SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MASSACHUSETTS FINCORP, INC.
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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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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MASSACHUSETTS FINCORP, INC.
1442 Dorchester Avenue
Boston, Massachusetts 02122
(617) 825-5555
June 16, 1999
Fellow Shareholders:
You are cordially invited to attend the 1999 annual meeting of
shareholders (the "Annual Meeting") of Massachusetts Fincorp, Inc. (the
"Company"), the holding company for The Massachusetts Co-operative Bank
(the "Bank"), Boston, Massachusetts, which will be held on July 21, 1999 at
2:00 p.m., Eastern Time, at The Phillips Old Colony House, 780-900
Morrissey Boulevard, Boston, Massachusetts.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the business to be transacted at the Annual Meeting. Directors
and Officers of the Company will be present at the Annual Meeting to
respond to any questions that our shareholders may have regarding the
business to be transacted.
The Board of Directors of the Company has determined that matters to
be considered at the Annual Meeting are in the best interests of the
Company and its shareholders. For the reasons set forth in the Proxy
Statement, the Board of Directors unanimously recommends that you vote
"FOR" each of the nominees as directors specified under Proposal 1, and
that you vote "FOR" approval of the Massachusetts Fincorp, Inc. 1999 Stock-
Based Incentive Plan (the "Plan") as specified under Proposal 2.
Please sign and return the enclosed proxy card promptly. Your
cooperation is appreciated since a majority of the common stock must be
represented, either in person or by proxy, to constitute a quorum for the
conduct of business at the Annual Meeting.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Paul C. Green
Paul C. Green
President and Chief Executive Officer
MASSACHUSETTS FINCORP, INC.
1442 Dorchester Avenue
Boston, Massachusetts 02122
__________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on July 21, 1999
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Annual Meeting") of Massachusetts Fincorp, Inc. (the "Company"), the
holding company for The Massachusetts Co-operative Bank (the "Bank"), will
be held on July 21, 1999 at 2:00 p.m., Eastern Time, at The Phillips Old
Colony House, 780-900 Morrissey Boulevard, Boston, Massachusetts.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of four directors to a three-year term of office;
2. The approval of the Massachusetts Fincorp, Inc. 1999 Stock-
Based Incentive Plan; and
3. Such other matters as may properly come before the meeting and
at any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established June 7, 1999 as the record
date for the determination of shareholders entitled to receive notice of
and to vote at the Annual Meeting and at any adjournments thereof. Only
record holders of the common stock of the Company as of the close of
business on such record date will be entitled to vote at the Annual Meeting
or any adjournments thereof. In the event there are not sufficient votes
for a quorum or to approve the foregoing proposals at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit
further solicitation of proxies by the Company. A list of shareholders
entitled to vote at the Annual Meeting will be available at Massachusetts
Fincorp, Inc., 1442 Dorchester Avenue, Boston, Massachusetts 02122, for a
period of ten days prior to the Annual Meeting and will also be available
at the Annual Meeting itself.
By Order of the Board of Directors
/s/ Ruth J. Rogers
Ruth J. Rogers
Chief Financial Officer, Treasurer and
Corporate Secretary
Boston, Massachusetts
June 16, 1999
MASSACHUSETTS FINCORP, INC.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
July 21, 1999
_______________________
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to shareholders of
Massachusetts Fincorp, Inc. (the "Company") in connection with the
solicitation by the Board of Directors ("Board of Directors" or "Board") of
proxies to be used at the annual meeting of shareholders (the "Annual
Meeting"), to be held on July 21, 1999 at 2:00 p.m., Eastern Time, at The
Phillips Old Colony House, 780-900 Morrissey Boulevard, Boston,
Massachusetts, and at any adjournments thereof. The 1998 Annual Report to
Stockholders, including the consolidated financial statements of the
Company for the fiscal year ended December 31, 1998, accompanies this Proxy
Statement which is first being mailed to record holders on or about June
16, 1999.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Shareholders are requested to
vote by completing the enclosed proxy card and returning it signed and
dated in the enclosed postage-paid envelope. Shareholders are urged to
indicate their vote in the spaces provided on the proxy card. Proxies
solicited by the Board of Directors of the Company will be voted by the
Board of Directors in accordance with the directions given therein. Where
no instructions are indicated, signed proxy cards will be voted "FOR" the
election of the nominees for director named in this Proxy Statement and
"FOR" the approval of the Massachusetts Fincorp, Inc. 1999 Stock-Based
Incentive Plan (the "Incentive Plan").
Other than the matters listed on the attached Notice of Annual
Meeting of Shareholders, 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 and at any adjournments thereof, including whether or not to
adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company,
by delivering to the Company a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. However, if you are
a shareholder whose shares are not registered in your own name, you will
need appropriate documentation from your record holder to attend the Annual
Meeting and vote personally at the Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Regan & Associates, Inc., a proxy solicitation firm, will assist the
Company in soliciting proxies for the Annual Meeting and will be paid a fee
of $3,000, plus out-of-pocket expenses. Proxies may also be solicited
personally or by telephone by directors, officers and other employees of
the Company and its subsidiary, The Massachusetts Co-operative Bank (the
"Bank"), without additional compensation therefor. The Company will also
request persons, firms and corporations holding shares in their names, or
in the name of their nominees, which are beneficially owned by others, to
send proxy material to, and obtain proxies from, such beneficial owners,
and will reimburse such holders for their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below.
The close of business on June 7, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual
Meeting and at any adjournments thereof. The total number of shares of
Common Stock outstanding on the Record Date was 545,481 shares.
As provided in the Company's Certificate of Incorporation, for voting
purposes, holders of Common Stock who beneficially own in excess of 10% of
the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote in respect of the shares held in excess of the Limit and are not
treated as outstanding for voting purposes. A person or entity is deemed
to beneficially own shares owned by an affiliate of, as well as, by persons
acting in concert with, such person or entity. The Company's Certificate
of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock
in excess of the Limit to supply information to the Company to enable the
Board of Directors to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote
(after subtracting any shares in excess of the Limit pursuant to the
Company's Certificate of Incorporation) is necessary to constitute a quorum
at the Annual Meeting. In the event that there are not sufficient votes
for a quorum or to approve or ratify any proposal at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors (Proposal 1), the proxy card being
provided by the Board of Directors enables a shareholder to vote "FOR" the
election of the nominees proposed by the Board, or to "WITHHOLD" authority
to vote for one or more of the nominees being proposed. Under Delaware law
and the Company's Bylaws, directors are elected by a plurality of votes
cast, without regard to either (i) broker non-votes or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the proposed approval of the Incentive Plan (Proposal 2)
submitted for shareholder action, the proxy card being provided by the
Board of Directors enables a shareholder to check the appropriate box on
the proxy card to (i) vote "FOR" the item, (ii) vote "AGAINST" the item, or
(iii) "ABSTAIN" from voting on such item.
Under the Company's Bylaws and Delaware law, an affirmative vote of
the holders of a majority of the votes cast at the Annual Meeting on
Proposal 2 is required to constitute shareholder approval. Shares
underlying broker non-votes or in excess of the Limit will not be counted
as present and entitled to vote or as votes cast and will have no effect on
the vote. For purposes of the rules and regulations of the Securities and
Exchange Commission ("SEC"), shares as to which the "ABSTAIN" box has been
selected on the proxy card with respect to Proposal 2 have the effect of a
vote against Proposal 2 and shares underlying broker non-votes or in excess
of the Limit are not counted as entitled to vote on Proposal 2 and have no
effect on the vote on the Proposal. For further information regarding
certain regulatory approvals or conditions which may be required to be
satisfied in order for the Company to implement the Incentive Plan, see the
discussion under Proposal 2 herein.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to tabulate the votes for the Annual Meeting. RTC is not
otherwise employed by, or a director of, the Company or any of its
affiliates. The proxies will be returned to the Company prior to the
Annual Meeting. Two officers of the Bank have been appointed to act as
inspectors of election at the Annual Meeting.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to those persons
believed by management to be beneficial owners of more than 5% of the
Company's outstanding shares of Common Stock on the Record Date or as
disclosed in certain reports received to date regarding such ownership
filed by such persons with the Company and with the SEC, in accordance with
Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Other than those persons listed below, the Company is
not aware of any person, as such term is defined in the Exchange Act, that
owns more than 5% of the Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Name and Address Number Percent
Title of Class of Beneficial Owner of Shares of Class
- -------------- ------------------- --------- --------
<S> <C> <C> <C>
Common Stock The Massachusetts Co-operative Bank 43,638(1) 8.0%
Employee Stock Ownership Plan
(the "ESOP")
1442 Dorchester Avenue
Boston, Massachusetts 02122
Common Stock Mark W. Jaindl and Zachary John Jaindl Trust 34,200(2) 6.3%
c/o American Bank of the Lehigh Valley
4029 West Tilghman Street
Allentown, Pennsylvania 18104
Common Stock Spence Limited, L.P. 33,100(3) 6.1%
4712 Clendenin Road
Nashville, Tennessee 37220-1004
<FN>
- --------------------
<F1> Shares of Common Stock were acquired by the ESOP in the Bank's
conversion. The ESOP Committee of the Board of Directors administers
the ESOP. First Bankers Trust, N.A. has been appointed as the
corporate trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee,
subject to its fiduciary duty, must vote all allocated shares held in
the ESOP in accordance with the instructions of the participants. As
of June 7, 1999, 4,364 shares have been allocated under the ESOP and
39,274 shares remain unallocated. Under the ESOP, unallocated shares
and allocated shares as to which voting instructions are not given by
participants are to be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions received from
participants regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
<F2> Based on information filed in a Schedule 13D filed on May 19, 1999,
Mark W. Jaindl and Zachary John Jaindl Trust may, in the aggregate,
be deemed the beneficial owner of 34,200 shares.
<F3> Based on information filed in a Schedule 13G filed on March 12, 1999,
Spence Limited, L.P. may be deemed the beneficial owner of 33,100
shares.
</FN>
Interest of Certain Persons in Matters to be Acted Upon
The four nominees proposed by the Board of Directors for election as
director were unanimously adopted by the Nominating Committee of the Board
of Directors. None of the nominees are being proposed for election
pursuant to any agreement or understanding between any of them and the
Company.
After obtaining shareholder approval, the Company and the Bank will
consider granting awards to directors, officers and employees of the Bank
and the Company, under the Incentive Plan being presented for approval in
Proposal 2.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eleven
(11) directors and is divided into three classes. Each of the eleven
members of the Board of Directors also presently serves as a director of
the Bank. Directors are elected for staggered terms of three years each,
with the term of office of only one of the three classes of directors
expiring each year. Directors serve until their successors are elected and
qualified.
The four nominees proposed for election at the Annual Meeting are
Paul C. Green, John B. Byrne, John E. Hurley, Jr. and Robert E. McGovern.
No person being nominated as a director is being proposed for election
pursuant to any agreement or understanding between any such person and the
Company.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that proxies will be voted for the
election of the balance of those nominees named and for such other persons
as may be designated by the present Board of Directors. The Board of
Directors has no reason to believe that any of the persons named will be
unable or unwilling to serve. Unless authority to vote for the directors
is withheld, it is intended that the shares represented by the enclosed
proxy card will be voted "FOR" the election of all nominees proposed by the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
Information with Respect to Nominees, Continuing Directors and Certain
Executive Officers
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as
defined below), their ages, a brief description of their recent business
experience, including present occupations and employment, the year in which
each became a director of the Bank and the year in which their terms (or,
in the case of nominees, their proposed terms) as director of the Company
expire. This table also sets forth the amount of Common Stock and the
percent thereof beneficially owned by each director and all directors and
executive officers as a group as of the Record Date.
</TABLE>
<TABLE>
<CAPTION>
Amount
Expiration and Nature of Ownership
Name and Principal Occupation Director of Term as Beneficial as a Percent
at Present and for Past Five Years Age Since(1) Director Ownership(2)(3) of Class(4)
- ---------------------------------- --- -------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Paul C. Green............................... 49 1991 2002 10,628 1.95%
President and Chief Executive Officer
of the Company and the Bank.
John B. Byrne............................... 86 1977 2002 10,000 1.83
Retired, former President and Treasurer
of Byrne, Daily & Pike Insurance
Agency, East Milton, Massachusetts.
Mr. Byrne is the father of John R.
Byrne.
John E. Hurley, Jr.......................... 57 1981 2002 1,000 *
Probation officer, Chelsea,
Massachusetts.
Robert E. McGovern.......................... 80 1972 2002 500 *
Retired, former real estate director for
the Boston Redevelopment Authority,
Boston, Massachusetts.
CONTINUING DIRECTORS
John R. Byrne............................... 57 1983 2000 5,000 *
President and Treasurer, Byrne, Daily
& Pike Insurance Agency, East Milton,
Massachusetts. Mr. Byrne is the son of
John B. Byrne.
Richard F. Cahill........................... 56 1984 2000 1,500 *
President and Chief Executive Officer
of Jack Conway & Co., Inc., a real
estate firm located in Hanover,
Massachusetts.
W. Craig Dolan.............................. 59 1973 2000 3,100 *
President, James W. Dolan, Inc., a
funeral home located in the Dorchester
section of Boston, Massachusetts.
John P. O'Hearn, Jr......................... 59 1973 2000 15,000 2.75%
Executive Vice President of Meredith
& Grew, Inc., a real estate firm located
in Boston, Massachusetts.
Robert H. Quinn............................. 71 1974 2001 1,000 *
Partner, Quinn & Morris, a law firm
located in Boston, Massachusetts.
Joseph W. Sullivan.......................... 61 1977 2001 2,500 *
Retired, former President of Neponset
Lincoln Mercury, Boston,
Massachusetts.
Diane Valle................................. 46 1983 2001 2,653 *
President, Harbor Greenery, a retail
florist located in Boston,
Massachusetts.
All directors and executive officers as a
group (14 persons)........................ - - - 66,642 12.22%
<FN>
- --------------------
<F*> Does not exceed 1.0% of the Company's voting securities.
<F1> Includes years of service as a director of the Bank.
<F2> Each person effectively exercises sole (or shares with spouse or
other immediate family members) voting or dispositive power as to
shares reported.
<F3> Does not include options and awards intended to be granted under the
Incentive Plan, which is subject to shareholder approval. For a
discussion of the options and awards that are intended to be granted
under the Incentive Plan, see Proposal 2.
<F4> As of the Record Date, there were 545,481 shares of Common Stock
outstanding.
</FN>
Meetings of the Board of Directors and Committees of the Board of Directors
The Board of Directors of the Company and the Board of Directors of
the Bank conduct business through meetings of the Board of Directors and
through activities of their committees. The Board of Directors of the
Company and Bank generally meet on a monthly basis and may have additional
meetings as needed. During the fiscal year ended December 31, 1998, the
Board of Directors of the Company, which was formed on July 10, 1999, held
6 meetings primarily related to organizational and other matters in
connection with the formation of the Company and the acquisition of the
Bank through the Conversion. The Board of Directors of the Bank held 13
meetings during fiscal 1998. All of the directors of the Company and Bank
attended at least 75% of the total number of the Company's Board meetings
held and committee meetings on which such directors served during the
fiscal year ended December 31, 1998. The Board of Directors of the Company
and Bank maintain committees, the nature and composition of which are
described below:
Audit and Compliance Committee. The Audit and Compliance Committee
of the Company consists of Messrs. Hurley, O'Hearn and Quinn. This
committee generally meets on an annual basis and is responsible for the
review of audit reports and management's actions regarding the
implementation of audit findings and to review compliance with all relevant
laws and regulations. Due to the timing of the Conversion, the Audit and
Compliance Committee of the Company did not meet in fiscal 1998.
Nominating Committee. The Company's Nominating Committee for the
1999 Annual Meeting consists of Messrs. Byrne, Dolan, McGovern and
Sullivan. The committee considers and recommends the nominees for director
to stand for election at the Company's Annual Meeting. Messrs. Byrne and
McGovern abstained from the vote recommending their nomination for election
to the Board of Directors. The Company's Certificate of Incorporation and
Bylaws provide for shareholder nominations of directors. These provisions
require such nominations to be made pursuant to timely notice in writing to
the Secretary of the Company. The shareholder's notice of nomination must
contain all information relating to the nominee which is required to be
disclosed by the Company's Bylaws and by the Exchange Act. See "Additional
Information-Notice of Business to be Conducted at a Special or Annual
Meeting." Due to the timing of the Conversion, the Nominating Committee of
the Company did not meet in fiscal 1998 and has met one time during fiscal
1999.
Compensation Committee. The Compensation Committee of the Company
consists of Messrs. John R. Byrne, Cahill, Green and Ms. Valle. Such
committee is responsible for all matters regarding compensation and fringe
benefits for officers and employees of the Company and the Bank and meets
on an as needed basis. Due to the timing of the Conversion, the
Compensation Committee of the Company did not meet in fiscal 1998.
Directors' Compensation
Directors' Fees. All directors of the Company are paid an annual
retainer fee of $1,800. Non-employee directors of the Bank are currently
paid an annual retainer of $6,600. Each member of the Bank's Security
Committee is currently paid an annual retainer of $1,800.
Incentive Plan. The Company is presenting the Incentive Plan to
shareholders for approval, under which all directors of the Company and the
Bank are eligible to receive awards. See Proposal 2 for a summary of the
material terms of the Incentive Plan.
Executive Compensation
Summary Compensation Table. The following table sets forth the cash
compensation paid as well as other compensation paid or accrued for
services rendered in all capacities during fiscal years ended December 31,
1998 and 1997 to the Chief Executive Officer and the highest paid executive
officer who earned and/or received salary and bonus in excess of $100,000
("Named Executive Officers").
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation(1) Awards Payouts
----------------------------------- -------------------------- -------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Fiscal Salary Bonus Compensation Awards Options/SARs Payouts Compensation
Principal Positions Year(2) ($) ($) ($)(3) ($)(4) (#)(5) ($)(6) ($)(7)
- ------------------- ------- ------ ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul C. Green
President and Chief 1998 $114,118 $12,075 - - - - $12,148
Executive Officer.... 1997 96,000 19,600 - - - - 7,895
Anthony A. Paciulli 1998 $ 96,067 $ 9,930 - - - - $10,110
Senior Vice President 1997 71,669 - - - - - 3,609
<FN>
- --------------------
<F1> Under Annual Compensation, the column titled "Salary" includes
directors' fees for Mr. Green.
<F2> Neither the Company nor its predecessor, the Bank, was a reporting
company with respect to the 1996 fiscal year.
<F3> For fiscal years 1998 and 1997, there were no (a) perquisites over
the lesser of $50,000 or 10% of the individual's total salary and
bonus for the year; (b) payments of above-market preferential
earnings on deferred compensation; (c) payments of earnings with
respect to long-term incentive plans prior to settlement or
maturation; (d) tax payment reimbursements; or (e) preferential
discounts on stock. For fiscal years 1998 and 1997, the Bank had no
restricted stock or stock related plans in existence.
<F4> No stock awards were granted or earned in fiscal years 1998 and 1997.
See Proposal 2.
<F5> No stock options or SARs were earned or granted in fiscal years 1998
and 1997. See Proposal 2.
<F6> For fiscal years 1998 and 1997, there were no payouts or awards under
any long-term incentive plan.
<F7> Other Compensation includes matching contributions under the Bank's
401(k) Plan of $6,862 for Mr. Green and $5,530 for Mr. Paciulli and
ESOP allocations with a market value as of December 31, 1998 of
$5,286 for Mr. Green and $4,580 for Mr. Paciulli.
</FN>
Employment Agreements
The Bank and the Company entered into employment agreements with
Messrs. Green and Paciulli and Ruth J. Rogers, Chief Financial Officer and
Treasurer, (individually, the "Executive") (collectively, the "Employment
Agreements"). The Employment Agreements are intended to ensure that the
Bank and the Company will be able to maintain a stable and competent
management base after the Conversion. The continued success of the Bank
and the Company depends to a significant degree on the skills and
competence of the above referenced officers.
The Employment Agreements provide for a three-year term for Mr. Green
and a one-year term for Ms. Rogers and Mr. Paciulli. The term of the
Company Employment Agreements shall be extended on a daily basis unless
written notice of non-renewal is given by the Board of Directors and the
term of the Bank Employment Agreements are renewable on an annual basis.
The Employment Agreements provide that the Executive's base salary will be
reviewed annually. The current base salaries for such Employment
Agreements for Messrs. Green and Paciulli and Ms. Rogers are $120,750,
$99,300 and $69,000, respectively. In addition to the base salary, the
Employment Agreements provide for, among other things, participation in
stock benefit plans and other fringe benefits applicable to executive
personnel. The Employment Agreements provide for termination by the Bank
or the Company for cause, as defined in the Employment Agreements, at any
time. In the event the Bank or the Company chooses to terminate the
Executive's employment for reasons other than for cause, or in the event of
the Executive's resignation from the Bank or the Company upon: (i) failure
to re-elect the Executive to his or her current office; (ii) a material
change in the Executive's functions, duties or responsibilities; (iii) a
relocation of the Executive's principal place of employment by more than 25
miles; (iv) a reduction in the benefits and perquisites being provided to
the Executive in the Employment Agreement; (v) liquidation or dissolution
of the Bank or the Company; or (vi) a breach of the Employment Agreement by
the Bank or the Company, the Executive or, in the event of death, his or
her beneficiary would be entitled to receive an amount equal to the
remaining base salary and bonuses due to the Executive for the remaining
term of the Employment Agreement plus the value of certain stock-based
awards held by the Executive on the date of termination and contributions
that would have been made on the Executive's behalf to any employee benefit
plans of the Bank and the Company during the remaining term of the
Employment Agreement. The Bank and the Company would also continue and pay
for the Executive's life, health, dental and disability coverage for the
remaining term of the Employment Agreement. Upon any termination of the
Executive, the Executive is subject to a one year non-competition
agreement.
Under the Employment Agreements, if voluntary or involuntary
termination follows a change in control of the Bank or the Company, the
Executive or, in the event of the Executive's death, his beneficiary, would
be entitled to a severance payment equal to the greater of: (i) base
salary and bonuses that would have been paid for the remaining term of the
agreement, plus the value of any stock options or stock awards that had not
yet vested or become exercisable on the date of termination; or (ii) three
times the average of the five preceding taxable years' annual compensation.
The Bank and the Company would also continue the Executive's life, health,
and disability coverage for thirty-six months in the case of Mr. Green and
12 months in the case of Mr. Paciulli and Ms. Rogers. Notwithstanding that
both the Bank and Company Employment Agreements provide for a severance
payment in the event of a change in control, the Executive would only be
entitled to receive a severance payment under one agreement.
Payments to the Executive under the Bank's Employment Agreement are
guaranteed by the Company in the event that payments or benefits are not
paid by the Bank. Payment under the Company's Employment Agreement would
be made by the Company. All reasonable costs and legal fees paid or
incurred by the Executive pursuant to any dispute or question of
interpretation relating to the Employment Agreements shall be paid by the
Bank or Company, respectively, if the Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement. The Employment
Agreements also provide that the Bank and Company shall indemnify the
Executive to the fullest extent allowable under Massachusetts and Delaware
law, respectively. In the event of a change in control of the Bank or the
Company, the total amount of payments due under the Agreements, based
solely on cash compensation paid to the officers who will receive
Employment Agreements over the past five fiscal years and excluding any
benefits under any employee benefit plan which may be payable, would be
approximately $675,000. The Employment Agreements also provide that the
Company will compensate the Executive for excise taxes imposed on any
"excess parachute payments," as defined under section 280G of the Code,
made thereunder, and any additional income and excise taxes imposed as a
result of such compensation.
Management Supplemental Executive Retirement Plan. The Bank
implemented a non-qualified deferred compensation arrangement known as a
"Management Supplemental Executive Retirement Plan" (the "MSERP"). The
Bank intends the MSERP to make up lost ESOP benefits to designated
participants who retire, who terminate employment in connection with a
change in control, or whose participation in the ESOP ends due to
termination of the ESOP in connection with a change in control (regardless
of whether the individual terminates employment) prior to the complete
repayment of the ESOP loan. Generally, upon the retirement of an eligible
individual (designated by the Board of Directors of the Bank or a
participating affiliate of the Bank) or upon a change in control of the
Bank or the Company prior to complete repayment of the ESOP Loan, the MSERP
will provide the individual with a benefit determined by first (i)
projecting the number of shares that would have been allocated to the
individual under the ESOP if the individual had remained employed
throughout the term of the ESOP loan (measured from the individual's first
date of ESOP participation) and (ii) reducing that number by the number of
shares actually allocated to the individual's account under the ESOP; and
second, by multiplying the number of shares that represent the difference
between such figures by the average fair market value of the Common Stock
over the preceding five years. The individual's benefits become payable
under the MSERP upon the participant's retirement (in accordance with the
standard retirement policies of the Bank) or upon the change in control of
the Bank or the Company. The Bank may establish a grantor trust in
connection with the MSERP to satisfy the obligations of the Bank with
respect to the MSERP. The assets of the grantor trust would remain subject
to the claims of the Bank's general creditors in the event of the Bank's
insolvency until paid to the individual pursuant to the terms of the MSERP.
Currently, Messrs. Green and Paciulli and Ms. Rogers are the only
participants in the MSERP.
Transactions With Certain Related Persons
Since 1991, the Bank has maintained a policy prohibiting making loans
to executive officers and directors. However in 1998, the Bank made a one-
time exception to this policy and refinanced a loan to a member of the
Board of Directors which loan was initially originated by the Bank prior to
1991 (the "1998 Refinanced Loan"). As of December 31, 1998, the Bank had
seven loans outstanding to directors totalling $336,000, all of which loans
(except for the 1998 Refinanced Loan) were originated prior to 1991. All
advances made to directors since 1991 consist of advances made under the
line of credit agreements made with the directors prior to 1991. All of
such related party loans and advances (including the 1998 Refinanced Loan)
were made by the Bank in the ordinary course of business with no favorable
terms and do not involve more than the normal risk of collectibility or
present unfavorable features.
PROPOSAL 2. APPROVAL OF THE MASSACHUSETTS FINCORP, INC.
1999 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for shareholder
approval the Massachusetts Fincorp, Inc. 1999 Stock-Based Incentive Plan
("Incentive Plan"), in the form attached hereto as Appendix A. The purpose
of the Incentive Plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors ("Outside
Directors") of the Company and any of its affiliates, including the Bank,
with a proprietary interest in the Company as an incentive to contribute to
the success of the Company, promote the attention of management to other
shareholder's concerns and reward employees for outstanding performance.
The following is a summary of the material terms of the Incentive Plan
which is qualified in its entirety by the complete provisions of the
Incentive Plan attached as Appendix A.
General
The Incentive Plan authorizes the granting of options to purchase
Common Stock of the Company ("Options") and awards of restricted shares of
Common Stock ("Stock Awards") (collectively, Options and Stock Awards are
referred to as "Awards"). Subject to certain adjustments to prevent
dilution of Awards to participants, the maximum number of shares of Common
Stock reserved for Awards under the Incentive Plan is 76,367 shares,
consisting of 54,548 shares reserved for Options and 21,819 shares reserved
for Stock Awards. All employees and Outside Directors of the Company and
its affiliates, including the Bank, are eligible to receive Awards under
the Incentive Plan. The Incentive Plan will be administered by a committee
(the "Committee") consisting of 11 members of the Board of Directors, 10 of
which are not employees of the Company or its affiliates. Authorized but
unissued shares or shares previously issued and reacquired by the Company
may be used to satisfy Awards under the Incentive Plan. If authorized but
unissued shares are used to satisfy the grant of Stock Awards and the
exercise of Options granted under the Incentive Plan, it will result in an
increase in the number of shares outstanding and will have a dilutive
effect on the holdings of existing shareholders. It is currently
anticipated that a trust (the "Incentive Plan Trust") will be established
which will purchase previously issued shares to fund the Company's
obligation for Stock Awards which such stock will be purchased by the
Incentive Plan trustee in open market transactions with contributions from
the Company or Bank. As of the date of this Proxy Statement, no Awards
have been granted under the Incentive Plan.
Types of Awards
General. The Incentive Plan authorizes the grant of Awards in the
form of: (i) Options intended to qualify as incentive stock options under
Section 422 of the Code (Options which afford certain tax benefits to the
recipients upon compliance with certain conditions and which do not result
in tax deductions to the Company), referred to as "Incentive Stock
Options"; (ii) Options that do not so qualify (Options which do not afford
certain income tax benefits to recipients, but which may provide tax
deductions to the Company), referred to as "Non-Statutory Stock Options";
and (iii) Stock Awards. Each type of Award may be subject to vesting or
service requirements or other conditions imposed by the Committee.
Options. The Committee has the authority to determine the date or
dates on which each Option shall become exercisable and any other
conditions applicable to the exercisability of an Option; provided,
however, certain regulatory limitations on exercisability will apply to any
Option granted prior to December 21, 1999. See "Amendments" and
"Shareholder Approval, Effective Date of Plan and Regulatory Compliance."
The exercise price (described below) of any Option may generally be paid in
cash or in Common Stock at the discretion of the Committee. See "Method of
Exercise." The term of Options shall be determined by the Committee, but
in no event shall an Option be exercisable more than ten years from the
date of grant.
All Options granted under the Incentive Plan to officers and
employees may qualify as Incentive Stock Options to the extent permitted
under Section 422 of the Code and to the extent awarded as such by the
Committee. In order to qualify as Incentive Stock Options under Section
422 of the Code, the Option must be granted only to an employee, the
exercise price must not be less than 100% of the fair market value on the
date of grant (except in the case of "10% owners," as described below), the
term of the Option may not exceed ten years from the date of grant (except
in the case of "10% owners," as described below), no more than $100,000 of
options may become exercisable for the first time in any calendar year and
the options must not be transferable except by the laws of descent and
distribution. Incentive Stock Options granted to any person who is the
beneficial owner of more than 10% of the outstanding voting stock (a "10%
owner") may be exercised only for a period of five years from the date of
grant and the exercise price must be at least equal to 110% of the fair
market value of the underlying Common Stock on the date of grant.
Each Outside Director of the Company or its affiliates will be
eligible to receive Non-Statutory Stock Options to purchase shares of
Common Stock. Additionally, officers and employees are also eligible to
receive Non-Statutory Stock Options.
Unless otherwise determined by the Committee and subject to
applicable regulation, upon termination of an optionee's services for any
reason other than death, disability, retirement, change in control or
termination for cause, all then exercisable Options shall remain
exercisable for a period of three months following termination and all
unexercisable Options shall be cancelled. In the event of the death or
disability of an optionee, all unexercisable Options held by such optionee
will become fully exercisable and remain exercisable for up to one year
thereafter. In the event of termination for cause, all exercisable and
unexercisable Options held by the optionee shall be cancelled. In the
event of retirement, all exercisable options held by such optionee will
remain generally exercisable for a period of one year following the
optionee's termination from service. However, in the event of the
retirement of an optionee, the Committee shall, subject to applicable
regulation, have the discretion to allow unexercisable Options to continue
to vest or become exercisable in accordance with their original terms. In
the event an optionee's service or employment with the Company or the Bank
is actually or constructively terminated in connection with a change in
control, the optionee may exercise all vested Options for one year after
such termination. All unexercisable options shall be canceled.
Under generally accepted accounting principles, compensation expense
is generally not recognized with respect to the award of options to
officers and employees of the Company and its subsidiaries, However, the
Financial Accounting Standards Board recently indicated that it would
propose rules during 1999 that would generally require recognition of
compensation expense with respect to awards made to non-employees,
including non-employee directors of the Company, and that the proposed
changes would apply to awards made after December 15, 1998 and not fully
vested prior to October 1, 1999.
Stock Awards. The Committee has the authority to determine the dates
on which Stock Awards granted will vest or any other conditions which must
be satisfied prior to vesting; provided, however, certain regulatory
conditions on vesting will apply to any Stock Award granted prior to
December 21, 1999. See "Amendments" and "Shareholder Approval, Effective
Date of Plan and Regulatory Compliance."
When Stock Awards are distributed (i.e., vest) in accordance with the
Incentive Plan, the recipients will receive an amount equal to accumulated
cash and stock dividends (if any) with respect thereto plus earnings
thereon minus any required tax withholding amounts. Prior to vesting,
recipients of Stock Awards may direct the voting of shares of Common Stock
granted to them and held in the Incentive Plan Trust. Shares of Common
Stock held by the Incentive Plan Trust which have not been allocated or for
which voting has not been directed are voted by the trustee in the same
proportion as the awarded shares are voted in accordance with the
directions given by all recipients of Stock Awards.
Unless otherwise determined by the Committee and subject to
applicable regulation, upon termination of the services of a Stock Award
recipient for any reason other than death, disability, retirement or
termination for cause, all such holder's rights in unvested Stock Awards
shall be cancelled. In the event of the death or disability of the holder
of the Stock Award, all unvested Stock Awards held by such individual will
become fully vested. In the event of termination for cause of a holder of
a Stock Award, all unvested Stock Awards held by such individual shall be
cancelled. In the event of retirement of the holder of a Stock Award, the
Committee shall, subject to applicable regulation, have the discretion to
determine that all unvested Stock Awards shall continue to vest in
accordance with their original terms.
Tax Treatment
Options. An optionee will generally not recognize 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 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 recognize ordinary income upon exercise of the Option in an
amount equal to the aggregate amount by which the per share exercise price
is exceeded by the fair market value of the Common Stock. 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 for the year in which the
disqualifying disposition occurs. The amount of any ordinary income
recognized by the 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) (discussed below).
Stock Awards. A participant who has been granted Stock Awards under
the Plan and does not make an election under Section 83(b) of the Code will
not recognize taxable income at the time of the Stock Award grant. At the
time any transfer or forfeiture restrictions applicable to the Stock Award
lapse, the recipient will recognize ordinary income, and the Company will
be entitled to a corresponding deduction, equal to the excess of the fair
market value of such Common Stock at such time over the amount, if any,
paid for the award. Any dividend paid to the recipient on the restricted
stock subject to the Stock Award at or prior to such time will be ordinary
compensation income to the recipient and deductible as such by the Company.
A recipient of a Stock Award who makes an election under Section
83(b) of the Code will recognize ordinary income at the time of the Stock
Award and the Company will be entitled to a corresponding deduction equal
to the fair market value of such stock at such time over the amount, if
any, paid for the award. Any dividends subsequently paid to the recipient
on the restricted stock subject to the Stock Award will be dividend income
to the recipient and not deductible by the Company. If the recipient makes
a Section 83(b) election, there are no federal income tax consequences
either to the recipient or the Company at the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse.
Performance Awards.
General. The Incentive Plan provides the Committee with the ability
to condition or restrict the vesting or exercisability of any Award upon
the achievement of performance targets or goals as set forth under the
Incentive Plan. Any Award subject to such conditions or restrictions is
considered to be a "Performance Award." Subject to the express provisions
of the Plan and as discussed in this paragraph, the Committee has
discretion to determine the terms of any Performance Award, including the
amount of the award, or a formula for determining such, the performance
criteria and level of achievement related to these criteria which determine
the amount of the award granted, issued, retainable and/or vested, the
period as to which performance shall be measured for determining
achievement of performance (a "performance period"), the timing of delivery
of any awards earned, forfeiture provisions, the effect of termination of
employment for various reasons, and such further terms and conditions, in
each case not inconsistent with the Plan, as may be determined from time to
time by the Committee. The performance criteria upon which Performance
Awards are granted, issued, retained and/or vested may be based on
financial performance and/or personal performance evaluations, except that
for any Performance Award that is intended by the Committee to satisfy the
requirements for "performance based compensation" under Code Section
162(m), the performance criteria shall be a measure based on one or more
Qualifying Performance Criteria (as defined below). Notwithstanding
satisfaction of any performance goals, the number of Shares granted,
issued, retainable and/or vested under a Performance Award may be adjusted
by the Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine. However, the Committee
may not increase the amount earned upon satisfaction of any performance
goal by any Participant who is a "covered employee" within the meaning of
Section 162(m) of the Code.
Qualifying Performance Criteria and Section 162(m) Limits. Subject
to shareholder approval of the Plan, the Performance Criteria for any
Performance Award that is intended to satisfy the requirements for
"performance based compensation" under the Code Section 162(m) shall be
based upon any one or more of the following Performance Criteria, either
individually, alternatively or in any combination, applied to either the
Company as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured either on
an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income,
as adjusted for non-recurring items; cash earnings; earnings per share;
cash earnings per share; return on equity; return on assets; assets; stock
price; total shareholder return; capital; net interest income; market
share; cost control or efficiency ratio; and asset growth.
Maximum Awards. The aggregate amount of Options granted under the
Plan during any 60 month period to any one Participant may not exceed 25%
of the total amount of options available to be granted under the Incentive
Plan. The aggregate amount of shares of Common Stock issuable under a
Stock Award granted under the Plan for any 60 month period to any one
Participant may not exceed 25% of the total amount of Stock Awards
available to be granted under the Incentive Plan.
Payout Alternatives
Any shares of Common Stock tendered in payment of an obligation
arising under the Incentive Plan or applied to tax withholding amounts
shall be valued at the fair market value of the Common Stock. The
Committee may use treasury stock, authorized but unissued stock or it may
direct the market purchase of shares of Common Stock to satisfy its
obligations under the Incentive Plan.
Method of Exercise of Options
Subject to the terms of the Incentive Plan, the Committee also has
discretion to determine the form of payment for the exercise of an Option.
The Committee may indicate acceptable forms in the Award Agreement 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. The Committee may permit the following forms of payment for
Options: (a) in cash; (b) by tendering previously acquired shares of
Common Stock; or (c) some other method acceptable to it, including exercise
by means of a cashless exercise arrangement with a qualifying broker-
dealer. Any 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.
Amendments
Subject to limitations imposed by the Incentive Plan, the Board of
Directors or Committee may amend the Incentive Plan in any respect, at any
time, provided that no amendment may affect the rights of the holder of an
Award without his or her permission and such amendment must comply with
applicable law and regulation.
Adjustments
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in
such shares without receipt or payment of consideration by the Company, or
in the event an extraordinary capital distribution is made, including the
payment of an extraordinary dividend, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution
or enlargement of the rights of the holder; provided, however, that in the
case of an extraordinary dividend, the Committee may be required to obtain
regulatory approval prior to any such adjustment. All Awards under the
Incentive Plan shall be binding upon any successors or assigns of the
Company.
Nontransferability
Unless determined otherwise by the Committee, Awards under the
Incentive Plan shall not be transferable by the recipient other than by
will or the laws of intestate succession or pursuant to a domestic
relations order. With the consent of the Committee, an Award recipient may
permit transferability or assignment of Non-Statutory Stock Options for
valid estate planning purposes as permitted under the Code or Rule 16b-3
under the Exchange Act and a participant may designate a person or his or
her estate as beneficiary of any Award to which the recipient would then be
entitled, in the event of the death of the participant.
Shareholder Approval, Effective Date of Plan and Regulatory Compliance
The implementation of the Incentive Plan and effectiveness of any
awards thereunder is subject to any required approval and review of the
Commissioner of Banks of the Commonwealth of Massachusetts (the
"Commissioner"). The Company believes the Incentive Plan complies with all
applicable laws and regulations. However, neither the Commissioner, the
FDIC nor any other regulatory authority has in any way endorsed or approved
the Incentive Plan.
The Incentive Plan shall become effective upon the earlier of: (i)
the date that it is approved by a majority of votes eligible to be cast by
the Company's shareholders at a duly called meeting of shareholders, or
(ii) December 21, 1999; provided, however, that the Incentive Plan will not
be implemented prior to the Company's receipt of any required approval by
the Commissioner or satisfaction of any conditions required by the
Commissioner or the Massachusetts Division of Banks. In this regard, the
Company has been advised that is the current policy of the Massachusetts
Division of Banks that if the Incentive Plan is implemented before December
21, 1999, the Plan will require the approval of two-thirds of the votes
eligible to be cast by shareholders. Accordingly, if the current policy of
the Division of Banks is not revised and the Incentive Plan is not approved
by two-thirds of the votes eligible to be cast by shareholders at the
Annual Meeting, the Incentive Plan and any grants thereunder shall become
effective on December 21, 1999 without further shareholder approval unless
it is terminated by the Board of Directors or unless the Company has not
received any required approval by the Commissioner or satisfied any
conditions required by the Commissioner. In the absence of the approval of
the Incentive Plan by a majority of shares cast at the Annual Meeting, the
Options granted under the Incentive Plan would not qualify as Incentive
Stock Options under the Code.
New Plan Benefits
As of the date of this Proxy Statement, no determination had been
made regarding the granting of Awards under the Incentive Plan.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" the approval of
the Massachusetts Fincorp, Inc. 1999 Stock-Based Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE MASSACHUSETTS FINCORP, INC. 1999 STOCK-BASED INCENTIVE PLAN.
ADDITIONAL INFORMATION
Shareholder Proposals
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 2000 Annual Meeting of Shareholders, a
shareholder proposal must be received by the Secretary of the Company at
the address set forth on the Notice of Annual Meeting of Shareholders not
later than February 16, 1999. If such annual meeting is held on a date
more than 30 calendar days from July 21, 1999, a stockholder proposal must
be received by a reasonable time before the proxy solicitation for such
annual meeting is made. Any such proposal will be subject to 17 C.F.R.
[SECTION] 240.14a-8 of the Rules and Regulations under the Exchange Act.
Notice of Business to be Conducted at a Special or Annual Meeting
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of the
Board of Directors may be conducted at a special meeting. The Bylaws of
the Company provide an advance notice procedure for a shareholder to
properly bring business before an annual meeting. The shareholder must
give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally 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 to shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the tenth day following
the date on which the Company's notice to shareholders of the annual
meeting date was mailed or such public disclosure was made. In order for
the notice of a stockholder proposal for consideration at the Company's
2000 Annual Meeting of Stockholders to be timely, the Company would have to
receive such notice no later than January 19, 2000 assuming the 2000 Annual
Meeting is held on April 19, 2000 and that the Company provides at least
100 days notice or public disclosure of the date of the meeting. The
advance notice by shareholders must include the shareholder's name and
address, as they appear on the Company's record of shareholders, a brief
description of the proposed business, the reason for conducting such
business at the annual meeting, the class and number of shares of the
Company's capital stock that are beneficially owned by such shareholder and
any material interest of such shareholder in the proposed business. In the
case of nominations to the Board of Directors, 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 or the
proxy relating to any Annual Meeting any shareholder proposal which does
not meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice
of Annual Meeting of Shareholders. If, however, other matters are properly
brought before the Annual Meeting, it is the intention of the persons named
in the accompanying proxy to vote the shares represented thereby on such
matters in accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting, you
are urged to return your proxy card promptly. If you are then present at
the Annual Meeting and wish to vote your shares in person, your original
proxy may be revoked by voting at the Annual Meeting. However, if you are
a shareholder whose shares are not registered in your own name, you will
need appropriate documentation from your recordholder to vote personally at
the Annual Meeting.
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT
CHARGE TO SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO RUTH J. ROGERS,
MASSACHUSETTS FINCORP, INC., 1442 DORCHESTER AVENUE, BOSTON, MASSACHUSETTS
02122.
By Order of the Board of Directors
/s/ Ruth J. Rogers
Ruth J. Rogers
Chief Financial Officer, Treasurer
and Corporate Secretary
Boston, Massachusetts
June 16, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
MASSACHUSETTS FINCORP, INC.
1999 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the
Plan of Non-Statutory Stock Options, Incentive Stock Options and Stock
Awards.
(c) "Award Agreement" means an agreement evidencing and setting
forth the terms of an Award.
(d) "Bank" means Massachusetts Co-operative Bank, Boston,
Massachusetts.
(e) "Board of Directors" means the board of directors of the
Holding Company.
(f) "Change in Control" of the Holding Company or the Bank shall
mean an event 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 Holding Company within the meaning of the Change in Bank
Control Act and the Rules and Regulations promulgated by the Federal
Deposit Insurance Corporation ("FDIC") at 12 C.F.R. [SECTION] 303.4(a) with
respect to the Bank and the Board of Governors of the Federal Reserve
System ("FRB") at 12 C.F.R. [SECTION] 225.41(b) with respect to the Holding
Company, as in effect on the date hereof; or (iii) results in a transaction
requiring prior FRB approval under the Bank Holding Company Act of 1956 and
the regulations promulgated thereunder by the FRB at 12 C.F.R. [SECTION]
225.11, as in effect on the date hereof except for the Holding Company's
acquisition of the Bank; or (iv) 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 Bank or the Holding
Company representing 20% or more of the Bank's or the Holding Company's
outstanding securities except for any securities of the Bank purchased by
the Holding Company in connection with the conversion of the Bank to the
stock form and any securities purchased by any tax qualified employee
benefit plan of the Bank; or (B) individuals who constitute the Board of
Directors 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 Holding
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 Holding Company or similar transaction
occurs in which the Bank or Holding Company is not the resulting entity; or
(D) solicitations of shareholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder
approval of a plan or reorganization, merger of consolidation of the
Holding Company or Bank 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 or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Holding Company shall be distributed; or (E) a tender offer is made for 20%
or more of the voting securities of the Bank or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of
Directors, pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company,
par value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with
respect to which the Participant qualifies for and receives benefits for
under a long-term disability plan of the Holding Company or an Affiliate,
or in the absence of such a long-term disability plan or coverage under
such a plan, "Disability" shall mean a physical or mental condition which,
in the sole discretion of the Committee, is reasonably expected to be of
indefinite duration and to substantially prevent the Participant from
fulfilling his duties or responsibilities to the Holding Company or an
Affiliate.
(l) "Effective Date" means the earlier of the date the Plan is
approved by shareholders or December 21, 1999.
(m) "Employee" means any person employed by the Holding Company or
an Affiliate. Directors who are employed by the Holding Company or an
Affiliate shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a Participant may
purchase a share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in question on
The Nasdaq Stock Market then the Fair Market Value shall
be equal to the closing price reported for such date;
(ii) If the Common Stock was traded on a stock exchange on the
date in question, then the Fair Market Value shall be
equal to the closing price reported by the applicable
composite transactions report for such date; and
(iii) If neither of the foregoing provisions is applicable,
then the Fair Market Value shall be determined by the
Committee in good faith on such basis as it deems
appropriate.
Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in The Wall Street Journal.
The Committee's determination of Fair Market Value shall be conclusive and
binding on all persons.
(q) "Holding Company" means Massachusetts Fincorp, Inc.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to meet
the requirements of Section 422 of the Code.
(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to
be and is not identified as an Incentive Stock Option or a stock option
granted under the Plan which is intended to be and is identified as an
Incentive Stock Option but which does not meet the requirements of Section
422 of the Code.
(t) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(u) "Outside Director" means a member of the board(s) of directors
of the Holding Company or an Affiliate who is not also an Employee of the
Holding Company or an Affiliate.
(v) "Participant" means any person who holds an outstanding Award.
(w) "Performance Award" means an Award granted to a Participant
pursuant to Section 9 of the Plan.
(x) "Plan" means this Massachusetts Fincorp, Inc. 1999 Stock-Based
Incentive Plan.
(y) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement
policies of the Holding Company or Affiliate, as applicable. "Retirement"
with respect to an Outside Director means the termination of service from
the board(s) of directors of the Holding Company and any Affiliate
following written notice to such board(s) of directors of the Outside
Director's intention to retire.
(z) "Stock Award" means an Award granted to a Participant pursuant
to Section 8 of the Plan.
(aa) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the board(s) of directors of the Holding Company and
its Affiliates in accordance with the applicable by-laws of the Holding
Company and its Affiliates or, in the case of an Employee, as defined under
any employment agreement with the Holding Company or an Affiliate;
provided, however, that if no employment agreement exists with respect to
the Employee, Termination for Cause shall mean termination of employment
because of a material loss to the Holding Company or an Affiliate, as
determined by and in the sole discretion of the Board of Directors or its
designee(s).
(bb) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
(cc) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.
2. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Holding Company, who
shall be appointed by the Board of Directors. A member of the Board of
Directors shall be deemed to be "disinterested" only if he satisfies (i)
such requirements as the Securities and Exchange Commission may establish
for non-employee directors administering plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act and
(ii) such requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for exemption
under Section 162(m)(4)(C) of the Code. The Board of Directors may also
appoint one or more separate committees of the Board of Directors, each
composed of one or more directors of the Holding Company or an Affiliate
who need not be disinterested and who may grant Awards and administer the
Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the
Exchange Act or for whom Awards are not intended to satisfy the provisions
of Section 162(m) of the Code.
(b) The Committee shall (i) select the Employees and Outside
Directors who are to receive Awards under the Plan, (ii) determine the
type, number, vesting requirements and other features and conditions of
such Awards, (iii) interpret the Plan and Award Agreements in all respects
and (iv) make all other decisions relating to the operation of the Plan.
The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute
a binding contract between the Holding Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an Award Agreement,
shall be bound by the terms and restrictions of the Plan and the Award
Agreement. The terms of each Award Agreement shall be in accordance with
the Plan, but each Award Agreement may include any additional provisions
and restrictions determined by the Committee, in its discretion, provided
that such additional provisions and restrictions are not inconsistent with
the terms of the Plan. In particular and at a minimum, the Committee shall
set forth in each Award Agreement: (i) the type of Award granted; (ii) the
Exercise Price of any Option; (iii) the number of shares subject to the
Award; (iv) the expiration date of the Award; (v) the manner, time, and
rate (cumulative or otherwise) of exercise or vesting of such Award; and
(vi) the restrictions, if any, placed upon such Award, or upon shares which
may be issued upon exercise of such Award. The Chairman of the Committee
and such other directors and officers as shall be designated by the
Committee is hereby authorized to execute Award Agreements on behalf of the
Company or an Affiliate and to cause them to be delivered to the recipients
of Awards.
(d) The Committee may delegate all authority for: (i) the
determination of forms of payment to be made by or received by the Plan and
(ii) the execution of any Award Agreement. The Committee may rely on the
descriptions, representations, reports and estimates provided to it by the
management of the Holding Company or an Affiliate for determinations to be
made pursuant to the Plan, including the satisfaction of any conditions of
a Performance Award. However, only the Committee or a portion of the
Committee may certify the attainment of any conditions of a Performance
Award intended to satisfy the requirements of Section 162(m) of the Code.
3. TYPES OF AWARDS.
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 14 of the Plan, the
maximum number of shares reserved for Awards under the Plan is 76,367,
which number shall not exceed 14% of the shares of the Common Stock issued
by the Company in connection with the Bank's conversion from mutual to
stock form of organization. Subject to adjustment as provided in Section
14 of the Plan, the maximum number of shares reserved hereby for purchase
pursuant to the exercise of Options granted under the Plan is 54,548, which
number shall not exceed 10% of the publicly traded shares of Common Stock
as of the Effective Date. The maximum number of the shares reserved for
Stock Awards is 21,819, which number shall not exceed 4% of the publicly
traded shares of Common Stock as of the Effective Date. The shares of
Common Stock issued under the Plan may be either authorized but unissued
shares or authorized shares previously issued and acquired or reacquired by
the Trustee or the Holding Company, respectively. To the extent that
Options and Stock Awards are granted under the Plan, the shares underlying
such Awards will be unavailable for any other use including future grants
under the Plan except that, to the extent that Stock Awards or Options
terminate, expire or are forfeited without having vested or without having
been exercised, new Awards may be made with respect to these shares.
5. ELIGIBILITY.
Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan. In addition, the
Committee may grant eligibility to consultants and advisors of the Holding
Company or an Affiliate, as it sees fit.
6. NON-STATUTORY STOCK OPTIONS.
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded
under the Plan, grant Non-Statutory Stock Options to eligible individuals
upon such terms and conditions as it may determine to the extent such terms
and conditions are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise
Price of each Non-Statutory Stock Option. However, the Exercise Price
shall not be less than 100% of the Fair Market Value of the Common Stock on
the Date of Grant.
(b) Terms of Non-statutory Stock Options. The Committee shall
determine the term during which a Participant may exercise a Non-Statutory
Stock Option, but in no event may a Participant exercise a Non-Statutory
Stock Option, in whole or in part, more than ten (10) years from the Date
of Grant. The Committee shall also determine the date on which each Non-
Statutory Stock Option, or any part thereof, first becomes exercisable and
any terms or conditions a Participant must satisfy in order to exercise
each Non-Statutory Stock Option. The shares of Common Stock underlying
each Non-Statutory Stock Option may be purchased in whole or in part by the
Participant at any time during the term of such Non-Statutory Stock Option,
or any portion thereof, once the Non-Statutory Stock Option becomes
exercisable.
(c) Non-Transferability. Unless otherwise determined by the
Committee in accordance with this Section 6(c), a Participant may not
transfer, assign, hypothecate, or dispose of in any manner, other than by
will or the laws of intestate succession, a Non-Statutory Stock Option.
The Committee may, however, in its sole discretion, permit transferability
or assignment of a Non-Statutory Stock Option if such transfer or
assignment is, in its sole determination, for valid estate planning
purposes and such transfer or assignment is permitted under the Code and
Rule 16b-3 under the Exchange Act. For purposes of this Section 6(c), a
transfer for valid estate planning purposes includes, but is not limited
to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family,
(ii) any trust solely for the benefit of members of the Participant's
Immediate Family, (iii) any partnership whose only partners are members of
the Participant's Immediate Family, and (iv) any limited liability
corporation or corporate entity whose only members or equity owners are
members of the Participant's Immediate Family, or (c) a transfer to the
Massachusetts Co-operative Charitable Foundation. For purposes of this
Section 6(c), "Immediate Family" includes, but is not necessarily limited
to, a Participant's parents, grandparents, spouse, children, grandchildren,
siblings (including half bothers and sisters), and individuals who are
family members by adoption. Nothing contained in this Section 6(c) shall
be construed to require the Committee to give its approval to any transfer
or assignment of any Non-Statutory Stock Option or portion thereof, and
approval to transfer or assign any Non-Statutory Stock Option or portion
thereof does not mean that such approval will be given with respect to any
other Non-Statutory Stock Option or portion thereof. The transferee or
assignee of any Non-Statutory Stock Option shall be subject to all of the
terms and conditions applicable to such Non-Statutory Stock Option
immediately prior to the transfer or assignment and shall be subject to any
other conditions proscribed by the Committee with respect to such Non-
Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless
otherwise determined by the Committee, upon the termination of a
Participant's employment or other service for any reason other than
Retirement, Disability or death, a Change in Control, or Termination for
Cause, the Participant may exercise only those Non-Statutory Stock Options
that were immediately exercisable by the Participant at the date of such
termination and only for a period of three (3) months following the date of
such termination.
(e) Termination of Employment or Service (Retirement). Unless
otherwise determined by the Committee, in the event of a Participant's
Retirement, the Participant may exercise only those Non-Statutory Stock
Options that were immediately exercisable by the Participant at the date of
Retirement and only for a period of one (1) year following the date of
Retirement; provided, however, that upon the Participant's Retirement.
(f) Termination of Employment or Service (Disability or Death).
Unless otherwise determined by the Committee, in the event of the
termination of a Participant's employment or other service due to
Disability or death, all Non-Statutory Stock Options held by such
Participant shall immediately become exercisable and remain exercisable for
a period one (1) year following the date of such termination.
(g) Termination of Employment or Service (Change in Control).
Unless otherwise determined by the Committee, in the event of the
termination of a Participant's employment or service due to a Change in
Control, whether such termination is actual, constructive, or otherwise,
the Participant may exercise only those Non-Statutory Stock Options that
were immediately exercisable by the Participant at the date of such
termination and only for a period of one (1) year following the date of
such termination.
(h) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of a
Participant's Termination for Cause, all rights with respect to the
Participant's Non-Statutory Stock Options shall expire immediately upon the
effective date of such Termination for Cause.
(i) Payment. Payment due to a Participant upon the exercise of a
Non-Statutory Stock Option shall be made in the form of shares of Common
Stock.
(j) Maximum Individual Award. No individual Employee shall be
granted an amount of Non-Statutory Stock Options which exceeds 25% of all
Options eligible to be granted under the Plan within any 60-month period.
7. INCENTIVE STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this
Plan, grant Incentive Stock Options to an Employee upon such terms and
conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise
Price of each Incentive Stock Option. However, the Exercise Price shall
not be less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant; provided, however, that if at the time an Incentive Stock
Option is granted, the Employee owns or is treated as owning, for purposes
of Section 422 of the Code, Common Stock representing more than 10% of the
total combined voting securities of the Holding Company ("10% Owner"), the
Exercise Price shall not be less than 110% of the Fair Market Value of the
Common Stock on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the
aggregate Fair Market Value of shares of Common Stock with respect to which
Incentive Stock Options that are exercisable for the first time by an
Employee during any calendar year under the Plan and any other stock option
plan of the Holding Company or an Affiliate exceeds $100,000, or such
higher value as may be permitted under Section 422 of the Code, such
Options in excess of such limit shall be treated as Non-Statutory Stock
Options. Fair Market Value shall be determined as of the Date of Grant
with respect to each such Incentive Stock Option.
(c) Terms of Incentive Stock Options. The Committee shall
determine the term during which a Participant may exercise an Incentive
Stock Option, but in no event may a Participant exercise an Incentive Stock
Option, in whole or in part, more than ten (10) years from the Date of
Grant; provided, however, that if at the time an Incentive Stock Option is
granted to an Employee who is a 10% Owner, the Incentive Stock Option
granted to such Employee shall not be exercisable after the expiration of
five (5) years from the Date of Grant. The Committee shall also determine
the date on which each Incentive Stock Option, or any part thereof, first
becomes exercisable and any terms or conditions a Participant must satisfy
in order to exercise each Incentive Stock Option. The shares of Common
Stock underlying each Incentive Stock Option may be purchased in whole or
in part at any time during the term of such Incentive Stock Option after
such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his lifetime, only by the Employee to whom the
Committee grants the Incentive Stock Option. The designation of a
beneficiary does not constitute a transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's
employment or other service for any reason other than Retirement,
Disability or death, a Change in Control, or Termination for Cause, the
Participant may exercise only those Incentive Stock Options that were
immediately exercisable by the Participant at the date of such termination
and only for a period of three (3) months following the date of such
termination.
(f) Termination of Employment (Retirement). Unless otherwise
determined by the Committee, in the event of a Participant's Retirement,
the Participant may exercise only those Incentive Stock Options that were
immediately exercisable by the Participant at the date of Retirement and
only for a period of one (1) year following the date of Retirement.
(g) Termination of Employment (Disability or Death). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Incentive Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the
date of such termination.
(h) Termination of Employment (Change in Control). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service due to a Change in Control, the
Participant may exercise only those Incentive Stock Options that were
immediately exercisable by the Participant at the date of such termination
and only for a period of three (3) months following the date of such
termination.
(i) Termination of Employment (Termination for Cause). Unless
otherwise determined by the Committee, in the event of an Employee's
Termination for Cause, all rights under such Employee's Incentive Stock
Options shall expire immediately upon the effective date of such
Termination for Cause.
(j) Payment. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) Maximum Individual Award. No individual Employee shall be
granted an amount of Incentive Stock Options which exceeds 25% of all
Options eligible to be granted under the Plan within any 60-month period.
(l) Disqualifying Dispositions. Each Award Agreement with respect
to an Incentive Stock Option shall require the Participant to notify the
Committee of any disposition of shares of Common Stock issued pursuant to
the exercise of such Option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions), within
10 days of such disposition.
8. STOCK AWARDS.
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon
such terms and conditions as it may determine to the extent such terms and
conditions are consistent with the following provisions:
(a) Grants of the Stock Awards. Stock Awards may only be made in
whole shares of Common Stock. Stock Awards may only be granted from
shares reserved under the Plan and available for award at the time the
Stock Award is made to the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the
dates on which Stock Awards granted to a Participant shall vest and any
terms or conditions which must be satisfied prior to the vesting of any
Stock Award or portion thereof. Any such terms or conditions shall be
determined by the Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless
otherwise determined by the Committee, upon the termination of a
Participant's employment or service for any reason other than Retirement,
Disability or death, a Change in Control, or Termination for Cause, any
Stock Awards in which the Participant has not become vested as of the date
of such termination shall be forfeited and any rights the Participant had
to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the
event of a Participant's Retirement, any Stock Awards in which the
Participant has not become vested as of the date of Retirement shall be
forfeited and any rights the Participant had to such unvested Stock Awards
shall become null and void; provided however, that upon the Participant's
Retirement, the Committee, in its discretion, may determine that all
unvested Stock Awards shall continue to vest in accordance with the Award
Agreement if the Participant is immediately engaged by the Holding Company
or an Affiliate as a consultant or advisor or continues to serve the
Holding Company or an Affiliate as a director, advisory director, or
director emeritus.
(e) Termination of Employment or Service (Disability or Death).
Unless otherwise determined by the Committee, in the event of a termination
of the Participant's service due to Disability or death all unvested Stock
Awards held by such Participant shall immediately vest as of the date of
such termination.
(f) Termination of Employment or Service (Change in Control).
Unless otherwise determined by the Committee, in the event of a termination
of the Participant's service due to a Change in Control any Stock Awards in
which the Participant has not become vested as of the date of such
termination shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void.
(g) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, or in the event of the
Participant's Termination for Cause, all Stock Awards in which the
Participant had not become vested as of the effective date of such
Termination for Cause shall be forfeited and any rights such Participant
had to such unvested Stock Awards shall become null and void.
(h) Maximum Individual Award. No individual Employee shall be
granted an amount of Stock Awards which exceeds 25% of all Stock Awards
eligible to be granted under the Plan within any 60-month period.
(i) Issuance of Certificates. Unless otherwise held in Trust and
registered in the name of the Trustee, reasonably promptly after the Date
of Grant with respect to shares of Common Stock pursuant to a Stock Award,
the Holding Company shall cause to be issued a stock certificate,
registered in the name of the Participant to whom such Stock Award was
granted, evidencing such shares; provided, that the Holding Company shall
not cause such a stock certificate to be issued unless it has received a
stock power duly endorsed in blank with respect to such shares. Each such
stock certificate shall bear the following legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions, terms
and conditions (including forfeiture provisions and
restrictions against transfer) contained in the Massachusetts
Fincorp, Inc. 1999 Stock-Based Incentive Plan and Award
Agreement entered into between the registered owner of such
shares and Massachusetts Fincorp, Inc. or its Affiliates. A
copy of the Plan and Award Agreement is on file in the office
of the Corporate Secretary of Massachusetts Fincorp, Inc.
located at 1442 Dorchester Avenue, Boston, Massachusetts 02122.
Such legend shall not be removed until the Participant becomes vested in
such shares pursuant to the terms of the Plan and Award Agreement. Each
certificate issued pursuant to this Section 8(i), in connection with a
Stock Award, shall be held by the Holding Company or its Affiliates, unless
the Committee determines otherwise.
(j) Non-Transferability. Except to the extent permitted by the
Code, the rules promulgated under Section 16(b) of the Exchange Act or any
successor statutes or rules:
The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the
Stock Award until full vesting of such shares has occurred.
For purposes of this section, the separation of beneficial
ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.
Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary shall not constitute a
transfer.
If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject
to such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Award Agreement),
be sold or otherwise disposed of within six (6) months
following the date of grant of the Stock Award.
(k) Accrual of Dividends. To the extent Stock Awards are held in
Trust and registered in the name of the Trustee, unless otherwise specified
by the Trust Agreement whenever shares of Common Stock underlying a Stock
Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive,
with respect to each such share distributed, a payment equal to any cash
dividends and the number of shares of Common Stock equal to any stock
dividends, declared and paid with respect to a share of the Common Stock if
the record date for determining shareholders entitled to receive such
dividends falls between the date the relevant Stock Award was granted and
the date the relevant Stock Award or installment thereof is issued. There
shall also be distributed an appropriate amount of net earnings, if any, of
the Trust with respect to any dividends paid out on the shares related to
the Stock Award.
(l) Voting of Stock Awards. After a Stock Award has been granted
but for which the shares covered by such Stock Award have not yet been
vested, earned and distributed to the Participant pursuant to the Plan, the
Participant shall be entitled to vote or to direct the Trustee to vote, as
the case may be, such shares of Common Stock which the Stock Award covers
subject to the rules and procedures adopted by the Committee for this
purpose and in a manner consistent with the Trust agreement.
(m) Payment. Payment due to a Participant upon the redemption of a
Stock Award shall be made in the form of shares of Common Stock.
9. PERFORMANCE AWARDS.
(a) The Committee may determine to make any Award under the Plan
contingent upon the satisfaction of any conditions related to the
performance of the Holding Company, an Affiliate of the Participant. Each
Performance Award shall be evidenced in the Award Agreement, which shall
set forth the applicable conditions, the maximum amounts payable and such
other terms and conditions as are applicable to the Performance Award.
Unless otherwise determined by the Committee, each Performance Award shall
be granted and administered to comply with the requirements of Section
162(m) of the Code and subject to the following provisions:
(b) Any Performance Award shall be made not later than 90 days
after the start of the period for which the Performance Award relates and
shall be made prior to the completion of 25% of such period. All
determinations regarding the achievement of any applicable conditions will
be made by the Committee. The Committee may not increase during a year the
amount of a Performance Award that would otherwise be payable upon
satisfaction of the conditions but may reduce or eliminate the payments as
provided for in the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to
limit or restrict the Committee from making any Award or payment to any
person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
(d) A Participant who receives a Performance Award payable in
Common Stock shall have no rights as a shareholder until the Company Stock
is issued pursuant to the terms of the Award Agreement. The Common Stock
may be issued without cash consideration.
(e) A Participant's interest in a Performance Award may not be
sold, assigned, transferred, pledged, hypothecated, or otherwise
encumbered.
(f) No Award or portion thereof that is subject to the satisfaction
of any condition shall be distributed or considered to be earned or vested
until the Committee certifies in writing that the conditions to which the
distribution, earning or vesting of such Award is subject have been
achieved.
10. DEFERRED PAYMENTS.
The Committee, in its discretion, may permit a Participant to elect
to defer receipt of all or any part of any cash or stock payment under the
Plan, or the Committee may determine to defer receipt by some or all
Participants, of all or part of any such payment. The Committee shall
determine the terms and conditions of any such deferral, including the
period of deferral, the manner of deferral, and the method for measuring
appreciation on deferred amounts until their payout.
11. METHOD OF EXERCISE OF OPTIONS.
Subject to any applicable Award Agreement, any Option may be
exercised by the Participant in whole or in part at such time or times, and
the Participant may make payment of the Exercise Price in such form or
forms permitted by the Committee, including, without limitation, payment by
delivery of cash, Common Stock or other consideration (including, where
permitted by law and the Committee, Awards) having a Fair Market Value on
the day immediately preceding the exercise date equal to the total
Exercise Price, or by any combination of cash, shares of Common Stock and
other consideration, including exercise by means of a cashless exercise
arrangement with a qualifying broker-dealer, as the Committee may specify
in the applicable Award Agreement.
12. RIGHTS OF PARTICIPANTS.
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance
of a stock certificate for such Common Stock. Nothing contained herein or
in any Award Agreement confers on any person any right to continue in the
employ or service of the Holding Company or an Affiliate or interferes in
any way with the right of the Holding Company or an Affiliate to terminate
a Participant's services.
13. 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 Award to which the
Participant would then be entitled. Such designation will be made upon
forms supplied by and delivered to the Holding Company and may be revoked
in writing. If a Participant fails effectively to designate a beneficiary,
then the Participant's estate will be deemed to be the beneficiary.
14. 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, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares,
or other similar corporate change, or other increase or decrease in such
shares without receipt or payment of consideration by the Holding Company,
or in the event an extraordinary capital distribution is made, the
Committee may make such adjustments to previously granted Awards, to
prevent dilution, diminution, 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 or other securities that may underlie future Awards under
the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock or other securities underlying Awards already made under
the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive
and/or Non-Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards
under this Plan shall be binding upon any successors or assigns of the
Holding Company. Notwithstanding the above, in the event of an
extraordinary capital distribution, any adjustment under this Section 14
shall be subject to required regulatory approval.
15. TAXES.
(a) Whenever under this Plan, cash or shares of Common Stock are to
be delivered upon exercise or payment of an Award or any other event with
respect to rights and benefits hereunder, the Committee shall be entitled
to require as a condition of delivery (i) that the Participant remit an
amount sufficient to satisfy all federal, state, and local withholding tax
requirements related thereto, (ii) that the withholding of such sums come
from compensation otherwise due to the Participant or from any shares of
Common Stock due to the Participant under this Plan or (iii) any
combination of the foregoing provided, however, that no amount shall be
withheld from any cash payment or shares of Common Stock relating to an
Award which was transferred by the Participant in accordance with this
Plan.
(b) If any disqualifying disposition described in Section 7(l) is
made with respect to shares of Common Stock acquired under an Incentive
Stock Option granted pursuant to this Plan, or any transfer described in
Section 6(c) is made, or any election described in Section 16 is made, then
the person making such disqualifying disposition, transfer, or election
shall remit to the Holding Company or its Affiliates an amount sufficient
to satisfy all federal, state, and local withholding taxes thereby
incurred; provided that, in lieu of or in addition to the foregoing, the
Holding Company or its Affiliates shall have the right to withhold such
sums from compensation otherwise due to the Participant, or, except in the
case of any transfer pursuant to Section 6(c), from any shares of Common
Stock due to the Participant under this Plan.
(c) The Trustee may deduct from any distribution of shares of
Common Stock awarded to an Outside Director under this Plan, sufficient
amounts of shares of Common Stock to cover any applicable tax obligations
incurred as a result of vesting of the Stock Award.
16. NOTIFICATION UNDER SECTION 83(b).
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has
not prohibited such Participant from making such election, and the
Participant shall, in connection with the exercise of any Option, or the
grant of any Stock Award, make the election permitted under Section 83(b)
of the Code, such Participant shall notify the Committee of such election
within 10 days of filing notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
17. AMENDMENT OF THE PLAN AND AWARDS.
(a) Except as provided in paragraph (c) of this Section 17, the
Board of Directors may at any time, and from time to time, modify or amend
the Plan in any respect, prospectively or retroactively; provided however,
that provisions governing grants of Incentive Stock Options shall be
submitted for shareholder approval to the extent required by such law,
regulation or otherwise. Failure to ratify or approve amendments or
modifications by shareholders shall be effective only as to the specific
amendment or modification requiring such ratification. Other provisions of
this Plan will remain in full force and effect. No such termination,
modification or amendment may adversely affect the rights of a Participant
under an outstanding Award without the written permission of such
Participant.
(b) Except as provided in paragraph (c) of this Section 17, the
Committee may amend any Award Agreement, prospectively or retroactively;
provided, however, that no such amendment shall adversely affect the rights
of any Participant under an outstanding Award without the written consent
of such Participant.
(c) In no event shall the Board of Directors amend the Plan or
shall the Committee amend an Award Agreement in any manner that has the
effect of:
(i) Allowing any Option to be granted with an exercise below
the Fair Market Value of the Common Stock on the Date of
Grant.
(ii) Allowing the exercise price of any Option previously
granted under the Plan to be reduced subsequent to the
Date of Award.
(d) Notwithstanding anything in this Plan or any Award Agreement to
the contrary, if any Award or right under this Plan would, in the opinion
of the Holding Company's accountants, cause a transaction to be ineligible
for pooling of interest accounting that would, but for such Award or right,
be eligible for such accounting treatment, the Committee, at its
discretion, may modify, adjust, eliminate or terminate the Award or right
so that pooling of interest accounting is available.
18. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon approval by the Holding
Company's shareholders in accordance with FDIC, Commissioner of Banks of
the Commonwealth of Massachusetts ("Commissioner") and Internal Revenue
Service ("IRS") regulations or December 21, 1999, whichever is earlier;
provided, however, that the Plan shall not be implemented prior to receipt
of any required approval by the Commissioner or satisfaction of any
conditions required by the Commissioner. The failure to obtain shareholder
ratification for such purposes will not effect the validity of the Plan and
any Awards made under the Plan; provided, however, that if the Plan is not
ratified by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted
under the Plan shall be deemed to be Non-Statutory Stock Options and any
Award intended to comply with Section 162(m) of the Code shall not comply
with Section 162(m) of the Code.
19. TERMINATION OF THE PLAN.
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; (ii) the issuance
of a number of shares of Common Stock pursuant to the exercise of Options
or the distribution of Stock Awards (is equivalent to the maximum number of
shares reserved under the Plan as set forth in Section 4 hereof. The Board
of Directors has the right to suspend or terminate the Plan at any time,
provided that no such action will, without the consent of a Participant,
adversely affect a Participant's vested rights under a previously granted
Award.
20. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the
state of Delaware to the extent not pre-empted by applicable federal law.
21. TREATMENT OF UNVESTED, UNEXERCISED, OR NON-EXERCISABLE AWARDS UPON A
CHANGE IN CONTROL.
(a) Notwithstanding any other provision of this Plan, and unless
otherwise determined by the Committee, in the event of a Change in Control,
all Awards shall continue to remain exercisable (in the case of Options)
and shall continue to vest or become exercisable (in the case of Stock
Awards and Options) in accordance with the terms and conditions of the
grant of the Awards, as set forth in the Award Agreement(s) governing the
grant of such Awards; provided, however, that the continuation or timing of
vesting or exercisability shall take place without regard to the
Participant's continued employment or service or satisfaction of any other
requirements concerning vesting or exercisability set forth in the Award
Agreement(s).
(b) Subject to paragraph (a) of this Section 21, in the event of a
Change in Control where the Holding Company or the Bank is not the
surviving entity, the Board of Directors of the Holding Company and/or the
Bank, as applicable, shall require that the successor entity take one of
the following actions with respect to all Awards held by Participants at
the date of the Change in Control:
(i) Assume the Awards with the same terms and conditions as
granted to the Participant under this Plan; or
(ii) Replace the Awards with comparable Awards, subject to the
same or more favorable terms and conditions as the Award
granted to the Participant under this Plan, whereby the
Participant will be granted common stock or the option to
purchase common stock of the successor entity; or, only
if the Committee determines that neither of the
alternatives set forth in clauses (i) or (ii) are legally
available,
(iii) Replace the Awards with a cash payment under an incentive
plan, program, or other arrangement of the successor
entity that preserves the economic value of the Awards
and makes any such cash payment subject to the same
vesting or exercisability schedule applicable to such
Awards.
(c) The determination of comparability of Awards offered by a
successor entity under clause (ii) of paragraph(b) above shall be made by
the Committee, and the Committee's determination shall be conclusive and
binding.
22. COMPLIANCE WITH FDIC AND MASSACHUSETTS COMMISSIONER OF BANKS OF THE
COMMONWEALTH OF MASSACHUSETTS CONVERSION REGULATIONS.
Notwithstanding any other provision contained in this Plan:
(a) Unless the Plan is approved by a majority vote of the
outstanding shares of the Holding Company eligible to be cast
at a meeting of stockholders to consider the Plan, as
determined by Delaware law, the Plan and any Awards under the
Plan shall not become effective or implemented prior to
December 21, 1999;
(b) No Options or Stock Awards granted to any individual Employee
prior to one year from the date of the Bank's conversion from
the mutual to stock form ("Conversion") may exceed 25% of the
total amount of Options or Stock Awards, as applicable, which
may be granted under the Plan;
(c) No Options or Stock Awards granted to any individual Outside
Director prior to one year from the Bank's Conversion may
exceed 5% of the total amount of Options or Stock Awards, as
applicable, which may be granted under the Plan;
(d) The aggregate amount of Options or Stock Awards granted to all
Outside Directors prior to one year from the Bank's Conversion
may not exceed 30% of the total amount of Options or Stock
Awards, as applicable, which may be granted under the Plan; and
(e) No Option granted prior to one year from the Bank's Conversion
may be granted with an exercise price which is less than the
Fair Market Value of the Common Stock underlying the Option on
the Date of Grant.
MASSACHUSETTS FINCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
July 21, 1999
2:00 p.m. Eastern Time
--------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Massachusetts Fincorp, Inc. (the "Company"), each
with full power of substitution, to act as proxy for the undersigned, and
to vote all shares of common stock of the Company which the undersigned is
entitled to vote only at the Annual Meeting of Shareholders, to be held on
July 21, 1999, at 2:00 p.m. Eastern Time, at The Phillips Old Colony House,
780-900 Morrissey Boulevard, Boston, Massachusetts, and at any and all
adjournments thereof, with all of the powers the undersigned would possess
if personally present at such meeting as follows:
1. The election as directors of all nominees listed (except as
marked to the contrary below).
Paul C. Green John B. Byrne John E. Hurley, Jr. Robert E. McGovern
FOR ALL
FOR VOTE WITHHELD EXCEPT
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[ ] [ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR
ALL EXCEPT" and write that nominee's name in the space provided below.
- -------------------------------------------------------------------------------
2. The approval of the Massachusetts Fincorp, Inc. 1999 Stock-
Based Incentive Plan.
FOR AGAINST ABSTAIN
--- ------- -------
[ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted "FOR" each of the
proposals listed. If any other business is presented at the Annual
Meeting, including whether or not to adjourn the meeting, this proxy will
be voted by the proxies in their best judgment. At the present time, the
Board of Directors knows of no other business to be presented at the Annual
Meeting.
The above-signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and
of a Proxy Statement dated June 16, 1999 and of the Annual Report to
Shareholders.
Please sign exactly as your name appears on this card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder may sign but only one
signature is required.
Dated:
---------------------------------
----------------------------------------
SHAREHOLDER SIGN ABOVE
----------------------------------------
CO-HOLDER (IF ANY) SIGN ABOVE
--------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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