SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
AMBANC HOLDING CO., INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is
calculated and state how it was determined)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
April 30, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Ambanc Holding Co.,
Inc. (the "Company"), we cordially invite you to attend the Annual Meeting of
Stockholders of the Company. The meeting will be held at 10:00 a.m., New York
time, on Friday, May 28, 1999 at the Best Western Hotel, located at 10 Market
Street, Amsterdam, New York. At the meeting we will report on the Company's
operations and outlook for the year ahead.
An important aspect of the annual meeting process is the annual stockholder
vote on corporate business items. I urge you to exercise your rights as a
stockholder to vote and participate in this process.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, however, please read the enclosed proxy statement and then complete,
sign and date the enclosed proxy card and return it in the accompanying postpaid
return envelope as promptly as possible. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the meeting.
Your Board of Directors and management are committed to the success of
Ambanc Holding Co., Inc., and the enhancement of your investment. As President
and Chief Executive Officer, I want to express my appreciation for your
confidence and support.
Very truly yours,
/s/ John M. Lisicki
JOHN M. LISICKI
President and Chief Executive Officer
<PAGE>
AMBANC HOLDING CO., INC.
11 Division Street
Amsterdam, New York 12010-4303
(518) 842-7200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 28, 1999
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Ambanc Holding Co., Inc. (the "Company") will be held at the Best
Western Hotel, located at 10 Market Street, Amsterdam, New York, on Friday, May
28, 1999, at 10:00 a.m., New York time.
A proxy card and a proxy statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
I. The election of five directors of the Company;
II. The ratification of the appointment of KPMG LLP as independent auditors
for the Company for the fiscal year ending December 31, 1999; and
such other matters as may properly come before the Meeting or any adjournments
or postponements thereof. The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on April
15, 1999 are the stockholders entitled to vote at the Meeting and any
adjournments or postponements thereof. A complete list of stockholders entitled
to vote at the Meeting will be available for inspection by stockholders at the
offices of the Company during the ten days prior to the Meeting, as well as at
the Meeting.
You are requested to complete, sign and date the enclosed form of proxy
which is solicited on behalf of the Board of Directors and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person or otherwise properly revoke the proxy.
By Order of the Board of Directors
/s/ Robert Kelly
Robert Kelly
Secretary
Amsterdam, New York
April 30, 1999
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A PRE-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
<PAGE>
AMBANC HOLDING CO., INC.
11 Division Street
Amsterdam, New York 12010-4303
(518) 842-7200
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1999
--------------------
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Ambanc Holding Co., Inc. (the "Company") of
proxies to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting"), to be held at the Best Western Hotel, located at 10 Market Street,
Amsterdam, New York, on Friday, May 28, 1999, at 10:00 a.m., New York time, and
all adjournments or postponements of the Meeting. The accompanying Notice of
Meeting and form of proxy and this Proxy Statement are first being mailed to
stockholders on or about April 30, 1999. Certain of the information provided
herein relates to Mohawk Community Bank (the "Bank"), a wholly owned subsidiary
of the Company.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon the election of five directors of the Company and the appointment of
KPMG LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999.
Proxies and Proxy Solicitation
All shares of the Company's common stock represented at the Meeting by
properly executed proxies received prior to or at the Meeting, and not revoked,
will be voted at the Meeting in accordance with the instructions thereon. If no
instructions are indicated, properly executed proxies will be voted "FOR" the
election of the director nominees named in this proxy statement and "FOR" the
ratification of the appointment of KPMG LLP. The Company does not know of any
matters, other than as described in the Notice of Annual Meeting, that are to
come before the Meeting. If any other matters are properly presented at the
Meeting for action, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance with
their best judgment.
Any proxy given pursuant to this solicitation or otherwise may be revoked
by the stockholder giving it at any time before it is voted by delivering to the
Secretary of the Company at the above address, on or before the taking of the
vote at the Meeting, a written notice of revocation bearing a later date than
the proxy or a later dated proxy relating to the same shares of common stock or
by attending the Meeting and voting in person. Attendance at the Meeting will
not in itself constitute the revocation of a proxy.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of common stock. In addition to solicitation by mail,
directors, officers and employees of the Company and the Bank may solicit
proxies personally or by facsimile, telegraph or telephone, without additional
compensation.
Voting Rights; Vote Required
Stockholders of record as of the close of business on April 15, 1999 (the
"Voting Record Date") will be entitled to one vote on each matter presented for
a vote at the Meeting for each share of common stock then held. Such vote may be
exercised in person or by a properly executed proxy as discussed above.
Directors will be elected by a plurality of the votes cast in person or by proxy
at the Meeting. Approval of the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999 requires the
1
<PAGE>
affirmative vote of the majority of the votes cast in person or by proxy at the
Meeting. The presence in person or representation by proxy of at least one-third
of the outstanding shares of the common stock will constitute a quorum for
purposes of the Meeting.
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of the item on which the abstention is noted. Abstentions on the
proposal to ratify KPMG LLP as the Company's independent auditors will have the
effect of a negative vote. A broker non-vote (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons as to certain proposals on which such
beneficial owners or persons are entitled to vote their shares but with respect
to which the brokers or nominees have no discretionary power to vote without
such instructions) will have no effect on the election of directors or
ratification of the appointment of the auditors. Brokers who do not receive
instructions are entitled to vote on the election of directors and the
ratification of the appointment of the auditors.
2
<PAGE>
Voting Securities and Principal Holders Thereof
As of the Voting Record Date, the Company had 5,349,337 shares of common
stock issued and outstanding. The following table sets forth, as of the Voting
Record Date, information regarding share ownership by: (i) the persons or
entities known by management to beneficially own more than five percent of the
Company's common stock; (ii) each person who served as Chief Executive Officer
of the Company during fiscal 1998; and (iii) all nominees for election as
director, directors whose terms of office extend beyond the date of the Meeting
and executive officers of the Company and the Bank, as a group. See "Proposal I
- -Election of Directors" for information regarding share ownership by the
individual director nominees and directors continuing in office. An asterisk (*)
denotes beneficial ownership of less than one percent of the outstanding shares
of common stock of the Company.
<TABLE>
<CAPTION>
Shares Beneficially Percent of
Beneficial Owners Owned Class
- ------------------------------------------------- ------------------- ----------
<S> <C> <C>
Ambanc Holding Co., Inc. 433,780(1) 8.11%
Employee Stock Ownership Plan
11 Division Street
Amsterdam, New York 12010
Jewelcor Management, Inc., et al. 307,671(2) 5.75
100 N. Wilkes-Barre Boulevard
Wilkes-Barre, Pennsylvania 18702
Wellington Management Company, LLP 289,180(3) 5.41
75 State Street
Boston, Massachusetts 02109
and
First Financial Fund, Inc.
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102-4077
John M. Lisicki 62,127(4)(5) 1.15
Lauren T. Barnett 39,697(4)(6) *
Robert J. Brittain 84,094(4)(7) 1.56
Director nominees, directors continuing in office 700,761(8) 12.71
and executive officers of the Company and the Bank
as a group (19 persons)
- --------------
<FN>
(1) The amount reported represents shares of common stock held by the
Ambanc Holding Co., Inc. Employee Stock Ownership Plan (the "ESOP").
As of the Voting Record Date, 103,525 shares of common stock under the
ESOP had been allocated to accounts of participants. First Bankers
Trust Company, N.A., Quincy, Illinois, as the trustee of the ESOP, may
be deemed to beneficially own the shares held by the ESOP which have
not been allocated to the accounts of participants or which have been
allocated but are not voted by the participants. Participants in the
ESOP have the right to direct the voting of shares allocated to their
accounts. Unallocated shares held by the ESOP are voted by the plan
trustee in the same manner that the plan trustee is directed to vote
by the majority of the plan participants who directed the plan trustee
as to the manner of voting the shares allocated to their plan
accounts.
(2) As reported by Jewelcor Management, Inc. ("JMI") and the other members
of a group formed with JMI under Section 13(d) of the Securities
Exchange Act of 1934 (the "Group") on a Schedule 13D filed with the
Securities and Exchange Commission (the "SEC") on December 2, 1998.
JMI reported sole voting and dispositive power over 300,440 shares.
Seymour Holtzman, a director of the Company and a member of the Group,
is Chairman of the Board and Chief Executive Officer of JMI and
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<PAGE>
Jewelcor Inc., the sole stockholder of JMI ("Jewelcor"). Jewelcor is a
wholly owned subsidiary of S.H. Holdings, Inc. Mr. Holtzman and his
wife, also a member of the Group, own as tenants by the entireties a
majority interest in S.H. Holdings, Inc. and Mr. Holtzman is Chairman
and President of S.H. Holdings, Inc. The members of the Group other
than JMI reported beneficial ownership as follows: Mr. Holtzman:
shared voting and dispositive power over 3,467 shares; Mr. Holtzman's
wife: none; Allison Holtzman Garcia, Mr. Holtzman's daughter: sole
voting and dispositive power over 1,535 shares; Custodial Account
f/b/o Allison Holtzman Garcia ("AHG Custodial Account"): sole voting
and dispositive power over 1,374 shares; Trust f/b/o Steven Holtzman,
Mr. Holtzman's son ("SH Trust"): sole voting and dispositive power
over 160 shares; Custodial Account f/b/o Olivia Garcia, Mr. Holtzman's
granddaughter ("OG Custodial Account"): sole voting and dispositive
power over 160 shares; Custodial Account f/b/o Chelsea Holtzman, Mr.
Holtzman's other granddaughter ("CH Custodial Account"): sole voting
and dispositive power over 535 shares; S.H. Holdings, Inc.: none;
Jewelcor: none. Mr. Holtzman is the custodian for the OG Custodial
Account. Mr. Holtzman's wife is the custodian for the AHG and CH
Custodial Accounts. Mr. Holtzman's brother-in-law is the trustee of
the SH Trust.
(3) As reported by Wellington Management Company, LLP ("Wellington")
and its investment advisory client, First Financial Fund, Inc. ("First
Financial"), as of December 31, 1998 on amendments to Schedule 13Gs
filed with the SEC. Wellington reported that it had shared dispositive
power as to all of the shares listed and First Financial reported that
it had sole voting and shared dispositive powers as to all of the
shares listed.
(4) Included in the shares listed for Messrs. Lisicki, Barnett and
Brittain are options to purchase shares of common stock, which are
currently exercisable or which will become exercisable within 60 days
of the Voting Record Date, as follows: Mr. Lisicki - 38,913 shares,
Mr. Barnett - 9,028 shares; and Mr. Brittain - 50,156 shares.
(5) Mr. Lisicki shares voting and dispositive powers over 6,261 shares
held by his wife.
(6) Includes 6,100 shares of restricted common stock over which Mr.
Barnett has no dispositive power.
(7) Includes 20,333 shares of restricted common stock over which Mr.
Brittain has no dispositive power.
(8) This amount includes shares held directly, as well as shares held
jointly with family members, shares held in retirement accounts, held
in a fiduciary capacity, held by certain of the group members'
families, or held by trusts of which the group member is a trustee or
substantial beneficiary, with respect to which shares the group member
may be deemed to have sole or shared voting and/or investment powers.
This amount also includes options to purchase 165,878 shares of common
stock granted to group members which are currently exercisable or
which will become exercisable within 60 days of the Voting Record
Date. In addition, this amount includes the 307,671 shares owned by
Mr. Holtzman and the other members of his group described in footnote
(2).
</FN>
</TABLE>
4
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
Approximately one-third of the Company's directors are elected annually to
serve for a three-year term or until their respective successors are elected and
qualified. The Company's Board of Directors is currently comprised of 17
directors, with seven directors in one class, whose terms will expire on the
date of the Meeting, and five directors in each of two other classes, with terms
that will expire in 2000 and 2001, respectively. Effective upon commencement of
the Meeting, the number of directors will be reduced to 15, and the Board will
be divided into three classes with five directorships in each class.
Accordingly, stockholders will elect five directors at the Meeting (and at each
succeeding annual meeting) and may not vote for more than five persons for
election as directors. Three of the current directors whose terms will expire
this year, Paul W. Baker, Robert J. Dunning, D.D.S. and Carl A. Schmidt, Jr.,
are retiring from the Board and have therefore not been renominated. The Company
wishes to express its sincere gratitude for the years of dedicated service and
guidance provided by Directors Baker, Dunning and Schmidt.
The following table sets forth certain information, as of the Voting Record
Date, regarding each nominee for director and each current director whose term
of office extends beyond the date of the Meeting. The Board of Directors acting
as the nominating committee has recommended and approved the nominees identified
in the following table. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to a
nominee) will be voted at the Meeting "FOR" the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by all
valid proxies will be voted "FOR" the election of such substitute nominee as the
Board of Directors may recommend. At this time, the Board of Directors knows of
no reason why a nominee might be unable to serve if elected. Except as disclosed
herein, there are no arrangements or understandings between any nominee and any
other person pursuant to which the nominee was selected. An asterisk (*) in the
table indicates that an individual beneficially owns less than one percent of
the outstanding shares of common stock of the Company.
<TABLE>
<CAPTION>
Shares of
common stock
Director Term to Beneficially Percent
Name Age Position(s) Held in the Company Since(1) Expire Owned(2) of Class
- --------------------- --- ------------------------------- -------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
James J. Bettini, Sr. 44 Director 1998 2002 600 *
Seymour Holtzman 63 Director 1999 2002 307,671(3) 5.75%
Allan R. Lyons 58 Director 1999 2002 0 *
Charles E. Wright 56 Director 1998 2002 700(4) *
William L. Petrosino 40 Nominee --- 2002 54,298 1.02
DIRECTORS CONTINUING IN OFFICE
Lauren T. Barnett 74 Chairman of the Board 1966 2001 39,697(5) *
Daniel J. Greco 71 Director 1998 2001 17,848 *
John M. Lisicki 52 President and Chief Executive Officer 1998 2001 62,127(6) 1.15
Charles S. Pedersen 73 Director 1977 2001 19,662(5)(7) *
John A. Tesiero, Jr. 71 Director 1998 2001 26,942(8) *
John J. Daly 58 Director 1988 2000 23,883(5)(9) *
Lionel H. Fallows 79 Director 1981 2000 20,536(5)(10) *
Marvin R. LeRoy, Jr. 38 Director 1996 2000 10,048(5)(11) *
Ronald S. Tecler 60 Director 1998 2000 29,085 *
William A. Wilde, Jr. 81 Director 1966 2000 18,162(5) *
- ---------------
<FN>
(1) Includes service as a director of the Bank.
(2) The nature of beneficial ownership for shares reported in this column is
sole voting and dispositive power, except as otherwise noted in these
footnotes. Included in the shares beneficially owned by the named
individuals are options to purchase shares of common stock, which are
currently exercisable or which will become exercisable within 60 days of
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<PAGE>
the Voting Record Date, as follows: Mr.Lisicki - 38,913 shares; Messrs.
Greco, Tecler and Tesiero - 7,782 shares; and Messrs. Barnett, Daly,
Fallows, LeRoy, Pedersen and Wilde - 9,028 shares.
(3) For detailed information regarding Mr. Holtzman's ownership, see footnote 2
to the table under "Voting Securities and Principal Holders Thereof."
(4) The director shares voting and dispositive powers over such shares with his
wife.
(5) Includes 6,100 shares of restricted common stock over which such individual
has no dispositive power.
(6) The director shares voting and dispositive powers over 6,261 shares with
his wife.
(7) The director shares voting and dispositive powers over 2,500 shares with
his wife.
(8) The director shares voting and dispositive powers over 2,681 shares with
his wife.
(9) The director shares voting and dispositive powers over 1,391 shares with
his wife.
(10) The director shares voting and dispositive powers over 3,374 shares with
his wife.
(11) The director shares voting and dispositive powers over 1,000 shares with
his wife.
</FN>
</TABLE>
The business experience for at least the past five years of each
nominee and director continuing in office is set forth below.
James J. Bettini, Sr. Mr. Bettini is Executive Vice President of Operations
of Farm Family Holding Co., parent company of Farm Family Insurance, where he
has been employed since 1979. He is past president of the Albany Association of
Chartered Property and Casualty Underwriters, and served on the Amsterdam City
Zoning Board of Appeals and the Amsterdam Golf Commission.
Seymour Holtzman. Since 1990, Mr. Holtzman has served as Chairman and Chief
Executive Officer of each of the following companies: Jewelcor Management &
Consulting, Inc., a management and consulting firm in Wilkes-Barre,
Pennsylvania; C.D. Peacock, Inc., a jewelry company based in Chicago, Illinois;
Central European Capital Investors, Inc., an investment company operating in
eastern Europe; and S.A. Peck & Co., a mail order jewelry company based in
Chicago, Illinois. Mr. Holtzman has over 35 years of management experience, and
has been an investor in the banking and thrift industries since 1972. A
philanthropist, Mr. Holtzman has been honored as "Humanitarian of the Year" by
the Cardinal Cushing School and Training Center in Boston, Massachusetts and
"Man of the Year" by the B'nai B'rith Youth Services.
Allan R. Lyons. Mr. Lyons is Chairman of the Board and Chief Executive
Officer of Piaker & Lyons, Vestal, New York. Mr. Lyons has worked for Piaker &
Lyons since 1964, and became an executive of the firm in 1968. He is the
Chairman of the firm's personal financial planning committee and executive
committee. Mr. Lyons is a member of the American Institute of CPAs, the New York
State Society of CPAs, and the International Association for Financial Planning.
He is on the board of advisors of the Binghamton University School of
Management, is a treasurer and trustee of United Health Services, and serves on
the endowment committee of the United Jewish Appeal of Broome County, and on the
Harpur Form. Mr. Lyons is a director of Officeland, Inc. and Franklin Credit
Management Corporation.
Charles E. Wright. Since 1976, Mr. Wright has been President of W.W. Custom
Clad, Inc., Canajoharie, New York, a metal finishing shop specializing in powder
coatings. Prior to that time, Mr. Wright was a sales representative for the
Industrial Coatings Division of Schenectady International in the New York and
New England regions and a teacher and vocational guidance counselor at
Canajoharie High School. Mr. Wright is a trustee of the Arkell Hall Foundation
in Canajoharie and the Foundation of St. Mary's Hospital in Amsterdam.
William L. Petrosino. Mr. Petrosino is a longtime local businessman in the
wholesale beverage industry, operating beverage companies in the Amsterdam,
South Glens Falls and Schenectady, New York areas. He also owns and operates
warehouse rental space in Montgomery and Fulton Counties, as well as residential
rental properties in the Amsterdam area. Mr. Petrosino serves as the Chairman of
the Board of Directors of the Fulton-Montgomery-Schoharie Private Industry
Council, and of the Workforce Development Board. In addition, Mr. Petrosino
serves as Chairman of the Amsterdam City Planning Board, and is on the boards of
directors of the Montgomery County Economic Development Zone and Amsterdam
Memorial Hospital.
Lauren T. Barnett. Mr. Barnett became Chairman of the Board of the Company
in 1998. Mr. Barnett served as Interim President and Chief Executive Officer of
the Company and the Bank from July 1, 1998 until the Company's merger with
AFSALA Bancorp, Inc. ("AFSALA") on November 16, 1998. Since 1957, Mr. Barnett
6
<PAGE>
has been the President of Barnett Agency, Inc., an insurance agency located in
Amsterdam, New York. Mr. Barnett is also a licensed real estate broker.
Dr. Daniel J. Greco. Dr. Greco became a director of the Company and the
Bank following the merger with AFSALA. Prior to the merger, Dr. Greco had been a
director of Amsterdam Federal Bank, a subsidiary of AFSALA, since 1980, and a
director of AFSALA since its formation in 1996. Dr. Greco is a former school
teacher and the retired superintendent of the Greater Amsterdam School District.
Dr. Greco serves on the Board of Directors of the Amsterdam Memorial Hospital
and Industries for Amsterdam, Inc. and is active in the Rotary Club, the Elks
Club, and the Boy Scouts of America.
John M. Lisicki. Mr. Lisicki became President and Chief Executive Officer
of the Company and the Bank upon consummation of the merger with AFSALA. Prior
to the merger, Mr. Lisicki had served as President and Chief Executive Officer
of Amsterdam Federal Bank since 1983 and as President and Chief Executive
Officer of AFSALA since 1996. Mr. Lisicki is a current member, Treasurer and
past Chairman of the Board of Trustees of Amsterdam Memorial Hospital, a member
of the Board and former President of Industries for Amsterdam, a member of the
Board and former Vice President of the Amsterdam Free Library, a member of the
Board of the Sarah J. Sanford Home for Elderly Women, former President of the
Foundation of Liberty Enterprises, as well as a member of its Board of
Directors, and a former board member of Hospice Foundation, the Amsterdam City
Center and the Advisory Board of St. Mary's Hospital.
Charles S. Pedersen. Since 1985, Mr. Pedersen has been a manufacturers'
representative for various international fiberglass and related product
companies. Mr. Pedersen's office is located in Amsterdam, New York.
John A. Tesiero, Jr. Mr. Tesiero became a director of the Company and the
Bank following the merger with AFSALA. Prior to the Merger, Mr. Tesiero had
served as a director of Amsterdam Federal Bank since 1994 and of AFSALA since
1996. Mr. Tesiero is the sole owner and President and Chief Executive Officer of
Cranesville Block Co., Inc., a construction supply business selling ready mix
concrete, concrete block, sand, gravel and stone, located in Amsterdam, New
York.
John J. Daly. Mr. Daly is the Vice President and was a former owner of
Alpin Haus, Inc., a retail company located in Amsterdam, New York, which
specializes in the sale of recreational vehicles. Mr. Daly has been associated
with Alpin Haus since 1963.
Lieutenant Colonel Lionel H. Fallows. Lieutenant Colonel Fallows is a
retired logistics manager, Stratton Air National Guard Base, Schenectady, New
York and Deputy Group Commander, 109th Military Airlift Group, New York Air
National Guard. Lieutenant Colonel Fallows retired in 1980.
Marvin R. LeRoy, Jr. Mr. LeRoy is Executive Director of the Alzheimer's
Association, Northeastern New York Chapter and is also Town/County Supervisor
for Saratoga County representing the Town of Clifton Park. Previously, he has
served as Development Officer for Skidmore College in Saratoga Springs,
Executive Director of the Kenwood Child Development Center in Albany, Executive
Director of the Amsterdam City Center (YMCA) and served as Executive Director of
the Montgomery County Youth Bureau, Planning Officer for the Montgomery County
Planning Department, and Director of the Montgomery County Veterans Services.
Mr. LeRoy is also active in the community, having served on over 25 boards and
councils throughout the Capital District.
Dr. Ronald S. Tecler. Dr. Tecler became a director of the Company and the
Bank following the merger with AFSALA. Prior to the merger, Dr. Tecler had been
a director of Amsterdam Federal Bank since 1994 and a director of AFSALA since
1996. Dr. Tecler is the majority stockholder of a professional corporation
engaged in the practice of dentistry in Amsterdam, New York and has practiced
dentistry since 1971. Dr. Tecler is the Chairman of the Board of the Amsterdam
Urban Renewal Agency, a board member of Industries for Amsterdam, Inc., the Vice
President of the Twin Rivers Boy Scouts Council, and is active in the Amsterdam
Rotary Club and the St. Mary's Hospital of Amsterdam Foundation.
7
<PAGE>
William A. Wilde, Jr. Mr. Wilde is a retired Vice President of Operations
for Amsterdam Printing and Litho Corp., located in Amsterdam, New York. Mr.
Wilde retired in 1983.
Meetings and Committees of the Boards of Directors
Meetings and Committees of the Company. Meetings of the Company's Board of
Directors are generally held on a monthly basis. For the year ended December 31,
1998, the Board of Directors met 13 times. During 1998, no incumbent director of
the Company attended fewer than 75% of the aggregate of the total number of
Board meetings held while he was a director and the total number of meetings
held by the committees of the Board of Directors on which he served during the
period in which he served.
The Board of Directors of the Company has standing Audit, Compensation and
Nominating Committees.
The Company's Audit Committee is responsible for the review of the
Company's annual audit report prepared by the Company's independent auditors.
The review includes a detailed discussion with the independent auditors and
recommendation to the full Board concerning any action to be taken regarding the
audit. Directors Pedersen (Chairman), Baker, Daly LeRoy, Fallows and Tecler
serve on this Committee. The Audit Committee met three times during 1998.
The Company's Compensation and Benefits Committee is currently comprised of
Directors Schmidt (Chairman), Baker, Barnett, Bettini, Daly, Pedersen, Tesiero
and Wilde. (As noted above, Directors Schmidt and Baker will retire as directors
upon the expiration of their terms at the Meeting.) The Compensation and
Benefits Committee is responsible for developing and making recommendations to
the Board of Directors with respect to the Company's executive compensation
policies as well as administering the Company's 1997 Stock Option and Incentive
Plan (the "Stock Option Plan") and Recognition and Retention Plan (the "RRP").
This committee met 15 times during 1998.
The Company's Nominating Committee, consisting of the entire Board of
Directors, reviews the terms of the directors and makes nominations for
directors to be voted on by stockholders. The Nominating Committee generally
meets once a year. Nominations of persons for election to the Board of Directors
may be made only by or at the direction of the Board of Directors or by any
stockholder entitled to vote for the election of directors who complies with the
notice procedures set forth in the Company's Bylaws. Pursuant to the Company's
Bylaws, nominations by stockholders must be delivered in writing to the
Secretary of the Company at least 30 days prior to the date of the annual
meeting, except that if less than 40 days' notice of the date of the meeting is
given or made to stockholders, nominations must be delivered no later than the
close of business on the tenth day following the day on which notice of the
meeting was mailed. The Nominating Committee met twice in 1999 for the purpose
of making nominations for directors to be voted on by stockholders at the
Meeting.
Meetings and Committees of the Bank. The Bank's Board of Directors meets at
least monthly and held 17 meetings during the year ended December 31, 1998.
During 1998, no incumbent director of the Bank attended fewer than 75% of the
aggregate of the total number of Board meetings held while he was a director and
the total number of meetings held by the committees of the Board of Directors on
which he served during the period in which he served.
Director Compensation
Directors of the Company did not receive any remuneration during 1998 for
service on the Company's Board of Directors or any committees of the Company's
Board of Directors. Each non-employee director of the Bank, however, received
during 1998 an annual fee of $13,800 in cash for service on the Board of
Directors of the Bank. Non-employee directors serving on the Bank's Executive,
Audit, Personnel and Strategic Planning Committees also received during 1998
$200 in cash for each committee meeting attended. Each director of the Company
also currently serves as a director of the Bank, except Directors Holtzman and
Lyons. Following the Meeting, if elected, Directors Holtzman and Lyons will also
serve as directors of the Bank. For 1999 and each succeeding year, 65% of the
annual fee for the Bank's non-employee directors will be paid in shares of the
Company's common stock issued pursuant to the RRP (with one-twelfth of the
annual share amount vesting each month), and the remaining 35% will be paid in
cash.
8
<PAGE>
The Bank has established a deferred compensation program for the benefit of
certain of its non-employee directors. This program permits participating
directors to defer a portion of their Board fees over a five-year period.
Pursuant to agreements entered into with participating directors, upon the later
of the first year after the end of the five-year period or the director reaching
65 years of age, the director (or in the event of death, his designated
beneficiary) will receive an annual cash payment for a period of up to 10 years
based upon the amount of fees deferred. In order to balance the expected
payments under the deferred compensation plan, the Bank has purchased whole life
insurance policies on the lives of the participating directors. While the Bank
will make the annual payments to participating directors over the ten year
period, the lump sum death benefits payable on the insurance policies should be
sufficient to repay the Bank for the benefits paid to the participating
directors with a modest return, provided actuarial assumptions regarding life
expectancies are accurate. The participants in the deferred compensation program
are Directors Baker, Barnett, Daly, Dunning, Fallows and Schmidt. Each of these
directors has completed his five-year deferral period, except Director Daly, who
is expected to complete his deferral period during fiscal 1999.
9
<PAGE>
Executive Compensation
The following table sets forth information concerning the compensation paid
to John M. Lisicki, who became President and Chief Executive Officer of the
Company and the Bank on November 16, 1998 upon consummation of the merger with
AFSALA; Lauren T. Barnett, the Chairman of the Board of the Company who served
as Interim President and Chief Executive Officer of the Company and the Bank
from July 1, 1998 to November 15, 1998; and Robert J. Brittain, who retired as
President and Chief Executive Officer of the Company and the Bank on June 30,
1998. No other officer earned a salary and bonus in excess of $100,000 in 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
-------------------------------------- -------------------------
Other Annual Restricted All Other
Salary Bonus Compensation Stock Options Compensation
Name and Principal Position Year ($) ($) ($)(2) Award ($) (#) ($)
- ------------------------------ ------- ------------- ------- ---------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John M. Lisicki, President 1998 $19,615(1) --- --- --- --- $16,055(3)
and Chief Executive Officer 1997 --- --- --- --- --- ---
1996 --- --- --- --- --- ---
Lauren T. Barnett, former 1998 $50,000 --- --- --- --- $19,200(4)
Interim President and Chief 1997 --- --- --- --- --- ---
Executive Officer 1996 --- --- --- --- --- ---
Robert J. Brittain, former 1998 $ 85,507 --- --- --- --- $125,668(6)
President and Chief 1997 167,000 --- --- $372,776(5) 100,312 54,378
Executive Officer 1996 167,000 --- --- --- --- 33,788
- ---------------
<FN>
(1) Represents that portion of Mr. Lisicki's salary earned by him for his
service as President and Chief Executive Officer during 1998, which began
on November 16, 1998. Mr. Lisicki's base annual salary under his employment
agreement is $170,000. For a description of Mr. Lisicki's employment
agreement, see "Employment Agreement with John M. Lisicki" below.
(2) None of the persons listed received any additional benefits or perquisites
which, in the aggregate, exceeded the lesser of 10% of the person's salary
and bonus, or $50,000.
(3) Includes $9,807 for unused vacation time and the value at December 31, 1998
of the allocation to Mr. Lisicki's ESOP account for 1998 ($6,248).
(4) Represents fees for service as a director.
(5) Represents the dollar value of the award, based on the $13.75 closing price
per share of the common stock on May 23, 1997, the date of grant. The
shares of restricted stock have a vesting schedule of four equal annual
installments (with the first installment having vested on May 23, 1998).
Holders of restricted stock granted under the RRP are entitled to receive
any dividends paid by the Company on the common stock. At December 31,
1998, Mr. Brittain owned 20,333 shares of restricted common stock with a
market value of $360,911 at such date (based on the $17.75 closing price
per share of the common stock on December 31, 1998).
(6) Represents payment of $40,000 under the Agreement of Termination between
Mr. Brittain and the Company and the Bank and payment of $85,668 under the
Consulting Agreement between Mr. Brittain and the Company and the Bank. The
Agreement of Termination and the Consulting Agreement are described below
under "Agreements with Robert J. Brittain."
</FN>
</TABLE>
10
<PAGE>
The following table sets forth certain information concerning the
aggregate number and value of the stock options held by Messrs. Lisicki, Barnett
and Brittain at December 31, 1998. No stock appreciation rights have been
granted by the Company to date.
Aggregate Options Exercised in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options
on Value Options at FY-End (#) FY-End ($)(1)
Exercise Realized ----------------------------- ------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- -------------- ------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John M. Lisicki --- --- 38,913 --- $186,004 ---
Lauren T. Barnett --- --- 4,514 13,542 18,056 $ 54,168
Robert J. Brittain --- --- 25,078 75,234 100,312 300,936
<FN>
(1) Represents the aggregate market value of the stock options as of December
31, 1998, based on the difference between the market price per share of the
common stock ($17.75, the closing price per share of the common stock as
reported on the Nasdaq Stock Market on December 31, 1998), and the exercise
price of the stock options ($12.97 per share for Mr. Lisicki; $13.75 for
Messrs. Barnett and Brittain).
</FN>
</TABLE>
Defined Benefit Pension Plan
The Bank sponsors a defined benefit pension plan for its employees (the
"Pension Plan"). Full-time salaried employees are eligible to participate in the
Pension Plan following the completion of one year of service (1,000 hours worked
during a continuous 12-month period) and attainment of 21 years of age. A
participant must complete five years of service before attaining a vested
interest in his or her retirement benefits, after which the participant is 100%
vested. The Pension Plan is funded solely through contributions made by the
Bank.
The benefit provided to a participant at normal retirement age (generally
age 65) is based on the average of the participant's basic annual compensation
during the 36 consecutive months of service within the last 120 completed months
of a participant's service which yields the highest average compensation
("average annual compensation"). Compensation for this purpose is the
participant's basic annual salary, including any contributions through a salary
reduction arrangement pursuant to a cash or deferred plan under Section 401(k)
of the Internal Revenue Code of 1986, as amended, but exclusive of overtime,
bonuses, severance pay, or any special payments or other deferred compensation
arrangements. The annual benefit provided to a participant who retires at age 65
is equal to 2% of average annual compensation for each year of service without
offset of the participant's anticipated Social Security benefits. An
individual's annual benefit is limited to 70% of his or her annual average
compensation.
The annual benefit provided to participants (i) at early retirement age
(generally age 60) with five years of service who elect to defer the payment of
their benefits to normal retirement age, (ii) at early retirement age with ten
years of service who elect to receive payment of their benefits prior to normal
retirement age or (iii) who postpone annual benefits beyond normal retirement
age, are calculated basically the same as the benefits for normal retirement
age, with annual average compensation being multiplied by 2% for each year of
such individual's actual years of service. A participant eligible for early
retirement benefits who does not meet the requirements set forth above will have
his or her benefits adjusted as further described in the Pension Plan.
The Pension Plan also provides for disability and death benefits.
11
<PAGE>
The following table sets forth, as of December 31, 1998, estimated annual
pension benefits for individuals at age 65 payable in the form of a life annuity
under the most advantageous plan provisions for various levels of compensation
and years of service. The figures in this table are based upon the assumption
that the Pension Plan continues in its present form.
Pension Plan Table
Years of Credited Service
------------------------------------------------
Remuneration 15 20 25 30 35
------------- ------- ------- ------- ------- -------
$ 75,000 $22,500 $30,000 $37,500 $45,000 $52,500
100,000 30,000 40,000 50,000 60,000 70,000
125,000 37,500 50,000 62,500 75,000 87,500
150,000 45,000 60,000 75,000 90,000 105,000
175,000(1) 48,000 64,000 80,000 96,000 112,000
- -----------
(1) 1998 annual earnings limited to $160,000 by Internal Revenue Service
regulations.
At December 31, 1998, Mr. Lisicki had no years of credited service under
the Pension Plan. At the time of his retirement, Mr. Brittain had 22 years of
credited service under the Pension Plan. Mr. Barnett, who was briefly employed
by the Bank as Interim President and Chief Executive Officer from July 1, 1998
through November 15, 1998, is not eligible to participate in the Pension Plan.
Employment Agreement with John M. Lisicki
The Bank entered into an employment agreement with Mr. Lisicki on November
16, 1998, the effective date of the merger with AFSALA. The agreement provides
for a minimum annual base salary of $170,000, and for the payment of bonuses in
the discretion of the Board of Directors of the Bank. Mr. Lisicki's employment
agreement has a term of three years, which commenced on November 16, 1998. The
term of the agreement will be extended for an additional year (in addition to
the then-remaining term) on the first anniversary of the commencement date and
on each anniversary thereafter, subject to approval of the Board of Directors of
the Bank. The Agreement entitles Mr. Lisicki to participate in all employee
benefit and retirement plans in which the Bank's executive officers participate.
Under the employment agreement, if Mr. Lisicki's employment were
"involuntarily terminated" by the Bank other than in connection with or within
twelve months after a change in control of the Bank or the Company or for cause,
then (i) the Bank would be required to pay to Mr. Lisicki during the remaining
term of the agreement his salary at the rate in effect as of the date of
termination and (ii) the Bank would be required to provide to Mr. Lisicki during
the remaining term of the agreement substantially the same benefits as the Bank
maintained for its executive officers immediately prior to the date of
termination. The agreement provides that if Mr. Lisicki's employment were
involuntarily terminated in connection with or within 12 months after a change
in control, Mr. Lisicki would be entitled to receive from the Bank a lump sum
payment in cash of an amount equal to 299% of Mr. Lisicki's "base amount" and,
for the remaining term of the agreement, substantially the same health benefits
as the Bank maintained for its executive officers immediately prior to the
change in control. Under the agreement, "involuntary termination" means
termination of Mr. Lisicki's employment without his express written consent, and
also includes a material diminution of his current duties, responsibilities and
benefits (including not being elected or re-elected to the Board of Directors of
the Bank or the Company).
Supplemental Retirement Plan
The Bank maintains a supplemental retirement plan ("SERP") for the benefit
of Mr. Lisicki, which was adopted by Amsterdam Federal Bank in connection with
the termination of Amsterdam Federal Bank's defined benefit retirement plan in
fiscal 1994, and amended as of March 17, 1998. The purpose of the SERP is to
furnish Mr. Lisicki with
12
<PAGE>
supplemental post-retirement benefits in addition to those which will be
provided to him under the Bank's 401(k) Plan. (Amsterdam Federal Bank's 401(k)
Plan, in which Mr. Lisicki currently participates, is expected to be merged into
the Bank's 401(k) Plan during fiscal 1999. Mr. Lisicki will become a participant
in the Bank's 401(k) plan upon the merger of the two plans.) It is intended that
Mr. Lisicki's benefits under the SERP, when added to his benefits under the
Bank's 401(k) Plan, will be approximately equal to the benefits Mr. Lisicki
would have received under the terminated defined benefit retirement plan.
Annually, a sum equal to 16.90% of Mr. Lisicki's annual salary is expensed and
funded by the Bank to a reserve account ("Deferred Compensation Account") for
the purpose of providing to him the target benefits under the SERP. Upon Mr.
Lisicki's termination of employment with the Bank (other than for cause), the
supplemental retirement benefits consisting of the then-current value of all
amounts credited to Mr. Lisicki's Deferred Compensation Account will be payable
to him. The SERP provides that the Bank may pay the benefits either as a single
lump sum payment, by purchasing a straight life or joint and survivor annuity,
or in monthly installments over five, ten or fifteen years. Upon receipt of
benefits under the SERP, under current federal income tax laws, Mr. Lisicki will
recognize ordinary income in the amount of the benefits he receives and the Bank
will be entitled to a tax deduction for the amount of benefits paid as
compensation expense at that time.
Agreements with Robert J. Brittain
In order to facilitate the merger with AFSALA, Mr. Brittain retired as
President and Chief Executive Officer of the Company and the Bank effective June
30, 1998. In connection with his retirement as President and Chief Executive
Officer, Mr. Brittain executed termination and consulting agreements with the
Company and the Bank whereby his employment agreement with the Bank (which was
to expire on December 31, 1999) terminated effective June 30, 1998 and he is to
serve as a consultant to the Company and the Bank through December 31, 2000.
Under the termination agreement, in exchange for not becoming associated
directly or indirectly with any competitor of the Company or the Bank until
December 31, 2000, whether as a shareholder (other than as a holder of not more
than 1% of the outstanding voting shares of a publicly traded company), partner,
employee or consultant, Mr. Brittain received $40,000 in 1998 and is entitled to
receive $40,000 for each remaining year this restriction is in effect (1999 and
2000), payable on a monthly basis.
The consulting agreement calls for Mr. Brittain to provide such consulting
services to the Company and the Bank as the Chairman of the Board or President
and Chief Executive Officer of the Company and/or the Bank may reasonably
request. Mr. Brittain's major responsibility is to assist the Chairman and the
President, at their request, in evaluating strategic alternatives for current
and future business needs of the Company and the Bank. For his services under
the consulting agreement and in lieu of any payments otherwise due under his
terminated employment agreement, Mr. Brittain is entitled to receive an annual
fee of $171,175, payable in monthly or semi-monthly installments. The Company
and the Bank must also pay for medical insurance coverage for Mr. Brittain and
his wife on the same basis as is provided to senior executives through December
31, 1999 and must allow Mr. Brittain to pay for such coverage for himself and
his wife, as a participant in the Company's or the Bank's medical insurance
plans, for the period from January 1, 2000 through the date on which Mr.
Brittain becomes eligible to receive Medicare benefits. Mr. Brittain is entitled
to be reimbursed by the Company and the Bank for normal travel expenses, if any,
incurred in connection with performing his services under the consulting
agreement, and is entitled to be provided secretarial, telephone and other
support services as well as other equipment which Mr. Brittain reasonably
requests to assist him in the performance of his services under the consulting
agreement.
The consulting agreement also provides that Mr. Brittain shall be
compensated for his service as a director or advisory director of the Company
and/or the Bank at the rate of $1,150 per month of service from January 1, 1999
until at least May 23, 2001, and be nominated as necessary to enable him to
remain a director or advisory director of the Company and/or the Bank until at
least May 23, 2001. Mr. Brittain retired as a director of the Company and the
Bank on November 23, 1998, at which time he was appointed as an advisory
director of the Company to serve for a term expiring on November 30, 2001. So
long as Mr. Brittain serves as an advisory director, he will continue to vest in
his options to purchase Company common stock and restricted shares of Company
common stock. As of December 31, 1998, Mr. Brittain held an option to purchase
100,312 shares of Company common stock at an exercise price of $13.75 per share;
as of that date 25% of the option had vested (i.e., became exercisable), with
the remaining 75% scheduled to vest in equal annual installments on May 23,
13
<PAGE>
1999, 2000 and 2001, respectively. As of December 31, 1998, 6,778 of 27,111
restricted shares of Company common stock awarded to Mr. Brittain had vested;
the remaining 20,333 unvested restricted shares are scheduled to vest in equal
annual installments on May 23, 1999, 2000 and 2001, respectively. As a result of
his retirement, Mr. Brittain forfeited his right to receive future allocations
under the Company's Employee Stock Ownership Plan, including an allocation for
1998.
Compensation and Benefits Committee Report
The Compensation and Benefits Committee (the "Committee") is responsible
for the establishment, oversight and administration of executive compensation
and executive and director incentive plans. The Committee is composed entirely
of outside directors.
Executive Compensation Philosophy
The executive compensation program is designed to achieve two principal
objectives. First, the program is intended to be fully competitive so as to
attract, motivate and retain talented executives. Secondly, the program is
intended to align executive compensation with the values and objectives,
business strategy, management initiatives, and the business and financial
performance of the Company. The Committee's philosophy is to pay competitive
annual salaries to executive officers, coupled with incentives that will result
in overall compensation for executive officers that will fluctuate depending
upon, and be commensurate with, the Company's actual performance in relation to
the financial goals established by the Committee and ratified by the Board of
Directors at the beginning of each year. These incentives consist of annual cash
incentive compensation and long-term stock compensation, consisting primarily of
stock grants and stock options.
The Committee assesses the competitiveness of its executives' compensation
by referring, at least annually, to a survey which compares and examines a
variety of compensation-related data furnished by a prominent international
consulting firm for the financial industry. The Committee also periodically
reviews the compensation policies of other similarly situated companies, as set
forth in various industry publications, to determine whether the Company's
compensation decisions are competitive within its industry. Based upon this
information, the Committee believes that it has established a program to:
o Support a performance-oriented environment that rewards
performance not only with respect to the Company's goals but
also the Company's performance as compared to that of others
in the industry;
o Attract and retain key executives critical to the long-term
success of the Company and the Bank;
o Integrate compensation programs with both the Company's annual
and long-term strategic planning and measuring processes; and
o Reward executives for long-term strategic management and the
enhancement of stockholder value.
In making compensation decisions the Committee also focuses on the
individual contributions of executives of the Company and the Bank. The
Committee uses its discretion to set executive compensation as, in its judgment,
external, internal or individual circumstances dictate.
Effective August 1, 1998 and simultaneous with the imposition of a freeze
on directors' fees, the Board of Directors imposed a freeze on the salaries of
the Chief Executive Officer and certain other executive officers (collectively,
"executive managers") at then-current levels. The freeze will remain in effect
until the Board of Directors determines that the Company has shown satisfactory
improvement in its consolidated operating results.
Annual Salaries
Salary ranges governing executives are established annually based upon
competitive data and other information pertinent to the geographic area,
especially in the banking field. Within the ranges, salaries vary based upon an
individual's level of responsibility, impact on the business, work experience,
performance, tenure and potential for
14
<PAGE>
advancement within the Company and the Bank. Annual salaries for newly-hired
executives are determined at the time of hire, taking into account all of the
foregoing except tenure. The chief executive officer and other executive
officers generally receive salary increase consideration at 12-15 month
intervals for purposes of business performance comparisons. Salary adjustments
for the chief executive officer and other executives are subject to approval by
the full Board, based upon the recommendations of the Committee. Until the
freeze on salaries is lifted, however, annual salaries of executive managers
will not increase.
Annual Incentives/Bonuses.
As a result of expenses incurred in connection with the Company's
acquisition of AFSALA, the Committee determined not to award cash bonuses to
executive officers for 1998.
Long-Term Incentives
The Company's Stock Option Plan and RRP, which were approved by
stockholders in 1997, are the Company's long-term incentive plans for executive
officers, directors and employees of the Company and the Bank. The objectives of
the program are to align executive and stockholder long-term interests by
creating a strong and direct link between executive pay and the Company's
performance, and to enable such individuals to develop and maintain a
significant, long-term stock ownership position in the Company's common stock.
Awards are made at a level calculated to be competitive with the thrift
industry.
In 1993, Section 162(m) was added to the Internal Revenue Code, the effect
of which was to eliminate the deductibility of compensation over $1 million,
with certain exclusions, paid to each of certain highly compensated executive
officers of publicly held corporations, such as the Company. Section 162(m)
applies to all remuneration (both cash and non-cash) that would otherwise be
deductible for tax years beginning on or after January 1, 1994, unless expressly
excluded. Because the current compensation of each of the Company's executive
officers is well below the $1 million threshold, the Company has not yet
considered its policy regarding this provision.
Submitted by the Compensation and Benefits Committee of the Company:
Carl A. Schmidt, Jr. (Chairman)
Paul W. Baker
Lauren T. Barnett
James J. Bettini
John J. Daly
Charles S. Pedersen
John A. Tesiero, Jr.
William A. Wilde, Jr.
15
<PAGE>
Stockholder Return Performance Presentation
The Company's initial public offering price for its common stock was $10.00
per share. The line graph below compares the cumulative total shareholder return
on the Company's common stock to the cumulative total return of a broad index of
the Nasdaq Stock Market and a savings and loan industry index for the period
from December 27, 1995 (the date the Company became a public company) through
December 31, 1998. The graph assumes the investment of $100.00 on December 27,
1995.
[GRAPHIC: LINE GRAPH PLOTTED AS FOLLOWS:
12/27/95 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- --------
Ambanc Holding Co., Inc ... $100.00 $101.09 $112.50 $188.65 $180.57
Selected Thrift Index...... 100.00 100.00 130.51 219.43 192.36
Nasdaq Market Index........ 100.00 100.00 124.27 152.00 214.39
16
<PAGE>
Certain Transactions
Litigation and Settlement Agreement with Director Seymour Holtzman. In May
1998, Director Seymour Holtzman and a group of related persons and entities
filed lawsuits against the Company objecting to certain disclosures contained in
the Company's proxy materials for its 1998 Annual Meeting of Stockholders, and
alleging certain defamation claims. On August 11, 1998, the Company, together
with AFSALA, entered into a settlement and standstill agreement with Mr.
Holtzman and his group (the "Settlement Agreement"). Pursuant to the Settlement
Agreement, Mr. Holtzman and his group agreed to dismiss the litigation against
the Company with prejudice and to refrain from future litigation against the
Company and AFSALA through January 1, 2000. Mr. Holtzman and his group also, as
required by the Settlement Agreement, publicly stated that they fully supported
the then-pending merger of the Company and AFSALA, and agreed to vote all shares
of Company and AFSALA common stock they owned in favor of the merger.
Pursuant to the Settlement Agreement, Mr. Holtzman and his group have
agreed to vote at the Meeting all shares of common stock they control in
accordance with the recommendation by the Company's Board of Directors on the
election of directors and ratification of the appointment of auditors. Mr.
Holtzman and his group have further agreed not to introduce any shareholder
proposal at the Meeting or to support any proposal that is opposed by the
Company's Board of Directors. In addition, Mr. Holtzman and his group agreed not
to, in connection with the Meeting, solicit proxies against or otherwise oppose
any management proposal or nominee for election as a director.
In consideration for the covenants made by Mr. Holtzman and his group, the
Company engaged an investment banking firm to seek ways to maximize shareholder
value, including the sale of the Company. The Company agreed that if, as was the
case, the Company did not enter into a merger or acquisition agreement with a
third party by April 1, 1999, the Company's Board of Directors would appoint two
persons selected by Mr. Holtzman and his group to serve three-year terms as
directors of the Company. Pursuant to this provision, the Company appointed Mr.
Holtzman and Allan R. Lyons to the Board on April 1, 1999. (Because the current
terms of Messrs. Holtzman and Lyons will expire at the Meeting, each of them has
been nominated for election at the Meeting to serve for a term expiring in
2002.) The Company and AFSALA also agreed to pay to Mr. Holtzman and his group
$80,000 in cash representing reimbursement of a portion of their expenses, and
to refrain from litigation against Mr. Holtzman and his group for any matters
which occurred on or before the date of the Settlement Agreement.
Lease Agreements. Director John A. Tesiero, Jr. is a principal owner of the
Amsterdam Riverfront Center, which has leased two properties to the Bank. One
property is used as an operations center, and the other is used as a branch
office. Each lease agreement has a term of five years, expiring in 2003, with an
option to renew after expiration for an additional five years. The lease
payments by the Bank are equivalent to the market rate at the time the lease
agreements were executed. The Bank is expected to pay in the aggregate
approximately $125,000 in lease payments under both agreements over the terms of
the leases.
Loans. The Company has followed a policy of granting consumer loans and
loans secured by the borrower's personal residence to officers, directors and
employees. Loans to directors must be approved by a majority of the
disinterested directors. Residential loans and any loan in excess of $100,000 to
an executive officer must be approved by a majority of the Board of Directors.
All loans to executive officers and directors are made in the ordinary course of
business and on the same terms and conditions as those of comparable
transactions prevailing at the time, in accordance with the Company's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
17
<PAGE>
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP to be the Company's
independent auditors for the fiscal year ending December 31, 1999, subject to
ratification of such appointment by the Company's stockholders at the Meeting. A
representative of KPMG LLP is expected to attend the Meeting to respond to
appropriate questions and will have an opportunity to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
its 2000 Annual Meeting of Stockholders, any stockholder proposal to take action
at the 2000 Annual Meeting must be received at the main office of the Company,
11 Division Street, Amsterdam, New York 12010-4312, no later than January 1,
2000. Any proposal submitted will be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934, as amended, and, as
with any stockholder proposal (regardless of whether included in the Company's
proxy materials), the Company's Certificate of Incorporation and Bylaws and
Delaware law. Under the proxy rules, in the event that the Company receives
notice of a stockholder proposal to take action at the 2000 Annual Meeting that
is not submitted for inclusion in the Company's proxy materials, or is submitted
for inclusion but is properly excluded from the Company's proxy materials, the
persons named in the form of proxy sent by the Company to its stockholders
intend to exercise their discretion to vote on the proposal in accordance with
their best judgment if notice of the proposal is not received at the main office
of the Company by the Deadline (as defined below). In addition to the provision
of the proxy rules regarding discretionary voting authority described in the
preceding sentence, the Company's Bylaws provide that if notice of a stockholder
proposal to take action at the 2000 Annual Meeting is not received at the main
office of the Company by the Deadline, the proposal will not be recognized as a
matter proper for submission to the Company's stockholders and will not be
eligible for presentation at the 2000 Annual Meeting. The "Deadline" means March
29, 2000; however, in the event the 2000 Annual Meeting is held before May 8,
2000 or after July 27, 2000, the "Deadline" means the close of business on the
later of the 60th day prior to the date of the 2000 Annual Meeting or the tenth
day following the day on which notice of the 2000 Annual Meeting is first mailed
or public announcement of the date of the 2000 Annual Meeting is first made.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. Should
any other matters properly come before the Meeting, it is intended that holders
of the proxies will act in accordance with their best judgment.
18
<PAGE>
REVOCABLE PROXY
Ambanc Holding Co., Inc.
Amsterdam, New York
Annual Meeting of Stockholders May 28, 1999
The undersigned hereby appoints the members of the Board of Directors of
Ambanc Holding Co., Inc. (the "Company") with full powers of substitution, to
act as attorneys and proxies for the undersigned to vote all shares of common
stock, par value $.01 per share (the "Common Stock"), of Ambanc Holding Co.,
Inc. which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the Best Western Hotel located at 10 Market Street,
Amsterdam, New York, at the date and time set forth in the Notice of Annual
Meeting and at any and all adjournments and postponements thereof, as instructed
hereon.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES LISTED ON THE
REVERSE SIDE AND FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR all
nominees listed WITHHOLD
at right (except AUTHORITY to
as marked to vote for all
the contrary nominees listed
below) at right FOR AGAINST ABSTAIN
I. Election of five [ ] [ ] Nominees: II. The ratification of the [ ] [ ] [ ]
directors for terms James J. Bettini, Sr. appointment of KPMG LLP
of three years Seymour Holtzman as independent auditors for
Allan R. Lyons the Company for the fiscal
Charles E. Wright year ending December 31,
William L. Petrosino 1999.
</TABLE>
(Instructions: To withhold authority to vote for one or more but not all
nominees, mark the "FOR" box, and write the name(s) of the nominee(s) for whom
you wish to withhold your vote in the space provided below. To withhold
authority to vote for all nominees, mark the 'WITHHOLD AUTHORITY" box.
In their discretion, the proxies are authorized to vote on any other
business may properly come before the Meeting or any adjournment or postponement
thereof.
The Board of Directors recommends a vote "For" the Election of All Nominees
Listed at Left and "For" the Ratification of the Appointment of KPMG LLP.
This proxy may be revoked at any time before it is voted by delivering to
the Secretary of the Company, on or before the taking of the vote at the
Meeting, a written notice of revocation bearing a later date than the proxy or a
later dated proxy relating to the same shares of Company Common Stock, or by
attending the Meeting and voting in person. Attendance at the Meeting will not
in itself constitute the revocation of this proxy. If this proxy is properly
revoked as described above, then the power of the attorneys and proxies named
herein shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this Proxy, of the Notice of the Annual Meeting, the related Proxy
Statement and the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1998.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
___________________________ __________________________ Dated _________, 1999
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Note: Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
