SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 28, 2005
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BROOKLINE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23695 04-3402944
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
160 Washington Street, Brookline, Massachusetts 02447-0469
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(Address of principal executive offices) (Zip Code)
(617) 730-3500
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Effective January 1, 2006, Brookline Bancorp, Inc. (the "Company") is required
to adopt Financial Accounting Standards Board Statement No. 123 (revised 2004),
"Share-Based Payment" ("SFAS 123R"). This Statement addresses how companies must
account for stock options and other equity-based compensation issued to
employees and non-employees.
Under SFAS 123R, a stock option must be classified as a liability if the terms
of the stock option require cash settlement on the occurrence of any
circumstance that is outside the control of the company granting the stock
option. SFAS 123R also requires companies to record compensation expense equal
to the fair market value of a stock option over a stock option's requisite
service period, even if the exercise price of a stock option exceeds the current
market value of a company's common stock.
Since 1999, stock options have been granted to employees and Directors of the
Company and Brookline Bank, its principal subsidiary, under the Company's 1999
Stock Option Plan (the "1999 Plan") and 2003 Stock Option Plan (the "2003
Plan"). Stock options granted under those Plans include "Limited Rights" and
other features that could require cash settlement of the options on the
occurrence of certain circumstances outside the control of the Company. Limited
Rights, which were granted in connection with the awarding of certain stock
options under the 1999 and 2003 Plans, entitle the holder to receive from the
Company an amount of cash equal to the difference between the fair market value
of the Company's common stock on the date a Limited Right is exercised and the
amount at which the underlying stock option can be exercised, multiplied by the
number of shares with respect to which Limited Rights are being exercised. A
Limited Right may be exercised only in the event of a Change of Control, as
defined in the 1999 and 2003 Plans, and when the related stock option is
eligible to be exercised.
The terms of the Limited Rights described in the preceding paragraph meet the
conditions of SFAS 123R that require the related stock options to be classified
as a liability. To comply with the requirements of SFAS 123R, effective January
1, 2006, the Company would have to record a liability of approximately $9.7
million and, after consideration of income taxes, charge its 2006 earnings and
reduce its stockholders' equity by approximately $5.6 million, or $0.09 per
share. Subsequently, such liability would be adjusted each reporting period
through earnings for the change in the fair value of the related stock options.
As of December 28, 2005, outstanding unvested stock options granted to Company
employees and Directors were as follows: 20,000 options granted under the 1999
Plan at an exercise price of $12.91 per option, 10,000 of which were to vest on
January 16, 2006 and 10,000 on January 16, 2007, and 249,000 options granted
under the 2003 Plan at an exercise price of $14.95 per option, 71,900 of which
were to vest each on January 2, 2006, January 2, 2007 and January 2, 2008, and
33,900 on January 2, 2009. To comply with the requirements of SFAS 123R,
non-cash compensation expense of approximately $290,000 in 2006, $202,000 in
2007, $97,000 in 2008 and less than $1,000 in 2009 would be recognized in the
Company's financial statements for those years.
To eliminate having to record the liability and non-cash compensation expenses
mentioned in the two preceding paragraphs, on December 28, 2005, the
Compensation Committee of the Board of Directors of the Company voted (a) to
amend the 1999 Plan and the 2003 Plan to eliminate Limited Rights and any other
features in those Plans that grant the holder of options awarded under such
Plans the right to receive a cash settlement of any options outstanding in
circumstances that are not within the absolute discretion of the Company, (b) to
solicit and, to the extent practicable, obtain the consent of the holders of
options under the Plans to eliminate their Limited Rights related to options
granted to them that remained outstanding on December 28, 2005 and (c) to
accelerate the vesting of all unvested stock options outstanding on December 28,
2005 granted under the Plans to December 28, 2005.
The average of the high price and the low price at which the Company's stock
traded on December 28, 2005, the date of the Compensation Committee's vote, was
$14.26 per share and the closing price of the Company's stock on that date was
$14.30.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
BROOKLINE BANCORP, INC.
Date: December 30, 2005 By: /s/ Paul R. Bechet
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Paul R. Bechet
Senior Vice President and Chief
Financial Officer