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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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.
70 Quincy Avenue
Quincy, Massachusetts 02169
(617) 825-5555
March __, 2000
Fellow Shareholders:
You are cordially invited to attend the 2000 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 April 26, 2000
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 for directors nominated by the Board of
Directors and specified under Proposal 1 and "FOR" the ratification of
certain amendments to the Massachusetts Fincorp, Inc. 1999 Stock-Based
Incentive Plan.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting in person, however, please sign, date and return the
enclosed BLUE 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.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT OUR PROXY SOLICITOR,
REGAN & ASSOCIATES, INC. AT (800) 737-3426 OR RENEE CZAJKOWSKI, CORPORATE
SECRETARY, AT (617) 825-5555 EXT. 1409.
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,
Paul C. Green
Chairman of the Board, President
and Chief Executive Officer
MASSACHUSETTS FINCORP, INC.
70 Quincy Avenue
Quincy, Massachusetts 02169
__________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 26, 2000
__________________________________
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 April 26, 2000 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;
and
2. The ratification of certain amendments to 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 March 1, 2000 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. We request that you
complete and return the BLUE proxy card and return it in the enclosed
postage-paid envelope as soon as possible. A list of shareholders entitled
to vote at the Annual Meeting will be available at Massachusetts Fincorp,
Inc., 70 Quincy Avenue, Quincy, Massachusetts 02169, 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
Renee R. Czajkowski
Corporate Secretary
Quincy, Massachusetts
March __, 2000
MASSACHUSETTS FINCORP, INC.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 26, 2000
_______________________
This Proxy Statement is being furnished to shareholders of
Massachusetts Fincorp, Inc. (the "Company") in connection with the
solicitation by the Board of Directors (the "Board of Directors" or the
"Board") of proxies to be used at the annual meeting of shareholders (the
"Annual Meeting"), to be held on April 26, 2000 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 1999 Annual Report to
Stockholders, including the consolidated financial statements of the
Company for the fiscal year ended December 31, 1999, accompanies this Proxy
Statement which is first being mailed to record holders on or about March
__, 2000.
Vote Required and Voting of Proxies
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 BLUE 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 nominated by the Board of Directors
and named in this Proxy Statement and "FOR" ratification of certain
amendments to 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
(Renee Czajkowski), 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.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT THE COMPANY'S PROXY
SOLICITOR, REGAN & ASSOCIATES, INC. AT (800) 737-3426 OR RENEE CZAJKOWSKI,
CORPORATE SECRETARY, AT (617) 825-5555 EXT. 1409.
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 March 1, 2000 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. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of
determining the existence of a quorum. Broker non-votes also will be
counted for purposes of determining the existence of a quorum. A broker
non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to the item and has
not received instructions from the beneficial owner. 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 enclosed BLUE 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 ratification of the amendments to the Incentive Plan
(Proposal 2), the enclosed BLUE proxy card enables a shareholder to (i)
vote "FOR" the proposal, (ii) vote "AGAINST" the proposal or "ABSTAIN" from
voting on the item. This matter will be decided by the affirmative vote of
a majority of the votes cast. Shares underlying broker non-votes, shares
in excess of the Limit and abstentions will not be counted as votes cast
and will have no effect on the voting.
Proxies solicited by the Company will 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. American Securities Transfer and Trust, Inc. has been
appointed to act as the independent inspector of election at the Annual
Meeting and will be paid a fee of $5,000 plus additional hourly fees and
out-of-pocket expenses.
Stock Ownership
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
(the "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>
Percent
Name and Address Number of Outstanding
of Beneficial Owner of Shares Common Stock
- ------------------- --------- --------------
<S> <C> <C>
Frederick J. Jaindl, Mark W. Jaindl, 54,548(1) 9.9%
Zachary John Jaindl Trust and
Julianne Katherine Jaindl Trust ("Jaindl")
1964 Diehl Court
Allentown, Pennsylvania 18104
The Massachusetts Co-operative Bank 43,638(2) 8.0%
Employee Stock Ownership Plan
(the "ESOP")
70 Quincy Avenue
Quincy, Massachusetts 02169
Spence Limited, L.P. 33,100(3) 6.1%
4712 Clendenin Road
Nashville, Tennessee 37220-1004
<FN>
<F1> Based on information filed in a Schedule 13D, as amended, filed on
January 20, 2000, Jaindl may, in the aggregate, be deemed the
beneficial owner of 54,548 shares.
<F2> First Bankers Trust, N.A. has been appointed as the corporate trustee
for the ESOP (the "ESOP Trustee"). The ESOP Trustee, subject to its
fiduciary duty, will vote all unallocated shares and allocated shares
for which no timely voting instructions are received in the same
proportion as shares for which the trustee has received voting
instructions from participants. As of March 1, 2000, 8,728 shares
have been allocated under the ESOP and 34,910 shares remain
unallocated.
<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>
</TABLE>
Interest of Certain Persons in Matters to be Acted Upon
Certain directors, officers and employees of the Company and the Bank
have been granted awards of stock and stock options under the Incentive
Plan as described herein. An amendment to the Incentive Plan is being
presented for ratification in Proposal 2, which will affect such awards.
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 by the
Board of Directors are John R. Byrne, Richard F. Cahill, W. Craig Dolan and
John P. O'Hearn, Jr. 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. Alternatively, the
Board of Directors may adopt a resolution to reduce the size of the Board.
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 BLUE 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 NOMINATED BY THE BOARD OF DIRECTORS 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 nominated by the Board of Directors, 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
nominated by the Board of Directors, 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. Unless
otherwise indicated, each of the named individuals has sole voting and
investment power with respect to the shares shown.
<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) of Class (3)
- ---------------------------------- --- --------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
NOMINEES
John R. Byrne 58 1983 2003 5,000 *
President and Treasurer, Byrne, Daily
& Pike Insurance Agency, East Milton,
Massachusetts.
Richard F. Cahill 57 1984 2003 1,500 (4) *
President and Chief Executive Officer
of Jack Conway & Co., Inc., a real
estate firm located in Hanover,
Massachusetts.
W. Craig Dolan 60 1973 2003 3,100 (5) *
President and Funeral Director of,
James W. Dolan, Inc., a funeral home
located in the Dorchester section of
Boston, Massachusetts.
John P. O'Hearn, Jr. 60 1973 2003 15,000 2.86%
Executive Vice President of Meredith
& Grew, Inc., a real estate firm
located in Boston, Massachusetts.
CONTINUING DIRECTORS
Paul C. Green 50 1991 2002 12,867 (6) 2.36%
Chairman of the Board, President and
Chief Executive Officer of the
Company and the Bank.
John E. Hurley, Jr. 58 1981 2002 1,000 *
Probation officer, Chelsea, Massachusetts.
Robert E. McGovern 81 1972 2002 1,000 *
Retired, former real estate director
for the Boston Redevelopment Authority,
Boston, Massachusetts.
Robert H. Quinn 72 1974 2001 1,000 *
Partner, Quinn & Morris, a law firm
located in Boston, Massachusetts.
John J. Sousa, Jr. 53 2000 2002 4,550 *
Managing Director, Institutional
Mortgage Acquisition Corporation, a
firm that facilitates the purchase
and sale of mortgage products, located
in Waltham, Massachusetts since 1997.
Prior to 1997, served as a vice
president of a residential appraisal
company for two years.
Joseph W. Sullivan 62 1977 2001 2,500 *
Retired, former President of Neponset
Lincoln Mercury, Boston, Massachusetts.
Diane Valle 47 1983 2001 2,653 (7) *
President, Harbor Greenery, a retail
florist located in Boston, Massachusetts.
NAMED EXECUTIVE OFFICER
(WHO IS NOT A DIRECTOR)
Anthony A. Paciulli 50 -- -- 1,377 *
Vice President of the Company and
Senior Vice President of the Bank
All directors and executive officers as a
group (13 persons) (8) -- -- -- 61,133 11.21%
<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> Does not include shares awarded under the Incentive Plan, which have
been granted but which have not yet been funded by the Company and,
accordingly, do not provide the recipient with any voting rights.
<F3> As of the Record Date, there were 545,481 shares of Common Stock
outstanding.
<F4> Includes 600 shares held by Mr. Cahill's spouse's individual
retirement account.
<F5> Includes 500 shares held by Mr. Dolan's son and 100 shares held by
Mr. Dolan's daughter.
<F6> Includes 50 shares in trusts for benefit of Mr. Green's son and
daughter.
<F7> Includes 1,653 shares as custodian by Ms. Valle for her daughter.
<F8> Includes Ruth J. Rogers who held 9,586 shares beneficially, but who
will be resigning from the Company effective March 10, 2000.
</FN>
</TABLE>
In addition, the Company has been notified of the nomination of three
other individuals and a committee's intention to solicit proxies in
opposition to the recommendation of the Board of Directors. These
individuals consist of Mark W. Jaindl, Scott E. Buck and William E.
Schantz, II. Mr. Jaindl beneficially owns 54,548 shares of the Company's
common stock. Messrs. Buck and Schantz claim ownership of 250 and 100
shares of the Company's common stock, respectively. We will be providing
you with information in the future regarding these nominees. YOUR BOARD
URGES YOU TO RETURN ONLY MANAGEMENT'S BLUE PROXY CARD, WHICH IS ENCLOSED.
Meetings 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, 1999, the
Board of Directors of the Company and Bank each held 13 meetings. All of
the directors of the Company 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, 1999. The Board
of Directors of the Company maintains 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, Quinn and Sullivan.
This committee generally meets on a quarterly 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. During the fiscal year ended December 31, 1999, the
Audit and Compliance Committee held five meetings.
Nominating Committee. The Company's Nominating Committee for the 2000
Annual Meeting consists of Messrs. McGovern, Sullivan and Ms. Valle. The
committee considers and recommends the nominees for director to stand for
election at the Company's Annual Meeting. 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." The Nominating Committee met on
January 12, 2000.
Compensation Committee. The Compensation Committee of the Company
consists of Messrs. Byrne, Cahill, Hurley 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. During the fiscal year ended December 31, 1999, the
Compensation Committee held four meetings.
Directors' Compensation
Directors' Fees. All non-employee 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. Under the Incentive Plan, which was adopted by the
Company's shareholders on July 21, 1999, each member of the Board of
Directors of the Company who is not an officer or employee of the Company
or the Bank received non-statutory stock options to purchase 1,487 shares
of common stock at an exercise price of $12.00, the fair market value of
the common stock on November 16, 1999, the date the option was granted, and
stock awards for 595 shares (collectively "Directors' Awards"). The
Directors' awards initially granted under the Incentive Plan vest equally
over a five-year period, beginning on November 16, 2000. The vesting of
all Directors' awards immediately accelerates upon the death and disability
of a director. The Board of Directors amended the Incentive Plan to
provide the Compensation Committee with the ability to accelerate the
vesting of awards upon a participant's retirement and provide for the
acceleration of vesting of awards upon a change in control of the Company
or the Bank. Such amendments are being submitted to shareholders for
ratification under Proposal 2.
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,
1999, 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
$100,000 ("Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
----------------------------------- -------------------------
Other Restricted Securities
Name and Annual Stock Underlying All Other
Principal Fiscal Salary Bonus Compensation Awards Options/SARs Compensation
Positions Year ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
- --------- ------ ------ ----- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul C. Green 1999 $122,360 $ -- -- $65,448 12,546 $15,257
President and Chief 1998 114,118 12,075 -- -- -- 12,148
Executive Officer 1997 96,000 19,600 -- -- -- 7,895
Anthony A. Paciulli 1999 $100,624 $ -- -- $34,032 6,818 $13,382
Senior Vice President 1998 96,067 9,930 -- -- -- 10,110
1997 71,669 -- -- -- -- 3,609
<FN>
<F1> Does not include the aggregate amount of perquisites and other
personal benefits, which was less than 10% of the total annual salary
and bonus reported.
<F2> Includes awards of 5,454 and 2,836 shares of stock granted to Messrs.
Green and Paciulli, respectively, under the Incentive Plan. The
dollar amounts set forth in the table represent the market value of
the date of the grant of the stock awarded. The stock awards
vest in five equal annual installments commencing on November 16,
2000, the first anniversary of the awards. When shares become
vested, the recipients will also receive an amount equal to
unaccumulated cash and stock dividends (if any) paid with respect
thereto, plus earnings thereon. As of December 31, 1999, the market
value of the shares subject to stock awards held by Messrs. Green and
Paciulli were $61,358 and $31,905, respectively.
<F3> Includes stock options granted pursuant to the Incentive Plan during
fiscal year 1999. See "Option Grants in last Fiscal Year" table for
discussion of options granted under the Incentive Plan.
<F4> Other Compensation includes ESOP allocations with a market value as
of December 31, 1999 of $12,006 for Mr. Green and $9,868 for Mr.
Paciulli and a one-time cash payment for accrued vacation time of
$3,251 for Mr. Green and $3,514 for Mr. Paciulli.
</FN>
</TABLE>
Employment Agreements. The Bank and the Company entered into
employment agreements with Messrs. Green and Paciulli effective December
22, 1998. The employment agreements are intended to ensure that the Bank
and the Company will be able to maintain a stable and competent management
base. 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 Mr. Paciulli. The employment agreements with the
Company are extended on a daily basis unless written notice of non-renewal
is given by the Board of Directors and the term of the employment
agreements with the Bank are renewable on an annual basis. The employment
agreements provide that each executive's base salary will be reviewed
annually. The current base salaries for Messrs. Green and Paciulli are
$125,580 and $103,272, 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 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 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 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. The employment agreements restrict each executive's
right to compete against the Bank or the Company for a period of one year
from the date of termination of the agreement if his employment is
terminated without cause, except if termination follows a change in
control.
Under the employment agreements, if voluntary (in connection with
reasons stated in the agreements) 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. 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 not receive duplicative
payments or benefits under the agreements.
Payments to the executives under the employment agreements with the
Bank are guaranteed by the Company in the event that payments or benefits
are not paid by the Bank. Payment under the employment agreements with the
Company would be made by the Company. All reasonable costs and legal fees
paid or incurred by an executive pursuant to any dispute or question of
interpretation relating to the employment agreements shall be paid by the
Bank or Company, respectively, if an 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
executives 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 $446,276. 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
maintains 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.
Messrs. Green and Paciulli participate in the MSERP.
Incentive Plan. The Company's stockholders adopted the Incentive
Plan on July 21, 1999. It provides discretionary awards of options to
purchase common stock and awards of restricted common stock (collectively,
"Awards") to officers, directors and employees as determined by a committee
of the Board of Directors. The following table lists all grants of options
under the Incentive Plan to the Named executive Officers for fiscal year
1999 and contains certain information about potential value of those
options based upon certain assumptions as to the appreciation of the
Company's stock over the life of the option.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1)(2) Fiscal Year Per Share Date (3)
- ---- ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Paul C. Green 12,546 35.7% $12.00 November 16, 2009
Anthony A. Paciulli 6,818 19.4 12.00 November 16, 2009
<FN>
<F1> Options granted under the Incentive Plan become exercisable in five
equal annual installments commencing on November 16, 2000, provided,
however, options will be immediately exercisable in the event the
optionees terminate employment due to death or disability. The Board
of Directors has amended the Incentive Plan to also provide for the
acceleration of vesting of the options upon a participant's
retirement or upon a change in control of the Company or the Bank.
See Proposal 2 for more information.
<F2> The purchase price equals the fair market value of the stock on the
date the option was granted and generally may be made in whole or in
part in cash or common stock.
<F3> The option term is ten years.
</FN>
</TABLE>
The following table provides certain information with respect to the
number of shares of common stock represented by outstanding options held by
the Named executive Officers as of December 31, 1999. Also reported are
the values for "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock options and the year
end price of the common stock.
Fiscal Year-End Option Value
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End(#)(1) at Fiscal Year-End($)(2)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul C. Green -- 12,546 $ --
Anthony A. Paciulli -- 6,818 --
<FN>
<F1> The options in this table have an exercise price of $12.00 per share.
<F2> The price of the common stock on December 31, 1999 was $11.25 per
share.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than
10% of any registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC. Executive
officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of the reports it has
received and written representations provided to the Company from the
individuals required to file the reports, the Company believes that each of
its executive officers and directors has complied with applicable reporting
requirements for transactions in Company common stock during the fiscal
year ended December 31, 1999.
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"). The 1998 Refinanced Loan was sold in
the secondary market in February 1998. As of December 31, 1999, the Bank
had four loans outstanding to directors totaling $119,008, all of which
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. RATIFICATION OF THE AMENDMENTS TO THE
MASSACHUSETTS FINCORP, INC. 1999 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting amendments to the
Massachusetts Fincorp, Inc. 1999 Stock-Based Incentive Plan to stockholders
for ratification. Stockholders originally approved the Incentive Plan on
July 21, 1999. The Board of Directors of the Company approved the
amendments to the Incentive Plan on January 12, 2000. The Incentive Plan
was amended primarily in two respects. First, the amendments clarify that
the Company may accelerate or modify the vesting of restricted stock awards
and stock options upon a participant's retirement. Second, the amendments
provide for accelerated vesting of outstanding awards of stock and stock
options upon a change in control of the Bank or the Company. For purposes
of the Incentive Plan, a "change in control" of the Bank or the Company
generally means an event or circumstance that results in a substantial
change in ownership or control of the Bank or the Company. In the most
typical circumstance, a change in control of the Bank or the Company will
result from an acquisition or merger of the Bank or the Company with
another entity in which the Bank or the Company is not the surviving
entity. Other circumstances involving a change in control may result from
a sale of substantially all the assets of the Bank or the Company, a change
in the composition of the Board of Directors following a contested election
of Board members or an offer by a third party to purchase in excess of 20%
of the Company's outstanding stock. The amendments to the Incentive Plan
do not increase the number of shares available for grant under the
Incentive Plan, change the eligibility requirements for participation in
the Incentive Plan, or otherwise alter the type of grants or existing
grants that have been made to the participants of the Incentive Plan. The
following is a summary of all material terms of the Incentive Plan, which
are affected by the amendments. However, shareholders are urged to read
carefully the Incentive Plan, as amended, which is attached hereto as
Appendix A.
General
The Incentive Plan authorizes the granting of options to purchase
common stock and awards of common stock (collectively, "Awards"). Subject
to certain adjustments to the Awards, the maximum number of shares
available for Awards under the Incentive Plan is 76,367 shares, consisting
of 54,548 shares authorized for issuance pursuant to the exercise of stock
options and 21,819 shares for stock awards. All officers, other employees
and non-employee directors of the Company and its affiliates are eligible
to receive Awards under the Incentive Plan. The Incentive Plan is
administered by a committee appointed by the Board of Directors (the
"Committee"). Subject to the terms of the Incentive Plan, the Committee
interprets the plan and is authorized to make decisions and determinations
thereunder, including the terms and conditions of awards. Authorized but
unissued shares or shares previously issued and reacquired by the Company
may be used to satisfy Awards under the Incentive Plan. To date, the
Company has not funded the Incentive Plan awards by issuing stock from
authorized but unissued shares or through shares reacquired in the open
market.
The Incentive Plan authorizes the grant of awards in the form of: (i)
options to purchase the Company's common stock 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" or "ISOs"; (ii) options that do
not so qualify (options which do not afford the same income tax benefits to
recipients, but which may provide tax deductions to the Company), referred
to as "Non-Statutory Stock Options" or "NSOs"; and (iii) restricted stock
awards, which provide a grant of common stock that vests over time.
Stock Options
The Committee has the discretion to award Incentive Stock Options or
Non-Statutory Stock Options to employees, while only Non-Statutory Stock
Options may be awarded to non-employee directors. Pursuant to the
Incentive Plan, the Committee has the authority to determine the date or
dates on which each stock option will become exercisable. In order to
qualify as Incentive Stock Options under Section 422 of the Code, the
exercise price must not be less than 100% of the fair market value on the
date of the grant. Incentive Stock Options granted to any person who is
the beneficial owner of more than 10% of the outstanding voting stock 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 the grant. The exercise price
may be paid in cash or in common stock at the discretion of the Committee.
Termination of Employment or Service. The Committee, in its
discretion, may determine the time frame in which options may be exercised
and may redesignate Incentive Stock Options as Non-Statutory Stock Options.
However, unless otherwise determined by the Committee, upon termination of
a participant's service for any reason other than death, disability,
retirement or termination for cause, the vested Incentive Stock Options and
Non-Statutory Stock Options shall be exercisable for a period of three
months following termination. In the event of termination for cause, all
rights to any stock options granted under the Incentive Plan shall expire
immediately upon termination. In the event a participant's service is
terminated for death or disability, all stock options held by the
participant vest immediately and shall be exercisable for up to one year
from the date of such termination of service. The Incentive Plan as
amended now provides the Committee with the discretion to permit the
acceleration of the vesting of stock options upon the retirement of a
participant. Following retirement, a participant generally has one year to
exercise his stock options; provided that Incentive Stock Options not
exercised within three months from the participant's retirement date shall
not be eligible for incentive treatment for tax purposes.
Acceleration Upon a Change in Control. As amended, the Incentive
Plan also now provides that in the event of a change in control of the
Company or the Bank, stock options will immediately become fully vested and
shall be exercisable for the term of the stock option regardless of
termination of employment or service; provided that Incentive Stock Options
not exercised within three months of an individual's termination of
employment shall not be eligible for incentive treatment for tax purposes.
Stock Awards
The Incentive Plan also authorizes the granting of stock awards to
employees and directors. The Committee has the authority to determine the
amounts of stock awards granted to any individual and the dates on which
stock awards granted will vest or any other conditions, which must be
satisfied prior to vesting.
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. Before 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.
Termination of Employment or Service. Unless otherwise determined by
the Committee, upon termination of the services of a stock award recipient
for any reason other than death, disability, retirement or termination for
cause, all rights in the recipient's unvested stock awards shall be
cancelled. In the event of the death or disability of the stock award
recipient all unvested stock awards held by such individual will become
fully vested. In the event of termination for cause, all unvested stock
awards held by an Incentive Plan participant shall be cancelled. The
Incentive Plan as amended now provides the Committee in the event of
retirement of an Incentive Plan participant, any stock awards in which the
participant has not vested as of his retirement date shall be forfeited.
However, in the event the Incentive Plan participant is immediately engaged
by the Company or the Bank as a consultant, advisor or director, the
Committee has the discretion to determine that all unvested stock awards
held by the participant will continue to vest in accordance with their
original terms.
Acceleration Upon a Change in Control. As amended, the Incentive
Plan now provides that all stock awards immediately vest in the event of a
change in control.
Stockholder Vote
Stockholders are being requested to ratify the amendments to the
Incentive Plan. If stockholders fail to ratify Proposal 2, the Incentive
Plan, in the form attached hereto, will remain in full force and effect at
the discretion of the Company's Board of Directors. The affirmative vote
of a majority of the shares present at the Annual Meeting and eligible to
be cast on this proposal is required to ratify the amendments to the
Incentive Plan.
Unless marked to the contrary, the shares represented by the enclosed
BLUE proxy card, if executed and returned, will be voted "FOR" the
ratification of the amendments to the Massachusetts Fincorp, Inc. 1999
Stock-Based Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF
THE AMENDMENTS TO THE MASSACHUSETTS FINCORP, INC. 1999 STOCK-BASED
INCENTIVE PLAN.
ADDITIONAL INFORMATION
Solicitation of Proxies
The cost of solicitation of proxies on behalf of management will be
borne by the Company. While a precise estimate of the total cost of
soliciting proxies cannot be made at this time due to a proxy contest, the
Company estimates it will incur $25,000 to $75,000 of such expenses,
including expenses for attorneys, advisors, solicitors and printing,
postage and mailing. 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
that ranges from $3,000 to $14,000, depending on the existence and results
of a proxy contest, 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.
Shareholder Proposals
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 2001 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 November 22, 2000. If such annual meeting is held on a date
more than 30 calendar days from April 26, 2001, a stockholder proposal must
be received by a reasonable time before the proxy solicitation for such
annual meeting is made to be considered for inclusion in the Company's
proxy statement. 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
2001 Annual Meeting of Stockholders to be timely, the Company would have to
receive such notice no later than January 26, 2001 assuming the 2001 Annual
Meeting is held on April 26, 2001 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 BLUE proxy card 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 BLUE 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.
Certain Information Regarding Participants
The Company and its directors may be deemed to be "participants" as
such term is defined by the regulations of the U.S. Securities and Exchange
Commission. Certain additional information with respect to the Company and
its directors is set forth in Appendix B to this Proxy Statement.
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT
CHARGE TO SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO RENEE R.
CZAJKOWSKI, MASSACHUSETTS FINCORP, INC., 70 QUINCY AVENUE, QUINCY,
MASSACHUSETTS 02169.
By Order of the Board of Directors
Renee R. Czajkowski
Corporate Secretary
Quincy, Massachusetts
March __, 2000
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 BLUE PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
APPENDIX A
MASSACHUSETTS FINCORP, INC.
1999 STOCK-BASED INCENTIVE PLAN
(as amended and restated)
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, as amended (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 July 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, as amended and restated.
(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.
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. The maximum number of the shares
reserved for Stock Awards is 21,819. 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, 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, or, if
sooner, the expiration of the term of the Non-Statutory Stock Option.
(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, or, if sooner, the expiration of the term of the Non-Statutory
Stock Option.
(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, or, if
sooner, the expiration of the term of the Non-Statutory Stock Option.
(g) 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.
(h) Acceleration Upon a Change in Control. In the event of a
Change in Control all Non-Statutory Stock Options held by a Participant as
of the date of the Change in Control shall immediately become exercisable
and shall remain exercisable until the expiration of the term of the Non-
Statutory Stock Options regardless of termination of employment or service.
(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, 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, or, if sooner, the
expiration of the term of the Incentive Stock Option..
(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, or, if
sooner, the expiration of the term of the Incentive Stock Option.
(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, or, if sooner, the expiration of the term of the
Incentive Stock Option.
(h) 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.
(i) Acceleration Upon a Change in Control. In the event of a
Change in Control all Incentive Stock Options held by a Participant as of
the date of the Change in Control shall immediately become exercisable and
shall remain exercisable until the expiration of the term of the Incentive
Stock Options regardless of termination of employment or service. Any
Option originally designated as an Incentive Stock Option shall be treated
as a Non-Statutory Stock Option to the extent the Participant exercises
such Option more than three (3) months from the Participant's cessation of
employment.
(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, 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). Unless
otherwise determined by the Committee, 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.
(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 (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.
(g) Acceleration Upon a Change in Control. In the event of a
Change in Control all unvested Stock Awards held by a Participant shall
immediately vest.
(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.
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:
(a) 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.
(b) 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.
(c) 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.
(d) A Participant's interest in a Performance Award may not be
sold, assigned, transferred, pledged, hypothecated, or otherwise
encumbered.
(e) 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; and
(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 Board of Directors approved and adopted the Plan with an
effective date of July 21, 1999. All amendments to the Plan are effective
upon approval by the Board of Directors, subject to shareholder
ratification when specifically required under the Plan or applicable
federal or state statutes, rules or regulations. The failure to obtain
shareholder ratification for such purposes will not affect the validity or
other provisions of the Plan and any Awards made under the Plan.
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; or (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 AWARDS UPON A CHANGE IN CONTROL.
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:
(a) Assume the Awards with the same terms and conditions as granted
to the Participant under this Plan;
(b) 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
(c) Replace the Awards with an immediate cash payment of equivalent
value.
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) No Options or Stock Awards granted to any individual Employee
prior to the first anniversary of the Bank's conversion or
December 22, 1999, may exceed 25% of the total amount of
Options or Stock Awards, as applicable, which may be granted
under the Plan;
(b) No Options or Stock Awards granted to any individual Outside
Director prior to the first anniversary of the Bank's
Conversion or December 22, 1999, may exceed 5% of the total
amount of Options or Stock Awards, as applicable, which may be
granted under the Plan;
(c) The aggregate amount of Options or Stock Awards granted to all
Outside Directors prior to the first anniversary of the Bank's
Conversion or December 22, 1999, may not exceed 30% of the
total amount of Options or Stock Awards, as applicable, which
may be granted under the Plan; and
(d) No Option granted prior to the first anniversary of the Bank's
Conversion or December 22, 1999, 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.
APPENDIX B
PARTICIPANT INFORMATION
The following table sets forth the names, principal business
occupations, business addresses (or home addresses if retired) and the
number of shares of the common stock of Massachusetts Fincorp, Inc. (the
"Company") beneficially owned, directly or indirectly, by those individuals
who may be deemed to be participants in this proxy solicitation under the
federal securities laws (the "Participants"). None of the Participants owns
any securities of record, but not beneficially.
<TABLE>
<CAPTION>
Name, Principal
Occupation Beneficial Stock Stock
and Business Address Ownership(1) Awards(2) Options(3)
- -------------------- ------------ --------- ----------
<S> <C> <C> <C>
Paul C. Green 12,867(4) 5,454 12,546
President and Chief Executive Officer
70 Quincy Avenue
Quincy, Massachusetts 02169
John J. Sousa, Jr. 4,550 595 1,487
Managing Director
Institutional Mortgage Acquisition Corp.
255 Bear Hill Road
Waltham, Massachusetts 02451
John E. Hurley, Jr. 1,000 595 1,487
Probation Officer
Chelsea District Court
19 Park Street
Chelsea, Massachusetts 02150
Robert E. McGovern 1,000 595 1,487
Retired
11 Arborview Road
Jamaica Plain, Massachusetts 02130
John R. Byrne 5,000 595 1,487
President and Treasurer
Byrne, Daily & Pike Insurance Agency
480 Adams Street
East Milton, Massachusetts 02186
Richard F. Cahill 1,500(5) 595 1,487
President and Chief Executive Officer
Jack Conway & Co., Inc.
137 Washington Street
Norwell Massachusetts 02061
W. Craig Dolan 3,100(6) 595 1,487
President
James W. Dolan, Inc.
1140 Washington Street
Boston, Massachusetts 02122
John P. O'Hearn, Jr. 15,000 595 1,487
Executive Vice President
Meredith & Grew, Inc.
160 Federal Street
Boston, Massachusetts 02110
Robert H. Quinn 1,000 595 1,487
Partner
Quinn & Morris
141 Tremont Street
Boston, Massachusetts 02111
Joseph W. Sullivan 2,500 595 1,487
Retired
203 Bridge Street
P.O. Box 853
Osterville, Massachusetts 02655
Diane Valle 2,653 (7) 595 1,487
President
Harbor Greenery
107 Atlantic Avenue
Boston, Massachusetts 02110
<FN>
<F1> As of March 1, 2000.
<F2> Under the Massachusetts Fincorp, Inc. 1999 Stock-Based Incentive Plan
(the "Incentive Plan"), which was adopted by the Company's
stockholders on July 21, 1999, each non-employee Director was awarded
595 shares of restricted stock. These stock awards vest equally over
a five-year period beginning on November 16, 2000. As of March 1,
2000, the restricted stock granted under the Incentive Plan had not
been funded by the Company and as a result, the recipients have no
voting rights with respect to awards of stock under the Incentive
Plan.
<F3> Under the Incentive Plan each non-employee Director received non-
statutory stock options to purchase 1,487 shares of common stock at
an exercise price of $12.00, the fair market value of the common
stock at the date of grant. The options will vest equally over a
five-year period beginning on November 16, 2000.
<F4> Includes 50 shares held in trust for each of Mr. Green's son and
daughter.
<F5> Includes 600 shares held by Mr. Cahill's spouse's individual
retirement account.
<F6> Includes 500 shares held by Mr. Dolan's son and 1000 shares held by
Mr. Dolan's daughter.
<F7> Includes 1,653 shares held as custodian by Ms. Valle for her daughter.
</FN>
</TABLE>
None of the Participants has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) during the past ten
years. During the past two years, none of the Participants borrowed or
otherwise obtained funds for the purpose of acquiring or holding securities
of the Company. None of the Participants owns any securities of any
subsidiary of the Company.
Other than the stock options and stock awards referenced above and
the participation by Mr. Green in The Massachusetts Co-operative Bank
Employee stock Ownership Plan, no Participant, is or within the past year,
a party to a contract, arrangement or understanding with any person with
respect to any securities of the Company.
All of the Participants have been granted stock awards and options
under the Incentive Plan. An amendment to the Incentive Plan is being
presented for stockholder ratification at the Annual Meeting which will
effect such stock options and stock awards. For a detailed description of
the amendments proposed for ratification, see Proposal 2 in the Company's
Proxy Statement. Other than the amendments to the Incentive Plan and those
Participants who have been re-nominated for election to the Board of
Directors, none of the Participants have any substantial direct or indirect
interest in any matters to be acted upon at the meeting.
Except for Mr. Green, who entered into an employment agreement with
the Company and the Bank, no Participant has any arrangement or
understanding with any person: (i) with respect to any future employment by
the Company or its affiliates or (ii) with respect to any future
transactions to which the Company or any of its affiliates may be a party.
For a description of the material terms of the Bank and Company employment
agreements with Mr. Green, see "Executive Compensation - "Employment
Agreements" in the Company's Proxy Statement. Additionally, no
Participant has since January 1, 1999 or will have a direct or indirect
material interest, in any transaction or series of transactions to which
the Company or any of its subsidiaries was or is to be a party in which the
amount involved exceeds $60,000.
The following table sets forth all purchases and sales of the
Company's common stock by the Participant's and the dates and amounts of
such transactions.
<TABLE>
<CAPTION>
Name Transactions(1)
- ---- ---------------
<S> <C>
Paul C. Green *Purchased 10,100 shares on December 21, 1998.
*Purchased 1,700 shares on February 11, 2000.
*Obtained 1,067 shares through the ESOP.
John R. Byrne *Purchased 5,000 shares on December 21, 1998.
Richard F. Cahill *Purchased 1,500 shares on December 21, 1998.
W. Craig Dolan *Purchased 3,100 shares on December 21, 1998.
John E. Hurley, Jr. *Purchased 1,000 shares on December 21, 1998.
Robert E. McGovern *Purchased 500 shares on December 21, 1998.
*Purchased 500 shares on February 24, 2000.
John P. O'Hearn, Jr. *Purchased 10,000 shares on December 21, 1998.
*Purchased 2,500 shares on May 19, 1999.
*Purchased 2,500 shares on December 21, 1998.
Robert H. Quinn *Purchased 1,000 shares on December 21, 1998.
John J. Sousa, Jr. *Purchased 10,000 shares on December 21, 1998.
*Sold 500 shares on July 23, 1999.
*Sold 5,500 shares on August 5, 1999.
*Purchased 550 shares on August 30, 1999.
Joseph W. Sullivan *Purchased 2,500 shares on December 21, 1998.
Diane Valle *Purchased 2,653 shares on December 21, 1998.
<FN>
<F1> On December 21, 1998, The Massachusetts Co-operative Bank converted
from the mutual to stock form of organization, issued common stock,
all of which was acquired by the Company, which issued shares of its
common stock in the conversion.
</FN>
</TABLE>
MASSACHUSETTS FINCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 26, 2000
2:00 p.m. Eastern Time
_______________________________
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
April 26, 2000, 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).
John R. Byrne Richard F. Cahill W. Craig Dolan John P. O'Hearn,
Jr.
FOR ALL
FOR VOTE WITHHELD EXCEPT
[ ] [ ] [ ]
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 ratification of certain amendments to 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 March ___, 2000 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.
