<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
CENTRAL BANCORP, INC.
- ---------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________
<PAGE>
<PAGE>
[CENTRAL BANCORP, INC. LETTERHEAD]
June 25, 1999
Dear Central Bancorp, Inc. Stockholder:
Enclosed is the first Proxy Statement and Annual Report of
Central Bancorp, Inc. In January 1999, Central Bancorp, Inc.
became the holding company for Central Co-operative Bank. With
the completion of the holding company reorganization, we believe
we have positioned ourselves well, and invite you to review the
enclosed materials.
Thank you for your continued interest and support of
Central Bancorp, Inc.
Sincerely,
/s/ John D. Doherty
John D. Doherty
President and Chief Executive Officer
<PAGE>
<PAGE>
June 25, 1999
Dear Fellow Stockholder:
The First Annual Meeting of Stockholders (the "Meeting")
of Central Bancorp, Inc. (the "Company") will be held at the
Auditorium of BankBoston, 100 Federal Street, Boston,
Massachusetts, on Thursday, July 29, 1999 at 11:00 a.m.
Accompanying this letter are a Notice of Annual Meeting, a
Proxy Statement, a Proxy Card for voting your shares and a copy
of the Company's Annual Report. You are encouraged to review
these materials carefully. At the Meeting, you will be asked to
elect three directors of the Company, and to approve a stock
option plan for the Company. During the meeting, we will report
on the operations of the Company. Directors and officers of the
Company as well as a representative of KPMG LLP will be present
to respond to any questions our stockholders may have.
Your vote is very important, regardless of the number of
shares you own. ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU
TO SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO ATTEND THE MEETING.
This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the
Meeting.
Your continued interest and support of Central Bancorp,
Inc. are sincerely appreciated.
Sincerely,
/s/ John D. Doherty
John D. Doherty
President and Chief Executive Officer
<PAGE>
<PAGE>
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 29, 1999
Notice is hereby given that the 1999 Annual Meeting of
Stockholders (the "Meeting") of Central Bancorp, Inc. (the
"Company") will be held at the Auditorium of BankBoston, 100
Federal Street, Boston, Massachusetts on Thursday, July 29,
1999 at 11:00 a.m.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed herewith.
The Meeting is for the purpose of considering and acting
upon:
1. The election of three directors of the
Company; and
2. Approval of Central Bancorp, Inc. 1999 Stock
Option and Incentive Plan; and
3. Such other matters as may properly come before
the Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing
proposals at the Meeting on the date specified above, or on any
date or dates to which, by original or later adjournment, the
Meeting may be adjourned. Pursuant to the Company's Bylaws,
stockholders of record at the close of business on June 1, 1999
are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
Whether or not you expect to be present at the Meeting,
please sign and date the enclosed proxy and mail it promptly in
the enclosed postage-paid envelope. If you do attend the Annual
Meeting and wish to vote in person, you may do so even though
you have signed an earlier proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gladys N. Partamian
GLADYS N. PARTAMIAN
SECRETARY AND CLERK
Somerville, Massachusetts
June 25, 1999
IMPORTANT:
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD WITHOUT
DELAY. THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES. AN ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
<PAGE>
<PAGE>
CENTRAL BANCORP, INC.
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
(617) 628-4000
ANNUAL MEETING OF STOCKHOLDERS
JULY 29, 1999
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Central
Bancorp, Inc. (the "Company"), the holding company for Central
Co-operative Bank (the 'Bank") to be used at the 1999 Annual
Meeting of Stockholders of the Company (hereinafter called the
"Meeting") which will be held at the Auditorium of BankBoston,
100 Federal Street, Boston, Massachusetts, on Thursday, July 29,
1999 at 11:00 a.m. On January 8, 1999, the reorganization of
the Bank into the holding company form of ownership was
completed, and the Company became the sole stockholder of the
Bank. The Bank's shares of Common Stock were previously
registered under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") with the Federal Deposit Insurance
Corporation ("FDIC"). The Company's shares of Common Stock are
now registered under the Exchange Act with the Securities and
Exchange Commission ("SEC"). The accompanying Notice of Annual
Meeting and this Proxy Statement are being first mailed to
stockholders on or about June 25, 1999.
________________________________________________________________
VOTING AND REVOCATION OF PROXIES
________________________________________________________________
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies may be revoked by written notice
to the Secretary of the Company at the address noted above, or
the filing of a later proxy, prior to a vote being taken on a
particular proposal at the Meeting. A proxy will not be voted
if a stockholder attends the Meeting and votes in person. The
presence of a stockholder at the Meeting will not automatically
revoke such stockholder's proxy. Proxies solicited by the Board
of Directors of the Company will be voted in accordance with the
directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED,
PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH
IN THIS PROXY STATEMENT AND IN FAVOR OF EACH OF THE OTHER
PROPOSALS SET FORTH HEREIN FOR CONSIDERATION AT THE MEETING.
The proxy confers discretionary authority on the persons
named therein to vote with respect to the election of any person
as a director where the nominee is unable to serve or for good
cause will not serve, and matters incident to the conduct of the
Meeting. If any other business is presented at the Meeting,
proxies will be voted by those named therein in accordance with
the determination of a majority of the Board of Directors.
Proxies marked as abstentions will not be counted as votes cast.
In addition, shares held in street name which have been
designated by brokers on proxy cards as not voted will not be
counted as votes cast. Proxies marked as abstentions or as
broker non-votes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
Stockholders of record as of the close of business on June
1, 1999 (the "Record Date"), are entitled to one vote for each
share then held. As of the Record Date, the Company had
1,957,000 shares of common stock, par value $1.00 per share (the
"Common Stock"), issued and outstanding. The Company did not
have any other class of equity security
1
<PAGE>
outstanding on the record date. The presence, in person or by
proxy, of at least a majority of the total number of outstanding
shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Meeting.
Persons and groups beneficially owning in excess of 5% of
the Company's Common Stock are required to file certain reports
regarding such ownership pursuant to the Exchange Act. Based on
such reports and other information which management believes to
be correct, management knows of no persons, except as listed
below, who owned more than 5% of the outstanding shares of
Common Stock as of the Record Date.
The following table sets forth, as of the Record Date,
certain information as to those persons who were the beneficial
owners of more than five percent (5%) of the Company's
outstanding shares of Common Stock and as to the shares of
Common Stock beneficially owned by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- ------------------- ---------- ------------
<S> <C> <C>
Central Co-operative Bank (2) 167,203 8.54%
Employee Stock Ownership Plan
399 Highland Ave.
Somerville, Massachusetts 02144
Jeffrey L. Gendell (3) 176,400 9.00%
Tontine Partners, L.P.
200 Park Avenue
New York, New York 10166
All Directors and Executive Officers 188,782 9.65%
as a Group (11 persons) (4)
<FN>
_____________
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
the Common Stock if he or she has sole or shared voting or investment
power with respect to such security, or has a right to acquire
beneficial ownership at any time within 60 days from the Record Date. As
used herein, "voting power" is the power to vote or direct the voting of
shares and "investment power" is the power to dispose or direct the
disposition of shares.
(2) Of the shares beneficially owned by the Central Co-operative Bank
Employee Stock Ownership Plan ("ESOP"), 86,563 shares had been allocated
to participating employees, over which shares Directors Boulos and
Kenney as co-trustees of the ESOP (the "ESOP Trustees") had shared
voting and sole investment power, and 80,640 shares had not been
allocated, as to which shares the ESOP Trustees generally would vote in
the same proportion as voting directions received from voting ESOP
participants.
(3) Based on a statement dated November 23, 1998, Mr. Gendell is the
managing member of a limited liability company which is the general
partner of Tontine Partners, L.P.
(4) Includes 28,000 shares of Common Stock which could be purchased by
officers pursuant to stock options which were exercisable within 60 days
of the Record Date. Does not include 80,640 shares held by the ESOP,
over which shares the ESOP Trustees had shared or sole voting and/or
investment power.
</FN>
</TABLE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Company's Board of Directors is currently composed of
eight members. During fiscal 1999, Director Burton F. Faulkner,
Jr. retired from the Board, and John G. Quinn was appointed as a
new Director. The Company's Articles of Organization and Bylaws
provide that Directors are to be elected for terms of three
years, approximately one-third of whom are to be elected
annually. Three directors will be elected at the Meeting, each
to serve for a three year period or until their respective
successors have been elected and qualified. The Nominating
Committee has nominated to serve as Directors Marat E. Santini,
John F. Gilgun, Jr. and John G. Quinn, each to serve for a three
year term. All nominees are currently members of the Board.
Directors will be elected by a plurality of all votes cast.
2
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ELECTION OF MARAT E. SANTINI, JOHN F. GILGUN, JR. AND
JOHN G. QUINN AS DIRECTORS OF THE COMPANY.
It is intended that the proxies solicited by the Board of
Directors will be voted for the election of the above named
nominees for a three year term. If a nominee is unable to
serve, the shares represented by all valid proxies will be voted
for the election of such substitute nominee as the Board of
Directors may recommend or the Board may also decide to reduce
the number of Directors to eliminate the vacancy. At this time,
the Board of Directors knows of no reason why any nominee might
be unavailable to serve.
The following table sets forth for each nominee and for
each director continuing in office, their name, age, the year he
first became a director of the Bank, which is the Company's
principal operating subsidiary, the year of expiration of their
present term and the number of shares and percentage of the
Company's Common Stock beneficially owned at the Record Date.
For information regarding shares of Common Stock beneficially
owned by all Directors and Executive Officers as a group, see
"Voting Securities and Principal Holders Thereof." All persons
were appointed as directors of the Company in 1998 in connection
with the incorporation and organization of the Company. Each
director of the Company is also a member of the Board of
Directors of the Bank.
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST PRESENT COMMON STOCK
AGE AS OF ELECTED TERM OWNED AT THE PERCENT
NAME RECORD DATE DIRECTOR TO EXPIRE RECORD DATE(1) OF CLASS
- ---- ------------- ----------- --------- -------------- --------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
Marat E. Santini 74 1972 1999 2,300 .12%
John F. Gilgun, Jr. 75 1987 1999 1,075 .06
John G. Quinn 36 -- 1999 1,200 .06
DIRECTORS CONTINUING IN OFFICE
Joseph R. Doherty 75 1958 2000 71,603 3.68
Terence D. Kenney 83 1975 2000 1,541 (2) .08
Gregory W. Boulos 42 1998 2001 5,500 (2) .28
John D. Doherty 41 1983 2001 89,564 (3) 4.58
George L. Doherty, Jr. 72 1991 2001 400 .02
<FN>
____________
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be the
beneficial owner, for purposes of this table, of any shares of the Common Stock if
he or she has sole or shared voting or investment power with respect to such
security, or has a right to acquire beneficial ownership at any time within 60
days from the Record Date.
(2) Did not include 80,640 shares held by the ESOP, over which shares the ESOP
Trustees, Directors Boulos and Kenney, had shared or sole voting and/or investment
power.
(3) Includes 25,000 shares of Common Stock which would be acquired upon the exercise
of stock options exercisable within 60 days. Also included 8,564 shares of Common
Stock allocated under the ESOP.
</FN>
</TABLE>
3
<PAGE>
<PAGE>
Presented below is certain information concerning each of
the nominees and Directors continuing in office. Unless
otherwise stated, all nominees and Directors have held the
positions listed for at least the last five years.
MARAT E. SANTINI was the Office Manager of Santini Inc., a
general contractor located in Arlington, Massachusetts, until
January 31, 1990. He is now retired and acts as a consultant to
Santini Inc.
JOHN F. GILGUN, JR. is the sole owner of the John F.
Gilgun Agency, a real estate agency located in Woburn,
Massachusetts.
JOHN G. QUINN, has been the President of Quinn Printing
Co., Inc., since 1990, which is located in Boston,
Massachusetts.
JOSEPH R. DOHERTY served as President of the Bank from
1958 until April 1986. From April 1986 until March 31, 1992,
Mr. Doherty served as Chairman of the Board of Directors and
Chief Executive Officer, responsible for guiding the overall
operations of the Bank. As of March 31, 1992, Mr. Doherty
retired as Chief Executive Officer of the Bank, although he
remains Chairman of the Board. Mr. Doherty is the father of
Bank President and Chief Executive Officer, John D. Doherty.
TERENCE D. KENNEY was from 1975 to September 1986, Senior
Vice President of the Bank. He presently serves as Chairman of
the Board of Assessors of the City of Woburn, Massachusetts.
GREGORY W. BOULOS was elected to the Board of Directors in
January 1998. He is a partner in The Boulos Company of
Portland, Maine, which is Maine's largest commercial real estate
brokerage and development firm, specializing in the sale and
leasing of commercial/industrial properties and the brokerage of
investment properties.
JOHN D. DOHERTY was elected President of the Bank in April
1986. As President, Mr. Doherty is responsible for the day-to-
day operations of the Bank and reports on the Bank's operations
directly to the Board of Directors. Commencing April 1, 1992,
Mr. Doherty also became the Chief Executive Officer of the Bank.
Mr. Doherty has been employed by the Bank in various capacities
since 1981 and is the son of Chairman of the Board Joseph R.
Doherty.
GEORGE L. DOHERTY, JR. is the owner of the George L.
Doherty Funeral Service, Inc., located in West Somerville,
Massachusetts. Mr. Doherty is not related to either Joseph R.
Doherty or John D. Doherty.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth the information, including the
ages, as of the Record Date with respect to executive officers
of the Company who do not serve on the Board of Directors.
Executive officers are appointed annually by the Board of
Directors.
PAUL S. FEELEY, 52, joined the Bank in July 1997 as Senior
Vice President and Treasurer/Chief Financial Officer. From 1993
to 1997, Mr. Feeley was Senior Vice President and Treasurer of
Bridgewater Credit Union. Prior to 1993 Mr. Feeley was Senior
Vice President, Chief Financial Officer and Clerk of the
Corporation at The Cooperative Bank of Concord, Acton,
Massachusetts.
DAVID W. KEARN, 57, joined the Bank in June 1993 as Senior
Vice President - Retail Banking. From 1990 to 1993, Mr. Kearn
was a Vice President of Loan Administration at Somerset Savings
Bank, Somerville, Massachusetts. Mr. Kearn was Senior Vice
President/Branch Administration at United States Trust Company
from 1987 to 1990.
WILLIAM P. MORRISSEY, 71, joined the Bank on November 1,
1992 as Senior Vice President of public affairs who represents
the Bank in outside banking and business organizations. Prior
to 1986, Mr. Morrissey served
4
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<PAGE>
as Executive Vice President for Corporate Affairs at the Boston
Five Cents Savings Bank, and as Deputy Commissioner of Banks for
the Commonwealth of Massachusetts.
________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
________________________________________________________________
The Board of Directors conducts its business through
meetings of the Board and through its committees. During the
year ended March 31, 1999 (and following its organization), the
Board of Directors of the Company held one meeting, and the
Board of Directors of the Bank met 12 times. No Director
attended fewer than 75% of the total number of meetings of the
Board of Directors and meetings of committees on which the
director served during this period.
A Nominating Committee consisting of Directors John D.
Doherty, Terence D. Kenney and Gregory W. Boulos met once to
nominate the nominees for Directors to be voted on at the
Meeting. The Company's Articles of Organization provide the
procedures for making nominations and states, among other
things, that any stockholder nomination to the Board of
Directors must be made in writing and delivered or mailed to the
Secretary of the Company not less than 30, nor more than 60 days
prior to the meeting of stockholders called for the election of
directors.
The Company's Finance Committee serves as an Audit
Committee. This Committee meets monthly to review reports
prepared by the Company's accounting staff as well as by its
internal auditor. In addition, the Finance Committee selects
the Company's independent accountants with whom it meets to
review the Company's audit. The members of the Finance
Committee are Directors Gregory W. Boulos (Chairman), Terence D.
Kenney, John G. Quinn and George L. Doherty, Jr. This Committee
met 12 times during the year ended March 31, 1999.
The Company's Finance Committee (as listed above) also
serves as a compensation committee and reviews various personnel
issues such as wage and salary programs and incentive
compensation. During the year ended March 31, 1999, the Finance
Committee met two times in its capacity as a compensation
committee.
________________________________________________________________
DIRECTOR COMPENSATION
________________________________________________________________
Directors of the Company are each paid a fee of $350 per
Board meeting attended. The Chairman of the Finance Committee
and the Security (or loan review) Committee each are paid a fee
of $660 for each meeting of the respective committee which they
attend in their capacities as chairman. Members of both the
Finance and Security Committees each receive a fee of $350 per
meeting attended. The Chairman of the Board and the President
do not receive any directors' or committee fees. Director
Terence D. Kenney receives an additional $567 per month as a
consulting fee for services rendered in connection with the
Bank's Woburn branches.
5
<PAGE>
<PAGE>
________________________________________________________________
EXECUTIVE COMPENSATION AND OTHER BENEFITS
________________________________________________________________
Summary Compensation Table. The following table sets forth
cash and noncash compensation for each of the last three fiscal
years awarded to or earned by the Chief Executive Officer and
each other executive officer of the Company whose salary and
bonus earned in 1999 exceeded $100,000 for services rendered in
all capacities to the Company and its subsidiaries (the "Named
Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
NAME AND FISCAL OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(4)
- ------------------ ------ ------ ----- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John D. Doherty 1999 $222,519 $45,000 $ -- $29,076
President and Chief 1998 197,500 20,000 -- 39,141
Executive Officer 1997 180,000 50,000 -- 16,107
Paul S. Feeley (3) 1999 102,600 10,000 -- 2,513
Senior Vice President/ 1998 -- -- -- --
Chief Financial officer 1997 -- -- -- --
David W. Kearn (2) 1999 108,000 20,000 -- 21,135
Senior Vice President/ 1998 99,616 10,000 -- 23,377
Lending and Retail 1997 -- -- -- --
Banking
William P. Morrissey (2) 1999 98,000 10,000 -- 19,695
Senior Vice President 1998 92,116 10,000 -- 22,339
1997 -- -- -- --
<FN>
___________
(1) Does not include perquisites which totaled less than ten percent of annual
salary and bonus.
(2) The salary and bonus. of Messrs. Kearn and Morrissey did not exceed $100,000
for fiscal year 1997.
(3) Mr. Feeley was not employed by the Bank in fiscal 1997, and his salary and
bonus did not exceed $100,000 for fiscal 1998.
(4) For fiscal 1999, consists of $4,846, $633, $3,569 and $3,168 contributions to
defined contribution retirement plan, $2,419, $1,880, $1,909 and $1,856 life
insurance premium payments and 1,283, 0, 921 and 863 shares, based on $17.00
per share (the reported last sale price of such shares on November 1, 1998),
allocated under employee stock ownership plan, respectively, for each of Mr.
Doherty, Mr. Feeley, Mr. Kearn and Mr. Morrissey, respectively.
</FN>
</TABLE>
6
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<PAGE>
Option Exercises and Fiscal Year-End Values. The
following table sets forth information regarding the values of
options held by the named executive officers at the end of
fiscal 1999. No options were granted during fiscal 1999, and
the named executive officers did not exercise any options during
fiscal 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (1) AT FISCAL YEAR END (1)(2)
------------------------------ -------------------------
<S> <C> <C>
John D. Doherty 25,000 $ 12,500
President and Chief
Executive Officer
Paul S. Feeley -- --
Senior Vice President/
Chief Financial Officer
David W. Kearn -- --
Senior Vice President/Lending
and Retail Banking
William P. Morrissey -- --
Senior Vice President
<FN>
________
(1) All options were exercisable.
(2) Value is based on difference between last sale price per share on March
31, 1999 ($16.75) and weighted average option exercise price per share of
$16.25 for Mr. Doherty.
</FN>
</TABLE>
Employment, Consulting and Severance Agreements. The Bank
has entered into an employment agreement (the "Agreement") with
John D. Doherty, President. The Agreement provides for a term
of five years and an automatic annual extension of the term of
employment for an additional one-year period beyond the then
effective expiration date unless either the Bank or Mr. Doherty
gives written notice that the Agreement will not be extended
further. The current base annual salary of John D. Doherty is
$222,519. The Agreement also provides for annual salary review
by the Board of Directors, as well as inclusion of Mr. John D.
Doherty in any discretionary bonus plans, customary fringe
benefits, vacation and sick leave and disability payments of the
Bank. Mr. John D. Doherty's Agreement is terminated upon death
and is terminable by the Bank for "just cause" as defined in the
Agreement. If the Bank terminates Mr. John D. Doherty without
just cause, he is entitled to a continuation of his salary for
the remaining term of the Agreement. Mr. John D. Doherty may
terminate the Agreement upon 90 days notice to the Bank.
The Agreement contains a provision stating that in the
event of Mr. John D. Doherty's involuntary termination of
employment in connection with, or within three years after, any
change in control of the Bank or the Company, Mr. John D.
Doherty will be paid within 10 days of such termination an
amount equal to the difference between (i) 2.99 times his "base
amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code, and (ii) the sum of any other parachute payments,
as defined under Section 280G(b)(2) of the Internal Revenue
Code, that Mr. John D. Doherty receives on account of the change
in control. The term "change in control" is defined as the
acquisition, by any person or entity, of the ownership, holding
or power to vote more than 25% of the Company's or the Bank's
voting stock, the control of the election of a majority of the
Company's or the Bank's directors, or the exercise of a
controlling influence over the management or policies of the
Company or the Bank. In addition, under the Agreement, a change
in control occurs when, during any consecutive two-year period,
directors of the Company or the Bank at the beginning of such
period cease to constitute a majority of the Board of Directors
of the Company or the Bank, unless the election of replacement
directors was approved by a two-thirds vote of the initial
directors then in office. The Agreement also provides for a
similar lump sum payment to be made in the event of Mr. John D.
Doherty's voluntary termination of
7
<PAGE>
<PAGE>
employment within three years following a change in control,
upon the occurrence, or within 90 days thereafter, of certain
specified events following a change in control, which have not
been consented to in writing by Mr. John D. Doherty, including
(i) the requirement that he perform his principal executive
functions more than 35 miles away from his primary office, (ii)
a reduction in the his base compensation as in effect prior to
the change in control, (iii) the failure of the Bank to provide
Mr. John D. Doherty with compensation and benefits substantially
similar to those provided to him at the time of the change in
control under any employee benefit plans in which he becomes a
participant, (iv) the assignment to Mr. John D. Doherty of
material duties and responsibilities other than those normally
associated with his position with the Bank, and (v) a material
reduction in his authority and responsibility. In the event
that a dispute arises between Mr. John D. Doherty and the Bank,
as to the terms or interpretation of the Agreement, Mr. John D.
Doherty will be reimbursed for all reasonable expenses arising
from such dispute. Payments made under these "change in
control" provisions are in lieu of any rights to which Mr. John
D. Doherty would be entitled in the event his employment was
terminated without just cause. If the change in control
provisions were triggered as of March 31, 1999, Mr. John D.
Doherty would receive up to approximately $670,439.
In connection with Joseph R. Doherty's retirement as Chief
Executive Officer of the Bank effective March 31, 1992, the Bank
and Joseph R. Doherty entered into a Consulting Agreement
whereby the Bank retained Mr. Doherty as a consultant to the
Bank and its Board of Directors and as Chairman of the Board.
Pursuant to the Consulting Agreement, Mr. Doherty receives
$100,000 annually in addition to use of an office and secretary,
reimbursement for certain business related dues and expenses,
group health and life insurance benefits for him and his
dependents and use of an automobile. The Consulting Agreement
currently provides for a term of one year and is subject to
automatic annual extensions for additional one year periods,
unless written notice from the Bank or Mr. Doherty directs
otherwise. Mr. Doherty's Consulting Agreement may be terminated
by the Board of Directors at any time for "just cause," as
defined in the Consulting Agreement. In addition, the Board may
terminate Mr. Doherty at any time for reasons other than "just
cause," however, under such circumstances Mr. Doherty shall be
entitled to the salary and benefits payable under the Consulting
Agreement until its expiration. Mr. Doherty may terminate the
Consulting Agreement upon giving the Board of Directors 60 days
prior written notice.
The Bank has entered into severance agreements (the
"Agreements") with Paul S. Feeley, Senior Vice President/Chief
Financial Officer, David W. Kearn, Senior Vice President /
Lending & Retail Banking, and William P. Morrissey, Senior Vice
President. The Agreements provide for a term of three years and
an automatic annual extension of the term of employment for an
additional one-year period beyond the then effective expiration
date unless either the Bank or Mr. Feeley or Mr. Kearn or
Morrissey gives written notice that the Agreement will not be
extended further. The Agreements contain a provision stating
that in the event of Mr. Feeley's, Mr. Kearn's or Morrissey's
involuntary termination of employment in connection with, or
within one year after, any change in control of the Company or
the Bank, Mr. Feeley, Mr. Kearn or Morrissey will be paid within
10 days of such termination an amount equal to two times the
employee's annual base salary at the rate just prior to the
change in control, however, the amount received shall in no
event exceed the difference between (i) 2.99 times his "base
amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code, and (ii) the sum of any other parachute payments,
as defined under Section 280G(b)(2) of the Internal Revenue
Code, that Mr. Feeley, Mr. Kearn or Morrissey receives on
account of the change in control. "Control" generally refers to
the acquisition, by any person or entity, of the ownership,
holding, or power to vote more than 25% of the Company's or the
Bank's voting stock, the control of the election of a majority
of the Company's or the Bank's directors, or the exercise of a
controlling influence over the management or policies of the
Company or the Bank. In addition, under the Agreements, a
change in control occurs when, during any consecutive two-year
period, directors of the Company or the Bank at the beginning of
such period cease to constitute a majority of the Board of
Directors of the Company or the Bank, unless the election of
replacement directors was approved by a two-thirds vote of the
initial directors then in office. The Agreements also provide
for a similar lump sum payment to be made in the event of Mr.
Feeley's, Mr. Kearn's or Morrissey's voluntary termination of
employment within one year following a change in control, upon
the occurrence, or within 90 days thereafter, of certain
specified events following a change in control, which have not
been consented to in writing by Mr. Feeley, Mr. Kearn or
Morrissey, including (i) the requirement that he perform his
principal executive functions more than 35 miles away from his
primary office, (ii) a reduction in the his base compensation as
in effect prior to the change in control, (iii) the failure
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<PAGE>
of the Company or the Bank to provide him with compensation and
benefits substantially similar to those provided to him at the
time of the change in control under any employee benefit plans
in which he becomes a participant, (iv) the assignment to him of
material duties and responsibilities other than those normally
associated with his position with the Bank, and (v) a material
reduction in his authority and responsibility. In the event
that a dispute arises between Mr. Feeley or Mr. Kearn or
Morrissey and the Bank, as to the terms or interpretation of the
Agreements, he will be reimbursed for all reasonable expenses
arising from such dispute. If the change in control provisions
were triggered as of March 31, 1999, Messrs. Feeley, Kearn and
Morrissey would receive up to approximately $205,200, $216,000
and $196,000, respectively.
Pension Plan. The following table illustrates the maximum
estimated annual benefits payable upon retirement pursuant to
the Bank's defined benefit pension plan based upon the pension
plan formula for specified final average earnings and specified
years of service.
<TABLE>
<CAPTION>
Final Years of Service
Average ----------------------------------------------------
Earnings 10 15 20 25 30 35
- -------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 $ 2,500 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750
50,000 5,847 6,271 9,194 12,118 16,041 17,966
100,000 13,347 20,021 26,694 33,368 40,041 46,715
150,000 20,847 31,271 41,694 52,118 62,541 72,965
175,000 22,347 33,521 44,694 55,868 67,041 78,215
200,000 22,347 33,521 44,694 55,868 67,041 78,215
250,000 22,347 33,521 44,694 55,868 67,041 78,215
300,000 22,347 33,521 44,694 55,868 67,041 78,215
</TABLE>
Benefits are hypothetical amounts only. Currently, the
maximum annual benefit payable under the pension plan is
$130,000. Final average earnings in excess of $228,973 are not
covered under the pension plan for pre-1994 accruals, and final
average earnings in excess of $160,000 are not covered under the
pension plan for post-1993 accruals. "Final average earnings,"
which is based upon a participant's highest three consecutive
years of compensation, consists of compensation that would
appear under the "Salary" and "Bonus" columns of the Summary
Compensation Table above. Benefits under the pension plan
become 100% vested over a six-year period, with 20% of such
benefits vesting upon the completion of each of the second
through sixth years of credited service under the pension plan.
As of March 31, 1999, Messrs. John D. Doherty, Paul S. Feeley,
David W. Kearn and William P. Morrissey had approximately 18,
six and seven years, respectively, of credited service under the
pension plan. Benefits set forth in the preceding table are
computed as a single life annuity and are not subject to any
deduction for Social Security or other offset amounts.
________________________________________________________________
CERTAIN TRANSACTIONS
________________________________________________________________
The Bank engages in transactions with affiliates of the
Bank on the same terms and other conditions as those offered to
unaffiliated parties. Loans by the Bank made to Directors,
officers and employees are made in the ordinary course of
business, on substantially the same terms, including interest
rates, collateral and repayment terms as those prevailing at the
time for comparable transactions with other persons, and do not
involve more than the normal risk of collectability or present
other unfavorable features. Massachusetts law provides that co-
operative banks are limited in the amount of money they may lend
an officer of the Bank. These limits are $275,000 for a
mortgage on a primary residence, $75,000 loans for educational
purposes and $20,000 for all other types of loans in total.
This restriction does not apply to non-officer employees of the
Bank or to its outside Directors. Any loans existing prior to
the implementation of this restriction are grandfathered. The
same loans available to the public are available to Directors,
officers and employees.
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________________________________________________________________
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
________________________________________________________________
General. The function of administering the Company's
executive compensation policies is currently performed by the
Finance Committee of the Board of Directors, which is composed
entirely of outside directors. The Committee is responsible for
developing and making recommendations to the Board concerning
compensation paid to the Chief Executive Officer and each of the
other executive officers and for overseeing all aspects of the
Company's executive compensation program, including employee and
executive benefit plans. Because the Company does not have any
executive officers who are not also executive officers of the
Bank, this discussion refers to the executive officers of the
Bank, rather than the Company.
Compensation Committee Report on Executive Compensation.
In 1992, the Bank formalized the process by which Management is
hired, evaluated and compensated. At that time, the Bank
engaged the services of New England Business Advisors, Inc.
("NEBA"), and KPMG LLP ("KPMG"), each acting under the direction
of the Bank's Finance Committee (which is composed of outside
directors) to assist the Bank in developing a "Management Plan".
This Plan included (i) an assessment of the qualifications of
senior management; (ii) a review of the compensation of senior
management based on their qualifications, experience and
responsibilities; and (iii) certain suggestions regarding
organizational aspects of the Bank's senior management. NEBA
prepared the Management Plan and KPMG conducted the analysis
relating to senior management compensation and provided that
information to the Finance Committee. Acting at that time, the
Finance Committee determined that the compensation of each of
the Bank's senior officers was appropriate for his or her
qualifications, experience and responsibilities at the Bank.
The Bank's Management Plan includes job descriptions for each
officer position, the Senior Officer Compensation Statement of
Policy and a process for the review of senior officer
compensation. These plans and policies form the basis by which
senior officer salaries (including the salary of the Chief
Executive Officer) are evaluated on an annual basis.
The management assessment process calls for the Finance
Committee to evaluate the Chief Executive Officer and the other
executive officers to determine their ability to: (i) operate
the Bank in a safe and sound manner; (ii) comply with applicable
laws and regulations; and (iii) maintain and improve all aspects
of the Bank, including asset quality, capital adequacy,
earnings, management effectiveness and liquidity.
The officers are assessed on the following criteria,
through personal interviews and reviews of their position
descriptions and personnel records: (i) position
responsibilities; (ii) experience and expertise; (iii)
education; (iv) performance record; (v) technical capability;
(vi) management capability; (vii) implementation capability;
(viii) strategic capability; (ix) compliance capability; and (x)
current problems/issues in areas of responsibilities.
Subsequent to the completion of the Management Plan, and
using the information included in the Plan, NEBA has worked with
the Bank to develop a comprehensive job and salary
administration program, including position descriptions,
position evaluation (grading) and a salary structure, and NEBA
have worked with the Bank to develop the salary structure, with
recommended salary ranges for each grade, using three different
independent sources providing compensation information for
comparable companies. As noted, the recommended compensation
ranges are based on job content, as compared to comparable
positions in the market, as well as the Bank's overall
compensation philosophy.
The Bank performs a comprehensive compensation analysis at
least every two years. In 1998, for compensation determinations
for fiscal 1999, the Finance Committee reviewed and updated the
Bank's salary structure, by: (i) examining competitive pay
practices for comparable positions with a focus on location of
the Bank (Massachusetts) and asset size using the following
sources: (a) KPMG Peat Marwick 1998 Northeast Banking Industry
Compensation Survey, (b) America's Community Bankers 1998
Compensation Survey for Savings Institutions, (c) Savings and
Community Bankers of America 1998 Compensation Survey for
Savings Institutions, (d) Community Bank League of New England
1998 Salary Survey, (e) NEBA's private files, (f) W.M. Sheehan &
Company, Inc. 1998 Banking Compensation Report, and (g)
compensation practices at Central Cooperative Bank; (ii)
updating the composite survey data collected to more closely
approximate recent salary levels, and base position matches on
job content and scope;
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<PAGE>
and (iii) developing the Bank's salary structure to reflect
external pay practices as well as internal position
relationships and compensation practices.
The recommended salary ranges for fiscal 1999 were based
on the analysis of the following data: (i) a review of the
salaries being paid to Bank employees and an analysis of where
salaries fell within the existing ranges; and (ii) a review of
comparable salaries paid by Northeast commercial banks and
thrifts in the asset range of $250 million to $500 million.
Using all this information and evaluating all factors,
without giving any additional weight to any one factor, the
Finance Committee annually establishes the salaries of senior
officers (including the Chief Executive Officer's salary) in the
following manner, based upon the individual's performance of
specific position duties, and within the guidelines for the
salary range of the positions: (i) it begins with a
recommendation from the Bank's Chairman of the Board as to the
compensation of the Chief Executive Officer, and with a
recommendation from the President and Chief Executive Officer as
to the compensation of other officers; (ii) evaluates the
performance of the Bank's officers; and (iii) adjusts the
respective officer's salary accordingly based on the ratings and
the factors noted above, and the merit increase guidelines in
place for the Bank for that particular year.
MEMBERS OF THE FINANCE COMMITTEE
(WHICH SERVES AS THE COMPENSATION COMMITTEE)
GREGORY W. BOULOS
GEORGE L. DOHERTY, JR.
TERENCE D. KENNEY
JOHN G. QUINN
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company and Bank had no "interlocking" relationships
existing on or after January 1, 1996 in which (i) any executive
officer of the Bank served as a member of the compensation
committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire
board of directors) of another entity, one of whose executive
officers served on the Finance Committee of the Bank, (ii) any
executive officer of the Bank served as a director of another
entity, one of whose executive officers served on the Finance
Committee of the Bank, or (iii) any executive officer of the
Bank served as a member of the compensation committee (or other
board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served as a
member of the Bank's Board of Directors.
No member of the Board of Directors of the Company or the
Bank was (a) an officer or employee of the Company or the Bank
or any of its subsidiaries during the fiscal year ended March
31, 1999, (b) a former officer of the Company or the Bank or any
of its subsidiaries, or (c) an insider (i.e., director, officer,
director or officer nominee, greater than 5% stockholder, or
immediate family member of the foregoing) of the Company or the
Bank and directly or indirectly engaged in transactions with the
Bank or any subsidiary involving more than the $60,000 during
the fiscal year ended March 31, 1999.
________________________________________________________________
PROPOSAL II -- APPROVAL OF THE CENTRAL BANCORP, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
________________________________________________________________
GENERAL
The Board of Directors of the Company is seeking
stockholder approval of the Central Bancorp, Inc. 1999 Stock
Option and Incentive Plan (the "Option Plan"). The Option Plan
is attached hereto as Exhibit A and should be
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<PAGE>
consulted for additional information. All statements made
herein regarding the Option Plan, which are only intended to
summarize the Option Plan, are qualified in their entirety by
reference to the Option Plan.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests
of the Company by providing selected employees of the Company
and its affiliates, including the Bank, with the opportunity to
acquire shares of Common Stock. By encouraging such stock
ownership, the Company seeks to attract, retain, and motivate
the best available personnel for positions of substantial
responsibility and to provide additional incentives to employees
of the Company and its affiliates to promote the success of the
business of the Company.
DESCRIPTION OF THE OPTION PLAN
Effective Date. The Option Plan was formally adopted by
the Board of Directors on April 8, 1999, and the Option Plan's
effectiveness will be contingent on its approval by the
Company's stockholders, on which date, if approved by
stockholders, the Option Plan will become effective (the
"Effective Date").
Administration. The Option Plan will be administered by
a committee (the "Committee"), appointed by the Board of
Directors, consisting of at least two directors of the Company
who are "non-employee directors" within the meaning of the
federal securities laws. The Committee will have discretionary
authority to select participants and grant stock options
("Options"), to determine the form and content of any Options
granted under the Option Plan, to interpret the Option Plan, to
prescribe, amend and rescind rules and regulations relating to
the Option Plan and to make other decisions necessary or
advisable in connection with administering the Option Plan. All
decisions, determinations and interpretations of the Committee
will be final and conclusive on all persons affected thereby.
Members of the Committee will be indemnified to the full extent
permissible under the Company's governing instruments in
connection with any claims or other actions relating to any
action taken under the Option Plan. It is expected that the
Committee will initially consist of Directors Boulos, Kenney and
Quinn.
Eligible Persons. Under the Option Plan, the Committee
will have discretionary authority to grant Options to such
employees as the Committee shall designate. No grants or awards
under the Option Plan had been made, as of the date of the
Meeting. As of the Record Date, the Company and its
subsidiaries had 80 employees who were eligible to participate
in the Option Plan.
Shares Available for Grants. The Option Plan reserves
97,500 shares of Common Stock for issuance upon the exercise of
Options, subject to adjustment for stock repurchases, stock
splits and stock dividends and certain other events, so that
such amount shall represent 4.99% of the Company's outstanding
shares of Common Stock on the Effective Date. Such shares may
be (i) authorized but unissued shares, (ii) shares held in
treasury, or (iii) shares held in a grantor trust created by the
Company or the Bank. In the event of any merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without receipt or
payment of consideration by the Company, the Committee will
adjust the number and kind of shares subject to outstanding
Options, the number and kind of shares reserved for issuance
under the Option Plan and the exercise prices of such Options.
If Options expire, become unexercisable or are forfeited for any
reason without having been exercised, the shares of Common Stock
subject to such Options shall, unless the Option Plan shall have
been terminated, be available for the grant of additional
Options under the Option Plan.
<PAGE>
Options; Exercise Price. Options may be either incentive
stock options ("ISOs") as defined in Section 422 of the Internal
Revenue Code, or options that are not ISOs ("Non-ISOs"). The
exercise price as to any Option may not be less than the fair
market value (determined under the Option Plan) of the optioned
shares on the date of grant. In the case of a participant who
owns more than 10% of the outstanding Common Stock on the date
of grant, such exercise price may not be less than 110% of fair
market value of the shares. As required by federal tax laws, to
the extent that the aggregate fair market value (determined when
an ISO is granted) of the Common Stock with respect to which
ISOs
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are exercisable by an optionee for the first time during
any calendar year (under all plans of the Company and of any
subsidiary) exceeds $100,000, the Options granted in excess of
$100,000 will be treated as Non-ISOs, and not as ISOs.
Exercise of Options. The exercise of Options will be
subject to such terms and conditions as are established by the
Committee in a written agreement between the Committee and the
optionee. The Committee may impose a vesting requirement or
vesting schedule in an agreement granting an Option, or may
choose not to do so; provided that no vesting shall occur prior
to stockholder approval of the Option Plan, and further provided
that no vesting shall occur on a particular date in the event of
the termination or interruption of the optionee's continuous
service as an employee of the Company or an affiliate prior
thereto. In the absence of Committee action to the contrary, an
otherwise unexpired Option shall cease to be exercisable upon
(i) on the date of an optionee's termination of employment for
"just cause" (as defined in the Option Plan), (ii) the date that
is three months after an optionee terminates service for a
reason other than just cause or death, or (iii) the date that is
two years after an optionee's death or one year after an
optionee's disability, but in no event later than the date on
which such options would otherwise expire.
An optionee may exercise Options, subject to provisions
relative to their termination and limitations on their exercise,
only by (i) written notice of intent to exercise the Option with
respect to a specified number of shares of Common Stock, and
(ii) payment to the Company (contemporaneously with delivery of
such notice) in cash, in Common Stock, or a combination of cash
and Common Stock, of the amount of the exercise price for the
number of shares with respect to which the Option is then being
exercised. Common Stock utilized in full or partial payment of
the exercise price for Options shall be valued at its market
value at the date of exercise.
Conditions on Issuance of Shares. The Committee will have
the discretionary authority to impose, in agreements, such
restrictions on shares of Common Stock issued pursuant to the
Option Plan as it may deem appropriate or desirable, including
but not limited to the authority to impose a right of first
refusal or to establish repurchase rights or both of these
restrictions. In addition, the Committee may not issue shares
unless the issuance complies with applicable securities laws,
and to that end may require that a participant make certain
representations or warranties.
Change in Control. The Option Plan provides that upon the
earlier of a "Change in Control," all Options shall become fully
exercisable, notwithstanding any other provision of the Option
Plan or any agreement with an optionee. For purposes of the
Option Plan, Change in Control means any one of the following
events: (1) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting stock,
(2) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors, (3) the
exercise of a controlling influence over the management or
policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Exchange Act), (except in the case of (1), (2), and (3) hereof,
ownership or control of the Bank by the Company itself shall not
constitute a "Change in Control"), or (4) during any period of
two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of
Directors of the Company or the Bank (the "Existing Board")
cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, the term "person" refers to an
individual (other than the employee), or a corporation,
partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision of
the Committee as to whether a change in control has occurred
shall be conclusive and binding. With respect to Options at the
time of a Change in Control, the optionee shall, at the
discretion of the Committee, be entitled to receive a cash
amount equal to the difference between the fair market value of
the shares of Common Stock subject to such Options and the
exercise price of such Options, in exchange for the cancellation
of the Options.
Although these provisions are included in the Option Plan
primarily for the protection of an employee-optionee in the
event of a Change in Control of the Company, they may be
regarded as having a takeover defensive effect, which may reduce
the Company's vulnerability to hostile takeover attempts and
certain other transactions which have not been negotiated with
and approved by the Board of Directors.
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Nontransferability. Options may not otherwise be sold,
pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and
distribution. Optionees granted Non-ISOs may transfer such Non-
ISOs to family members or trusts under specified circumstances.
In addition, Common Stock that is purchased upon the exercise of
an Option may not be sold within the six-month period following
the grant date of that Option, except in the event of the
optionee's death or disability, or such other event as the Board
of Directors may specifically deem appropriate.
Effect of Dissolution and Related Transactions. In the
event of (i) the liquidation or dissolution of the Company, (ii)
a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets (any of the foregoing
to be referred to herein as a "Transaction"), all outstanding
Options, together with the exercise prices thereof, will be
equitably adjusted for any change or exchange of shares for a
different number or kind of shares or other securities which
results from the Transaction. However, any such adjustment will
be made in such a manner as to not constitute a modification,
within the meaning of Section 424(h) of the Internal Revenue
Code, of outstanding ISOs.
Duration of the Option Plan and Grants. The Option Plan
has a term of 10 years from the Effective Date, after which date
no Options may be granted. The maximum term for an Option is 10
years from the date of grant, except that the maximum term of an
ISO may not exceed five years if the optionee owns more than 10%
of the Common Stock on the date of grant. The expiration of the
Option Plan, or its termination by the Committee, will not
affect any Option then outstanding.
Amendment and Termination of the Option Plan. The Board
of Directors of the Company may from time to time amend the
terms of the Option Plan and, with respect to any shares at the
time not subject to Options, suspend or terminate the Option
Plan. No amendment, suspension, or termination of the Option
Plan will, without the consent of any affected optionee, alter
or impair any rights or obligations under any Option previously
granted.
Financial Effects of Options. The Company will receive no
monetary consideration for the granting of Options under the
Option Plan. It will receive no monetary consideration other
than the exercise price for shares of Common Stock issued to
optionees upon the exercise of their Options. Under applicable
accounting standards, recognition of compensation expense is not
required when Options are granted at an exercise price equal to
or exceeding the fair market value of the Common Stock on the
date the Option is granted, but disclosure may be required in
financial statement footnotes regarding pro forma effects on
earnings and earnings per share of recognizing as a compensation
expense an estimate of the fair value of such stock-based
awards.
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the
grant of ISOs. If the optionee holds the shares purchased upon
exercise of an ISO for at least two years from the date the ISO
is granted, and for at least one year from the date the ISO is
exercised, any gain realized on the sale of the shares received
upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of
the ISO will be treated by the optionee as an item of tax
preference in the year of exercise for purposes of the
alternative minimum tax. If an optionee disposes of the shares
before the expiration of either of the two special holding
periods noted above, the disposition is a "disqualifying
disposition." In this event, the optionee will be required, at
the time of the disposition of the Common Stock, to treat the
lesser of the gain realized or the difference between the
exercise price and the fair market value of the Common Stock at
the date of exercise as ordinary income and the excess, if any,
as capital gain.
The Company will not be entitled to any deduction for
federal income tax purposes as the result of the grant or
exercise of an ISO, regardless of whether or not the exercise of
the ISO results in liability to the optionee for alternative
minimum tax. However, if an optionee has ordinary income
taxable as compensation as a result of a disqualifying
disposition, the Company will be entitled to deduct an
equivalent amount.
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Non-ISOs. In the case of a Non-ISO, an optionee will
recognize ordinary income upon the exercise of the Non-ISO in an
amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price (or, if
the optionee is subject to certain restrictions imposed by the
federal securities laws, upon the lapse of those restrictions
unless the optionee makes a special tax election within 30 days
after the date of exercise to have the general rule apply).
Upon a subsequent disposition of such shares, any amount
received by the optionee in excess of the fair market value of
the shares as of the exercise will be taxed as capital gain.
The Company will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as the
ordinary income recognized by the optionee in connection with
the exercise of a Non-ISO.
PROPOSED STOCK OPTION GRANTS
As of the Record Date for the Meeting, and the date of the
Meeting, no decision had been made relating to Options expected
to be granted to employees under the Option Plan. The exercise
price for Options granted are currently expected to be the fair
market value of the Common Stock on the date of grant.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Option Plan
is desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the Option Plan in
order to satisfy the requirements of the Internal Revenue Code
for favorable tax treatment of ISOs and to satisfy the
requirements of the National Association of Securities Dealers
for securities listed on the Nasdaq National Market.
Stockholder approval of the Option Plan requires the
affirmative vote of the holders of a majority of the votes cast
at the Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE OPTION PLAN.
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<PAGE>
________________________________________________________________
STOCK PRICE PERFORMANCE GRAPH
________________________________________________________________
The graph and table which follow show the cumulative total
return on the Common Stock of the Bank and the Company from
March 31, 1994 through March 31, 1999 compared with the
cumulative total return of (i) an index of Nasdaq commercial
banks and (ii) the S&P 500 Index (the "S&P 500"). Cumulative
total return on the stock or the index equals the total increase
in value since March 31, 1994, assuming reinvestment of all
dividends paid on the stock or the index, respectively. The
graph and table were prepared assuming that $100 was invested at
the closing price on March 31, 1994 in the Common Stock of the
Bank and in each index. The stockholder returns shown on the
performance graph are not necessarily indicative of the future
performance of the Common Stock or of any particular index. Up
to January 8, 1999, information is for the Common Stock of
Central Co-operative Bank. After January 8, 1999, information
is for the Common Stock of Central Bancorp, Inc.
[Line graph appears here depicting the cumulative total
stockholder return of $100 invested in the Common Stock as
compared to $100 invested in the S&P 500 and the NASDAQ Bank
Index. Line graph begins at March 31, 1994 and plots the
cumulative total return at March 31, 1995, March 29, 1996, and
March 31, 1997, 1998 and 1999. Plot points are provided below.]
<TABLE>
<CAPTION>
3/31/94 3/31/95 3/29/96 3/31/97 3/31/98 3/31/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Central Co-operative
Bank 100.00 75.96 125.00 123.65 244.21 133.37
S&P 500 100.00 112.32 144.81 189.85 247.16 288.57
NASDAQ Bank Index 100.00 110.42 156.19 213.30 351.15 316.24
</FN>
</TABLE>
16
<PAGE>
<PAGE>
________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
________________________________________________________________
Under the Exchange Act, the Company's officers and
directors and all persons who own more than ten percent of the
Common Stock ("Reporting Persons") are required to file reports
detailing their ownership and changes of ownership in the Common
Stock and to furnish the Company with copies of all such
ownership reports that are filed. Based solely on the Company's
review of the copies of such ownership reports which it has
received in the past fiscal year or with respect to the past
fiscal year, or written representations from such persons that
no annual report of changes in beneficial ownership were
required, the Company believes during fiscal year March 31, 1999
and prior fiscal years all Reporting Persons have complied with
these reporting requirements.
________________________________________________________________
INDEPENDENT AUDITORS
________________________________________________________________
The Board of Directors has heretofore renewed the
Company's arrangements with KPMG LLP, independent public
accountants, to be its auditors for the 2000 fiscal year. A
representative of KPMG LLP will be present at the Meeting to
respond to questions from stockholders and will have the
opportunity to make a statement if he or she so desires.
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to
come before the Meeting other than those matters described above
in this Proxy Statement. However, if any other matters should
properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies. The cost of the proxy solicitation will be borne by
the Company. In addition to solicitations by mail, directors,
officers and regular employees of the Company may solicit
proxies personally or by telegraph or telephone at their regular
salary or hourly compensation.
________________________________________________________________
FINANCIAL STATEMENTS
________________________________________________________________
The Company's 1999 Annual Report to Stockholders,
including financial statements prepared in conformity with
generally accepted accounting principles, has been mailed to all
stockholders of record as of the close of business on June 1,
1999. Any stockholder who has not received a copy of such
Annual Report may obtain a copy by writing the Company. Such
Annual Report is not to be treated as part of the proxy
solicitation materials nor as having been incorporated herein by
reference.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST TO
GLADYS N. PARTAMIAN, SECRETARY, CENTRAL BANCORP, INC., 399
HIGHLAND AVENUE, SOMERVILLE, MASSACHUSETTS 02144.
17
<PAGE>
<PAGE>
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the proxy
materials of the Company for next year's Annual Meeting of
Stockholders, any stockholder proposal to take action at such
meeting must be received at the Company's main office at 399
Highland Avenue, Somerville, Massachusetts no later than
February 25, 2000. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Exchange Act.
Stockholder proposals to be considered at such Annual
Meeting, other than those submitted pursuant to the Exchange
Act, must be stated in writing, delivered or mailed to the
Secretary and Clerk of the Company at the above address, not
less than 30 days nor more than 60 days prior to the date of any
such Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
GLADYS N. PARTAMIAN
SECRETARY AND CLERK
Somerville, Massachusetts
June 25, 1999
18
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EXHIBIT A
CENTRAL BANCORP, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select Employees of the Bank, the
Company, and their Affiliates with the opportunity to acquire
Shares. By encouraging such stock ownership, the Company seeks
to attract, retain and motivate the best available personnel for
positions of substantial responsibility and to provide
additional incentives to Employees of the Company or any
Affiliate to promote the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean Options, unless the context
clearly indicates a different meaning.
(d) "Bank" shall mean Central Co-operative Bank.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Change in Control" shall mean (1) acquisition of
the ownership, holding or power to vote more than 25% of the
voting stock of the Bank or the Company, (2) acquisition of the
control of the election of a majority of the Bank's or the
Company's directors, (3) the exercise of a controlling influence
over the management or policies of the Bank or the Company by
any person or by persons acting as a "group" (within the meaning
of Section 13(d) of the Securities Exchange Act of 1934), or (4)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Bank or the Company (the "Company Board") (the
"Continuing Directors") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Company
Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director. The term "person" means an individual
other than the Employee, or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietor-
ship, unincorporated organization or any other form of entity
not specifically listed herein.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(h) "Committee" shall mean the Stock Option Committee
appointed by the Board in accordance with Paragraph 5(a) hereof.
(i) "Common Stock" shall mean the common stock of the
Company.
(j) "Company" shall mean Central Bancorp, Inc.
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(k) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee of the
Company or an Affiliate. Continuous Service shall not be
considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Company, or in the
case of transfers between payroll locations of the Company or
between the Company, an Affiliate or a successor.
(l) "Director" shall mean any member of the Board.
(m) "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
(n) "Effective Date" shall mean the date specified in
Paragraph 13 hereof.
(o) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(p) "Exercise Price" shall mean the price per Optioned
Share at which an Option may be exercised.
(q) "ISO" means an option to purchase Common Stock which
meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(r) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(s) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(t) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(u) "Option" means an ISO and/or a Non-ISO.
(v) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(w) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(x) "Plan" shall mean this Central Bancorp, Inc. 1999
Stock Option and Incentive Plan.
(y) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(z) "Share" shall mean one share of Common Stock.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 15 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares
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<PAGE>
representing more than 10% of the outstanding Common Stock at
the time an ISO is granted, the term of such ISO shall not
exceed five years.
4. SHARES SUBJECT TO THE PLAN.
Except as otherwise required under Paragraph 12, the
aggregate number of Shares deliverable pursuant to Awards shall
not exceed a number of shares equal to 4.99% (rounded down to
the next whole Share) of the number of shares outstanding on the
date the Plan is approved by stockholders in accordance with
Paragraph 13. Such Shares may either be authorized but unissued
Shares, Shares held in treasury, or Shares held in a grantor
trust created by the Bank or the Company. If any Awards should
expire, become unexercisable, or be forfeited for any reason
without having been exercised, the Optioned Shares shall, unless
the Plan shall have been terminated, be available for the grant
of additional Awards under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of not less
than two (2) members of the Board who are Non-Employee
Directors. Members of the Committee shall serve at the pleasure
of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by those members of
the Board who are Non-Employee Directors.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms of each such Agreement shall be in
accordance with the Plan, but each Agreement may include such
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, the Committee shall set forth in
each Agreement (i) the Exercise Price of an Option, (ii) the
number of Shares subject to, and the expiration date of, the
Award, (iii) the manner, time and rate (cumulative or otherwise)
of exercise or vesting of such Award, and (iv) the restrictions,
if any, to be 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 are hereby
authorized to execute Agreements on behalf of the Company and to
cause them to be delivered to the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Company in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Award, granted hereunder
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<PAGE>
to the full extent provided for under the Company's governing
instruments with respect to the indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. The Committee shall have the
discretion to make Awards to Employees. In selecting those
Employees to whom Awards will be granted and the number of
shares covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Employees,
the value of their services to the Company and its Affiliates,
and any other factors the Committee may deem relevant.
(b) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case such Options granted in excess of such limitation shall be
Options which are Non-ISOs.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Any Option granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Option
granted to an Optionee. An Option may not be exercised for a
fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise, and may
consist of Shares subject to the Option being exercised.
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<PAGE>
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within three months after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall
have the definition set forth in any unexpired employment
or severance agreement between the Employee and the Bank
and/or the Company (and, in the absence of any such
definition, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Employee's rights to
exercise such Option shall expire on the date of such
termination;
(2) death, then to the extent that the Employee
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Employee may be exercised within two years from
the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution;
(3) Disability, then to the extent that the
Employee would have been entitled to exercise the Option
immediately prior to his or her Disability, such Option
may be exercised within one year from the date of
termination of employment due to Disability, but not later
than the date on which the Option would otherwise expire.
(d) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
9. CHANGE IN CONTROL
Notwithstanding the provisions of any Award which provides
for its exercise or vesting in installments, upon a Change in
Control, all Options shall be immediately exercisable and fully
vested. With respect to Options, at the time of a Change in
Control, the Participant shall, at the discretion of the
Committee, be entitled to receive cash in an amount equal to the
excess of the Market Value of the Common Stock subject to such
Option over the Exercise Price of such Shares, in exchange for
the cancellation of such Options by the Participant.
10. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE
PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without the
receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards, together with the
Exercise Prices thereof, shall be equitably
A-5
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<PAGE>
adjusted for any change or exchange of Shares for a different
number or kind of shares or other securities which results from
the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
11. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding any
other provision of this Plan to the contrary, to the extent
permissible under Rule 16b-3, a Participant who is granted Non-
ISOs pursuant to this Plan may transfer such Non-ISOs to his or
her spouse, lineal ascendants, lineal descendants, or to a duly
established trust, provided that Non-ISOs so transferred may not
again be transferred other than to the Participant originally
receiving the grant of Non-ISOs or to an individual or trust to
whom such Participant could have transferred Non-ISOs pursuant
to this Paragraph 11. Non-ISOs which are transferred pursuant
to this Paragraph 11 shall be exercisable by the transferee
subject to the same terms and conditions as would have applied
to such Non-ISOs in the hands of the Participant originally
receiving the grant of such Non-ISOs.
12. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the date on which the Committee makes the determination of
granting such Award, provided that Awards granted prior to
approval of the Plan by the Company's stockholders (in
accordance with Paragraph 13) shall be contingent on, and
subject to, such approval. Notice of the determination shall be
given to each Participant to whom an Award is so granted within
a reasonable time after the date of such grant.
13. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by the Company's Board of Directors, subject to a
favorable vote of stockholders owning at least a majority of the
total votes cast at a duly called meeting of the Company's
stockholders held in accordance with applicable laws.
14. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may
authorize the Committee to direct execution of an instrument
providing for the modification of any outstanding Award,
provided no such modification shall confer on the holder of said
Award any right or benefit which could not be conferred on him
by the grant of a new Award at such time, or impair the Award
without the consent of the holder of the Award.
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15. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option, the
Company may require the person exercising the Option to make
such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
17. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
18. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and employment
tax withholding obligations. The Committee, in its discretion,
may permit the Participant to satisfy the obligation, in whole
or in part, by irrevocably electing to have the Company withhold
Shares, or to deliver to the Company Shares that he already
owns, having a value equal to the amount required to be
withheld. The value of the Shares to be withheld, or delivered
to the Company, shall be based on the Market Value of the Shares
on the date the amount of tax to be withheld is to be
determined. As an alternative, the Company may retain, or sell
without notice, a number of such Shares sufficient to cover the
amount required to be withheld.
19. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's eligibility to participate
or participation in the Plan create or be deemed to create any
legal or equitable right of the Employee or any other party to
continue service with the Company, the Bank, or any Affiliate of
such corporations. No Employee shall have a right to be granted
an Award or, having received an Award, the right to again be
granted an Award. However, an Employee who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
<PAGE>
20. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, except to
the extent that federal law shall be deemed to apply.
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REVOCABLE PROXY
CENTRAL BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
July 29, 1999
The undersigned hereby appoints John P. Doherty and Gregory
W. Boulos, with full powers of substitution to act, as attorneys
and proxies for the undersigned, to vote all shares of Common
Stock of Central Bancorp, Inc. which the undersigned is entitled
to vote at the Annual Meeting of Stockholders, to be held at the
Auditorium of BankBoston, 100 Federal Street, Boston,
Massachusetts on Thursday, July 29, 1999 at 11:00 a.m. and at
any and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all
nominees listed below (except as
noted to the contrary). [ ] [ ]
Marat E. Santini
John F. Gilgun, Jr.
John G. Quinn
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY
NOMINEE(S), WRITE THAT NOMINEE'S NAME ON THE LINE
BELOW.
_____________________________________
FOR AGAINST ABSTAIN
--- ------- -------
2. Approval of the Central Bancorp, [ ] [ ] [ ]
Inc. 1999 Stock Option and
Incentive Plan
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING,
INCLUDING MATTERS RELATING TO THE CONDUCT OF THE MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Meeting of the
stockholder's decision to terminate this Proxy, then the power
of said attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt from the Company prior
to the execution of this Proxy of Notice of the Meeting, a Proxy
Statement dated June 25, 1999, and the Company's Annual Report
to Stockholders.
Dated: _______________, 1999
______________________________ ____________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
______________________________ ____________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
To assist us in our preparation, please check here if you
currently plan to attend the Annual Meeting.
________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
________________________________________________________________
