SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 ss.240.14a-11(c) or ss.240.14a-12
Brookline Bancorp, Inc.
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(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.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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.):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
March 15, 1999
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Brookline Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the
Brookline Holiday Inn, 1200 Beacon Street, Brookline, Massachusetts 02446, at
10:00 a.m., Eastern Standard Time, on April 15, 1999.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting we will also report on the
operations of the Company. Directors and officers of the Company will be present
to respond to any questions that stockholders may have. Also enclosed for your
review is our Annual Report to Stockholders, which contains detailed information
concerning the activities and operating performance of the Company.
The business to be conducted at the Annual Meeting consists of the election of
five directors and the approval of each of the Company's 1999 Stock Option Plan
and 1999 Recognition and Retention Plan. For the reasons set forth in the Proxy
Statement, the Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interest of the Company
and its stockholders, and the Board of Directors unanimously recommends a vote
"FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
Richard P. Chapman, Jr.
President and Chief Executive Officer
<PAGE>
Brookline Bancorp, Inc.
160 Washington Street
Brookline, Massachusetts 02447
(617) 730-3500
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 15, 1999
Notice is hereby given that the Annual Meeting of Brookline Bancorp,
Inc., (the "Company") will be held at the Brookline Holiday Inn, 1200 Beacon
Street, Brookline, Massachusetts 02446 at 10:00 a.m., Eastern Standard Time, on
April 15, 1999.
A Proxy Card and a Proxy Statement for the Annual Meeting are
enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of five Directors to the Board of Directors;
2. The approval of the Company's 1999 Stock Option Plan;
3. The approval of the Company's 1999 Recognition and Retention Plan;
and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which the Annual
Meeting may be adjourned. Stockholders of record at the close of business on
March 8, 1999 are the stockholders entitled to vote at the Annual Meeting and
any adjournments thereof.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's main office, 160 Washington Street, Brookline,
Massachusetts 02447, for the ten days immediately prior to the Annual Meeting.
It also will be available for inspection at the meeting itself.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT
DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER
MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY
REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE
ANNUAL MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER IN ORDER FOR YOU TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
George C. Caner, Jr.
Secretary
March 15, 1999
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
Brookline Bancorp, Inc.
160 Washington Street
Brookline, Massachusetts 02447
(617) 730-3500
ANNUAL MEETING OF STOCKHOLDERS
April 15, 1999
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Brookline Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting"), which will be held at the Brookline Holiday Inn, 1200 Beacon
Street, Brookline, Massachusetts 02446, on April 15, 1999, at 10:00 a.m.,
Eastern Standard Time, and all adjournments of the Annual Meeting. The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are first being mailed to stockholders on or about March 15, 1999.
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REVOCATION OF PROXIES
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Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, validly executed proxies will be voted "FOR" the
election of the nominees for directors named in this Proxy Statement, "FOR" the
approval of the 1999 Stock Option Plan and "FOR" the approval of the 1999
Recognition and Retention Plan.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company at the address shown above. The presence at the Annual
Meeting of any stockholder who had returned a proxy shall not revoke such proxy
unless the stockholder delivers his or her ballot in person at the Annual
Meeting or delivers a written revocation to the Secretary of the Company prior
to the voting of such proxy.
The cost of solicitation of proxies in the form enclosed herewith
will be borne by the Company. Proxies also may be solicited personally or by
mail, telephone or telegraph by the Company's directors, officers and employees,
without additional compensation therefor. The Company also will request persons,
firms and corporations holding shares in their names, or in the names of their
nominees which are beneficially owned by others, to send proxy materials to and
to obtain proxies from such beneficial owners, and will reimburse such holders
for their reasonable expenses in doing so.
<PAGE>
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Holders of record of the Company's common stock, par value $0.01 per
share (the "Common Stock"), as of the close of business on March 8, 1999 (the
"Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 29,095,000 shares issued and 28,981,500 shares
outstanding, 15,420,350 of which were held by Brookline Bancorp, M.H.C. (the
"Mutual Holding Company"), and 13,561,150 of which were held by stockholders
other than the Mutual Holding Company ("Minority Stockholders"). The presence in
person or by proxy of a majority of the outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Annual Meeting. In
the event there are not sufficient votes for a quorum, or to approve or ratify
any matter being presented at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit the further solicitation of proxies.
Directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which the authority to vote for the
nominees being proposed is withheld. As to the approval of each of the 1999
Stock Option Plan and the 1999 Recognition and Retention Plan, the approval of
such matter shall be determined by a majority of votes cast, without regard to
broker non-votes or proxies marked "ABSTAIN."
Proxies solicited hereby will be returned to the Company and will be
tabulated by an Inspector of Election designated by the Company's Board of
Directors.
Persons and groups who beneficially own in excess of five percent of
the Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership. The following table
sets forth, as of the Record Date, the shares of Common Stock beneficially owned
by Directors individually, by executive officers individually, by executive
officers and Directors as a group and by each person who was the beneficial
owner of more than five percent of the Company's outstanding shares of Common
Stock.
<TABLE>
<CAPTION>
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners Ownership(1)(4) Outstanding
----------------- --------------- -----------
<S> <C> <C>
Directors and Officers(2):
Oliver F. Ames 35,000 0.1%
Dennis S. Aronowitz 3,983 *
George C. Caner, Jr. 10,000 *
David C. Chapin 9,500 *
Richard P. Chapman, Jr. 61,119 0.2
William G. Coughlin 40,000 0.1
John L. Hall, II 3,000 *
Charles H. Peck 13,619 *
Hollis W. Plimpton, Jr. 1,500 *
Edward D. Rowley 3,060 *
Joseph J. Slotnik 11,172 *
William V. Tripp, III 2,893 *
Rosamond B. Vaule 30,000 0.1
Peter O. Wilde 2,140 *
Franklin Wyman, Jr. 40,000 0.1
Paul R. Bechet 30,000 0.1
Susan M. Ginns 8,050 *
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All Directors and Executive Officers
as a Group (17 persons)(3) 305,036 1.0%
======= ===
Principal Stockholders:
Brookline Bancorp, M.H.C.(3) 15,420,350 53.2%
160 Washington Street
Brookline, Massachusetts 02447
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(footnotes on following page)
2
<PAGE>
Brookline Savings Bank 391,673 1.4%
Employee Stock Ownership Plan (4)
160 Washington Street
Brookline, Massachusetts 02447
</TABLE>
- -----------------------------
* Less than one-tenth of 1%.
(1) A person is deemed to be the beneficial owner, for purposes of this table,
of any shares of Common Stock if he has shared voting or investment power
with respect to such security, or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Includes all shares held directly as well as by spouses and minor
children, in trust and other indirect ownership, over which shares the
named individuals effectively exercise sole or shared voting and
investment power. Unless otherwise indicated, the named individual has
sole voting and investment power.
(2) The mailing address for each person is listed as 160 Washington Street,
Brookline, Massachusetts 02447.
(3) The Company's executive officers and directors are also executive officers
and trustees of the Mutual Holding Company, except for Ms. Ginns.
(4) Under the Brookline Savings Bank Employee Stock Ownership Plan and Trust
(the "ESOP"), shares allocated to participants' accounts are voted in
accordance with the participants' directions. Unallocated shares held by
the ESOP are voted by the trustee of the ESOP in the manner calculated to
most accurately reflect the instructions it has received from the
participants regarding the allocated shares. As of the Record Date, 15,927
shares of Common Stock had been allocated to the accounts of employees
under the ESOP. The 391,673 shares set forth in the table reflect
unallocated shares only.
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PROPOSAL 1--ELECTION OF DIRECTORS
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The Company's Board of Directors currently is composed of 15 members.
The Company's bylaws provide that approximately one-third of the Directors are
to be elected annually. Directors of the Company are generally elected to serve
for a three-year period and until their respective successors shall have been
elected and shall qualify. Five directors will be elected at the Annual Meeting
to serve for a three-year period and until their respective successors shall
have been elected and shall qualify. The Board of Directors has nominated to
serve as directors, George C. Caner, Jr., Richard P. Chapman, Jr., Edward D.
Rowley, William V. Tripp, III and Peter O. Wilde, all of whom are currently
members of the Board of Directors.
The table below sets forth certain information regarding the
composition of the Company's Board of Directors, including the terms of office
of Board members. 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 one
or more nominees) will be voted at the Annual Meeting for the election of the
nominees identified below. If the nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why any of the nominees might be unable to serve,
if elected. Except as indicated herein, there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Director Current Term Owned on Percent
Name(1) Age Held Since(2) to Expire Record Date(3) of Class
- --------------------- ---------- ------------------------- ----------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
George C. Caner, Jr. 73 Secretary 1966 1999 10,000 *
Richard P. Chapman, Jr. 64 President and 1972 1999 61,119 0.2%
Chief Executive Officer
Edward D. Rowley 80 Director 1966 1999 3,060 *
William V. Tripp, III 60 Director 1975 1999 2,893 *
Peter O. Wilde 59 Director 1993 1999 2,140 *
3
<PAGE>
DIRECTORS CONTINUING IN OFFICE
Oliver F. Ames 78 Director 1973 2000 35,000 0.1
Dennis S. Aronowitz 67 Director 1991 2000 3,983 *
David C. Chapin 62 Director 1989 2001 9,500 *
William G. Coughlin 66 Director 1976 2000 40,000 0.1
John L. Hall, II 59 Director 1983 2001 3,000 *
Charles H. Peck 58 Director 1995 2001 13,619 *
Hollis W. Plimpton, Jr. 68 Director 1974 2001 1,500 *
Joseph J. Slotnik 62 Director 1970 2000 11,172 *
Rosamond B. Vaule 61 Director 1989 2001 30,000 0.1
Franklin Wyman, Jr. 77 Director 1974 2001 40,000 0.1
</TABLE>
(1) The mailing address for each person listed is 160 Washington Street,
Brookline, Massachusetts 02447. Each of the persons listed is also a
trustee of Brookline Bancorp, M.H.C., which owns the majority of the
Company's issued and outstanding shares of Common Stock.
(2) Reflects initial appointment to the Board of Trustees of the mutual
predecessor, Brookline Savings Bank. With the exception of Messrs.
Aronowitz, Caner, Hall, Peck, Plimpton, Rowley and Ms. Vaule, all directors
of the Company continue to serve as directors of the Bank.
(3) See definition of "beneficial ownership" in the table in "Voting Securities
and Principal Holders Thereof."
* Less than one-tenth of 1%.
The principal occupation during the past five years of each director
and executive officer of the Company is set forth below. All directors and
executive officers have held their present positions for five years unless
otherwise stated.
Oliver F. Ames has served as a director of the Bank since 1973 and as
a member of the Executive Committee (formerly the Board of Investment) of the
Bank since 1974. Mr. Ames serves on the board of directors of a number of civic
and charitable organizations. From 1962 through 1970, Mr. Ames served as a State
Senator.
Dennis S. Aronowitz has served as a director of the Bank since 1991.
In 1996, Mr. Aronowitz, an attorney, retired from Boston University where he
served on the faculty of the Law School since 1967 and was Director of the
Banking Law Center and Graduate Banking Law programs. He also is a trustee of a
number of John Hancock mutual funds.
George C. Caner, Jr. has served as a director of the Bank since 1966
and also serves as the Clerk of the Bank and Secretary of the Company. Mr. Caner
is an attorney at the law firm of Ropes & Gray, where he was a partner from 1965
through 1996. Mr. Caner currently is Of Counsel at the firm.
David C. Chapin has served as a director of the Bank since 1989. Mr.
Chapin is President of Cameron Properties, a real estate investment, property
appraisal and management company, and has served in that capacity since 1975.
Richard P. Chapman, Jr. has served as a director of the Bank since
1972 and also has served as President of the Bank since 1973 and Chief Executive
Officer since 1975. He has served as President and Chief Executive Officer of
the Company since its organization in 1998. Mr. Chapman is also a trustee of a
number of John Hancock mutual funds, a director of Lumber Insurance Cos. and a
trustee of Northeastern University.
William G. Coughlin has served as a director of the Bank since 1976
and became a member of the Executive Committee in 1997. Mr. Coughlin is a
private investor in commercial real estate.
John L. Hall, II has served as a director of the Bank since 1983. Mr.
Hall is President of Hall Properties, Inc., a real estate investment, management
and development company, and has served in that capacity since 1989.
Charles H. Peck has served as a director of the Bank since 1995. Mr.
Peck also is an Executive Vice President of the Bank and the Company, and has
served as the Senior Loan Officer of the Bank since 1970.
4
<PAGE>
Hollis W. Plimpton, Jr. has served as a director of the Bank since
1974. Reverend Plimpton is Rector of St. George's Anglican Church.
Edward D. Rowley has been a director of the Bank since 1966. Prior to
his retirement, Mr. Rowley was associated with a retail merchandising firm and
served in an administrative position at the Harvard Business School.
Joseph J. Slotnik has served as a director of the Bank since 1970 and
a member of the Executive Committee since 1974. Mr. Slotnik is a private
investor and previously was managing partner of the Boston office of a brokerage
and investment firm.
William V. Tripp, III has served as a director of the Bank since
1975. Mr. Tripp is an attorney and partner at Sherburne, Powers and Needham,
P.C., and has been with that firm since 1968.
Rosamond B. Vaule has served as a director of the Bank since 1989.
Ms. Vaule is active in volunteer work for various educational and charitable
organizations.
Peter O. Wilde has served as a director of the Bank since 1993. In
1997, Mr. Wilde became Managing Director of Beckwith Bemis Incorporated, a
coatings and finishing company. Previously, he was Vice President of Finance and
Administration at Ran Demo, Inc., a materials technology company, and served in
that position since 1991.
Franklin Wyman, Jr. has served as a director of the Bank since 1974
and became a member of the Executive Committee in 1979. Mr. Wyman is Chairman
and Treasurer of O'Conor, Wright, Wyman, Inc., a consulting firm providing
advisory services in mergers and acquisitions, where he has been since 1984. He
is also a director of Unitil Corporation, an electric utility company in New
Hampshire, and a director of Fitchburg Gas & Electric Company.
Executive Officers of the Company Who Are Not Directors
Paul R. Bechet is Senior Vice President and Chief Financial Officer
of the Bank, a position he has held since June 1997. He also serves as Senior
Vice President and Chief Financial Officer of the Company. Mr. Bechet is a
certified public accountant who, prior to joining the Bank, was a partner at
KPMG Peat Marwick LLP since 1972. His primary areas of responsibility include
financial reporting and risk management.
Susan M. Ginns is Senior Vice President and Treasurer of the Bank, a
position she has held since 1987. She also serves as Senior Vice President and
Treasurer of the Company. Her primary areas of responsibility include retail
banking, marketing and personnel.
Ownership Reports by Officers and Directors
The Common Stock of the Company is registered with the SEC pursuant
to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act").
The officers and directors of the Company and beneficial owners of greater than
10% of the Company's Common Stock ("10% beneficial owners") are required to file
reports on Forms 3,4 and 5 with the SEC disclosing beneficial ownership and
changes in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement or Annual Report on Form 10-K of the
failure of an officer, director or 10% beneficial owner of the Company's Common
Stock to file a Form 3, 4, or 5 on a timely basis. All of the Company's officers
and directors filed these reports on a timely basis, with the exception of
director Edward D. Rowley, who failed to timely report on a purchase of 60
shares by his spouse in March 1998.
5
<PAGE>
Meetings and Committees of the Board of Directors
The business of the Boards of Directors of the Company and the Bank
is conducted through meetings and activities of the Boards and their committees.
The Board of the Company has the following committees: Audit Committee, CRA
Committee, Bond and Salary Committee, Executive Committee and Nominating
Committee. The Board of the Bank has the following committees: Audit Committee,
Bond and Salary Committee, Executive Committee, Loan Committee, Nominating
Committee and Watch Committee.
During the year ended December 31, 1998, the Board of Directors of
the Company held three regular meetings and the Board of Directors of the Bank
held nine regular meetings. During the year ended December 31, 1998, no director
attended fewer than 75% of the total meetings of the Boards of Directors and
committees on which such director served.
The Audit Committees of the Company and the Bank consist of directors
Chapin, Tripp and Wilde. The committees met quarterly to review the contents of
and conclusions in audit reports prepared by the internal auditor and the
Company's independent auditors, to review and approve the annual engagement of
the Company's independent auditors, the Company's audit policy, the internal
audit function and the plan of audit coverage, and to review with management the
Company's financial statements and internal controls.
The CRA Committee consists of directors Ames, Aronowitz and Vaule.
The Committee met quarterly to review the status of the Bank's CRA program and
any reports issued by regulators resulting from their examination of the Bank's
compliance with CRA regulations.
The Bond and Salary Committee of the Company and the Bank consists of
directors Ames, Slotnik, Tripp and Wyman. The Committee met twice during the
year ended December 31, 1998 to review executive compensation and the Company's
blanket bond and directors' and officers' insurance coverage. It recommends the
compensation to be paid to the Company's three highest paid officers,
establishes the parameters that must be met for bonuses to be paid to selected
officers and approves the actual amounts of bonuses paid.
The Nominating Committee of the Company and the Bank consists of
directors Coughlin, Wilde and Wyman. The Committee meets as needed to identify,
evaluate and recommend to the Board of Directors potential candidates for
election as directors and appointments to the Board's committees. It also
reviews officer candidates and recommends to the Board of Directors their
election to office.
The Executive Committee consists of directors Ames, Chapman,
Coughlin, Slotnik and Wyman. The Committee met 15 times during the year ended
December 31, 1998 to exercise general control and supervision of all matters
pertaining to the interests of the Company and the Bank, subject at all times to
the direction of the Board of Directors.
The Loan Committee consists of directors Chapman, Coughlin and Wyman.
The Committee generally meets weekly to review and approve all loan requests
over $400,000.
The Watch Committee consists of directors Chapman and Slotnik. The
Committee met quarterly to review the status of the loan portfolio and OREO
properties, the classification of loans and the adequacy of the allowance for
losses on loans and OREO.
Performance Graph
Set forth hereunder is a performance graph comparing (a) the total
return on the Common Stock for the period beginning on March 25, 1998 through
December 31, 1998, (b) the cumulative total return on stocks included in the S&P
500 Index over such period, (c) the cumulative total return on stocks included
in the SNL MHC Thrift Index
6
<PAGE>
over such period, and (d) the cumulative total return on stocks included in the
SNL New England Thrift Index over such period. The cumulative total return on
the Common Stock was computed assuming the reinvestment of cash dividends during
the period.
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Brookline Bancorp, Inc.
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[TABULAR REPRESENTATION OF BAR CHART]
<TABLE>
<CAPTION>
Period Ending
-----------------------------------------------------------
Index 3/25/98 6/30/98 9/30/98 12/31/98
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brookline Bancorp, Inc. 100.00 89.81 71.95 69.94
S&P 500 100.00 103.30 93.03 112.83
SNL New England Thrift Index 100.00 96.23 74.11 81.59
MHC Thrifts 100.00 90.59 63.56 64.83
</TABLE>
There can be no assurance that the Common Stock's performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.
Personnel Committee Interlocks and Insider Participation
The full Board of Directors of the Company approves the salaries to
be paid each year to the three highest paid officers of the Company, based on
the recommendations of the Bond and Salary Committee. Richard P. Chapman, Jr.
and Charles H. Peck are directors of the Company in addition to being the
President and Chief Executive Officer and Executive Vice President,
respectively, of the Company and of the Bank. Messrs. Chapman and Peck do not
participate in the Board of Directors' determination of compensation for their
respective offices.
7
<PAGE>
Report of the Bond and Salary Committee of the Board of Directors on Executive
Compensation
Under rules established by the SEC, the Company is required to
provide certain data and information regarding compensation and benefits
provided to its Chief Executive Officer and other executive officers. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the Bond and
Salary Committee of the Board of Directors has prepared the following report for
inclusion in this proxy statement.
The Committee annually reviews the performance of the Chief Executive
Officer and other executive officers and approves changes to base compensation
as well as the level of bonus, if any, to be awarded. In determining whether the
employment agreements of the Chief Executive Officer and other executive
officers should be extended, the Committee took into account the individual
performance of each executive officer and the performance of the Company under
the direction of the executive officers. Other factors considered by the
Committee in 1998 included each executive officer's general managerial oversight
of the Company, the quality of communications with the Board of Directors, and
the Company's record of compliance with regulatory requirements.
While the Committee does not use strict numerical formulas to
determine changes in compensation for the Chief Executive Officer and other
executive officers, and while it weighs a variety of different factors in its
deliberations, it has emphasized and expects to continue to emphasize the
profitability and scope of the Company's operations, the experience, expertise
and management skills of the executive officers and their roles in the future
success of the Company, as well as compensation surveys prepared by banking
associations and professional firms to determine compensation paid to executives
performing similar duties for similarly-sized financial institutions in the New
England and Mid-Atlantic Regions. While each of the quantitative and
non-quantitative factors described above was considered by the Committee, such
factors were not assigned a specific weight in evaluating the performance of the
Chief Executive Officer and other executive officers. Rather, all factors were
considered.
The amount of bonus payments to an executive officer is based on the
performance of the Company as measured against certain quantitative thresholds.
Specifically, bonus payments are based on the Company's level of net operating
income, net interest margin, non-performing assets and operating expenses. The
performance thresholds for bonus payments have been established by the full
Board of Directors. In 1998, the Committee did not recommend any changes to the
bonus payments derived from the application of the foregoing quantitative
criteria.
With respect to Richard P. Chapman, Jr., the Chief Executive Officer,
the Committee recommended to the full Board of Directors a $35,000 increase in
base salary to $365,000 in 1998. Mr. Chapman's annual bonus was increased by
$10,500 to $109,500 for 1998.
This report has been provided by the Bond and Salary Committee:
Oliver F. Ames Joseph J. Slotnick
William V. Tripp, III Franklin Wyman, Jr.
Directors' Compensation
Executive officers of the Company and the Bank receive no fees for
service on the Board of Directors of the Company and the Bank or on any
committees of the Boards. Directors of the Company receive an annual retainer of
$1,000 and directors of the Bank (comprised of seven outside directors of the
Company and Mr. Chapman) receive an annual retainer of $5,000. Payment of
retainers commenced in April 1998 and, accordingly, only 75% of the annual
retainers were paid in 1998. Directors of the Company receive fees of $750 for
each meeting attended except for the Secretary of the Company who receives $900
for each meeting. No additional fees are paid to directors who also attend
meetings of the Bank held on the same day as meetings of the Company. When Board
meetings are held
8
<PAGE>
concurrently with meetings of the Board of Trustees of Brookline Bancorp, MHC,
meeting fees are partially assumed by Brookline Bancorp, MHC.
Members of the Audit Committee and the CRA Committee receive fees of
$750 for each meeting attended. The chairman of the Audit Committee receives an
additional annual retainer of $2,000. Members of the Executive Committee of the
Bank receive an annual retainer of $5,000 plus fees of $750 for each meeting
attended. The Vice Chairman of the Committee receives an additional retainer of
$4,000. Members of the Loan Committee of the Bank receive an annual retainer of
$18,000. The outside director on the Watch Committee receives an annual retainer
of $5,000 and an additional $2,000 for serving as Chairman of the Committee.
Executive Compensation
The following table sets forth the cash compensation paid and bonuses
accrued as well as certain other compensation paid or accrued for services
rendered in all capacities during the year ended December 31, 1998 to the Chief
Executive Officer of the Company and the three other executive officers of the
Company who received total annual compensation in excess of $100,000 ("Named
Executive Officers").
<TABLE>
<CAPTION>
Long-term compensation
----------------------------------
Annual compensation Awards Payout
--------------------------------------- ------------------------ --------
Year Other Restricted Options/
ended annual stock SARS All
Name and 12/31 compensation awards (#) LTIP other
principal position (1) Salary Bonus (2)(5) (3) (4) payouts compensation
- ---------------------------- ------- --------- --------- ------------ ---------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard P. Chapman, Jr. 1998 $365,000 $109,500 $17,178 -- -- -- --
President and Chief
Executive Officer
Charles H. Peck 1998 175,000 43,750 11,762 -- -- -- --
Executive Vice
President
Paul R. Bechet 1998 127,500 31,875 7,459 -- -- -- --
Senior Vice President
and Chief Financial
Officer
Susan M. Ginns 1998 120,000 30,000 9,184 -- -- -- --
Senior Vice President
and Treasurer
</TABLE>
- ----------------
(1) In accordance with the rules on executive officer and director
compensation disclosure adopted by the SEC, summary compensation
information is excluded for the years ended December 31, 1997 and 1996, as
the Company was not a public company during such periods.
(2) The Company also provides certain members of senior management with the
use of an automobile, club membership dues and certain other personal
benefits, the aggregate value of which did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for each
officer.
(3) Does not include awards pursuant to the stock plans, as such awards were
not earned or granted in 1998. For a discussion of the terms of the stock
plan which is to be considered by stockholders at the Annual Meeting, see
Proposal 3 - Approval of the Brookline Bancorp, Inc. 1999 Recognition
and Retention Plan.
(4) No stock options or SARs were earned or granted in 1998. For a discussion
of the stock option plan which is to be considered by stockholders at the
Annual Meeting, see Proposal 2 - Approval of the Brookline Bancorp, Inc.
1999 Stock Option Plan.
(5) Includes premium paid for group term life insurance and medical and dental
insurance coverage.
9
<PAGE>
Employment and Severance Agreements
Employment Agreements. The Bank has entered into substantially
identical employment agreements with Messrs. Chapman and Peck. Each of the
agreements has a term of 36 months. On each anniversary date, the agreement may
be extended for an additional twelve months, so that the remaining term shall be
36 months. If the agreement is not renewed, the agreement will expire 36 months
following the anniversary date. Under the agreements, the current Base Salaries
for Messrs. Chapman and Peck are $385,000 and $185,000, respectively. The Base
Salary may be increased but not decreased. In addition to the Base Salary, the
agreement provides for, among other things, participation in retirement plans
and other employee and fringe benefits applicable to executive personnel. The
agreement provides for termination by the Bank for cause at any time. In the
event the Bank terminates the executive's employment for reasons other than for
cause, or in the event of the executive's resignation from the Bank (such
resignation to occur within the period or periods set forth in the employment
agreement) upon (i) failure to re-elect the executive to his current offices,
(ii) a material change in the executive's functions, duties or responsibilities,
or relocation of his principal place of employment by more than 30 miles, (iii)
liquidation or dissolution of the Bank, (iv) a breach of the agreement by the
Bank, or (v) following a change in control of the Bank or the Company, the
executive, or in the event of death, his beneficiary, would be entitled to
severance pay in an amount equal to three times the Base Salary and the highest
bonus paid during any of the last three years. Messrs. Chapman and Peck would
receive an aggregate of $2.2 million pursuant to their employment agreements
upon a change in control of the Bank or the Company, based upon current levels
of compensation. The Bank also would continue the executive's life, health,
dental and disability coverage for 36 months from the date of termination. In
the event the payments to the executive include an "excess parachute payment" as
defined by Code Section 280G (relating to payments made in connection with a
change in control), the payments would be reduced in order to avoid having an
excess parachute payment.
Under the agreement, the executive's employment may be terminated
upon his retirement in accordance with any retirement policy established on
behalf of the executive and with his consent. Upon the executive's retirement,
he will be entitled to all benefits available to him under any retirement or
other benefit plan maintained by the Bank. In the event of the executive's
disability for a period of six months, the Bank may terminate the agreement
provided that the Bank will be obligated to pay him his Base Salary for the
remaining term of the agreement or one year, whichever is longer, reduced by any
benefits paid to the executive pursuant to any disability insurance policy or
similar arrangement maintained by the Bank. In the event of the executive's
death, the Bank will pay his Base Salary to his named beneficiaries for one year
following his death, and will also continue medical, dental and other benefits
to his family for one year. The employment agreement provides that, following
his termination of employment, the executive will not compete with the Bank for
a period of one year.
Severance Agreements. The Bank has entered into severance agreements
(the "Severance Agreements") with seven other officers of the Bank, including
Mr. Bechet and Ms. Ginns, which provide certain benefits in the event of a
change in control of the Bank or the Company. Each of the Severance Agreements
provides for a term of 36 months. Commencing on each anniversary date, the Board
of Directors may extend any Severance Agreement for an additional year. The
Severance Agreements enable the Bank to offer to designated officers certain
protections against termination without cause in the event of a "change in
control." For these purposes, a "change in control" is defined generally to
mean: (i) consummation of a plan of reorganization, merger or sale of
substantially all of the assets of the Bank or the Company where the Bank or the
Company is not the surviving entity; (ii) changes to the Board of Directors of
the Bank or the Company whereby individuals who constitute the current Board
cease to constitute a majority of the Board, subject to certain exceptions;
(iii) a change in "control" as defined by the BHCA, in effect on the date of the
Severance Agreement; (iv) a transaction or occurrence whereby any person becomes
the beneficial owner of 25% or more of the voting securities of the Company; and
(v) a tender offer is made for 25% or more of the voting securities of the
Company and 25% or more of the stockholders have tendered their shares. Mr.
Bechet and Ms. Ginns would receive an aggregate of $302,600 and the remaining
officers would receive an aggregate of $433,400, pursuant to their severance
agreements upon a change in control of the Bank or the Company. These
protections against termination without cause in the event of a change in
control are frequently offered by other
10
<PAGE>
financial institutions, and the Bank may be at a competitive disadvantage in
attracting and retaining key employees if it does not offer similar protections.
Although the Severance Agreements may have the effect of making a takeover more
expensive to an acquiror, the Bank believes that the benefits of enhancing the
Bank's ability to attract and retain qualified management persons by offering
the Severance Agreements outweighs any disadvantage of such agreements.
Following a change in control of the Company or the Bank, an officer
is entitled to a payment under the Severance Agreement if the officer's
employment is involuntarily terminated during the term of such agreement, other
than for cause, as defined, or if the officer voluntarily terminates employment
during the term of such agreement as the result of a demotion, loss of title,
office or significant authority, reduction in his annual compensation or
benefits, or relocation of his principal place of employment by more than 30
miles from its location immediately prior to the change in control. In the event
that an officer who is a party to a Severance Agreement is entitled to receive
payments pursuant to the Severance Agreement, he will receive a cash payment up
to a maximum of one times the average of the three preceding years' annual base
salary and bonuses. In addition to the severance payment, each covered officer
is entitled to receive life, health, dental and disability coverage for a period
of up to 12 months from the date of termination. Notwithstanding any provision
to the contrary in the Severance Agreement, payments under the Severance
Agreements are limited so that they will not constitute an excess parachute
payment under Section 280G of the Internal Revenue Code.
Compensation of Officers and Directors through Benefit Plans
The Bank's current tax-qualified employee pension benefit plans
consist of a defined benefit pension plan and a profit sharing plan with a
salary deferral feature under section 401(k) of the Code.
Medical, Dental, Life and Other Similar Employee Benefit Plans. The
Bank provides eligible employees (i.e., generally full-time employees and
employees who work more than 17 1/2 hours per week) with group life (after three
months of employment), accidental death and dismemberment, and long term
disability coverage. For its eligible employees, the Bank pays 80% of the
monthly premiums for group health coverage and 50% of the monthly premiums for
individual and family dental coverage. The Bank pays 100% of the monthly
premiums for group life insurance coverage after the employee has completed one
year of service. The Bank also sponsors a flexible benefits plan under which
employees can pay their ratable share of health insurance premiums on a pre-tax
basis and a medical expense reimbursement plan under which employees can defer
their salary on a pre-tax basis to cover the costs of certain medical expenses
not reimbursed through insurance or otherwise.
Disability/Death Benefit Plan. The Bank has entered into a
non-qualified plan providing death and disability benefits to Mr. Chapman if he
dies or becomes disabled prior to his retirement date, i.e., his 65th birthday.
In the event of Mr. Chapman's death prior to his retirement date, his
beneficiary will be entitled to a benefit equal to 50% of the average three
highest total annual amounts of compensation paid to Mr. Chapman during the last
five years of his employment (the "Annual Benefit"), reduced by any distribution
from the Bank's tax-qualified defined benefit pension plan and one-half of any
social security benefits that any beneficiary derives through Mr. Chapman. The
annual benefit will be payable for 180 months. In the event of Mr. Chapman's
disability prior to his retirement date, the Bank will pay to Mr. Chapman a
disability benefit equal to the Annual Benefit, reduced by amounts paid to Mr.
Chapman under any disability income policy provided by the Bank. Any disability
benefits paid to Mr. Chapman under this plan will cease when Mr. Chapman attains
his retirement date.
Defined Benefit Pension Plan. The Bank maintains the Savings Banks
Employees Retirement Association Pension Plan, which is a qualified, tax-exempt
defined benefit plan ("Retirement Plan"). All employees age 21 or older who have
worked at the Bank for a period of one year and have been credited with 1,000 or
more hours of service with the Bank during the year are eligible to accrue
benefits under the Retirement Plan. The Bank annually contributes an amount to
the Retirement Plan necessary to satisfy the actuarially determined minimum
funding requirements in accordance with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
11
<PAGE>
At the normal retirement age of 65, the plan is designed to provide a
single life annuity. For a married participant, the normal form of benefit is an
actuarially reduced joint and survivor annuity where, upon the participant's
death, the participant's spouse is entitled to receive a benefit equal to 100%
of that paid during the participant's lifetime. The joint and survivor annuity
will be actuarially equivalent to the single life annuity. The retirement
benefit provided is an amount equal to 1.25% of a participant's average
compensation based on the average of the three consecutive years providing the
highest average multiplied by the participant's years of service (up to a
maximum of 25 years) plus .6% of such average compensation in excess of covered
compensation multiplied by the participant's total number of years of service
(up to a maximum of 25 years). Retirement benefits are also payable upon
retirement due to early and late retirement, disability or death. A reduced
benefit is payable upon early retirement at age 62, at or after age 55 and the
completion of ten years of service with the Bank, or at age 50 and the
completion of 15 years of service. Upon termination of employment other than as
specified above, a participant who was employed by the Bank for a minimum of
five years is eligible to receive his or her accrued benefit commencing,
generally, on such participant's normal retirement date. Benefits under the
Retirement Plan are payable in various annuity forms as well as in the form of a
single lump sum payment. As of October 31, 1998, the most recent date for which
information is available, the market value of the Retirement Plan assets equaled
$5.8 million. No contribution was made to the Retirement Plan for the plan year
ended October 31, 1998.
The following table indicates the annual retirement benefit that
would be payable under the Retirement Plan upon retirement at age 65 in calendar
year 1998, expressed in the form of a single life annuity for the final average
salary and benefit service classifications specified below.
<TABLE>
<CAPTION>
Years of service and benefit payable at retirement
Final --------------------------------------------------
average 25 years
compensation 10 15 20 and after(2)
------------ --------- ---------- --------- ------------
<S> <C> <C> <C> <C>
$ 50,000 $ 7,382 $11,073 $14,765 $18,456
100,000 16,632 24,948 33,265 41,581
150,000 25,882 38,823 51,765 64,706
160,000(1) 27,732 41,598 55,465 69,331
</TABLE>
- -------------------
(1) Under present law, a retirement benefit cannot be funded based
on compensation in excess of $160,000. Prior to 1994, retirement
benefits could be funded based on compensation of up to
$235,840. If a participant had accrued a larger retirement
benefit based on the law before 1994, the participant would be
entitled to the larger benefit.
(2) Benefits under the Retirement Plan are calculated based on a
participant's average compensation over a three year period and
years of service, up to 25 years. Benefits do not increase due
to years of service in excess of 25.
At December 31, 1998 the approximate years of service for the named
executive officers were as follows:
<TABLE>
<CAPTION>
Years of Service
----------------
<S> <C>
Richard P. Chapman, Jr. 27
Charles H. Peck 33
Susan M. Ginns 23
</TABLE>
Supplemental Retirement Income Agreement. The Bank has entered into
non-qualified supplemental retirement income agreements ("SRIA") for the benefit
of Mr. Richard P. Chapman, Mr. Charles H. Peck and Ms. Susan M. Ginns. The SRIA
for Mr. Chapman and Mr. Peck provide them with benefits generally equal to 70%
of their average compensation for the three calendar years with the highest rate
of compensation in the ten calendar year period prior to retirement, reduced by
any distribution they are entitled to receive from the Bank's pension plan and
one-half of any Social Security benefits. The SRIA for the benefit of Ms. Ginns
provides for a benefit at normal retirement equal to $3,000 per month.
Retirement benefits under the SRIA are generally payable as a monthly
benefit or, at the election of the Bank, as a lump sum benefit. The monthly
benefits are payable on early or normal retirement or disability and continue
until
12
<PAGE>
the later of the executive's death or 15 years from the executive's retirement
(20 years in the case of Mr. Chapman). Monthly benefits are provided for
designated beneficiaries of participants who do not survive until retirement
commencing on the date of death and ending on the earlier of (1) the date the
executive would have attained his standard life expectancy or (2) 15 years from
the date of death (20 years in the case of the death of Mr. Chapman). Under the
SRIAs for Messrs. Chapman and Peck, in the case of a change in control, the
executive (or in the event of the executive's death, his beneficiary) is
irrevocably entitled to elect a lump sum benefit equal to the actuarial
equivalent of the monthly benefit to which the executive is entitled at such
time. The SRIA is considered an unfunded plan for tax and ERISA purposes. For
the year ended December 31, 1998, the Bank contributed under the SRIA $328,291,
$79,920 and $16,589 to Mr. Chapman, Mr. Peck and Ms. Ginns, respectively. All
obligations under the SRIA are payable from the general assets of the Bank.
401(k) Plan. The Bank maintains the Savings Banks Employees
Retirement Association 401(k) Plan which is a qualified, tax-exempt profit
sharing plan with a salary deferral feature under Section 401(k) of the Code
(the "401(k) Plan"). All employees who have attained age 21 and have completed
one year of employment during which they worked at least 1,000 hours are
eligible to participate.
Under the 401(k) Plan, participants are permitted to make salary
reduction contributions equal to the lesser of 15% of compensation or $10,000
(as indexed annually). For these purposes, "compensation" includes wages
reported on federal income tax form W-2, but does not include compensation in
excess of the Code Section 401(a)(17) limits (i.e., $160,000 for plan years
beginning in 1997). All employee contributions and earnings thereon are fully
and immediately vested. A participant may withdraw salary reduction
contributions in the event the participant suffers a financial hardship. The 401
(k) Plan permits employees to direct the investment of their own accounts into
various investment options.
Plan benefits will be paid to each participant in the form of a life
annuity (or joint and survivor annuity if married) upon retirement or death
unless an alternate form of distribution (lump sum or equal payments over a
fixed period) is selected. If a participant terminates employment prior to
retirement, his vested benefit will be held by the 401(k) Plan until the
participant elects to receive his benefit from the plan. If a participant (and
the participant's spouse, if married) elects to receive benefits after
termination of employment prior to normal or early retirement age, benefits will
be paid in a lump sum. Normal retirement age under the plan is age 65. Early
retirement age is the earliest of age 62, age 55 with ten years of service, or
the date on which a claim for Social Security disability income benefits is
approved.
Employee Stock Ownership Plan and Trust. The Bank has implemented an
Employee Stock Ownership Plan (the "ESOP"). The first plan year for the ESOP
ended October 31, 1998. Employees with at least one year of employment with the
Bank and who have attained age 21 are eligible to participate. The ESOP has
borrowed funds from the Company and used those funds to purchase shares of the
Common Stock of the Company. Collateral for the loan is the Common Stock
purchased by the ESOP. The loan will be repaid principally from the Bank's
contributions to the ESOP over a maximum of 30 years. The interest rate for the
loan is fixed at 8-1/2%. Shares purchased by the ESOP are held in a suspense
account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense
account in an amount proportional to the repayment of the ESOP loan are
allocated among ESOP participants on the basis of compensation in the year of
allocation. For the plan year ended October 31, 1998, 15,927 shares were
released from the suspense account and allocated to employees. Participants in
the ESOP receive credit for each year of service with the Bank prior to the
effective date of the ESOP (up to a maximum of three years). Benefits generally
vest over a seven year period. Benefits generally vest at the rate of 20% per
year beginning in the third year of service until a participant is 100% vested
after seven years or upon normal retirement (as defined in the ESOP), disability
or death of the participant or a change in control (as defined in the ESOP). A
participant who terminates employment for reasons other than death, retirement
or disability prior to seven years of credited service will forfeit the
nonvested portion of his benefits under the ESOP. Benefits will be payable in
the form of Common Stock and cash upon death, retirement, early
13
<PAGE>
retirement, disability or separation from service. The Bank's contributions to
the ESOP are discretionary, subject to the loan terms and tax law limits and,
therefore, benefits payable under the ESOP cannot be estimated. The Bank is
required to record compensation expense in an amount equal to the fair market
value of the shares released from the suspense account.
The Bank's Board of Directors administers the ESOP. The Bank has
appointed an independent financial institution to serve as trustee of the ESOP.
The ESOP 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 participating employees. Under the ESOP, nondirected shares and shares held
in the suspense account will be voted in a manner calculated to most accurately
reflect the instructions it has received from participants regarding the
allocated stock so long as such vote is in accordance with the provisions of
ERISA.
Transactions with Certain Related Persons
All transactions between the Company and its executive officers,
directors, holders of 10% or more of the shares of its Common Stock and
affiliates thereof, are on terms no less favorable to the Company than could
have been obtained by it in arm's-length negotiations with unaffiliated persons.
The balance of loans outstanding to directors, executive officers and their
related interests amounted to $6.7 million at December 31, 1998.
- --------------------------------------------------------------------------------
PROPOSAL 2 -APPROVAL OF THE BROOKLINE BANCORP, INC.
1999 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company intends to adopt the 1999 Stock
Option Plan (the "Stock Option Plan"). Under the Stock Option Plan, 1,367,465
shares of the Company's Common Stock will be reserved for issuance pursuant to
the exercise of options to be granted thereunder. To the extent the Company
issues shares under the Stock Option Plan from authorized but unissued shares,
the voting interests of current stockholders will be diluted.
The Board of Directors believes that it is appropriate for the
Company to adopt a flexible and comprehensive stock option plan which permits
the granting of a variety of long-term incentive awards to directors, officers
and employees as a means of enhancing and encouraging the recruitment and
retention of those individuals on whom the continued success of the Company most
depends. Attached as Appendix A to this Proxy Statement is the complete text of
the Stock Option Plan. The principal features of the Stock Option Plan are
summarized below.
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock
options, reload options, limited stock appreciation rights ("Limited Rights")
and dividend equivalent rights. Each award shall be on such terms and
conditions, consistent with the Stock Option Plan, as the committee
administering the Stock Option Plan may determine.
The committee has full and exclusive power within the limitations set
forth in the Stock Option Plan to make all decisions and determinations
regarding the selection of participants and the granting of awards; establishing
the terms and conditions relating to each award; adopting rules, regulations and
guidelines for carrying out the Stock Option Plan's purposes; and interpreting
and otherwise construing the Stock Option Plan.
14
<PAGE>
Stock options granted under the Stock Option Plan may be either
"incentive stock options" as defined under Section 422 of the Internal Revenue
Code or stock options not intended to qualify as such ("non-qualified stock
options"). The term of an incentive stock option will not exceed ten years from
the date of grant.
Shares issued upon the exercise of a stock option may be either
authorized but unissued shares or reacquired shares held by the Company as
treasury shares. Any shares subject to an award which expires or is terminated
unexercised will again be available for issuance under the Stock Option Plan.
Generally, in the discretion of the Board, all or any non-qualified stock
options granted under the Stock Option Plan may be transferable by the
Participant but only to the persons or classes of persons determined by the
Board. No other award or any right or interest therein is assignable or
transferable except under certain limited exceptions set forth in the Stock
Option Plan.
The Stock Option Plan will be administered by a committee of the
Board (the "Committee") consisting of either two or more "non-employee
directors" (as defined in the Stock Option Plan), or the entire Board. The
members of the Committee shall be appointed by the Board. Pursuant to the terms
of the Stock Option Plan, any director, officer or employee of the Company or
its affiliates is eligible to participate. The Committee will determine to whom
the awards will be granted, in what amounts, and the period over which such
awards will vest and become exercisable. In granting awards under the Stock
Option Plan, the Committee will consider, among other things, position and years
of service, value of the individual's services to the Company and the Bank and
the added responsibilities of such individuals as employees, directors and
officers of a public company. The Committee may extend or accelerate the time
period for the exercise of an option.
Stock Options
All stock options will be exercisable in such installments as the
Committee shall determine. If an individual to whom an incentive stock option or
right was granted ceases to maintain continuous service for any reason
(excluding normal retirement, death or disability, and termination of employment
by the Company or any affiliate following a change in control or for cause),
such individual may, but only for a three month period immediately following
cessation of continuous service and in no event after the expiration date of
such option or right, exercise such option or right to the extent that such
option or right was exercisable at the date of cessation of service. If an
individual to whom a non-statutory stock option was granted ceases to maintain
continuous service for any reason (excluding normal retirement, death or
disability, and termination of employment by the Company or any affiliate
following a change in control or for cause), such individual may, but only for a
one year period immediately following cessation of continuous service and in no
event after the expiration date of such option or right, exercise such option or
right to the extent that such individual was entitled to exercise such option or
right at the date of cessation of service. If an individual to whom an incentive
stock option, non-statutory stock option or right was granted ceases to maintain
continuous service by reason of normal retirement, death or disability, or
following a change in control, then, unless the Committee provides otherwise in
the instrument evidencing the grant, all options and rights granted and not
fully exercisable shall become exercisable in full upon the happening of such
event and shall remain exercisable for a one year period.
In the event of an individual's termination of employment or service
as a result of death, disability, or normal retirement, the Committee may, upon
request by the option holder, elect to pay to the holder an amount of cash equal
to the amount by which the market value of the shares covered by the option on
the date of termination of employment or service exceeds the exercise price,
multiplied by the number of shares with respect to which such option is properly
exercised. If the continuous service of an individual to whom an option or right
was granted by the Company is terminated for cause, all rights under such option
or right shall expire immediately upon the effective date of such termination.
The exercise price for the purchase of shares subject to a stock
option may not be less than 100% of the market value of the shares on the date
of grant. The exercise price may be paid in cash, shares of Common Stock, or
through a "cashless exercise".
15
<PAGE>
Limited Stock Appreciation Rights
The Committee may grant Limited Rights at the same time as the grant
of any option to any employee. A Limited Right gives the option holder the
right, upon a change in control of the Company or the Bank, to receive the
excess of the market value of the shares represented by the Limited Rights on
the date exercised over the exercise price. Limited Rights generally will be
subject to the same terms and conditions and exercisable to the same extent as
stock options, as described above. Payment upon exercise of a Limited Right will
be in cash, or in the event of a change in control in which pooling accounting
treatment is a condition to the transaction, for shares of stock of the Company,
or in the event of a merger transaction, for shares of the acquiring corporation
or its parent, as applicable.
Limited Rights may be granted at the time of, and must be related to,
the grant of a stock option. The exercise of one will reduce to that extent the
number of shares represented by the other. If a Limited Right is granted with
and related to an incentive stock option, the Limited Right must satisfy all the
restrictions and limitations to which the related incentive stock option is
subject.
Dividend Equivalent Rights
Dividend equivalent rights may also be granted at the time of the
grant of a stock option. Dividend equivalent rights entitle the option holder to
receive an amount of cash at the time that certain extraordinary dividends are
declared equal to the amount of the extraordinary dividend multiplied by the
number of options that the person holds. For these purposes, an extraordinary
dividend is defined under the Stock Option Plan as any dividend paid on shares
of Common Stock where the rate of dividend exceeds the Bank's weighted average
cost of funds on interest-bearing liabilities for the current and preceding
three quarters.
Reload Options
Reload options may also be granted at the time of the grant of a
stock option. Reload options entitle the option holder, who has delivered shares
that he or she owns as payment of the exercise price for option stock, to a new
option to acquire additional shares equal in amount to the number of shares he
or she has traded in. Reload options may also be granted to replace option
shares retained by the employer for payment of the option holder's withholding
tax. The option price at which the additional shares of stock can be purchased
by the option holder through the exercise of a reload option is equal to the
market value of the stock at the time of the new option grant. The option period
during which the reload option may be exercised expires at the same time as that
of the original option that the holder has exercised.
Effect of Adjustments
Shares as to which awards may be granted under the Stock Option Plan,
and shares then subject to awards, will be adjusted by the Committee in the
event of any merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination or exchange of shares or other change in the
corporate structure of the Company.
In the case of any merger, consolidation or combination of the
Company with or into another holding company or other entity, whereby either the
Company is not the continuing holding company or its outstanding shares are
converted into or exchanged for securities, cash or other property, or any
combination thereof, any individual to whom a stock option or Limited Right has
been granted at least six months prior to such event will have the right
(subject to the provisions of the Stock Option Plan and any applicable vesting
period) upon exercise of the option or Limited Right to an amount equal to the
excess of fair market value on the date of exercise of the consideration
receivable in the merger, consolidation or combination with respect to the
shares covered or represented by the stock option or Limited Right over the
exercise price of the option multiplied by the number of shares with respect to
which the option or Limited Right has been exercised.
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Amendment and Termination
The Board of Directors may at any time amend, suspend or terminate
the Stock Option Plan or any portion thereof, provided however, that no such
amendment, suspension or termination shall impair the rights of any individual,
without his consent, in any award made pursuant to the Stock Option Plan. Unless
previously terminated, the Stock Option Plan shall continue in effect for a term
of ten years, after which no further awards may be granted.
Federal Income Tax Consequences
An optionee will generally not be deemed to have recognized taxable
income upon grant or exercise of any incentive stock option, provided that
shares transferred in connection with the exercise are not disposed of by the
optionee for at least one year after the date the shares are transferred in
connection with the exercise of the option and two years after the date of grant
of the option. If these holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
capital gains rates. No compensation deduction may be taken by the Company for
income tax purposes as a result of the grant or exercise of incentive stock
options, assuming these holding periods are met.
In the case of the exercise of a non-statutory stock option, an
optionee will be deemed to have received ordinary income upon exercise of the
option in an amount equal to the aggregate amount by which the fair market value
of the Common Stock exceeds the exercise price of the option. In the event
shares received through the exercise of an incentive stock option are disposed
of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will essentially be treated as the
exercise of a non-statutory stock option, except that the optionee will
recognize the ordinary income in the year in which the disqualifying disposition
occurs. The amount of any ordinary income recognized by an optionee upon the
exercise of a non-statutory stock option or due to a disqualifying disposition
will be a deductible expense of the Company for federal income tax purposes,
subject to the limitations imposed by Code Section 162(m).
The exercise of Limited Rights will result in the recognition of
compensation income by employees and self- employment income by outside
directors on the date of exercise in an amount of cash and/or fair market value
on that date of the shares acquired pursuant to the exercise. Similarly, the
receipt of a cash payment pursuant to a dividend equivalent right will result in
the recognition of compensation or self-employment income by the recipient. The
Company will be allowed a deduction at the time, and in the amount of, any
compensation or self-employment income recognized by the employee or outside
director, respectively, under the circumstances described above, provided that
the Company meets its federal withholding obligations.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE 1999 STOCK OPTION PLAN.
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PROPOSAL 3--APPROVAL OF THE BROOKLINE BANCORP, INC.
1999 RECOGNITION AND RETENTION PLAN
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General
The Board of Directors intends to adopt a Recognition and Retention
Plan (the "RRP") as a method of recognizing prior service and providing
executive officers and directors with a proprietary interest in the Company in a
manner designed to encourage such individuals to remain with the Company.
Pursuant to the RRP, restricted stock awards covering 546,986 shares will be
reserved for issuance under the RRP.
Attached as Appendix B to this Proxy Statement is the complete text
of the RRP. The principal features of the RRP are summarized below.
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Principal Features of the RRP
The RRP provides for the award of shares of Common Stock ("RRP
Shares"), subject to the restrictions described below. Each award under the RRP
will be made on terms and conditions, consistent with the RRP, as determined by
the RRP committee.
The RRP will be administered by a committee of the Board consisting
of either (i) at least two "non-employee directors" or (ii) the entire Board
(the "RRP Committee"). The members of the RRP Committee shall be appointed by
the Board. The RRP Committee will select the recipients and terms of awards
pursuant to the RRP, and may determine to accelerate the vesting period of an
award. Pursuant to the terms of the RRP, any director, officer or employee of
the Company or its affiliates may be selected by the RRP Committee to
participate in the RRP. In determining to whom and in what amount to grant
awards, the RRP Committee considers the position and responsibilities of
eligible employees, the value of their services to the Company and the Bank and
other factors it deems relevant. As of December 31, 1998, there were 13
non-employee directors eligible to participate in the RRP.
The RRP provides that RRP Shares used to fund awards under such plan
may be either authorized but unissued shares or issued shares reacquired by the
Company in the open market and held as treasury shares. To the extent that the
Company utilizes authorized but unissued shares to fund the RRP, the voting
interests of current stockholders will be diluted.
RRP Shares to be awarded in 1999 to directors, officers and employees
will vest in such installments as the RRP Committee shall determine. RRP Shares
are subject to forfeiture if the recipient fails to remain in continuous service
(as defined in the RRP) as an employee, officer or director of the Company or
the Bank for the stipulated period (the "restricted period").
In the event a recipient ceases to maintain continuous service with
the Company or the Bank by reason of normal retirement, death or disability, or
following a change in control, RRP Shares still subject to restrictions will
vest and be free of these restrictions. In the event of termination for any
other reason, all nonvested shares will be forfeited and returned to the
Company. Prior to vesting of the nonvested RRP shares, a recipient will have the
right to vote the nonvested RRP Shares which have been awarded to the recipient
and will receive any dividends declared on such RRP Shares.
Effect of Adjustments
Restricted stock awarded under the RRP will be adjusted by the RRP
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure.
Federal Income Tax Consequences
Holders of restricted stock will recognize ordinary income on the
date that the shares of restricted stock are no longer subject to a substantial
risk of forfeiture, in an amount equal to the fair market value of the shares on
that date. In certain circumstances, a holder may elect to recognize ordinary
income and determine such fair market value on the date of the grant of the
restricted stock. Holders of restricted stock will also recognize ordinary
income equal to their dividend or dividend equivalent payments when such
payments are received. Generally, the amount of income recognized by individuals
will be a deductible expense for income tax purposes by the Company.
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Amendment to the RRP
The Board of Directors may at any time amend, suspend or terminate
the RRP or any portion thereof, provided however, that no such amendment,
suspension or termination shall impair the rights of any award recipient,
without his consent, in any award theretofore made pursuant to the RRP.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE 1999 RECOGNITION AND RETENTION PLAN.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's executive office, 160
Washington Street, Brookline, Massachusetts 02447, no later than November 16,
1999. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934.
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before
the Annual Meeting other than the matters described above in the Proxy
Statement. However, if any matters should properly come before the Annual
Meeting, it is intended that holders of the proxies will act as directed by a
majority of the Board of Directors, except for matters related to the conduct of
the Annual Meeting, as to which they shall act in accordance with their best
judgment. The Board of Directors intends to exercise its discretionary authority
to the fullest extent permitted under the Securities Exchange Act of 1934.
The Bylaws of the Company provide an advance notice procedure for
certain business, or nominations to the Board of Directors to be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than ninety (90)
days before the date fixed for such meeting; provided, however, that in the
event that less than one hundred (100) days notice or prior public disclosure of
the date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
The date on which the Annual Meeting of Stockholders is expected to
be held is April 20, 2000. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2000 Annual
Meeting of Stockholders must be given to the Company no later than January 22,
2000.
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO PAUL R. BECHET, SENIOR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, BROOKLINE BANCORP, INC., 160 WASHINGTON
STREET, BROOKLINE, MASSACHUSETTS 02447, OR CALL AT 617-730-3500.
BY ORDER OF THE BOARD OF DIRECTORS
George C. Caner, Jr.
Corporate Secretary
Brookline, Massachusetts
March 15, 1999
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APPENDIX A
BROOKLINE BANCORP, INC.
1999 STOCK OPTION PLAN
1. Purpose
The purpose of the Brookline Bancorp, Inc. 1999 Stock Option Plan
(the "Plan") is to advance the interests of the Company and its stockholders by
providing Key Employees and Outside Directors of the Company and its Affiliates,
including Brookline Savings Bank, upon whose judgment, initiative and efforts
the successful conduct of the business of the Company and its Affiliates largely
depends, with an additional incentive to perform in a superior manner as well as
to attract people of experience and ability.
2. Definitions
The following words and phrases when used in this Plan with an
initial capital letter, unless the context clearly indicates otherwise, shall
have the meanings set forth below. Wherever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company or the Bank, as such terms are defined in Section
424(e) or 424(f), respectively, of the Code, or a successor to a parent
corporation or subsidiary corporation.
"Award" means an Award of Non-Statutory Stock Options, Incentive
Stock Options, Reload Options, Limited Rights, and/or Dividend Equivalent Rights
granted under the provisions of the Plan.
"Bank" means Brookline Savings Bank, or a successor corporation.
"Beneficiary" means the person or persons designated by a Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Board" or "Board of Directors" means the board of directors of the
Company or its Affiliate, as applicable.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Bank or the Company means a change in
control of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change in Control of the Bank or the
Company within the meaning of the Bank Holding Company Act of 1956, as amended,
and applicable rules and regulations promulgated thereunder, as in effect at the
time of the Change in Control (collectively, the "BHCA"); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (a) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of Company's outstanding
securities except for any securities purchased by the Bank's employee stock
ownership plan or trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in which the Bank or
Company is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than the
current management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar transaction
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the Plan are to be exchanged for or
converted into cash or property or securities not issued by the Company; or (e)
a tender offer is made for 25% or more of the voting securities of the Company
and the shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i)
at least two Non-Employee Directors of the Company, or (ii) the entire Board of
the Company.
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"Common Stock" means shares of the common stock of the Company, par
value $.01 per share.
"Company" means Brookline Bancorp, Inc. or a successor corporation.
"Continuous Service" means employment as a Key Employee and/or
service as an Outside Director without any interruption or termination of such
employment and/or service. Continuous Service shall also mean a continuation as
a member of the Board of Directors following a cessation of employment as a Key
Employee. In the case of a Key Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its subsidiaries or its
successor.
"Date of Grant" means the actual date on which an Award is granted by
the Committee.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of said employee's lifetime.
"Dividend Equivalent Rights" means the right to receive an amount of
cash based upon the terms set forth in Section 10 hereof.
"Effective Date" means the date of, or a date determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.
"Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the reported closing price of the Common Stock as
reported by the Nasdaq stock market (as published by The Wall Street Journal, if
published) or any nationally recognized stock exchange on such date, or if the
Common Stock was not traded on the day prior to such date, on the next preceding
day on which the Common Stock was traded; provided, however, that if the Common
Stock is not reported on the Nasdaq stock market or any nationally recognized
stock exchange, Fair Market Value shall mean the average sale price of all
shares of Common Stock sold during the 30-day period immediately preceding the
date on which such stock option was granted, and if no shares of stock have been
sold within such 30-day period, the average sale price of the last three sales
of Common Stock sold during the 90-day period immediately preceding the date on
which such stock option was granted. In the event Fair Market Value cannot be
determined in the manner described above, then Fair Market Value shall be
determined by the Committee. The Committee is authorized, but is not required,
to obtain an independent appraisal to determine the Fair Market Value of the
Common Stock.
"Incentive Stock Option" means an Option granted by the Committee to
a Participant, which Option is designated as an Incentive Stock Option pursuant
to Section 8.
"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Limited Right" means the right to receive an amount of cash based
upon the terms set forth in Section 9.
"Non-Statutory Stock Option" means an Option granted by the Committee
to (i) an Outside Director or (ii) to any other Participant and such Option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.
"Non-Employee Director" means, for purposes of the Plan, a Director
who (a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the
normal or early retirement date set forth in the Bank's Employee Stock Ownership
Plan, or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on
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the Board of Directors for any reason other than removal for Cause, after
reaching 65 years of age and maintaining at least 10 years of Continuous
Service.
"Outside Director" means a Director of the Company or an Affiliate
who is not an employee of the Company or an Affiliate.
"Option" means an Award granted under Section 7 or Section 8.
"Participant" means a Key Employee or Outside Director of the Company
or its Affiliates who receives or has received an award under the Plan.
"Reload Option" means an option to acquire shares of Common Stock
equivalent to the shares (i) used by a Participant to pay for an Option, or (ii)
deducted from any distribution in order to satisfy income tax required to be
withheld, based upon the terms set forth in Section 19.
"Termination for Cause" means the termination of employment or
termination of service on the Board caused by the individual's personal
dishonesty, willful misconduct, any breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, or the willful violation
of any law, rule or regulation (other than traffic violations or similar
offenses), or a final cease-and-desist order, any of which results in material
loss to the Company or one of its Affiliates.
3. Plan Administration Restrictions
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.
All transactions involving a grant, award or other acquisition from
the Company shall:
(a) be approved by the Company's full Board or by the Committee; or
(b) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the securities present, or represented and entitled to vote at a meeting duly
held in accordance with the laws of the state in which the Company is
incorporated; or the written consent of the holders of a majority of the
securities of the issuer entitled to vote provided that such ratification occurs
no later than the date of the next annual meeting of shareholders; or
(c) result in the acquisition of an Option or Limited Right that is
held by the Participant for a period of six months following the date of such
acquisition.
4. Types of Awards
Awards under the Plan may be granted in any one or a combination of:
(a) Incentive Stock Options; (b) Non-Statutory Stock Options; (c) Limited
Rights; (d) Dividend Equivalent Rights; and (e) Reload Options.
5. Stock Subject to the Plan
Subject to adjustment as provided in Section 17, the maximum number
of shares reserved for issuance under the Plan is 1,367,465 shares. To the
extent that Options or rights granted under the Plan are exercised, the shares
covered will be unavailable for future grants under the Plan; to the extent that
Options together with any related rights granted under the Plan terminate,
expire or are canceled without having been exercised or, in the case of Limited
Rights exercised for cash, new Awards may be made with respect to these shares.
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6. Eligibility
Key Employees of the Company and its Affiliates shall be eligible to
receive Non-Statutory Stock Options, Incentive Stock Options, Equivalent Rights
and/or Reload Options under the Plan. Outside Directors shall be eligible to
receive Non-Statutory Stock Options, Dividend Equivalent Rights and Reload
Options under the Plan.
7. Non-Statutory Stock Options
7.1 Grant of Non-Statutory Stock Options
(a) Grants to Outside Directors and Key Employees. The Committee may,
from time to time, grant Non-Statutory Stock Options to eligible Key Employees
and Outside Directors, and, upon such terms and conditions as the Committee may
determine, grant Non-Statutory Stock Options in exchange for and upon surrender
of previously granted Awards under the Plan. Non-Statutory Stock Options granted
under the Plan, including Non-Statutory Stock Options granted in exchange for
and upon surrender of previously granted Awards, are subject to the terms and
conditions set forth in this Section 7.
(b) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Participant specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of the Plan.
(c) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Statutory Stock Option shall be the Fair Market
Value of the Common Stock of the Company on the date the Option is granted.
Shares may be purchased only upon full payment of the purchase price. Payment of
the purchase price may be made, in whole or in part, through the surrender of
shares of the Common Stock of the Company at the Fair Market Value of such
shares determined in the manner described in Section 2.
(d) Manner of Exercise and Vesting. The Committee may, in its sole
discretion, designate the period over which the Non-Statutory Stock Options
shall vest or accelerate the time at which any Non-Statutory Stock Option may be
exercised in whole or in part. A vested Option may be exercised from time to
time, in whole or in part, by delivering a written notice of exercise to the
President or Chief Executive Officer of the Company, or his designee. Such
notice shall be irrevocable and must be accompanied by full payment of the
purchase price in cash or shares of Common Stock at the Fair Market Value of
such shares, determined on the exercise date in the manner described in Section
2 hereof. If previously acquired shares of Common Stock are tendered in payment
of all or part of the exercise price, the value of such shares shall be
determined as of the date of such exercise.
(e) Terms of Options. The term during which each Non-Statutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Non-Statutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant. No Options shall be earned by a
Participant unless the Participant maintains Continuous Service until the
vesting date of such Option, except as set forth herein. The shares comprising
each installment may be purchased in whole or in part at any time after such
installment becomes purchasable. The Committee may, in its sole discretion,
accelerate the time at which any Non-Statutory Stock Option may be exercised in
whole or in part by Key Employees and/or Outside Directors. Notwithstanding any
other provision of this Plan, in the event of a Change in Control of the Company
or the Bank, all Non-Statutory Stock Options that have been awarded shall become
immediately exercisable for three years following such Change in Control.
(f) Termination of Employment or Service. Upon the termination of a
Key Employee's employment or upon termination of an Outside Director's service
for any reason other than Normal Retirement, death, Disability, Change in
Control or Termination for Cause, the Participant's Non-Statutory Stock Options
shall be exercisable only as to those shares that were immediately purchasable
on the date of termination and only for one year following termination. In the
event of Termination for Cause, all rights under a Participant's Non-Statutory
Stock Options shall expire upon termination. In the event of the Normal
Retirement, death or Disability of any Participant, all Non-Statutory Stock
Options held by the Participant, whether or not exercisable at such time, shall
be exercisable by the Participant or his legal representative or beneficiaries
for one year following the date of his Normal Retirement, death or cessation of
employment due to Disability, provided that in no event shall the period extend
beyond the expiration of the Non-Statutory Stock Option term.
(g) Transferability. In the discretion of the Board, all or any
Non-Statutory Stock Option granted hereunder may be transferable by the
Participant once the Option has vested in the Participant, provided, however,
that the Board may limit the transferability of such Option or Options to a
designated class or classes of persons.
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8. Incentive Stock Options
8.1 Grant of Incentive Stock Options
The Committee may, from time to time, grant Incentive Stock Options
to Key Employees. Incentive Stock Options granted pursuant to the Plan shall be
subject to the following terms and conditions:
(a) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Key Employee specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of the Plan.
(b) Price. Subject to Section 17 of the Plan and Section 422 of the
Code, the purchase price per share of Common Stock deliverable upon the exercise
of each Incentive Stock Option shall be not less than 100% of the Fair Market
Value of the Company's Common Stock on the date the Incentive Stock Option is
granted. However, if a Key Employee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its
Affiliates (or under Section 424(d) of the Code is deemed to own stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or its Affiliates by reason of the ownership of such
classes of stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such Key Employee, or by or for any
corporation, partnership, estate or trust of which such Key Employee is a
shareholder, partner or Beneficiary), the purchase price per share of Common
Stock deliverable upon the exercise of each Incentive Stock Option shall not be
less than 110% of the Fair Market Value of the Company's Common Stock on the
date the Incentive Stock Option is granted. Shares may be purchased only upon
payment of the full purchase price. Payment of the purchase price may be made,
in whole or in part, through the surrender of shares of the Common Stock of the
Company at the Fair Market Value of such shares, determined on the exercise
date, in the manner described in Section 2.
(c) Manner of Exercise. The Committee may, in its sole discretion,
designate the period over which the Incentive Stock Options shall vest or
accelerate the time at which any Incentive Stock Option may be exercised in
whole or in part, provided that it is consistent with the terms of Section 422
of the Code and in the event of a Change in Control of the Company, all
Incentive Stock Options that have been awarded shall become immediately
exercisable, unless the Fair Market Value of the amount exercisable as a result
of a Change in Control shall exceed $100,000 (determined as of the Date of
Grant). In such event, the first $100,000 of Incentive Stock Options (determined
as of the Date of Grant) shall be exercisable as Incentive Stock Options and any
excess shall be exercisable as Non-Statutory Options. Incentive Stock Options
granted under the Plan shall vest in a Participant at the rate or rates
determined by the Committee. Vested Options may be exercised from time to time,
in whole or in part, by delivering a written notice of exercise to the President
or Chief Executive Officer of the Company or his designee. Such notice is
irrevocable and must be accompanied by full payment of the purchase price in
cash or shares of Common Stock at the Fair Market Value of such shares
determined on the exercise date by the manner described in Section 2. If
previously acquired shares of Common Stock are tendered in payment of all or
part of the exercise price, the value of such shares shall be determined as of
the date of such exercise. An Incentive Stock Option shall not be earned unless
the Participant maintains Continuous Service with the Bank or an Affiliate until
the Incentive Stock Option vests.
(d) Amounts of Options. Incentive Stock Options may be granted to any
eligible Key Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
Notwithstanding the above, the maximum number of shares that may be subject to
an Incentive Stock Option awarded under the Plan to any Key Employee shall be
684,000. In granting Incentive Stock Options, the Committee shall consider such
factors as it deems relevant, which factors may include, among others, the
position and responsibilities of the Key Employee, the length and value of his
or her service to the Bank, the Company, or the Affiliate, the compensation paid
to the Key Employee and the Committee's evaluation of the performance of the
Bank, the Company, or the Affiliate, according to measurements that may include,
among others, key financial ratios, levels of classified assets, and independent
audit findings. In the case of an Option intended to qualify as an Incentive
Stock Option, the aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and its Affiliates) shall not
exceed $100,000. The provisions of this Section 8.1(d) shall be construed and
applied in accordance with Section 422(d) of the Code and the regulations, if
any, promulgated thereunder.
(e) Terms of Options. The term during which each Incentive Stock
Option may be exercised shall be determined by the Committee, but in no event
shall an Incentive Stock Option be exercisable in whole or in part more than 10
years from the Date of Grant. If any Key Employee, at the time an Incentive
Stock Option is granted to him, owns stock representing more than 10% of the
total combined voting power of all classes of stock of the Company or its
Affiliate (or, under Section 424(d) of the Code, is deemed to own stock
representing more than 10% of the total combined voting power of all classes of
stock, by reason of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent
of such Key Employee, or
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by or for any corporation, partnership, estate or trust of which such Key
Employee is a shareholder, partner or Beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five years from
the Date of Grant.
(f) Termination of Employment. Upon the termination of a Key
Employee's service for any reason other than Disability, Normal Retirement,
Change in Control, death or Termination for Cause, the Key Employee's Incentive
Stock Options shall be exercisable only as to those shares that were immediately
purchasable by such Key Employee at the date of termination and only for a
period of three months following termination. In the event of Termination for
Cause all rights under the Incentive Stock Options shall expire upon
termination.
Upon termination of a Key Employee's employment due to Normal
Retirement, death, Disability, or following a Change in Control, all Incentive
Stock Options held by such Key Employee, whether or not exercisable at such
time, shall be exercisable for a period of one year following the date of his
cessation of employment, provided however, that any such Option shall not be
eligible for treatment as an Incentive Stock Option in the event such Option is
exercised more than three months following the date of his Normal Retirement or
termination of employment following a Change in Control; and provided further,
that no Option shall be eligible for treatment as an Incentive Stock Option in
the event such Option is exercised more than one year following termination of
employment due to Disability and provided further, in order to obtain Incentive
Stock Option treatment for Options exercised by heirs or devisees of an
Optionee, the Optionee's death must have occurred while employed or within three
(3) months of termination of employment. In no event shall the exercise period
extend beyond the expiration of the Incentive Stock Option term.
(g) Transferability. No Incentive Stock Option granted under the Plan
is transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Key Employee to which it is granted.
(h) Compliance with Code. The Options granted under this Section 8
are intended to qualify as Incentive Stock Options within the meaning of Section
422 of the Code, but the Company makes no warranty as to the qualification of
any Option as an Incentive Stock Option within the meaning of Section 422 of the
Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not or cannot be
cured, such Option shall be a Non-Statutory Stock Option.
9. Limited Rights
9.1 Grant of Limited Rights
The Committee may grant a Limited Right simultaneously with the grant
of any Option to any Key Employee of the Bank, with respect to all or some of
the shares covered by such Option. Limited Rights granted under the Plan are
subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable
in whole or in part before the expiration of six months from the date of grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control of the Company.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.
Upon exercise of a Limited Right, the related Option shall cease to
be exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
promptly receive from the Company an amount of cash equal to the difference
between the Fair Market Value on the Date of Grant of the related Option and the
Fair Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which such Limited
Right is being exercised. In the event of a Change in Control in which pooling
accounting treatment is a condition to the transaction, the Limited Right shall
be exercisable solely for shares of stock of the Company, or in the event of a
merger transaction, for shares of the acquiring corporation or its parent, as
applicable. The number of shares to be received on the exercise of such Limited
Right shall be determined by dividing the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.
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10. Dividend Equivalent Rights
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Dividend Equivalent Right with respect to all or some of
the shares covered by such Option. Dividend Equivalent Rights granted under this
Plan are subject to the following terms and conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the
Participant with a cash benefit per share for each share underlying the
unexercised portion of the related Option equal to the amount of any
extraordinary dividend (as defined in Section 10(c)) per share of Common Stock
declared by the Company. The terms and conditions of any Dividend Equivalent
Right shall be evidenced in the Option agreement entered into with the
Participant and shall be subject to the terms and conditions of the Plan. The
Dividend Equivalent Right is transferable only when the related Option is
transferable and under the same conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the
Participant holding a Dividend Equivalent Right with respect to Options or
portions thereof which have vested shall promptly receive from the Company or
the Bank the amount of cash equal to the amount of the extraordinary dividend
per share of Common Stock, multiplied by the number of shares of Common Stock
underlying the unexercised portion of the related Option. With respect to
options or portions thereof which have not vested, the amount that would have
been received pursuant to the Dividend Equivalent Right with respect to the
shares underlying such unvested Option or portion thereof shall be paid to the
Participant holding such Dividend Equivalent Right together with earnings
thereon, on such date as the Option or portion thereof becomes vested. Payments
shall be decreased by the amount of any applicable tax withholding prior to
distribution to the Participant as set forth in Section 19.
(c) Extraordinary Dividend. For purposes of this Section 10, an
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend, on the date the dividend is declared, exceeds the Bank's
weighted average cost of funds on interest-bearing liabilities for the current
and preceding three quarters.
11. Reload Option
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Reload Option with respect to all or some of the shares
covered by such Option. A Reload Option may be granted to a Participant who
satisfies all or part of the exercise price of the Option with shares of Common
Stock (as described in Section 13(c) below). The Reload Option represents an
additional option to acquire the same number of shares of Common Stock as is
used by the Participant to pay for the original Option. Reload Options may also
be granted to replace Common Stock withheld by the Company for payment of a
Participant's withholding tax under Section 19. A Reload Option is subject to
all of the same terms and conditions as the original Option except that (i) the
exercise price of the shares of Common Stock subject to the Reload Option will
be determined at the time the original Option is exercised and (ii) such Reload
Option will conform to all provisions of the Plan at the time the original
Option is exercised.
12. Surrender of Option
In the event of a Participant's termination of employment or
termination of service as a result of death, Disability or Normal Retirement,
the Participant (or his or her personal representative(s), heir(s), or
devisee(s)) may, in a form acceptable to the Committee make application to
surrender all or part of the Options held by such Participant in exchange for a
cash payment from the Company of an amount equal to the difference between the
Fair Market Value of the Common Stock on the date of termination of employment
or the date of termination of service on the Board and the exercise price per
share of the Option. Whether the Company accepts such application or determines
to make payment, in whole or part, is within its absolute and sole discretion,
it being expressly understood that the Company is under no obligation to any
Participant whatsoever to make such payments. In the event that the Company
accepts such application and determines to make payment, such payment shall be
in lieu of the exercise of the underlying Option and such Option shall cease to
be exercisable.
13. Alternate Option Payment Mechanism
The Committee has sole discretion to determine what form of payment
it will accept for the exercise of an Option. The Committee may indicate
acceptable forms in the agreement with the Participant covering such Options or
may reserve its decision to the time of exercise. No Option is to be considered
exercised until payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by
certified check. To the extent permitted by law, the Committee may permit all or
a portion of the exercise price of an Option to be paid through borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if
applicable, a Participant may engage in a "cashless exercise" of the Option.
Upon a cashless exercise, the Participant shall give the Company written notice
of the exercise of the Option together with
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an order to a registered broker-dealer or equivalent third party, to sell part
or all of the Common Stock subject to the Option and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Participant does not sell the Common Stock subject to
the Option through a registered broker-dealer or equivalent third party, the
Optionee can give the Company written notice of the exercise of the Option and
the third party purchaser of the Common Stock subject to the Option shall pay
the Option exercise price plus applicable withholding taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of the
Option exercise price by the tendering of previously acquired shares of Common
Stock. All shares of Common Stock tendered in payment of the exercise price of
an Option shall be valued at the Fair Market Value of the Common Stock on the
date prior to the date of exercise. No tendered shares of Common Stock which
were acquired by the Participant upon the previous exercise of an Option or as
awards under a stock award plan (such as the Company's Recognition and Retention
Plan) shall be accepted for exchange unless the Participant has held such shares
(without restrictions imposed by said plan or award) for at least six months
prior to the exchange.
14. Rights of a Stockholder
A Participant shall have no rights as a stockholder with respect to
any shares covered by a Non-Statutory and/or Incentive Stock Option until the
date of issuance of a stock certificate for such shares. Nothing in the Plan or
in any Award granted confers on any person any right to continue in the employ
of the Company or its Affiliates or to continue to perform services for the
Company or its Affiliates or interferes in any way with the right of the Company
or its Affiliates to terminate his services as an officer, director or employee
at any time.
15. Agreement with Participants
Each Award of Options, Reload Options, Limited Rights, and/or
Dividend Equivalent Rights will be evidenced by a written agreement, executed by
the Participant and the Company or its Affiliates that describes the conditions
for receiving the Awards including the date of Award, the purchase price,
applicable periods, and any other terms and conditions as may be required by the
Board or applicable securities law.
16. Designation of Beneficiary
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Option, Reload Option,
Limited Rights Award or Dividend Equivalent Rights to which he would then be
entitled. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked in writing. If a Participant fails effectively to
designate a Beneficiary, then his estate will be deemed to be the Beneficiary.
17. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock
by reason of any stock dividend or split, pro rata return of capital to all
shareholders, recapitalization, or any merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other corporate change, or
other increase or decrease in such shares, without receipt or payment of
consideration by the Company, the Committee will make such adjustments to
previously granted Awards, to prevent dilution or enlargement of the rights of
the Participant, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock that may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock covered by Awards already made under the Plan;
or
(c) adjustments in the purchase price of outstanding Incentive
and/or Non-Statutory Stock Options, or any Limited Rights
attached to such Options.
No such adjustments may, however, materially change the value of
benefits available to a Participant under a previously granted Award. With
respect to Incentive Stock Options, no such adjustment shall be made if it would
be deemed a "modification" of the Award under Section 424 of the Code.
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18. Effect of a Change in Control on Option Awards
In the event of a Change in Control, the Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of such Change in Control:
(a) provide that such Options shall be assumed, or equivalent options
shall be substituted ("Substitute Options") by the acquiring or succeeding
corporation (or an affiliate thereof), provided that: (A) any such Substitute
Options exchanged for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, and (B) the shares of stock issuable upon the
exercise of such Substitute Options shall constitute securities registered in
accordance with the Securities Act of 1933, as amended ("1933 Act") or such
securities shall be exempt from such registration in accordance with Sections
3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered Securities"), or
in the alternative, if the securities issuable upon the exercise of such
Substitute Options shall not constitute Registered Securities, then the
Participant will receive upon consummation of the Change in Control a cash
payment for each Option surrendered equal to the difference between the (1) Fair
Market Value of the consideration to be received for each share of Common Stock
in the Change in Control times the number of shares of Common Stock subject to
such surrendered Options, and (2) the aggregate exercise price of all such
surrendered Options, or
(b) in the event of a transaction under the terms of which the
holders of Common Stock will receive upon consummation thereof a cash payment
(the "Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, make or provide for a cash payment to the Participants
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such Options held by each Optionee (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such surrendered Options in exchange for such
surrendered Options.
19. Withholding
There may be deducted from each distribution of cash and/or Common
Stock under the Plan the amount of tax required by any governmental authority to
be withheld. Shares of Common Stock will be withheld where required from any
distribution of Common Stock.
20. Amendment of the Plan
The Board may at any time, and from time to time, modify or amend the
Plan in any respect, or modify or amend an Award received by Key Employees
and/or Outside Directors; provided, however, that no such termination,
modification or amendment may affect the rights of a Participant, without his
consent, under an outstanding Award. Any amendment or modification of the Plan
or an outstanding Award under the Plan, including but not limited to the
acceleration of vesting of an outstanding Award for reasons other than the
death, Disability, Normal Retirement, or a Change in Control, shall be approved
by the Committee or the full Board of the Company.
21. Effective Date of Plan
The Plan shall become effective upon the date of, or a date
determined by the Board of Directors following, approval of the Plan by the
Company's stockholders.
22. Termination of the Plan
The right to grant Awards under the Plan will terminate upon the
earlier of (i) 10 years after the Effective Date, or (ii) the date on which the
exercise of Options or related Rights equaling the maximum number of shares
reserved under the Plan occurs, as set forth in Section 5. The Board may suspend
or terminate the Plan at any time, provided that no such action will, without
the consent of a Participant, adversely affect his rights under a previously
granted Award.
23. Applicable Law
The Plan will be administered in accordance with the laws of the
Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
its duly authorized officers and the corporate seal to be affixed and duly
attested, as of the ____ day of _______________________.
Date Approved by Stockholders: _____________________
Effective Date: _____________________
ATTEST: BROOKLINE BANCORP, INC.
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Secretary Richard P. Chapman, Jr.
President and Chief Executive Officer
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APPENDIX B
BROOKLINE BANCORP, INC.
1999 RECOGNITION AND RETENTION PLAN
1. Establishment of the Plan
Brookline Bancorp, Inc. hereby establishes the Brookline Bancorp,
Inc. 1999 Recognition and Retention Plan (the "Plan") upon the terms and
conditions hereinafter stated in the Plan.
2. Purpose of the Plan
The purpose of the Plan is to advance the interests of the Company
and its stockholders by providing Key Employees and Outside Directors of the
Company and its Affiliates, including Brookline Savings Bank, upon whose
judgment, initiative and efforts the successful conduct of the business of the
Company and its Affiliates largely depends, with compensation for their
contributions to the Company and its Affiliates and an additional incentive to
perform in a superior manner, as well as to attract people of experience and
ability.
3. Definitions
The following words and phrases when used in this Plan with an
initial capital letter, unless the context clearly indicates otherwise, shall
have the meanings set forth below. Wherever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company or the Bank, as such terms are defined in Section
424(e) and (f), respectively, of the Code, or a successor to a parent
corporation or subsidiary corporation.
"Award" means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"Bank" means Brookline Savings Bank, or a successor corporation.
"Beneficiary" means the person or persons designated by a Recipient
to receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
"Board" or "Board of Directors" means the Board of Directors of the
Company or an Affiliate, as applicable. For purposes of Section 4 of the Plan,
"Board" shall refer solely to the Board of the Company.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Company means a change in control of a
nature that: (i) would be required to be reported in response to Item 1(a) of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change in Control of the Company within the meaning of the
Bank Holding Company Act of 1956, as amended, and applicable rules and
regulations promulgated thereunder (collectively, the "BHCA") as in effect at
the time of the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he were a member of the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the
Company or similar transaction in which the Company is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the
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current management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar transaction
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the Plan are to be exchanged for or
converted into cash or property or securities not issued by the Company; or (e)
a tender offer is made for 25% or more of the voting securities of the Company
and the shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i)
at least two Non-Employee Directors of the Company, or (ii) the entire Board of
the Company.
"Common Stock" means shares of the common stock of the Company, par
value $.01 per share.
"Company" means Brookline Bancorp, Inc. the stock holding company of
the Bank, or a successor corporation.
"Continuous Service" means employment as a Key Employee and/or
service as an Outside Director without any interruption or termination of such
employment and/or service. Continuous Service shall also mean a continuation as
a member of the Board of Directors following a cessation of employment as a Key
Employee. In the case of a Key Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its subsidiaries or its
successor.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of such employee's lifetime.
"Effective Date" means the date of, or a date determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Non-Employee Director" means, for purposes of the Plan, a Director
who (a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the
normal or early retirement date set forth in the Bank's Employee Stock Ownership
Plan, or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on the Board of Directors for any reason other than removal
for Cause, after reaching 65 years of age and maintaining at least 10 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate
who is not an employee of the Company or an Affiliate.
"Recipient" means a Key Employee or Outside Director of the Company
or its Affiliates who receives or has received an Award under the Plan.
"Restricted Period" means the period of time selected by the
Committee for the purpose of determining when restrictions are in effect under
Section 6 with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" means shares of Common Stock that have been
contingently awarded to a Recipient by the Committee subject to the restrictions
referred to in Section 6, so long as such restrictions are in effect.
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4. Administration of the Plan.
4.1 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in the Plan. The interpretation and construction by the Committee of any
provisions of the Plan or of any Award granted hereunder shall be final and
binding. The Committee shall act by vote or written consent of a majority of its
members. Subject to the express provisions and limitations of the Plan, the
Committee may adopt such rules and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than one time per calendar year.
4.2 Role of the Board. The members of the Committee shall be
appointed or approved by, and will serve at the pleasure of, the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee. The Board shall have all of the powers allocated to
it in the Plan, may take any action under or with respect to the Plan that the
Committee is authorized to take, and may reverse or override any action taken or
decision made by the Committee under or with respect to the Plan, provided,
however, that except as provided in Section 6.2, the Board may not revoke any
Award except in the event of revocation for Cause or with respect to unearned
Awards in the event the Recipient of an Award voluntarily terminates employment
with the Bank prior to Normal Retirement.
4.3 Plan Administration Restrictions. All transactions involving a
grant, award or other acquisition from the Company shall:
(a) be approved by the Company's full Board or by the Committee; or
(b) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either the affirmative vote of the holders of a majority of the
shares present, or represented and entitled to vote at a meeting duly held in
accordance with the laws under which the Company is incorporated or the written
consent of the holders of a majority of the securities of the issuer entitled to
vote provided that such ratification occurs no later than the date of the next
annual meeting of shareholders; or
(c) result in the acquisition of Common Stock that is held by the
Recipient for a period of six months following the date of such acquisition.
4.4 Limitation on Liability. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Awards granted under it. If a member of the Board or the Committee
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Bank or the Company shall indemnify such
member against expense (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Bank and the Company and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
5. Eligibility; Awards
5.1 Eligibility. Key Employees and Outside Directors are eligible to
receive Awards.
5.2 Awards to Key Employees and Outside Directors. The Committee may
determine which of the Key Employees and Outside Directors referenced in Section
5.1 will be granted Awards and the number of shares covered by each Award;
provided, however, that in no event shall any Awards be made that will violate
the Bank's Charter and Bylaws, the Company's Articles of Organization and
Bylaws, or any applicable federal or state law or regulation. Shares of
Restricted Stock that are awarded by the Committee shall, on the date of the
Award, be registered in the name of the Recipient and transferred to the
Recipient, in accordance with the terms and conditions established under the
Plan. The aggregate number of shares that shall be issued under the Plan is
546,986.
In the event Restricted Stock is forfeited for any reason, the
Committee, from time to time, may determine which of the Key Employees and
Outside Directors will be granted additional Awards to be awarded from forfeited
Restricted Stock.
B-3
<PAGE>
In selecting those Key Employees and Outside Directors to whom Awards
will be granted and the amount of Restricted Stock covered by such Awards, the
Committee shall consider such factors as it deems relevant, which factors may
include, among others, the position and responsibilities of the Key Employees
and Outside Directors, the length and value of their services to the Bank and
its Affiliates, the compensation paid to the Key Employees or fees paid to the
Outside Directors, and the Committee may request the written recommendation of
the Chief Executive Officer and other senior executive officers of the Bank, the
Company and its Affiliates or the recommendation of the full Board. All
allocations by the Committee shall be subject to review, and approval or
rejection, by the Board.
No Restricted Stock shall be earned unless the Recipient maintains
Continuous Service with the Bank or an Affiliate until the restrictions lapse.
5.3 Manner of Award. As promptly as practicable after a determination
is made pursuant to Section 5.2 to grant an Award, the Committee shall notify
the Recipient in writing of the grant of the Award, the number of shares of
Restricted Stock covered by the Award, and the terms upon which the Restricted
Stock subject to the Award may be earned. Upon notification of an Award of
Restricted Stock, the Recipient shall execute and return to the Company a
restricted stock agreement (the "Restricted Stock Agreement") setting forth the
terms and conditions under which the Recipient shall earn the Restricted Stock,
together with a stock power or stock powers endorsed in blank. Thereafter, the
Recipient's Restricted Stock and stock power shall be deposited with an escrow
agent specified by the Company ("Escrow Agent") who shall hold such Restricted
Stock under the terms and conditions set forth in the Restricted Stock
Agreement. Each certificate in respect of shares of Restricted Stock Awarded
under the Plan shall be registered in the name of the Recipient.
5.4 Treatment of Forfeited Shares. In the event shares of Restricted
Stock are forfeited by a Recipient, such shares shall be returned to the Company
and shall be held and accounted for pursuant to the terms of the Plan until such
time as the Restricted Stock is re-awarded to another Recipient, in accordance
with the terms of the Plan and the applicable state and federal laws, rules and
regulations.
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant awards of Restricted Stock to Key Employees
and Outside Directors and, in addition to the terms and conditions contained in
Sections 6.1 through 6.8, to provide such other terms and conditions (which need
not be identical among Recipients) in respect of such Awards, and the vesting
thereof, as the Committee shall determine.
6.1 General Rules. At the time of an Award of Restricted Stock, the
Committee shall establish for each Participant a Restricted Period during which
or at the expiration of which (as the Committee shall determine and provide for
in the agreement referred to in Section 5.3), the Shares awarded as Restricted
Stock shall vest. The Committee shall have the authority, in its discretion, to
accelerate the time at which any or all of the restrictions shall lapse with
respect to a Restricted Stock Award, or to remove any or all of such
restrictions. Subject to any such other terms and conditions as the Committee
shall provide with respect to Awards, shares of Restricted Stock may not be
sold, assigned, transferred (within the meaning of Code Section 83), pledged or
otherwise encumbered by the Recipient, except as hereinafter provided, during
the Restricted Period.
6.2 Continuous Service; Forfeiture. Except as provided in Section
6.3, if a Recipient ceases to maintain Continuous Service for any reason (other
than death, Disability, Change in Control or Normal Retirement), unless the
Committee shall otherwise determine, all shares of Restricted Stock theretofore
awarded to such Recipient and which at the time of such termination of
Continuous Service are subject to the restrictions imposed by Section 6.1 shall
upon such termination of Continuous Service be forfeited. Any stock dividends or
declared but unpaid cash dividends attributable to such shares of Restricted
Stock shall also be forfeited.
6.3 Exception for Termination Due to Death, Disability, Normal
Retirement or following a Change in Control. Notwithstanding the general rule
contained in Section 6.1, Restricted Stock awarded to a Recipient whose
employment with, or service on, the Board of the Company or an Affiliate
terminates due to death, Disability, Normal Retirement or following a Change in
Control shall be deemed earned as of the Recipient's last day of employment with
the Company or an Affiliate, or last day of service on the Board of the Company
or an Affiliate; provided that Restricted Stock awarded to a Key Employee who at
any time also serves as a Director, shall not be deemed earned until both
employment and service as a Director have been terminated.
6.4 Revocation for Cause. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof, previously awarded under the Plan, to the extent
Restricted Stock has not been redelivered by the Escrow Agent to the Recipient,
whether or not yet earned, in the case of a Key Employee whose employment is
terminated by the Company or an Affiliate or an Outside Director whose service
is terminated by the Company or an
B-4
<PAGE>
Affiliate for Cause or who is discovered after termination of employment or
service on the Board to have engaged in conduct that would have justified
termination for Cause.
6.5 Restricted Stock Legend. Each certificate in respect of shares of
Restricted Stock awarded under the Plan shall be registered in the name of the
Recipient and deposited by the Recipient, together with a stock power endorsed
in blank, with the Escrow Agent and shall bear the following (or a similar)
legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the Brookline Bancorp, Inc. 1999 Recognition
and Retention Plan. Copies of such Plan are on file in the offices of
the Secretary of Brookline Bancorp, Inc. 160 Washington Street,
Brookline, Massachusetts 02147."
6.6 Payment of Dividends and Return of Capital. After an Award has
been granted but before such Award has been earned, the Recipient shall receive
any cash dividends paid with respect to such shares, or shall share in any
pro-rata return of capital to all shareholders with respect to the Common Stock.
Stock dividends declared by the Company and paid on Awards that have not yet
been earned shall be subject to the same restrictions as the Restricted Stock
and the certificate(s) or other instruments representing or evidencing such
shares shall be legended in the manner provided in Section 6.5 and shall be
delivered to the Escrow Agent for distribution to the Recipient when the
Restricted Stock upon which such dividends were paid are earned. Unless the
Recipient has made an election under Section 83(b) of the Code, cash dividends
or other amounts so paid on shares that have not yet been earned by the
Recipient shall be treated as compensation income to the Recipient when paid. If
dividends are paid with respect to shares of Restricted Stock under the Plan
that have been forfeited and returned to the Company or to a trust established
to hold issued and unawarded or forfeited shares, the Committee can determine to
award such dividends to any Recipient or Recipients under the Plan, to any other
employee or director of the Company or the Bank, or can return such dividends to
the Company.
6.7 Voting of Restricted Shares. After an Award has been granted, the
Recipient as conditional owner of the Restricted Stock shall have the right to
vote such shares.
6.8 Delivery of Earned Shares. At the expiration of the restrictions
imposed by Section 6.1, the Escrow Agent shall redeliver to the Recipient (or
where the relevant provision of Section 6.3 applies in the case of a deceased
Recipient, to his Beneficiary) the certificate(s) and any remaining stock power
deposited with it pursuant to Section 5.3 and the shares represented by such
certificate(s) shall be free of the restrictions referred to Section 6.1.
7. Adjustments Upon Changes in Capitalization
In the event of any change in the outstanding shares subsequent to
the Effective Date by reason of any reorganization, recapitalization, stock
split, stock dividend, combination or exchange of shares, or any merger,
consolidation or any change in the corporate structure or shares of the Company,
without receipt or payment of consideration by the Company, the maximum
aggregate number and class of shares as to which Awards may be granted under the
Plan shall be appropriately adjusted by the Committee, whose determination shall
be conclusive. Any shares of stock or other securities received, as a result of
any of the foregoing, by a Recipient with respect to Restricted Stock shall be
subject to the same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and
deposited with the Escrow Agent in the manner provided in Section 6.5.
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the Plan in
any instrument evidencing any Award under the Plan may be assigned, encumbered
or transferred (within the meaning of Code Section 83) except, in the event of
the death of a Recipient, by will or the laws of descent and distribution until
such Award is earned.
B-5
<PAGE>
9. Key Employee Rights Under the Plan
No Key Employee shall have a right to be selected as a Recipient nor,
having been so selected, to be selected again as a Recipient and no Key Employee
or other person shall have any claim or right to be granted an Award under the
Plan or under any other incentive or similar plan of the Bank or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as giving
any Key Employee any right to be retained in the employ of the Bank or any
Affiliate.
10. Outside Director Rights Under the Plan
Neither the Plan nor any action taken thereunder shall be construed
as giving any Outside Director any right to be retained in the service of the
Bank or any Affiliate.
11. Withholding Tax
Upon the termination of the Restricted Period with respect to any
shares of Restricted Stock (or at any such earlier time that an election is made
by the Recipient under Section 83(b) of the Code, or any successor provision
thereto, to include the value of such shares in taxable income), the Bank or the
Company shall have the right to require the Recipient or other person receiving
such shares to pay the Bank or the Company the amount of any taxes that the Bank
or the Company is required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell without notice, a sufficient number of shares held by
it to cover the amount required to be withheld. The Bank or the Company shall
have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Bank or the Company is
required to withhold with respect to such dividend payments.
12. Amendment or Termination
The Board of the Company may amend, suspend or terminate the Plan or
any portion thereof at any time, provided, however, that no such amendment,
suspension or termination shall impair the rights of any Recipient, without his
consent, in any Award theretofore made pursuant to the Plan. Any amendment or
modification of the Plan or an outstanding Award under the Plan, including but
not limited to the acceleration of vesting of an outstanding Award for reasons
other than death, Disability, Normal Retirement or termination following a
Change in Control, shall be approved by the Committee, or the full Board of the
Company.
13. Governing Law
The Plan shall be governed by the laws of the Commonwealth of
Massachusetts.
14. Term of Plan
The Plan shall become effective on the date of, or a date determined
by the Board of Directors following, approval of the Plan by the Company's
stockholders. It shall continue in effect until the earlier of (i) ten years
from the Effective Date unless sooner terminated under Section 12 hereof, or
(ii) the date on which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
B-6
<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
its duly authorized officers and the corporate seal to be affixed and duly
attested, as of the ____ day of _______________________.
Date Approved by Shareholders: ______________________
Effective Date: ______________________
ATTEST:
BROOKLINE BANCORP, INC.
- --------------------------- -------------------------------------
Secretary Richard P. Chapman, Jr.
President and Chief Executive Officer
B-7
<PAGE>
REVOCABLE PROXY
BROOKLINE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 15, 1999
The undersigned hereby appoints the official proxy committee
consisting of the Board of Directors with full powers of substitution to act as
attorneys and proxies for the undersigned to vote all shares of Common Stock of
the Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders ("Annual Meeting") to be held at the Brookline Holiday Inn, 1200
Beacon Street, Brookline, Massachusetts 02446 on April 15, 1999, at 10:00 a.m.
Eastern Standard Time. The official proxy committee is authorized to cast all
votes to which the undersigned is entitled as follows:
<TABLE>
<CAPTION>
VOTE
FOR WITHHELD
--- --------
(except as
marked to
the contrary
below)
<S> <C> <C>
1. The election as Directors of all nominees listed below
each to serve for a three-year term [ ] [ ]
</TABLE>
George C. Caner, Jr.
Richard P. Chapman, Jr.
Edward D. Rowley
William V. Tripp, III
Peter O. Wilde
INSTRUCTION: To withhold your vote for one or more
nominees, write the name of the nominee(s) on the line(s) below.
- -----------------------------
- -----------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
2. The approval of the Company's 1999 Stock
Option Plan. [ ] [ ] [ ]
3. The approval of the Company's 1999 Recognition
and Retention Plan. [ ] [ ] [ ]
</TABLE>
The Board of Directors recommends a vote "FOR" Proposal 1, Proposal 2 and
Proposal 3.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS DIRECTED BY A MAJORITY OF
THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Stockholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of notice of the Annual Meeting, a proxy statement dated March 15,
1999 and audited financial statements.
Dated: [ ] Check Box if You Plan
------------------------ to Attend Annual Meeting
- ------------------------------- -------------------------------
PRINT NAME OF Stockholder PRINT NAME OF Stockholder
- ------------------------------- -------------------------------
SIGNATURE OF Stockholder SIGNATURE OF Stockholder
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title.
- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-paid envelope.
- --------------------------------------------------------------------------------
