of
the following group:
(i) individuals who were members of the Board of
Directors of the Company on the effective
date; or
(ii) individuals who first became members of the
Board of Directors of the Company after the
effective date either:
(A) upon election to serve as a member
of the Board of Directors of the
Company by affirmative vote of
three-quarters of the members of
such Board, or of a nominating
committee thereof, in office at the
time of such first election; or
A-5
(B) upon election by the shareholders of
the Company to serve as a member of
such board, but only if nominated
for election by affirmative vote of
three-quarters of the members of the
Board of Directors of the Company,
or of a nominating committee
thereof, in office at the time of
such first nomination;
PROVIDED, HOWEVER, that such individual's election or
nomination did not result from an actual or
threatened election contest or other actual or
threatened solicitation of proxies or consents other
than by or on behalf of the Board of Directors of the
Company;
(e) approval by the stockholders of the Company of any
agreement, plan or arrangement for the consummation
of a transaction which, if consummated, would result
in the occurrence of an event described in Section
2.6(a), (b), (c) or (d); or
(f) any event which would be described in Section 2.6(a),
(b), (c), (d) or (e), if the term "Bank" were
substituted for the term "Company" therein.
In no event, however, shall a Change of Control be deemed to have
occurred as a result of any acquisition of securities or assets of the
Company, the Bank, or a subsidiary of either of them, by the Company,
the Bank, or any subsidiary of either of them, or by any employee
benefit plan maintained by any of them. For purposes of this Section
2.6, the term "person" shall have the meaning assigned to it under
Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
SECTION 2.7 CODE means the Internal Revenue Code of 1986 (including the
corresponding provisions of any succeeding law).
SECTION 2.8 COMMITTEE means the Committee described in Section 4.1.
SECTION 2.9 COMPANY means Westbank Corporation and any successor thereto.
SECTION 2.10 DISABILITY means a condition of total incapacity, mental or
physical, for further performance of duty with the Company,
which the Committee shall have determined, on the basis of
competent medical evidence, if likely to be permanent.
SECTION 2.11 DISINTERESTED BOARD MEMBER means a member of the Board who (a)
is not a current employee of the Company or a subsidiary, (b)
does not receive remuneration from the Company or a
subsidiary, either directly or indirectly, in any capacity
other than as a director, except in an amount for which
disclosure would not be required pursuant to Item 404(a) of
the proxy solicitation rules of the Securities and Exchange
Commission and (c) does not possess an interest in any other
transaction, and is not
A-6
engaged in a business relationship, for which a disclosure
would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission.
The term Disinterested Board Member shall be interpreted in
such manner as shall be necessary to conform to the
requirements of Rule 16(b)(3) promulgated under the Exchange
Act.
SECTION 2.12 EFFECTIVE DATE means April 21, 2004.
SECTION 2.13 ELIGIBLE DIRECTOR means a member of the Board of Directors of
an Employer who is not also an employee of any Employer.
SECTION 2.14 ELIGIBLE EMPLOYEE means any employee whom the Committee may
determine to be a key officer or employee of the Employer and
selects to receive an Award pursuant to the Plan.
SECTION 2.15 EMPLOYER means the Company, the Bank and any successor thereto
and, with the prior approval of the Board of Directors of the
Company, and subject to such terms and conditions as may be
imposed by the Board, any other savings bank, savings and loan
association, bank, corporation, financial institution or other
business organization or institution. With respect to any
Eligible Employee or Eligible Director, the Employer shall
mean the entity that employs such person or upon whose board
of directors such person served.
SECTION 2.16 EXCHANGE ACT means the Securities and Exchange Act of 1934, as
amended.
SECTION 2.17 FDIC REGULATIONS means the rules and regulations of the
Federal Deposit Insurance Corporation.
SECTION 2.18 PERSON means an individual, a corporation, a bank, a savings
bank, a savings and loan association, a financial institution,
a partnership, an association, a joint-stock company, a trust,
an estate, an unincorporated organization and any other
business organization or institution.
SECTION 2.19 PLAN means the Westbank Corporation 2004 Recognition and
Retention Plan, as amended from time to time.
SECTION 2.20 RETIREMENT means, with respect to an Eligible Employee,
termination of all service for all Employers as an employee at
or after the normal or early retirement date set forth in any
tax qualified retirement plan of the Bank, whether or not the
individual in question actually participates in any such tax
qualified plan of the Bank, and, in the case of an Eligible
Director, termination of all service for all Employers as a
voting member of the Employer's board of directors after the
attainment of the latest age at which the Eligible Director is
eligible for election or appointment as a voting member of the
Employer's board of directors under the Employer's charter.
SECTION 2.21 SHARE means a share of common stock of Westbank Corporation,
par value $2.00 per share.
A-7
SECTION 2.22 TRUST means the legal relationship created by the Trust
Agreement pursuant to which the Trustee holds the Trust Fund
in trust. The Trust may be referred to as the "Recognition and
Retention Plan Trust of Westbank Corporation."
SECTION 2.23 TRUST AGREEMENT means the agreement between Westbank
Corporation and the Trustee therein named or its successor
pursuant to which the Trust Fund shall be held in trust.
SECTION 2.24 TRUST FUND means the corpus (consisting of contributions paid
over to the Trustee and investments thereof) and all earnings,
appreciations or additions thereof and thereto, held by the
Trustee under the Trust Agreement in accordance with the Plan,
less any depreciation thereof and any payments made therefrom
pursuant to the Plan.
SECTION 2.25 TRUSTEE means the Trustee of the Trust Fund from time to time
in office. The Trustee shall serve as Trustee until it is
removed or resigns from office and is replaced by a successor
Trustee or Trustees appointed by Westbank Corporation.
ARTICLE III:
SHARES AVAILABLE UNDER THE PLAN
-------------------------------
SECTION 3.1 SHARES AVAILABLE UNDER THE PLAN
The maximum number of Shares available for Awards under the
plan shall be 88,100, subject to adjustment, pursuant to
Section 8.3.
ARTICLE IV:
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE
The Plan shall be administered by the members of the
Compensation Committee of Westbank Corporation who are
Disinterested Board Members. If the Committee consists of
fewer than two Disinterested Board Members, then the Board
shall appoint to the Committee such additional Disinterested
Board Members as shall be necessary to provide for a Committee
consisting of at least two Disinterested Board Members.
A-8
SECTION 4.2 COMMITTEE ACTION
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A
majority of the members of the Committee shall constitute a
quorum and the action of a majority of the members of the
Committee present at a meeting at which a quorum is present,
as well as actions taken pursuant to the unanimous written
consent of all of the members of the Committee without holding
a meeting, shall be deemed to be actions of the Committee. All
actions of the Committee shall be final and conclusive and
shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully
protected in relying upon any written notice, instruction,
direction or other communication signed by the Secretary of
the Committee and one member of the Committee, by two members
of the Committee or by a representative of the Committee
authorized to sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES
Subject to the terms and conditions of the Plan, and such
limitations as may be imposed by the Board, the Committee
shall be responsible for the overall management and
administration of the Plan and shall have such authority as
shall be necessary or appropriate in order to carry out its
responsibilities, including, without limitation, the
authority:
(a) to interpret and construe the Plan, and to determine
all questions that may arise under the Plan as to
eligibility for Awards under the Plan, the amount of
Shares, if any, to be granted pursuant to an Award,
and the terms and conditions of such Award;
(b) to adopt rules and regulations and to prescribe forms
for the operation and administration of the Plan; and
(c) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or
appropriate.
ARTICLE V:
THE TRUST FUND
--------------
SECTION 5.1 CONTRIBUTIONS
Westbank Corporation shall contribute, or cause to be
contributed, to the Trust, from time to time, such amounts of
money or property as shall be determined by the Board, in its
discretion. No contributions by Eligible Directors or Eligible
Employees shall be permitted.
A-9
SECTION 5.2 THE TRUST FUND
The Trust Fund shall be held and invested under the Trust
Agreement with the Trustee. The provisions of the Trust
Agreement shall include provisions conferring powers on the
Trustee as to investment, control and disbursement of the
Trust Fund, and such other provisions not inconsistent with
the Plan as may be prescribed by or under the authority of the
Board. No bond or security shall be required of any Trustee at
any time in office.
SECTION 5.3 INVESTMENTS
The Trustee shall invest the Trust Fund in Shares and in such
other investments as may be permitted under the Trust
Agreement, including savings accounts, time or other
interest-bearing deposits in or other interest-bearing
obligations of the Company, in such proportions as shall be
determined by the Committee; PROVIDED, HOWEVER, that in no
event shall the Trust Fund be used to purchase more than
88,100 Shared (subject to adjustment pursuant to Section 8.3).
Notwithstanding the immediately preceding sentence, the
Trustee may temporarily invest the Trust Fund in short-term
obligations of, or guaranteed by, the U.S. Government or an
agency thereof, or the Trustee may retain the Trust Fund
uninvested or may sell assets of the Trust Fund to provide
amounts required for purposes of the plan.
ARTICLE VI:
AWARDS
------
SECTION 6.1 TO ELIGIBLE DIRECTORS
Subject to the limitations of the Plan and such limitations as
the Board may from time to time impose, the number of Shares
that an Eligible Director may be granted as an Award shall be
determined by the Committee in its discretion; PROVIDED,
HOWEVER, that in no event shall the number of Shares allocated
to an Eligible Director in an Award exceed the number of
Shares then held in the Trust and not allocated in connection
with other Awards.
SECTION 6.2 TO ELIGIBLE EMPLOYEES
Subject to the limitations of the Plan and such limitations as
the Board may from time to time impose, the number of Shares
that an Eligible Employee may be granted as an Award shall be
determined by the Committee in its discretion; PROVIDED,
HOWEVER, that in no event shall the number of Shares allocated
to an Eligible Employee in an Award exceed the number of
Shares then held in the Trust and not allocated in connection
with other Awards.
A-10
SECTION 6.3 AWARDS IN GENERAL
Any Award shall be evidenced by an Award Notice issued by the
Committee to the Eligible Director or Employee, which notice
shall:
(a) specify the number of Shares covered by the Award;
(b) specify the date of grant of the Award;
(c) specify the dates on which such Shares shall become
vested; and
(d) contain such other terms and conditions not
inconsistent with the Plan as the Board or Committee
may, in its discretion, prescribe.
SECTION 6.4 SHARE ALLOCATIONS
Upon the grant of an Award to an Eligible Director or Eligible
Employee, the Committee shall notify the Trustee of the Award
and of the number of Shares subject to the Award. Thereafter,
until such time as the Shares subject to such Award become
vested or are forfeited, the books and records of the Trustee
shall reflect that such number of Shares have been awarded to
such Award recipient.
SECTION 6.5 DIVIDEND RIGHTS
(a) Unless the Committee determines otherwise with
respect to any Award and specifies such determination
in the relevant Award Notice, any cash dividends or
distributions declared and paid with respect to
Shares subject to the Award that are, as of the
record date for such dividend, allocated to an
Eligible Director or Eligible Employee in connection
with such Award shall be promptly paid to and
retained by such Eligible Director or Eligible
Employee. Any cash dividends declared and paid with
respect to Shares that are not, as of the record date
for such dividend, allocated to any Eligible Director
or Eligible Employee in connection with any Award,
shall, at the direction of the Committee, be held in
Trust or used to pay the administrative expenses of
the Plan, including any compensation due to the
Trustee.
(b) Unless the Committee determines otherwise with
respect to any Award and specifies such determination
in the relevant Award Notice, any dividends or
distributions declared and paid in property other
than cash with respect to Shares shall be subject to
the same vesting and other restrictions as the Shares
to which the Award relates. Any such dividends
declared and paid with respect to Shares that are
not, as of the record date for such dividend,
allocated to any Eligible Director or Eligible
Employee in connection with any Award, shall, at the
direction of the Committee, be held in the Trust or
used to pay the administrative expenses of the Plan,
including any compensation due to the Trustee or, in
the case of a stock dividend, used for future Awards.
A-11
SECTION 6.6 VOTING RIGHTS
(a) Each Eligible Director or Eligible Employee to whom
an Award has been made that is not fully vested shall
have the right to exercise, or direct the exercise
of, all voting rights appurtenant to unvested Shares
related to such Award. Such a direction for any
Shares as to which the Eligible Director or Eligible
Employee is not the record owner shall be given by
completing and filing, with the inspector of
elections, the Trustee or such other person who shall
be independent of the Company as the Committee shall
designate in the direction, a written direction in
the form and manner prescribed by the Committee. If
no such direction is given by an Eligible Director or
Eligible Employee, then the voting rights appurtenant
to the Shares allocated to him shall not be
exercised.
(b) To the extent that the Trust Fund contains Shares
that are not allocated in connection with an Award,
all voting rights appurtenant to such Shares shall be
exercised by the Trustee in such manner as the
Committee shall direct to reflect the voting
directions given by Eligible Directors or Eligible
Employees with respect to Shares allocated in
connection with their Awards.
(c) The Committee shall furnish, or cause to be
furnished, to each Eligible Director or Eligible
Employee who is not the record holder of the Shares
relating to his or her Award all annual reports,
proxy materials and other information furnished by
Westbank Corporation, or by any proxy solicitor, to
the holders of Shares.
SECTION 6.7 TENDER OFFERS
(a) Each Eligible Director or Eligible Employee to whom
an Award has been made that is not fully vested shall
have the right to respond, or to direct the response,
with respect to the Shares related to such Award, to
any tender offer, exchange offer or other offer made
to the holders of Shares. Such a direction for any
Shares as to which the Eligible Director or Eligible
Employee is not the record owner shall be given by
completing and filing, with the inspector of
elections, the Trustee or such other person who shall
be independent of the Company as the Committee shall
designate in the direction, a written direction in
the form and manner prescribed by the Committee. If
no such direction is given by an Eligible Director or
Eligible Employee, then the Shares shall not be
tendered or exchanged.
(b) To the extent that the Trust Fund contains Shares
that are not allocated in connection with an Award,
all responses to tender, exchange and other offers
appurtenant to such Shares shall be given by the
Trustee in such manner as the Committee shall direct
to reflect the responses given by Eligible Directors
or Eligible Employees with respect to Shares
allocated in connection with their Awards.
A-12
(c) The Committee shall furnish, or cause to be
furnished, to each Eligible Director or Eligible
Employee, all information furnished by the offeror to
the holders of Shares.
SECTION 6.8 LIMITATIONS ON AWARDS
(a) No Award shall be granted under the Plan prior to the
date on which the Plan is approved by shareholders
pursuant to Section 9.9.
(b) An Award by its terms shall not be transferable by
the Eligible Director or Eligible Employee other than
by will or by the laws of descent and distribution,
and the Shares granted pursuant to such Award and
held in the Trust shall be distributable, during the
lifetime of the Recipient, only to the Recipient.
ARTICLE VII:
VESTING
-------
SECTION 7.1 VESTING OF AWARDS
Subject to the terms and conditions of the Plan, unless
otherwise determined by the Committee and specified in the
Award Notice relating to an Award, Shares subject to each
Award granted to an Eligible Director or Eligible Employee
under the Plan shall become vested as follows: (i) twenty
percent (20%) of such shares shall become vested on the first
anniversary of the date of the grant; (ii) an additional
twenty percent (20%) of such Shares shall become vested on the
second anniversary of the date of grant; (iii) an additional
twenty percent (20%) if such Shares shall become vested on the
third anniversary of grant; (iv) an additional twenty percent
(20%) of such Shares shall become vested on the fourth
anniversary of the date of grant; (v) an additional twenty
percent (20%) of such Shares shall become vested on the fifth
anniversary of the date of grant; AND PROVIDED, FURTHER, an
Award shall become one hundred percent (100%) vested upon the
Award recipient's death, Disability, Retirement or after a
Change of Control.
SECTION 7.2 DESIGNATION OF BENEFICIARY
An Eligible Director or Eligible Employee who has received an
Award may designate a Beneficiary to receive any undistributed
Shares that are, or become, available for distribution on, or
after, the date of his death. Such designation (and any change
or revocation of such designation) shall be made in writing in
the form and manner prescribed by the Committee. In the vent
that the Beneficiary designated by an Eligible Director or
Eligible Employee dies prior to the Eligible Director or
Eligible
A-13
Employee, or in the event that no Beneficiary has been
designated, any undistributed Shares that are, or become,
available for distribution on, or after, the Eligible
Director's or Eligible Employee's death shall be paid to the
executor or administrator of the Eligible Director's or
Eligible Employee's estate or, if no such executor or
administrator is appointed within such time as the Committee,
in its sole discretion, shall deem reasonable, to such one or
more of the spouse and descendants and blood relatives of such
deceased person as the Committee may select.
SECTION 7.3 MANNER OF DISTRIBUTION
(a) Except as provided in Section 7.3(b), as soon as
practicable following the date any shares granted
pursuant to an Award become vested pursuant to
Section 7.1, the Committee shall take such actions as
are necessary to cause the transfer of record
ownership of the Shares that have become vested from
the Trustee to the Award holder and shall cause the
Trustee to distribute to the Award holder all
property other than Shares than being held in
connection with the Shares being distributed.
(b) The Committee may, in its discretion, cause the
transfer to an Award recipient of record ownership of
the Shares subject to such Award that have not yet
vested. Any such Shares shall be held in certificated
form only and the certificate therefor shall bear the
following, or a substantially similar, legend:
The securities evidenced hereby are subject to the
terms of an Award Notice dated [DATE] between the
issuer and [NAME OF AWARD RECIPIENT] pursuant to the
Westbank Corporation 2004 Recognition and Retention
Plan, a copy of which is on file with the issuer and
may be inspected at the issuer's executive offices at
225 Park Avenue, West Springfield, Massachusetts
01089. No sale, transfer, hypothecation or other
disposition of these securities may be made except in
compliance with the terms of such Award Notice and
the terms of the Plan.
(c) The Company's obligation to deliver Shares with
respect to an Award shall, if the Committee so
requests, be conditioned upon the receipt of a
representation as to the investment intention of the
Eligible Director or Eligible Employee or Beneficiary
to whom such Shares are to be delivered, in such form
as the Committee shall determine to be necessary or
advisable to comply with the provisions of applicable
federal, state or local law. It may be provided that
any such representation shall become in operative
upon a registration of the Shares or upon the
occurrence of any other event eliminating the
necessity of such representation. The Company shall
not be required to deliver any Shares under the Plan
prior to (i) the admission of such Shares to listing
on any stock exchange on which Shares may then be
listed, or (ii) the completion of such registration
or other qualification under any state or federal
law, rule or regulation as the Committee shall
determine to be necessary or advisable.
A-14
SECTION 7.4 TAXES
The Company, the Committee or the Trustee shall have the right
to require any person entitled to receive Shares pursuant to
an Award to pay the amount of any tax which is required to be
withheld with respect to such Shares, or, in lieu thereof, to
retain, or to sell without notice, a sufficient number of
Shares to cover the amount required to be withheld.
ARTICLE VIII:
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION
The Board may suspend or terminate the Plan in whole or in
part at any time by giving written notice of such suspension
or termination to the Committee; PROVIDED, HOWEVER, that the
Plan may not be terminated while there are outstanding Awards
that may thereafter become vested. Upon the termination of the
Plan, the Trustee shall make distributions from the Trust Fund
in such amounts and to such persons as the Company may direct
and shall return the remaining assets of the Trust Fund, if
any, to Westbank Corporation.
SECTION 8.2 AMENDMENT
The Board may amend or revise the Plan in whole or in part at
any time.
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION
(a) In the event of any merger, consolidation, or other
business reorganization (including but not limited to
a Change of Control) in which Westbank Corporation is
the surviving entity, and in the event of any stock
split, stock dividend or other event generally
affecting the number of Shares held by each person
who is then a holder of record of Shares, the number
of Shares held or permitted to be held in the Trust
Fund, the number of Shares covered by outstanding
Awards, and the number of Shares available as Awards
in total or to particular individuals or groups shall
be adjusted to account for such event. Such
adjustment shall be effected by multiplying such
number of Shares by an amount equal to the number of
Shares that would be owned after such event by a
person who, immediately prior to such event, was the
holder of record of one Share, unless the Committee,
in its discretion, establishes another appropriate
method of adjustment.
A-15
(b) In the event of any merger, consolidation, or other
business reorganization (including but not limited to
a Change of Control) in which Westbank Corporation is
not the surviving entity, the Trustee shall hold in
the Trust Fund any money, stock, securities or other
property received by holders of record of Shares in
connection with such merger, consolidation, or other
business reorganization. Any Award with respect to
which Shares had been allocated to an Eligible
Director or Eligible Employee shall be adjusted by
allocating to the Eligible Director or Eligible
Employee receiving such Award the amount of money,
stock, securities or other property received by the
Trustee for the Shares allocated to such Eligible
Director or Eligible Employee, and such money, stock,
securities or other property shall be subject to the
same terms and conditions of the Award that applied
to the Shares for which it has been exchanged.
ARTICLE IX:
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN
This Plan is not intended to satisfy the requirements for
qualification under Section 401(a) of the Code or to satisfy
the definitional requirements for an "employee benefit plan"
under Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended. It is intended to be a non-qualified
incentive compensation program that is exempt from the
regulatory requirements of the Employee Retirement Income
Security Act of 1974, as amended. The Plan shall be construed
and administered so as to effectuate this intent.
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with
respect to the Plan shall be held or construed to confer upon
any Eligible Director or Eligible Employee any right to
continue in the service of any Employer. The Employers reserve
the right to dismiss any Eligible Director or Eligible
Employee or otherwise deal with any Eligible Director or
Eligible Employee to the same extent as though the Plan had
not been adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be
read in the singular and words importing the masculine gender
may be read as referring equally to the feminine or the
neuter. Any reference to an Article or Section number shall
refer to an Article or Section or this Plan, unless otherwise
indicated.
A-16
SECTION 9.4 GOVERNING LAW
The Plan shall be construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts without giving
effect to the conflict of laws principles thereof, except to
the extent that such laws are preempted by the federal laws of
the United States of America. The Plan shall be construed to
comply with applicable FDIC regulations.
SECTION 9.5 HEADINGS
The headings of Articles and Sections are included solely for
convenience of reference. If there is any conflict between
such headings and the text of the Plan, the text shall
control.
SECTION 9.6 NON-ALIENATION OF BENEFITS
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or
assignment, nor shall such right be liable for or subject to
debts, contracts, liabilities, engagements or torts; provided,
however, that any recipient of an Award who makes an election
pursuant to Section 83(b) of the Code to include the value of
the Shares subject to such Award in gross income for federal
income purposes when granted rather than when vested shall
have the right to margin such Shares to finance the payment of
taxes. Any Shares so margined shall nevertheless remain
subject to the forfeiture provisions and other terms and
conditions of the Award.
SECTION 9.7 NOTICES
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment,
instruction, objection or waiver, shall be in writing and
shall be deemed to have been given at such time as it is
personally delivered or five (5) days after mailing if mailed,
postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address
listed below, or at such other address as one such party may
by written notice specify to the other:
(a) If to the Corporation:
Westbank Corporation
225 Park Avenue
West Springfield, Massachusetts 01089
Attention: Clerk
(b) If to an Eligible Director or Eligible Employee, to
the Eligible Director's or Eligible Employee's
address as shown in the Employer's records.
A-17
SECTION 9.8 REQUIRED REGULATORY PROVISIONS
The making and payment of Awards under this Plan shall be
conditioned upon and subject to compliance with Section 18(k)
of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and
the rules and regulations promulgated thereunder.
SECTION 9.9 APPROVAL OF SHAREHOLDERS
The Plan shall not be effective or implemented unless approved
by the holders of a majority of the total votes eligible to be
cast at any duly called annual or special meeting of the
Company. No award shall be made prior to the date on which the
Plan becomes effective.
A-18
APPENDIX B
----------
WESTBANK CORPORATION
NOMINATING COMMITTEE CHARTER
I. RESPONSIBILITIES
The Nominating Committee is a committee of the Board of Directors, with the
responsibility to:
o identify individuals believed to be qualified to become members of the
Board of Directors, consistent with criteria approved by the Board and
such other factors as the Committee deems appropriate, and to select,
or recommend to the Board, the nominees to stand for election as
Directors at the Annual Meeting of Shareholders, and nominees to fill
vacancies in the office of a Director (including a vacancy created by
an increase in the size of the Board of Directors).
o consider candidates recommended by the Company's shareholders in
accordance with the procedures set forth in the Company's annual proxy
statement and, in its discretion, to consider candidates proposed by
management.
o assist management in the preparation of the disclosure in the
Company's annual proxy statement regarding the operation of the
Committee.
o make regular reports to the Board and propose any necessary action to
the Board.
o review this Charter on an annual basis and recommend any changes
hereto to the Board for approval.
o perform any other duties or responsibilities expressly delegated to
the Committee by the Board from time to time relating to the
nomination of the Board and committee members.
II. PROCEDURES
The Committee shall elect one (1) member of the Committee as its
Chairperson. The Committee shall hold at least one (1) regular meeting each
year and such special meetings as may be required. Meetings may be called
by the Chair of the Committee or the Chairman of the Board. The presence in
person or by telephone of two (2) members shall constitute a
B-1
quorum. Meetings may be held at any time, any place and in any manner
permitted by applicable law and the Company's Bylaws. Minutes of the
Committee's meetings shall be kept. The Committee shall have authority to
create and delegate specific tasks to such standing or ad hoc subcommittees
as it may determine to be necessary or appropriate for the discharge of its
responsibilities. The results of the meetings shall be reported to the full
Board.
Prospective nominees shall be evaluated by the Nominating Committee on the
basis of a subjective review of the background of each prospective nominee
and the current needs of the Company. Factors considered by the Committee
shall include:
o the candidate's background, including, but not limited to, education
and employment experience.
o the candidate's standards of integrity, work ethic and commitment.
o the candidate's ability to devote sufficient time and effort to the
duties of a Director, including, but not limited to, the candidate's
service on other boards of directors; and
o the candidate's specific skills and experience in light of the needs
of the Company and the Board of Directors, including, but not limited
to, the need for specific expertise to serve on committees of the
Board.
The Committee may also consider other factors as it deems appropriate. The
Committee may determine to interview candidates, either in person or by
telephone. Upon completion of the evaluation process, the Committee
recommends candidates for election to the Board of Directors.
The Nominating Committee will consider any Director candidate recommended
by the shareholders on the same basis that the Committee considers
candidates identified by the Committee.
III. MEMBERSHIP
The Committee shall consist of three (3) or more Directors, who shall be
appointed annually and who are subject to removal at any time, by the Board
of Directors. Each Committee member shall meet the definition of
"independent director" under the listing standards of the Nasdaq rules or
any other statute, rule or regulation applicable to the Company. Each
Committee member shall serve until his or her Committee service is
terminated by the Board.
IV. RESOURCES, AUTHORITY
The Committee shall have the resources and authority necessary to discharge
its duties and responsibilities, including the authority to retain special
counsel or other experts or consultants, as it deems appropriate, without
seeking approval of the Board or management. The Committee shall have sole
authority to retain and terminate any search firm to be used to identify
Director candidates, including sole authority to approve the search firm's
fees and other retention terms.
B-2
APPENDIX C
----------
WESTBANK CORPORATION
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors known as the Audit
Committee. The Audit Committee shall be composed of a minimum of three (3)
directors who are independent of the management of the corporation and are free
of any relationship that, in the opinion of the Board of Directors, would
interfere with their exercise of independent judgment as a Committee member.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Directors in fulfilling
their responsibility to the shareholders, potential shareholders and investment
community relating to corporate accounting, reporting practices of the
corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication among the Directors, the independent
auditors, the internal auditor and the financial management of the corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the Directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
o meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized and, at the conclusion thereof,
review such audit, including any comments or recommendations of the
independent auditors. Particular emphasis should be placed on the adequacy
of such internal controls to expose any payments, transactions or
procedures that might be deemed illegal or otherwise improper.
o annually, review the quality and independence of the independent auditors
by reviewing the resumes of key partners and managers responsible for the
audit, the independent auditors' description of established quality control
procedures and the independent auditors' most recent peer review report.
C-1
o review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable.
o review the internal audit function of the corporation, including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year and the coordination of such plans with the
independent auditors.
o review at each meeting findings from completed internal audits and the
progress on completing the proposed internal audit plan.
o review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders; review any
changes in accounting principles.
o provide sufficient opportunity for the internal and independent auditors to
meet with members of the Committee without members of management present.
o submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors.
o investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
C-2
APPENDIX D
----------
WESTBANK CORPORATION
CODE OF ETHICS
--------------
WESTBANK CORPORATION'S reputation for integrity is perhaps our most valuable
asset and is determined by the conduct of our Directors and Officers. Our
position with the Bank must never be used, directly or indirectly, for private
gain, to advance personal interests or to obtain favors or benefits for us,
members of our families or any other person.
The following sets forth certain standards and rules of conduct as they apply to
both personal and business life.
I. CONFIDENTIAL INFORMATION
------------------------
Maintaining a confidential relationship between our subsidiaries and each
of our customers, potential customers, stockholders, employees and
suppliers is a fundamental principle of the banking industry. Confidential
information which might reflect favorably or adversely upon the investment
value or future market value of any business enterprise, including our own
Bank, shall not be used in any manner for the purpose of personal advantage
or to provide advantage to others.
The material discussed at our subsidiaries and/or Board meetings is
extremely confidential. Topics for discussion at these meetings will
include the Bank's plans, Bank management performance, the
credit-worthiness of our borrowers and other confidential topics.
Information discussed at these meetings cannot be discussed elsewhere.
Confidential information should never be discussed in an environment where
it might be overheard by any unauthorized individuals.
II. CONFLICT OF INTEREST
--------------------
Legal, regulatory and ethical considerations make it mandatory that
Directors and Officers avoid any and all conflicts of interest situations.
Specifically, Directors and Officers must:
A. Avoid any potential conflict of interest involving insider information
or any information involving customer accounts, i.e. deposits, loans
or trusts. The insider shall excuse themselves from any discussions
and abstain from any decisions where a conflict of interest exists.
B. Avoid involvement of any kind in the credit approval process when the
credit being considered will directly or indirectly benefit him or her
(this policy includes loans, overdrafts, immediate credit on funds and
any other form of credit).
D-1
C. Avoid any potential conflict of interest involving any of the
Corporation's Trust accounts by not participating in discussions and
the decision-making process on such accounts.
D. Directors and Officers shall disclose to the President and to the
Board of Directors any actual or potential conflicts of interest as
soon as the situation arises (any substantial ownership or beneficial
interest which they or members of their immediate family have in
customers, suppliers or competitors of the Bank and, if a conflict of
interest with the Bank exists, appropriate action shall be taken).
E. Use only arm's-length transactions when buying, selling or leasing
assets or services to the subsidiaries. Competitive bids will be
obtained for any service, fee or product in excess of $10,000
purchased from a Director or Director-related company, except in an
emergency. (It is the policy of all the subsidiaries to contract for
assets and services using only arm's-length transactions that are in
the best interest. Directors and Officers are asked to honor this
policy and to refrain from influencing or asking for special
considerations in negotiating contracts for needed assets or
services.)
F. All dealings must be based strictly on merit, regardless of race,
color, national origin, age, handicap, gender or creed.
G. Any discussion or decision that may involve a conflict of interest
shall be fully documented in the appropriate committee and/or Board of
Directors Minutes.
III. PERSONAL INTEGRITY
------------------
It is vital that our word is viewed as our bond and, for that reason,
Directors and Officers may not make any actual or apparent commitments,
formal or informal, regarding the Holding Company without prior
authorization in accordance with existing policies.
It is improper for Directors or Officers or members of their immediate
family to accept a gift of cash or securities from a customer, supplier or
from any other person or business seeking a business relationship with the
subsidiaries. Directors and Officers and members of their immediate
families may accept other gifts, including food, entertainment, advertising
or promotional items of modest value, or gifts of a nominal value on
special occasions such as Christmas. Nominal or modest value is a value
that would be within the ability of the Director or Officer to reciprocate
on a personal basis or with legitimate claim for reimbursement under
similar circumstances.
No gift may be received if it is in return for any favor or in any attempt
to influence any transaction. The above restrictions do not apply, however,
to gifts that have no business purpose and are received from close friends
and family members.
D-2
The high standard of financial integrity that Westbank Corporation is
obligated to observe requires that each of us be above criticism in his/her
own financial affairs. If financial difficulties occur, the President of
the Holding Company is available to help you.
The indispensability of our Directors and Officers Liability Insurance
coverage must never be underestimated.
No Director or Officer, nor any member of his/her family, may trade in
Westbank Stock if the trade is based on information not known outside of
the Bank.
Directors and Officers always live by rules. Any illegal conduct by a
Director or Officer of Westbank or any of its subsidiaries reflects
unfavorably on the Bank. Therefore, each Director and Officer shall refrain
from any illegal conduct or activity. For purposes of this Code of Ethics,
"illegal conduct or activity" is defined as any conduct, activity or
omission which constitutes a crime as determined under the Laws of the
United States or the Commonwealth of Massachusetts.
IV. LOANS
-----
Directors and/or Officers may obtain loans from the subsidiaries or other
banks or financial institutions, on reasonable and customary terms to
finance normal credit needs. Loan Officers cannot approve loans to family
members.
With respect to Federal Regulation O (Reg. O), all Directors and
policy-making officers should be familiar with the provisions of the
Regulation including the reporting provisions.
V. INSIDER STOCK TRANSACTIONS
--------------------------
For purposes of complying with Section 16(b) of the Securities and Exchange
Act, any Director or Executive Officer must inform the President and Chief
Executive Officer of Westbank Corporation of his or her intent to purchase
or otherwise acquire any additional shares of Westbank Corporation stock
prior to such purchase.
VI. CONCLUSION
----------
It is recommended that all current Directors and Officers read and sign
this Code annually, and that any potential new Director or Officer be
totally familiar and in agreement with this Code prior to being appointed
or hired.
As a Director and/or Officer of WESTBANK CORPORATION, I was elected to serve the
needs and the Bank's employees and not to serve my personal financial needs.
Therefore, by signing my name below, I acknowledge that I have read the above
Code of Ethics and agree to comply with it.
D-3
WESTBANK CORPORATION
PROXY FOR 2004 ANNUAL SHAREHOLDERS MEETING - APRIL 21, 2004
I, the undersigned holder of common stock of Westbank Corporation, hereby
appoint Gary L. Briggs and Kathleen A. Jalbert, or either of them, with the
power of substitution, proxies of the undersigned to vote the shares of the
undersigned at the 2004 Annual Meeting of Shareholders of Westbank Corporation
to be held at 9:00 A.M., April 21, 2004, at the Best Western Sovereign Hotel &
Conference Center, 1080 Riverdale Street, West Springfield, Massachusetts, and
at any adjournment thereof, with all the powers the undersigned would possess if
personally present. Said proxies are specifically authorized to vote as
indicated below.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED BELOW
UNLESS AUTHORITY IS WITHHELD OR OTHERWISE INDICATED. ALL PROXIES EXECUTED
CORRECTLY WILL BE VOTED AS DIRECTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS.
1. ELECTION OF DIRECTORS: To elect the following Directors of the Corporation
for a three-year term until the 2007 Annual Meeting of Shareholders.
Roland O. Archambault [_] FOR [_] AGAINST [_] ABSTAIN
Donald R. Chase [_] FOR [_] AGAINST [_] ABSTAIN
George R. Sullivan [_] FOR [_] AGAINST [_] ABSTAIN
2. TO APPROVE THE WESTBANK CORPORATION
2004 RECOGNITION AND RETENTION PLAN [_] FOR [_] AGAINST [_] ABSTAIN
(over)
3. SELECTION OF CERTIFIED PUBLIC ACCOUNTANTS: To ratify the appointment, by
the Board of Directors, of Grant Thornton LLP as the Corporation's
independent public accountants for the fiscal year ending December 31,
2004.
[_] FOR [_] AGAINST [_] ABSTAIN
4. OTHER BUSINESS: In their discretion, to act upon the transaction of such
other business as may properly come before the meeting and any adjournment
thereof.
Date:
-------------------------------
-------------------------------
(Signature of Shareholder)
-------------------------------
(Signature, if jointly held)
When signing as Attorney,
Executor, Administrator,
Trustee or Guardian, please
give full title. IF MORE THAN
ONE TRUSTEE, ALL SHOULD SIGN.
ALL JOINT OWNERS MUST SIGN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.