<PAGE> 1
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 sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ABINGTON 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:
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<PAGE> 2
[ABINGTON BANCORP, INC. LETTERHEAD]
May 14, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting in Lieu of the
Annual Meeting of Stockholders (the "Annual Meeting") of Abington Bancorp, Inc.
to be held on Tuesday, June 17, 1997 at 10:00 a.m., local time, at the Sheraton
Tara Hotel, 37 Forbes Road, Braintree, Massachusetts.
At the Annual Meeting, you will be asked to consider and vote upon the
election of four Directors and the approval of the Abington Bancorp, Inc. 1997
Incentive and Nonqualified Stock Option Plan. The Board of Directors has fixed
the close of business on Tuesday, May 6, 1997 as the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting.
The officers and Directors look forward to greeting you personally at
the Annual Meeting. However, whether or not you plan to attend personally and
regardless of the number of shares you own, it is important that your shares be
represented.
YOU ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED FOR YOUR CONVENIENCE.
Sincerely,
/s/ James P. McDonough
-----------------------
JAMES P. MCDONOUGH
President and
Chief Executive Officer
<PAGE> 3
ABINGTON BANCORP, INC.
538 BEDFORD STREET
ABINGTON, MASSACHUSETTS 02351
NOTICE OF
SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1997
NOTICE IS HEREBY GIVEN that a Special Meeting in Lieu of the Annual
Meeting of Stockholders (the "Annual Meeting") of Abington Bancorp, Inc., a
Massachusetts bank holding company (the "Company"), will be held at the Sheraton
Tara Hotel, 37 Forbes Road, Braintree, Massachusetts, on Tuesday, June 17, 1997,
beginning at 10:00 a.m., local time, for the following purposes:
1. To elect four Directors of the Company;
2. To approve the Abington Bancorp, Inc. 1997 Incentive and
Nonqualified Stock Option Plan; and
3. To transact such further business as may properly come before
the Annual Meeting, or any adjournment or adjournments
thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED IN THE ACCOMPANYING PROXY STATEMENT AND FOR APPROVAL OF THE 1997
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN.
The Board of Directors has fixed the close of business on May 6, 1997
as the record date for determining the stockholders of the Company entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof.
Accordingly, only stockholders of record on such date are entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
/s/ Barbara M. Manning
-------------------------
Barbara M. Manning, Clerk
Abington, Massachusetts
May 14, 1997
IMPORTANT
EVEN THOUGH YOU MAY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN
PERSON, YOU MAY DO SO.
<PAGE> 4
ABINGTON BANCORP, INC.
PROXY STATEMENT
SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, JUNE 17, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Abington Bancorp, Inc. (the "Company")
for use at the Special Meeting in Lieu of the Annual Meeting of Stockholders
(the "Annual Meeting") to be held at the Sheraton Tara Hotel, 37 Forbes Road,
Braintree, Massachusetts on Tuesday, June 17, 1997, beginning at
10:00 a.m., local time, and at any adjournments thereof.
This Proxy Statement and the accompanying Notice and Proxy are first
being mailed to stockholders of the Company on or about May 14, 1997 in
connection with the solicitation of proxies for the Annual Meeting. The Board of
Directors has fixed the close of business on Tuesday, May 6, 1997 as the record
date for the Annual Meeting (the "Record Date"). Only stockholders of record as
of the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting and any adjournments thereof. The holders of the
Common Stock on the Record Date will be entitled to one vote for each share held
of record upon each matter properly submitted to the Annual Meeting or any
adjournments thereof. On April 28, 1997, there were 1,893,738 shares of the
Company's common stock, $.10 par value per share (the "Common Stock"), issued,
outstanding and entitled to vote at the Annual Meeting and approximately
846 holders of record of Common Stock.
The presence, in person or by proxy, of at least a majority in interest
of all Common Stock issued, outstanding and entitled to vote is necessary to
constitute a quorum for transaction of business at the Annual Meeting. The
affirmative vote of the holders of a plurality of the Common Stock present and
voting, in person or by proxy, is required to elect each of the nominees for
Director and the affirmative vote of a majority of the Common Stock present and
voting, in person or by proxy, is required to approve the Abington Bancorp, Inc.
1997 Incentive and Nonqualified Stock Option Plan (the "1997 Stock Option
Plan"). Any abstentions or broker nonvotes will count as "present" toward
formation of a quorum for transaction of business at the Annual Meeting, but
broker nonvotes are counted as not voting.
Stockholders of the Company are requested to complete, date, sign and
promptly return the accompanying form of proxy in the enclosed envelope.
Properly executed proxies received by the Company and not revoked will be voted
at the Annual Meeting in accordance with the instructions contained therein. If
instructions are not given in such proxies, they will be voted FOR the election
of the four nominees for Director listed in this Proxy Statement and FOR the
approval of the 1997 Stock Option Plan.
Any properly completed proxy may be revoked at any time before the
commencement of voting on any matter at the Annual Meeting or any adjournment
thereof by giving written
<PAGE> 5
notice of revocation to the Clerk of the Company (538 Bedford Street, Abington,
Massachusetts 02351), or by signing and duly delivering a proxy bearing a later
date, or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy.
ANNUAL REPORT TO STOCKHOLDERS; OTHER INFORMATION
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1996 accompanies this Proxy Statement, but is not incorporated
herein and is not to be deemed a part hereof.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, WHICH ALSO SERVES AS ITS ANNUAL DISCLOSURE STATEMENT REQUIRED
BY REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST. SUCH REQUESTS SHOULD BE DIRECTED TO
EDWARD J. MERRITT, TREASURER, ABINGTON BANCORP, INC., 538 BEDFORD STREET,
ABINGTON, MASSACHUSETTS 02351, (617) 982-3200.
FORMATION OF THE COMPANY AS THE HOLDING COMPANY
OF ABINGTON SAVINGS BANK
The Company was incorporated under Massachusetts law at the direction
of Abington Savings Bank (the "Bank") for the purpose of becoming the holding
company of the Bank on October 15, 1997 (the "Incorporation Date"). On the
Incorporation Date, the Company and the Bank entered into a Plan of
Reorganization and Acquisition (the "Holding Company Plan") which became
effective on January 31, 1997 (the "Effective Date"). Pursuant to the Holding
Company Plan, the Company became the owner of all of the issued and outstanding
shares of the Bank's common stock, par value $.10 per share, and each issued and
outstanding share of the Bank's common stock was converted into one share of
common stock of the Company. For the purposes of this Proxy Statement, unless
the context otherwise requires, the term "Company" refers to Abington Bancorp,
Inc. and its subsidiaries. As the Holding Company Plan did not become effective
until January 31, 1997, the Company was an inactive subsidiary of the Bank
during fiscal 1996 and much of the information that would ordinarily be included
herein is not applicable. Accordingly, portions of the information provided in
this Proxy Statement relate to the Bank rather than the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
In accordance with Massachusetts law and the Company's By-laws, the
Company's Board of Directors may have no fewer than three Directors. On the
Company's Incorporation Date, the then-existing Directors of the Bank became the
initial Directors of the Company (the "Initial Directors"). Under the Company's
Articles of Organization and By-laws, the Board of Directors is divided into
three classes, as nearly equal in number as possible, with the Initial Directors
holding office as follows: the first class of Initial Directors will hold office
for a
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term which expires at the Annual Meeting, the second class of Initial Directors
will hold office for a term which expires at the annual meeting of stockholders
to be held in 1998, and the third class of Initial Directors will hold office
for a term which expires at the annual meeting of stockholders to be held in
1999. As the term of one class expires, a successor class is elected by the
stockholders generally for a three-year term of office until their successors
are elected and qualified. Pursuant to the Company's By-laws, the Board of
Directors may from time to time fix the number of Directors and their respective
classifications. At present, the number of Directors constituting the entire
Board of Directors is 12.
Pursuant to the Company's By-laws, the Board of Directors acted as a
nominating committee for selecting nominees for election as Directors. The Board
has nominated William F. Borhek, Rodney D. Henrikson and A. Stanley Littlefield
to serve as Directors for a three-year term and Robert J. Armstrong to serve as
Director for a one-year term. Pursuant to Section 3.4 of the Company's By-laws
(which prohibit a person from serving as Director after the annual meeting of
stockholders immediately following such person's seventy-fifth birthday), Mr.
Armstrong, who will turn seventy-five on February 2, 1998, can only be nominated
for a one-year term of office. Each of the nominees is currently serving as a
Director of the Company.
Unless authority is withheld, proxies in the accompanying form will be
voted FOR the election of the four nominees, to hold office until the 2000
annual meeting of stockholders or special meeting in lieu thereof (except in the
case of Robert J. Armstrong, whose term of office will expire at the 1998 annual
meeting of stockholders or special meeting in lieu thereof) and until their
respective successors are elected and qualified. If the proxy withholds
authority to vote for one or more nominees for Director, the stockholder's
instructions will be followed.
The Company has no reason to believe that any of the nominees will not
be able to serve. In the event that any nominee is unable to serve at the time
of the election, the shares represented by the proxy will be voted for the other
nominees and may be voted for a substitute for that nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
FOUR NOMINEES FOR DIRECTOR LISTED IN THIS PROXY STATEMENT.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth certain information (as of April 28,
1997) regarding the current Directors and the nominees for Director of the
Company:
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<TABLE>
<CAPTION>
Term as
Director
Position(s) Director Will
Name Age with the Company Since** Expire
- ---- --- ---------------- -------- --------
<S> <C> <C> <C> <C>
*Robert J. Armstrong 74 Director 1971 1997
Bruce G. Atwood 59 Director 1978 1998
*William F. Borhek 58 Director 1980 1997
Ralph B. Carver, Jr. 69 Director 1980 1998
Joel S. Geller 56 Director 1982 1998
*Rodney D. Henrikson 61 Director 1973 1997
*A. Stanley Littlefield 71 Director 1985 1997
James P. McDonough 46 President, CEO 1990 1999
and Director
Jay Timothy Noonan 54 Director 1975 1998
Gordon N. Sanderson 63 Director 1985 1999
James J. Slattery 61 Director 1973 1999
Wayne P. Smith 58 Director 1973 1999
<FN>
- -------------------------
* Nominees for Director.
** Includes service as a trustee of the Bank prior to its conversion from
mutual to stock form in 1986 (the "Conversion") and as director of the
Bank from the date of the Conversion to the Effective Date of the
establishment of the Company as the holding company of the Bank on
January 31, 1997.
</TABLE>
The principal occupation and business experience during at least the
last five years of each Director and nominee is as follows:
ROBERT J. ARMSTRONG has been President and General Manager of Armstrong
Construction Corporation, a home building firm, since 1952.
BRUCE G. ATWOOD has been Vice President-Operations and Treasurer of
Hyer Industries, Inc., a manufacturer of industrial scales, since 1978.
WILLIAM F. BORHEK has been President of Wm. F. Borhek Insurance Agency,
Inc., a general insurance agency, since 1964.
RALPH B. CARVER, JR. has been President, Treasurer and a director of
Den-Lea Rental, Inc., a truck leasing company, since 1979.
JOEL S. GELLER is the owner-manager and a director of Abington Liquors
Corp., a retail liquor store.
RODNEY D. HENRIKSON has been Treasurer of Henrikson Realty Corp., a
real estate company, since 1986. He was Treasurer of Henrikson's Dairy, Inc., a
food processing and distribution company, from 1982 through 1984 and President
from 1984 through 1986.
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<PAGE> 8
A. STANLEY LITTLEFIELD is an attorney in private practice in Rockland,
Massachusetts. He was formerly District Attorney of Plymouth County.
JAMES P. MCDONOUGH has been President and Chief Executive Officer of
the Company since its incorporation on October 15, 1996. Mr. McDonough has also
served as President and Chief Executive Officer of the Bank since August 1991.
Previously, he served as President and Chief Operating Officer of the Bank from
November 1990 to August 1991 and Senior Vice President-Lending of the Bank from
December 1987 to November 1990. Mr. McDonough was also Vice President-Regional
Manager of GEM Mortgage Corporation of North America from 1983 to 1987. Mr.
McDonough is a graduate of Massasoit Community College and Boston State College.
JAY TIMOTHY NOONAN has been with J. P. Noonan Trans., Inc., an
interstate hauler, in a management capacity since 1968 and is currently Chief
Financial Officer. Mr. Noonan was also President of Rourke Coal and Oil Co. from
1960 to 1989.
GORDON N. SANDERSON has been retired since 1991. From 1970 to 1991, he
was Vice President-Sales of B & W Press, Inc., a specialty printing company.
JAMES J. SLATTERY has been President of J. H. Slattery Insurance
Agency, Inc., Abington, Massachusetts, an independent insurance agency, since
1958.
WAYNE P. SMITH is Treasurer and a director of Suburban Enterprises
Inc., Abington, Massachusetts, a sales and marketing firm.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company conducted no substantive activities during 1996.
Accordingly, its Board of Directors did not meet in 1996 and actions taken by
the Board in connection with the formation of the Company were adopted by the
written consent of Directors. However, for the year ended December 31, 1996, the
Bank's Board of Directors (which consists of the same members as the Company's
Board of Directors) met 12 times. Each incumbent Director attended at least 75%
of all meetings of the Bank's Board and any committees thereof of which he was a
member.
The Company's Board of Directors has an Executive Committee (as
required by law), an Audit Committee and a Compensation Committee, but does not
have a nominating committee or another committee performing a similar function.
On the Effective Date of the Holding Company Plan, the then-existing membership
of each of the Bank's Executive, Audit and Compensation Committees constituted
the initial membership of each of the Company's Executive, Audit and
Compensation Committees.
The Executive Committee, of which Messrs. Borhek, McDonough,
Littlefield, Geller and Slattery are members, is the primary operating committee
of the Company's Board of Directors
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and is vested with the authority of the Board in most matters, except those
powers which by law may not be delegated. During 1996, the Executive Committee
of the Bank met 17 times.
The Audit Committee, which is comprised of Messrs. Atwood, Henrikson
and Sanderson, is responsible for recommending the selection of the Company's
independent certified public accountants, reviewing the scope of the annual
examination of the Company's financial statements, reviewing the report of the
independent certified public accountants, reviewing the independent certified
public accountants' recommendations to management concerning auditing,
accounting and tax issues, aiding the Board in discharging its responsibility in
financial reporting and related matters and reviewing the services and fees of
the independent certified public accountants. During fiscal 1996, the Audit
Committee of the Bank met 4 times.
The Compensation Committee, of which Messrs. Borhek, Carver and
Littlefield are current members, reviews and establishes salaries and other
compensation of certain officers and employees of the Company and its
subsidiaries, and administers the Company's stock option plan and recommends to
the Board of Directors the granting of stock options to employees eligible
thereunder. The Compensation Committee of the Bank met three times during 1996.
The Board of Directors of the Company nominates candidates for election
as Directors. In accordance with the Company's By-laws, the Board will consider
nominees recommended by a stockholder of the Company, provided that the
stockholder notifies the Clerk of the Company of the proposed nominee in
writing, setting forth certain required information regarding the nominee. Such
notification must be made in a timely manner, as set forth in the By-laws. To be
timely, such notice must be received by the Company not less than 60 nor more
than 150 days prior to the scheduled date of the annual meeting of stockholders,
or, if less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made, within 10 days of public disclosure of the date of the
annual meeting. The Board may reject any stockholder nomination that is not
timely made or does not otherwise satisfy the requirements of the Company's
By-laws.
The Bank also maintains a Community Reinvestment Act ("CRA") Committee,
of which Messrs. Armstrong, Noonan, Sanderson, Littlefield and Smith are
members. Donna L. Thaxter, Senior Vice President, Abington Savings Bank -
Consumer Banking Division and Mario A. Berlinghieri, Senior Vice President,
Abington Savings Bank - Business Banking Division, chaired the committee during
1996. Other Bank employees also serve on this committee. The CRA Committee
reviews the Bank's policy with respect to the Community Reinvestment Act and
establishes the Bank's goals and guidelines in this area. The CRA Committee met
four times during 1996.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1996, Directors received $500 for
each Board meeting of the Bank they attended. Members of the Bank's Executive
Committee received an annual fee of $6,500. Members of the Bank's Audit
Committee received $375 for each
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meeting, and members of all other committees received $300 for each committee
meeting that they attended throughout the year. Officers who are also members of
the Bank's Board and its committees did not receive these fees.
In 1993, the Board of Directors of the Bank adopted a Long Term
Performance Incentive Plan (the "Bank's LTIP"). Pursuant to the Bank's LTIP,
which was a three-year program, each non-employee Director was eligible to
receive an annual grant (for each of the 1993, 1994 and 1995 fiscal years) of a
non-statutory option (under the Bank's 1986 Incentive and Nonqualified Stock
Option Plan) to purchase 750 shares of Common Stock. In accordance with the
terms of the Bank's LTIP, 8,250 options were granted to Directors for each of
the fiscal years 1993, 1994, and 1995, for an aggregate of 24,750 options. These
options were granted with an exercise price per share equal to the fair market
value of the Common Stock on the date of grant, which was the regular February
Board of Directors meeting following the end of the relevant fiscal year. The
Bank's LTIP provides that options become exercisable upon the earliest to occur
of the following: (a) after the market price of the Common Stock exceeds 140% of
the exercise price, in the case of the 1993 and 1994 fiscal years, for a period
of five consecutive business days and, in the case of the 1995 fiscal year, for
a period of 180 consecutive business days (determined as the average of the
daily closing prices per share as reported by the Nasdaq Stock Market National
Market System for such period), (b) upon the ninth anniversary of the date of
grant or (c) upon a change in control of the Bank (as defined in the option
agreement).
On March 27, 1997, the Board of Directors of the Company adopted a new
Long Term Performance Incentive Plan (the "Company's LTIP") which is
substantially similar to the Bank's LTIP. Under the terms of the Company's LTIP,
each non-employee Director is eligible to receive an annual grant of a
non-statutory option (under the Company's 1997 Incentive and Nonqualified Stock
Option Plan) to purchase 750 shares of Common Stock. Options issuable under the
Company's LTIP will have a minimum exercise price per share at least equal to
the fair market value of the Common Stock on the date of grant. The Company's
LTIP provides that options become exercisable upon the earliest to occur of the
following: (a) after the market price of the Common Stock exceeds 120% of the
exercise price for a period of thirty consecutive business days (determined as
the average of the daily closing prices per share as reported by the Nasdaq
Stock Market National Market System for such period), (b) upon the ninth
anniversary of the date of grant or (c) upon a change in control of the Company
(as defined in the option agreement). As of April 28, 1997, no options had been
issued under the Company's LTIP.
PROPOSAL 2 - 1997 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
The Bank adopted a stock option plan, the 1986 Incentive and
Nonqualified Stock Option Plan (the "1986 Stock Option Plan"), in connection
with its conversion from mutual to stock form in 1986. On the Effective Date of
the Holding Company Plan, the 1986 Stock Option Plan became the Stock Option
Plan of the Company. By its terms, the 1986 Stock Option Plan has expired, and
new options may no longer be granted. The Board of Directors of the
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<PAGE> 11
Company has adopted the Abington Bancorp, Inc. 1997 Incentive and Nonqualified
Stock Option Plan ("the 1997 Stock Option Plan"), subject to approval by the
stockholders, to replace the 1986 Stock Option Plan.
Under the Internal Revenue Code (the "Code"), stockholder approval is
necessary for stock options relating to the shares issuable under the 1997 Stock
Option Plan to qualify as incentive stock options under Section 422 of the Code.
In addition, Nasdaq rules (the "Nasdaq Rules") require stockholder approval of
the 1997 Stock Option Plan. Approval for purposes of the Code and the Nasdaq
Rules will require the affirmative vote of a majority of the shares of Common
Stock present or represented at the meeting and voting on the 1997 Stock Option
Plan. The full text of the 1997 Stock Option Plan as adopted by the Board of
Directors is printed as Appendix A, beginning on page A-1. The following is a
summary of some of its provisions.
The 1997 Stock Option Plan authorizes the grant of (i) options to
purchase Common Stock intended to qualify as incentive stock options ("Incentive
Options"), as defined in Section 422 of the Code, and (ii) options that do not
so qualify ("Nonqualified Options"). Up to 150,000 shares of Common Stock
(subject to adjustment upon certain changes in the capitalization of the
Company) may be issued pursuant to awards granted under the 1997 Stock Option
Plan. The 1997 Stock Option Plan will be administered by the Company's
Compensation Committee (the "Compensation Committee"). The Compensation
Committee will select the individuals to whom awards are granted and will
determine the terms of each award, subject to the provisions of the 1997 Stock
Option Plan. Incentive Options may be granted under the 1997 Stock Option Plan
only to officers and other employees of the Company or its subsidiaries.
Nonqualified Options may be granted under the 1997 Stock Option Plan to officers
or other employees of the Company or its subsidiaries, and to members of the
Board of Directors and consultants or other persons who render services to the
Company. As of April 28, 1997, 11 non-employee directors and approximately 28
officers and 169 non-officer employees were eligible to participate in the 1997
Stock Option Plan.
Each option shall expire on the date specified in the option agreement, which
date shall not, in the case of an Incentive Option, extend for more than ten
years from the date of grant (five years in the case of an optionee who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary("greater-than-ten-percent-
stockholder")). The exercise price of each option shall be determined by the
Compensation Committee at the time the option is granted; provided, however,
that the option price of any Incentive Option granted under the 1997 Stock
Option Plan must be at least equal to the fair market value of the Common Stock
on the date of grant (110% of fair market value in the case of a
greater-than-ten-percent-stockholder). The aggregate fair market value
(determined at the time of grant) of shares issuable pursuant to Incentive
Options which first become exercisable by an employee or officer in any calendar
year may not exceed one hundred thousand dollars ($100,000). Options are
non-transferable except by will or by the laws of descent or distribution and
are exercisable, during the optionee's lifetime, only by the optionee.
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<PAGE> 12
Options generally may not be exercised (i) after termination of the
optionee's employment with the Company or any of its subsidiaries, or
directorship with the Company, for cause or by reason of such optionee's
voluntary resignation, (ii) thirty days after termination of the optionee's
employment with the Company or any of its subsidiaries, or directorship with the
Company, without cause or by reason of retirement in accordance with the
Company's (or the applicable subsidiary's) retirement policies, (iii) ninety
days after termination of the optionee's employment with the Company or any of
its subsidiaries, or directorship with the Company, by reason of disability, and
(iv) one hundred and eighty days after termination of the optionee's employment
with the Company or any of its subsidiaries, or directorship with the Company,
by reason of death. In all cases, however, the Board has the discretion to
extend the exercise date. Payment of the exercise price of the shares subject to
the option may be made (i) in cash in an amount, or by check, bank draft or
postal or express money order payable in an amount, equal to the aggregate
exercise price for such shares, (ii) with the consent of the Compensation
Committee, in the form of shares of Common Stock having a fair market value
equal to the exercise price of such shares, (iii) with the consent of the
Compensation Committee, by reducing the number of option shares otherwise
issuable to the optionee upon exercise of the option by a number of shares
having a fair market value equal to the aggregate exercise price of such shares,
(iv) with the consent of the Compensation Committee, by delivering such other
consideration that is acceptable to the Compensation Committee and that has a
fair market value, as determined by the Compensation Committee, equal to the
aggregate exercise price of such shares, including any broker-directed cashless
exercise/resale procedure adopted by the Compensation Committee, or (v) with the
consent of the Compensation Committee, any combination of the foregoing.
At the discretion of the Company, options granted under the 1997 Stock
Option Plan may include a so-called "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Common
Stock would automatically be granted an additional option (with an exercise
price equal to the fair market value of the Common Stock on the date the
additional option is granted and with the same expiration date as the original
option being exercised, and with such other terms as the Compensation Committee
may provide) to purchase that number of shares of Common Stock equal to the
number delivered to exercise the original option.
In the event of a change of control, as defined in the 1997 Stock
Option Plan, (i) the time for exercise of all unexercised and unexpired awards
will be automatically accelerated, effective as of the effective time of the
change of control (or such earlier date as may be specified by the Board) and
(ii) after the effective time of the change of control, all unexercised awards
will remain outstanding and will be exercisable in full for shares of Common
Stock or, if applicable, for shares of such securities, cash or property as the
holders of shares of Common Stock received in connection with the change of
control.
Federal Income Tax Information with Respect to the 1997 Stock Option
Plan. The grantee of a Nonqualified Option recognizes no income for federal
income tax purposes on the grant thereof. On the exercise of a Nonqualified
Option, the difference between the fair market
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<PAGE> 13
value of the underlying shares of Common Stock on the exercise date and the
option exercise price is treated as compensation to the holder of the option
taxable as ordinary income in the year of exercise, and such fair market value
becomes the basis for the underlying shares which will be used in computing any
capital gain or loss upon disposition of such shares. Subject to certain
limitations, the Company may deduct for the year of exercise an amount equal to
the amount recognized by the option holder as ordinary income upon exercise of a
Nonqualified Option.
The grantee of an Incentive Option recognizes no income for federal
income tax purposes on the grant thereof. Except as provided below with respect
to the alternative minimum tax, there is no tax upon exercise of an Incentive
Option. If no disposition of shares acquired upon exercise of the Incentive
Option is made by the option holder within two years from the date of the grant
of the Incentive Option or within one year after exercise of the Incentive
Option, any gain realized by the option holder on the subsequent sale of such
shares is treated as a long-term capital gain for federal income tax purposes.
If the shares are sold prior to the expiration of such periods, the difference
between the lesser of the value of the shares at the date of exercise or at the
date of sale and the exercise price of the Incentive Option is treated as
compensation to the employee taxable as ordinary income and the excess gain, if
any, is treated as capital gain (which will be long-term capital gain if the
shares are held for more than one year). The excess of the fair market value of
the underlying shares over the option price at the time of exercise of an
Incentive Option will constitute an item of tax preference for purposes of the
alternative minimum tax. Taxpayers who incur the alternative minimum tax are
allowed a credit which may be carried forward indefinitely to be used as a
credit against the regular tax liability in a later year; however, the minimum
tax credit can not reduce the regular tax below the alternative minimum tax for
that carryover year. In connection with the sale of the shares covered by
Incentive Options, the Company is allowed a deduction for tax purposes only to
the extent, and at the time, the option holder receives ordinary income (for
example, by reason of the sale of shares by the holder of an Incentive Option
within two years to the date of the granting of the Incentive Option or one year
after the exercise of the Incentive Option), subject to certain limitations on
the deductibility of compensation paid to executives
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
ABINGTON BANCORP, INC. 1997 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN.
MANAGEMENT
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company and the
principal occupation and business experience during at least the last five years
for each are set forth below as of April 28, 1997.
-10-
<PAGE> 14
JAMES P. MCDONOUGH. For biographical information concerning, see
"Election of Directors - Information Regarding Directors and Nominees" above.
EDWARD J. MERRITT has been Treasurer of the Company since the
Incorporation Date and Executive Vice President and Chief Financial Officer of
the Bank since September 1993. Prior to that date, he served as Senior Vice
President and Chief Financial Officer of the Bank from June 1991 to September
1993 and Treasurer and Chief Financial Officer of the Bank from July 1986 to
June 1991. Previously, he held various positions, including Senior Accountant
and Supervisor, at Wolf & Company of Massachusetts, P.C., from 1983 to 1986. Mr.
Merritt is a graduate of Salem State College and is a Certified Public
Accountant. Mr. Merritt is 37 years old.
MARIO M. BERLINGHIERI has been Senior Vice President - Business Banking
Division of the Bank since January 29, 1996. Prior to that date, he served as
Program Manager of the Executive Office of Communities & Development for The
Commonwealth of Massachusetts in 1995; Vice President and Senior Risk Manager of
Fleet Bank of Massachusetts in charge of commercial portfolio approval from 1992
to 1994; and Regional Manager - Boston Small Business Lending for Bank of New
England from 1990 to 1992. Mr. Berlinghieri is a graduate of Suffolk University
with a B.S.B.A. degree in Banking/Finance and an M.B.A. in Business
Administration. Mr. Berlinghieri is 47 years old.
DONNA L. THAXTER has been Senior Vice President - Consumer Banking
Division of the Bank since December 1993. Prior to that date, she was Vice
President - Retail Banking since August 1992. Ms. Thaxter joined the Bank in
January 1988 and has held various positions including Production Manager,
Commercial Loan Officer and Compliance Officer. Previously, she worked as
Underwriting Manager for GEM Mortgage Corporation of North America from 1984 to
1988. Ms. Thaxter is a graduate of Framingham State College. Ms. Thaxter is 36
years old.
ROBERT M. LALLO has been Vice President - Treasurer since he joined the
Bank in October 1993. Previously, he held various positions, including Audit
Manager, with Arthur Andersen & Co., currently known as Arthur Andersen LLP,
from July 1986 to October 1993. Mr. Lallo is a graduate of Boston College with
degrees in both Accounting and Finance and is a Certified Public Accountant. Mr.
Lallo is 32 years old.
All executive officers of the Company hold office until the first
meeting of the Board of Directors following the annual meeting of stockholders
or special meeting in lieu thereof and until their successors are chosen and
qualified, unless a shorter term is specified in the vote appointing them.
Officers may generally be removed from office by vote of two-thirds of the Board
of Directors.
EXECUTIVE COMPENSATION
-11-
<PAGE> 15
<TABLE>
Summary Compensation Table. The following Summary Compensation Table
sets forth certain information regarding compensation paid or accrued by the
Bank with respect to the Chief Executive Officer and the Bank's most highly
compensated officers other than the Chief Executive Officer who served as
officers in fiscal 1996 and whose annual compensation exceeded $100,000 for
fiscal 1996:
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term All Other(1)
Annual Compensation Compensation Compensation
------------------------------------- -------------------------------
Name and Fiscal Option
Principal Position with Bank Year Salary(2) Bonus(3) Other(4) Grants
- ---------------------------- ------ --------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
James P. McDonough 1996 $202,800 $47,315 5,000 $10,930
President and Chief 1995 $195,000 $32,175 5,000 $10,727
Executive Officer 1994 $180,000 $28,800 5,000 $ 8,949
Edward J. Merritt 1996 $117,000 $25,826 4,000 $ 9,462
Executive Vice 1995 $112,500 $19,125 4,000 $ 9,101
President and Chief 1994 $112,500 $19,125 4,500 $ 7,520
Financial Officer
Donna L. Thaxter 1996 $ 86,643 $15,941 3,000 $ 5,969
Senior Vice President, 1995 $ 81,900 $13,104 3,000 $ 5,639
Consumer Banking 1994 $ 78,000 $12,480 3,500 $ 4,601
Division
<FN>
- --------------------
(1) Includes payments of life insurance premiums and ESOP contributions.
Amounts attributable to life insurance premiums for fiscal 1994, 1995 and
1996, respectively were: for Mr. McDonough, $438, $571 and $641; for Mr.
Merritt, $232, $261 and $277; and, for Ms. Thaxter, $172, $188 and $201.
The Bank allocates ESOP contributions to employees annually, in
unrestricted shares of Common Stock. The dollar value of ESOP
contributions in fiscal 1994, 1995 and 1996, respectively, were; for Mr.
McDonough, $8,511, $10,156 and $10,289; for Mr. Merritt, $7,288, $8,840,
and $9,185; and for Ms. Thaxter, $4,429, $5,451 and $5,768.
(2) Includes employee's voluntary 401(k) contribution; the Bank did not
provide matching 401(k) contributions.
(3) Bonuses reported for fiscal 1996 were earned in fiscal 1996 but paid in
fiscal 1997. Bonuses reported for fiscal 1995 were earned in fiscal 1995
but paid in fiscal 1996. Bonuses reported for fiscal 1994 were earned in
fiscal 1994 but paid in fiscal 1995.
(4) Perquisites and other personal benefits paid to each officer included in
the Summary Compensation Table in each instance aggregated less than 10%
of the total annual salary and bonus set forth in the columns entitled
"Salary" and "Bonus" for each officer, and accordingly, are omitted from
the table as permitted by the rules of the Securities and Exchange
Commission.
</TABLE>
Option Grants Table. The following Option Grants Table sets forth
certain information regarding stock options granted during the fiscal year ended
December 31, 1996 by the Bank to the executive officers named in the Summary
Compensation Table:
-12-
<PAGE> 16
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
-------------------------------------------- AT ASSUMED
ANNUAL RATES OF
PERCENT OF STOCK PRICE
TOTAL OPTIONS EXERCISE APPRECIATION FOR
GRANTED TO PRICE PER OPTION TERM (2)
OPTIONS EMPLOYEES IN SHARE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR ($/SH)(1) DATE 5% 10%
---- ------- ------------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
James P. McDonough 5,000 41.7 $17.00 2/28/06 $53,456 $135,469
Edward J. Merritt 4,000 33.3 $17.00 2/28/06 $42,764 $108,375
Donna L. Thaxter 3,000 25.0 $17.00 2/28/06 $32,073 $ 81,281
<FN>
- -------------------
(1) Stock options were granted under the Bank's 1986 Stock Option Plan at an
exercise price equal to the fair market value of the Bank's Common Stock
on the date of the grant. The stock options expire ten years from the
date of grant. Options may not be exercised until the fair market value
(as defined in option agreements) is at least 140% of exercise price per
share for one hundred and eighty consecutive business days or upon the
ninth anniversary of the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimates of future stock
price growth. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the timing of such exercise and sale of
the shares and the future performance of the Company's Common Stock.
There can be no assurances that the rates of appreciation assumed in this
table can be achieved or that the amounts shown will be received by the
individuals.
</TABLE>
<TABLE>
Fiscal Year-End Option Table. The following Fiscal Year-End Option
Table sets forth certain information regarding stock options exercised during
the fiscal year ended December 31, 1996 and stock options held as of December
31, 1996 by the executive officers named in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ON VALUE ----------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(2)
---- -------- -------- ----------- ------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
James P. McDonough 0 0 50,000 5,000 $674,375 $ -
Edward J. Merritt 0 0 19,000 4,000 $202,344 $ -
</TABLE>
-13-
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Donna L. Thaxter 0 0 7,000 3,000 $ 52,469 $ -
<FN>
- --------------------------
(1) Value is based on the last sales price of Common Stock of $19.50 on
December 31, 1996 (the "Year End Price"), the last day prior to the end
of fiscal 1996 for which a trade in the Common Stock was reported by the
Nasdaq Stock Market National Market System, less the applicable option
exercise price. These values have not been and may never be realized.
Actual gains, if any, on exercise will depend on the value of the Common
Stock on the date of the sale of the shares underlying the options.
(2) Disclosure of the value of unexercisable in-the-money stock options based
on the Year End Price of $19.50 per share is not meaningful since, by
their terms, such options may not be exercised until the 180th
consecutive business day in which the fair market value of the Common
Stock is at least $23.80 per share (the "Option Trigger Date"). On the
Option Trigger Date, the value of the unexercised in-the-money options
held at the end of fiscal 1996 by Mr. McDonough, Mr. Merritt and Ms.
Thaxter, respectively, would be $34,000, $27,200 and $20,400.
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board is currently composed of three
Directors, Messrs. Borhek, Carver and Littlefield. Mr. Carver replaced Mr.
Slattery as a member of the Compensation Committee on July 2, 1996. The
Compensation Committee also administers the 1997 Stock Option Plan and the 1986
Stock Option Plan. This Committee is charged with the responsibility of
reviewing and approving executive officers' compensation and recommending all
discretionary grants of stock options under the Company's (and previously the
Bank's) stock option plan. The following describes the compensation programs in
effect during fiscal 1996. The Company's compensation policies are similar to
those policies in effect at the Bank prior to the establishment of the Company
as the holding company of the Bank on January 31, 1997.
Compensation Policy
The Company's compensation policies are designed to pay executives an
annual salary that is industry competitive and an annual bonus that is based
both on the performance of the Company (as compared to its annual business plan
as well as a selected peer group) and on individual goals established for each
of the executives for the fiscal year. The Company also has longer term
incentives based on stock options. All three components of compensation are
reviewed by the Committee to ensure salaries remain competitive, bonuses reward
performance and stock options provide continued incentives.
Salaries for the executive officers are based on the duties and
responsibilities of the position held by the executive compared with executive
officers of other companies in the industry. Salaries are reviewed and
established annually. Various industry salary surveys are reviewed in
establishing the new compensation. The Chief Executive Officer prepares a
performance review, including an assessment of prior-year performance, for each
executive officer, then communicates this information to the Compensation
Committee. Based on this information and its performance review of the Chief
Executive Officer, which is based on its assessment of the degree to which the
Chief Executive Officer accomplished pre-established
-14-
<PAGE> 18
strategic and financial goals, the Compensation Committee makes recommendations
to the Board of Directors, which establishes annual executive salaries for the
next year.
Executive officers and key management employees of the Bank participate
in the Bank's Management Incentive Compensation Plan (the "Bonus Plan").
Payments under the Bonus Plan are contingent on the Bank meeting its strategic
and operational objectives for the fiscal year. Bonuses may be awarded for the
achievement of the Bank's financial performance goals and an individual
participant's objectives. Bonus awards will be determined by a defined formula;
factors considered in this formula include financial performance of the Bank,
evaluation of achievement of strategic and/or operational goals and unit
profitability, and Bank performance compared to a peer group on both a
return-on-assets and a return-on-equity basis. Based on the extent to which the
Bank achieves those objectives, participants, depending on the Bonus Plan group,
may receive from 15% to 30% of base salary. The Committee reviews both the
individual and Bank goals annually. However, the Board of Directors has final
authority with respect to all bonus awards. Approximately 16.9% of the Bank's
compensation to executives in fiscal 1996 was in the form of bonuses. Such
bonuses were earned in fiscal 1996 but paid in fiscal 1997.
The Company will periodically grant (and the Bank previously granted)
stock options to some or all of its executives and key employees as a means of
creating a long-term incentive and benefit. In October 1993, in conjunction with
its existing stock option plan, the Bank adopted the Long Term Performance
Incentive Program (the "Bank's LTIP") to incent executive management and members
of the Board of Directors to build long-term shareholder value. The Bank's LTIP
was a three-year program (for each of the 1993, 1994 and 1995 fiscal years) and
provided a mechanism for granting options under the Bank's stock option plan. In
each year of the Bank's LTIP, options to purchase a maximum of 23,250 shares of
Common Stock were granted to members of the Board of Directors, the Chief
Executive Officer, the Chief Financial Officer, and eligible Division Heads. The
Bank's LTIP provides that options become exercisable after the fair market value
per share of the Common Stock exceeds 140% of the grant price for a specified
period, upon the ninth anniversary of the date of grant or upon a change of
control of the Company. The options were granted based on achievement of the
Bank's business plan for the fiscal year in question. Additional grants could be
made for the achievement of strategic goals such as acquisitions and asset
purchases. All stock options granted in fiscal 1996 were at the fair market
value of shares of Common Stock on the date of grant. Thus, no benefit will
accrue to the executive or key employee from the stock option grant until the
Common Stock appreciates.
On March 27, 1997, the Board of Directors of the Company adopted a new
Long Term Performance Incentive Plan (the "Company's LTIP") which is
substantially similar to the Bank's LTIP except, among other differences, that
the Company's LTIP is not limited to a three-year duration. In each year of the
Company's LTIP, options to purchase a maximum of 23,250 shares of Common Stock
may be granted to members of the Board of Directors, the Chief Executive
Officer, the Chief Financial Officer, and eligible Division Heads of the Bank.
Such options become exercisable after the fair market value per share of the
Common Stock
-15-
<PAGE> 19
exceeds 120% of the grant price for a period of 30 consecutive business days,
upon the ninth anniversary of the date of grant or upon a change of control of
the Company. As of April 28, 1997, no options have been issued under the
Company's LTIP.
Chief Executive Officer Compensation
James P. McDonough first joined the Bank in 1976, left in 1983,
rejoined in 1987 and has served as the Chief Executive Officer of the Bank for
almost six years. Mr. McDonough became Chief Executive Officer and President of
the Company as of the date of the Company's incorporation on October 15, 1996.
Mr. McDonough's salary was increased from $180,000 during fiscal 1994 to
$195,000 during fiscal 1995 and to $202,800 during fiscal 1996. Mr. McDonough
has received grants of stock options from time to time, with per share exercise
prices equal to the current market value of the Common Stock at the time of
grant. Mr. McDonough also participates in the executive bonus plan under which
he received bonuses of $28,800, $32,175 and $47,315 for services rendered in
fiscal 1994, fiscal 1995 and fiscal 1996, respectively.
COMPENSATION COMMITTEE
William F. Borhek
Ralph B. Carver
A. Stanley Littlefield
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William F. Borhek, Ralph B. Carver, A. Stanley Littlefield and James J.
Slattery served on the Compensation Committee during fiscal 1996. Mr.Carver
replaced Mr. Slattery as a member of the Compensation Committee on July 2, 1996.
Except as described below, persons serving on the Compensation Committee had no
relationships with the Bank other than their relationship to the Bank as
Directors entitled to the receipt of standard compensation as Directors and
members of certain committees of the Board and their relationship to the Bank as
stockholders. No person serving on the Compensation Committee or on the Board of
Directors of the Company or who served in the such capacity for the Bank is an
executive officer of another entity for which an executive officer of the
Company or the Bank serves on the board of directors or on that entity's
compensation committee.
As a result of a competitive bid process, the Company purchases some of
its insurance from J. H. Slattery Insurance Agency, Inc. of which James J.
Slattery, a Director of the Company, is President. The Bank paid $139,279 to the
insurance agency in 1996 for insurance premiums covering the 3 year period
ending November 1, 1999.
PERFORMANCE GRAPH
-16-
<PAGE> 20
<TABLE>
The following Performance Graph compares the performance of the Bank's
cumulative stockholder return with that of a broad market index (the S&P 500
Index) and a published industry index (the Keefe, Bruyette & Woods New England
Bank Index) for each of the most recent five fiscal years. The cumulative
stockholder return for shares of Common Stock and each of the indices is
calculated assuming that $100 was invested on December 31, 1991. The performance
of the indices is shown on a total return (dividends reinvested) basis. The
graph lines merely connect year-end dates and do not reflect fluctuations
between those dates.
[Graph comparing the performance of the Bank's cumulative stockholder return
with the S&P 500 Index, and the Keefe, Bruyette & Woods New England Bank Index
for each of the 5 most recent years. Coordinates of the graph are as follows.]
Comparison of Five-Year Cumulative Return
<CAPTION>
=================================================================================================
INDEX OF TOTAL RETURN (12/31/91 = 100)
---------------------------------------------------------------------------------------------
S&P 500 KBW NEW ENGLAND ABBK PRICE PLUS
DATE INDEX BANK INDEX INDEXED CUMULATIVE DIVIDENDS
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/31/91 100.00 100.00 100.00 $ 3.750
3/31/92 97.49 130.88 146.67 $ 5.500
6/30/92 99.34 135.57 173.33 $ 6.500
9/30/92 102.47 134.42 180.00 $ 6.750
12/31/92 107.61 175.64 226.67 $ 8.500
---------------------------------------------------------------------------------------------
3/31/93 112.30 194.82 263.33 $ 9.875
6/30/93 112.83 183.66 230.00 $ 8.625
9/30/93 115.71 237.82 286.67 $10.750
12/31/93 118.39 234.48 306.67 $11.500
---------------------------------------------------------------------------------------------
3/31/94 113.93 246.65 319.33 $11.975
6/30/94 114.42 290.59 419.50 $15.731
9/30/94 120.02 277.45 415.44 $15.579
12/31/94 119.99 236.05 329.63 $12.361
---------------------------------------------------------------------------------------------
3/31/95 131.64 265.05 357.10 $13.391
6/30/95 144.16 301.08 418.22 $15.683
9/30/95 155.59 344.52 441.72 $16.565
12/31/95 164.92 368.43 482.76 $18.104
---------------------------------------------------------------------------------------------
3/31/96 173.76 369.18 450.58 $16.897
6/30/96 181.54 391.57 439.32 $16.474
9/30/96 187.11 440.02 495.29 $18.573
12/31/96 202.69 508.88 558.72 $20.952
---------------------------------------------------------------------------------------------
SOURCE: KEEFE, BRUYETTE & WOODS, INC.
=================================================================================================
<FN>
- -------------------
(1) Assumes $100 invested on December 31, 1991, in ABBK common stock, S&P
500 Index and KBW New England Bank Index.
(2) Total return assumes reinvestment of dividends.
</TABLE>
-17-
<PAGE> 21
401(k) PLAN
The Bank has a defined contribution plan pursuant to Section 401(k) of
the Internal Revenue Code for the benefit of its employees, including officers.
Subject to certain eligibility requirements, the 40l(k) plan permits each
participant to defer up to 15% of such participant's annual salary up to a
maximum annual amount ($9,500 in calendar year 1996). The Bank does not make
matching contributions to the plan. Federal income taxes on amounts allocated to
a participating employee are deferred until such amounts are distributed to the
participant.
RETIREMENT PLAN
In addition to the foregoing, the Bank also provides a retirement plan
for eligible employees through the Savings Banks Employees Retirement
Association ("SBERA"), an unincorporated association of savings banks operating
within Massachusetts and other organizations providing services to or for
savings banks. SBERA's purpose is to enable the participating banks to provide
pension and other benefits for their employees.
Each employee age 21 or older who has completed at least 1,000 hours of
service in one consecutive twelve-month period beginning with such employee's
date of employment automatically becomes a participant in the retirement plan.
All participants become fully vested after three years of service or at age 62
if earlier.
The retirement plan is a qualified defined benefit plan which does not
require the employee to make any contribution to become a participant or to earn
benefits under the plan. The benefits provided at age 65 to any participant are
based on the average of the highest three consecutive years of compensation
(including bonuses) for such participant (the "Average Compensation"). The
benefits provided at age 65 are equal to 1.35% of the Average Compensation for
each year of service with the Bank up to a maximum of 30 years, plus .6% of the
excess of Average Compensation over Covered Compensation (as defined below) for
the participant's age for each year of service with the Bank up to 30 years.
Covered Compensation is the average of 35 years of social security taxable wages
up to and including the year in which a participant reaches social security
retirement age. Due to certain requirements of the Tax Reform Act of 1986, the
Bank's retirement plan was modified, effective November 1, 1989. The prior plan
calculated benefits using a different formula than the current plan.
Participants who were employed by the Bank on November 1, 1989 and were
participants in the plan prior to that date will receive the greater of the
retirement benefit earned as of October 31, 1989 under the prior plan or the
benefit earned by application of the new formula under the current plan.
The following table is derived from information provided by SBERA and
illustrates annual pension benefits for retirement at age 65 under the most
advantageous plan provisions available for various levels of compensation and
years of service. The figures in this table are based upon the assumption that
the plan continues in its present form and certain other assumptions regarding
social security benefits and compensation trends.
-18-
<PAGE> 22
<TABLE>
PROJECTED ANNUAL PENSION BENEFIT
BASED ON YEARS OF SERVICE(1)
<CAPTION>
Average 10 15 20 25 30 Years
Compensation Years Years Years Years and After
------------ ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
$ 20,000 $ 2,700 $ 4,050 $ 5,400 $ 6,750 $ 8,100
40,000 6,145 9,218 12,291 15,364 18,436
60,000 10,045 15,068 20,091 25,114 30,136
80,000 13,945 20,918 27,891 34,864 41,836
100,000 17,845 26,768 35,691 44,614 53,536
120,000 21,745 32,618 43,491 54,364 65,236
125,000 22,720 34,081 45,441 56,801 68,161
140,000 25,645 38,468 51,291 64,114 76,936
150,000 27,595 41,393 55,191 68,989 82,786
160,000(2) 29,545 44,318 59,091 73,864 88,636
<FN>
- ---------------------
(1) The annual pension benefit is computed on the basis of a straight-line
annuity and assumes retirement at age 65 between November 1, 1996 and
October 31, 1997
(2) Federal law does not permit defined benefit pension plans to recognize
compensation in excess of $150,000 for plan years beginning in 1994; for
plan years beginning in 1997, this amount will be increased to $160,000.
</TABLE>
<TABLE>
Normal retirement age under the plan is 65; a reduced early retirement
benefit is payable from age 50 to 65 under certain conditions. The following
table is derived from information provided by SBERA and sets forth estimated
retirement benefits under the plan at normal retirement dates for the executive
officers of the Bank named in the Summary Compensation Table, computed on the
basis of their present salary levels.
<CAPTION>
Estimated
Years of Credited Annual Pension
Name Service at Age 65 Benefit at Age 65
---- ----------------- -----------------
<S> <C> <C>
James P. McDonough 28 $73,358
Edward J. Merritt 38 $59,294
Donna L. Thaxter 37 $46,670
</TABLE>
-19-
<PAGE> 23
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into special termination agreements with
Messrs. McDonough, Merritt and Berlinghieri and Ms. Thaxter (the "Agreements").
The Agreements are substantially similar to special termination agreements
entered into between the Bank and these officers prior to the formation of the
Company as the holding company of the Bank.
The Special Termination Agreement between the Company and Mr. McDonough
provides for severance payments if Mr. McDonough's employment with the Company
or the Bank is terminated within three years following a change in control of
the Bank (as defined in the agreement) under certain circumstances, including
either (1) termination by the Company or the Bank for any reason other than
death, deliberate dishonesty with respect to the Company or any subsidiary or
affiliate thereof or conviction of a crime involving moral turpitude, or (2)
resignation by Mr. McDonough subsequent to the occurrence of any of the
following events: (a) a reduction in compensation, (b) a significant change in
Mr. McDonough's authority or responsibility, (c) a reasonable determination by
Mr. McDonough that he is unable to exercise his prior authority or
responsibility as a result of such change in control or (d) the failure by the
Company or the Bank to continue any material compensation, incentive, bonus or
benefit plan (or provide an appropriate substitute plan) or the failure by the
Company or the Bank to continue Mr. McDonough's participation therein on a basis
not materially less favorable as existed at the time of the change of control.
In such event, Mr. McDonough would receive a lump sum payment equal to
approximately three times his average annual compensation (including bonuses)
over the five years prior to the change in control, subject to a cap of
$750,000.
The Special Termination Agreements between the Company and Mr. Merritt
and Ms. Thaxter are identical to the agreement with Mr. McDonough, except that
their agreements contain a $500,000 cap on severance payments. The Special
Termination Agreement between the Company and Mr. Berlinghieri is substantially
the same as the agreement with Mr. McDonough, except that he would receive a
lump sum payment equal to approximately two times his average annual
compensation (including bonuses) over the five years prior to the change in
control, subject to a cap of $350,000.
EMPLOYEE STOCK OWNERSHIP PLAN
The Bank established an Employee Stock Ownership Plan (the "ESOP"),
effective as of November 1, 1985, for employees age 21 or older who have
completed at least 1,000 hours of service with the Bank in a twelve-month period
beginning with the employee's date of employment or any anniversary thereof.
The ESOP is funded by contributions made in cash or stock. Cash
contributions will generally be invested in Common Stock of the Company and
stock contributions will be made in Common Stock of the Company. Benefits may be
paid in shares of Common Stock or in cash, subject to the participant's right to
require payment in shares.
-20-
<PAGE> 24
In November 1993, the ESOP entered into a loan agreement with the Bank
pursuant to which the ESOP has borrowed up to $570,000 to purchase additional
shares of Common Stock. The loan is to be repaid over seven years, with
principal and interest (at a fixed rate of 8.5% per annum) payable quarterly.
Shares purchased with loan proceeds are held in a suspense account for
allocation among participants as the loan is paid. The loan is secured by the
unallocated shares acquired by the ESOP and will be repaid with funds from
contributions to the ESOP. The ESOP's purchases of additional shares of the
Company's (previously the Bank's) Common Stock (including reinvestment of cash
dividends) will be and have been made through periodic purchases on the open
market effected through a broker-dealer, subject to market conditions. The
timing and price of the purchases are in the discretion of the ESOP Trustee. As
of December 31, 1996, 47,128 additional shares were purchased by the ESOP with
the proceeds from the loan. An aggregate of 8,261 shares were allocated to
participants for the plan year ended October 31, 1996.
Contributions to the ESOP and shares released from the suspense account
are allocated among participants on the basis of compensation (including
bonuses). Benefits become 20% vested after three years of eligible service with
an additional 20% becoming vested each year thereafter. Non-vested benefits
which are forfeited are reallocated among remaining participants in the same
manner as contributions. Benefits are payable upon retirement, death,
disability, or separation from service with the Bank. Dividends paid by the Bank
on allocated shares of Common Stock held in the ESOP may be paid directly to the
participants in cash. The Bank's contributions to the ESOP are not fixed
(although required to be in amounts at least sufficient to pay the principal and
interest of the loan) so future benefits payable under the ESOP cannot be
estimated.
A Committee consisting of Lewis J. Paragona, Ida C. Frazier and Donna
L. Thaxter administers the ESOP. The trustee of the ESOP is currently James P.
McDonough. Under the ESOP, the Committee is required to solicit instructions
from the participants with respect to voting shares that have been allocated to
such participants, and is required to follow such instructions in directing the
trustee to vote such allocated shares. In addition, the trustee is required to
vote shares which are held in the suspense account in the same proportion as the
trustee is directed to vote those shares for which instructions are given. Upon
the direction of the Committee, the trustee also exercises numerous other powers
including the right to sell or otherwise dispose of Common Stock held by the
ESOP.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
Certain of the Directors and officers of the Company and the Bank are
at present, as in the past, customers of the Bank and have loans with the Bank
in the ordinary course of business. Certain of the Directors of the Company are
also at present, as in the past, directors, officers or stockholders of
corporations, trustees of trusts or members of partnerships which are customers
of the Bank and which have loans with the Bank in the ordinary course of
business. Such loan transactions with Directors and officers of the Company and
the Bank and with such corporations, trusts and partnerships were on terms,
including interest rates and collateral, as
-21-
<PAGE> 25
those prevailing at the time for comparable transactions with other persons and
did not involve more than normal risk of collectibility or present other
features unfavorable to the Bank.
The Bank is a party to a lease for office space located at 538 Bedford
Street, Abington, Massachusetts, used for the Bank's principal and
administrative offices. Northeast Terminal Associates, Limited, of which Dennis
E. Barry and Joseph L. Barry, Jr., who beneficially own more than 5% of the
Bank's Common Stock, are the principal beneficial owners, owns the property. All
lease negotiations were conducted on an arms-length basis. Messrs. Barry did not
participate in the Bank's decision to enter into the lease and received no fees
in connection therewith. The term of this lease is two years, commencing January
1, 1996, with annual rent of $48,000.
As a result of a competitive bid process, the Company purchases some of
its insurance from J. H. Slattery Insurance Agency, Inc. of which James J.
Slattery, a Director of the Company, is President. The Bank paid $139,279 to the
insurance agency in 1996 for insurance premiums covering the 3 year period
ending November 1, 1999.
PRINCIPAL STOCKHOLDERS
<TABLE>
The following table sets forth certain information as of April 21, 1997
regarding each person known by the Company to own beneficially more than 5% of
the Company's Common Stock, each Director and nominee for Director of the
Company, each executive officer named in the Summary Compensation Table and all
Directors and executive officers of the Company as a group.
<CAPTION>
Amount and
Nature of Percent
Beneficial of
Name Ownership (1) Class (2)
---- ------------- ---------
<S> <C> <C>
Dennis E. Barry and 182,000(2) 9.6%
Joseph L. Barry, Jr.
c/o Hallamore Motor
Transportation, Inc.
795 Plymouth Street
Holbrook, MA 02343
James P. McDonough 86,619(3) 4.5
Joel S. Geller 72,505(4)(5) 3.8
James J. Slattery 38,086(4)(6) 2.0
Wayne P. Smith 30,762(4)(7) 1.6
Edward J. Merritt 29,405(8) 1.5
*Robert J. Armstrong 14,850(4)(9) 0.8
Bruce G. Atwood 14,492(4)(10) 0.8
</TABLE>
-22-
<PAGE> 26
<TABLE>
<S> <C> <C>
Gordon N. Sanderson 14,437(4)(11) 0.8
*William F. Borhek 12,036(4)(12) 0.6
*Rodney D. Henrikson 11,645(4)(13) 0.6
Ralph B. Carver, Jr. 11,500(14) 0.6
Donna L. Thaxter 10,010(15) 0.5
*A. Stanley Littlefield 8,750(4)(16) 0.5
Jay Timothy Noonan 8,750(4) 0.5
All Directors and
executive officers as a
group (16 persons) 369,355(17) 18.1%
<FN>
- -----------------------
* Nominee for Director
(1) Except as otherwise noted, all persons and entities have sole voting and
investment power over their shares. All amounts shown in this column
include shares obtainable upon exercise of stock options exercisable
within 60 days of the date of this table.
(2) The Bank received a report on Schedule 13D, Amendment No. 3, dated
February 22, 1990, as filed with the FDIC, stating that (i) Dennis E.
Barry owns 84,750 shares as to which he has sole voting and dispositive
power, (ii) Joseph L. Barry, Jr. owns 84,750 shares as to which he has
sole voting and dispositive power, and (iii) Dennis E. Barry and Joseph
L. Barry, Jr. jointly own 12,500 shares as to which they have shared
voting and dispositive power. The Schedule 13D indicated that Messrs.
Barry were each describing a relationship with other persons but were not
affirming the existence of a group. Nevertheless, the Company believes
that Dennis E. Barry and Joseph L. Barry, Jr. may constitute a "group" as
that term is used in Section 13(d)(3) of the Securities Exchange Act of
1934 and that such group may be deemed to be the beneficial owner of the
shares set forth in this table.
(3) Includes 50,000 shares subject to currently exercisable options, 6,620
shares held in his self-directed IRA, 23,039 shares owned jointly with
his wife and 1,096 shares owned by his wife in a self-directed IRA. Also
includes 207 shares held by Mr. McDonough as custodian for one of his two
children and 207 shares held by his wife as custodian for one of his two
children (414 shares total). Mr. McDonough disclaims beneficial
ownership of the shares owned directly by his wife. Also includes 5,450
shares held by the ESOP as to which Mr. McDonough has the power to
direct the voting. Does not include 5,000 shares subject to options
which by their terms are not exercisable until the fair market value
(as defined in the option agreement) is at least $23.80 per share for a
period of 180 consecutive business days.
(4) Includes 7,250 shares subject to currently exercisable options. Does not
include for each person 750 shares which by their terms are not
exercisable until the fair market value (as defined in the option
agreement) is at least $23.80 per share for a period of 180 consecutive
business days.
(5) Includes 1,000 shares owned jointly with his mother, 3,000 shares owned
jointly with his wife, 1,784 shares owned directly by his wife, 844
shares owned by his son, 1,114 shares owned by his daughter, and 56,513
shares owned by a partnership in which Mr. Geller is a partner. Mr.
Geller disclaims beneficial ownership of the 1,784 shares owned directly
by his wife and the shares owned by his son and daughter.
(6) Includes 2,854 shares held in his IRA, 2,000 shares held as custodian for
each of three daughters (6,000 shares total), 2,020 held as custodian for
his son, 100 shares owned by his wife, 812 shares held in his wife's IRA,
50
</TABLE>
-23-
<PAGE> 27
shares held by his wife as custodian for his son and 12,825 shares owned
by a corporation of which he is a principal owner. Mr. Slattery disclaims
beneficial ownership of the shares held on behalf of his children and the
shares owned by his wife.
(7) Includes 10,166 shares owned by his wife. Mr. Smith disclaims beneficial
ownership of the shares owned by his wife.
(8) Includes 19,000 shares subject to currently exercisable options, 50
shares owned by his wife and 25 shares held as custodian for each of two
sons (50 shares total). Also includes 4,674 shares held by the ESOP as to
which Mr. Merritt has the power to direct voting. Does not include 4,000
shares subject to options which by their terms are not exercisable until
the fair market value (as defined in the option agreement) is at least
$23.80 per share for a period of 180 consecutive business days.
(9) Includes 7,600 shares owned jointly with his wife.
(10) Includes 5,173 shares owned by his wife. Mr. Atwood disclaims beneficial
ownership of the shares owned by his wife.
(11) Includes 7,187 shares owned through a realty trust.
(12) Includes 3,752 shares owned jointly with his wife and 1,035 shares owned
by his wife. Mr. Borhek disclaims beneficial ownership of the shares
owned directly by his wife.
(13) Includes 2,395 shares owned by a corporation in which Mr. Henrikson is an
officer, director and stockholder. Also includes 900 shares held in his
self-directed IRA and 900 shares held by his wife in a self-directed IRA.
(14) Includes 750 shares subject to currently exercisable options and 10,000
shares owned jointly with his wife. Does not include 750 shares subject
to options which by their terms are not exercisable until the fair market
value (as defined in the option agreement) is at least $23.80 per share
for a period of 180 consecutive business days.
(15) Includes 7,000 shares subject to currently exercisable options. Also
includes 2,062 shares held by the ESOP as to which Ms. Thaxter has the
power to direct voting. Does not include 3,000 shares subject to options
which by their terms are not exercisable until the fair market value (as
defined in the option agreement) is at least $23.80 per share for a
period of 180 consecutive business days.
(16) Includes 500 shares owned jointly with his wife.
(17) Includes 152,750 shares obtainable by exercise of currently exercisable
options held by all Directors and executive officers as a group. Also
includes 12,802 shares held by the ESOP as to which executive officers of
the Company have the power to direct the voting. Does not include 20,250
shares subject to options which by their terms are not exercisable until
the fair market value (as defined in the relevant option agreements) of
the Common Stock is at least $23.80 per share for a period of 180
consecutive business days.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
During fiscal 1996, the Bank was subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires
the Bank's officers and Directors, and persons who own more than 10% of a
registered class of the Bank's equity securities, to file reports of ownership
and changes in ownership with the Federal Deposit Insurance
-24-
<PAGE> 28
Corporation. Officers, Directors, and greater-than-10% shareholders were
required by FDIC regulations to furnish the Bank with copies of all Section
16(a) forms they file.
Based solely on review of the copies of Forms F-7, F-8 and F-8A furnished
to the Bank during and with respect to the 1996 fiscal year, or written
representations that no Forms F-8A were required, the Company believes that all
Section 16(a) filing requirements applicable to the Bank's officers, Directors,
and greater-than-10% beneficial owners were complied with during 1996.
INFORMATION CONCERNING AUDITORS
The Board of Directors has selected Arthur Andersen LLP to audit the
Company's financial statements for the current fiscal year. That firm also
served as the auditors for the Bank during the past fiscal year. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so and will be available to respond to appropriate questions.
SOLICITATION
Brokers, banks and other nominees will be reimbursed for out-of-pocket
expenses and other reasonable clerical expenses incurred in obtaining
instructions from beneficial owners of Common Stock. In addition to the
solicitation by mail, solicitations of proxies may be made personally or by
telephone by Directors, officers and certain employees of the Company. The
Company also intends to employ the services of Regan and Associates, Inc. to
solicit proxies. It is estimated that Regan and Associates, Inc. will receive
approximately $6,500, plus reimbursement of certain out-of-pocket expenses, for
its service in connection with such solicitation of proxies. All expenses
incurred in connection with this solicitation will be borne by the Company.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 1998 ANNUAL MEETING
In order to be included in proxy materials for the 1998 annual meeting of
stockholders or special meeting in lieu thereof, qualifying stockholder
proposals (in compliance with Section 2.3 of the Company's By-laws) must be
delivered to the Company at its principal executive offices on or before January
14, 1998. Any such proposal should be mailed to: Clerk, Abington Bancorp, Inc.
538 Bedford Street, Abington, Massachusetts 02351. If the date of the next
annual meeting is subsequently changed by more than 30 calendar days from the
date of this year's Annual Meeting, the Company will, in a timely manner, inform
its stockholders of such change and the date by which proposals of stockholders
must be received.
In addition, the Company's By-laws set forth certain procedural
requirements, including a notice requirement, that apply to stockholders wishing
to nominate a Director or propose an
-25-
<PAGE> 29
item of business for consideration at the scheduled annual meeting or special
meeting in lieu thereof.
MISCELLANEOUS
The Board was not aware, a reasonable time before mailing this Proxy
Statement to stockholders, of any business that may properly be presented at the
Annual Meeting, other than the matters specifically listed in the Notice of
Annual Meeting of Stockholders. However, if any further business is properly
presented, the persons present will have discretionary authority to vote the
shares they own or represent by proxy in accordance with their judgment.
-26-
<PAGE> 30
Revocable Proxy
Abington Bancorp, Inc.
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON JUNE 17, 1997
The undersigned stockholder of Abington Bancorp, Inc. (the "Company") hereby appoints James P. McDonough, Edward J. Merritt and
Barbara M. Manning, and each or any of them, proxies, with full power of substitution to each and to each substitute appointed
pursuant to such power, of the undersigned to vote all shares of stock of the Company which the undersigned may be entitled to vote
at a Special Meeting in Lieu of the Annual Meeting of Stockholders of the Company to be held on Tuesday, June 17, 1997, and at any
and all adjournments thereof, with all powers the undersigned would possess if personally present. The proxies are authorized to
vote as indicated on the reverse side hereof upon the matters set forth herein and in their discretion upon all other matters which
may properly come before said Meeting.
With- For All
For hold Except For Against Abstain
1. Election of Directors [ ] [ ] [ ] 2. Approval of the Abington Bancorp, Inc. [ ] [ ] [ ]
1997 Stock Option Plan
ROBERT J. ARMSTRONG RODNEY D. HENRIKSON The undersigned hereby acknowledges receipt of a copy of the accompanying
WILLIAM F. BORHEK A. STANLEY LITTLEFIELD Notice of a Special Meeting in Lieu of the Annual Meeting of Stockholders
and Proxy Statement for said Meeting and hereby revokes all proxies, if
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY any, heretofore given by him to others for said Meeting.
INDIVIDUAL NOMINEE(S), MARK THE "FOR ALL EXCEPT" BOX
AND STRIKE A LINE THROUGH THE NOMINEE'S NAME. If this proxy is properly executed and returned, the shares represented
hereby will be voted. If a choice is specified on the reverse side hereof
by the stockholder with respect to any matter to be acted upon, the
shares will be voted upon such matter in accordance with the
specification so made. IN THE ABSENCE OF ANY SPECIFICATION, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation, the
signature should be that of an authorized officer who should state his
or her title.
-------------------------
PLEASE BE SURE TO SIGN AND DATE THIS PROXY. DATE
- -------------------------------------------------------------------------
STOCKHOLDER SIGN HERE CO-OWNER SIGN HERE
- ----- ----------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
ABINGTON BANCORP, INC.
Dear Stockholder:
Please take note of the important Company information enclosed with this proxy card. There are a number of issues related to
the management and operation of the Company that require your immediate attention and approval. These are discussed in detail
in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be voted. Then sign the card, detach it and return
your proxy in the enclosed postage paid envelope.
Your vote must be received prior to the Special Meeting in Lieu of the Annual Meeting of Stockholders, to be held on Tuesday,
June 17, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Abington Bancorp, Inc.
</TABLE>
<TABLE>
<S> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
</TABLE>
<PAGE> 31
Appendix A
ABINGTON BANCORP, INC.
1997 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
Effective __________, 1997
<PAGE> 32
ABINGTON BANCORP, INC.
1997 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
SECTION 1. PURPOSE
This 1997 Incentive and Nonqualified Stock Option Plan (the "Plan") of
Abington Bancorp, Inc., a Massachusetts corporation (the "Company"), is designed
to provide additional incentive to executives and other key employees of the
Company and its subsidiaries and for certain other individuals providing
services to or acting as directors of the Company and its subsidiaries. The
Company intends that this purpose will be effected by the granting of incentive
stock options ("Incentive Stock Options") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock
options ("Nonqualified Options") under the Plan which afford such executives,
key employees, directors and other eligible individuals an opportunity to
acquire or increase their proprietary interest in the Company through the
acquisition of shares of its Common Stock. The Company intends that Incentive
Stock Options issued under the Plan will qualify as "incentive stock options" as
defined in Section 422 of the Code and the terms of the Plan shall be
interpreted in accordance with this intention. The term "subsidiary" shall have
the meaning set forth in Section 424 of the Code.
SECTION 2. ADMINISTRATION
2.1 THE COMMITTEE. The Plan shall be administered by the Company's
Compensation Committee (the "Committee"). It is the intention of the Company
that the Plan shall be administered by "non-employee directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange
Act"), but the authority and validity of any act taken or not taken by the
Committee shall not be affected if any person administering the Plan is not a
non-employee director. Except as specifically reserved to the Company's Board of
Directors (the "Board") under the terms of the Plan, the Committee shall have
full and final authority to operate, manage and administer the Plan on behalf of
the Company. Action by the Committee shall require the affirmative vote of a
majority of all members thereof.
2.2 POWERS OF THE COMMITTEE. Subject to the terms and conditions
of the Plan, the Committee shall have the power:
(a) To determine from time to time the persons eligible to
receive options and the options to be granted to such persons under the
Plan and to prescribe the terms, conditions, restrictions, if any, and
provisions (which need not be identical) of each option granted under
the Plan to such persons, and to recommend to the Board of
A-1
<PAGE> 33
Directors for its approval the grant of options (the power to grant
options is specifically reserved to the Board of Directors);
(b) To construe and interpret the Plan and options granted
thereunder and to establish, amend, and revoke rules and regulations
for administration of the Plan. In this connection, the Committee may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any option agreement, in the manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective. All decisions and determinations by the Committee in
the exercise of this power shall be final and binding upon the Company
and optionees;
(c) To make, in its sole discretion, changes to any
outstanding option granted under the Plan, including: (i) to reduce the
exercise price, (ii) to accelerate the vesting schedule or (iii) to
extend the expiration date; and
(d) Generally, to exercise such powers and to perform such
acts as are deemed necessary or expedient to promote the best interests
of the Company with respect to the Plan.
SECTION 3. STOCK
3.1 STOCK TO BE ISSUED. The stock subject to the options granted
under the Plan shall be shares of the Company's authorized but unissued Common
Stock, $.10 par value (the "Common Stock"), or shares of the Company's Common
Stock held in treasury. The total number of shares that may be issued pursuant
to options granted under the Plan shall not exceed an aggregate of 150,000
shares of Common Stock; provided, however, that the class and aggregate number
of shares which may be subject to options granted under the Plan shall be
subject to adjustment as provided in Section 8 hereof.
3.2 EXPIRATION, CANCELLATION OR TERMINATION OF OPTION. Whenever
any outstanding option under the Plan expires, is cancelled or is otherwise
terminated (other than by exercise), the shares of Common Stock allocable to the
unexercised portion of such option may again be the subject of options under the
Plan.
SECTION 4. ELIGIBILITY
4.1 PERSONS ELIGIBLE. Incentive Stock Options under the Plan may
be granted only to officers and other employees of the Company or its
subsidiaries. Nonqualified Options may be granted to officers or other employees
of the Company or its subsidiaries, and to members of the Board and consultants
or other persons who render services to the Company (regardless of whether they
are also employees).
4.2 GREATER-THAN-TEN-PERCENT STOCKHOLDERS. Except as may otherwise
be
A-2
<PAGE> 34
permitted by the Code or other applicable law or regulation, no Incentive Stock
Option shall be granted to an individual who, at the time the option is granted,
owns (including ownership attributed pursuant to Section 424 of the Code) more
than ten percent of the total combined voting power of all classes of stock of
the Company or any subsidiary (a "greater- than-ten-percent stockholder"),
unless such Incentive Stock Option provides that (i) the purchase price per
share shall not be less than one hundred ten percent of the fair market value of
the Common Stock at the time such option is granted, and (ii) that such option
shall not be exercisable to any extent after the expiration of five years from
the date it is granted.
4.3 MAXIMUM AGGREGATE FAIR MARKET VALUE. The aggregate fair market
value (determined at the time the option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any optionee during any calendar year (under the Plan and any other plans of the
Company or its subsidiary for the issuance of incentive stock options) shall not
exceed $100,000 (or such greater amount as may from time to time be permitted
with respect to incentive stock options by the Code or any other applicable law
or regulation).
SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE
5.1. TERMINATION BY DEATH. If any optionee's employment with or
other services to the Company and its Subsidiaries terminates by reason of
death, any option held by such optionee may thereafter be exercised to the
extent exercisable at the date of death, by the legal representative or legatee
of the optionee, for a period of 180 days from the date of death (or such longer
period as the Committee shall specify at any time), or until the expiration of
the stated term of the option, if earlier.
5.2 TERMINATION BY REASON OF DISABILITY. If any optionee's
employment with or other services to the Company and its Subsidiaries terminates
by reason of Disability, any option held by such optionee may thereafter be
exercised, to the extent it was exercisable at the time of such termination, for
a period of 90 days from the date of such termination of employment or other
services (or such longer period as the Committee shall specify at any time, it
being understood that any Incentive Stock Options that are so extended shall
thereafter become Nonqualified Stock Options to the extent provided by
applicable law) or until the expiration of the stated term of the option, if
earlier. The Committee shall have sole authority and discretion to determine
whether an optionee's employment or services has been terminated by reason of
Disability. Except as otherwise provided by the Committee or the Board at the
time of grant, the death of an optionee during a period provided in this Section
5.2 for the exercise of an option shall extend such period for 180 days from the
date of death, subject to termination on the expiration of the stated term of
the option, if earlier.
5.3 TERMINATION BY REASON OF NORMAL RETIREMENT. If any optionee's
employment with or other services to the Company and its Subsidiaries terminates
by reason of normal retirement in accordance with the Company's retirement
policies, any option held by
A-3
<PAGE> 35
such optionee may thereafter be exercised, to the extent it was exercisable at
the time of such termination, for a period of 30 days from the date of such
termination of employment or services (or such longer period as the Committee
shall specify at any time, it being understood that any Incentive Stock Options
that are so extended shall thereafter become Nonqualified Stock Options to the
extent provided by applicable law) or until the expiration of the stated term of
the option, if earlier. The Committee shall have sole authority and discretion
to determine whether an optionee's employment or services has been terminated by
reason of normal retirement. Except as otherwise provided by the Committee or
the Board at the time of grant, the death of an optionee during a period
provided in this Section 5.3 for the exercise of an option shall extend such
period for 180 days from the date of death, subject to termination on the
expiration of the stated term of the option, if earlier.
5.4 VOLUNTARY TERMINATION. If any optionee's employment with or
other services to the Company and its Subsidiaries terminates by reason of such
optionee's voluntary resignation, any option held by such optionee shall
immediately terminate and shall thereafter be of no further force and effect (i)
at the end of the last day of the optionee's employment or, (ii) in the case of
a director, on the effective date of the optionee's resignation from the Board
of Directors (or in either case for such longer period as the Committee shall
specify at any time, it being understood that any Incentive Stock Options that
are so extended shall thereafter become Nonqualified Stock Options to the extent
provided by applicable law) or until the expiration of the stated term of the
option, if earlier.
5.5 TERMINATION FOR CAUSE. If any optionee's employment with or
other services to the Company and its Subsidiaries has been terminated by the
Company or any of its Subsidiaries for cause, any option held by such optionee
shall immediately terminate at the end of the last day of the optionee's
employment or other services and shall thereafter be of no further force and
effect; provided, however, that the Committee may, in its sole discretion,
provide that such option can be exercised for a period of up to thirty (30) days
from the date of termination of employment or other services (it being
understood that any Incentive Stock Options that are so extended shall
thereafter become Nonqualified Stock Options to the extent provided by
applicable law) or until the expiration of the stated term of the option, if
earlier. The Committee shall have sole authority and discretion to determine
whether an optionee's employment has been terminated for cause.
5.6 TERMINATION WITHOUT CAUSE. Unless otherwise determined by the
Committee, if an optionee's employment with or other services to the Company and
its Subsidiaries is terminated by the Company or any of its Subsidiaries without
cause, any option held by such optionee may thereafter be exercised, to the
extent it was exercisable on the date of termination of employment, for thirty
days from the last day of the optionee's employment or other services (or such
longer period as the Committee shall specify at any time, it being understood
that any Incentive Stock Options that are so extended shall thereafter become
Nonqualified Stock Options to the extent provided by applicable law) or until
the expiration of the stated term of the option, if earlier.
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5.7 MISCELLANEOUS. An employment relationship between the Company
and the optionee shall be deemed to exist during any period in which the
optionee is employed by the Company or any subsidiary. Whether authorized leave
of absence, or absence on military or government service, shall constitute
termination of the employment relationship between the Company and the optionee
shall be determined by the Committee at the time thereof. "Disability" shall
mean disability as set forth in Section 22(e)(3) of the Code.
SECTION 6. TERMS OF THE OPTION AGREEMENTS
Each option agreement shall be in writing and shall contain such terms,
conditions, restrictions, if any, and provisions as the Committee shall from
time to time deem appropriate. Such provisions or conditions may include without
limitation restrictions on transfer, repurchase rights, or such other provisions
as shall be determined by the Committee; PROVIDED THAT such additional
provisions shall not be inconsistent with any other term or condition of the
Plan and such additional provisions shall not cause any Incentive Stock Option
granted under the Plan to fail to qualify as an incentive option within the
meaning of Section 422 of the Code. Option agreements need not be identical, but
each option agreement by appropriate language shall include the substance of all
of the following provisions:
6.1 EXPIRATION OF OPTION. Notwithstanding any other provision of
the Plan or of any option agreement, each option shall expire on the date
specified in the option agreement, which date shall not, in the case of an
Incentive Stock Option, be later than the tenth anniversary (fifth anniversary
in the case of a greater-than-ten-percent stockholder) of the date on which the
option was granted, or as specified in Section 5 hereof.
6.2 EXERCISE. Subject to Section 7.3 hereof, each option may be
exercised, so long as it is valid and outstanding, from time to time in part or
as a whole, subject to any limitations with respect to the number of shares for
which the option may be exercised at a particular time and to such other
conditions as the Committee in its discretion may specify upon granting the
option.
6.3 PURCHASE PRICE. The purchase price per share under each option
shall be determined by the Committee at the time the option is granted;
provided, however, that the option price of any Incentive Stock Option shall
not, unless otherwise permitted by the Code or other applicable law or
regulation, be less than the fair market value of the Common Stock on the date
the option is granted (110% of the fair market value in the case of a
greater-than-ten-pe rcent stockholder). For the purpose of the Plan the fair
market value of the Common Stock shall be the closing price per share on the
date of grant of the option as reported by the National Association of
Securities Dealers Automated Quotation System, Inc. ("NASDAQ"), or, if the
Common Stock is not quoted on NASDAQ, the fair market value as determined by the
Committee.
6.4 TRANSFERABILITY OF OPTIONS. Options shall not be transferable
by the optionee
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otherwise than by will or under the laws of descent and distribution, and shall
be exercisable, during his or her lifetime, only by him or her.
6.5 RIGHTS OF OPTIONEES. No optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any option
unless and until the option shall have been exercised pursuant to the terms
thereof, and the Company shall have issued and delivered the shares to the
optionee.
6.6 RELOAD OPTIONS. At the discretion of the Committee, options
granted hereunder may include a so-called "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Common
Stock in accordance with Section 7.2(b) hereof would automatically be granted an
additional option (with an exercise price equal to the fair market value of the
Common Stock on the date the additional option is granted and with the same
expiration date as the original option being exercised, and with such other
terms as the Committee may provide) to purchase that number of shares of Common
Stock equal to the number delivered to exercise the original option.
SECTION 7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
7.1 METHOD OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to the Company on any business day a
written notice specifying the number of shares of Common Stock the optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed (the "Notice"), accompanied by payment for such
shares.
7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Common
Stock purchased pursuant to the exercise of an option shall be made:
(a) in cash in an amount, or a check, bank draft or postal or
express money order payable in an amount, equal to the aggregate
exercise price for the number of shares specified in the Notice;
(b) with the consent of the Committee, by delivering "mature"
shares (as defined in the Financial Accounting Standards Board's
Emerging Issues Task Force Issue 84-18 ("Issue 84-18")) of Common Stock
of the Company having a fair market value (as defined for purposes of
Section 6.3 hereof) equal to such aggregate exercise price;
(c) with the consent of the Committee, by reducing the number
of option shares otherwise issuable to the optionee upon exercise of
the option by a number of shares having a fair market value (as defined
for purposes of Section 6.3 hereof) equal to such aggregate exercise
price (it being understood that this alternative will be available only
if the optionee holds sufficient "mature" shares as defined in Issue
84-18;
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(d) with the consent of the Committee, by delivering such
other consideration that is acceptable to the Committee and that has a
fair market value, as determined by the Committee, equal to such
aggregate exercise price, including any broker-directed cashless
exercise/resale procedure adopted by the Committee; or
(e) with the consent of the Committee, any combination of the
foregoing.
As promptly as practicable after receipt of the Notice and accompanying payment,
the Company shall deliver to the optionee certificates for the number of shares
with respect to which such option has been so exercised, issued in the
optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when the Company or a stock transfer agent of the Company shall
have deposited such certificates in the United States mail, addressed to the
optionee, at the address specified in the Notice.
7.3 SPECIAL LIMITS AFFECTING SECTION 16(B) OPTION HOLDERS. Shares
issuable upon exercise of options granted to a person who in the opinion of the
Committee may be deemed to be a director or officer of the Company within the
meaning of Section 16(b) of the Exchange Act and the rules and regulations
thereunder shall not be sold or disposed of until after the expiration of six
months following the date of grant.
SECTION 8. CHANGES IN COMPANY'S CAPITAL STRUCTURE
8.1 RIGHTS OF COMPANY. The existence of outstanding options shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize, without limitation, any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of Common Stock, or any issue of bonds, debentures, preferred or prior
preference stock or other capital stock ahead of or affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
8.2 RECAPITALIZATION, STOCK SPLITS AND DIVIDENDS. If the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend, or other increase or reduction of
the number of shares of the Common Stock outstanding, in any such case without
receiving compensation therefor in money, services or property, then (i) the
number, class, and price per share of shares of stock subject to outstanding
options hereunder shall be appropriately adjusted in such a manner as to entitle
an optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised his or her option in full immediately prior to such event and (ii) the
number and class of shares with respect to which options may be granted under
the Plan shall be adjusted by substituting for the total number of shares of
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Common Stock then reserved for issuance under the Plan that number and class of
shares of stock that the owner of an equal number of outstanding shares of
Common Stock would own as the result of the event requiring the adjustment.
8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one or
more corporations into the Company, or after a consolidation of the Company and
one or more corporations in which (i) the Company shall be the surviving
corporation, and (ii) the stockholders of the Company immediately prior to such
merger or consolidation own after such merger or consolidation shares
representing at least fifty percent of the voting power of the Company, each
holder of an outstanding option shall, at no additional cost, be entitled upon
exercise of such option to receive in lieu of the number of shares as to which
such option shall then be so exercisable, the number and class of shares of
stock or other securities to which such holder would have been entitled pursuant
to the terms of the agreement of merger or consolidation if, immediately prior
to such merger or consolidation, such holder had been the holder of record of a
number of shares of Common Stock equal to the number of shares for which such
option was exercisable.
8.4 CHANGE OF CONTROL. In the event of a Change of Control while
unexercised options remain outstanding under the Plan, then (i) the time for
exercise of all unexercised and unexpired options shall be automatically
accelerated, effective as of the effective time of the Change of Control (or
such earlier date as may be specified by the Board), and (ii) after the
effective time of such Change of Control, unexercised options shall remain
outstanding and shall be exercisable in full for shares of Common Stock or, if
applicable, for shares of such securities, cash or property as the holders of
shares of Common Stock received in connection with such Change of Control.
"Change of Control" shall mean the occurrence of any one of the
following events:
(a) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) becomes a "beneficial owner" (as such
term is defined in Rule 13d-3 promulgated under the Exchange Act)
(other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), directly or indirectly, of securities of the
Company representing thirty-five percent (35%) or more of the combined
voting power of the Company's then outstanding securities; or
(b) persons who, as of January 1, 1997, constituted the
Company's Board (the "Incumbent Board") cease for any reason, including
without limitation as a result of a tender offer, proxy contest, merger
or similar transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company subsequent
to January 1, 1997 whose election was approved by, or who was nominated
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with the approval of, at least a majority of the directors then
comprising the Incumbent Board shall, for purposes of this Plan, be
considered a member of the Incumbent Board; or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or other
entity, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
sixty-five percent (65%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
8.5 ADJUSTMENTS TO COMMON STOCK SUBJECT TO OPTIONS. Except as
hereinbefore expressly provided, the issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any 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, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
outstanding options.
8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be
determined by the Committee, and such determinations shall be conclusive. No
fractional shares of Common Stock shall be issued under the Plan on account of
any adjustment specified above.
SECTION 9. GENERAL RESTRICTIONS
9.1 NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Committee may require each person acquiring shares pursuant to an option to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Common Stock shall be issued pursuant to an option until
all applicable securities laws and other legal and stock exchange requirements
have been satisfied. The Committee may require the placing of such stop orders
and restrictive legends on certificates for stock as it deems appropriate.
9.2 DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates
to optionees under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail,
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addressed to the optionee, at the optionee's last known address on file with the
Company.
9.3 NO EMPLOYMENT RIGHTS. The adoption of the Plan or the granting
of any option under the Plan does not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 10. WITHHOLDING TAXES
10.1 RIGHTS OF COMPANY. The Company may require an employee
exercising a Nonqualified Option, or disposing of shares of Common Stock
acquired pursuant to the exercise of an Incentive Option in a disqualifying
disposition (as defined in Section 421(b) of the Code), to reimburse the Company
for any taxes required by any government to be withheld or otherwise deducted
and paid by the Company in respect of the issuance or disposition of such
shares. In lieu thereof, the Company shall have the right to withhold the amount
of such taxes from any other sums due or to become due from the Company to the
employee upon such terms and conditions as the Company may prescribe. The
Company may, in its discretion, hold the stock certificate to which such
employee is otherwise entitled upon the exercise of an option as security for
the payment of any such withholding tax liability, until cash sufficient to pay
that liability has been received or accumulated.
10.2 PAYMENT IN SHARES. An employee may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant to the
exercise of a Nonqualified Option a number of shares with an aggregate fair
market value (as defined in Section 6.3 hereof determined as of the date the
withholding is effected) that would satisfy the minimum withholding amount due
with respect to such exercise, or (ii) transferring to the Company mature shares
(as defined in Section 7.2) of Common Stock owned by the employee with an
aggregate fair market value (as defined in Section 6.3 hereof determined as of
the date the withholding is effected) that would satisfy the withholding amount
due. With respect to any employee who is subject to Section 16 of the Exchange
Act, the following additional restrictions shall apply:
(a) the election to satisfy tax withholding obligations
relating to an option exercise in the manner permitted by this Section
10.2 shall be made either (1) during the period beginning on the third
business day following the date of release of quarterly or annual
summary statements of sales and earnings of the Company and ending on
the twelfth business day following such date, or (2) at least six (6)
months prior to the date of exercise of the option;
(b) such election shall be irrevocable;
(c) such election shall be subject to the consent or approval
of the Committee; and
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(d) the Common Stock withheld to satisfy tax withholding, if
granted at the discretion of the Committee, must pertain to an option
which has been held by the employee for at least six (6) months from
the date of grant of the option.
10.3 NOTICE OF DISQUALIFYING DISPOSITION. Each holder of an
Incentive Option shall agree to notify the Company in writing immediately after
making a disqualifying disposition (as defined in Section 421(b) of the Code) of
any Common Stock purchased upon exercise of the Incentive Option.
SECTION 11. AMENDMENT OF PLAN
The Board may amend the Plan at any time, and from time to time,
subject to the limitation that, except as provided in Section 8 hereof, no
amendment shall be effective unless approved by the stockholders of the Company
in accordance with applicable law and regulations, at an annual or special
meeting held within twelve months before or after the date of adoption of such
amendment, in any instance in which such amendment would: (i) increase the
number of shares of Common Stock that may be issued under, or as to which
options may be granted pursuant to, the Plan; or (ii) change in substance the
provisions of Section 4 hereof relating to eligibility to participate in the
Plan. Without limiting the generality of the foregoing, the Board is expressly
authorized to amend the Plan, at any time and from time to time, to conform it
to the provisions of Rule 16b-3 under the Exchange Act, as that Rule may be
amended from time to time.
Except as provided in Section 8 hereof, the rights and obligations
under any option granted before amendment of this Plan or any unexercised
portion of such option shall not be adversely affected by amendment of this Plan
or such option without the consent of the holder of such option.
SECTION 12. NONEXCLUSIVITY OF PLAN
Neither the adoption of this Plan by the Board of Directors nor the
submission of this Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other or additional compensation or incentive arrangements as it may deem
desirable, including the granting of stock options otherwise than under this
Plan, and such arrangements may be either applicable generally or only in
specific cases.
SECTION 13. EFFECTIVE DATE AND DURATION AND TERMINATION OF PLAN
13.1 EFFECTIVE DATE. The effective date of this Plan shall be the
date of its adoption by the Board, PROVIDED that the stockholders of the Company
shall have approved this Plan within twelve months prior to or following the
adoption of this Plan by the Board. Subject to the foregoing, options may be
granted under the Plan at any time subsequent to its effective
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date; PROVIDED, HOWEVER, that (a) no such option shall be exercised or
exercisable unless the stockholders of the Company shall have approved the Plan
within twelve months prior to or following the adoption of this Plan by the
Board, and (b) all options issued prior to the date of such stockholders'
approval shall contain a reference to such condition.
13.2 TERMINATION. The Plan shall terminate (i) when the total
amount of the Common Stock with respect to which options may be granted shall
have been issued upon the exercise of options or (ii) by earlier action of the
Board of Directors for any (or no) reason, whichever shall first occur. No
option may be granted under the Plan after the tenth anniversary of the
effective date of the Plan, or after the Plan has been terminated (if earlier).
No option granted while this Plan is in effect shall be altered or impaired by
termination of this Plan, except upon the consent of the holder of such option.
The power of the Committee to construe and interpret this Plan and the options
granted prior to the termination of this Plan shall continue after such
termination.
SECTION 14. PROVISIONS OF GENERAL APPLICATION
14.1 SEVERABILITY. The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan, each of which shall remain in full force and
effect.
14.2 CONSTRUCTION. The headings in this Plan are included for
convenience only and shall not in any way effect the meaning or interpretation
of this Plan. Any term defined in the singular shall include the plural, and
vice versa. The words "herein," "hereof" and "hereunder" refer to this Plan as a
whole and not to any particular part of this Plan. The word "including" as used
herein shall not be construed so as to exclude any other thing not referred to
or described.
14.3 FURTHER ASSURANCES. The Company and any holder of an option
shall from time to time execute and deliver any and all further instruments,
documents and agreements and do such other and further acts and things as may be
required or useful to carry out the intent and purpose of this Plan and such
option and to assure to the Company and such option holder the benefits
contemplated by this Plan; PROVIDED, HOWEVER, that neither the Company nor any
option holder shall in any event be required to take any action inconsistent
with the provisions of this Plan.
14.4 GOVERNING LAW. This Plan and each option shall be governed by
the laws of the Commonwealth of Massachusetts.
* * * * *
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