<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MADISON BANCSHARES GROUP, LTD.
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
MADISON BANCSHARES GROUP, LTD.
MADISON BANK BUILDING
1767 SENTRY PARKWAY WEST
BLUE BELL, PENNSYLVANIA 19422
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
-----------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the 1997 Annual Meeting of
Shareholders (the "Annual Meeting") of Madison Bancshares Group, Ltd. (the
"Corporation") will be held on May 20, 1997 at 3:00 p.m., prevailing local time,
at Madison Bank Building, 1767 Sentry Parkway West, Blue Bell, PA 19422 to
consider and act upon:
1. The election of four (4) Class I Directors to serve until
the Annual Meeting of Shareholders in 2000;
2. The adoption of the Corporation's 1997 Stock Option Plan;
3. The ratification of the selection of Deloitte & Touche LLP
as the Corporation's auditors for the 1997 fiscal year; and,
4. The transaction of such other business as may be properly
brought before the Annual Meeting or any adjournment
thereof.
Shareholders of record of the Corporation at the close of
business on April 9, 1997 will be entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof.
All shareholders are cordially invited to attend the Annual
Meeting. Whether or not you plan to attend the Annual Meeting, please complete
and sign the enclosed proxy card and return it promptly to the Corporation in
the enclosed envelope, which requires no postage if mailed in the United States.
At any time prior to their being voted, your proxy is revocable by delivering
written notice to the Corporation in accordance with the instructions set forth
in the Proxy Statement or by voting at the Annual Meeting in person.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING.
April 18, 1997
/s/ Philip E. Hughes, Jr.
-------------------------
Philip E. Hughes, Jr.
Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROXY STATEMENT.................................................................................................-1-
General Information..............................................................................-1-
Voting and Revocability of Proxies...............................................................-1-
Solicitation of Proxies..........................................................................-1-
Voting Securities and Holders Thereof............................................................-2-
Shareholder Proposals for the 1998 Annual Meeting................................................-2-
Nominations for Directors for the 1998 Annual Meeting............................................-2-
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.............................-2-
ELECTION OF DIRECTORS...........................................................................................-4-
Information Concerning Nominees and Continuing Directors.........................................-4-
Nominees and Continuing Directors................................................................-4-
NOMINEES.........................................................................................-4-
Class I Directors.........................................................................-4-
Continuing Directors.............................................................................-5-
Class II Directors........................................................................-5-
Class III Directors.......................................................................-6-
VOTING SECURITIES AND PRINCIPAL HOLDERS.........................................................................-7-
Security Ownership of Management and Beneficial Owners...........................................-7-
Board Committees.................................................................................-8-
Executive Committee..............................................................................-8-
Audit Committee..................................................................................-8-
Executive Compensation/Stock Option Committee....................................................-8-
EXECUTIVE COMPENSATION; RELATED PARTY TRANSACTIONS; AND
CERTAIN INFORMATION CONCERNING OFFICERS..........................................................-9-
Executive Compensation...........................................................................-9-
SUMMARY COMPENSATION TABLE.......................................................................-9-
Employment Agreements...........................................................................-10-
Related Party Transactions......................................................................-11-
Other Officers..................................................................................-12-
PROPOSAL II - ADOPTION OF THE CORPORATION'S 1997 STOCK OPTION PLAN.............................................-13-
Description of the Plan.........................................................................-13-
General..................................................................................-13-
Administration...........................................................................-13-
Stock Options............................................................................-13-
Amendments...............................................................................-14-
Federal Income Tax Consequences..........................................................-14-
Section 162(m)...........................................................................-14-
New Plan Benefits and Future Plan Benefits...............................................-15-
Voting Required For Approval....................................................................-15-
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS..........................................-15-
PROPOSAL III - PROPOSAL TO RATIFY SELECTION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT PUBLIC ACCOUNTANT...................................................................-16-
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS..........................................-16-
OTHER MATTERS ................................................................................................-17-
</TABLE>
i
<PAGE>
MADISON BANCSHARES GROUP, LTD.
MADISON BANK BUILDING
1767 SENTRY PARKWAY WEST
BLUE BELL, PENNSYLVANIA 19422
-----------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 20, 1997
---------------
PROXY STATEMENT
---------------
General Information
This Proxy Statement has been prepared and is being distributed
in connection with the solicitation by the Board of Directors of Madison
Bancshares Group, Ltd. (the "Corporation") of proxies in the enclosed form for
use at the Annual Meeting of Shareholders of the Corporation to be held on May
20, 1997 at 3:00 p.m., prevailing local time, at the Madison Bank Building, 1767
Sentry Parkway West, Blue Bell, PA 19422, and at any adjournment or postponement
thereof. (Such meeting and any adjournment or postponement thereof will be
hereinafter referred to as the "Annual Meeting.") This Proxy Statement is being
first given or sent to Shareholders of the Corporation on or about April 18,
1997.
Voting and Revocability of Proxies
Unless contrary instructions are indicated on the proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
not revoked before they are voted) will be voted FOR the election of the
nominees for Directors named herein, FOR the adoption of the proposal to approve
the Corporation's 1997 Stock Option Plan (the "1997 Plan") and FOR the
ratification of the selection of Deloitte & Touche LLP as the Corporation's
outside auditors described in this Proxy Statement in the manner stated in the
accompanying proxy. As of the date of this Proxy Statement, the Board of
Directors knows of no business that will be presented for consideration at the
Annual Meeting other than that referred to above. If any other business properly
comes before the Annual Meeting, the persons designated in the enclosed proxy
will vote on such business in accordance with the direction of the Board of
Directors.
Any shareholder who executes and returns a proxy may revoke it at
any time before it is exercised by (i) delivering to E. Cheryl Hinkle, Assistant
Secretary of the Corporation, at the principal executive offices of the
Corporation at 1767 Sentry Parkway West, Blue Bell, PA 19422, either an
instrument revoking the proxy, or a duly executed proxy bearing a later date, or
(ii) by attending the Annual Meeting and voting in person.
Solicitation of Proxies
The enclosed proxy is being solicited by the Board of Directors
of the Corporation for use in connection with the Annual Meeting. The cost of
such solicitation will be borne by the Corporation. Proxies may be solicited in
person or by mail, telephone, telegram, mailgram or other means by directors,
officers, employees and management of the Corporation; however, such persons
will not receive any fees for such solicitation. Brokers, nominees, fiduciaries
and other custodians have been requested to forward such soliciting material to
the beneficial owners of shares held of record by them, and such custodians may
be reimbursed for their expenses.
<PAGE>
Voting Securities and Holders Thereof
As of the close of business on April 9, 1997, the record date for
voting at the Annual Meeting, the Corporation had 1,044,033 shares of Common
Stock outstanding, par value $1.00 per share (the "Common Stock"), held by
approximately 302 shareholders of record. The actual number of beneficial
holders of the Corporation's Common Stock is believed to be higher. Holders of
Common Stock are entitled to one vote per share on all matters to be voted upon
at the Annual Meeting. As of the date hereof, there are no other classes of the
Corporation's capital stock issued or outstanding.
Shareholder Proposals for the 1998 Annual Meeting
Any stockholder who intends to present a proposal for
consideration at the Corporation's 1997 Annual Meeting of stockholders must, on
or before December 19, 1997, submit his proposal to the Corporation and notify
the Corporation that he intends to appear personally at the 1998 Annual Meeting
to present his proposal in order to have the Corporation consider the inclusion
of such proposal in the Corporation's 1998 Proxy Statement and form of proxy
relating to the 1998 Annual Meeting. Reference is made to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
information concerning the content and form of such proposal and the manner in
which such proposal must be made.
Nominations for Directors for the 1998 Annual Meeting
Nominations for election to the Board of Directors at the 1998
Annual Meeting may be made only in writing by a Shareholder entitled to vote at
the 1998 Annual Meeting of Shareholders. Such nominations must be sent to the
Chairman or President of the Corporation at the following address: Madison
Bancshares Group, Ltd., 1767 Sentry Parkway West, Blue Bell, Pennsylvania 19422.
Nominations for the 1998 Annual Meeting must be received not less than 14 days
nor more than 50 days prior to the date of the 1998 Annual Meeting. To the
extent known by the nominating Shareholder, the nomination shall contain (i) the
name and address of the nominee; (ii) the principal occupation of each proposed
nominee; (iii) the total number of shares of capital stock of the Corporation
that will be voted for each proposed nominee; (iv) the name and residence of the
nominating Shareholder; and, (v) the number of shares of the Corporation's
capital stock owned by the nominating Shareholder. In the event that less than
twenty-one days notice of the 1998 Annual Meeting is given to Shareholders,
Shareholder nominations to the Board of Directors shall be mailed or delivered
to the Chairman or President of the Corporation not later than the close of
business on the seventh day following the date on which the notice of the Annual
Meeting was mailed to Shareholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Corporation's
directors, certain of its officers and persons who own more than ten percent of
the Corporation's Common Stock (collectively, the "Reporting Persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Corporation with copies of these reports.
Based on the Corporation's review of the copies of these reports
received by it, and representations received from Reporting Persons, the
Corporation believes that all filings required to be made by the Reporting
Persons for the period January 1, 1996 through December 31, 1996 were made on a
timely basis except that one report was not filed by Alan T. Schiffman, a
director of the Corporation.
-2-
<PAGE>
The Corporation will provide, without charge, to each person or
shareholder, upon written request of any such person, a copy of the
Corporation's 1996 Annual Report on Form 10-KSB, including any exhibits thereto
and the Financial Statements thereto. Any such request shall be delivered to E.
Cheryl Hinkle, Assistant Secretary, Madison Bancshares Group, Ltd., 1767 Sentry
Parkway West, Blue Bell, PA 19422.
-3-
<PAGE>
ELECTION OF DIRECTORS
Information Concerning Nominees and Continuing Directors
The Corporation's By-Laws provide for the classification of
Directors into three classes, as nearly equal in number as possible, with
approximately one-third of the Directors to be elected annually for three-year
terms. At the Annual Meeting, there will be four (4) persons elected as Class I
Directors, for terms expiring in 2000. All four (4) of the persons nominated for
election as Class I Directors are presently serving as Directors of the
Corporation.
At each annual meeting subsequent to the Annual Meeting, one
class of Directors will be elected for a 3-year term, with Class III Directors
to be elected in 1998 and Class II Directors to be elected in 1999.
Nominees and Continuing Directors
Set forth below is certain information with respect to each of
the nominees for election to the Board of Directors at the Annual Meeting as
well as each of the other continuing Directors, including name, age, the period
during which such person has served as a Director of the Corporation, such
person's principal occupation and employment during the past five years and the
amount and percentage of the Corporation's Common Stock (based upon 1,044,033
shares of Common Stock issued and outstanding as of April 9, 1997) beneficially
owned (as determined in accordance with Rule 13d-3 of the Exchange Act) by such
person as of April 9, 1997. It is the intention of the persons named in the
accompanying form of proxy to vote for all those nominees listed below.
Each of the persons listed below as nominees has agreed to be
named as a nominee for Director in this Proxy Statement and has consented to
serve as a Director if elected. The Corporation expects all nominees to be
willing and able to serve. The Board of Directors may designate a substitute
nominee to replace any bona fide nominee who was nominated and who, for any
reason, becomes unavailable for election as a Director. If any of the nominees
shall become unable to serve, the persons designated in the enclosed Proxy Card
will vote for the election of such other person or persons as the Board of
Directors may recommend. It is presently anticipated that each person elected as
a Director of the Corporation at the Annual Meeting, will be elected by the
Corporation as a Director of the Corporation's wholly-owned subsidiary, The
Madison Bank (the "Bank"), following the Annual Meeting.
NOMINEES
Class I Directors:
Gary E. Daniels, age 43, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Daniels also serves as a
member of the Corporation's Audit and Executive Compensation/Stock Option
Committees. Mr. Daniels is President of Creative Financial Group Ltd., a full
service financial planning firm, and is a Chartered Life Underwriter and
Chartered Financial Consultant. Mr. Daniels is the founder of the Creative
Financial Charitable Foundation, which sponsors the Variety Club of Philadelphia
and other charitable institutions.
Philip E. Hughes, Jr., age 48, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Hughes also serves as
Secretary/Treasurer and Chief Financial Officer of the Corporation, Vice
Chairman and Treasurer of the Bank and a member of the Executive and Executive
Compensation/Stock Option Committee. Mr. Hughes is an attorney at law, a
certified public accountant and Director of Taxation of Schiffman Hughes Brown,
a regional certified public accounting firm. Mr. Hughes serves on the Board of
the Philadelphia Senior Center and formerly served on the Board of Trustees of
LaSalle University and Chairman of the board of Trustees of the Roxborough YMCA.
-4-
<PAGE>
Kathleen A. Kucer, M.D., age 45, has been a Director of the
Corporation since 1988 and the Bank since 1989. Dr. Kucer also serves as a
member of the Executive and Audit Committees. Dr. Kucer is Chairman of the
Department of Dermatology at Grandview Hospital and the author of scholarly
articles on the subject of Dermatology. Dr. Kucer conducts skin cancer
prevention screenings for the Grand View Community and is an active participant
in Norristown's Habitat for Humanity projects.
Blaine W. Scott, III, age 70, has been a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Scott also serves as a
member of the Corporation's Executive, Audit and Executive Compensation/Stock
Option Committees. Mr. Scott is President of International Medical Insurance
Services, Ltd. And President and Chief Executive Officer of Upper Merion
Investment Corporation, a real estate and restaurant management company. Mr.
Scott is also Secretary/Treasurer and Chief Financial Officer of Baron's Inne.
Mr. Scott was formerly a Trustee of Valley Forge Military Academy and College
and Temple University and a member of the Pennsylvania Republican State
Committee. Mr. Scott is a Director Emeritus of the King of Prussia Chamber of
Commerce.
Continuing Directors
Class II Directors:
Peter DePaul, age 69, has served as a Director of the Corporation
since 1988 and the Bank since 1989. Since March 25, 1996, he has served as
Chairman of the Board of Directors of the Corporation and since April 11, 1996,
as President and Chief Executive Officer of the Corporation and Chairman of the
Bank. Mr. DePaul also serves as a member of the Corporation's Executive, Audit
and Executive Compensation/Stock Option Committees. Mr. DePaul is the Managing
Partner of the DePaul Group of Companies, headquartered in Blue Bell,
Pennsylvania, specializing in the real estate, construction, health care and
hospitality industries. In addition, Mr. DePaul serves on the Board of Trustees
of Temple University, the Board of Directors of the Philadelphia Heart Institute
of Presbyterian Hospital and the Board of Directors of Independence Blue Cross.
Arnold M. Katz, age 57, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Katz also serves as a member
of the Corporation's Executive Committee. Mr. Katz is President of Brokerage
Concepts, Inc., a distributor of life and health insurance. Mr. Katz is Chairman
of the Board of Brokers Service, Inc. and the president of several companies in
the life and health insurance field. Mr. Katz serves as a member of the
executive committee of the Police Athletic League, the Board of Trustees of
Albert Einstein Health Care Foundation and the Golden Slipper Foundation.
Lorraine C. King, M.D., age 55, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Dr. King serves as a member of
the Audit and Executive Compensation/Stock Option Committees. Dr. King
specializes in the field of reproductive endocrinology and infertility and is
President of L.C. King M.D., P.C. and Diagnostic Endocrinology Associates. Dr.
King is a member of the Philadelphia College of Physicians and an Associate of
Professor of OB/GYN. Dr. King is also a staff physician at Thomas Jefferson
University Hospital and the author of scholarly articles on the subject of
reproductive endocrinology.
Michael O'Donoghue, age 54, has served as a Director of the
Corporation and the Bank since 1991. Mr. O'Donoghue serves as Chairman of the
Audit Committee, member of the Executive Committee and Executive
Compensation/Stock Option Committee. Mr. O'Donoghue is a senior partner in the
law firm of Wisler, Perlstein, Talone, Craig, Garity and Potash located in Blue
Bell, Pennsylvania. Mr. O'Donoghue serves as a member of the Board of Directors
of the Southeastern Pennsylvania Transportation Authority (SEPTA). Mr.
O'Donoghue formerly served on the Board of Directors of the Montgomery County
Bar Association and as editor of the Montgomery County Law Reporter.
-5-
<PAGE>
Class III Directors:
Vito A. DeLisi, age 48, has served as a Director and Executive
Vice President of the Corporation since 1988 and President and Chief Executive
Officer of the Bank since 1989. Mr. DeLisi also serves as chairman of the
Executive Committee.
John P. Horton, age 72, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Dr. Horton is chairman of the
Executive Compensation/Stock Option Committee and serves as a member of the
Executive and Audit Committees. Dr. Horton is President of Rokalor, Inc., a
management consulting firm and a Director of Versar, Inc., a public company
which provides consulting services to hazardous waste facilities. Dr. Horton
formerly served as Chairman of the Clean Air Council of New Jersey and Assistant
Administrator of the United States Environmental Protection Agency.
Francis R. Iacobucci, age 67, has served as a Director of the
Corporation since 1988 and the Bank since 1989. Mr. Iacobucci also serves as a
member of the Executive Compensation/Stock Option Committee. Mr. Iacobucci is
President and co-founder of the Iacobucci Organization and Consolidated
Carpenters, Inc., builder of residential housing and commercial and industrial
complexes.
Donald J. Reape, age 59, has been a Director of the Corporation
and the Bank since 1994. Mr. Reape is President of Donald J. Reape and
Associates, a real estate company specializing in appraisals, mortgage banking
and development.
Alan T. Schiffman, age 55, has been a Director of the Corporation
since 1988 and the Bank since 1989. Mr. Schiffman was formerly Chairman,
President and Chief Executive Officer of the Corporation and Chairman of the
Bank. Mr. Schiffman is the President of Schiffman Hughes Brown, certified public
accountants.
-6-
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Management and Beneficial Owners
The following table sets forth information as of April 9, 1997
with respect to the shares of the Corporation's Common Stock beneficially owned
by each director and executive officer of the Corporation and by all directors
and executive officers as a group. Except as disclosed by the table, there are
no other entities or persons known to the Corporation to be the beneficial owner
of more than five (5%) percent of the shares of the Corporation's Common Stock
(based on 1,044,033 shares of the Corporation's Common Stock outstanding as of
April 9, 1997).
<TABLE>
<CAPTION>
Shares Beneficially Percentage of
Name Owned (1) Class (1)
- ---- --------- ---------
<S> <C> <C>
Gary E. Daniels (2) 11,994 1.1%
Vito A. DeLisi (3) 63,285 5.8%
Peter D. DePaul (4) 99,708 9.5%
John P. Horton (5) 8,727 *
Philip E. Hughes, Jr. (6) 25,585 2.4%
Francis R. Iacobucci (7) 20,430 2.0%
Arnold M. Katz (8) 35,613 3.4%
Lorraine C. King, M.D. (9) 18,918 1.8%
Kathleen A. Kucer, M.D. (10) 13,917 1.3%
Michael O'Donoghue 6,559 *
Donald J. Reape 15,115 1.5%
Alan T. Schiffman (11) 112,898 10.5%
Blaine W. Scott, III (12) 9,993 *
All Directors as a group
(13 persons ) (13) 442,742 38.0%
All Directors and officers as a group
(15 persons) (14) 453,043 38.5%
</TABLE>
* less than one (1%) percent.
(1) Calculated in accordance with Rule 13d-3 of the Exchange Act.
(2) Includes 4,144 immediately exercisable warrants to purchase shares of the
Corporation's Common Stock ("Warrants").
(3) Includes 51,078 immediately exercisable options to purchase shares of the
Corporation's Common Stock ("Options").
(4) Includes 8,716 immediately exercisable Warrants. Mr. DePaul is the
brother-in-law of Mr. O'Donoghue.
-7-
<PAGE>
(5) Includes 877 immediately exercisable Warrants.
(6) Includes 3,565 immediately exercisable Warrants.
(7) Includes 5,286 immediately exercisable Warrants.
(8) Includes 4,225 immediately exercisable Warrants.
(9) Includes 3,774 immediately exercisable Warrants.
(10) Includes 2,428 immediately exercisable Warrants.
(11) Includes 34,328 immediately exercisable Options and Warrants.
(12) Includes 2,633 immediately exercisable Warrants.
(13) Includes 121,054 immediately exercisable Options and Warrants.
(14) Includes 131,355 immediately exercisable Options and Warrants.
Board Committees
The Corporation's Board of Directors has standing Executive,
Audit and Executive Compensation/Stock Option committees.
Executive Committee. The Executive Committee is composed of the
following Directors: Messrs. DeLisi, (Chairman), DePaul, Horton, Hughes, Katz,
O'Donoghue, Scott and Dr. Kucer. The Executive Committee is authorized by the
entire Board of Directors to exercise all of the authority of the Board in the
management of the Corporation between Board meetings, unless otherwise provided
in the Corporation's by-laws. The Executive Committee held 12 meetings during
1996.
Audit Committee. The Audit Committee is composed of the following
independent Directors: Messrs. O'Donoghue (Chairman), Daniels, DePaul, Horton
and Scott and Drs. King and Kucer. The Audit Committee provides general
financial oversight in financial reporting and the adequacy of the Corporation's
internal controls through periodic meetings with the Corporation's management
and its independent auditors. The Audit Committee held 1 meeting during 1996.
Executive Compensation/Stock Option Committee. The Executive
Compensation/Stock Option Committee is composed of the following Directors:
Messrs. Horton (Chairman), DePaul, Iacobucci, Hughes, Scott, O'Donoghue, Katz
and Drs. King and Kucer. The Compensation Committee provides general oversight
in all employee personnel matters through periodic meetings with management of
the Corporation. The Executive Compensation/Stock Option Committee held 2
meetings during 1996.
The Corporation does not have a standing nominating committee.
During 1996, the Corporation's Board of Directors held 14
meetings. [Of the continuing directors and nominees, one director, Kathleen A.
Kucer, attended fewer than 75% of the aggregate number of meetings of the Board
of Directors of the Corporation and the Bank and meetings of the committees on
which such director served.]
-8-
<PAGE>
EXECUTIVE COMPENSATION; RELATED PARTY TRANSACTIONS; AND
CERTAIN INFORMATION CONCERNING OFFICERS
Executive Compensation
The following table shows the annual compensation of the Chief
Executive Officer of each of the Corporation and the Bank and the Bank's most
highly compensated executive officers for the fiscal years 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
Securities All other
Underlying Compensation
Name & Principal Year Salary ($) Bonus ($) Options/SARs ($) (i)
---------------- ---- ---------- --------- ------------ -------
Position (a) (b) (c) (d) (#) (g)
----------------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
Vito A. DeLisi 1996 $175,000 $50,000 0 $13,371(1)
Executive Vice President and 1995 175,000 55,000 3,000 11,382(2)
Director of the Corporation; 1994 175,000 26,000 0 11,215(3)
President, Chief Executive
Officer and Director of the
Bank
Thomas J. Coletti, 1996 $102,300 $15,000 0 $2,446(4)
Executive Vice President of the 1995 102,300 16,500 4,000 1,790(5)
Bank 1994 102,300 6,500 0 2,616(6)
</TABLE>
(1) Includes $4,725 paid to Mr. DeLisi for his services as a director, $5,292
paid by the Bank for premium on life and disability insurance policies for
the benefit of Mr. DeLisi and $3,354 contributed by the corporation to a
defined contribution plan for the benefit of Mr. DeLisi.
(2) Includes $3,900 paid to Mr. DeLisi for his services as a director, $5,292
paid by the Bank for premium on life and disability insurance policies for
the benefit of Mr. DeLisi and $2,190 contributed by the corporation to a
defined contribution plan for the benefit of Mr. DeLisi.
(3) Includes $2,600 paid to Mr. DeLisi for his services as a director, $5,904
paid by the Bank for premiums on life and disability insurance policies for
the benefit of Mr. DeLisi and $2,711 contributed by the Corporation to a
defined contribution plan for the benefit of Mr. DeLisi.
(4) Includes $296 paid by the Bank for premiums on a life insurance policy for
the benefit of Mr. Coletti and $2,150 contributed by the Bank to a defined
contribution plan for the benefit of Mr. Coletti.
(5) Includes $296 paid by the Bank for premiums on a life insurance policy for
the benefit of Mr. Coletti and $1,494 contributed by the Bank to a defined
contribution plan for the benefit of Mr. Coletti.
(6) Includes $296 paid by the Bank for premiums on a life insurance policy for
the benefit of Mr. Coletti and $2,320 contributed by the Bank to a defined
contribution plan for the benefit of Mr. Coletti.
-9-
<PAGE>
No options were granted by the Corporation during 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d)
# of Securities Underlying
Shares Acquired Value Unexercised Options at FY-End (#)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable
---- --------------- ------------ -------------------------
<S> <C> <C> <C>
Vito A. DeLisi 0 0 27,009
27,009
Thomas J. Coletti 0 0 6,698
6,698/0
</TABLE>
During 1996, members of the Boards of Directors of the
Corporation and the Bank were compensated at the following rates for their
services:
Per Board Meeting Attended $350
Per Committee Meeting Attended $250
During 1996, an aggregate of $115,325 was paid to directors for
their services. No director received more than $19,400.
Employment Agreements
Vito A. DeLisi. Mr. DeLisi's prior employment agreement expired
on December 31, 1995. The Corporation and Mr. DeLisi have reached an agreement
pursuant to which Mr. DeLisi will continue to serve as President of the
Corporation and President and Chief Executive Officer of the Bank. Mr. DeLisi
will continue to receive an annual base salary of $175,000, a car allowance,
four (4) weeks of paid vacation, reimbursement of expenses reasonably incurred
in the performance of his duties and life insurance in the face amount of
$1,000,000. During the term of Mr. DeLisi's service with the Corporation and the
Bank and for a further period of one (1) year following termination of such
service, Mr. DeLisi will be prohibited from associating in any capacity (other
than as a less than 5% shareholder or a customer) with any corporation or bank
which competes with the Corporation and/or with the Bank in the counties of
Philadelphia, Bucks, Montgomery, Delaware or Chester, Pennsylvania or in the
areas of New Jersey or Delaware in which the Bank competes.
In the event that Mr. DeLisi's services were terminated due to
disability, he will be entitled to the continuation of his annual salary and/or
the payment to him of benefits under any disability insurance policy up to the
aggregate amount of $200,000. Mr. DeLisi has been granted stock options to
purchase an aggregate number of shares of the Common Stock of the Corporation
equal to 5% of the issued and outstanding Common Stock immediately prior to any
merger or acquisition. Such options will only be exercisable by Mr. DeLisi in
the event of such a merger or acquisition where the Corporation would not be the
surviving entity (including, for this purpose, any change in the ownership of a
majority of the Corporation's issued and outstanding Common Stock or a sale of
all or substantially all of the Corporation's assets) (collectively, a "Change
of Control") and his employment were terminated by him or the
-10-
<PAGE>
surviving entity failed to agree to retain his services for a period of one year
following such Change of Control. Such options would be exercisable for a period
of 5 years at an exercise price equal to the highest per share price to be paid
by the surviving or acquiring entity. In addition, Mr. DeLisi would be entitled
to receive a lump sum payment equal to the total compensation paid to him or
earned by him for the twelve month period preceding the termination of his
services to the Corporation, up to an aggregate amount of $200,000.
Thomas J. Coletti. Mr. Coletti's prior employment agreement
expired August 31, 1995. The Bank and Mr. Coletti have reached an agreement
pursuant to which Mr. Coletti will continue to serve as Executive Vice President
of the Bank at an annual salary of $102,300. Mr. Coletti has been granted stock
options to purchase an aggregate number of shares of the Common Stock of the
Corporation equal to 1% of the issued and outstanding Common Stock immediately
prior to any Change of Control. Such options will only be exercisable in the
event of a Change of Control and Mr. Coletti's employment were terminated by him
or the surviving entity failed to agree to retain his services for a period of
one year following such Change of Control. Such options would be exercisable for
a period of 5 years at an exercise price equal to the highest per share price to
be paid by the surviving or acquiring entity. In addition, Mr. Coletti would be
entitled to receive a lump sum payment equal to one-half the total compensation
paid to him or earned by him for the twelve month period preceding the
termination of his services to the Corporation, up to an aggregate amount of
$100,000.
E. Cheryl Hinkle. Ms. Hinkle serves as Vice President, Assistant
Secretary and Treasurer of the Corporation and Senior Vice President, Secretary
and Treasurer of the Bank. Ms. Hinkle has been granted stock options to purchase
an aggregate number of shares of the Common Stock of the Corporation equal to 1%
of issued and outstanding Common Stock. Such options will only be exercisable in
the event of a Change of Control and Ms. Hinkle's employment were terminated by
her or the surviving entity failed to agree to retain her services for a period
of one year following such Change of Control. Such options would be exercisable
for a period of 5 years at an exercise price equal to the highest per share
price to be paid by the surviving or acquiring entity. In addition, Ms. Hinkle
would be entitled to receive a lump sum payment equal to one-half the total
compensation paid to her or earned by her for the twelve month period preceding
the termination of her services to the Corporation, up to an aggregate amount of
$100,000.
Related Party Transactions
Except as set forth below, there are no other existing or
proposed direct or indirect material transactions between the Corporation or the
Bank and any of its officers, directors, promoters, or any associates of the
foregoing, outside the ordinary course of the Bank's and the Corporation's
business.
An accounting firm of which Messrs. Schiffman and Hughes are
principals provided services to the Corporation and the Bank during 1996 and was
compensated for its services in the aggregate amount of approximately $3,585.
Certain of the Directors, including Peter D. DePaul, and Philip
E. Hughes, Jr., executive officers of the Corporation, and Alan T. Schiffman,
own the Madison Bank Building (the "Building") where the Corporation and the
Bank have maintained their principal offices since 1989. The Corporation and the
Bank were advised by an independent real estate firm at the outset of the lease
for such principal office (the "Lease") that the Lease was on terms which are
commercially reasonable and typical of those found for similar leases in the
Blue Bell, Pennsylvania area. The Corporation currently leases approximately
12,481 square feet (including 3,381 square feet leased by the Corporation on
February 1, 1996) on the first floor of the Building. The space is occupied by
both the Corporation and the Bank and serves as the Bank's primary banking
location. The space contains a banking area, lobby, operations center and a
vault together with administrative and executive offices. The initial term of
the Lease expired on August 31, 1994, and the Corporation exercised the first of
two five year renewal options. Annual base rental payments are $142,092 during
the current option term. For the second five-year option period, beginning
January 1, 2000, the amount of the base rental payments will increase to
$164,700 per annum. In addition to the base rents referred to above, the
Corporation is required to pay its pro rata share of the Building's operating
costs, including real estate taxes, water and sewer charges,
-11-
<PAGE>
equipment maintenance charges, exterior maintenance and upkeep, common area
electric charges, trash removal, and certain other similar items. For 1996, the
amount of such expenses was $31,080. The minimum allocable portion of the
Building's operating costs will ultimately increase to $51,684 for the final
year of the second option period. The additional 3,381 square feet are leased at
an annual rate of approximately $58,660.
A law firm in which Mr. O'Donoghue is a partner provided certain
legal services to the Corporation and the Bank during 1996 and received
compensation for its services in the aggregate amount of approximately $3,000.
From time to time, companies with which certain of the other
directors of the Corporation and the Bank are affiliated provide services to the
Corporation and/or the Bank for which they are compensated.
Certain of the directors and officers of the Bank, and companies
with which they are associated, have and will enter into banking relationships
and transactions with the Bank in the ordinary course of business. Any loans to
such persons or commitments to make such loans are required by law to be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons of similar
creditworthiness. At December 31, 1996, the aggregate amount of such loans was
$5,929,059 or 74% of total shareholder's equity. When appropriate, each such
banking relationship and transaction has been or will be approved by the Bank's
Board of Directors or an appropriate committee thereof with any interested
director not voting on such transaction.
Other Officers
Set forth below is certain information with respect to Thomas J.
Coletti and E. Cheryl Hinkle, the officers of the Corporation or the Bank who
are not also directors of the Corporation or the Bank, including such officers'
ages, principal employment prior to joining the Corporation and the Bank and the
amount and percentage of the Corporation's Common Stock, if any, beneficially
owned as of April 9, 1997.
<TABLE>
<CAPTION>
Corporation's Common Stock
Beneficially Owned
Principal Occupation Prior Directly or Indirectly,
Name/Position Age to Joining Corporation on , 1997
- ------------- --- ---------------------- --------------------------
<S> <C> <C> <C>
Percent of
Amount Outstanding
------ ------------
Thomas J. Coletti 43 Senior Vice President 9,082(1) *
Executive Vice President of the Progress Federal Savings
Bank Bank, Plymouth Meeting,
PA, 1983 to March, 1990.
E. Cheryl Hinkle 42 Banking/Financial 4,020(2) *
Senior Vice President of the Bank Consultant, CFC Financial
and Vice President of the Bank Services (subsidiary of
Company PNC Financial Corp.),
Louisville, KY, August 1987 to
August 1988; Senior Vice
President, Century Bank,
Oklahoma City, OK, 1982 to
August, 1987.
</TABLE>
- ------------------------
(1) Includes 6,698 immediately exercisable Options.
(2) Includes 3,603 immediately exercisable Options.
* less than one (1%) percent
-12-
<PAGE>
PROPOSAL II
ADOPTION OF THE CORPORATION'S 1997 STOCK OPTION PLAN
The Board of Directors of the Corporation has approved, and
proposed for submission for shareholder approval, the Madison Bancshares Group,
Ltd. 1997 Stock Option Plan (the "Plan"). The Plan is intended to provide an
incentive to employees (including employee directors), non-employee directors
and independent contractors or consultants through the issuance of options to
purchase shares of Common Stock. The approval of this Proposal II is a condition
precedent to the implementation of the Plan.
The Board of Directors believes that the Corporation's ability to
grant awards under the Plan is a valuable and necessary compensation tool that
aligns the long-term financial interests of employees and directors with the
financial interests of the Corporation's shareholders. The Board of Directors
also believes that the Plan will contribute to the success of the Corporation by
improving its ability to attract, motivate and retain key employees and
directors.
Description of the Plan
The Plan as proposed is set forth as Exhibit "A" to this Proxy
Statement, and the description of the Plan contained herein is qualified in its
entirety by reference to Exhibit "A".
General. The Plan, as proposed, provides for the issuance of
options to purchase up to 500,000 shares of Common Stock. Persons eligible for
participation in the Plan include key employees (including employees who also
serve as directors), non-employee directors and independent contractors or
consultants (collectively, "Participants"). As of April 9, 1997, all of the
Corporation's full-time employees and non-employee directors, or a total of
approximately 50 persons, would have been eligible to participate in the Plan.
The Plan provides for the granting of options intended to qualify as Incentive
Stock Options ("ISOs") and of nonqualified stock options ("NQSOs") as defined in
Section 422 of the Internal Revenue Code. NQSOs and ISOs are sometimes
collectively hereinafter referred to as "Options".
Administration. The Plan would be administered and interpreted by
a committee of the Board (the "Committee") consisting of two or more persons
("Outside Directors") designated by the Board. The Committee has the full power
to administer and interpret the Plan.
Stock Options. Only officers and employees of the Company would
be eligible to receive ISOs. All Participants may receive NQSOs. The exercise
price of all Options granted would not be less than the Fair Market Value (as
such term is defined in the Plan) of the Corporation's Common Stock on the date
of grant or such higher price as the Committee may determine. On April 9, 1997,
the closing price of the Corporation's Common Stock on the NASDAQ SmallCap
Market was $10.50 per share. Options may be granted for a term of up to ten
years from the date of grant, subject to earlier termination on the optionee's
death, disability or termination of employment or relationship with the
Corporation. In addition, in the event that the Corporation adopts a plan of
reorganization pursuant to which it would merge into, consolidate with or sell
its assets to any other corporation or entity, the Participant would (i) be
required to exercise all such Options or (ii) consent to the conversion of such
Options into options to purchase shares of the acquiring entity's shares or
(iii) receive the same consideration as received by other holders of the
Corporation's Common Stock reduced by an amount equal to the exercise price of
such Options. Options would be assignable or otherwise transferable to the
extent permitted by applicable securities laws. The exercise price of an option
would be payable in cash or by such other method as the Committee may approve.
Shares subject to Stock Options granted under the Plan which have lapsed or
terminated may be regranted under the Plan. The Committee may offer to exchange
new options for existing options, with the shares subject to the existing
options being again available for grant under the Plan. The Committee may also
determine (i) circumstances upon which Stock Options would become immediately
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<PAGE>
exercisable, (ii) to accelerate the exercisability of any Stock Options and
(iii) to extend the period of exercise upon termination of employment .
No Options have been granted under the Plan pending shareholder
approval, and the Corporation does not currently plan to grant any such Options
until and unless the Plan is approved by the shareholders.
Amendments. The Committee has the full authority to amend the
Plan, subject to the consent of the Participants in certain instances.
Federal Income Tax Consequences. The federal income tax
consequences of an employee's participation in the Plan are complex and subject
to change. The following discussion is only a summary of the general rules and
participants in the Plan should consult their own tax advisors regarding their
particular situation.
There are no federal income tax consequences to the Participant
or the Corporation upon the grant of NQSOs. Upon the exercise of Options, the
Participant will realize ordinary income in the amount by which the Fair Market
Value of the option stock exceeds the exercise price of the Option. The
Corporation is allowed a deduction for federal income tax purposes equal to the
amount of ordinary income recognized by the Participant at the time of exercise
of NQSOs. The Participant's holding period for purposes of determining whether
any subsequently realized gain or loss will be long-term or short-term will
begin at the time the Participant recognizes ordinary income. If, at the time of
issuance of the shares, the Participant is subject to the restrictions of
Section 16(b) of the Exchange Act, then the Participant generally will recognize
ordinary income as of the later of (i) the date of exercise, or (ii) the
expiration of six months from the date of grant of the Option, based upon the
difference between the Fair Market Value of the shares at such time and the
exercise price.
Except as provided below with respect to "disqualifying
dispositions", there generally is no regular federal income tax consequences
upon the exercise of an ISO. However, for purposes of computing any alternative
minimum tax liability, the amount by which the Fair Market Value of the shares
issuable under the Option at the time of exercise exceeds the option price (or
other tax basis in the shares) is an item of tax preference subject to the
alternative minimum tax applicable to the person exercising the Option. The
Company is not entitled to a deduction upon the exercise of an ISO. A sale of
shares acquired by exercise of an ISO that does not occur within one year after
the exercise, or within two years after the grant of the Option, generally will
result in the recognition of long-term capital gain or loss in an amount equal
to the difference between the amount realized from the sale and the
Participant's tax basis in the shares, assuming that the shares were held as
capital assets. The Company is not entitled to any tax deduction in such event.
However, if the sale occurs within one year from the date of exercise or within
two years from the date of grant (a "disqualifying disposition") the Participant
will recognize ordinary income equal to the lesser of (i) the excess of the Fair
Market Value of the shares on the date of exercise of the Options over the
option price (or the Participant's other tax basis in the shares), or (ii) the
excess of the amount realized on the sale of the shares over the option price
(or the Participant's other tax basis in the shares). Any amount realized on a
disqualifying disposition in excess of the amount treated as ordinary income (or
any loss realized) will be a long-term or short-term capital gain (or loss),
depending upon the length of time the shares were held and assuming that the
shares were held as capital assets. If, at the time of issuance of the option
shares, the Participant is subject to the restriction of Section 16(b) of the
Exchange Act, then the Fair Market Value of shares acquired upon exercise of an
ISO generally will be determined as of the later of (i) the time of exercise, or
(ii) the expiration of six months from the date of grant of the Option. The
Company generally will be entitled to a tax deduction on a disqualifying
disposition in the amount and at the time the ordinary income is recognized by
the Participant assuming that such amount constitutes an ordinary and necessary
business expense to the employer corporation.
Section 162(m). Under Section 162(m) of the Code, The Corporation
may be precluded from claiming a federal income tax deduction for total
remuneration in excess of $1,000,000 paid to the chief executive officer or to
any of the other four most highly compensated officers in any one taxable year.
Total remuneration would include amounts received upon the exercise of Options.
-14-
<PAGE>
New Plan Benefits and Future Plan Benefits. Plan benefits
(assuming that the Plan was in place during the 1996 fiscal year) to the
Corporation's Chief Executive Officer, other executive officers and directors
are not determinable because no Options were granted by the Corporation during
the 1996 fiscal year. Similarly, Future Plan Benefits under the Plan are not
determinable since grants of Options are at the discretion of the Committee.
Voting Required For Approval
Approval of this Proposal II, the adoption of the Corporation's
1997 Stock Option Plan, requires the affirmative vote of a majority of the
shares of the Corporation's Common Stock, in person or by proxy, at the Annual
Meeting. Abstentions and broker non-votes (i.e., proxies as to which a broker
grants no authority with respect to this Proposal) shall be counted as voting
neither for nor against this Proposal, but the shares represented by such
abstention or broker non-vote shall be considered present at the Annual Meeting
for purposes of determining whether a quorum is present.
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS
THE PROPOSED PLAN IS INTENDED TO REPLACE THE COMPANY'S EXISTING
STOCK OPTION PLAN WHICH WILL EXPIRE IN 1999. THE PROPOSED PLAN AND THE EXISTING
PLAN ARE SUBSTANTIALLY SIMILAR IN THEIR TERMS EXCEPT THAT, AMONG OTHER THINGS,
THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF OPTIONS
TO BE GRANTED UNDER THE PROPOSED PLAN HAS BEEN INCREASED TO 500,000 FROM THE
9,860 SHARES WHICH REMAIN ISSUABLE UNDER THE EXISTING PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
-15-
<PAGE>
PROPOSAL III
PROPOSAL TO RATIFY SELECTION OF
DELOITTE & TOUCHE LLP AS
INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors has selected Deloitte & Touche LLP
("Deloitte & Touche") as independent public accountants to examine and verify
the accounts of the Corporation for the 1997 fiscal year, and to report thereon
to the Board of Directors and the Shareholders. This selection will be submitted
for ratification or rejection at the 1997 Annual Meeting.
The Corporation's financial statements for the year ended
December 31, 1996, were examined by Deloitte & Touche, independent public
accountants. The Audit Committee of the Corporation's Board of Directors meets
with representatives of Deloitte & Touche periodically to review the nature and
scope of services performed by that firm.
Deloitte & Touche has no interest in or relationship with the
Corporation except in the capacity of independent public accountants, nor has
that firm had any other interest or relationship with the Corporation in the
past.
Representatives of Deloitte & Touche are expected to be present
at the 1997 Annual Meeting. Such representatives will have the opportunity at
the Annual Meeting to make a statement if they so desire and will be available
to respond to appropriate Shareholder questions.
RECOMMENDATION OF THE CORPORATION'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
-16-
<PAGE>
OTHER MATTERS
Management does not know of any other matters to come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons designated as proxies to vote in accordance with
the directors of the Board of Directors.
PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED WHITE PROXY CARD IN
THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING.
By Order of the Board of Directors,
/s/ Philip E. Hughes, Jr.
---------------------------------
Philip E. Hughes, Jr.
Secretary
-17-
<PAGE>
EXHIBIT A
MADISON BANCSHARES GROUP, LTD.
1997 STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this 1997 Stock Option Plan
("Plan") of Madison Bancshares Group, Ltd. (the "Company"), is to promote the
interests of the Company by providing incentives to (i) designated officers and
other key employees of the Company and (ii) non-employee members of the
Company's Board of Director, to attract and retain such persons and to encourage
them to acquire or increase their proprietary interest in the Company and to
maximize the Company's performance during the term of their employment or period
of service with the Company.
2. Definitions. As used in the Plan, unless the context requires
otherwise, the following terms shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) The "Committee" shall mean a committee composed of two or
more members of the Board each of whom shall be an "Outside Director"
(as such term is defined under the Internal Revenue Code of 1986, as
amended (the "Code").
(c) "Common Stock" shall mean the common stock, par value
$1.00 per share of the Company, or if, pursuant to the adjustment
provisions set forth in Section 12 hereof, another security is
substituted for the Common Stock, such other security.
(d) "Fair Market Value" shall mean the fair market value of
the Common Stock on the Grant Date (as hereinafter defined) or other
relevant date. If on such date the Common Stock is listed on a stock
exchange or is quoted on the Nasdaq Stock Market National Market (the
"NMS"), the Fair Market Value shall be the closing sale price (or if
such price is unavailable, the average of the high bid price and the
low asked price) on such date. If on such date the Common Stock is
traded in the over-the-counter market (but not on the NMS), the Fair
Market Value shall be the average of the high bid and the low asked
price on such date (or if there are no reported bid and asked prices on
the Grant Date, then the average between the high bid price and the low
asked price on the next preceding day for which such quotations exist).
If the Common Stock is neither listed or admitted to trading on any
stock exchange, quoted on the NMS or traded in the over-the counter
market, the Fair Market Value shall be determined in good faith by the
Committee in accordance with generally accepted valuation principles
and such other factors as the Committee reasonably deems relevant.
(e) "Grant Date" shall mean the date on which an Option is
granted.
(f) "Option" shall mean the right, granted pursuant to the
Plan, to purchase one or more shares of Common Stock. "Incentive Stock
Option" and "Nonqualified Stock Option" shall have the meanings
ascribed to such terms in Section 422 of the Code.
(g) "Optionee" shall mean a person to whom an Option has been
granted under the Plan.
(h) "Option Shares" shall mean the Common Stock issuable upon
exercise of an Option.
3. Stock Subject to the Plan. There will be reserved for issuance upon
the exercise of Options granted from time to time under the Plan an aggregate of
500,000 shares of Common Stock (subject to adjustment as set forth in Section 11
hereof.) The Board shall determine from time to time whether all or part of such
500,000 shares shall be authorized but unissued shares of Common Stock or issued
shares of Common Stock which shall have been reacquired by the Company and which
are held in its treasury. If any Option granted under the Plan expires or
terminates for any
<PAGE>
reason without having been exercised in full, the shares subject to such Option
will again become available for the grant of Options under the Plan.
4. Administration of the Plan. The Plan shall be administered by the
Committee.
(a) Subject to the provisions of the Plan, the Committee shall
have full discretion and sole authority:
(i) To designate the officers, employees and
non-employee directors of the Company to whom Options will be
granted, to determine whether an Optionee will be granted
Incentive Stock Options or Nonqualified Stock Options, to
designate the number of Option Shares to be issuable upon
exercise of an Option, and to determine the time or times at
which Options shall be granted;
(ii) Subject to Sections 6(a) and 7(a) hereof to
determine the exercise price of Options granted hereunder;
(iii) To interpret the Plan;
(iv) To promulgate, amend and rescind rules,
regulations, agreements and instruments relating to the Plan,
provided, however, that no such rules or regulations shall be
inconsistent with any of the terms of the Plan;
(v) To subject any Option to such additional terms
and conditions (not inconsistent with the Plan) as may be
specified when granting the Option, including, without
limitation, vesting and additional restrictions or conditions
on the exercise of an Option;
(vi) To determine circumstances upon which Options
will become immediately exercisable and to accelerate the
exercisability of any Option; and
(vii) To make all other determinations in connection
with the administration of the Plan.
(b) The Committee's interpretations of the Plan and all
determinations made by the Committee pursuant to the powers vested in
it hereunder shall be conclusive and binding on all persons having
interests in the Plan or in any Option granted under the Plan.
(c) Each member of the Committee shall be indemnified and held
harmless by the Company against any cost or expense (including counsel
fees) reasonably incurred by him or her, or liability (including any
sum paid in settlement of a claim with the approval of the Company)
arising out of any act or omission to act in connection with the Plan,
unless arising out of such member's own fraud or bad faith, to the
extent permitted by applicable law. Such indemnification shall be in
addition to any rights of indemnification the members may have as
directors or otherwise under the Certificate of Incorporation or
By-Laws of the Company, any agreement of shareholders or disinterested
directors or otherwise.
5. Eligibility. Optionees shall be selected by the Committee from among
the officers, key full-time employees and non-employee directors of the Company.
6. Incentive Stock Options. The following provisions shall apply solely
with respect to Options which are specifically designated by the Committee as
"Incentive Stock Options" at the time of grant:
(a) Option Exercise Price. The price (the "Exercise Price") at
which Option Shares shall be purchased upon exercise of any Incentive
Stock Option shall be not less than the Fair Market Value of such
shares on the Grant Date, except that if on the Grant Date an Optionee
owns Common Stock (as determined
-2-
<PAGE>
under section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company, if any,
then the Exercise Price of an Incentive Stock Option granted to such
Optionee shall not be less than 110% of the Fair Market Value of such
shares on the Grant Date and, notwithstanding Section 6(b) hereof, such
Incentive Stock Option will cease to be exercisable five (5) years
after the Grant Date.
(b) Term. Except as otherwise provided in Sections 6(a) and 10
hereof, each Incentive Stock Option granted hereunder will be
exercisable for a term of ten (10) years from the Grant Date.
(c) Restriction on Exercise. The Fair Market Value (as
determined on the Grant Date) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any
person during any calendar year (under this Plan and all other plans of
the Company cannot be greater than $100,000.
7. Nonqualified Stock Options. The following provision shall apply with
respect to Options which are designated by the Committee as "Nonqualified Stock
Options" at the time of grant:
(a) Option Exercise Price. The Exercise Price of a
Nonqualified Stock Option shall be not less than the Fair Market Value
of such shares on the Grant Date.
(b) Term. Except as otherwise provided in Section 10 hereof,
each Nonqualified Stock Option granted hereunder will be exercisable
for a term of ten (10) years from the Grant Date.
(c) Designation. Any Option which is not specifically
designated by the Committee as an Incentive Stock Option shall
automatically be deemed to be a Nonqualified Stock Option.
8. Vesting of Option. The vesting period, if any, for all Options
granted hereunder shall commence on the Grant Date and shall end on the date or
dates, determined by the Committee.
9. Method of Exercise. Optionees may exercise their Options from time
to time by giving written notice to the Company. The date of exercise shall be
the date on which the Company receives such notice. Such notice shall be on a
form furnished by the Company and shall state the number of Option Shares to be
purchased, the aggregate Exercise Price and shall be accompanied by payment in
full of the Exercise Price for the number of Option Shares to be delivered, such
payment to be by (i) a certified or bank cashier's check, (ii) by transfer to
the Company of capital stock of the Company having a Fair Market Value on the
date of exercise equal to the aggregate Exercise Price, (iii) by notifying the
Company to subtract from the number of Option Shares issuable to such Optionee,
that number of Option Shares having a Fair Market Value equal to the aggregate
Exercise Price, or (iv) any combinations of (i) - (iii). As soon as practicable
thereafter, the Company shall deliver to the Optionee (or other person entitled
to exercise the Option) at the principal office of the Company, or such other
place as shall be mutually acceptable, a certificate or certificates for such
Option Shares.
10. Termination of Employment. Except as set forth below, in the event
that an Optionee's employment terminates for any reason, any Options then
exercisable shall automatically terminate sixty days after the date on which
such employment terminates unless exercised.
(a) In the event that an Optionee's employment terminates by
reason of retirement, the Committee shall have the right to extend the
termination date of such Optionee's Options until the earlier of (x)
three months after the date of retirement or (y) the date on which such
Options would otherwise terminate pursuant to Sections 6(a), 6(b) and
7(b) hereof.
(b) In the event that an Optionee's employment terminates by
reason of disability, such Optionee's Options shall be extended to a
date one year after the date of disability of the Optionee (such date
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to be determined by the Committee), but in any event not later than the
date on which such Options would otherwise terminate pursuant to
Sections 6(a), 6(b) and 7(d) hereof.
(c) In the event that an Optionee's employment terminates by
reason of death, an Option exercisable by him shall terminate on the
earlier of (i) one year after the date of death, and (ii) the date on
which such Options would otherwise terminate pursuant to Sections 6(a),
6(b) and 7(b) hereof. During such time after death, an Option may only
be exercised by the Optionee's personal representative, executor or
administrator, as the case may be. No exercise permitted by this
Section 10 shall entitle an Optionee or his personal representative,
executor or administrator to exercise any Option which is not (on the
date of death) then exercisable.
11. Changes in Capital Structure. In the event that, by reason of a
stock dividend, recapitalization, reorganization, merger, consolidation,
reclassification, stock split-up, combination of shares, exchange of shares, or
the like, the outstanding shares of Common Stock of the Company are hereafter
increased or decreased, or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of any other corporation,
then appropriate adjustments shall be made by the Board to the number and kind
of shares reserved for issuance under the Plan upon the grant and exercise of
Options. In addition, the Board shall make appropriate adjustments to the number
and kind of shares subject to outstanding Options, and the purchase price per
share thereunder shall be appropriately adjusted consistent with such change. In
no event shall fractional shares be issued or issuable pursuant to any
adjustment made under this Section 11. The determination of the Board as to any
adjustment shall be final and conclusive.
12. Mandatory Exercise. Notwithstanding anything to the contrary set
forth in the Plan, in the event that:
(a) the Company should adopt a plan of reorganization pursuant
to which it shall merger into, consolidate with, or sell its assets to,
any other corporation or entity (an "Acquiring Entity"), the Company
may give an Optionee written notice thereof :
(i) requiring such Optionee to exercise his or her
Options within thirty days after receipt of such notice,
(including any unvested Options which would, except for this
Section 12, otherwise be unexercisable at that date); or
(ii) requiring such Optionee to consent to the
conversion of such Options into an option to purchase the same
number of shares of the Acquiring Entity's common stock as
would have been received by the Optionee if the Optionee had
exercised such Option; or
(iii) deeming such Options to have been exercised, in
which case the Optionee shall be entitled to receive the same
consideration per share as received by other holders of the
Company's stock but reduced by an amount equal to the Exercise
Price.
(b) the Company adopts a plan of complete liquidation, the
Company will give an Optionee written notice thereof requiring such
Optionee to exercise his or her Options within thirty days after
receipt of such notice, (including any unvested Options which would,
except for this Section 12, otherwise be unexercisable at that date).
Those Options which the Company requests to be exercised as set forth
above and which shall not have been exercised in accordance with the provisions
of the Plan at the end of such 30 day period will automatically lapse
irrevocably and the Optionee will have no further rights with respect to such
Options.
13. Option Grant. Each grant of an Option under the Plan will be
evidenced by an award agreement in such form as the Committee may from time to
time approve. Such award agreement will contain such provisions as the Committee
may in its discretion deem advisable, including, without limitation, additional
restrictions or conditions upon
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the exercise of an Option. The Committee may require an Optionee, as a condition
to the grant or exercise of an Option or the issuance or delivery of shares upon
the exercise of an Option or the payment therefor, to make such representations
and warranties and to execute and deliver such notices of exercise and other
documents as the Committee may deem consistent with the Plan or the terms and
conditions of the Option Agreement. Without limiting any of the foregoing, in
any such case referred to in the preceding sentence the Committee may also
require the Optionee to execute and deliver documents (including the investment
letter described in Section 14), containing such representations, warranties and
agreements as the Committee or counsel to the Company shall deem necessary or
advisable to comply with any exemption from registration under the Securities
Act of 1933, as amended (the "Securities Act") any applicable State securities
laws, and any other applicable law, regulation or rule.
14. Investment Letter. If required by the Committee, each Optionee
shall execute a statement directed to the Company, upon each and every exercise
by such Optionee of any Options, that shares issued thereby are being acquired
for investment purposes only and not with a view to the distribution thereof,
and containing an agreement that such shares will not be sold or transferred
unless either (1) registered under the Securities Act, or (2) exempt from such
registration in the opinion of Company counsel. If required by applicable
securities laws, certificates representing shares of Common Stock issued upon
exercise of Options will bear a restrictive legend.
15. Requirement of Law. The granting of Options, the issuance of Option
Shares upon the exercise of an Option, and the delivery of Option Shares upon
the payment therefore shall be subject to compliance with all applicable laws,
rules, and regulations. Without limiting the generality of the foregoing, the
Company shall not be obligated to sell, issue or deliver any shares unless all
required approvals from governmental authorities and stock exchanges shall have
been obtained and all applicable requirements of governmental authorities and
stock exchanges have been complied with.
16. Tax Withholding. The Company, as and when appropriate, shall have
the right to require each Optionee purchasing or receiving shares of Common
Stock under the Plan to pay any federal, state, or local taxes required by law
to be withheld or to take whatever action it deems necessary to protect the
interests of the Company in respect to such tax obligations.
17. Assignability. To the extent permitted by applicable securities
laws or the Code, an Optionee may transfer those rights by will, by the laws of
descent and distribution, by gift or as otherwise permitted by the Committee in
its sole discretion.
18. Optionee's Rights as Shareholder and Employee. An Optionee shall
have no rights as a shareholder of the Company with respect to any shares
subject to an Option until the Option has been exercised and the certificate
with respect to the shares purchased upon exercise of the Option has been duly
issued and registered in the name of the Optionee. Nothing in the Plan shall be
deemed to give an employee any right to continued employment nor shall it be
deemed to give any employee any other right not specifically and expressly
provided in the Plan.
19. Termination and Amendment.
(a) Amendment. The Board may amend or terminate the Plan at
any time, subject to the following limitations:
(i) the approval by the shareholders of the Company
will be required in respect of any amendment that (A)
materially increases the benefits accruing to participants
under the Plan, (B) increases the aggregate number of shares
of Common Stock that may be issued or transferred under the
Plan (other than by operation of Section 11 above), (C)
increases the maximum number of shares of Common Stock for
which any Optionee may be granted options under this Plan or
(D) materially modifies the requirements as to eligibility for
participation in the Plan; (E) modifies the provisions for
determining the Fair Market Value; and
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(ii) the Board shall not amend the Plan if such
amendment would cause any Option or the exercise of any right
under the Plan to fail to comply with the requirements of Rule
16b-3 under the Exchange Act, or if such amendment would cause
the Plan or an Incentive Stock Option or exercise of an
Incentive Stock Option to fail to comply with the requirements
of Section 422 of the Code (including, without limitation, a
reduction of the option price or an extension of the period
during which an Incentive Stock Option may be exercised).
(b) Termination of Plan. The Plan will terminate on the tenth
anniversary of its effective date (as set forth in Section 20 below)
unless earlier terminated by the Board or unless extended by the Board
with approval of the stockholders.
(c) Termination and Amendment of Outstanding Grants. Except as
otherwise provided in Section 12 hereof or in any award agreement
evidencing the grant of an Option hereunder, a termination or amendment
of the Plan that occurs after an Option has been granted shall not
result in the termination or amendment of the Option unless the
Optionee consents or unless the Committee acts under Section 21(b)
below. The termination of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Option.
Whether or not the Plan has terminated, an outstanding Option may be
terminated or amended under Section 21(b) below or may be amended by
agreement of the Company and the Optionee which is consistent with the
Plan.
20. Shareholder Approval. This Plan is subject to the approval of this
Plan by the holders of a majority of the shares of stock of the Company present
or represented in proxy in a vote at a duly held meeting of the shareholders of
the Company on May 20, 1997. If the Plan is not so approved by shareholders, the
Plan shall automatically terminate and be of no force and effect. Subject to
such approval, the effective date of the Plan shall be December 13, 1996.
21. Miscellaneous.
(a) Substitute Grants. The Committee may grant an Option to an
employee or a non-employee director of another corporation, if such
person becomes an employee or non-employee director of the Company, by
reason of a corporate merger, consolidation, acquisition of stock or
property, reorganization or liquidation involving the Company and such
other corporation. Any Option so granted will be substituted for a
stock option granted by the other corporation, but the terms and
conditions of such Option may vary from the terms and conditions
required by the Plan and from those of the option granted by the other
corporation. The Committee shall determine the provisions of any Option
so granted.
(b) Compliance with Law. The Plan, the exercise of Option and
the obligations of the Company to issue shares of Common Stock upon
exercise of Options shall be subject to all applicable laws and
required approvals by any governmental or regulatory agencies. With
respect to persons subject to Section 16 of the Exchange Act, it is the
intent of the Company that the Plan and all transactions under the Plan
shall comply with all applicable conditions of Rule 16b-3 or any
successor provisions under the Exchange Act. The Committee may revoke
the grant of any Option if it is contrary to law or modify any Option
to bring it into compliance with any valid and mandatory government
regulations. The Committee may also adopt rules regarding the
withholding of taxes on payments to Optionees. The Committee may, in
its sole discretion, agree to limit its authority under this section.
(c) Sunday or Holiday. In the event, that the time for the
performance of any action or the giving of any notice is called for
under the Plan within a period of time which ends or falls on a Sunday
or legal holiday, such period shall be deemed to end or fall on the
next date following such Sunday or legal holiday which is not a Sunday
or legal holiday.
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MADISON BANCSHARES GROUP, LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - May 20, 1997
The undersigned shareholder of MADISON BANCSHARES GROUP, LTD. (the "Company"),
revoking all previous proxies, hereby constitutes and appoints E. Cheryl Hinkle
and Thomas J. Coletti, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution, for and in the name
and stead of the undersigned, to attend the Annual Meeting of Shareholders of
the Company to be held on Tuesday, May 20, 1997 at 3:00 P.M. at the Madison Bank
Building, 1767 Sentry Parkway West, Blue Bell, Pennsylvania, 19422, and to vote
all shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at such Annual Meeting, and at any
adjournment or postponement thereof; provided that said proxies are authorized
and directed to vote as indicated with respect to the following matters:
1. [ ] FOR all nominees for director named below.
[ ] WITHHOLD AUTHORITY to vote for all nominees for director named below.
[ ] FOR all nominees for director named below, except WITHHOLD AUTHORITY
to vote for the nominee(s) whose name(s) is (are) lined through.
Nominees: Gary E. Daniels; Philip E. Hughes, Jr.; Kathleen A. Kucer,
M.D.; and Blaine W. Scott III
2. [ ] FOR approval of the Company's 1997 Stock Option Plan
[ ] AGAINST
[ ] ABSTAIN
3. [ ] FOR the ratification of the selection of Deloitte & Touche L.L.P. as
the Company's independent auditor for 1997.
[ ] AGAINST
[ ] ABSTAIN
4. In their discretion, the proxies will vote on such other business as may
properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE NOMINEES FOR DIRECTOR, "FOR" THE APPROVAL OF THE 1997 STOCK
OPTION PLAN, AND "FOR" THE RATIFICATION OF THE SELECTION OF AUDITOR. This proxy
also delegates discretionary authority to vote with respect to any other
business which may properly come before the meeting or any adjournment or
postponement thereof.
(Continued and to be signed on opposite side)
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ANNUAL REPORT, NOTICE OF
SAID MEETING AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The
undersigned also hereby ratifies all that the said attorneys and proxies may do
by virtue hereof and hereby confirms that this proxy shall be valid and may be
voted whether or not the shareholder's name is signed as set forth below or a
seal is affixed or the description, authority or capacity of the person signing
is given or other defect of signature exists.
NOTE: PLEASE MARK, DATE AND SIGN THIS PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. Please sign this proxy exactly as it appears in address
below. If shares are registered in more than one name, all owners should sign
full title and attach evidence of authority. Corporations please sign with full
corporate name by a duly authorized officer and affix the corporate seal.
Date __________________________, 1997
_______________________________(SEAL)
(Shareholder's Signature)
_______________________________(SEAL)
(Shareholder's Signature)
_______________________________SHARES
