-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GPnPFadM6V9RPch02nm+lGJnZI+oHTqiT+/3cNxmS3CumyvX5DW2MnycOJIlihDd kqYBAj6XXMp9bl/hknGBIg== 0000914317-99-000414.txt : 19990723 0000914317-99-000414.hdr.sgml : 19990723 ACCESSION NUMBER: 0000914317-99-000414 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990722 EFFECTIVENESS DATE: 19990722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IPSWICH BANCSHARES INC CENTRAL INDEX KEY: 0001089857 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 043459169 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-83471 FILM NUMBER: 99668678 BUSINESS ADDRESS: STREET 1: 23 MARKET STREET CITY: IPSWICH STATE: MA ZIP: 01938 BUSINESS PHONE: 9783567777 MAIL ADDRESS: STREET 1: 23 MARKET STREET CITY: IPSWICH STATE: MA ZIP: 01938 S-8 1 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Ipswich Bancshares, Inc. (Exact name of issuer as specified in its charter) Massachusetts 04-3459169 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 23 Market Street, Ipswich, Massachusetts 01938 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Deferred Stock Compensation Plan for Directors of Ipswich Savings Bank Savings Banks Employees Retirement Association 401(k) Plan as adopted by Ipswich Savings Bank Ipswich Savings Bank 1998 Stock Incentive Plan Ipswich Savings Bank 1996 Stock Incentive Plan Ipswich Savings Bank 1992 Incentive and Nonqualified Stock Incentive Plan ------------------------------------------------------------------------- (Full title of the plans) David L. Grey President and Chief Executive Officer Ipswich Bancshares, Inc. 23 Market Street Ipswich, Massachusetts 01938 (978) 356-7777 ------------------------------------------ (Name and address, including zip code, and telephone number, including area code, of agent for service) WITH A COPY TO: Deborah Drosnin, Esquire Foley, Hoag & Eliot LLP One Post Office Square Boston, Massachusetts 02109 (617) 832-1000 ------------------------------------------ CALCULATION OF REGISTRATION FEE
==================================================================================================================== Amount Proposed Maximum Proposed Maximum Amount of Title of Securities to be Offering Price Aggregate Offering Registration to be Registered Registered (1) Per Share (2) Price Fee - -------------------------------------------------------------------------------------------------------------------- Common Stock (par value $.10) 296,698 shares $9.9075 $2,939,535.44 $ 817.19 - --------------------------------- --------------------- --------------------- --------------------- ----------------
(1) Maximum number of shares issuable under the Ipswich Savings Bank 1998 Stock Incentive Plan (100,000), the Ipswich Savings Bank 1996 Stock Incentive Plan (111,775), the Ipswich Savings Bank 1992 Incentive and Nonqualified Stock Option Plan (11,323), the Deferred Stock Compensation Plan for Directors of Ipswich Savings Bank (23,600) and the Savings Banks Employees Retirement Association 401(k) Plan as adopted by Ipswich Savings Bank (50,000), and such additional number of shares of the Company's common stock as may be required in the event of a stock dividend, stock split, split-up, recapitalization or other similar event. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the 401(k) Plan. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) and (h), upon the basis of the average of the high and low prices of the common stock of the Registrant on July __, 1999, as reported on the Nasdaq Stock Market. PART I The document(s) containing the information specified in Part I of Form S-8 will be sent or given to participating employees and directors as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). These documents and the documents incorporated by reference into this Registration Statement pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The Registrant has not previously filed any annual or quarterly reports with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Act of 1934, as amended (the "Exchange Act"). The Registrant hereby incorporates by reference (i) the Annual Report on Form 10-K for the fiscal year ended December 31, 1998 filed by its predecessor, Ipswich Savings Bank, with the Federal Deposit Insurance Corporation and (ii) all other reports filed by Ipswich Savings Bank with the Federal Deposit Insurance Corporation since December 31, 1998 pursuant to Section 13(a) of the Exchange Act. The Registrant hereby incorporates by reference the Company's Current Report on Form 8-K (including the description of the Company's Common Stock) filed with the Commission on July 9, 1999, including any amendment or report filed for the purpose of updating such description. In addition, all documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents. Any statement contained in this Registration Statement, or in a document incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. -2- Item 4. Description of Securities. Not applicable since the Company's Common Stock is registered under Section 12 of the Exchange Act. Item 5. Interests of Named Experts and Counsel. Not applicable. Item 6. Indemnification of Directors and Officers. Article VI of the By-Laws of the Company provides that directors and officers of the Company shall be indemnified by the Company (and non-officer employees of the Company may be so indemnified, at the discretion of the Board of Directors) against all expenses incurred in connection with any proceedings as a result of serving or having served as a director, officer or employee of the Company or any of its wholly owned subsidiaries, or serving or having served in any capacity with respect to any other corporation, organization, partnership, joint venture, trust, employee benefit plan or other entity at the request or direction of the Company. The By-laws of the Company provide that such indemnification shall not be provided if it is determined that the action giving rise to the liability was not taken in good faith in the reasonable belief that the action was in the best interests of the Company. The Company also has a policy of directors' and officers' liability insurance to indemnify its directors and officers against certain liabilities incurred in their capacities as such. The Articles of Organization provide that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability. However, in conformity with Section 13(b) (1 1/2) of Chapter 156B of the Massachusetts General Laws, a director shall be liable (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of Chapter 156B of the Massachusetts General Laws or (iv) with respect to any transaction from which the director derived an improper personal benefit. The effect of these provisions would be to permit indemnification by the Company for liabilities arising out of the Securities Act. Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. 5 Opinion of Foley, Hoag & Eliot LLP as to the legality of the securities being registered -3- 23.1 Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5) 23.2 Consent of Baker Newman & Noyes LLC 24 Power of Attorney (contained on the signature page) 99.1 Ipswich Savings Bank 1992 Incentive and Nonqualified Stock Incentive Plan 99.2 Ipswich Savings Bank 1996 Stock Incentive Plan 99.3 Ipswich Savings Bank 1998 Stock Incentive Plan 99.4 Deferred Stock Compensation Plan for Directors of Ipswich Savings Bank Item 9. Undertakings. 1. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's or the Plan's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 2. The undersigned Registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) of the Securities Act if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and -4- (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs 2(a)(i) and 2(a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference herein. (b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. * * * -5- SIGNATURES Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Ipswich, Massachusetts, on July 21, 1999. IPSWICH BANCSHARES, INC. By: /s/ Francis Kenney ------------------------------------- Francis Kenney Senior Vice President, Treasurer and Chief Financial Officer LIB_18/S-8.WPD POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints David L. Grey and Francis Kenney and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing which they, or either of them, may deem necessary or advisable to be done in connection with this Registration Statement, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or any substitute or substitutes for either or both of them, may lawfully do or cause to be done by virtue hereof. * * * Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title - --------- ----- /s/ DAVID L. GREY President, Chief Executive Officer July 21, 1999 - -------------------------- and Director (Principal Executive David Grey Officer) /s/ FRANCIS KENNEY Senior Vice President, Treasurer July 21, 1999 - -------------------------- and Chief Financial Officer Francis Kenney (Principal Financial and Accounting Officer) /s/ WILLIAM M. CRAFT Director July 21, 1999 - -------------------------- William M. Craft /s/ THOMAS A. ELLSWORTH Director July 21, 1999 - -------------------------- Thomas A. Ellsworth /s/ WILLIAM E. GEORGE Director July 21, 1999 - -------------------------- William E. George /s/ MARK L. KLAMAN Director July 21, 1999 - -------------------------- Mark L. Klaman /s/ JOHN H. MORROW Director July 21, 1999 - -------------------------- John H. Morrow /s/ LAWRENCE J. PSZENNY Director July 21, 1999 - -------------------------- Lawrence J. Pszenny /s/ WILLIAM J. TINTI Director July 21, 1999 - -------------------------- William J. Tinti -7- The 401(k) Plan. Pursuant to the requirements of the Securities Act of 1933, the trustee of the Savings Banks Employees Retirement Association 401(k) Plan as adopted by Ipswich Savings Bank has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Woburn, Massachusetts on July 21, 1999. SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION 401(k) PLAN AS ADOPTED BY IPSWICH SAVINGS BANK By: /s/ Thomas Forese, Jr. ------------------------------------- Plan Administrator EXHIBIT INDEX 5 Opinion of Foley, Hoag & Eliot LLP as to the legality of the securities being registered. 23.1 Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5) 23.2 Consent of Baker Newman & Noyes LLC 24 Power of Attorney (contained on the signature page) 99.1 Ipswich Savings Bank 1992 Incentive and Nonqualified Stock Incentive Plan 99.2 Ipswich Savings Bank 1996 Stock Incentive Plan 99.3 Ipswich Savings Bank 1998 Stock Incentive Plan 99.4 Deferred Stock Compensation Plan for Directors of Ipswich Savings Bank EX-5 2 FOLEY, HOAG & ELIOT LLP ONE POST OFFICE SQUARE BOSTON, MASSACHUSETTS 02109-2170 TELEPHONE: 617-832-1000 1747 PENNSYLVANIA AVE., N.W. FACSIMILE: 617-832-7000 WASHINGTON, D.C. 20006 http://www.fhe.com TEL: 202-223-1200 FAX: 202-785-6687 July 22, 1999 Ipswich Bancshares, Inc. 23 Market Street Ipswich, Massachusetts 01938 Ladies and Gentlemen: We are familiar with the Registration Statement on Form S-8 (the "S-8 Registration Statement") filed today by Ipswich Bancshares, Inc., a Massachusetts corporation (the "Company"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended. The S-8 Registration Statement relates to the proposed offering by the Company of shares (the "Shares") of its common stock, $.10 par value per share ("Common Stock") issuable pursuant to the following plans (the "Plans"): o 100,000 shares of Common Stock issuable pursuant to the Ipswich Savings Bank 1998 Stock Incentive Plan. o 111,775 shares of Common Stock issuable pursuant to the Ipswich Savings Bank 1996 Stock Incentive Plan. o 11,323 shares of Common Stock issuable pursuant to the Ipswich Savings Bank 1992 Incentive and Nonqualified Stock Incentive Plan. o 23,600 shares of Common Stock issuable pursuant to the Ipswich Savings Bank Deferred Stock Compensation Plan for Directors. In arriving at the opinion expressed below, we have examined and relied on the following documents: 1. The Company's Articles of Organization and By-Laws, each as amended as of the date hereof; 2. Such records of meetings and consents of the Company's Board of Directors and of its stockholders, stock records and other records and documents as we deemed necessary or appropriate for purposes of rendering this opinion; 3. The Plans. Based upon the foregoing, it is our opinion that: 1. The Company has corporate power adequate for the issuance of the Shares in accordance with the S-8 Registration Statement. 2. The Company has taken all necessary corporate action required to authorize the issuance and sale of the Shares. 3. When certificates for the Shares have been duly executed and counter-signed and delivered against due receipt of the purchase price in accordance with the provisions of the Plan, the Shares will be legally issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the S-8 Registration Statement. Very truly yours, FOLEY, HOAG & ELIOT LLP By: /s/ David W. Walker ---------------------- David W. Walker A Partner EX-23.2 3 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated January 15, 1999 with respect to the consolidated financial statements of Ipswich Savings Bank included in its Form 10-K for the year ended December 31, 1998. /s/ Baker Newman & Noyes - ------------------------ Baker Newman & Noyes BAKER NEWMAN & NOYES Portland, Maine July 19, 1999 EX-99.1 4 IPSWICH SAVINGS BANK 1992 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN 1. Purpose. The purpose of this Plan is to advance the interests of the lpswich Savings Bank (the "Bank") by providing an opportunity to key employees of the Bank and certain affiliated corporations to purchase stock of the Bank through the exercise of options granted under this Plan. It is intended that this purpose will be effected by the granting of both "incentive stock options" ("incentive options") as described in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and nonqualified stock options ("nonqualified options"). To reflect the formation of Ipswich Bancshares, Inc. (the "Holding Company") as the holding company of the Bank on July 1, 1999, the term "Shares" shall mean the common stock, par value $.10 per share, of the Holding Company, and references to the "Bank" shall include the Holding Company. 2. Effective Date. This Plan becomes effective on the date on which the process of converting the Bank from a mutual-form, savings bank to a stock-form, savings bank is consummated, provided that the Plan is approved by the stockholders of the Bank within one (1) year from such date. Although options may be granted before such stockholder approval, no option may be exercised until such approval is obtained and such options will be null and void if such approval is not obtained. 3. Stock Subject to the Plan. The aggregate number of shares of $.10 par value, common stock of the Bank (the "Shares") with respect to which options may be granted under this Plan shall not exceed the greater of 30,000 or 10% of the number of shares sold in connection with conversion of the Bank from a mutual-form, savings bank to a stock-form, savings bank. Any Shares subject to an option which for any reason expires or is terminated unexercised as to such Shares may again be the subject of an option under the Plan. In addition, any Shares purchased by an optionee upon exercise of an option which are subsequently reacquired by the Bank pursuant to the terms of such option may again be the subject of an option under the Plan. The Shares delivered upon exercise of options under this Plan may, in whole or in part, be either authorized but unissued Shares or issued Shares reacquired by the Bank. 4. Administration. This Plan shall be administered by the Board of Directors of the Bank or, to the extent delegated by the Board of Directors, the Executive Committee or a compensation or stock option committee. Subject to the provisions of this Plan, the Board of Directors or such a committee shall have full power to construe and interpret the Plan and to establish, amend and rescind rules and regulations for its administration. Any decisions made with respect thereto shall be final and binding on the Bank, the optionees and all other persons. 5. Eligible Participants. Both incentive options and nonqualified options may be granted to such-key employees of the Bank, its parent (in existence at the time of grant) or any of its subsidiaries (in existence at the time of grant), including members of the Board of Directors who are also employees of the Bank, its parent (in existence at the time of grant) or any of its subsidiaries (in existence at the time of grant), as are selected by the Board of Directors of the Bank (or a committee to which it has delegated such authority). 6. Duration of the Plan. This Plan shall terminate ten (10) years from the effective date hereof, unless terminated earlier pursuant to Paragraph 12 hereafter, and no options may be granted thereafter. 7. Restrictions on Incentive Options. Incentive options granted under this Plan shall be subject to the following restrictions: (a) Limitation on Number of shares. The aggregate fair market value, determined as of the date the incentive option is granted, of the Shares with respect to which incentive options are exercisable for the first time by any optionee during any calendar year shall not exceed $100,000. In the event that, in a given calendar year, such optionee may exercise for the first time an incentive stock option granted under any other incentive stock option plan(s) of the Bank or its parent or a subsidiary which is (are) also intended to comply with the provisions of-Section 422 of the Code, such annual limitation shall apply to the aggregate number of Shares with respect to which incentive stock options are exercisable for the first time by such Eligible Participant under all such plans. (b) 10% Stockholder. If any employee to whom an incentive option is granted pursuant to the provisions of the Plan is on the date of grant the stock owner (as determined under Section 424 (d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Bank or its parent or subsidiaries, then the following special provisions shall be applicable to the incentive option granted to such individual: (i) The option price per Share subject to such incentive option shall not be less than 110% of the fair market value of one Share on the date of grant; and (ii) The incentive option shall not have a term in excess of I five (5) years from the date of grant. 8. Terms and Conditions of Options. Options granted under this Plan shall be evidenced by stock option agreements in such form and containing such terms and conditions as the Board of Directors of the Bank (or a committee to which it has delegated such authority) shall determine; provided, however, that such agreements shall evidence among their terms and conditions the following: (a) Price. Subject to the condition of subparagraph (b) of Paragraph 7, if applicable, the purchase price per Share payable upon the exercise of each option granted hereunder shall be determined by the Board of Directors of the Bank (or a committee to which it -2- has delegated such authority) at the time the option is granted and shall not be less than 100% of the fair market value of one Share on the date of the grant. (b) Number of Shares. Each option agreement shall specify the number of shares to which it pertains. (c) Exercise of Options. Each option shall be exercisable for the full amount or for any part thereof and at such intervals or in such installments or at such periods of service as the Board of Directors of the Bank (or a committee to which it has delegated such authority) may determine at the time it grants such option; provided, however, that no option shall be exercisable with respect to any Shares either (a) later than ten (10) years after the date of the grant of such option or (b) if and to the extent required by law without the approval of the Commissioner of Banks of The Commonwealth of Massachusetts. (d) Notice of Exercise and Payment. An option shall be exercisable only by delivery of a written notice to the Bank's Treasurer, or any other officer of the Bank designated by the Board of Directors of the Bank (or a committee to which it has delegated such authority) to accept such notices on its behalf, specifying the number of Shares for which, and the date on which, it is to be exercised. If the offering of said Shares is, at that time, both subject to the registration requirements of the Securities Act of 1933 and not effectively registered under the securities Act of 1933, as amended, the optionee shall include with such notice a letter, in form and substance satisfactory to the Bank, confirming that the Shares are being purchased for the optionee's own account for investment and not with a view to distribution, and acknowledging that the optionee is familiar with any restrictions on the resale of the Shares under applicable securities laws. Payment shall be made in full at the time the option is exercised. Payment shall be made either (i) in cash, (ii) by cashier's or certified check, (iii) if permitted by the Board of Directors of the Bank (or a committee to which it has delegated such authority), by delivery and assignment to the Bank of shares of Bank stock having a fair market value (as determined by the Board of Directors of the Bank [or a committee to which it has delegated such authority]) equal to the exercise price, or (iv) by a combination of (i), (ii), or (iii). (e) Non-Transferability. No option shall be transferable by the optionee (or any subsequent holder) otherwise than by will or the laws of descent or distribution, and each option shall be exercisable during the lifetime of the optionee by the optiones only. (f) Termination of Options Granted to Employees. Each incentive option and each nonqualified option granted to an employee of the Bank, its parent or a subsidiary, shall terminate and may no longer be exercised if the optionee ceases for any reason to be an employee of or ceases to render services for the Bank, its Parent, or a subsidiary, in accordance with the following provisions: (i) If the optionees employment shall have terminated by resignation or other voluntary action (other than retirement), or if such employment shall have -3- been terminated involuntarily for cause, the option shall terminate and may no longer be exercised; (ii) If the optionee employment shall have been terminated for any reason other than for cause, resignation or other voluntary action before he becomes disabled or dies or is eligible to retire, the optionee may, at any time within a period of three (3) months after such termination of employment, exercise the option to the extent it was exercisable on the date of termination of the optionee's employment; (iii) If the optionee's employment shall have been terminated because of disability (within the meaning-of Section 22 (e) (3) of the Code), the optionee may, at any time within a period of one (1) year after such termination of employment, exercise the option the extent that the option was exercisable on the date of termination of the optionee's employment; and (iv) If the optionee's employment shall have been terminated because of death, the option, to the extent that the optionee was entitled to exercise it on the date of death, may be exercised within a period of one (1) year after the optionee's death by the person or persons to whom the optionee's rights under the option shall Pass by will or by the laws of descent and distribution; provided, however, that no option may be exercised to any extent by anyone after the date of expiration of the option. (g) Rights as Stockholder. The optionee shall have no rights as a stockholder with respect to any Shares covered by his option until the date on which the optionee becomes legally entitled to have a stock certificate issued to him for such Shares. (h) Repurchase of Shares by the Company. Any Shares purchased by an optionee upon exercise of an option may in the discretion of the Board of Directors (or a committee to which the Board of Directors has delegated such authority) be subject to repurchase by the Company ft and to the extent specifically set forth in the option agreement pursuant to which the shares were purchased. 9. Stock Dividends; Stock Splits; Stock Combination; Recapitalizations. Appropriate adjustment shall be made by the Board of Directors of the Bank (or a committee to which it has delegated such authority) in the maximum number of Shares subject to the Plan and in the number, , kind, and option price of Shares covered by outstanding options granted hereunder to give effect to any stock dividends, stock splits, stock combinations, recapitalizations and other similar changes in the capital structure of the Bank after the effective date of the Plan. -4- 10. Merger; sale of Assets; Dissolution. In the event of a change of the Shares resulting from a merger, the formation of a holding company, or a similar reorganization as to which the Bank is the surviving corporation, the number and kind of shares which thereafter may be optioned and sold under the Plan, and the number and kind of shares then subject to options granted hereunder and the option price per share thereof shall be appropriately adjusted in such manner as the Board of Directors of the Bank (or a committee to which it has delegated such authority) may deem equitable to prevent substantial dilution or enlargement of the rights available or granted hereunder. Except as otherwise determined by the Board of Directors of the Bank, a merger or a similar reorganization which the Bank does not survive, or a sale of all or substantially all of the assets of the Bank, shall cause every option outstanding hereunder to terminate, to the extent not then exercised, unless any surviving entity agrees to assume the obligations hereunder. 11. Definitions. (a) The term "employee" shall have, for purposes of this Plan, the meaning ascribed to it under Section 3401(c) of the code and the regulations promulgated thereunder; the term "key employees" refers to those employees who are determined by the Board of Directors of the Bank (or a committee to which it has delegated such authority) to be eligible for options under this Plan. (b) The term "option" means either an incentive option or a nonqualified option. The term "options" refers to both incentive options and/or nonqualified options. (c) The term "optionee" means a key employee to whom an option is granted under this Plan. (d) The term "parent" shall have, for purposes of this Plan, the meaning ascribed to it under Section 424.(e) of the code and the regulations promulgated thereunder. (e) The term "subsidiary" shall have, for purposes of this Plan, the meaning ascribed to it under Section 424(f) of the code and the regulations promulgated thereunder. (f) The term "Board of Directors" shall mean, for periods prior to the consummation of the conversion of the-Bank from a mutual-form, savings bank to a stock-form, savings bank, the Board of Trustees of the Bank. 12. Termination or Amendment of Plan. The Board of Directors may at any time terminate the Plan or make such changes in or additions to the Plan as it deems advisable without further action on the part of the stockholders of the Bank, provided: -5- (a) that no such termination or amendment shall adversely affect or impair any then outstanding option without the consent of the optionee holding such option; and -6- (b) that no such amendment which increases the maximum number of Shares subject to this Plan or the employees eligible to participate in this Plan shall be effective unless it is approved by the stockholders of the Bank within twelve (12) months before or after the adoption of said amendment. Adopted this 23rd day of September, 1992 IPSWICH SAVINGS BANK By its President David L. Grey -7- EX-99.2 5 IPSWICH SAVINGS BANK. 1996 STOCK INCENTIVE PLAN SECTION 1. General Purpose of the Plan; Definitions The name of the plan is the Ipswich Savings Bank 1996 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, directors and employees of Ipswich Savings Bank (the "Company") and its wholly-owned subsidiaries ("Subsidiaries") upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company and its shareholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. To reflect the formation of Ipswich Bancshares, Inc. (the "Holding Company") as the holding company of the Company on July 1, 1999, the term "Stock" shall mean the common stock, par value $.10 per share, of the Holding Company and references to the "Company" shall include the Holding Company. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Award" or "Awards", except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Stock Appreciation Rights. "Board" means the Board of Directors of the Company. "Change of Control" shall have the meaning set forth in Section 15. "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. "Conditioned Stock Award" means an Award granted pursuant to Section 6. "Disability" means disability as set forth in Section 22(e)(3) of the Code. "Effective Date" shall have the meaning set forth in Section 17. "Eligible Person" shall have the meaning set forth in Section 4. "Fair Market Value" on any given date means the closing bid price per share of the Stock on such date as reported by the Nasdaq Stock Market or another nationally recognized stock exchange, or, if the Stock is not listed on such an exchange, the fair market value of the Stock as determined by the Board. "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code. o "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. "Normal Retirement" means retirement from active employment with, or from the Board of Directors of, the Company and its Subsidiaries in accordance with the retirement policies of the Company and its Subsidiaries then in effect. "Option" or "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5. "Performance Share Award" means an Award granted pursuant to Section 8. "Stock" means the Common Stock, $.10 par value per share, of the Company, subject to adjustments pursuant to Section 3. "Stock Appreciation Right" means an Award granted pursuant to Section 9. "Unrestricted Stock Award" means an Award granted pursuant to Section 7. SECTION 2. Administration of Plan (a) The Plan shall be administered by the full Board of Directors of the Company. The Board shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority: (i) to select the directors, officers and other employees of the Company and its Subsidiaries to whom Awards may from time to time be granted; (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock, Unrestricted Stock, Performance Shares and Stock Appreciation Rights, or any combination of the foregoing, granted to any one or more participants; (iii) to determine the number of shares to be covered by any Award; (iv) to determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; provided, however, that no such action shall adversely affect rights under any outstanding Award without the participant's consent; (v) to accelerate the exercisability or vesting of all or any portion of any Award; (vi) subject to the provisions of Section 5(a)(ii), to extend the period in which any outstanding Stock Option or Stock Appreciation Right may be exercised; (vii) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts equal to interest (at rates determined by the Board) or dividends or deemed dividends on such deferrals; and (viii) to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. (b) Decisions Binding. All decisions and interpretations of the Board shall be binding on all persons, including the Company and Plan participants. SECTION 3. Shares Issuable under the Plan; Mergers; Substitution. (a) Shares Issuable. The maximum number of shares of Stock with respect to which Awards (including Stock Appreciation Rights) may be granted under the Plan shall be 59,000. For purposes of this limitation, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company or otherwise terminated (other than by exercise) shall be added back to the shares of Stock with respect to which Awards may be granted under the Plan so long as the participants to whom such Awards had been previously granted received no benefits of ownership of the underlying shares of Stock to which the Award related. Subject to such overall limitation, any type or types of Award may be granted with respect to shares, including Incentive Stock Options. Shares issued under the Plan may be authorized but unissued shares or shares reacquired by the Company. -3- (b) Stock Dividends, Mergers, etc. In the event that after approval of the Plan by the stockholders of the Company in accordance with Section 17, the Company effects a stock dividend, stock split or similar change in capitalization affecting the Stock, the Board shall make appropriate adjustments in (i) the number and kind of shares of stock or securities with respect to which Awards may thereafter be granted (including without limitation the limitation set forth in Section 3(a) above), (ii) the number and kind of shares remaining subject to outstanding Awards, and (iii) the option or purchase price in respect of such shares. In the event of any merger, consolidation, dissolution or liquidation of the Company, the Board in its sole discretion may, as to any outstanding Awards, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and in the number and purchase price (if any) of shares subject to such Awards as it may determine and as may be permitted by the terms of such transaction, or accelerate, amend or terminate such Awards upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Award, shall require payment or other consideration which the Board deems equitable in the circumstances), subject, however, to the provisions of Section 15. (c) Substitute Awards. The Board may grant Awards under the Plan in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation (collectively, "Merger"). The Board may direct that the substitute awards be granted on such terms and conditions as the Board considers appropriate in the circumstances. Shares which may be delivered under such substitute awards may be in addition to the maximum number of shares provided for in Section 3(a). SECTION 4. Eligibility. Awards may be granted only to directors, officers or other key employees of the Company or its Subsidiaries ("Eligible Persons"). SECTION 5. Stock Options. Any Stock Option granted under the Plan shall be in such form as the Board may from time to time approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. To the extent that any option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after the tenth anniversary of the Effective Date. -4- (a) Grant of Stock Options. The Board in its discretion may determine the effective date of Stock Options, provided, however, that grants of Incentive Stock Options shall be made only to persons who are, on the effective date of the grant, employees of the Company or any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be subject to the following terms and conditions and the terms and conditions of Section 13 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board shall deem desirable. (i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Board at the time of grant but shall be, in the case of Incentive Stock Options, not less than one hundred percent (100%) of Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the option price shall be not less than one hundred ten percent (110%) of Fair Market Value on the grant date. (ii) Option Term. The term of each Stock Option shall be fixed by the Board but no Incentive Stock Option shall be exercisable more than ten (10) years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five (5) years from the date of grant. (iii) Exercisability; Rights of a Shareholder. Stock Options shall become vested and exercisable at such time or times, whether or not in installments, as shall be determined by the Board at or after the grant date. The Board may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a shareholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. (iv) Method of Exercise. Stock Options may be exercised in whole or in part, by delivering written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: (A) In cash, by certified or bank check or other instrument acceptable to the Board; (B) If permitted by the Board, in its discretion, in the form of shares of Stock that are not then subject to restrictions under any Company plan. Such -5- surrendered shares shall be valued at Fair Market Value on the exercise date; or (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Board shall prescribe as a condition of such payment procedure. The Company need not act upon such exercise notice until the Company receives full payment of the exercise price; or (D) By any other means (including, without limitation, by delivery of a promissory note of the optionee payable on such terms as are specified by the Board) which the Board determines are consistent with the purpose of the Plan and with applicable laws and regulations. The delivery of certificates representing shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the Optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of laws. (v) Non-transferability of Options. No Stock Option shall be transferable other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. (vi) Annual Limit on Incentive Stock Options. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Stock with respect to which incentive stock options granted under this Plan and any other plan of the Company or its Subsidiaries become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. (vii) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in this Plan. (b) Reload Options. At the discretion of the Board, Options granted under Section 5(a) may include a so-called "reload" feature pursuant to which an optionee exercising an option by the delivery of a number of shares of Stock in accordance with Section 5(a)(iv)(B) hereof would automatically be granted an additional Option (with an exercise price equal to the Fair Market Value of the Stock on the date the additional Option is granted and with the same -6- expiration date as the original Option being exercised, and with such other terms as the Board may provide) to purchase that number of shares of Stock equal to the number delivered to exercise the original Option. SECTION 6. Conditioned Stock Awards. (a) Nature of Conditioned Stock Award. The Board in its discretion may grant Conditioned Stock Awards to any Eligible Person. A Conditioned Stock Award is an Award entitling the recipient to acquire, at no cost or for a purchase price determined by the Board, shares of Stock subject to such restrictions and conditions as the Board may determine at the time of grant ("Conditioned Stock"). Conditions may be based on continuing employment and/or achievement of pre-established performance goals and objectives. In addition, a Conditioned Stock Award may be granted to an employee by the Board in lieu of a cash bonus due to such employee pursuant to any other plan of the Company. (b) Acceptance of Award. A participant who is granted a Conditioned Stock Award shall have no rights with respect to such Award unless the participant shall have accepted the Award within sixty (60) days (or such shorter date as the Board may specify) following the award date by making payment to the Company, if required, by certified or bank check or other instrument or form of payment acceptable to the Board in an amount equal to the specified purchase price, if any, of the shares covered by the Award and by executing and delivering to the Company a written instrument that sets forth the terms and conditions of the Conditioned Stock in such form as the Board shall determine. (c) Rights as a Shareholder. Upon complying with Section 6(b) above, a participant shall have all the rights of a shareholder with respect to the Conditioned Stock, including voting and dividend rights, subject to non-transferability restrictions and Company repurchase or forfeiture rights described in this Section 6 and subject to such other conditions contained in the written instrument evidencing the Conditioned Award. Unless the Board shall otherwise determine, certificates evidencing shares of Conditioned Stock shall remain in the possession of the Company until such shares are vested as provided in Section 6(e) below. (d) Restrictions. Shares of Conditioned Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein. In the event of termination of employment by the Company and its Subsidiaries for any reason (including death, Disability, Normal Retirement and for cause), the Company shall have the right, at the discretion of the Board, to repurchase shares of Conditioned Stock with respect to which conditions have not lapsed at their purchase price, or to require forfeiture of such shares to the Company if acquired at no cost, from the participant or the participant's legal representative. The Company must exercise such right of repurchase or forfeiture within ninety (90) days following such termination of employment (unless otherwise specified, in the written instrument evidencing the Conditioned Award). -7- (e) Vesting of Conditioned Stock. The Board at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Conditioned Stock and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such preestablished performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Conditioned Stock and shall be deemed "vested." The Board at any time may accelerate such date or dates and otherwise waive or, subject to Section 13, amend any conditions of the Award. (f) Waiver, Deferral and Reinvestment of Dividends. The written instrument evidencing the Conditioned Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock. SECTION 7. Unrestricted Stock Awards. (a) Grant or Sale of Unrestricted Stock. The Board in its discretion may grant or sell to any Eligible Person shares of Stock free of any restrictions under the Plan ("Unrestricted Stock") at a purchase price determined by the Board. Shares of Unrestricted Stock may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration. (b) Restrictions on Transfers. The right to receive unrestricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution. SECTION 8. Performance Share Awards. (a) Nature of Performance Shares. A Performance Share Award is an award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Board may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. Performance Share Awards may be granted under the Plan to any Eligible Person including those who qualify for awards under other performance plans of the Company. The Board in its discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Board may rely on the performance goals and other standards applicable to other performance-based plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) Restrictions on Transfer. Performance Share Awards and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. -8- (c) Rights as a Shareholder. A participant receiving a Performance Share Award shall have the rights of a shareholder only as to shares actually received by the participant under the Plan and not with respect to shares subject to the Award but not actually received by the participant. A participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Share Award (or in a performance plan adopted by the Board). (d) Termination. Except as may otherwise be provided by the Board at any time prior to termination of employment, a participant's rights in all Performance Share Awards shall automatically terminate upon the participant's termination of employment by the Company and its Subsidiaries for any reason (including death, Disability, Normal Retirement and for cause). (e) Acceleration, Waiver, Etc. At any time prior to the participant's termination of employment, the Board may in its sole discretion accelerate, waive or, subject to Section 13, amend any or all of the goals, restrictions or conditions imposed under any Performance Share Award. -9- SECTION 9. Stock Appreciation Rights (a) The Board in its discretion may grant Stock Appreciation Rights to any Eligible Person (i) alone, (ii) simultaneously with the grant of a Stock Option and in conjunction therewith or in the alternative thereto or (iii) subsequent to the grant of a Non-Qualified Option and in conjunction therewith or in the alternative thereto. (b) The exercise price per share of a Stock Appreciation Right granted alone shall be determined by the Board. A Stock Appreciation Right granted simultaneously with or subsequent to the grant of a Stock Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the related Stock Option, shall be transferable only upon the same terms and conditions as the related Stock Option, and shall be exercisable only to the same extent as the related Stock Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of Stock exceeds the exercise price per share thereof. (c) Upon any exercise of a Stock Appreciation Right which has been issued in conjunction with a stock option, the number of shares of Stock for which any related Stock Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right shall have been exercised. The number of shares of Stock with respect to which a Stock Appreciation Right shall be exercisable shall be reduced upon any exercise of any related Stock Option by the number of shares for which such Option shall have been exercised. Any Stock Appreciation Right shall be exercisable upon such additional terms and conditions as may from time to time be prescribed by the Board. -9- (d) A Stock Appreciation Right shall entitle the participant upon exercise thereof to receive from the Company, upon written request to the Company at its principal offices (the "Request"), a number of shares of Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Board in its sole discretion), an amount of cash, or any combination of Stock and cash, as specified in the Request (but subject to the approval of the Board in its sole discretion, at any time up to and including the time of payment, as to the making of any cash payment), having an aggregate Fair Market Value equal to the product of (i) the excess of Fair Market Value, on the date of such Request, over the exercise price per share of Stock specified in such Stock Appreciation Right or its related Option, multiplied by (ii) the number of shares of Stock for which such Stock Appreciation Right shall be exercised. Notwithstanding the foregoing, the Board may specify at the time of grant of any Stock Appreciation Right that such Stock Appreciation Right may be exercisable solely for cash and not for Stock. (e) Within thirty (30) days of the receipt by the Company of a Request to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock Appreciation Right for cash, the Board shall, in its sole discretion, either consent to or disapprove, in whole or in part, such Request. A Request to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise a Stock Appreciation Right for cash may provide that, in the event the Board shall disapprove such Request, such Request shall be deemed to be an exercise of such Stock Appreciation Right for Stock. (f) If the Board disapproves in whole or in part any election by a participant to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock Appreciation Right for cash, such disapproval shall not affect such participant's right to exercise such Stock Appreciation Right at a later date, to the extent that such Stock Appreciation Right shall be otherwise exercisable, or to elect the form of payment at a later date, provided that an election to receive cash upon such later exercise shall be subject to the approval of the Board. Additionally, such disapproval shall not affect such participant's right to exercise any related Option. (g) A Stock Appreciation Right shall be deemed exercised on the last day of its term, if not otherwise exercised by the holder thereof, provided that the fair market value of the Stock subject to the Stock Appreciation Right exceeds the exercise price thereof on such date. (h) No Stock Appreciation Right shall be transferable other than by will or by the laws of descent and distribution and all Stock Appreciation Rights shall be exercisable, during the holder's lifetime, only by the holder. SECTION 10. Termination of Stock Options and Stock Appreciation Rights. (a) Stock Options: -10- (i) Termination by Death. If any participant's employment or directorship with the Company and its Subsidiaries terminates by reason of death, any Stock Option owned by such participant may thereafter be exercised to the extent exercisable at the date of death, by the legal representative or legatee of the participant, for a period of one year from the date of death (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law), or until the expiration of the stated term of the Stock Option, if earlier. (ii) Termination by Reason of Disability. Any Stock Option held by a participant whose employment or directorship with the Company and its Subsidiaries has terminated by reason of Disability may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of one year from the date of such termination of employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. The Board shall have sole authority and discretion to determine whether a participant's employment or directorship has been terminated by reason of Disability. Except as otherwise provided by the Board at the time of grant, the death of a participant during a period provided in this Section 10(a)(ii) for the exercise of a Stock Option shall extend such period for one year from the date of death, subject to termination on the expiration of the stated term of the Stock Option, if earlier. (iii) Termination by Reason of Normal Retirement. Any Stock Option held by a participant whose employment or directorship with the Company and its Subsidiaries has terminated by reason of Normal Retirement may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of three months from the date of such termination of employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Option, if earlier. The Board shall have sole authority and discretion to determine whether a participant's employment or directorship has been terminated by reason of Normal Retirement. Except as otherwise provided by the Board at the time of grant, the death of a participant during a period provided in this Section 10(a)(iii) for the exercise of an Stock Option shall extend such period for one year from the date of death, subject to termination on the expiration of the stated term of the Stock Option, if earlier. -11- (iv) Voluntary Termination. Any Stock Option held by a participant whose employment or directorship by the Company and its Subsidiaries has terminated by reason of voluntary resignation by the optionee may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of seven days from the last day of the optionee's employment or, in the case of a director, for a period of seven days from the effective date of the optionee's resignation from the Board of Directors (or in either case for such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. (v) Termination for Cause. If any participant's employment or directorship with the Company and its Subsidiaries has been terminated by the Company or any of its Subsidiaries for cause, any Stock Option held by such participant shall immediately terminate at the end of the last day of the optionee's employment or directorship and shall thereafter be of no further force and effect; provided, however, that the Board may, in its sole discretion, provide that such Stock Option can be exercised for a period of up to thirty (30) days from the date of termination of employment (it being understood that any Incentive Stock Options so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or directorship or until the expiration of the stated term of the Stock Option, if earlier. The Board shall have sole authority and discretion to determine whether a participant's employment has been terminated for cause. (vi) Termination Without Cause. Unless otherwise determined by the Board, if a participant's employment or directorship with the Company and its Subsidiaries is terminated by the Company or any of its Subsidiaries without cause, any Stock Option held by such participant may thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for three months from the last day of the optionee's employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. (b) Stock Appreciation Rights. Any Stock Appreciation Right granted under the Plan shall contain such terms and conditions with respect to its termination as the Board, in its discretion, may from time to time determine. SECTION 11. Tax Withholding. (a) Payment by Participant. Each participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the participant for Federal income tax purposes, pay to the -12- Company, or make arrangements satisfactory to the Board regarding payment of any Federal, state or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. (b) Payment in Shares. A Participant may elect, with the consent of the Board, to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to an Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due with respect to such Award, or (ii) transferring to the Company shares of Stock owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. SECTION 12. Transfer, Leave of Absence, Etc. For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Board otherwise so provides in writing. SECTION 13. Amendments and Termination. The Board may at any time amend or discontinue the Plan and the Board may at any time amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price or with no exercise or purchase price, but such price, if any, must satisfy the requirements which would apply to the substitute or amended Award if it were then initially granted under this Plan) for the purpose of responding to comments of banking regulators, satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. However, no such amendment, unless approved by the stockholders of the Company, shall be effective if it would cause the Plan to fail to satisfy the incentive stock option requirements of the Code, or cause transactions under the Plan to fail to satisfy the requirements of Rule 16b-3 or any successor rule under the Act as in effect on the date of such amendment. SECTION 14. Status of Plan. With respect to the portion of any Award which has not been exercised and any -13- payments in cash, Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Board shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the provision of the foregoing sentence. SECTION 15. Change of Control Provisions. (a) In the event of a Change of Control while unexercised Stock Options, Conditional Stock Awards, Performance Share Awards or Stock Appreciation Rights remain outstanding under the Plan, then (i) the time for exercise of all unexercised and unexpired Awards shall be automatically accelerated, effective as of the effective time of the Change of Control (or such earlier date as may be specified by the Board), and (ii) after the effective time of such Change of Control, unexercised Stock Options, Conditional Stock Awards, Performance Share Awards or Stock Appreciation Rights shall remain outstanding and shall be exercisable in full for shares of Stock (or consideration based upon the Fair Market Value of Stock) or, if applicable, for shares of such securities, cash or property (or consideration based upon shares of such securities, cash or property) as the holders of shares of Stock received in connection with such Change of Control. (b) "Change of Control" shall mean the occurrence of any one of the following events: (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Act) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), directly or indirectly, of securities of the Company representing thirty-five percent (35%) or more of the combined voting power of the Company's then outstanding securities; or (ii) persons who, as of January 1, 1997, constituted the Company's Board (the "Incumbent Board") cease for any reason, including without limitation as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to January 1, 1997 whose election was approved by, or who was nominated with the approval of, at least a majority of the directors then comprising the Incumbent Board shall, for purposes of this Plan, be considered a member of the Incumbent Board; or (iii) the stockholders of the Company approve a merger or consolidation of the -14- Company with any other corporation or other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty-five percent (65%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. SECTION 16. General Provisions. (a) No Distribution; Compliance with Legal Requirements. The Board may require each person acquiring shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities laws and other legal and stock exchange requirements have been satisfied. The Board may require the placing of such stop orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. (b) Delivery of Stock Certificates. Delivery of stock certificates to participants under this Plan shall be deemed effected for all purposes when the Company or a stock transfer agent of the Company shall have delivered such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan or any Award under the Plan does not confer upon any employee any right to continued employment with the Company or any Subsidiary. SECTION 17. Effective Date of Plan. The Effective Date of the Plan shall be the date of its adoption by the Board of Directors provided that the stockholders of the Company and the Commissioner of Banks of the Commonwealth of Massachusetts shall have approved the Plan within twelve months following the adoption of the Plan by the Board. SECTION 18. Governing Law. -15- This Plan shall be governed by, and construed and enforced in accordance with, the substantive laws of the Commonwealth of Massachusetts without regard to its principles of conflicts of laws. -16- EX-99.3 6 IPSWICH SAVINGS BANK 1998 STOCK INCENTIVE PLAN SECTION 1. General Purpose of the Plan; Definitions The name of the plan is the Ipswich Savings Bank 1998 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, directors and employees of Ipswich Savings Bank (the "Company") and its wholly owned subsidiaries ("Subsidiaries") upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company and its shareholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. To reflect the formation of Ipswich Bancshares, Inc. (the "Holding Company") as the holding company of the Company on July 1, 1999, the term "Stock" shall mean the common stock, par value $.10 per share, of the Holding Company and references to the "Company" shall include the Holding Company. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Award" or "Awards", except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Stock Appreciation Rights. "Board" means the Board of Directors of the Company. "Change of Control" shall have the meaning set forth in Section 15. "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. "Conditioned Stock Award" means an Award granted pursuant to Section 6. "Disability" means disability as set forth in Section 22(e)(3) of the Code. "Effective Date" shall have the meaning set forth in Section 17. "Eligible Person" shall have the meaning set forth in Section 4. "Fair Market Value" on any given date means the closing bid price per share of the Stock on such date as reported by the Nasdaq Stock Market or another nationally recognized stock exchange, or, if the Stock is not listed on such an exchange, the fair market value of the Stock as determined by the Board. "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. "Normal Retirement" means retirement from active employment with, or from the Board of Directors of, the Company and its Subsidiaries in accordance with the retirement policies of the Company and its Subsidiaries then in effect. "Option" or "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5. "Performance Share Award" means an Award granted pursuant to Section 8. "Stock" means the Common Stock, $.10 par value per share, of the Company, subject to adjustments pursuant to Section 3. "Stock Appreciation Right" means an Award granted pursuant to Section 9. "Unrestricted Stock Award" means an Award granted pursuant to Section 7. SECTION 2. Administration of Plan (a) The Plan shall be administered by the full Board of Directors of the Company. The Board shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority: (i) to select the directors, officers and other employees of the Company and its Subsidiaries to whom Awards may from time to time be granted; (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Conditioned Stock, Unrestricted Stock, Performance Shares and Stock Appreciation Rights, or any combination of the foregoing, granted to any one or more participants; (iii) to determine the number of shares to be covered by any Award; (iv) to determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; provided, however, that no such action shall adversely affect rights under any outstanding Award without the participant's consent; -2- (v) to accelerate the exercisability or vesting of all or any portion of any Award; (vi) subject to the provisions of Section 5(a)(ii), to extend the period in which any outstanding Stock Option or Stock Appreciation Right may be exercised; (vii) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts equal to interest (at rates determined by the Board) or dividends or deemed dividends on such deferrals; and (viii) to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. (b) Decisions Binding. All decisions and interpretations of the Board shall be binding on all persons, including the Company and Plan participants. SECTION 3. Shares Issuable under the Plan; Mergers; Substitution. (a) Shares Issuable. The maximum number of shares of Stock with respect to which Awards (including Stock Appreciation Rights) may be issued under the Plan shall be equal to 100,000. For purposes of this limitation, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company or otherwise terminated (other than by exercise) shall be added back to the shares of Stock with respect to which Awards may be granted under the Plan so long as the participants to whom such Awards had been previously granted received no benefits of ownership of the underlying shares of Stock to which the Award related. Likewise, if any Option is exercised by the delivery of a number of shares of Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of an Option under this or any prior plan of the Company, only the number of shares of Stock issued net of the shares of Stock delivered shall be deemed issued for purposes of determining the maximum number of shares of Stock available for issuance under the Plan. Subject to such overall limitation, any type or types of Award may be granted with respect to shares, including Incentive Stock Options. Shares issued under the Plan may be authorized but unissued shares or shares reacquired by the Company. (b) Stock Dividends, Mergers, etc. In the event that after approval of the Plan by the stockholders of the Company in accordance with Section 17, the Company effects a stock dividend, stock split or similar change in capitalization affecting the Stock, the Board shall make appropriate adjustments in (i) the number and kind of shares of stock or securities with respect to which Awards may thereafter be granted (including without limitation the limitation set forth in Section 3(a) above), (ii) the number and kind of shares remaining subject to -3- outstanding Awards, and (iii) the option or purchase price in respect of such shares. In the event of any merger, consolidation, dissolution or liquidation of the Company, the Board in its sole discretion may, as to any outstanding Awards, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and in the number and purchase price (if any) of shares subject to such Awards as it may determine and as may be permitted by the terms of such transaction, or accelerate, amend or terminate such Awards upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Award, shall require payment or other consideration which the Board deems equitable in the circumstances), subject, however, to the provisions of Section 15. (c) Substitute Awards. The Board may grant Awards under the Plan in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation (collectively, "Merger"). The Board may direct that the substitute awards be granted on such terms and conditions as the Board considers appropriate in the circumstances. Shares which may be delivered under such substitute awards may be in addition to the maximum number of shares provided for in Section 3(a). SECTION 4. Eligibility. Awards may be granted only to directors, officers or other key employees of the Company or its Subsidiaries ("Eligible Persons"). SECTION 5. Stock Options. Any Stock Option granted under the Plan shall be in such form as the Board may from time to time approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. To the extent that any option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after the tenth anniversary of the Effective Date. (a) Grant of Stock Options. The Board in its discretion may determine the effective date of Stock Options, provided, however, that grants of Incentive Stock Options shall be made only to persons who are, on the effective date of the grant, employees of the Company or any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be subject to the following terms and conditions and the terms and conditions of Section 13 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board shall deem desirable. -4- (i) Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Board at the time of grant but shall be, in the case of Incentive Stock Options, not less than one hundred percent (100%) of Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the option price shall be not less than one hundred ten percent (110%) of Fair Market Value on the grant date. (ii) Option Term. The term of each Stock Option shall be fixed by the Board but no Incentive Stock Option shall be exercisable more than ten (10) years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five (5) years from the date of grant. (iii) Exercisability; Rights of a Shareholder. Stock Options shall become vested and exercisable at such time or times, whether or not in installments, as shall be determined by the Board at or after the grant date. The Board may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a shareholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. (iv) Method of Exercise. Stock Options may be exercised in whole or in part, by delivering written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: (A) In cash, by certified or bank check or other instrument acceptable to the Board; (B) If permitted by the Board, in its discretion, in the form of shares of Stock that are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Board shall prescribe as a condition of such payment procedure. The Company need not act upon such exercise notice until the Company receives full payment of the exercise price; or (D) By any other means (including, without limitation, by delivery of a promissory note of the optionee payable on such terms as are specified by the Board) which the Board determines are consistent with the purpose of the Plan and with applicable laws and regulations. The delivery of certificates representing shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the Optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of laws. (v) Non-transferability of Options. Except as otherwise may be provided in the option agreement governing an Option granted under the Plan, no Stock Option shall be transferable other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. (vi) Annual Limit on Incentive Stock Options. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Stock with respect to which incentive stock options granted under this Plan and any other plan of the Company or its Subsidiaries become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. (vii) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in this Plan. (b) Reload Options. At the discretion of the Board, Options granted under Section 5(a) may include a so-called "reload" feature pursuant to which an optionee exercising an Option by the delivery of a number of shares of Stock in accordance with Section 5(a)(iv)(B) hereof would automatically be granted an additional Option (with an exercise price equal to the Fair Market Value of the Stock on the date the additional Option is granted and with the same expiration date as the original Option being exercised, and with such other terms as the Board may provide) to purchase that number of shares of Stock equal to the number delivered to exercise the original Option. SECTION 6. Conditioned Stock Awards. (a) Nature of Conditioned Stock Award. The Board in its discretion may grant Conditioned Stock Awards to any Eligible Person. A Conditioned Stock Award is an Award entitling the recipient to acquire, at no cost or for a purchase price determined by the Board, shares of Stock subject to such restrictions and conditions as the Board may determine at the time of grant ("Conditioned Stock"). Conditions may be based on continuing employment -6- and/or achievement of pre-established performance goals and objectives. In addition, a Conditioned Stock Award may be granted to an employee by the Board in lieu of a cash bonus due to such employee pursuant to any other plan of the Company. (b) Acceptance of Award. A participant who is granted a Conditioned Stock Award shall have no rights with respect to such Award unless the participant shall have accepted the Award within sixty (60) days (or such shorter date as the Board may specify) following the award date by making payment to the Company, if required, by certified or bank check or other instrument or form of payment acceptable to the Board in an amount equal to the specified purchase price, if any, of the shares covered by the Award and by executing and delivering to the Company a written instrument that sets forth the terms and conditions of the Conditioned Stock in such form as the Board shall determine. (c) Rights as a Shareholder. Upon complying with Section 6(b) above, a participant shall have all the rights of a shareholder with respect to the Conditioned Stock, including voting and dividend rights, subject to non-transferability restrictions and Company repurchase or forfeiture rights described in this Section 6 and subject to such other conditions contained in the written instrument evidencing the Conditioned Award. Unless the Board shall otherwise determine, certificates evidencing shares of Conditioned Stock shall remain in the possession of the Company until such shares are vested as provided in Section 6(e) below. (d) Restrictions. Shares of Conditioned Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein. In the event of termination of employment by the Company and its Subsidiaries for any reason (including death, Disability, Normal Retirement and for cause), the Company shall have the right, at the discretion of the Board, to repurchase shares of Conditioned Stock with respect to which conditions have not lapsed at their purchase price, or to require forfeiture of such shares to the Company if acquired at no cost, from the participant or the participant's legal representative. The Company must exercise such right of repurchase or forfeiture within ninety (90) days following such termination of employment (unless otherwise specified, in the written instrument evidencing the Conditioned Award). (e) Vesting of Conditioned Stock. The Board at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Conditioned Stock and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such preestablished performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Conditioned Stock and shall be deemed "vested." The Board at any time may accelerate such date or dates and otherwise waive or, subject to Section 13, amend any conditions of the Award. (f) Waiver, Deferral and Reinvestment of Dividends. The written instrument evidencing the Conditioned Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock. -7- SECTION 7. Unrestricted Stock Awards. (a) Grant or Sale of Unrestricted Stock. The Board in its discretion may grant or sell to any Eligible Person shares of Stock free of any restrictions under the Plan ("Unrestricted Stock") at a purchase price determined by the Board. Shares of Unrestricted Stock may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration. (b) Restrictions on Transfers. The right to receive unrestricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution. SECTION 8. Performance Share Awards. (a) Nature of Performance Shares. A Performance Share Award is an award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Board may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. Performance Share Awards may be granted under the Plan to any Eligible Person including those who qualify for awards under other performance plans of the Company. The Board in its discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Board may rely on the performance goals and other standards applicable to other performance-based plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) Restrictions on Transfer. Performance Share Awards and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. (c) Rights as a Shareholder. A participant receiving a Performance Share Award shall have the rights of a shareholder only as to shares actually received by the participant under the Plan and not with respect to shares subject to the Award but not actually received by the participant. A participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Share Award (or in a performance plan adopted by the Board). (d) Termination. Except as may otherwise be provided by the Board at any time prior to termination of employment, a participant's rights in all Performance Share Awards shall automatically terminate upon the participant's termination of employment by the Company and its Subsidiaries for any reason (including death, Disability, Normal Retirement and for cause). (e) Acceleration, Waiver, Etc. At any time prior to the participant's termination of employment, the Board may in its sole discretion accelerate, waive or, subject to Section 13, -8- amend any or all of the goals, restrictions or conditions imposed under any Performance Share Award. SECTION 9. Stock Appreciation Rights (a) The Board in its discretion may grant Stock Appreciation Rights to any Eligible Person (i) alone, (ii) simultaneously with the grant of a Stock Option and in conjunction therewith or in the alternative thereto or (iii) subsequent to the grant of a Non-Qualified Option and in conjunction therewith or in the alternative thereto. (b) The exercise price per share of a Stock Appreciation Right granted alone shall be determined by the Board. A Stock Appreciation Right granted simultaneously with or subsequent to the grant of a Stock Option and in conjunction therewith or in the alternative thereto shall have the same exercise price as the related Stock Option, shall be transferable only upon the same terms and conditions as the related Stock Option, and shall be exercisable only to the same extent as the related Stock Option; provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share of Stock exceeds the exercise price per share thereof. (c) Upon any exercise of a Stock Appreciation Right which has been issued in conjunction with a stock option, the number of shares of Stock for which any related Stock Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right shall have been exercised. The number of shares of Stock with respect to which a Stock Appreciation Right shall be exercisable shall be reduced upon any exercise of any related Stock Option by the number of shares for which such Option shall have been exercised. Any Stock Appreciation Right shall be exercisable upon such additional terms and conditions as may from time to time be prescribed by the Board. (d) A Stock Appreciation Right shall entitle the participant upon exercise thereof to receive from the Company, upon written request to the Company at its principal offices (the "Request"), a number of shares of Stock (with or without restrictions as to substantial risk of forfeiture and transferability, as determined by the Board in its sole discretion), an amount of cash, or any combination of Stock and cash, as specified in the Request (but subject to the approval of the Board in its sole discretion, at any time up to and including the time of payment, as to the making of any cash payment), having an aggregate Fair Market Value equal to the product of (i) the excess of Fair Market Value, on the date of such Request, over the exercise price per share of Stock specified in such Stock Appreciation Right or its related Option, multiplied by (ii) the number of shares of Stock for which such Stock Appreciation Right shall be exercised. Notwithstanding the foregoing, the Board may specify at the time of grant of any Stock Appreciation Right that such Stock Appreciation Right may be exercisable solely for cash and not for Stock. (e) Within thirty (30) days of the receipt by the Company of a Request to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock Appreciation Right for cash, the Board shall, in its sole discretion, either consent to or -9- disapprove, in whole or in part, such Request. A Request to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise a Stock Appreciation Right for cash may provide that, in the event the Board shall disapprove such Request, such Request shall be deemed to be an exercise of such Stock Appreciation Right for Stock. (f) If the Board disapproves in whole or in part any election by a participant to receive cash in full or partial settlement of a Stock Appreciation Right or to exercise such Stock Appreciation Right for cash, such disapproval shall not affect such participant's right to exercise such Stock Appreciation Right at a later date, to the extent that such Stock Appreciation Right shall be otherwise exercisable, or to elect the form of payment at a later date, provided that an election to receive cash upon such later exercise shall be subject to the approval of the Board. Additionally, such disapproval shall not affect such participant's right to exercise any related Option. (g) A Stock Appreciation Right shall be deemed exercised on the last day of its term, if not otherwise exercised by the holder thereof, provided that the fair market value of the Stock subject to the Stock Appreciation Right exceeds the exercise price thereof on such date. (h) No Stock Appreciation Right shall be transferable other than by will or by the laws of descent and distribution and all Stock Appreciation Rights shall be exercisable, during the holder's lifetime, only by the holder. SECTION 10. Termination of Stock Options and Stock Appreciation Rights. (a) Stock Options: (i) Termination by Death. If any participant's employment or directorship with the Company and its Subsidiaries terminates by reason of death, any Stock Option owned by such participant may thereafter be exercised to the extent exercisable at the date of death, by the legal representative or legatee of the participant, for a period of one year from the date of death (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law), or until the expiration of the stated term of the Stock Option, if earlier. (ii) Termination by Reason of Disability. Any Stock Option held by a participant whose employment or directorship with the Company and its Subsidiaries has terminated by reason of Disability may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of one year from the date of such termination of employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. The Board shall -10- have sole authority and discretion to determine whether a participant's employment or directorship has been terminated by reason of Disability. Except as otherwise provided by the Board at the time of grant, the death of a participant during a period provided in this Section 10(a)(ii) for the exercise of a Stock Option shall extend such period for one year from the date of death, subject to termination on the expiration of the stated term of the Stock Option, if earlier. (iii) Termination by Reason of Normal Retirement. Any Stock Option held by a participant whose employment or directorship with the Company and its Subsidiaries has terminated by reason of Normal Retirement may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of three months from the date of such termination of employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Option, if earlier. The Board shall have sole authority and discretion to determine whether a participant's employment or directorship has been terminated by reason of Normal Retirement. Except as otherwise provided by the Board at the time of grant, the death of a participant during a period provided in this Section 10(a)(iii) for the exercise of an Stock Option shall extend such period for one year from the date of death, subject to termination on the expiration of the stated term of the Stock Option, if earlier. (iv) Voluntary Termination. Any Stock Option held by a participant whose employment or directorship by the Company and its Subsidiaries has terminated by reason of voluntary resignation by the optionee may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of thirty (30) days from the last day of the optionee's employment or, in the case of a director, for a period of thirty (30) days from the effective date of the optionee's resignation from the Board of Directors (or in either case for such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. (v) Termination for Cause. If any participant's employment or directorship with the Company and its Subsidiaries has been terminated by the Company or any of its Subsidiaries for cause, any Stock Option held by such participant shall immediately terminate at the end of the last day of the optionee's employment or directorship and shall thereafter be of no further force and effect; provided, however, that the Board may, in its sole discretion, provide that such Stock Option can be exercised for a period of up to seven (7) days from the date of termination of employment (it being understood that any Incentive Stock Options so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or directorship or until the expiration of the stated term of the Stock Option, if earlier. The Board shall have sole -11- authority and discretion to determine whether a participant's employment has been terminated for cause. (vi) Termination Without Cause. Unless otherwise determined by the Board, if a participant's employment or directorship with the Company and its Subsidiaries is terminated by the Company or any of its Subsidiaries without cause, any Stock Option held by such participant may thereafter be exercised, to the extent it was exercisable on the date of termination of employment or directorship, for thirty (30) days from the last day of the optionee's employment or directorship (or such longer period as the Board shall specify at any time, it being understood that any Incentive Stock Options that are so extended shall thereafter become Non-Qualified Stock Options to the extent provided by applicable law) or until the expiration of the stated term of the Stock Option, if earlier. (b) Stock Appreciation Rights. Any Stock Appreciation Right granted under the Plan shall contain such terms and conditions with respect to its termination as the Board, in its discretion, may from time to time determine. SECTION 11. Tax Withholding. (a) Payment by Participant. Each participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Board regarding payment of any Federal, state or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. (b) Payment in Shares. A Participant may elect, with the consent of the Board, to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to an Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due with respect to such Award, or (ii) transferring to the Company shares of Stock owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. SECTION 12. Transfer, Leave of Absence, Etc. For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; (b) an approved leave of absence for military service or sickness, or for any other -12- purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Board otherwise so provides in writing. SECTION 13. Amendments and Termination. The Board may at any time amend or discontinue the Plan and the Board may at any time amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price or with no exercise or purchase price, but such price, if any, must satisfy the requirements which would apply to the substitute or amended Award if it were then initially granted under this Plan) for the purpose of responding to comments of banking regulators, satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. However, no such amendment, unless approved by the stockholders of the Company, shall be effective if it would cause the Plan to fail to satisfy the incentive stock option requirements of the Code, or cause transactions under the Plan to fail to satisfy the requirements of Rule 16b-3 or any successor rule under the Act as in effect on the date of such amendment. SECTION 14. Status of Plan. With respect to the portion of any Award which has not been exercised and any payments in cash, Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Board shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the provision of the foregoing sentence. SECTION 15. Change of Control Provisions. (a) In the event of a Change of Control while unexercised Stock Options, Conditional Stock Awards, Performance Share Awards or Stock Appreciation Rights remain outstanding under the Plan, then (i) the time for exercise of all unexercised and unexpired Awards shall be automatically accelerated, effective as of the effective time of the Change of Control (or such earlier date as may be specified by the Board), and (ii) after the effective time of such Change of Control, unexercised Stock Options, Conditional Stock Awards, Performance Share Awards or Stock Appreciation Rights shall remain outstanding and shall be exercisable in full for shares of Stock (or consideration based upon the Fair Market Value of Stock) or, if applicable, for shares of such securities, cash or property (or consideration based upon shares of such securities, cash or property) as the holders of shares of Stock received in connection with such Change of Control. (b) "Change of Control" shall mean the occurrence of any one of the following events: -13- (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Act) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), directly or indirectly, of securities of the Company representing thirty-five percent (35%) or more of the combined voting power of the Company's then outstanding securities; or (ii) persons who, as of January 1, 1999, constituted the Company's Board (the "Incumbent Board") cease for any reason, including without limitation as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to January 1, 1999 whose election was approved by, or who was nominated with the approval of, at least a majority of the directors then comprising the Incumbent Board shall, for purposes of this Plan, be considered a member of the Incumbent Board; or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation or other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than sixty-five percent (65%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. SECTION 16. General Provisions. (a) No Distribution; Compliance with Legal Requirements. The Board may require each person acquiring shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities laws and other legal and stock exchange requirements have been satisfied. The Board may require the placing of such stop orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. (b) Delivery of Stock Certificates. Delivery of stock certificates to participants under this Plan shall be deemed effected for all purposes when the Company or a stock transfer agent of the Company shall have delivered such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan or any Award under the Plan does not confer upon any employee any right to continued employment with the Company or any Subsidiary. SECTION 17. Effective Date of Plan. The Effective Date of the Plan shall be the date of its adoption by the Board of Directors provided that the stockholders of the Company and the Commissioner of Banks of the Commonwealth of Massachusetts shall have approved the Plan within twelve months following the adoption of the Plan by the Board. SECTION 18. Governing Law. This Plan shall be governed by, and construed and enforced in accordance with, the substantive laws of the Commonwealth of Massachusetts without regard to its principles of conflicts of laws. EX-99.4 7 DEFERRED COMPENSATION PLAN FOR DIRECTORS OF IPSWICH SAVINGS BANK The Deferred Compensation Plan For Directors of Ipswich Savings Bank ("IpswichBank") is effective as of July 1, 1997. To reflect the formation of Ipswich Bancshares, Inc. as the holding company (the "Holding Company") for IpswichBank on July 1, 1999, references to the "Corporation" shall include the Holding Company and the term "Stock" shall mean the common stock, par value $.10 per share, of the Holding Company. 1. Eligibility. Any member of the Board of Directors of IpswichBank or any of its subsidiaries (each such entity being referred to herein as the "Corporation") who is not an employee of IpswichBank or any of its subsidiaries may elect to defer, in accordance with this Plan, payment of all or a portion of the compensation payable to him for service as such Director. 2. Election to Defer. A Director's election to defer payments shall be made in writing and shall be effective upon receipt and acceptance by the Corporation. An election to defer shall be made no later than (i) with respect to the first year of the Plan, five (5) days after the date of adoption of this Plan by the Board of Directors, such election to apply to deferral of compensation to be earned in such calendar year after the date of such election to defer. (ii) with respect to each subsequent year of the Plan, ten (10) days preceding commencement of each calendar year, such election to apply to deferral of compensation to be earned in such year. (iii) with respect to new Directors, thirty (30) days after the date such person becomes a Director, such election to apply to deferral of compensation to be earned in the calendar year after the date of such election to defer. Any election may be revoked in writing and such revocation shall be effective upon receipt by the Corporation, but only as to compensation to be earned at and after commencement of the next succeeding calendar month. Any election may be changed in writing and shall be effective upon receipt by the Corporation, but only as to compensation to be earned at and after commencement of the next succeeding calendar year. 3. Cash Deferral Account; Crediting of Interest. A Director's election may specify that such Director elects to have all or a portion of his deferred compensation during the next calendar year credited to a cash account on the books of the Corporation. The Corporation shall maintain a book account to which the cash portion of each participating Director's deferred compensation shall be credited as of the end of each calendar month after such compensation is earned (the "Cash Deferral Account"). As of the end of each calendar month, the Corporation shall also credit each Cash Deferral Account with interest on the amount then standing in the Account, exclusive of any deferred compensation first credited to the Account as of such date. The rate to be used for this purpose shall be the prime rate of interest as published in the Wall Street Journal from time to time. This rate of interest shall change from time to time upon the change in the published prime rate. 4. Stock Units. (a) In lieu of deferring compensation into his Cash Deferral Account, a Director's election to defer compensation for any calendar year may specify that such Director elects to have all or a portion of his deferred compensation during the next calendar year converted into stock units equivalent in value to shares of common stock of IpswichBank ("Stock"). The Corporation shall maintain a book account to which the stock unit portion of each participating Director's deferred compensation shall be credited as of the end of each calendar month after such compensation is earned ("Stock Unit Deferral Account"). (b) The conversion of deferred compensation into stock units will be made on the basis of the fair market value of the Stock on the date the compensation would otherwise be paid. For this purpose, fair market value of the Stock on any given date shall mean the closing bid price reported for the Stock on the NASDAQ National Market System on the immediately preceding trading date, or, if no sales were reported on such date, for the last date preceding such date for which a sale was reported. (c) During the term of the deferral, each Director's Stock Unit Deferral Account will be credited with additional stock units to reflect any payment of dividends (other than dividends payable only in shares of Stock). Each Account will be credited with a number of whole and fractional shares of stock units determined by multiplying the dividend value per share of Stock by the number of units in the account on the record date and dividing the result by the fair market value of the Stock (as defined in Paragraph 4(b) above) on the date the dividend is paid. (d) In the event of a stock dividend, stock split or similar change in capitalization affecting the Stock, appropriate adjustments shall be made in the number of stock units credited to each Director's Stock Unit Deferral Account. 5. Time and Method of Payment (a) Amounts credited to a Director's deferred compensation account(s) shall be paid, or commenced to be paid, on the January 15 coincident with or next following the date on which the Director ceases to be a member of the Board of Directors of the Corporation for any reason whatsoever. In the case of semi-annual installments, payments shall be made on each July 15. (b) Payments of deferred compensation may be made either in a single lump sum or in annual, or semi-annual, installments over a period of ten (10) years, as the Director may have irrevocably specified before the compensation is earned. In the absence of an effective election, payment shall be made in a single lump sum. In the case of installment -2- payments, interest or dividend equivalents shall continue to be credited in accordance with Paragraph 3 or 4 during the payment period. The amount of each installment payment shall be equal to the amount credited to the deferred compensation account as of the preceding June 30 or December 31, as the case may be, divided by the number of payments remaining to be made, including the current payment. Payments from each Director's Cash Deferral Account shall be payable only in cash. On and after the date that the Commissioner of Banks approves the Bank's issuance of stock under this Plan, payments from each Director's Stock Unit Deferral Account shall be payable only in the form of whole shares of Stock, with any fractional share payable in cash. Prior to such date, payments, if any, from a Stock Unit Deferral Account shall be made only in cash, determined based on the fair market value of the Stock underlying the stock units as of the date of payment. (c) Elections by a Director of a method of payment under sub-paragraph (b) shall be made in writing, effective upon receipt and acceptance by the Corporation, and applicable only to compensation to be earned after the effective date of the election. Such elections may also be changed by a Director, subject to the same restrictions. (d) Payments of deferred compensation shall be made as they become due to the Director if then living, otherwise to a beneficiary or beneficiaries designated by the Director in writing to the Corporation prior to the Director's death, or failing such designation, to the Director's estate. (e) Notwithstanding any provision hereof to the contrary, if a Director, or after a Director's death the Director's beneficiary, believes he is suffering from financial hardship, an application may be made to the Board of Directors of the Corporation for an acceleration of payments from the deferred compensation account of the Director. A "financial hardship" shall mean a need for financial assistance due to the occurrence of an unanticipated emergency caused by an event beyond the Director's control. The need for financial assistance must be such that the Director, any member of the Director's immediate family or, after the Director's death, a designated beneficiary will be subject to substantial hardship if the acceleration is not permitted. If the Board of Directors of the Corporation determines, in its sole discretion, that a hardship exists, the Corporation may accelerate payment to the Director or the designated beneficiary of only so much of the deferred compensation account as the Board of Directors of the Corporation may determine is required to alleviate such hardship, and the deferred compensation account shall be charged with said amount upon payment. 6. Change in Control. (a) In the event of a Change in Control of the Corporation while Stock Units remain outstanding under the Plan, then all Stock Units shall be cancelled as of the effective time of the Change in Control and the participating Directors shall receive, for each Stock Unit so cancelled, (i) one share of Common Stock of the Corporation (in the case of a Change in Control that does not result in any change in the Common Stock of the Corporation), or (ii) such securities, cash or property as the holders of each share of Common Stock received in connection with such Change of Control (in the case of a Change in Control that results in a change in the Common Stock of the Corporation or a conversion of such Common Stock into -3- other securities, cash or property). (b) In the event of a Change in Control of the Corporation, the Corporation shall pay to each participating Director, as of the effective time of the Change in Control, an amount in cash equal to the balance of such Director's Cash Deferral Account. (c) "Change in Control" shall mean the occurrence of any one of the following events: (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, or any corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), directly or indirectly, of securities of the Corporation representing thirty-five percent (35%) or more of the combined voting power of the Corporation 's then outstanding securities; or (ii) persons who, as of January 1, 1997, constituted the Corporation's Board (the "Incumbent Board") cease for any reason, including without limitation as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Corporation subsequent to January 1, 1997 whose election was approved by, or who was nominated with the approval of, at least a majority of the directors then comprising the Incumbent Board shall, for purposes of this Plan, be considered a member of the Incumbent Board; or (iii) the Corporation merges or consolidates with any other corporation or other entity, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets. 7. Merger without Change of Control. After a merger or consolidation of the Corporation with another corporation in which the stockholders of the Corporation immediately prior to such merger or consolidation continue to own after such merger or consolidation shares representing at least fifty percent of the voting power of the Corporation, each Stock Unit shall be automatically converted into a stock unit representing the number and class of shares of stock or other securities into which such Stock Unit would have been converted if, immediately prior to such merger or consolidation, such Stock Unit had been paid out in shares of Common Stock of the Corporation. 8. Limitation on Rights of Directors. No action taken pursuant to this Plan shall create or be deemed to create a trust or fiduciary relationship of any kind between the Corporation and the Directors. Although the Corporation shall have no obligation to establish any separate fund, reserve or to invest in any specific asset to provide security with respect to any deferred amounts during the deferral period, the Corporation may elect to do so and, in such event, the Directors shall not have any interest in such assets and all such assets shall continue for all purposes to be a part of the general assets of the Corporation, with the title to the beneficial ownership of such assets remaining at all times in the Corporation. Each Director, his legal representative or any of his beneficiaries shall not have any right, other than the right of an unsecured general creditor of the Corporation, in respect to the deferred compensation account(s) established hereunder, and such persons shall have no property interest in any specific assets of the Corporation. 9. Nonforfeitable. The right of each Director to the payment of deferred compensation under this Plan shall be nonforfeitable and no action or failure to act by the Director, the Corporation or any other person shall deprive the Director of, or excuse the Corporation from its obligations to pay, the amounts due hereunder. 10. Withholding Tax. The Corporation shall have the right to deduct from all deferred amounts or payments hereunder any federal or state taxes required by law to be withheld with respect to such deferred amounts or payments. 11. Non-Assignable. The deferred compensation payable under this Plan shall not be subject to alienation, assignment, garnishment, execution or levy of any kind, and any attempt to cause any compensation to be so subjected shall not be recognized. 12. Termination and Amendment. This Plan may be amended at any time or may be terminated, in whole or in part, at any time, and from time to time, by IpswichBank. The foregoing provisions of this Paragraph notwithstanding, no amendment or termination of this Plan shall, without the consent of a Director, adversely affect the amounts payable hereunder on account of compensation deferred prior to the effective date of such amendment or termination. 13. Notices. All notices, elections or designations by a Director to the Corporation shall be delivered in person or by registered mail, postage prepaid, and noted to be brought to the attention of the Treasurer, IpswichBank. 14. Governing Law. This Plan, and all actions taken hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, except as such laws may be superseded by any applicable federal law. 15. Shares Issuable. The aggregate maximum number of shares of Stock reserved and available for issuance under the Plan shall be 11,800, subject to appropriate adjustments in the -5- event of a stock dividend, stock split, or similar change in capitalization affecting the Stock. Shares subject to the Plan are authorized but unissued shares or Treasury shares. -6- IPSWICH SAVINGS BANK DEFERRED COMPENSATION PLAN FOR DIRECTORS Election to Participate Form ------------------------------------------------------------------------ ----------------------------------- ---------------------------- Name (Please Print) Social Security Number 1. Election to Defer. In accordance with the Ipswich Savings Bank Deferred Compensation Plan for Directors (the "Plan"), a copy of which has been provided to me, I hereby elect under the Plan to defer ____________% of any cash compensation that would otherwise be payable to me by the Bank during the year ended December 31, _______. In accordance with the terms of the above election, I hereby elect that the aggregate amount of cash compensation deferred be limited to: [ ] $------------------ [ ] No Limit. 2. Deferral to Cash or Stock Unit Deferral Account. I hereby elect that the compensation deferred hereunder be credited to the following type of deferral account: [ ] Cash Deferral Account [ ] Stock Unit Deferral Account 3. Designation of Time of Payment. I hereby irrevocably elect that the compensation deferred hereunder be distributed as follows: [ ] In a single lump sum on the January 15 coincident with or next following the date on which I cease to be a member of the Board of Directors of the Bank for any reason whatsoever. [ ] In annual installments over a period of ten (10) years, commencing on the January 15 coincident with or next following the date on which I cease to be a member of the Board of Directors of the Bank for any reason whatsoever. [ ] In semi-annual installments, payable on January 15 and July 15, over a period of ten (10) years, commencing on the January 15 coincident with or next following the date on which I cease to be a member of the Board of Directors of the Bank for any reason whatsoever. 4. Designation of Beneficiary. In the event that I die before all amounts deferred under the Plan shall have been distributed to me, I designate the following person(s) or legal entity(ies) as my beneficiary(ies) for purposes of the Plan:
- -------------------------------------------------------------- ----------- -------------------- Name and Address Percent Relationship - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- Name and Address of Secondary Beneficiaries (if any) - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- -------------------- - -------------------------------------------------------------- ----------- --------------------
If more than one person is named in either of the above beneficiary classifications, distributions under the Plan will be made to all surviving persons named in the classifications in the relative proportions indicated under "percent" (unless otherwise indicated in writing). Distributions to secondary beneficiaries will be made only if there is no surviving primary beneficiary. If none of the above named beneficiaries survives me, my beneficiary will be my estate. 5. Acknowledgment. I hereby acknowledge that I have received and reviewed a copy of the Plan. I understand that this election may be revoked in writing and such revocation shall be effective upon receipt by the Bank, but only as to compensation to be earned at and after commencement of the next succeeding calendar month. I further understand that this election may be changed in writing and shall be effective upon receipt by the Bank, but only as to compensation to be earned at and after commencement of the next succeeding calendar year. As to all amounts credited to my Cash Deferral Account/Stock Unit Deferral Account pursuant to this election, this election is irrevocable and the amounts credited to such Account shall be paid to me on the date I have elected hereunder regardless of any future action I may take. I further understand that I may not assign any payments or the rights of any payments under the Plan. - -------------------- ------------------------------------- Date Signature of Participant -----END PRIVACY-ENHANCED MESSAGE-----