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 Rule 14a-11(c) or Rule 14a-12
MYTIC FINANCIAL, 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:
---------------------------------------------------------------
September 20, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Mystic Financial, Inc. (the "Company"), the holding company
for Medford Co-operative Bank (the "Bank"), Medford, Massachusetts, which
will be held on October 20, 1999 at The Medford Co-operative Bank, 201 Salem
Street, Medford, Massachusetts, at 10:00 a.m. Eastern Time (the "Annual
Meeting").
The attached Notice of the 1999 Annual Meeting of Stockholders and
Proxy Statement describes the formal business to be transacted at the Annual
Meeting. Directors and officers of the Company will be present at the
Annual Meeting to report on the business of the Company and the Bank and to
answer questions.
The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Annual Meeting is in
the best interests of the Company and its stockholders and unanimously
recommends a vote "FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly
whether or not you plan to attend the Annual Meeting. Your vote is
important regardless of the number of shares you own. Voting by proxy will
not prevent you from voting in person at the Annual Meeting but will assure
that your vote is counted if you are unable to attend.
On behalf of the Board of Directors and the employees of Mystic
Financial, Inc. and Medford Co-operative Bank, we thank you for your
continued support.
Sincerely yours,
John J. McGlynn
Chairman of the Board
MYSTIC FINANCIAL, INC.
60 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
(781) 395-2800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
At the 1999 Annual Meeting, we will ask you to:
* Elect three directors to serve for a term of three years. The
following three directors are the Board of Directors' nominees:
Frederick N. Dello Russo Richard M. Kazanjian John W. Maloney
* Ratify the appointment of Wolf & Company, P.C. as our independent
auditors for the fiscal year ending June 30, 2000; and
* Transact any other business as may properly come before the Annual
Meeting.
You may vote at the Annual Meeting if you were a stockholder of the
Company at the close of business on September 3, 1999, the record date.
By Order of the Board of Directors,
Lorraine P. Silva
Secretary
Medford, Massachusetts
September 20, 1999
============================================================================
You are cordially invited to attend the Annual Meeting. It is important
that your shares be represented regardless of the number of shares you own.
The Board of Directors urges you to sign, date and mark the enclosed proxy
card promptly and return it in the enclosed envelope. Returning the proxy
card will not prevent you from voting in person if you attend the Annual
Meeting.
============================================================================
GENERAL INFORMATION
General
We have sent you this Proxy Statement and enclosed proxy card because
the Board of Directors is soliciting your proxy to vote at the Annual
Meeting. This Proxy Statement summarizes the information you will need to
know to cast an informed vote at the Annual Meeting. You do not need to
attend the Annual Meeting to vote your shares. You may simply complete,
sign and return the enclosed proxy card and your votes will be cast for you
at the Annual Meeting.
We began mailing this Proxy Statement, the Notice of Annual Meeting
and the enclosed proxy card on or about September 20, 1999 to all
stockholders entitled to vote. If you owned the Company's common stock at
the close of business on September 3, 1999, the record date, you are
entitled to vote at the Annual Meeting. On the record date, there were
2,444,878 shares of common stock outstanding.
Quorum
A quorum of stockholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the outstanding shares
of common stock entitled to vote are represented in person or by proxy at
the Annual Meeting, a quorum will exist. Shares underlying broker non-votes
will not be counted as having been voted in person or by proxy and will have
no effect on the election of directors.
Voting Rights
You are entitled to one vote at the Annual Meeting for each share of
the Company's common stock that you owned at the close of business on
September 3, 1999. The number of shares you own (and may vote) is listed at
the top of the back of the proxy card.
You may vote your shares at the Annual Meeting in person or by proxy.
To vote in person, you must attend the Annual Meeting and obtain and submit
a ballot, which we will provide to you at the Annual Meeting. To vote by
proxy, you must complete, sign and return the enclosed proxy card. If you
properly complete your proxy card and send it to us in time to vote, your
"proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares FOR each of the proposals
identified in the Notice of the Annual Meeting.
If any other matter is presented, your proxy will vote the shares
represented by all properly executed proxies on such matters as a majority
of the Board of Directors determines. As of the date of this Proxy
Statement, we know of no other matters that may be presented at the Annual
Meeting, other than those listed in the Notice of the Annual Meeting.
Vote Required
Proposal 1: The three nominees for director who receive the most
Elect Three votes will be elected. So, if you do not vote for a
Directors nominee, or you indicate "withhold authority" for any
nominee on your proxy card, your vote will not count
"for" or "against" the nominee. You may not vote your
shares cumulatively for the election of directors.
Proposal 2: The affirmative vote of a majority of the shares
Ratify Appointment present in person or by proxy at the Annual Meeting
of Independent and entitled to vote on this proposal is required to
Public Accountants ratify the appointment of Wolf & Company, P.C. as the
Company's independent certified public accountants.
So, if you "abstain" from voting, it has the same
effect as if you voted "against" this proposal.
Effect of Broker Non-Votes
If your broker holds shares that you own in "street name," the broker
may vote your shares on the two proposals listed above even if the broker
does not receive instructions from you. If your broker does not vote on any
of the proposals, this will constitute a "broker non-vote." Here is the
effect of a "broker non-vote":
* Proposal 1: Elect Three Directors. A broker non-vote would have no
effect on the outcome of this proposal because only a plurality of
votes cast is required to elect a director.
* Proposal 2: Ratify Appointment of Independent Public Accountants. A
broker non-vote would have no effect on the outcome of this proposal.
Revoking Your Proxy
You may revoke your proxy at any time before it is exercised by:
* Filing with the Secretary of the Company a letter revoking the proxy;
* Submitting another signed proxy with a later date; or
* Attending the Annual Meeting and voting in person, provided you file a
written revocation with the Secretary of the Annual Meeting prior to
the voting of such proxy.
If your shares are not registered in your own name, you will need
appropriate documentation from your stockholder of record to vote personally
at the Annual Meeting. Examples of such documentation include a broker's
statement, letter or other document that will confirm your ownership of
shares of the Company.
Solicitation of Proxies
The Company will pay the costs of soliciting proxies from its
stockholders. Directors, officers or employees of the Company and the Bank
may solicit proxies by:
* mail;
* telephone; and
* other forms of communication.
We will also reimburse persons, firms and corporations holding shares
in their names or in the name of their nominees, which are beneficially
owned by others, for the expenses that incur in forwarding the proxy
materials to and obtaining proxies from such beneficial owners. In
addition, we have retained MacKenzie Partners, Inc. to assist in the
solicitation of proxies, which firm will be paid a fee of $2,500, plus out-
of-pocket expenses.
Security Ownership of Certain Beneficial Owners
The following table contains common stock ownership information for
persons known to the Company to "beneficially own" 5% or more of the
Company's common stock as of June 30, 1999. In general, beneficial ownership
includes those shares that a person has the power to vote, sell, or
otherwise dispose. Beneficial ownership also includes that number of shares
which an individual has the right to acquire within 60 days (such as stock
options) of the date this table was prepared. Two or more persons may be
considered the beneficial owner of the same share. We obtained the
information provided in the following table from filings with the SEC and
with the Company. In this proxy statement, "voting power" is the power to
vote or direct the voting of shares, and "investment power" includes the
power to dispose or direct the disposition of shares.
<TABLE>
<CAPTION>
Amount of Percent of Shares
Name and Address of Beneficial of Common Stock
Title of Class Beneficial Owner Ownership Outstanding (1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, $.01 Mystic Financial, Inc. Employee 196,559(1) 8.04%
par value Stock Ownership Plan Trust
HSBC Bank USA
140 Broadway
New York, NY 10005
Common Stock, $.01 Thomson Horstman & Bryant, Inc. 170,000(2) 6.95%
par value Park 80 West, Plaza Two
Saddle Brook, NJ 07663
- --------------------
<FN>
<F1> The Mystic Financial, Inc. Employee Stock Ownership Plan ("ESOP") is
administered by the compensation committee of the Company's Board of
Directors (the "Compensation Committee"). The ESOP's assets are held
in a trust (the "ESOP Trust"), for which HSBC Bank USA, serves as
trustee (the "ESOP Trustee"). The ESOP Trust purchased these shares
with funds borrowed from the Company, initially placed these shares in
a suspense account for future allocation and intends to allocate them
to employees participating in the ESOP over a period of years as its
acquisition debt is retired. The ESOP Trustee is the beneficial owner
of the shares held in the ESOP Trust. The terms of the ESOP Trust
Agreement provide that, subject to the ESOP Trustee's fiduciary
responsibilities under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the ESOP Trustee will vote, tender or
exchange shares of Common Stock held in the ESOP Trust allocated to
participants' accounts in accordance with instructions received from
the participants. As of June 30, 1999, 20,331 shares have been
allocated to the accounts of the ESOP participants.
<F2> Based on a Schedule 13G filed with the SEC on January 28, 1999,
Thomson Horstman & Bryant, Inc. is a Delaware corporation which is an
investment advisor registered under the Investment Advisors Act of
1940.
</FN>
</TABLE>
Security Ownership of Management
The following table shows the number of shares of the Company's common
stock beneficially owned by each director and executive officer, and all
directors and executive officers of the Company as a group, as of June 30,
1999. Except as otherwise indicated, each person and each group shown in
the table has sole voting and investment power with respect to the shares of
common stock listed next to their name.
<TABLE>
<CAPTION>
Amount and Percent of
Nature Common
Position with of Beneficial Stock
Name the Company(1) Ownership(2)(3)(4) Outstanding
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Julie Bernardin Director 7,371(5) 0.30%
Frederick N. Dello Russo Director 6,700(6) 0.27
Ralph W. Dunham Executive Vice President, Chief
Financial Officer and Treasurer 21,586(7) 0.88
John A. Hackett Director 10,271(8) 0.42
Richard M. Kazanjian Director 17,471(9) 0.71
John W. Maloney Director 12,300(10) 0.50
John J. McGlynn Chairman of the Board 16,471(11) 0.67
Lorraine P. Silva Director 24,971(12) 1.02
Robert H. Surabian President, Chief Executive
Officer and Director 86,084(13) 3.52
Robert B. Risman Director Emeritus of the Bank 14,971 0.61
All directors and executive
officers as a group (14 persons) 438,534(14) 17.94%
- --------------------
<FN>
<F1> Titles are for both the Company and the Bank, except where indicated.
<F2> See "Principal Stockholders of the Company" for a definition of
"beneficial ownership."
<F3> Includes restricted stock awards of 34,226 shares made to outside
directors under the Mystic Financial, Inc. 1999 Recognition and
Retention Plan ("RRP"). Under the RRP, Messrs. Surabian and Dunham
were also granted restricted stock awards of 24,448 and 14,668 shares
of common stock, respectively and all other executive officers as a
group were granted restricted stock awards of 14,000 shares. Each
recipient of a restricted share award has sole voting power, but no
investment power, over the common stock covered by the award. The
restricted stock awards will vest at the rate of 20% per year on each
December 31st following the date of grant, with the first installment
scheduled to vest on December 31, 1999.
<F4> The figures shown above include shares held in trust pursuant to the
ESOP that have been allocated as of December 31, 1998 to individual
accounts as follows: Mr. Surabian - 636 shares and Mr. Dunham - 1,018
shares, and all executive officers as a group 5,810 shares. Such
persons have voting power (subject to the legal duties of the ESOP
Trustee) but no investment power, except in limited circumstances,
over such shares.
<F5> Includes 1,900 shares held in Ms. Bernardin's individual retirement
account ("IRA").
<F6> Includes 3,500 shares jointly owed with his spouse and 1,000 shares
held in Mr. Dello Russo's employer's profit sharing plan.
<F7> Includes 1,584 shares held in Mr. Dunham's IRA and 200 shares held by
Mr. Dunham as custodian for his two children.
<F8> Includes 2,500 shares held in Mr. Hackett's IRA, 2,500 shares held in
his spouse's IRA, 200 shares jointly held with his spouse, and 100
shares which Mr. Hackett holds as custodian for his minor child.
<F9> Includes 9,100 shares jointly owned by Mr. Kazanjian and his spouse,
2,400 shares held in Mr. Kazanjian's IRA and 1,000 shares held in his
spouse's IRA.
<F10> Includes 10,000 shares held in Mr. Maloney's employer's profit sharing
plan.
<F11> Includes 9,700 shares jointly owned by Mr. McGlynn and his spouse and
1,800 shares owned by Mr. McGlynn's spouse.
<F12> Includes 10,000 shares owned by Mrs. Silva's spouse.
<F13> Includes 30,000 shares owned by Mr. Surabian's spouse.
<F14> The amount of shares for all directors and executive officers as a
group includes 196,559 shares held by the ESOP Trust that have not
been allocated to eligible participants as of June 30, 1999, over
which the Compensation Committee (consisting of Mr. Hackett, Mr.
McGlynn and Ms. Silva) may be deemed to have sole "investment power,"
thereby causing each committee member to be deemed a beneficial owner.
Each committee member disclaims beneficial ownership of these shares.
The individual participants in the ESOP have shared voting power with
the ESOP Trustee with respect to the unallocated shares held in the
ESOP Trust.
</FN>
</TABLE>
DISCUSSION OF PROPOSALS RECOMMENDED BY BOARD
- ----------------------------------------------------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
- ----------------------------------------------------------------------------
General
The Board has nominated three persons for election as directors at the
Annual Meeting. Each of the nominees is currently serving on the Company's
Board of Directors. If you elect the nominees, they will hold office until
the Annual Meeting in 2002, or until their successors have been elected.
We know of no reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, your proxy may vote for
another nominee proposed by the Board. If for any reason these nominees
prove unable or unwilling to stand for election, the Board will nominate
alternates or reduce the size of the Board of Directors to eliminate the
vacancy. The Board has no reason to believe that its nominees would prove
unable to serve if elected.
Nominees and Continuing Directors
<TABLE>
<CAPTION>
Director Term Position(s) Held with the
Nominees Age(1) Since(2) Expires Company and the Bank
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frederick N. Dello Russo 55 1998 1999 Director
Richard M. Kazanjian 63 1984 1999 Director
John W. Maloney 59 1998 1999 Director
<CAPTION>
Continuing Directors
- --------------------
<S> <C> <C> <C> <C>
John J. McGlynn 77 1966 2000 Director and Chairman of the Board
Robert H. Surabian 63 1967 2000 Director
Lorraine P. Silva 68 1983 2001 Director and Secretary
John A. Hackett 59 1983 2001 Director
Julie Bernardin 56 1994 2001 Director
Robert B. Risman 67 1959 2001 Director Emeritus of the Bank
- --------------------
<FN>
<F1> As of June 30, 1999.
<F2> Includes service as a Director with the Bank prior to the Company's
incorporation in 1997.
</FN>
</TABLE>
The principal occupation and business experience of each nominee for
election as director and each Continuing Director is set forth below.
Unless otherwise indicated, each of the following persons has held his
present position for the last five years.
Nominees
Frederick N. Dello Russo has been the owner and operator of Dello
Russo Funeral Services, Inc., Medford, Massachusetts since 1978 and the
owner and operator of McLaughlin Funeral Home, Woburn, Massachusetts since
1995.
Richard M. Kazanjian is a Principal of Consolidated Realty Trust,
Medford, Massachusetts, and a General Partner in Wellington Realty, Medford,
Massachusetts.
John W. Maloney is the owner and treasurer of Arlex Oil Corporation,
Lexington, Massachusetts, which has been in the business of heating homes
and businesses for over 50 years.
Continuing Directors
John J. McGlynn is the Director of Special Projects for the Middlesex
Sheriff's Department, which involves locating properties for the
establishment of community counseling centers. Mr. McGlynn is also the
retired Commissioner of the Public Employee Retirement Administration for
the Commonwealth of Massachusetts in which he was responsible for the
regulation of all the retirement systems in the Commonwealth, municipal,
state, teachers, counties and authorities. Mr. McGlynn is a former member
of the Pension Reserves Investment Management Board, an eight member board
which oversaw the investments of $7.7 billion in reserve pension funds.
Robert H. Surabian is the President and Chief Executive Officer of the
Company and the Bank. He has been President since 1979 and was named Chief
Executive Officer in 1991.
Lorraine P. Silva was employed by the Bank for 28 years and has been
retired since 1988. Mrs. Silva is also the Secretary of the Company.
John A. Hackett is the President and owner of J.J. Ruddy Insurance
Agency, Inc., Medford, Massachusetts, which he has owned for 37 years.
Julie Bernardin, M.Ed., has been the sole proprietor of JB Consulting,
Medford, Massachusetts, a sole proprietorship for over ten years. Ms.
Bernardin's practice includes executive and career coaching, as well as
consulting/training in communications and planning. In the past year, her
major non-profit clients included the Federal Government, the City of
Boston, and the Commonwealth of Massachusetts. Ms. Bernardin also serves as
project coordinator to develop and deliver training materials for several
clients.
Director Emeritus
Robert B. Risman, Director Emeritus of the Bank, has been owner of
Risman Real Estate, Medford, Massachusetts, since 1959, which provides
residential sales and property management services. As Director Emeritus,
Mr. Risman is a non-compensated and non-voting member of the Board of
Directors of the Bank.
============================================================================
The Board of Directors unanimously recommends a vote "For" all
of the nominees for election as directors.
============================================================================
- ----------------------------------------------------------------------------
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
- ----------------------------------------------------------------------------
The Board of Directors has appointed Wolf & Company, P.C. as our
independent public auditors for the Company for the fiscal year ending June
30, 2000, and we are asking stockholders to ratify the appointment. A
representative of Wolf & Company, P.C. is expected to be present at the
Annual Meeting and will be available to respond to appropriate questions.
============================================================================
The Board of Directors unanimously recommends a vote "For" the
ratification of the appointment of Wolf & Company, P.C.
as independent auditors for the Company.
============================================================================
INFORMATION ABOUT BOARD OF DIRECTORS AND MANAGEMENT
Board of Directors
The Company's Board of Directors currently consists of eight members.
The Company's Certificate of Incorporation and Bylaws provide that the
Board of Directors shall be divided into three classes, as nearly equal in
number as possible. The terms of three directors expire at the Annual
Meeting.
The Board of Directors oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the Board of Directors does not involve itself in the day-to-day
operations of the Company. The Company's executive officers and management
oversee the day-to-day operations of the Company. The directors fulfill
their duties and responsibilities by attending regular meetings of the Board
which are held on a monthly basis. The directors also discuss business and
other matters with the Chairman of the Board and the President, other key
executives, and our principal external advisers (legal counsel, auditors,
financial advisors and other consultants).
The Board of Directors of the Bank met 18 times and the Company's
Board of Directors met 21 times during the fiscal year ended June 30, 1999.
Each incumbent director attended at least 75% of the meetings of the Board
of Directors plus committee meetings on which that particular director
served during this period.
Committees of the Board
The Board of Directors of the Company has established the following
committees:
EXECUTIVE COMMITTEE The Executive Committee provides advice and
recommendations to the Board and considers strategic
planning and industry issues.
Directors Surabian, Hackett, Kazanjian and McGlynn
serve as members of the Committee.
The Executive Committee met 12 times in the 1999
fiscal year.
COMPENSATION COMMITTEE The Compensation Committee provides advice and
recommendations to the Board in areas of employee
salaries and benefits and directors' compensation
Directors Hackett, McGlynn and Silva serve as
members of the committee.
The Compensation Committee met 12 times in the
1999 fiscal year.
AUDIT The Audit Committee is responsible for review of
COMMITTEE the annual audit with the Company's outside
auditors and to report any substantive issues found
during the audit to the Board.
Directors Silva, Maloney and Bernardin serve as
members of the Committee.
The Audit Committee met twice in the 1999 fiscal
year.
The Board of Directors, acting as the nominating committee, met in
August, 1999 to select the nominees for election as directors at the Annual
Meeting. See page 20 for a discussion of the procedures for stockholder
nominations for director.
Directors' Compensation
Director's Fees. Currently, each director of the Bank receives the
following fees:
* fees of $400 per Board meeting attended;
* committee fees ranging from $125 to $950 per month;
* fees of $7,200 per year as a retainer.
The Chairman of the Board also receives an additional $6,000 annual
retainer. Total directors' meeting and committee fees for fiscal 1999 were
$157,372. Directors of the Company do not receive compensation for their
services as such but participate in the Company's stock option plan and
restricted stock plan.
Executive Officers
The following individuals are executive officers of the Company and
hold the offices set forth opposite their names.
<TABLE>
<CAPTION>
Name Position Held with the Company
- ---------------------------------------------------------------------------
<S> <C>
Robert H. Surabian President and Chief Executive Officer
Ralph W. Dunham Executive Vice President, Chief Financial Officer and
Treasurer
Lorraine P. Silva Secretary
</TABLE>
The Board of Directors elects the executive officers of the Company
and the Bank, annually. The elected officers hold office until their
respective successors have been elected and qualified, or until death,
resignation or removal by the Board of Directors. The Company has entered
into Employment Agreements with certain of its executive officers which set
forth the terms of their employment. See "-Employment Agreements."
Biographical information of executive officers of the Company and the
Bank who are not directors is set forth below.
Thomas G. Burke, age 52, has served as Senior Vice President and
Commercial Loan Officer of the Bank since 1995. He is responsible for all
commercial lending and supervision of the commercial loan department. Mr.
Burke was employed at Medford Savings Bank from 1990 to 1995, where he was a
Vice President and a Commercial Loan Officer.
Ralph W. Dunham, age 43, has served as Executive Vice President since
1997 and the Chief Financial Officer of the Bank since 1988. He has also
served as the Executive Vice President, Chief Financial Officer and
Treasurer of the Company since 1997. As Chief Financial Officer, he is
responsible for the overall financial management of the Company and its
subsidiaries, including asset/liability management, investment management,
development and recommendation of policies and financial reporting. Mr.
Dunham is an attorney and a certified public accountant.
Deborah A. McNeill, age 44, has served as Senior Vice President since
1996 and Treasurer of the Bank since 1993. She has been an employee of the
Bank for 25 years. Her present duties include directing and coordinating
the operation of the accounting and operations department.
Henry T. Sampson, Jr., age 51, has served as Senior Vice President of
the Bank since 1992 and the Chief Residential Loan Officer of the Bank since
1993. Mr. Sampson is responsible for all non-commercial lending and
supervision of the lending department and has been an employee of the Bank
for 20 years.
John M. O'Donnell, age 40, has served as Senior Vice President,
Commercial Lending since December 1998. He joined the Bank in 1996 as Vice
President, Commercial Loan Officer. He is currently responsible for the
commercial lending and retail activities at the Bank's Lexington Office.
Prior to joining Medford Co-operative Bank, Mr. O'Donnell was employed at
Depositors Trust Company and Co-operative Bank of Concord from 1986 to 1996
as Senior Vice President of Lending.
Executive Compensation
The following table sets forth the cash compensation paid by the Bank
for services rendered in all capacities during the fiscal years ended June
30, 1999, 1998 and 1997 to Mr. Surabian and Mr. Dunham.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation(1)(2) Awards Payouts
-------------------------------------------------------------------------------------------------------
Other Restricted
Annual Stock LTIP All Other
Name and Principal Compensation Awards Options Payouts Compensation
Positions Year Salary($) Bonus($) ($) ($) (3) (#) ($) ($)(4)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. Surabian, 1999 $157,197 $30,500 - $294,904 61,121 - $40,125
President and Chief Executive 1998 $153,360 $47,000 - - - - $ 8,112
Officer
1997 $148,896 $37,000 - - - - $ 7,500
Ralph W. Dunham, 1999 $105,608 $ 7,500 - $176,932 36,673 - $17,026
Chief Financial Officer, 1998 $ 98,633 $10,000 - - - - $ 5,367
Executive Vice President 1997 $ 93,600 $ 9,400 - - - - $ 4,750
and Treasurer
- --------------------
<FN>
<F1> Under Annual Compensation, the column titled "Salary" includes base
salary and payroll deductions for health insurance under the Bank's
health insurance plan and pre-tax contributions to the Bank's 401(k)
Plan. The amounts under "Bonus" include a stipend of $17,500 to be
paid annually for a ten year period by the Bank to the Chief Executive
Officer to cover premiums due on a life insurance policy owned by the
Chief Executive Officer. The Chief Executive Officer pays all taxes
required on these payments which are reported on the IRS Form W-2
issued to the Officer. Directors' fees are not paid to the Chief
Executive Officer who is a member of the Board of Directors.
<F2> In 1999 and 1998, the compensation of each Named Executive Officer was
for services provided to both the Bank and the Company. Compensation
received in 1997 by each Named Executive Officer was only for services
provided to the Bank.
<F3> Pursuant to the RRP, Mr. Surabian and Mr. Dunham were awarded 24,448
and 14,668 shares of restricted stock, respectively as of March 24,
1999, which vest in 20% increments on December 31st of each year, with
the first installment scheduled to vest on December 31, 1999.
Dividends attributable to such shares are held in the trust fund of
the RRP and are distributed as soon as it is administratively
feasible. The dollar amounts shown in the table for 1999 are based on
the fair market value of a share of common stock on March 24, 1999
which was $12.0625. The aggregate fair market value of the restricted
stock awards made to Messrs. Surabian and Dunham were $290,320 and
$174,183, respectively, on June 30, 1999, based on a closing price of
$11.875 per share. During the fiscal years ended June 30, 1998 and
1997, neither the Bank nor the Company maintained any restricted stock
plans. In the case of death, disability, retirement while in service
and after attaining normal retirement age under any applicable tax-
qualified retirement plan or prior to the effective date of any change
in control of the Company, all restricted stock awards become
immediately vested.
<F4> Includes benefits for Mr. Surabian and Mr. Dunham as follows:
Mr. Surabian Mr. Dunham
------------ ----------
401(k) Matching Contributions 1999 $11,358 $ 4,555
1998 $ 8,112 $ 5,367
1997 $ 7,500 $ 4,750
ESOP Contributions 1999 $ 7,791 $12,471
1998 --- ---
1997 --- ---
</FN>
</TABLE>
Also, with respect to Mr. Surabian for fiscal year 1999, includes
$20,976 representing nonqualified supplemental ESOP and 401(k) plan benefits
credited on his behalf under the Benefit Restoration Plan described below.
Report of the Compensation Committee
The following Report of the Company's Compensation Committee is
provided in accordance with the rules and regulations of the SEC. Pursuant
to such rules and regulations, this Report shall not be deemed "soliciting
material," filed with the SEC subject to Regulation 14A or 14C of the SEC or
subject to the liabilities of Section 18 of the Exchange Act.
Mystic Financial, Inc. (the "Company") was formed in 1997 for the
purpose of becoming the holding company for Medford Co-operative Bank (the
"Bank") in a stock conversion that took effect in January 1998. For the
fiscal year ended June 30, 1999, substantially all of the business of the
Company was conducted through the Bank. During such fiscal year, the
Company's Chief Executive Officer and other executive officers served as the
Chief Executive Officer and executive officers, respectively, of the Bank
and performed substantially all of their services in connection with the
management and operation of the Bank. As a result, all compensation of the
Chief Executive Officer and all other executive officers for such period was
paid by the Bank and determined by the Board of Directors of the Bank on the
recommendation of its Compensation Committee (the "Compensation Committee").
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company annually reviews and
recommends changes to the compensation levels of the executive officers to
the Board of Directors. The Compensation Committee continues to review the
compensation program to better reflect the Company's public company status.
It is intended that the executive compensation program will enable the
Company and the Bank to attract, develop and retain strong executive
officers who are capable of maximizing the Company's performance for the
benefit of its stockholders.
It is the Company's policy to cause its executive officers to be
compensated, either directly or through its affiliates, using a combination
of cash compensation, consisting of a base salary and discretionary bonus
payments, participation in the Bank's fringe benefit plans and participation
in the Company's ESOP. These elements are intended to provide an overall
compensation package that is commensurate with the Company's financial
resources, that aligns the executives' financial interests with those of the
Company's stockholders and that is responsive to the immediate and long-term
needs of the executive officers and their families. The compensation
practices of other community banks in the Boston and New England area are
considered in establishing the overall level of compensation and the
components of the compensation package; however, it has not been a goal or
policy to set compensation at levels designed to achieve a predetermined
percentile ranking among an identified group of peer institutions.
The Board of Directors of the Company accepted without modification
all of the Compensation Committee's recommendations on executive
compensation. The Compensation Committee reviews salary and bonus levels
annually in December. The composition of the Bank's Compensation Committee
is the same as that of the Company's Compensation Committee.
Base Salary and Bonus
For the year ended June 30, 1999, base salaries of all executive
officers were set at levels determined, in the subjective judgment of the
Compensation Committee, to be commensurate with the executive officers'
customary respective duties and responsibilities and to enable them to
maintain appropriate standards of living within their communities. The
Compensation Committee has also utilized discretionary bonus payments to
ensure that compensation levels remain competitive with those of similar
institutions in the Bank's market area and to reflect cost of living
increases. Fringe benefit programs, consisting of life, disability and
group health insurance coverages, are designed to provide for the health and
welfare of the executives and their families as well as for their long-term
financial needs. The Company also pays its CEO a stipend to cover premiums
on an insurance policy owned by the CEO. The determination of the Chief
Executive Officer's compensation for the fiscal year ended June 30, 1999 was
based on the same general principles applied to other executive officers.
The Company currently uses stock based compensation so that
management's interests are aligned with stockholders' interests in the
enhancement of stockholders' value. In this regard, the Company, with the
approval of stockholders, implemented its 1999 Stock Option Plan and its
1999 Recognition and Retention Plan on March 24, 1999. In addition, all
executive officers participated in the Company's ESOP for the fiscal year
ended June 30, 1999. Each executive officer has an individual account
within the ESOP Trust, which is invested primarily in Mystic Financial, Inc.
Common Stock with the result that a portion of each executive officer's
long-term retirement savings is tied to the performance of the Bank and the
Company. These important stock-based incentive compensation plans assist
the Bank and the Company in attracting and retaining senior executive
personnel of outstanding caliber who will contribute to the Company's
success.
In addition to the compensation paid to executive officers as
described above, executive officers received certain benefits pursuant to
the 401(k) Plan and the Pension Plan. In addition, the Chief Executive
Officer will receive certain benefits under the Company's nonqualified
benefit restoration plan that are otherwise limited by Internal Revenue
Service caps on qualified plans.
COMPENSATION COMMITTEE OF
MYSTIC FINANCIAL, INC.
John A. Hackett
John J. McGlynn
Lorraine P. Silva
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Hackett, McGlynn and
Ms. Silva. There are no other interlocks, as defined under the rules and
regulations of the SEC, between members of the Compensation Committee or
executive officers of the Company and corporations with respect to which
such persons are affiliated, or otherwise.
Performance Graph
The following graph compares the Company's total cumulative
stockholder return from January 8, 1998, the date of the Company's initial
public offering, to June 30, 1999, to the total return for the Nasdaq
National Market Composite Index and the total return for the Nasdaq Bank
Stock Index, which is an index for publicly traded institutions that trade
on Nasdaq.
<TABLE>
<CAPTION>
1/8/98 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99
------ ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Mystic Financial, Inc. 100.00 176.88 146.25 113.75 122.50 116.25 118.75
Nasdaq Market Composite Index 100.00 118.53 121.83 109.17 141.65 159.04 173.52
Nasdaq Bank Stock Index 100.00 112.35 112.17 87.78 93.17 88.72 94.65
- -------------------
<FN>
Assumes $100 Invested on January 8, 1998
</FN>
</TABLE>
There can be no assurance that stock performance will continue into the
future with the same or similar trends depicted in the graph above.
Certain Employee Benefits and Employment Agreements
Employment Agreements with the Company and Two Senior Executives. The
Company entered into separate Employment Agreements with Messrs. Surabian
and Dunham (the "Senior Executives"), on behalf of both the Company and the
Bank, effective as of January 8, 1998. These Employment Agreements
establish the respective duties and compensation of the Senior Executives
and are intended to ensure that the Company and the Bank will be able to
maintain a stable and competent senior executive management team. The
continued success of the Company and the Bank depends to a significant
degree on the skills and competence of Mr. Surabian and Mr. Dunham.
Term. The Employment Agreements provide for a three-year term for
Messrs. Surabian and Dunham. The term of the Mr. Surabian's Employment
Agreement will be automatically extended on a daily basis so that the
remaining term of this Agreement will always be three years unless the Board
or Mr. Surabian give written notice of non-renewal. Mr. Dunham's Employment
Agreement provides that, commencing on the Agreement's first anniversary
date and continuing on each anniversary date, the Board may, with Mr.
Dunham's concurrence, extend the Employment Agreement for an additional
year, so that the remaining term will be three years, after the Board
conducts his performance evaluation.
Salary and Benefits. The benefits of Employment Agreements provide:
* Annual review of base salary;
* Entitlement to participation in pension, savings, incentive and
welfare benefit plans; and
* Eligibility for fringe benefits applicable to executive personnel,
such as fees for club and organization memberships.
Termination and Benefits Payable upon Termination. The Company may
terminate the Senior Executives at any time for cause, as defined in the
Employment Agreements. In the event of the termination of the Senior
Executive's employment with the Company and the Bank for reasons other than
for cause, death or disability, or in the event of the Senior Executive's
resignation from the Company and the Bank for certain reasons specified in
the Employment Agreements, the Senior Executive would be entitled to a lump
sum cash payment in an amount equal to the present value of the remaining
base salary payments due to the Senior Executive for the remaining term of
the Agreement. However, in the event a Senior Executive's employment
terminates following a change in control of the Company, for purposes of
computing the lump sum severance amount payable, the remaining term of each
Executive's Employment Agreement will be deemed to be three years. The
Agreements also provide for the Company (or the Bank, if applicable) to
continue the Senior Executive's life, health and disability insurance
coverage for the remaining term of the Employment Agreement. In addition,
the Company's Employment Agreement with Mr. Surabian provides for him to
receive the bonus payments and additional contributions or benefits he would
have earned under any employee benefit plan of the Company or the Bank
during the remaining term of his Employment Agreement, as well as the
payments that would have been made under any incentive compensation plan
during the remaining term of his Employment Agreement. In general, for
purposes of the Employment Agreements, the ESOP and any plans to be
maintained by the Company or the Bank, a "change of control" will generally
be deemed to occur when a person or group of persons acting in concert
acquires beneficial ownership of 25% or more of any class of equity security
of the Company or the Bank, upon stockholder approval of a merger or
consolidation or a change of the majority of the Board of Directors of the
Company or the Bank, or liquidation or sale of substantially all the assets
of the Company or the Bank.
Either the Bank or the Company may make the payments due to the Senior
Executives under the Employment Agreements, and these payments will not be
duplicated; the Employment Agreements provide that the Company will
guarantee that all payments due to the Senior Executives will be paid to
them. The Senior Executives would be entitled to reimbursement of certain
costs incurred in interpreting or enforcing the Employment Agreements.
Cash and benefits paid to a Senior Executive under the Employment
Agreements together with payments under other benefit plans following a
"change of control" of the Company or the Bank may constitute an "excess
parachute" payment under Section 280G of the Code, resulting in the
imposition of a 20% excise tax on the recipient and the denial of the
deduction for such excess amounts to the Company and the Bank. The
Company's Employment Agreements include a provision indemnifying each Senior
Executive on an after-tax basis for any "golden parachute" excise taxes.
Effective as of July 1, 1998, the Company amended Mr. Surabian's
Employment Agreement to provide him with a special benefit in the event of
his retirement from the service of the Company during the term of his
Agreement. Prior to this amendment (hereinafter, the "Amendatory
Agreement"), Mr. Surabian's Employment Agreement did not provide him with
retirement benefits in addition to those available through participation in
the savings and pension plans of the Company and the Bank (described below).
Pursuant to the Amendatory Agreement, if Mr. Surabian retires during the
term of his Employment Agreement but not before he reaches age 67 or dies or
becomes disabled during the term of his Employment Agreement, he would be
entitled to receive a lump sum retirement benefit payable by the Company
equal to the dollar value of the total number of shares of Common Stock
expected to be allocated to Mr. Surabian under the ESOP during the full term
of the ESOP's ten-year loan. The retirement benefit payable to Mr. Surabian
under the Amendatory Agreement would be calculated by (i) projecting the
total number of shares of Common Stock to be allocated to Mr. Surabian's
ESOP account balance during the ten-year term of the ESOP's loan, (ii)
reducing such projection by the number of shares actually allocated to Mr.
Surabian's account in the ESOP, and then by (iii) multiplying the remaining
number of shares by the average price ("Average Price") of a share of the
Company's Common Stock determined over the twelve calendar quarters
immediately preceding Mr. Surabian's retirement. The supplemental benefit
would be payable from the Company's general assets.
Benefits
Employee Stock Ownership Plan and Trust. The Company has established,
and the Bank has adopted, an ESOP and related trust, effective as of January
1, 1998. Substantially all employees of the Bank or the Company who have
attained age 21 and have completed one year of service are eligible to
become participants in the ESOP. The ESOP purchased 216,890 shares of the
Common Stock issued by the Company in its conversion to stock form with
funds borrowed from the Company. Although contributions to the ESOP are
discretionary, the Company or the Bank intends to make annual contributions
to the ESOP in an aggregate amount at least equal to the principal and
interest requirement on the debt. This loan is for a term of 10 years,
bears interest at the rate of 8% per annum and calls for level annual
payments of principal and interest designed to amortize the loan over its
term. The loan also permits optional pre-payment. The Company and the Bank
may make additional annual contributions to the ESOP to the maximum extent
deductible for federal income tax purposes.
The ESOP Trust has pledged ESOP shares as collateral for the loan. The
ESOP Trustee holds these shares in a suspense account until released for
allocation among participants in the ESOP as the loan is repaid. The pledged
shares will be released annually from the suspense account in an amount
proportional to the repayment of the ESOP loan for each plan year. The
Company will allocate the released shares among the accounts of participants
on the basis of the participant's compensation for the year of allocation.
Benefits generally become vested at the rate of 20% per year with vesting
beginning after an employee's completion of three years of service and full
vesting to occur after seven years of service. Participants also become
immediately vested upon termination of employment due to death, retirement
at age 65 or older, permanent disability or upon the occurrence of a change
of control. Forfeitures will be reallocated among remaining participating
employees, in the same proportion as contributions. Vested benefits may be
paid in a single sum or installment payments and are payable upon death,
attainment of age 65, disability or separation from service. As of June 30,
1999, 20,331 shares have been allocated to participant's ESOP accounts.
In connection with the establishment of the ESOP, the Board of
Directors appointed the Compensation Committee to administer the ESOP and
appointed HSBC Bank USA (formerly, Marine Midland Bank) as the ESOP's
trustee. The Compensation Committee may instruct the trustee regarding
investment of funds contributed to the ESOP. The ESOP trustee, subject to
its fiduciary duty, must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Under the
ESOP, unallocated shares will be voted in a manner calculated to most
accurately reflect the instructions it has received from participants
regarding the allocated stock as long as such vote is in accordance with the
provisions of ERISA.
The ESOP may purchase additional shares of Common Stock in the future,
and may do so either on a leveraged basis with borrowed funds or with cash
dividends, periodic employer contributions or other cash flow. The ESOP's
fiduciaries will determine whether it will make such purchases and the terms
and conditions of any such purchases, by taking into account such factors as
they consider relevant at the time, including:
* their judgment as to the attractiveness of the Common Stock as an
investment;
* the price at which Common Stock may be purchased; and, in the case of
leveraged purchases,
* the terms and conditions on which borrowed funds are available; and
* the willingness of the Company or the Bank to offer purchase money
financing or guarantee purchase money financing offered by third
parties.
Pension Plan. The Pension Plan provides a benefit for all eligible
Bank employees. The benefit is equal to an amount (A) the participant's
accrued benefit under the applicable Prior Plan determined as of December
31, 1988 plus (B) one percent (1%) of the participant's "Final Average
Compensation" (defined to mean a participant's highest compensation averaged
over three years) plus (C) one-half of one percent (.5%) of the
participant's Final Average Compensation in excess of covered compensation
multiplied by the participant's benefit service after December 31, 1988.
The Bank funds the Pension Plan on an actuarial basis and the trustee holds
all assets in trust.
A participant will become incrementally vested in their accrued
benefit under the Pension Plan as follows:
* at a rate of 20% each year beginning after two years of service with
the Bank;
* full vesting to occur after six years of service or earlier
termination of employment due to disability, death or attainment of
normal retirement age.
The following table illustrates the annual benefit payable upon normal
retirement at age 65 in the form of a single life annuity, with no offset
for Social Security benefits, under the Pension Plan at various levels of
compensation and years of service under the Plan:
<TABLE>
<CAPTION>
Years of Service at Retirement
-----------------------------------------
Final Average
Compensation 10 15 20 25
------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 50,000 $ 7,500 $11,250 $15,000 $18,750
75,000 11,250 16,875 22,500 28,125
100,000 15,000 22,500 30,000 37,500
125,000 18,750 28,125 37,500 46,875
150,000 (1) 22,500 33,750 45,000 56,250
175,000 (1) 26,250 39,375 52,500 65,625
200,000 (1) 30,000 45,000 60,000 75,000
- --------------------
<FN>
<F1> These are hypothetical benefits based on the Pension Plan's normal
retirement benefit formula. The benefits shown above do not reflect
an offset for Social Security benefits and there are no other offsets.
For the Pension Plan year ended December 31, 1998, the annual
compensation for calculating benefits may not exceed $160,000 (as
adjusted for subsequent years pursuant to Code provisions). The
portion of the benefits shown above attributable to annual
compensation in excess of $160,000 will be provided to Mr. Surabian
under the Benefit Restoration Plan described below.
</FN>
</TABLE>
The following table sets forth the years of credited service
determined as of December 31, 1998, the end of the 1998 plan year, for Mr.
Surabian and Mr. Dunham. The accrued benefit of each Mr. Surabian and Mr.
Dunham under the Pension Plan is determined on the basis of each officer's
"Years of Credited Service" shown below, and his "Final Average Compensation
(which includes salary and bonus)," as defined above.
<TABLE>
<CAPTION>
Years of Credited Service
-------------------------
Years Months
----- ------
<S> <C> <C>
Mr. Surabian 20 1
Mr. Dunham 10 10
</TABLE>
401(k) Plan. The 401(k) Plan permits eligible employees to save for
retirement by making pre-tax and post-tax contributions to the Plan of up to
twelve percent (12%) of the annual salary. The Bank may make "matching"
contributions on each participating employee's behalf for "eligible" pre-tax
and post-tax contributions made by participants. Under the 401(k) Plan, the
Bank will make a 50% "matching" contribution for each pre-tax contribution
made by a participant up to 5% of the participant's total annual salary. An
employee will always be 100% vested in any pre-tax or post-tax contributions
he makes to the 401(k) Plan and will become incrementally vested in any
matching contributions made on his behalf at a rate of 20% for each year of
service with the Bank, with initial vesting to begin after two years of
service and full vesting to occur after six years of service or upon earlier
disability, death or attainment of normal retirement age. Distributions may
be made at the election of a participant in either a single lump sum payment
or installments, as provided in the Plan.
Benefit Restoration Plan. Effective July 1, 1998, the Company adopted
the Benefit Restoration Plan of Mystic Financial, Inc. ("BRP") in order to
provide the person then serving as its Chief Executive Officer with the
benefits that would be due to such executive under the Pension Plan, the
401(k) Plan and the ESOP if such benefits had not been limited by certain
statutory restrictions under the Code. The Company has established an
irrevocable "grantor trust" for use in connection with the BRP. The assets
of such "grantor trust" would be considered part of the general assets of
the Company and subject to the claims of its general creditors. Earnings on
the trust's assets would be taxable to the Company.
Stock Option Plan. The Company has a Stock Option Plan in effect
which was approved by the stockholders at a Special Meeting on March 24,
1999. The purpose of the Stock Option Plan is to encourage the retention of
key employees and directors by facilitating their purchase of a stock
interest in the Company. The Stock Option Plan is not subject to ERISA and
is not a tax-qualified plan. The Company has reserved an aggregate of
257,355 shares of common stock for issuance upon the exercise of stock
options granted under the Plan.
The members of the Board's Compensation Committee who are
disinterested directors ("Option Committee") administer the Stock Option
Plan. In general, both "incentive stock options" and non-qualified stock
options to purchase common stock may be granted to eligible officers,
employees and outside directors, subject to the restrictions of the Internal
Revenue Code. The Option Committee has discretion under the Stock Option
Plan to establish certain material terms of the options granted to officers
and employees provided such grants are made in accordance with the Plan's
requirements. All options granted to outside directors are by automatic
formula grant and the Option Committee has no discretion over the material
terms of these grants. As of June 30, 1999, each outside director of the
Company had been granted a non-qualified stock option to purchase an
aggregate of 10,696 shares of common stock at an exercise price of $12.0625.
All stock options granted under the Plan generally vest in 20%
increments over a five year period on December 31st each year, subject to
automatic full vesting upon the optionee's death, disability or on the
effective date of a change in control of the Company. The Company believes
the use of a vesting schedule will encourage each option recipient to remain
in the service of the Company (or an affiliate) and contribute to its
profitability in order to enjoy the full economic benefit of the Option. The
Company pays all costs and expenses of the Stock Option Plan. The Company
has reserved the right to amend or terminate the Plan, in whole or in part,
subject to the requirements of all applicable laws.
The following table summarizes the option grants that were made to
the Named Executive Officers during the 1999 fiscal year.
Option/SAR Grants in Fiscal Year 1999
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------- Value at Assumed
Percent of Annual Rate of
Number of Total Stock Price
Securities Options/SARs Appreciation for
Underlying Granted to Option Term
Options/SARs Employees in Exercise or ---------------------
Granted Fiscal Year Base Price Expiration 5% 10%
Name (#)(1) (%) ($ per Share) Date ($) ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Surabian 61,121 33.3 12.0625 3/23/09 463,666 1,175,022
Ralph W. Dunham 36,673 20.0 12.0625 3/23/09 278,203 705,021
- --------------------
<FN>
<F1> All options granted are Incentive Stock Options which become
exercisable in 20% increments on an annual basis, with the first
installment vesting on December 31, 1999. In case of death,
disability or a change in control, as defined in the Stock Option
Plan, all options granted become immediately exercisable.
</FN>
</TABLE>
The following table shows the number of shares exercisable by Mr.
Surabian and Mr. Dunham as of June 30, 1999. There were no "in-the-money"
options at June 30, 1999.
Fiscal Year End Options/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options/SARs at Money Options/SARs at Fiscal
Shares Acquired Value Realized on Fiscal Year-End Year-end
on Exercise Exercise (#) ($)
Name(1) (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable (1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert H. Surabian - - 0/61,121 N/A
Ralph W. Dunham - - 0/36,673 N/A
- --------------------
<FN>
<F1> All options at June 30, 1999 were "out of money" options, i.e. the
exercise price of the options was greater than the closing price of the
Company's common stock on June 30, 1999.
</FN>
</TABLE>
Recognition and Retention Plan. The RRP was adopted by the Board of
Directors of the Company and approved by its stockholders at a Special
Meeting held on March 24, 1999. Similar to the Stock Option Plan, the RRP
functions as a long-term incentive compensation program for eligible
officers, employees and outside directors of the Company, the Bank and other
affiliates. The members of the Board's Compensation Committee who are
disinterested directors ("RRP Committee") administer the RRP. The Company
pays all costs and expenses of administering the RRP.
As required by the terms of the RRP, the Company has established a
trust ("Trust") and has contributed $1,294,495 to the Trust in order to fund
the purchase of 102,942 shares of Common Stock, the maximum number of
restricted stock awards ("Restricted Stock Awards") that may be granted
under the RRP. The Trust completed the purchase of these shares in
September, 1999. Shares of Common Stock subject to a Restricted Stock Award
are held in the Trust until the Award vests at which time the shares of
Common Stock attributable to the portion of the Award that have vested are
distributed to the Award holder. An Award recipient is entitled to exercise
voting rights and receive cash dividends with respect to the shares of
Common Stock subject to his Award, whether or not the underlying shares have
vested.
Restricted Stock Awards are granted under the RRP on a discretionary
basis to eligible officers and executives selected by the RRP Committee and
are awarded to outside directors pursuant to the terms of the RRP. As of
March 24, 1999, each outside director who has completed at least three years
of service has been granted a Restricted Stock Award with respect to 4,971
shares of Common Stock. Each outside director with less than three years of
service has been granted a restricted stock award with respect to 2,200
shares of Common Stock. All outstanding Restricted Stock Awards will vest
and become distributable at the rate of 20% per year, over a five year
period, commencing on December 31, 1999, subject to automatic full vesting
on the date of the Award holder's death, disability or upon a change in
control of the Company.
The Company may amend or terminate the RRP, in whole or in part, at
any time, subject to the requirements of all applicable laws.
Transactions with Certain Related Persons
The Bank has made loans or extended credit to executive officers and
directors and also to certain persons related to executive officers and
directors. All such loans were made by the Bank in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the general public, nor did they involve more than the normal risk of
collectibility or present other unfavorable features. The outstanding
principal balance of such loans to directors, executive officers and their
associates totaled $2,069,000 or 7.94% of the Bank's total equity at June
30, 1999.
The Company intends that all transactions in the future between the
Company and its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates thereof, will contain
terms no less favorable to the Company than could have been obtained by it
in arm's-length negotiations with unaffiliated persons and will be approved
by a majority of independent outside directors of the Company not having any
interest in the transaction.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of the Common
Stock to file with the SEC reports of ownership and changes of ownership.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such forms received
by it, or written representations from certain reporting persons, the
Company believes that all filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners for the fiscal
year ended June 30, 1999 were complied with.
ADDITIONAL INFORMATION
Information About Stockholder Proposals
If you wish to submit proposals to be included in our proxy statement
for the 2000 Annual Meeting of Stockholders, we must receive them by May 23,
2000, pursuant to the proxy soliciting regulations of the SEC. SEC rules
contain standards as to what stockholder proposals are required to be in the
proxy statement. Any such proposal will be subject to 17 C.F.R.
[Sections240.14a-8] of the rules and regulations promulgated by the SEC.
In addition, under the Company's Bylaws, if you wish to nominate a
director or bring other business before an annual meeting:
* You must be a stockholder of record and have given timely notice in
writing to the Secretary of the Company.
* Your notice must contain specific information required in our Bylaws.
By Order of the Board of Directors,
Lorraine P. Silva
Secretary
Medford, Massachusetts
September 20, 1999
============================================================================
To assure that your shares are represented at the Annual Meeting, please
complete, sign, date and promptly return the accompanying proxy card in the
postage-paid envelope provided.
============================================================================
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
MYSTIC FINANCIAL, INC.
This Proxy is solicited on behalf of the Board of Directors
of Mystic Financial, Inc. for the Annual Meeting of
Stockholders to be held on October 20, 1999.
The undersigned stockholder of Mystic Financial, Inc. hereby appoints
Julie Bernardian, John J. McGlynn and Robert H. Surabian, each of the, with
full powers of substitution, to represent and to vote as proxy, as
designated, all shares of common stock of Mystic Financial, Inc. held of
record by the undersigned on September 3, 1999, at the 1999 Annual Meeting
of Stockholders (the "Annual Meeting") to be held at 10:00 a.m., Eastern
Time, on October 20, 1999, or at any adjournment or postponement thereof,
upon the matters described in the accompanying Notice of the 1999 Annual
Meeting of Stockholders and Proxy Statement, dated September 20, 1999, and
upon such other matters as may properly come before the Annual Meeting. The
undersigned hereby revokes all prior proxies.
With- For All
1. Election of 3 Directors: For hold Except
Nominees: [ ] [ ] [ ]
Frederick N. Dello Russo, Richard M. Kazanjian
and John W. Maloney for terms of three years each.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
- -------------------------------------------------------------------------
2. Ratification of the appointment of For Against Abstain
Wolf & Company, P.C. as indepen- [ ] [ ] [ ]
dent auditors for the fiscal year
ending June 30, 2000.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND ---> [ ]
THE ANNUAL MEETING.
The Board of Directors unanimously recommends a vote "FOR" all of the
nominees named in Item 1 and a vote "FOR" the proposal in Item 2.
This Proxy when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given,
this Proxy will be voted FOR the election of all nominees listed in Item 1
and FOR the proposal listed in Item 2.
Please be sure to sign and date Date
this Proxy in the box below. -------------------------------
- -------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
MYSTIC FINANCIAL, INC.
The above signed hereby acknowledges receipt of the Notice of the
1999 Annual Meeting of Stockholders and the Proxy Statement dated,
September 20, 1999 for the Annual Meeting of Stockholder.
Please sign exactly as your name appears on this proxy. Joint owners
should each sign personally. If signing as attorney, executor,
administrator, trustee or guardian, please include your full title.
Corporate or partnership proxies should be signed by an authorized officer.
PLEASE MARK, SIGN AND DATE THIS PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
